JPMorgan to expand review of 100,000 pending repossessions
Thursday 14 October 2010
JPMorgan Chase, the second-biggest bank in the US, said it could face penalties over missing paperwork and irregularities in its foreclosure processes, but said the costs would be minor and that no customers had been inappropriately thrown out of their homes.
Its chief executive Jamie Dimon promised to widen the company's review of documents behind more than 100,000 pending repossessions, amid a public outcry over foreclosure procedures across the US banking industry. But he dismissed what he called the "shooting star risk" that the furore will develop into a major drain on profits or bank capital.
"We're not evicting people who deserve to stay in their house," he told analysts on a conference call to discuss JPMorgan's latest financial results. "It will cost us some money to go back and make sure it's done right. It will delay some foreclosures. But the whole mortgage issue costs us so much money now, to me it will be incremental."
The results revealed that JPMorgan has put aside $1.3bn to cover potential litigation costs, including mortgage-related matters.
Doug Braunstein, the chief financial officer, said the bank will review foreclosure cases in 41 states. "We are going file by file, case by case," he said. "If we made mistakes we will fix them."
JPMorgan's overall profits for the third quarter of 2010 were $4.4bn, up 23 per cent on a year ago and better than forecast, but they came amid declining revenue. Loan growth remains weak, and investment banking profits were down by one-third because Wall Street trading activity shrank dramatically over the summer.
As Mr Dimon was playing down the foreclosure fiasco, attorneys general of 49 states were announcing an investigation of industry practices, in an attempt to gauge the full scale of the problem and whether any state laws had been broken.
"What we have seen are not mere technicalities," said Richard Cordray, the attorney general of Ohio. "This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgments based on fraudulent evidence."
His comments were echoed by others in the group, which includes every US state except Alabama.
"This is not simply about a glitch in paperwork," said Iowa attorney general Tom Miller, who is leading the investigation. "It's also about some companies violating the law and many people losing their homes."
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