“More Disciplined Appraisals”

This is a little inside baseball, but on a conference call this morning, the chief executive of JP Morgan admitted that his company was taking a much closer look at appraisals and home-loans.

Ms. Whitney asked Mr. Dimon, who is JPMorgan’s chief executive, why his bank’s revenues from loan origination had fallen in the quarter. She said she was wondering if it had to do with a tightening of lending standards.
Mr. Dimon said Wednesday that lending had taken a hit as banks increased lending standards.

“People have gone back to old-fashioned 80 percent L.T.V.,” he said on the conference call, referring to what is known as the loan-to-value ratio on mortgages. “Real verified income. More disciplined appraisals. And in some areas, we won’t even go to 80 percent L.T.V. because of expected home decreases. We are not at 80 percent in California, Nevada and Florida — we are at 65 percent.”

This isn’t really news. Anyone watching the market can see that banks are skittish about lending money. It’s just fun to hear a company admit they are taking a closer look at appraisals. Ideally, this means the market is putting a premium on quality over quantity.