Chase Home Lending increases its closing guarantee

Chase Home Lending, the consumer and commercial banking arm of JPMorgan Chase & Co., has raised its closing guarantee from $5,000 to $20,000 until July 27, 2024, the bank announced on Thursday. 

The guarantee means that the bank promises an on-time closing on or before the contract closing date, or it will pay the homebuyer $20,000. This grant can be used to discount underwriting fees paid at closing, or to reduce the interest rate and down payment. 

“Current market dynamics have impacted the affordability of homeownership for many Americans, and at the same time, competition has only increased,” Sean Grzebin, head of consumer originations for Chase Home Lending, said in a statement. “We’re focused on the things we can control in this environment and that’s supporting our customers all the way home. Increasing our Closing Guarantee to $20,000 is a reflection of our confidence in getting customers into their new home without delay.”

Chase offers down payment options as low as 3% and flexible credit guidelines to help expand homeownership opportunities. It also offers a homebuyer grant that distributes up to $7,500 in eligible areas. The grant can be combined with state and local homebuyer assistance to lower the interest rate and/or reduce the closing costs and down payment. 

Simplified regulations around origination, servicing and securitization have also been recently mentioned by Chase CEO Jamie Dimon as solutions to make housing more affordable.

In his annual letter to shareholders in April, the influential head of JPMorgan Chase wrote that “mortgage regulations around origination, servicing and securitization could be simplified, without increasing risk, in a way that would reduce the average mortgage by 70 or 80 basis points.”

“The Urban Institute estimates that a reduction like this would increase mortgage originations by 1 million per year and help lower-income households, in particular, buy their first home, thereby starting them on the best way to build household net worth,” he wrote. 

Dimon further suggested a “candid review” of the thousands of new rules implemented since the passage of the Dodd-Frank Act in 2010.

“While Dodd-Frank did some good things, shouldn’t we take a look at the huge overlapping jurisdictions of various regulators?,” Dimon wrote. “This overlap creates difficulties, not only for banks, but for the regulators, too. Any and all of this is achievable, and, I believe, could be accomplished with simpler rules and guidelines and without stifling our critical banking system.”

In just the past year, the Department of Justice has called for a full dislocation of real estate agent commissions between sellers and buyers, and new appraisal bias protections have been set up. 

Meanwhile, the Consumer Financial Protection Bureau (CFPB) is targeting “junk fees” in mortgage origination and borrower-paid lender title policies.  

The Federal Housing Finance Agency (FHFA) has added new requirements in its Duty to Serve plans that govern Fannie Mae and Freddie Mac, as well as tweaks to loan-level pricing adjustments (LLPAs). On the capital markets front, banks and warehouse lenders are looking at new potential capital requirements stemming from wholesale changes to the Basel III regulatory framework.

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