JPMorgan Works to Shed Consumer Loans

NEW YORK (TheStreet) -- JPMorgan Chase (JPM) said its consumer lending portfolio could decline by nearly $50 billion over the next year as the financial titan works to unwind troubled mortgages and home equity loans on its books.

Speaking at the BancAnalysts Association of Boston conference, JPMorgan's head of retail Charlie Scharf Thursday projected the $329.3 billion portfolio would diminish by another 10% or 15% in 2010 as the company works to jettison bad loans from its acquisition of Washington Mutual and troubled brokered home equity loans in the legacy Chase portfolio. At the high end of that estimate, the company would be cutting away $49.4 billion in loans.

Scharf spent considerable time in his presentation discussing the institution's troubled mortgages and provided detail on the company's foreclosures and loss mitigation/loan modification efforts.

He specifically pointed out that there has been an improvement in sales of real estate-owned properties.

Real-estate owned properties in JPMorgan's servicing portfolio have been declining "fairly consistently," Scharf said. "We're all getting better at the process of selling these properties efficiently," but an improvement in the market is also helping the company clear the properties.

"It's very, very uneven, but in places like California, Arizona and Nevada, which had been a big part of the decline, you do start to see some flattening which is makes us feel better ... but we know there is more pain to come elsewhere in the country," Scharf says.

Florida is one state where the company continues to see erosion in the housing market, Scharf says.

Unlike states such as California, contract prices in Florida are not improving and new foreclosures continue to rise, despite high sales volume in the state. "There are people that are buying, but at very discounted values," Scharf says. There is "still a fair amount of investor buying getting done in Florida."