XML 52 R32.htm IDEA: XBRL DOCUMENT v3.2.0.727
Mortgage Servicing Rights (Tables)
 6 Months Ended
Jun. 30, 2015
Transfers and Servicing [Abstract]  
Schedule of Servicing Assets at Fair Value
Changes in the carrying value of residential first mortgage MSRs, accounted for at fair value, were as follows. 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(Dollars in millions)
Balance at beginning of period
$
279

 
$
320

 
$
258

 
$
285

Additions from loans sold with servicing retained
77

 
68

 
146

 
119

Reductions from sales
(49
)
 
(85
)
 
(71
)
 
(91
)
Changes in fair value due to (1)
 
 
 
 
 
 
 
Decrease in MSR due to pay-offs, pay-downs and run-off
(11
)
 
(7
)
 
(26
)
 
(12
)
Changes in valuation inputs or assumptions (2)
21

 
(7
)
 
10

 
(12
)
Fair value of MSRs at end of period
$
317

 
$
289

 
$
317

 
$
289


(1)
Changes in fair value are included within net return on mortgage servicing asset on the Consolidated Statements of Operations.
(2)
Represents estimated MSR value change resulting primarily from market-driven changes in interest rates
Schedule of Servicing Assets at Fair Value, Servicing Fees
The following table summarizes income and fees associated with the mortgage servicing asset. 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(Dollars in millions)
Income on mortgage servicing asset
 
 
 
 
 
 
 
Servicing fees, ancillary income and late fees (1)
$
17

 
$
17

 
$
34

 
$
34

Fair value adjustments (2)
12

 
(14
)
 
(14
)
 
(24
)
(Loss) gain on hedging activity (3)
(14
)
 
5

 
(5
)
 
10

Net transaction costs
(6
)
 
(3
)
 
(8
)
 
1

Total income on mortgage servicing asset, included in net return on mortgage servicing asset
$
9

 
$
5

 
$
7

 
$
21

(1)
Servicing fees are recorded on the accrual basis. Ancillary income and late fees are recorded on cash basis.
(2)
Includes a $2 million gain related to the sale of MSRs during the three and six months ended June 30, 2015.
(3)
Changes in the derivatives utilized as economic hedges to offset changes in fair value of the MSRs.

Contractual servicing and subservicing fees. Contractual servicing and subservicing fees, including late fees and other ancillary income, for each type of loan serviced are presented below. Contractual servicing fees are included within net return on mortgage servicing asset on the Consolidated Statements of Operations. Contractual subservicing fees including late fees and other ancillary income are included within loan administration income on the Consolidated Statements of Operations. Subservicing fee income is recorded for fees earned, net of third-party subservicing costs, for loans subserviced.

The following table summarizes income and fees associated with the mortgage loans subserviced. 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(Dollars in millions)
Income on mortgage loans subserviced
 
 
 
 
 
 
 
Servicing fees, ancillary income and late fees (1)
$
9

 
$
7

 
$
16

 
$
14

Other servicing charges
(2
)
 
(1
)
 
(5
)
 
(1
)
Total income on mortgage loans subserviced, included in loan administration
$
7

 
$
6

 
$
11

 
$
13


(1)
Servicing fees are recorded on the accrual basis. Ancillary income and late fees are recorded on cash basis.
Schedule of Sensitivity Analysis of Fair Value
The following table summarizes the hypothetical effect on the fair value of servicing rights carried at fair value using adverse changes of 10 percent and 20 percent to the weighted-average of certain significant assumptions used in valuing these assets.
 
June 30, 2015
 
December 31, 2014
 
 
 
Fair value due to
 
 
 
Fair value due to
 
Actual
 
10% adverse change
 
20% adverse change
 
Actual
 
10% adverse change
 
20% adverse change
 
 
 
(Dollars in millions)
Option adjusted spread
8.19
%
 
$
310

 
$
303

 
8.88
%
 
$
250

 
$
243

Constant prepayment rate
12.26
%
 
309

 
301

 
14.98
%
 
253

 
245

Weighted average cost to service per loan
$
72.15

 
314

 
311

 
$
74.49

 
258

 
255