Updated with additional information throughout.
The bank's mortgage production revenue, excluding repurchase losses, rose to a record $1.8 billion, up 36% from the prior year on the back of wider margins driven by favorable market conditions and strong refinancing under the government's enhanced Home Affordable Refinance Program.
Mortgage loan originations were $47.3 billion, up 29% from the prior year and 8% compared with the prior quarter.Mortgage loan application volumes totaled $73.2B, up 26% year-on-year and 9% quarter-on-quarter. About 75% of the production volume is explained by refinancing activity, while the balance represents home purchases, management said during the media call. Dimon says the credit trends in the mortgage banking business are improving. Net charge-offs in the real estate portfolios was $595 million, excluding a one-time $825 million charge related to recent regulatory guidance that required charging off post-bankruptcy loans to the value of their underlying collateral. The bank expects to see a net charge off rate of $600 million a quarter going forward. The bank released mortgage loan loss reserves of $900 million to reflect its improving outlook on delinquency rates. Mortgage servicing expenses rose 23% to $1.1 billion. Those expenses are likely to stay elevated for some time as the bank works through foreclosure-related expenses. The bank also said the wide spreads currently being earned in the mortgage business is likely to compress over time. Dimon said during the media call that steps to taken to clearly define qualified mortgages and reopen the securitization market will further help the housing recovery. Wells Fargo (WFC - Get Report) also beat expectations in the third quarter, driven by the housing rebound. --Written by Shanthi Bharatwaj in New York.