- JPMorgan Chase (JPM +0.1%) is deciding on whether to offer more loans insured by the Federal Housing Administration, a program that insures more than $1.2T in U.S. mortgage debt, Bloomberg reports, citing people familiar with the matter.
- Deliberations are still ongoing and a decision to proceeds will depend on a number of factors, the people said.
- If JPMorgan re-enters the FHA market, that would be a "modest negative" for existing mortgage originators, writes KBW analyst Bose George, who points out that Penny Mac Financial (PFSI +0.7%) has the largest exposure to the market.
- Flagstar (FBC -0.8%) and Mr. Cooper (COOP +3.1%) also have some exposure, the analyst writes.
- Still, George expects any move by JPMorgan or other banks into the market would be "very slow, especially ahead of the November presidential election."
- The news comes years after most banks withdrew from the mortgage program that helps low-income Americans buy homes after the banks were faced with billions of dollars in penalties due to underwriting errors.
- The Trump administration's promises to make it easier for lenders to avoid fines for mistakes in underwriting are prompting JPMorgan to take a second look at the market.