JPMorgan Chase & Co. ousted mortgage chief David Lowman after it overcharged active-duty military personnel on loans and improperly foreclosed on other borrowers.
"Dave Lowman and I have decided he will leave the firm," Frank Bisignano, the head of home lending, said Tuesday in an internal employee memo.
JPMorgan Chase has been taking steps this year to repair its mortgage unit, which posted at least $3.3 billion in losses for the first quarter. Lowman, who ran home-lending since leaving Citigroup Inc. in 2006, was directed in February to start reporting to Bisignano, JPMorgan Chase's chief administrative officer. It then hired Cindy Armine, Citigroup's chief compliance officer, last month to increase oversight as chief control officer of home lending.
"We thank Dave for his five years of service to our firm," Bisignano said in the memo. "He worked here during extraordinary times and has said he will take some much needed time off." A message left at Lowman's office was not immediately returned.
Chief Executive Jamie Dimon said JPMorgan Chase's record $5.6 billion first-quarter profit was tempered by "extraordinarily high losses we still are bearing on mortgage-related issues."
"Unfortunately, these losses will continue for a while," Dimon said on April 13 when JPMorgan Chase reported results. Its performance has been hampered by poor performing mortgage portfolios acquired when it bought Washington Mutual Inc. and Bear Stearns Cos. in 2008.
In April, JPMorgan Chase agreed to pay $56 million and to reduce mortgage rates for all deployed soldiers to settle claims that it overcharged military personnel on their mortgages and seized homes of 27 active-duty military personnel who were protected by the Servicemembers Civil Relief Act.
Dimon said the military foreclosures were the worst mistake the bank has ever made.
"We deeply apologize to the military, the veterans, anyone who's ever served this country and we're trying to go way beyond" what is needed to correct the errors, he said at JPMorgan Chase's May 17 annual shareholder meeting. "We're sorry."
It also has committed to hiring 100,000 veterans during the next 10 years, reduced the interest rate for active-duty soldiers to 4% from 6% for one year, agreed to forgive loan balances for anyone wrongfully foreclosed on and created a special loan modification program for veterans.
Bank of America Corp. and Morgan Stanley's Saxon Mortgage Services Inc. unit also paid millions of dollars to settle similar lawsuits with military personnel. Bank of America agreed last month to pay $20 million to settle a lawsuit alleging improper foreclosure on about 160 members of the military between January 2006 and May 2009, the Justice Department said on May 26. Morgan Stanley also agreed to pay $2.35 million to resolve a lawsuit alleging it improperly foreclosed on 17 service members between January 2006 to June 2009.
JPMorgan Chase is among the five largest U.S. mortgage servicers in negotiations with the Justice Department and state attorneys general to end regulators' probes into the use of faulty documents in foreclosure proceedings. Armine was hired, in part, to oversee a separate consent agreement that JPMorgan Chase and 13 other banks reached with the Office of the Comptroller of the Currency and the Federal Reserve in April over foreclosure practices.