(CNBC) — JPMorgan Chase may be the second-largest mortgage lender in the nation, but when it comes to government-backed, low down-payment Federal Housing Administration loans, it's not even in the top 100. Onerous regulations and the constant threat of litigation have all but stalled originations of these loans, which were originally designed to help first-time homebuyers with lower credit scores and less cash.
"FHA requirements are down to a 520 FICO (credit score) and you only have to put 3.5 percent down; that's subprime lending, and we're not in the subprime lending business," said Kevin Watters, CEO of Chase Mortgage Banking.
Chase Mortgage has not stopped doing FHA loans entirely, but its FICO requirements are far higher, and its loans are more expensive to price in the added risk.
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