On Wednesday JPMorgan Chase & Co. reported strong third-quarter earnings as its thriving investment banking business more than offset the rising loan losses about which the bank has warned that the bank that would continue for the foreseeable future.

$3.59 billion profit to JPMorgan

JPMorgan, has reported a $3.59 billion profit but it has also said that it roughly doubled the amount of money that has been set aside by the bank for failed home and credit card loans in the quarter.

Loan losses continues to rise

It has been predicted by the banks for some time that their loan losses would continue to rise. And in JPMorgan’s earnings statement, it has been confirmed by the CEO Jamie Dimon that this trend continues.

Investment bank net income

JPMorgan said that its investment bank net income came to $1.92 billion, this has been raised up $1 billion from a year earlier as fixed income trading thrived.

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Credit card loans, could eventually push you to keep up your house as a debt consolidation object. For most people, this becomes the only option. Using the house as a collateral, or a secured loan, from which they can earn a loan to pay off all outstanding debts.

This means that if you owe a house and have been paying your mortgage in due time, then you have increased your equity amount. This equity amount can help you overcome your debts by serving as a secured debt against a loan. This kind of service is called as collateral service.

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Due to the recent economic problems, banks have become extremely careful and rigid in giving out loans. Most of the banks have tightened the grip on borrowers,  canceling home-equity loans and cutting limits on credit cards. This has opened a new way for Americans who are now turning to a timeless source of credit: one another.

Nowadays, person-to-person lending, facilitated by Web-based companies, is becoming increasingly popular. Due to tightened credit situation prevailing, person-to-person lending has turned into an attractive alternative.

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There are eminent signs that the economic recovery may finally be taking shape, but with dangers still hanging about, Federal Reserve policymakers are making sure to leave a key interest rate at a record low rate to make sure any emerging turnaround gains traction.

It is being anticipated that the worst recession since World War II is ending, and that the economy has started to grow again, or will soon. And with the economy turning a corner, the Fed also will weigh whether consumer lending programs intended to ease the recession and stem the financial crisis should be extended.

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Defaults and Late payments on home-equity loans and credit cards are climbing to the highest levels. According the the American Banker’s Association the figures are alarming and disturbing.  The worst hit area is home-equity loans. If this trend continued, it has a potential to develop into a major credit crisis in near future.

How This Happened?

In my opinion availability of cheap credit and rising house prices during early part of this decade created a window for home owners to take home-equity loans. Consumers were literally treating their homes like they were liquid assets (cash in bank or ATM). They were buy consumables and services(insane). All was well until the home prices started going down and down. The market collapsed and the consumers were left in pile of debt.

The data shows that default rates on home equity loans have climbed to more than 3.5 percent in first quarter of 2009. The late payments on credit cards is also touching 2% levels. This is a big jump compared to the figures this time last year.

One in 9 American is Jobless

The major contribution in this mess is Un-employment. According to official data, every 1 in 10 person is out of job. This is national average. there are states where every 1 in 8 people is out of job. worse thing is that is just a beginning. Job losses will keep on rising and people’s ability to pay their bills will come to a grinding halt.

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Welcome to the First edition of our Blog Carnival of Credit, Loan and Mortgage. I am really thankful to all of those who participated and submitted your articles. I really enjoyed reading them all. This carnival provided me an opportunity to discover some great blogs related to personal finance.

I hope you enjoy reading these articles.

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