Bad mortgage rules hold back the US economy



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<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "JPMorgan Chase (JPM) CEO Jamie Dimon said Thursday that the United States had "desperately needed" a reform of their mortgage loan and that they could unleash economic growth. "Data-reactid =" 11 "> JPMorgan Chase (JPM) CEO Jamie Dimon said Thursday that the US had" absolutely needed "mortgage reform and could release economic growth.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" Reduced needs in terms of origins and tedious and useless maintenance (3,000 federal and national requirements today) and opening the securitization markets to secure loans would significantly improve the cost and availability of mortgage loans for consumers – especially young, self-employed and those who had already been lacking, "writes Dimon in his & nbsp;annual letter widely read. "data-reactid =" 12 ">" Reducing onerous and unnecessary start-up and service requirements (there are currently 3,000 federal and national requirements) and opening securitization markets to secure lending would significantly improve the cost and availability of loans. mortgages for consumers – especially young people, the self-employed and those who had already defaulted, "Dimon wrote in his widely read annual letter.

He pointed out that these loans would not be subprime mortgages, but "mortgages that we should agree to".

According to JPMorgan economists, increased homeownership could help the economy grow at up to 0.2% per year. At the moment, mortgage regulation is stifling economic growth.

"In the early 2000s, bad mortgage laws contributed to the Great Recession of 2008. Today, bad mortgage rules hinder the good growth of the US economy," wrote Dimon. "As many regulators are involved in the development of the new rules, coupled with a policy intervention that is not always helpful, it is difficult to achieve the mortgage reform we so badly need."

For banks such as JPMorgan Chase, the mortgage industry has become difficult as volumes decline and production costs rise.

"It has become a critical issue and one of the reasons why banks have been losing important parts of the mortgage sector. This activity, in particular, highlights one of the flaws of our complex capital allocation regime, "wrote Dimon. "The best way to manage a bank's risk is to use risk weights that are really risk-based. However, since most banks are also constrained by standardized capital (a measure of equity that does not account for the lower risk of a good-credit-first mortgage properly subscribed), owning loans mortgage becomes extremely unprofitable. "

He added that the firm is "overhauling" its role as a mortgage lender and that "the chances are increasing", they could "significantly change" their mortgage strategy.

A slide presented at JPMorgan Investor Day on February 26 shows the current state of the mortgage industry.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Julia La Roche is a finance reporter at Yahoo Finance. To follow her Twitter."data-reactid =" 32 ">Julia La Roche is a finance reporter at Yahoo Finance. To follow her Twitter.

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