NEW YORK — JPMorgan Chase’s impending layoff of 13,000 employees in its mortgage division reveals much of what the nation’s biggest bank thinks about the housing market: the worst is over, but optimism for the future should be tempered.
On the one hand, the job cuts, as devastating as they might be for JPMorgan workers, reflect a positive turn in the housing market. Foreclosures at the bank have tumbled some 20 percent since the fourth quarter of 2011, which is why most of the employees receiving pink slips are those that were hired to handle mortgage defaults.
Struggling homeowners are catching up on payments or benefiting from alternatives to foreclosure as the economy improves. Seriously delinquent residential mortgages fell to 7 percent in the last three months of 2012, the lowest level since 2008, according to the Mortgage Bankers Association.
Yet the reduction of staff in JPMorgan’s mortgage production office indicates that demand for new home loans is not returning at a fast enough pace. The bank anticipates revenue from issuing mortgages will slide from $3.6 billion in 2012 to $1.5 billion this year. Mortgage banking income as a whole is expected to hit $2.1 billion in 2013, down from $3.3 billion.