XML 55 R43.htm IDEA: XBRL DOCUMENT v3.19.2
Mortgage Banking Activities (Tables)
 6 Months Ended
Jun. 30, 2019
Mortgage Banking Activities [Abstract]  
Analysis of Changes in Fair Value MSRs Table 11.1 presents the changes in MSRs measured using the fair value method.
Table 11.1: Analysis of Changes in Fair Value MSRs
 
Quarter ended June 30,
 
 
Six months ended June 30,
 
(in millions)
2019

 
2018

 
2019

 
2018

Fair value, beginning of period
$
13,336

 
15,041

 
14,649

 
13,625

Servicing from securitizations or asset transfers (1)
400

 
486

 
741

 
1,059

Sales and other (2)
(1
)
 
(1
)
 
(282
)
 
(5
)
Net additions
399

 
485

 
459

 
1,054

Changes in fair value:
 
 
 
 
 
 
 
Due to changes in valuation model inputs or assumptions:
 
 
 
 
 
 
 
Mortgage interest rates (3)
(1,153
)
 
376

 
(2,093
)
 
1,629

Servicing and foreclosure costs (4)
(22
)
 
30

 
(10
)
 
64

Discount rates (5)
(109
)
 
—

 
(9
)
 
—

Prepayment estimates and other (6)
206

 
(61
)
 
143

 
(18
)
Net changes in valuation model inputs or assumptions
(1,078
)
 
345

 
(1,969
)
 
1,675

Changes due to collection/realization of expected cash flows over time
(561
)
 
(460
)
 
(1,043
)
 
(943
)
Total changes in fair value
(1,639
)
 
(115
)
 
(3,012
)
 
732

Fair value, end of period
$
12,096

 
15,411

 
12,096

 
15,411

(1)
Includes impacts associated with exercising our right to repurchase delinquent loans from GNMA loan securitization pools. Total reported MSRs may increase upon repurchase due to servicing liabilities associated with these loans.
(2)
Includes sales and transfers of MSRs, which can result in an increase of total reported MSRs if the sales or transfers are related to nonperforming loan portfolios or portfolios with servicing liabilities.
(3)
Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).
(4)
Includes costs to service and unreimbursed foreclosure costs.
(5)
Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates.
(6)
Represents changes driven by other valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.
Analysis of Changes in Amortized MSRs
Table 11.2 presents the changes in amortized MSRs.
 
Table 11.2: Analysis of Changes in Amortized MSRs
 
Quarter ended June 30,
 
 
Six months ended June 30,
 
(in millions)
2019

 
2018

 
2019

 
2018

Balance, beginning of period
$
1,427

 
1,411

 
1,443

 
1,424

Purchases
16

 
22

 
40

 
40

Servicing from securitizations or asset transfers
33

 
39

 
59

 
73

Amortization
(69
)
 
(65
)
 
(135
)
 
(130
)
Balance, end of period (1)
$
1,407

 
1,407

 
1,407

 
1,407

Fair value of amortized MSRs:
 
 
 
 
 
 
 
Beginning of period
$
2,149

 
2,307

 
2,288

 
2,025

End of period
1,897

 
2,309

 
1,897

 
2,309

(1)
Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) for multi-family properties and non-agency. There was no valuation allowance recorded for the periods presented on the commercial amortized MSRs.
Managed Servicing Portfolio
We present the components of our managed servicing portfolio in Table 11.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.
 
Table 11.3: Managed Servicing Portfolio
(in billions)
Jun 30, 2019

 
Dec 31, 2018

Residential mortgage servicing:
 
 
 
Serviced for others
$
1,107

 
1,164

Owned loans serviced
340

 
334

Subserviced for others
5

 
4

Total residential servicing
1,452

 
1,502

Commercial mortgage servicing:
 
 
 
Serviced for others
548

 
543

Owned loans serviced
123

 
121

Subserviced for others
9

 
9

Total commercial servicing
680

 
673

Total managed servicing portfolio
$
2,132

 
2,175

Total serviced for others
$
1,655

 
1,707

Ratio of MSRs to related loans serviced for others
0.82
%
 
0.94
Mortgage Banking Noninterest Income
Table 11.4 presents the components of mortgage banking noninterest income. 
Table 11.4: Mortgage Banking Noninterest Income

 
Quarter ended June 30,
 
 
Six months ended June 30,
 
(in millions)
 
2019

 
2018

 
2019

 
2018

Servicing income, net:
 
 
 
 
 
 
 
 
Servicing fees:
 
 
 
 
 
 
 
 
Contractually specified servicing fees
 
$
846

 
901

 
1,686

 
1,817

Late charges
 
30

 
42

 
63

 
86

Ancillary fees
 
38

 
47

 
76

 
87

Unreimbursed direct servicing costs (1)
 
(84
)
 
(85
)
 
(154
)
 
(179
)
Net servicing fees
 
830

 
905

 
1,671

 
1,811

Changes in fair value of MSRs carried at fair value:
 
 
 
 
 
 
 
 
Due to changes in valuation model inputs or assumptions (2)
(A)
(1,078
)
 
345

 
(1,969
)
 
1,675

Changes due to collection/realization of expected cash flows over time
 
(561
)
 
(460
)
 
(1,043
)
 
(943
)
Total changes in fair value of MSRs carried at fair value
 
(1,639
)
 
(115
)
 
(3,012
)
 
732

Amortization
 
(69
)
 
(65
)
 
(135
)
 
(130
)
Net derivative gains (losses) from economic hedges (3)
(B)
1,155

 
(319
)
 
2,117

 
(1,539
)
Total servicing income, net
 
277

 
406

 
641

 
874

Net gains on mortgage loan origination/sales activities (4)
 
481

 
364

 
825

 
830

Total mortgage banking noninterest income
 
$
758

 
770

 
1,466

 
1,704

Market-related valuation changes to MSRs, net of hedge results (2)(3)
(A)+(B)
$
77

 
26

 
148

 
136

(1)
Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.
(2)
Refer to the analysis of changes in fair value MSRs presented in Table 11.1 in this Note for more detail.
(3)
Represents results from economic hedges used to hedge the risk of changes in fair value of MSRs. See Note 15 (Derivatives) for additional discussion and detail.
(4)
Includes net gains (losses) of $(283) million and $(434) million in the second quarter and first half of 2019, respectively, and $134 million and $759 million in the second quarter and first half of 2018, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.