. Intangible Assets

Intangible assets consisted of the following:



At December 31,	2012		2011
	(in millions)
Mortgage servicing rights	$	179	$	227
Purchased credit card relationships	60		—
Other	8		15
Total other intangible assets	$	247	$	242

Mortgage Servicing Rights (“MSRs”) A servicing asset is a contract under which estimated future revenues from contractually specified cash flows, such as servicing fees and other ancillary revenues, are expected to exceed the obligation to service the financial assets. We recognize the right to service mortgage loans as a separate and distinct asset at the time they are acquired or when originated loans are sold.

MSRs are subject to credit, prepayment and interest rate risk, in that their value will fluctuate as a result of changes in these economic variables. Interest rate risk is mitigated through an economic hedging program that uses securities and derivatives to offset changes in the fair value of MSRs. Since the hedging program involves trading activity, risk is quantified and managed using a number of risk assessment techniques.

Residential mortgage servicing rights Residential MSRs are initially measured at fair value at the time that the related loans are sold and are remeasured at fair value at each reporting date. Changes in fair value of MSRs are reflected in residential mortgage banking revenue in the period in which the changes occur. Fair value is determined based upon the application of valuation models and other inputs. The valuation models incorporate assumptions market participants would use in estimating future cash flows. The reasonableness of these valuation models is periodically validated by reference to external independent broker valuations and industry surveys.

Fair value of residential MSRs is calculated using the following critical assumptions:



At December 31,	2012		2011
Annualized constant prepayment rate (“CPR”)	22.4	%	21.4	%
Constant discount rate	11.3	%	11.3	%
Weighted average life	3.4		3.4

Residential MSRs activity is summarized in the following table:



Year Ended December 31,	2012			2011
	(in millions)
Fair value of MSRs:
Beginning balance	$	220		$	394
Additions related to loan sales	24			39
Changes in fair value due to:
Change in valuation inputs or assumptions used in the valuation models	(15		)	(136		)
Realization of cash flows	(61		)	(77		)
Ending balance	$	168		$	220

Information regarding residential mortgage loans serviced for others, which are not included in the consolidated balance sheet, is summarized in the following table:



At December 31,	2012		2011
	(in millions)
Outstanding principal balances at period end	$	32,041	$	37,839
Custodial balances maintained and included in noninterest bearing deposits at period end	$	810	$	838

Servicing fees collected are included in residential mortgage banking revenue (loss) and totaled $87 million, $109 million and $121 million during 2012, 2011 and 2010, respectively.

Commercial mortgage servicing rights Commercial MSRs, which are accounted for using the lower of amortized cost or fair value method, totaled $11 million and $7 million at December 31, 2012 and 2011, respectively.

Purchased credit card relationships In March 2012, we purchased from HSBC Finance the account relationships associated with $746 million of credit card receivables which were not included in the sale to Capital One at a fair value of $108 million. Approximately $43 million of this value was associated with the credit card receivables sold to First Niagara. The remaining $65 million was included in intangible assets and is being amortized over its estimated useful life of ten years

Other Intangible Assets Other intangible assets, which result from purchase business combinations, are comprised of favorable lease arrangements of $8 million and $12 million at December 31, 2012 and 2011, respectively, and customer lists of $3 million at December 31, 2011.