Who says retail lending is more expensive than wholesale production? Well, actually, JPMorgan Chase does. In its new earnings statement JPM notes that it spent an additional $82 million in 4Q (compared to 3Q) due to higher residential production costs: increased retail expenses and “enhanced” loan underwriting. JPM has been out of wholesale for two years now. As most mortgage professionals realize loan brokers don’t get paid unless they produce. And the wholesaler (usually) isn’t paying the rent for the loan broker, nor is the wholesaler paying for the broker’s licensing and educational costs. But retail is more expensive because the staff involved in dealing with the general public involves permanent employees who require salaries, benefits, matching 401-k payments. And office space. They get paid whether they produce or not. The underwriting revelation by JPM is interesting because it means Chase is doing everything in its power to avoid future loan buybacks from Fannie Mae and Freddie Mac.