Servicing Activities

Mortgage Servicing Rights

The following table summarizes past activity related to MSRs, which were carried at fair value. Management estimated fair value using our transaction data and other market data or, in periods when there were limited MSRs market transactions that were directly observable, internally-developed discounted cash flow models (an income approach) were used to estimate the fair value. These internal valuation models estimated net cash flows based on internal operating assumptions that we believed would be used by market participants in orderly transactions combined with market-based assumptions for loan prepayment rates, interest rates, and discount rates that we believed approximate yields required by investors in this asset.



Year ended December 31, ($ in millions)	2014		2013
Estimated fair value at January 1,	$	—	$	952
Additions	—		60
Changes in fair value
Due to changes in valuation inputs or assumptions used in the valuation model	—		(32		)
Other changes in fair value	—		(69		)
Sales (a)	—		(911		)
Estimated fair value at December 31,	$	—	$	—


(a)	Includes the sales of agency MSRs during April 2013.

Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model included all changes due to a revaluation by a model or by a benchmarking exercise. Other changes in fair value primarily included the accretion of the present value of the discount related to forecasted cash flows and the economic runoff of the portfolio.

Risk Mitigation Activities

The primary risk of servicing rights is interest rate risk and the resulting impact on prepayments. A significant decline in interest rates could lead to higher-than-expected prepayments that could reduce the value of the MSRs. We previously economically hedged the impact of these risks with both derivative and nonderivative financial instruments. Refer to Note 22 for additional information regarding the derivative financial instruments used to economically hedge MSRs.

The components of servicing valuation and hedge activities, net, were as follows.



Year ended December 31, ($ in millions)	2014		2013			2012
Change in estimated fair value of mortgage servicing rights	$	—	$	(101	)	$	(560	)
Change in fair value of derivative financial instruments	—		(112		)	556
Servicing asset valuation and hedge activities, net	$	—	$	(213	)	$	(4	)

Mortgage Servicing Fees

The components of mortgage servicing fees were as follows.



Year ended December 31, ($ in millions)	2014		2013		2012
Contractual servicing fees, net of guarantee fees and including subservicing	$	—	$	62	$	281
Late fees	—		2		7
Ancillary fees	—		4		12
Total mortgage servicing fees	$	—	$	68	$	300

Automotive Finance Servicing Activities

We service consumer automotive contracts. Historically, we have sold a portion of our consumer automotive contracts. With respect to contracts we sell, we retain the right to service and earn a servicing fee for our servicing function. Typically, we conclude that the fee we are paid for servicing consumer automotive finance receivables represents adequate compensation, and consequently, we do not recognize a servicing asset or liability. We recognized automotive servicing fee income of $31 million, $58 million, and $109 million during the years ended December 31, 2014, 2013, and 2012, respectively.

Automotive Finance Serviced Assets

The current unpaid principal balance and any related unamortized deferred fees and costs of total serviced automotive finance loans outstanding were as follows.



December 31, ($ in millions)	2014		2013
On-balance sheet automotive finance loans and leases
Consumer automotive	$	58,085	$	56,417
Commercial automotive	34,022		33,803
Operating leases	19,510		17,680
Other	55		54
Off-balance sheet automotive finance loans
Loans sold to third-party investors
Securitizations	2,832		887
Whole-loan	887		2,748
Total serviced automotive finance loans and leases	$	115,391	$	111,589