(Reuters) – JPMorgan Chase & Co, (JPM.N) the second-largest U.S. mortgage lender, is backing away from making home loans to less creditworthy borrowers after losing faith in its ability to recover much money from foreclosing on homes, even with government guarantees.
The shift reflects a change in the way the bank views its mortgage business: where before it viewed collateral and U.S. government lending programs as key backstops to most loans it was making, now it is determined to never have to foreclose.
To avoid loans that default, it is doing more work on establishing the capacity and willingness of borrowers to pay their loans. The bank is losing market share in government-backed loans, but is doing so consciously, JPMorgan executives told analysts Tuesday on a conference call.
“We maintained discipline regarding pricing to our required returns,” Chief Financial Officer Marianne Lake said.
Lenders have broadly been paying…
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