MORTGAGE BANKING (Tables)

12 Months Ended

Dec. 31, 2018

The following table summarizes activity related to the Company’s residential mortgage loan sales and the Company's mortgage banking activity:



	Year Ended December 31,
(in millions)	2018		2017		2016
Residential mortgage loan sold with servicing retained		$8,149		$3,161		$2,652
Gain on sales⁽¹⁾	89		35		69
Contractually specified servicing, late and other ancillary fees⁽¹⁾	118		53		51

⁽¹⁾Reported in mortgage banking fees in the Consolidated Statements of Operations.

Schedule of valuation allowance for impairment of recognized servicing assets



	As of and for the Year Ended December 31,
(in millions)	2018			2017
MSRs:
Balance as of beginning of period		$201			$167
Amount capitalized	36			37
Purchases	16			28
Amortization	(32		)	(31		)
Carrying amount before valuation allowance	221			201
Valuation allowance for servicing assets:
Balance as of beginning of period	3			5
Valuation recoveries	(3		)	(2		)
Balance at end of period	—			3
Net carrying value of MSRs		$221			$198

Servicing asset at amortized cost



	As of and for the Year Ended December 31,
(in millions)	2018			2017
MSRs:
Balance as of beginning of period		$201			$167
Amount capitalized	36			37
Purchases	16			28
Amortization	(32		)	(31		)
Carrying amount before valuation allowance	221			201
Valuation allowance for servicing assets:
Balance as of beginning of period	3			5
Valuation recoveries	(3		)	(2		)
Balance at end of period	—			3
Net carrying value of MSRs		$221			$198

Servicing asset at fair value



	As of and for the Year Ended December 31, 2018
(in millions)	As of and for the Year Ended December 31, 2018
MSRs:
Fair value as of beginning of the period		$—
Acquired MSRs	590
Amounts capitalized	73
Changes in unpaid principal balance during the period ⁽¹⁾	(32		)
Changes in fair value during the period ⁽²⁾	(31		)
Fair value at end of the period		$600

⁽¹⁾ Represents changes in value due to i) passage of time including the impact from both regularly scheduled loan principal payments and partial paydowns, and ii)

loans that paid off during the period.

⁽²⁾ Represents changes in value primarily due to market driven changes in interest rates and prepayment speeds.

Schedule of fair value assumptions used to estimate the value of Mortgage Servicing Rights

For MSRs under the amortization method, the key economic assumptions used to estimate the fair value are presented below:



	December 31, 2018			December 31, 2017
	Actual	Decline in fair value due to		Actual	Decline in fair value due to
(dollars in millions)	Actual	Decline in fair value due to		Actual	Decline in fair value due to
Fair value	$243	50 bps adverse change	100 bps adverse change	$218	50 bps adverse change	100 bps adverse change
Weighted average life (in years)	6.5	50 bps adverse change	100 bps adverse change	5.9	50 bps adverse change	100 bps adverse change
Weighted average constant prepayment rate	8.5%	$24	$56	10.0%	$22	$46
Weighted average discount rate	9.3%	5	9	9.9%	4	8

For MSRs under the fair value method, the key economic assumptions used to estimate the fair value are presented below:



	December 31, 2018
	Actual	Decline in fair value due to
(dollars in millions)	Actual	Decline in fair value due to
Fair value	$600	50 bps adverse change	100 bps adverse change
Weighted average life (in years)	8.0	50 bps adverse change	100 bps adverse change
Weighted average constant prepayment rate	8.2%	$68	$148
Weighted average option adjusted spread	609 bps	13	26