Refinance Surge Adds to Chase’s Strong Q2 Finish

Rallying investors by end of day Friday, ""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm posted strong earnings from the second-quarter, with Home Affordable Refinance Program modifications helping boost income for the laggardly mortgage servicing unit year-over-year.

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For mortgage production and servicing, the financial institution fielded $604 million in net income over the second quarter, a figure that trumps a net loss of $649 million from the past year.

Mortgage production rose to $931 million in pretax income for the lender, signaling a nearly 62 percent increase from the last year.

Mortgage loan originations rose to $43.9 billion, climbing by 29 percent year-over-year and 14 percent on a quarterly basis.

Retail channel originations jumped by 26 percent from the year before and 12 percent quarter-over-quarter, reaching $26.1 billion for the lender.

Mortgage loan applications rose to $66.9 billion over the second quarter, ticking up by 37 percent from the past year and 12 percent from the past quarter.

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Third-party vendors serviced $860 billion in mortgage loans, reflecting declines of 9 percent from the past year and 3 percent from the past quarter.

The mortgage servicing unit for Chase saw $65 million in income before taxes, eclipsing losses of $1.1 billion from the year before.

Excluding repurchase losses, Chase saw mortgage production revenue increase from $595 million to $1.6 billion, an increase by 62 percent, as a result of the favorable refinancing climate created by HARP modifications.

Chase said the past quarter offered up $216 million in reductions for repurchase liabilities, helping to realize repurchase losses when compared to figures for the same from the last quarter.

The financial institution revealed that it boosted net income overall by $5 billion, or $1.21 per share, with $22.9 billion in revenue.

A strong second-quarter finish for Chase, still smarting from nearly $6 billion in trading losses from June, inspired the Dow Jones Industrial Average to rally and close at 12,777 by end of day Friday.

Investors rewarded Chase with a bullish 6 percent pickup in shares.

Chase chairman and CEO Jamie Dimon, who recently appeared before lawmakers to address the stunning trading loss, said that the bank had overhauled management and some of the governance practices that first led to the fiasco.

In turn, he nodded at reductions in ""loan loss reserves by $2.1 billion, mostly for the mortgage and credit card portfolios. These reductions in reserves are based on the same methodologies we have used in the past - the good news is that these reductions reflected meaningful improvements in delinquencies and estimated losses in these portfolios.

""We continue to maintain strong reserves,"" Dimon said.