Dimon Voices FHA Frustrations

Julie C. Nichols General

M Report – Derek Templeton

In a conference call with analysts following the release of its second quarter earnings report Tuesday,JPMorgan CEO Jamie Dimon took the time to single out Federal Housing Administration (FHA) backed lending as a source of risk for the megabank. In February, the bank announced that it would pay $614 million to settle claims that it had improperly approved thousands of government backed mortgages, including those approved by the bank as a participant in the FHA’s Direct Endorsement Lender program. Under the program, lenders who have direct endorsement power can consider single-family FHA mortgage applications without first submitting paperwork to HUD. Skipping that step allows FHA mortgages to be processed as rapidly as other mortgages. Dimon said that the bank’s FHA business has cost them money. "So the real question is should we be in the FHA business at all? We’re still struggling with that," Dimon said. "Until they come up with some kind of safe harbors or something, we’re going to be very, very cautious in that line of business," Dimon said.

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