Loans Held-for-Investment (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Summary of Loans Held-for-Investment and UPB of Loan Sales and Purchases in the Loans Held-for-Investment Portfolio

The following table presents our loans held-for-investment:

	March 31, 2020		December 31, 2019
	(Dollars in millions)
Consumer loans
Residential first mortgage	$	2,964	$	3,154
Home equity	1,028		1,024
Other	858		729
Total consumer loans	4,850		4,907
Commercial loans
Commercial real estate	3,092		2,828
Commercial and industrial	1,880		1,634
Warehouse lending	3,973		2,760
Total commercial loans	8,945		7,222
Total loans held-for-investment	$	13,795	$	12,129

The following table presents the UPB of our loan sales and purchases in the loans held-for-investment portfolio:

	Three Months Ended March 31,
	2020		2019
	(Dollars in millions)
Loans Sold (1)
Performing loans	$	38	$	102
Total loans sold	$	38	$	102
Net gain associated with loan sales (2)	$	—	$	2
Loans Purchased
Home equity	$	—	$	49
Other consumer	63		51
Total loans purchased	$	63	$	100
Premium associated with loans purchased	$	—	$	3

(1) Upon a change in our intent, the loans were transferred to LHFS and subsequently sold.

(2) Recorded in net gain on loan sales on Consolidated Statements of Operations.    

Changes in ALLL and Method of Evaluation by Class of Loan

The following table presents changes in the allowance for loan losses, by class of loan:

	Residential First Mortgage (1)			Home Equity			Other Consumer			Commercial Real Estate			Commercial and Industrial			Warehouse Lending			Total
	(Dollars in millions)
Three Months Ended March 31, 2020
Beginning balance, prior to adoption of ASC 326	$	22		$	14		$	6		$	38		$	22		$	5		$	107
Impact of adopting ASC 326	25			12			10			(14		)	(6		)	(4		)	23
Provision (benefit)	—			(2		)	—			4			2			—			4
Charge-offs	(1		)	(1		)	(1		)	—			—			—			(3		)
Recoveries	—			—			1			—			—			—			1
Ending allowance balance	$	46		$	23		$	16		$	28		$	18		$	1		$	132
Three Months Ended March 31, 2019
Beginning balance	$	38		$	15		$	3		$	48		$	18		$	6		$	128
Provision (benefit)	(2		)	—			2			(12		)	12			—			—
Charge-offs	(1		)	—			(1		)	—			—			—			(2		)
Recoveries	—			1			—			—			—			—			1
Ending allowance balance	$	35		$	16		$	4		$	36		$	30		$	6		$	127

(1)

Includes loans with government guarantees.

Schedule of amortized cost basis of collateral-dependent loans

The following table presents the amortized cost basis of loans for which the reserve is established based on collateral value, by class of loan:

	Balance at March 31, 2020
	Real Estate
Consumer loans
Residential first mortgage	$	44
Home equity	20
Other	2
Total	$	66

Aging Analysis of Past Due and Current Loans

The following table sets forth the LHFI aging analysis of past due and current loans:

	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due (1)		Total Past Due		Current		Total LHFI
	(Dollars in millions)
March 31, 2020
Consumer loans
Residential first mortgage	$	8	$	3	$	24	$	35	$	2,929	$	2,964
Home equity	2		1		3		6		1,022		1,028
Other	4		1		2		7		851		858
Total consumer loans	14		5		29		48		4,802		4,850
Commercial loans
Commercial real estate	6		—		—		6		3,086		3,092
Commercial and industrial (1)	1		—		—		1		1,879		1,880
Warehouse lending	—		—		—		—		3,973		3,973
Total commercial loans	7		—		—		7		8,938		8,945
Total loans (2)	$	21	$	5	$	29	$	55	$	13,740	$	13,795
December 31, 2019
Consumer loans
Residential first mortgage	$	5	$	4	$	21	$	30	$	3,124	$	3,154
Home Equity	1		—		4		5		1,019		1,024
Other	3		1		1		5		724		729
Total consumer loans	9		5		26		40		4,867		4,907
Commercial loans
Commercial real estate	—		—		—		—		2,828		2,828
Commercial and industrial	—		—		—		—		1,634		1,634
Warehouse lending	—		—		—		—		2,760		2,760
Total commercial loans	—		—		—		—		7,222		7,222
Total loans (2)	$	9	$	5	$	26	$	40	$	12,089	$	12,129

(1) Includes less than 90 day past due performing loans which are deemed nonaccrual. Interest is not being accrued on these loans.

(2)

Includes $4 million of past due loans accounted for under the fair value option for both March 31, 2020 and December 31, 2019, respectively.

Summary of TDRs by Type and Performing Status and Newly Modified TDRs

The following table provides a summary of TDRs by type and performing status:

	TDRs
	Performing		Nonperforming		Total
	(Dollars in millions)
March 31, 2020
Consumer loans
Residential first mortgage	$	20	$	8	$	28
Home equity	17		2		19
Total TDRs (1)(2)	$	37	$	10	$	47
December 31, 2019
Consumer loans
Residential first mortgage	$	20	$	8	$	28
Home Equity	18		2		20
Total TDRs (1)(2)	$	38	$	10	$	48

(1) Allowance for loan losses on TDR loans totaled $5 million and $8 million at March 31, 2020 and December 31, 2019, respectively.

(2) Includes $2 million of TDR loans accounted for under the fair value option at March 31, 2020 and December 31, 2019.

The following table provides a summary of newly modified TDRs:

	New TDRs
	Number of Accounts	Pre-Modification Unpaid Principal Balance		Post-Modification Unpaid Principal Balance (1)
		(Dollars in millions)
Three Months Ended March 31, 2020
Residential first mortgages	5	$	1	$	1
Home equity (2)(3)	2	—		—
Consumer	1	—		—
Total TDR loans	8	$	1	$	1
Three Months Ended March 31, 2019
Residential first mortgages	2	$	—	$	—
Home equity (2)(3)	2	—		—
Total TDR loans	4	$	—	$	—

 

(1) Post-modification balances include past due amounts that are capitalized at modification date.

(2) Home equity post-modification UPB reflects write downs.

(3)

Includes loans carried at the fair value option.

Loan Credit Quality Indicators

The following table presents the amortized cost in residential and consumer loans based on payment activity:

	Term Loans												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
	Amortized Cost Basis by Origination Year
As of March 31, 2020	2020		2019		2018		2017		2016		Prior
Consumer Loans
Residential first mortgage
Pass	$	85	$	775	$	377	$	482	$	416	$	658	$	116	$	5	$	2,914
Watch	—		1		1		1		1		21		1		—		26
Substandard	—		2		5		3		—		14		—		—		24
Home Equity																	—
Pass	4		47		23		11		3		17		890		12		1,007
Watch	—		—		—		—		—		15		2		—		17
Substandard	—		—		—		—		—		2		1		1		4
Other Consumer																	—
Pass	68		391		197		6		3		8		179		3		855
Watch	—		—		1		—		—		—		—		—		1
Substandard	—		—		1		—		—		—		—		1		2
Total consumer loans	$	157	$	1,216	$	605	$	503	$	423	$	735	$	1,189	$	22	$	4,850

The following table presents the amortized cost in residential and consumer loans based on credit scores:

	FICO Band												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
	Amortized Cost Basis by Origination Year
As of March 31, 2020	2020		2019		2018		2017		2016		Prior
Consumer Loans
Residential first mortgage
>750	$	40	$	412	$	202	$	337	$	316	$	399	$	68	$	2	$	1,776
700-750	35		257		146		132		92		192		35		1		890
<700	9		109		34		17		8		105		14		2		298
Home Equity
>750	1		15		9		4		1		10		400		3		443
700-750	2		18		8		5		1		14		348		7		403
<700	2		13		7		2		1		10		144		3		182
Other Consumer
>750	46		250		104		3		2		3		93		1		502
700-750	20		128		75		2		1		1		59		1		287
<700	2		14		20		1		1		1		28		2		69
Total consumer loans	$	157	$	1,216	$	605	$	503	$	423	$	735	$	1,189	$	22	$	4,850

Loan-to-value ratios primarily impact the allowance on mortgages within the consumer loan portfolio. The following table presents the amortized cost in residential first mortgages and home equity based on loan-to-value ratios:

	LTV Band												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
	Amortized Cost Basis by Origination Year
As of March 31, 2020	2020		2019		2018		2017		2016		Prior
Consumer Loans
Residential first mortgage
>90	$	22	$	321	$	189	$	49	$	4	$	23	$	—	$	—	$	608
71-90	37		275		112		170		110		326		—		—		1,030
55-70	18		109		41		146		158		209		—		—		681
<55	8		73		40		121		144		137		117		5		645
Home Equity
>90	—		—		—		1		1		15		—		—		17
71-90	3		35		17		8		2		13		478		5		561
<=70	1		11		6		2		1		7		414		8		450
Total	$	89	$	824	$	405	$	497	$	420	$	730	$	1,009	$	18	$	3,992

Based on the most recent analysis performed, the amortized cost basis, by risk category for each class of loans within the commercial portfolio is as follows:

	Term Loans												Revolving Loans Amortized Cost Basis			Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
	Amortized Cost Basis by Origination Year
As of March 31, 2020	2020		2019		2018		2017		2016		Prior
Commercial Loans
Commercial real estate
Pass	$	166	$	999	$	519	$	546	$	355	$	278	$	(1	)	$	—	$	2,862
Watch	20		13		71		42		38		34		—			—		218
Special mention	—		—		7		—		—		—		—			—		7
Substandard	—		—		—		5		—		—		—			—		5
Commercial and industrial
Pass	236		614		277		332		184		114		24			—		1,781
Watch	1		6		6		42		—		1		1			—		57
Special mention	—		11		18		9		—		—		—			—		38
Substandard	—		—		—		4		—		—		—			—		4
Warehouse
Pass	—		—		—		—		—		—		3,720			—		3,720
Watch	—		—		—		—		—		—		222			—		222
Special mention	—		—		—		—		—		—		31			—		31
Substandard	—		—		—		—		—		—		—			—		—
Total commercial loans	$	423	$	1,643	$	898	$	980	$	577	$	427	$	3,997		$	—	$	8,945