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Loan Servicing (Tables)
 9 Months Ended
Sep. 30, 2016
Disclosures Pertaining to Servicing Assets and Servicing Liabilities [Abstract]  
Residential Mortgage Servicing Portfolio Data
The following tables summarize residential mortgage banking activities.
 
 
September 30, 2016
 
December 31, 2015
 
 
(Dollars in millions)
UPB of mortgage loan servicing portfolio
 
$
118,040

 
$
116,817

UPB of home equity loan servicing portfolio
 
4,420

 
5,352

UPB of residential mortgage and home equity loan servicing portfolio
 
$
122,460

 
$
122,169

 
 
 
 
 
UPB of residential mortgage loans serviced for others (primarily agency conforming fixed rate)
 
$
90,157

 
$
91,132

Mortgage loans sold with recourse
 
610

 
702

Maximum recourse exposure from mortgage loans sold with recourse liability
 
296

 
326

Indemnification, recourse and repurchase reserves
 
77

 
79

FHA-insured mortgage loan reserve
 
—

 
85
Summary of Residential Mortgage Banking Activities
 
 
As of / For The
Nine Months Ended September 30,
 
 
2016
 
2015
 
 
(Dollars in millions)
UPB of residential mortgage loans sold from LHFS
 
$
11,098

 
$
11,683

Pre-tax gains recognized on mortgage loans sold and held for sale
 
105

 
121

Servicing fees recognized from mortgage loans serviced for others
 
201

 
204

Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others
 
0.28
%
 
0.29
%
Weighted average interest rate on mortgage loans serviced for others
 
4.06

 
4.13
Analysis of Activity in Residential MSRs
 
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
 
(Dollars in millions)
Residential MSRs, carrying value, beginning of period
 
$
880

 
$
844

Additions
 
99

 
125

Change in fair value due to changes in valuation inputs or assumptions:
 
 
 
 
Prepayment speeds
 
(180
)
 
76

OAS
 
9

 
(67
)
Servicing costs
 
2

 
(25
)
Realization of expected net servicing cash flows, passage of time and other
 
(103
)
 
(105
)
Residential MSRs, carrying value, end of period
 
$
707

 
$
848

 
 
 
 
 
Gains (losses) on derivative financial instruments used to mitigate the income statement effect of changes in MSR fair value
 
$
232

 
$
56
Residential MSRs Sensitivity
The sensitivity of the fair value of the residential MSRs to changes in key assumptions is included in the accompanying table:
 
 
September 30, 2016
 
December 31, 2015
 
 
Range
 
Weighted
Average
 
Range
 
Weighted
Average
 
 
Min
 
Max
 
 
Min
 
Max
 
 
 
(Dollars in millions)
Prepayment speed
 
12.1
%
 
13.7
%
 
13.1
%
 
8.1
%
 
9.0
%
 
8.7
%
Effect on fair value of a 10% increase
 
 
 
 
 
$
(32
)
 
 
 
 
 
$
(28
)
Effect on fair value of a 20% increase
 
 
 
 
 
(61
)
 
 
 
 
 
(54
)
 
 
 
 
 
 
 
 
 
 
 
 
 
OAS
 
9.9
%
 
10.2
%
 
10.0
%
 
10.3
%
 
10.6
%
 
10.4
%
Effect on fair value of a 10% increase
 
 
 
 
 
$
(23
)
 
 
 
 
 
$
(32
)
Effect on fair value of a 20% increase
 
 
 
 
 
(44
)
 
 
 
 
 
(61
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Composition of loans serviced for others:
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate residential mortgage loans
 
 
 
 
 
99.2
%
 
 
 
 
 
99.2
%
Adjustable-rate residential mortgage loans
 
 
 
 
 
0.8

 
 
 
 
 
0.8

Total
 
 

 
 

 
100.0
%
 
 
 
 
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average life (in years)
 
 

 
 

 
5.2

 
 
 
 
 
6.8
Summary of Commercial Mortgage Banking Activities
The following table summarizes commercial mortgage banking activities for the periods presented:
 
September 30, 2016
 
December 31, 2015
 
(Dollars in millions)
UPB of CRE mortgages serviced for others
$
29,146

 
$
28,163

CRE mortgages serviced for others covered by recourse provisions
4,053

 
4,198

Maximum recourse exposure from CRE mortgages sold with recourse liability
1,231

 
1,259

Recorded reserves related to recourse exposure
7

 
7

Originated CRE mortgages during the year
5,184

 
7,012

Commercial MSRs at fair value
121

 
—


 
Effective January 1, 2016, the Company adopted the fair value option for commercial MSRs to facilitate hedging against changes in the fair value of the MSR asset. The impact of the adoption was immaterial.