Mortgage Banking Activities (Tables)

6 Months Ended

Jun. 30, 2013

Mortgage Banking Activities (Tables) [Abstract]

Changes In Mortgage Servicing Rights Carried at Fair Value



						Quarter ended June 30,		Six months ended June 30,
(in millions)						2013	2012	2013	2012
Fair value, beginning of period					$	12,061	13,578	11,538	12,603
	Servicing from securitizations or asset transfers (1)					1,060	1,139	1,995	2,915
	Sales					(160)	(293)	(583)	(293)
		Net additions				900	846	1,412	2,622
	Changes in fair value:
		Due to changes in valuation model inputs or assumptions:
			Mortgage interest rates (2)			2,223	(1,496)	3,253	(1,349)
			Servicing and foreclosure costs (3)			(82)	(146)	(140)	(200)
			Discount rates (4)			-	-	-	(344)
			Prepayment estimates and other (5)			(274)	11	(485)	104
				Net changes in valuation model inputs or assumptions		1,867	(1,631)	2,628	(1,789)
		Other changes in fair value (6)				(643)	(712)	(1,393)	(1,355)
			Total changes in fair value			1,224	(2,343)	1,235	(3,144)
Fair value, end of period					$	14,185	12,081	14,185	12,081

Six months ended June 30, 2012, includes $315 million residential MSRs transferred from amortized MSRs that we elected to carry at fair value effective January 1, 2012.
Primarily represents prepayment speed changes due to changes in mortgage interest rates, but also includes other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).
Includes costs to service and unreimbursed foreclosure costs.
Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates; the six months ended June 30, 2012, change reflects increased capital return requirements from market participants.
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 that occur independent of interest rate changes.
Represents changes due to collection/realization of expected cash flows over time.

Changes In Amortized Mortgage Servicing Rights



			Quarter ended June 30,		Six months ended June 30,
(in millions)			2013	2012	2013	2012
Balance, beginning of period		$	1,181	1,074	1,160	1,445
	Purchases		26	78	53	92
	Servicing from securitizations or asset transfers (1)		31	34	87	(293)
	Amortization		(62)	(56)	(124)	(114)
Balance, end of period			1,176	1,130	1,176	1,130
Valuation allowance:
Balance, beginning of period			-	-	-	(37)
	Reversal of provision for MSRs in excess of fair value (1)		-	-	-	37
Balance, end of period (2)			-	-	-	-
Amortized MSRs, net		$	1,176	1,130	1,176	1,130
Fair value of amortized MSRs (3):
	Beginning of period	$	1,404	1,263	1,400	1,756
	End of period		1,533	1,450	1,533	1,450

Six months ended June 30, 2012, is net of $350 million ($313 million after valuation allowance) of residential MSRs that we elected to carry at fair value effective January 1, 2012. A cumulative adjustment of $2 million to fair value was recorded in retained earnings at January 1, 2012.
Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) and non-agency. There was no valuation allowance recorded for the periods presented on the commercial amortized MSRs. Residential amortized MSRs are evaluated for impairment purposes by the following risk strata: mortgages sold to GSEs (FHLMC and FNMA) and mortgages sold to GNMA, each by interest rate stratifications. For six months ended June 30, 2012, valuation allowance of $37 million for residential MSRs was reversed upon election to carry at fair value.
Represent commercial amortized MSRs. The beginning of period balance for six months ended June 30, 2012 also includes fair value of $316 million in residential amortized MSRs.

Components of Managed Servicing Portfolio



					June 30,		Dec. 31,
(in billions)					2013		2012
Residential mortgage servicing:
	Serviced for others			$	1,487		1,498
	Owned loans serviced				358		368
	Subservicing				6		7
		Total residential servicing			1,851		1,873
Commercial mortgage servicing:
	Serviced for others				409		408
	Owned loans serviced				105		106
	Subservicing				11		13
		Total commercial servicing			525		527
			Total managed servicing portfolio	$	2,376		2,400
Total serviced for others				$	1,896		1,906
Ratio of MSRs to related loans serviced for others					0.81	%	0.67

Components of Mortgage Banking Noninterest Income



							Quarter ended June 30,		Six months ended June 30,
(in millions)							2013	2012	2013	2012
Servicing income, net:
	Servicing fees:
		Contractually specified servicing fees				$	1,102	1,164	2,227	2,312
		Late charges					58	63	118	129
		Ancillary fees					85	63	167	140
		Unreimbursed direct servicing costs (1)					(215)	(220)	(485)	(500)
			Net servicing fees				1,030	1,070	2,027	2,081
	Changes in fair value of MSRs carried at fair value:
		Due to changes in valuation model inputs or assumptions (2)					1,867	(1,631)	2,628	(1,789)
		Other changes in fair value (3)					(643)	(712)	(1,393)	(1,355)
			Total changes in fair value of MSRs carried at fair value				1,224	(2,343)	1,235	(3,144)
	Amortization						(62)	(56)	(124)	(114)
	Net derivative gains (losses) from economic hedges (4)						(1,799)	2,008	(2,431)	2,108
				Total servicing income, net			393	679	707	931
Net gains on mortgage loan origination/sales activities							2,409	2,214	4,889	4,832
					Total mortgage banking noninterest income	$	2,802	2,893	5,596	5,763
Market-related valuation changes to MSRs, net of hedge results (2) + (4)						$	68	377	197	319

Primarily associated with foreclosure expenses and other interest costs.
Refer to the changes in fair value of MSRs table in this Note for more detail.
Represents changes due to collection/realization of expected cash flows over time.
Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs. See Note 12 – Free-Standing Derivatives for additional discussion and detail.

Liability for Mortgage Loan Repurchase Losses



					Quarter		Six months
					ended June 30,		ended June 30,
(in millions)					2013	2012	2013	2012
Balance, beginning of period				$	2,317	1,444	2,206	1,326
	Provision for
		repurchase losses:
		Loan sales			40	72	99	134
		Change in estimate (1)			25	597	275	965
			Total additions		65	669	374	1,099
	Losses				(160)	(349)	(358)	(661)
Balance, end of period				$	2,222	1,764	2,222	1,764

Results from such factors as changes in investor demand and mortgage insurer practices, credit deterioration, and changes in the financial stability of correspondent lenders.

- Definition

Tabular disclosure of the activity in the balance of servicing assets subsequently measured at amortized value (including a description of where changes in carrying value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (through purchases of servicing assets and servicing assets that result from transfers of financial assets), disposals, amortization, application of valuation allowances, other-than-temporary impairments, and other changes that affect the balance along with a description of those changes.

+ References+ Details

- Definition

Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes.

+ References+ Details