JP Morgan Chase 2015 Annual Report Download - page 100

Management’s discussion and analysis
90 JPMorgan Chase & Co./2015 Annual Report
Business metrics
As of or for the year
ended December 31,
(in billions, except
ratios) 2015 2014 2013
Mortgage origination
volume by channel
Retail $ 36.1 $ 29.5 $ 77.0
Correspondent 70.3 48.5 88.5
Total mortgage
origination volume(a) 106.4 78.0 165.5
Total loans serviced
(period-end) 910.1 948.8 1,017.2
Third-party mortgage
loans serviced (period-
end) 674.0 751.5 815.5
Third-party mortgage
loans serviced
(average) 715.4 784.6 837.3
MSR carrying value
(period-end) 6.6 7.4 9.6
Ratio of MSR carrying
value (period-end) to
third-party mortgage
loans serviced (period-
end) 0.98% 0.98% 1.18%
Ratio of annualized loan
servicing-related
revenue to third-party
mortgage loans
serviced (average) 0.35 0.36 0.40
MSR revenue multiple(b) 2.80x 2.72x 2.95x
(a) Firmwide mortgage origination volume was $115.2 billion, $83.3 billion
and $176.4. billion for the years ended December 31, 2015, 2014 and
2013, respectively.
(b) Represents the ratio of MSR carrying value (period-end) to third-party
mortgage loans serviced (period-end) divided by the ratio of loan servicing-
related revenue to third-party mortgage loans serviced (average).
Mortgage servicing-related matters
The financial crisis resulted in unprecedented levels of
delinquencies and defaults of 1–4 family residential real
estate loans. Such loans required varying degrees of loss
mitigation activities. Foreclosure is usually a last resort, and
accordingly, the Firm has made, and continues to make,
significant efforts to help borrowers remain in their homes.
The Firm entered into various Consent Orders and
settlements with federal and state governmental agencies
and private parties related to mortgage servicing,
origination, and residential mortgage-backed securities
activities. The requirements of these Consent Orders and
settlements vary, but in the aggregate, include cash
compensatory payments (in addition to fines) and/or
“borrower relief,” which may include principal reduction,
refinancing, short sale assistance, and other specified types
of borrower relief. Other obligations required under certain
Consent Orders and settlements, as well as under new
regulatory requirements, include enhanced mortgage
servicing and foreclosure standards and processes.
On June 11, 2015, the Firm signed the Second Amended
Mortgage Banking Consent Order (the “Amended OCC
Consent Order”) with the Office of the Comptroller of the
Currency (“OCC”), which focused on ten remaining open
items from the original mortgage-servicing Consent Order
entered into with the OCC in April 2011 and imposed
certain business restrictions on the Firm’s mortgage
banking activities. The Firm completed its work on those
items, and on January 4, 2016, the OCC terminated the
Amended OCC Consent Order and lifted the mortgage
business restrictions. The Firm remains under the
mortgage-servicing Consent Order entered into with the
Board of Governors of the Federal Reserve System (“Federal
Reserve”) on April 13, 2011, as amended on February 28,
2013 (the “Federal Reserve Consent Order”). The Audit
Committee of the Board of Directors will provide
governance and oversight of the Federal Reserve Consent
Order in 2016.
The Federal Reserve Consent Order and certain other
mortgage-related settlements are the subject of ongoing
reporting to various regulators and independent overseers.
The Firm’s compliance with certain of these settlements is
detailed in periodic reports published by the independent
overseers. The Firm is committed to fulfilling all of these
commitments with appropriate due diligence and oversight.