Loan Servicing

12 Months Ended

Dec. 31, 2013

NOTE 6. Loan Servicing

Residential Mortgage Banking Activities

The following tables summarize residential mortgage banking activities for the periods presented:

			December 31,
			2013		2012

			(Dollars in millions)
	Mortgage loans managed or securitized (1)		$	27,353	$	29,882
	Less: Loans securitized and transferred to AFS securities			4		4
		LHFS		1,116		3,547
		Covered mortgage loans		802		1,040
		Mortgage loans sold with recourse		783		1,019
	Mortgage loans held for investment		$	24,648	$	24,272

	Mortgage loans on nonaccrual status		$	243	$	269
	Mortgage loans 90 days or more past due and still accruing interest (2)			69		92
	Mortgage loans net charge-offs - year to date			78		133
	UPB of residential mortgage loan servicing portfolio			112,835		101,362
	UPB of residential mortgage loans serviced for others (primarily agency conforming
		fixed rate)		87,434		73,769
	Maximum recourse exposure from mortgage loans sold with recourse liability			372		446
	Recorded reserves related to recourse exposure			13		12
	Repurchase reserves for mortgage loan sales to GSEs			59		59


(1)	Balances exclude loans serviced for others with no other continuing involvement.
(2)	Includes amounts related to residential mortgage LHFS and excludes amounts related to government guaranteed loans and covered mortgage loans.

		As Of / For The
		Year Ended December 31,
		2013			2012			2011

		(Dollars in millions)
UPB of residential mortgage loans sold from the LHFS portfolio		$	28,900		$	25,640		$	17,202
Pre-tax gains recognized on mortgage loans sold and held for sale			292			539			175
Servicing fees recognized from mortgage loans serviced for others			259			247			240
Approximate weighted average servicing fee on the outstanding balance
	of residential mortgage loans serviced for others		0.30	%		0.32	%		0.34	%
Weighted average interest rate on mortgage loans serviced for others			4.24			4.59			5.02

Gains on residential mortgage loan sales, including marking LHFS to fair value and the impact of interest rate lock commitments, are recorded in noninterest income as a component of mortgage banking income. For certain of these transactions, the loan servicing rights were retained, including the related MSRs and on-going servicing fees.

Payments made to date for recourse exposure on residential mortgage loans sold with recourse liability have been immaterial.

BB&T also issues standard representations and warranties related to mortgage loan sales to GSEs. Although these agreements often do not specify limitations, management does not believe that any payments related to these warranties would materially change the financial condition or results of operations of BB&T.

Residential MSRs are recorded on the Consolidated Balance Sheets at fair value with changes in fair value recorded as a component of mortgage banking income in the Consolidated Statements of Income. Various derivative instruments are used to mitigate the income statement effect of changes in fair value due to changes in valuation inputs and assumptions of its residential MSRs.

			Years Ended December 31,
			2013		2012		2011

			(Dollars in millions)
Carrying value, January 1,			$	627	$	563	$	830
	Additions			336		270		225
	Change in fair value due to changes in valuation inputs or assumptions:
		Prepayment speeds		287		19		(284)
		Weighted average OAS		(31)		(36)		(20)
		Servicing costs		(29)		(22)		(30)
	Realization of expected net servicing cash flows, passage of time and other			(143)		(167)		(158)
Carrying value, December 31,			$	1,047	$	627	$	563

Gains (losses) on derivative financial instruments used to mitigate the
	income statement effect of changes in fair value		$	(197)	$	128	$	394

During 2013, the prepayment speed assumptions were updated as actual observed prepayment speeds were slower, primarily as a result of rising interest rates. These valuation increases were partially offset by realization of servicing cash flows as well as higher servicing costs due to regulatory requirements and updates to OAS due to market changes in required rates of return.

The sensitivity of the fair value of the residential MSRs to adverse changes in key economic assumptions is included in the accompanying table:

			December 31, 2013							December 31, 2012
			Range				Weighted			Range				Weighted
			Min		Max		Average			Min		Max		Average

			(Dollars in millions)
Prepayment speed			5.5	%	8.0	%		6.9	%	15.3	%	18.5	%		17.3	%
	Effect on fair value of a 10% increase						$	(33)						$	(35)
	Effect on fair value of a 20% increase							(64)							(67)

OAS			9.1	%	9.9	%		9.3	%	8.2	%	8.4	%		8.3	%
	Effect on fair value of a 10% increase						$	(39)						$	(17)
	Effect on fair value of a 20% increase							(75)							(33)

Composition of loans serviced for others:
	Fixed-rate residential mortgage loans							99.7	%						99.4	%
	Adjustable-rate residential mortgage loans							0.3							0.6
		Total						100.0	%						100.0	%

Weighted average life								7.9	yrs						4.4	yrs

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change.

Commercial Mortgage Banking Activities

CRE mortgage loans serviced for others are not included in loans and leases on the accompanying Consolidated Balance Sheets. The following table summarizes commercial mortgage banking activities for the periods presented:

		December 31,
		2013		2012

		(Dollars in millions)
UPB of CRE mortgages serviced for others		$	28,095	$	29,520
CRE mortgages serviced for others covered by recourse provisions			4,594		4,970
Maximum recourse exposure from CRE mortgages
	sold with recourse liability		1,320		1,368
Recorded reserves related to recourse exposure			9		13
Originated CRE mortgages during the period - year to date			4,881		4,934