Signs of change in the subprime market continue with JPMorgan Chase & Co. rethinking its holdings strategy. During an investor presentation on Tuesday, Chief Executive Officer James Dimon announced that the company has sold off the majority of the loans it made last year to people with weak credit histories.
Even though subprime mortgages still make up 65 percent of the company’s total subprime portfolio, the company experienced a significant drop in nonprime mortgage holdings when it reported $13.2 billion in holdings during the fourth quarter compared to $16.3 billion during the third.

While Dimon said JPMorgan will not discontinue its business in the subprime lending market, the company has classified approximately $4 billion of its subprime mortgage loans as “up for sale.”

Thomas Kelly, a spokesperson for JPMorgan, told DSNews.com that the investor report should not be read as if JPMorgan were getting out of the subprime market.

“We continue to originate subprime mortgages,” said Kelly. “But, we are selling most of our new originations into the secondary market. We are not holding the new originations on our balance sheet.” The announcement arrives at a time when lenders such as New Century Financial Corp. and Accredited Home Lenders Holding Co. are trying to reduce a surge of early defaults on their loans, according to Reuters. Investors in some cases are utilizing the option of having lenders buy back the loans, which is causing originators to improve loan quality and pay less attention to volume.