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Chase loosens standards on jumbo lending

The nation’s largest bank has loosened its minimum requirements on jumbo loans, a move that could have ripple effects at the top end of the mortgage market.

JPMorgan Chase & Co. said it was lowering its FICO credit scores to 680 and would now require as little as a 15 percent downpayment for mortgages as large as $3 million. It had required a FICO score of 740 and a downpayment of 20 percent.

Chase has been jostling for market share with Bank of America and Wells Fargo, among other large mortgage lenders that have already loosened their standards on jumbo products, according to a report in the Wall Street Journal.

Wednesday’s move, however, is the most aggressive by a big bank so far to capture the business of wealthier borrowers. Jumbo mortgages exceed $417,000 in most markets and $625,500 in expensive markets, such as Hawaii.

“I think it allows them to gobble up more market share, and that is really what they are looking to do,” said Ruth Lee, an executive vice president at Titan Lenders Corp.

Lee said Chase’s move likely won’t cause a huge impact on the overall market for jumbo loans, which has been booming in recent quarters. According to the mortgage publication Inside Mortgage Finance, jumbo volume reached $93 billion in the second quarter, an eight-year high. The jumbo market now represents about one fifth of all mortgages.

Lee said Titan and other lenders have already been purchasing jumbo loans with FICOs in the 680-to-700 range. She said lenders covet these borrowers, even those with lower credit scores, because they tend to have savings and high incomes.  

“This market is already served,” Lee said. “680 was kind of an outlier. There were a lot of [lenders] who went to 700, but 680 was already there. If you wanted to get [a loan], you could get it.”  



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