Chase to stop lending through brokers

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JPMorgan Chase & Co. will quit making mortgages through brokers later this week, saying today that its decision was due in part to its acquisition of Washington Mutual Inc.

WaMu’s huge branch network will make it easier for Chase, the second-largest U.S. bank as measured by assets, to make mortgage loans directly to consumers, the New York company announced in a news release you can read here.

The meltdown of the home lending business has caused numerous companies to exit the brokered mortgage, or wholesale lending, business. Chase already had stopped wholesale lending to customers with tarnished credit.

Fred Arnold of American Family Funding in Stevenson Ranch, who is the president of the California Assn. of Mortgage Brokers, estimated that there are only 30% as many such wholesale lenders as there were two or three years back.

Although there are “still plenty of lenders” working with brokers, Arnold said that fewer players in the business will mean “less competition and higher prices for the consumer in the long run.”

This take from Laguna Niguel broker Jeff Lazerson: ‘It’s never good when you have only two national banks left doing wholesale [Wells Fargo Bank and Countrywide a.k.a. Bank of America].’

He added: ‘For the past year we did very little business with Chase because we found other lenders providing much more competitive pricing.’

-- E. Scott Reckard