Editor’s Note: This feature originally appeared in the July issue of MReport, out now.
If homeownership is the great American Dream, then Chase Home Lending is the place where such dreams can come true. Specifically, Chase’s product team has been charged with the key responsibility of ensuring that the origination products created by Chase and its mortgage servicing standards stay true to the end goal of providing comprehensive affordable lending products and services—one of the three five-year goals unveiled by JPMorgan Chase in January 2018.
“When we enter a community, we enter it with the full force of JPMorgan Chase behind it,” Jamie Dimon, CEO of JPMorgan Chase, said about these goals. “We hire people. We lend to and support local businesses. We help customers with banking, lending, and saving. And we align our business and philanthropic efforts to help more communities benefit from a growing economy.”
Schmitt and his team of more than 25 people, in partnership with the affordable lending team, have designed some of Chase’s most popular lending programs in recent years. For example, they developed Chase’s DreaMaker program that began offering up to $3,000 in grants and incentives to cover closing costs and down payments for families buying a new home in a low- to moderate-income (LMI) community in 2016. In 2018, DreaMaker grew to nearly 15 percent of Chase’s consumer purchase volume and is now a key part of the firm’s five-year investment plan.
Today, Schmitt manages both origination and servicing products across Chase Home Lending. As an originations leader, he’s responsible for designing origination products and policies to meet Chase’s customers’ financing needs prudently and responsibly. Wearing the servicer’s hat, he makes sure that the products are designed to allow customers to make the most of their money by ensuring products are flexible throughout the life of the loan.
“Chase is constantly looking for ways to responsibly expand access to credit. For example, we recently expanded our homeownership grant program from 40 markets to all markets nationally,” Schmitt said. “The program aims to reduce the cash that customers are required to contribute at purchase and can be used towards closing costs and down payments.”
Products that provide sustainable and lifelong access to credit and ensure that housing is a tangible, achievable dream for all are the foundation of the many initiatives that Schmitt has worked on during the past decade at JPMorgan Chase. This month, we sat down with Schmitt to learn about what drives him and his team in their mission to provide the best-in-class lending financial solutions for homeownership.
The Early Years
Schmitt has a background in strategy, portfolio management, and analytics. But the opportunity to develop a wide range of skills such as industry risk management and credit risk management and developing policies and procedures to help customers achieve their dream of homeownership attracted him to the mortgage space. “Some aspects of the mortgage business are highly analytical whereas some are highly qualitative making it necessary for a person to build a mix of relatively diverse skill sets to succeed in this business,” said Schmitt, who joined Chase after it acquired Washington Mutual.
“I initially came over to the capital markets team where I looked at the portfolio of loans and customers that the bank had acquired from Washington Mutual,” he said. This was at the height of the Great Recession, and the young portfolio manager was charged with modifying customer portfolios to help acquire more affordable terms and more stable products. His mandate involved designing and testing loss mitigation programs for delinquent or at-risk customers, as well as designing programs to help those customers who were performing in higher risk products move to less risky ones.
Within a few short years, Schmitt was leading a team responsible for Chase’s foreclosure prevention and loss mitigation products. He was also responsible for designing and executing Chase’s servicing strategy on loan sales and subservicing.
Working under David Beck, CFO at Chase Home Lending, Schmitt went on to develop the bank’s servicing portfolio strategy by redesigning the servicing portfolio of not only Chase but also of Bear Stearns and Washington Mutual and aligning it to the firm’s business strategy to make it a, “less volatile and a more stable and profitable business.”
Schmitt’s journey from Washington Mutual to Chase wasn’t an easy one. “I was at Washington Mutual at the height of the financial crisis. The firm was effectively failing, and there were significant layoffs over a short period. We had just had a child, and my responsibilities had increased,” he said. “There was a lot of uncertainty both for my job, my career, as well as the ability to accurately predict what could happen.”
Looking back though, Schmitt said he felt fortunate that he faced this challenge early on in his career because of the experience it gave him. “I joined Washington Mutual during a successful time in the mortgage industry when there was a lot of origination volume. Then through the Great Recession, I learned about what happens when there’s too much excess in the system and not enough prudence and responsibility. It helped me become part of a team that helped find a solution for that crisis,” Schmitt said. “And now we’re in a healthier cycle, so it’s been an interesting journey that’s full of learning.”
It was perhaps the expertise he developed building products and strategies to stabilize Chase’s lending portfolio during the crisis that helped Schmitt to work closely with regulators and investors to influence the future of foreclosure prevention and customer assistance. He represented Chase as the co-chair of an industry task force whose recommendations and end goals were adopted by Fannie Mae and Freddie Mac for their new foreclosure prevention program, which took effect in October 2017.
“This is one of those areas where we still have a lot to do as an industry,” said Schmitt, conceding that the start was made where “we are providing access to credit, and we have a more stable and predictable business for our customers, for our stakeholders, and for investors.”
According to Schmitt, a true government-industry partnership was possible only when all stakeholders laid out the outcomes of what they wanted for their customers followed by the critical step of finding the right industry experts to lay out their facts, customer research, and feedback. “Once that’s done, you need to have an open and honest dialogue between all the stakeholders on the intentions or motivations for building a particular product or service for a customer. Although that strategy may not be perfect, it works for the vast majority of stakeholders and ultimately, for most customers. Only once this is done can you achieve a true partnership approach to solving a problem,” Schmitt said.
Schmitt says that he has built a diverse team—not only in terms of their cultural backgrounds but also based on the skill sets. While the group consists of people with finance and underwriting experience, he has also selected those with different expertise and skill sets like capital markets and sales.
Schmitt, who doesn’t have a traditional mortgage background himself, says it helped to have a team that was diverse under all metrics—be it gender, ethnicity, backgrounds, or skill sets. “We have achieved the best outcome of having a vast array of ideas and strategies when we’re developing products for our customers,” Schmitt said, adding that the current diversity mix of his team of different disciplines, backgrounds, and experiences has driven them to create optimal strategies much faster than what would have happened if they all had the same background.
As a leader, Schmitt said he tries to empower his team and give them a platform to assist the bank’s customers and make it easier for their peers to deliver products and services to customers. “I work with my team to ensure that we all have the same core objectives and are aligned with our values and mission,” he said.
Rather than presenting a defined solution and then asking them to execute it, Schmitt encourages his team to work together and ideate on a business or customer experience challenge and come up with a solution, while giving them a platform to build their ideas on with some probable solutions. “My job is to remove obstacles that would impede their progress, and that’s what I try to do every day.”
Customer First Mindset
When you’re looking at fulfilling the customers’ needs “no day is ever the same,” according to Schmitt. “One of the really interesting things people ask me is, ‘How do you spend the entire day working on a single loan, given the scale and depth of your responsibilities in business?’ And here’s a simple answer I’ve learned from our CEO: If we need a solution for a customer, we’re committed,” Schmitt said. “That’s the Chase culture under Mike Weinbach’s leadership, where we have relatively senior leaders spending significant portions of their day solving a customer problem until it’s resolved.”
The team’s commitment to customer service was reflected in a recent initiative where Chase proactively informed thousands of customers that they were reducing their payment by eliminating the customer’s mortgage insurance with no action required by them. Explaining the reason behind this initiative, Schmitt said, “We are now able to eliminate the need for customers to request cancellation of their mortgage insurance and obtain a valuation, where the loan balance is below 80 percent of the original property value, and the customer meets other eligibility requirements. This is just one more example of ways our team is putting the customer first and helping them make the most of their mortgage with Chase.”
Schmitt said that the firm could bring the power of a large financial institution with multiple products and services within home lending as well as other lending products. But more importantly, it is keeping customer experience at the forefront. “We have a broad business that brings a powerful organization that’s fully committed to customers and meeting their needs,” he said. “Even the products we design for home lending are geared towards rewarding customers and fostering the depth of their relationship with us.”
Meeting customers is one of the reasons why Schmitt loves his current role. “I actually get to help individual customers and seeing the immediate satisfaction of that customer, whether it’s getting their first home, helping with their refinance, or helping a family stay in their home if they’re facing a hard financial situation, is so much more satisfying than doing large scale policy work.”