Bank of America 2015 Annual Report Download - page 69

Bank of America 2015 67
$15.9 billion of the FHA-insured loan population were repurchases
of delinquent FHA loans pursuant to our servicing agreements with
GNMA.
Table 26 presents certain residential mortgage key credit
statistics on both a reported basis excluding loans accounted for
under the fair value option, and excluding the PCI loan portfolio,
our fully-insured loan portfolio and loans accounted for under the
fair value option. Additionally, in the “Reported Basis” columns in
the table below, accruing balances past due and nonperforming
loans do not include the PCI loan portfolio, in accordance with our
accounting policies, even though the customer may be
contractually past due. As such, the following discussion presents
the residential mortgage portfolio excluding the PCI loan portfolio,
the fully-insured loan portfolio and loans accounted for under the
fair value option. For more information on the PCI loan portfolio,
see page 71.
Table 26 Residential Mortgage – Key Credit Statistics
December 31
Reported Basis (1)
Excluding Purchased
Credit-impaired and
Fully-insured Loans
(Dollars in millions) 2015 2014 2015 2014
Outstandings $ 187,911 $ 216,197 $ 138,768 $ 136,075
Accruing past due 30 days or more 11,423 16,485 1,568 1,868
Accruing past due 90 days or more 7,150 11,407 — —
Nonperforming loans 4,803 6,889 4,803 6,889
Percent of portfolio
Refreshed LTV greater than 90 but less than or equal to 100 7% 9% 5% 6%
Refreshed LTV greater than 100 812 47
Refreshed FICO below 620 13 16 68
2006 and 2007 vintages (2) 17 19 17 22
Net charge-off ratio (3) 0.24 (0.05) 0.35 (0.08)
(1) Outstandings, accruing past due, nonperforming loans and percentages of portfolio exclude loans accounted for under the fair value option.
(2) These vintages of loans account for $1.6 billion, or 34 percent, and $2.8 billion, or 41 percent, of nonperforming residential mortgage loans at December 31, 2015 and 2014. Additionally, these
vintages accounted for net charge-offs of $136 million to residential mortgage net charge-offs in 2015 and net recoveries of $233 million to residential mortgage net recoveries in 2014.
(3) Net charge-off ratios are calculated as net charge-offs divided by average outstanding loans excluding loans accounted for under the fair value option.
Nonperforming residential mortgage loans decreased $2.1
billion in 2015 including sales of $1.5 billion, partially offset by a
$261 million net increase related to the DoJ Settlement for those
loans that are no longer fully insured. Excluding these items,
nonperforming residential mortgage loans decreased as outflows,
including the transfers of certain qualifying borrowers discharged
in a Chapter 7 bankruptcy to performing status, outpaced new
inflows. Of the nonperforming residential mortgage loans at
December 31, 2015, $1.6 billion, or 34 percent, were current on
contractual payments. Nonperforming loans that are contractually
current primarily consist of collateral-dependent TDRs, including
those that have been discharged in Chapter 7 bankruptcy, as well
as loans that have not yet demonstrated a sustained period of
payment performance following a TDR. In addition, $2.0 billion, or
43 percent of nonperforming residential mortgage loans were 180
days or more past due and had been written down to the estimated
fair value of the collateral, less costs to sell. Accruing loans that
were 30 days or more past due decreased $300 million in 2015.
Net charge-offs increased $587 million to $473 million in
2015, or 0.35 percent of total average residential mortgage loans,
compared to a net recovery of $114 million, or (0.08) percent, in
2014. This increase in net charge-offs was primarily driven by $402
million of charge-offs during 2015 related to the consumer relief
portion of the DoJ Settlement. In addition, net charge-offs included
recoveries of $127 million related to nonperforming loan sales
during 2015 compared to $407 million in 2014. Excluding these
items, net charge-offs declined driven by favorable portfolio trends
and decreased write-downs on loans greater than 180 days past
due, which were written down to the estimated fair value of the
collateral, less costs to sell, due in part to improvement in home
prices and the U.S. economy.
Residential mortgage loans with a greater than 90 percent but
less than or equal to 100 percent refreshed loan-to-value (LTV)
represented five percent and six percent of the residential
mortgage portfolio at December 31, 2015 and 2014. Loans with
a refreshed LTV greater than 100 percent represented four percent
and seven percent of the residential mortgage loan portfolio at
December 31, 2015 and 2014. Of the loans with a refreshed LTV
greater than 100 percent, 98 percent and 96 percent were
performing at December 31, 2015 and 2014. Loans with a
refreshed LTV greater than 100 percent reflect loans where the
outstanding carrying value of the loan is greater than the most
recent valuation of the property securing the loan. The majority of
these loans have a refreshed LTV greater than 100 percent
primarily due to home price deterioration since 2006, partially
offset by subsequent appreciation. Loans to borrowers with
refreshed FICO scores below 620 represented six percent and
eight percent of the residential mortgage portfolio at December
31, 2015 and 2014.
Of the $138.8 billion in total residential mortgage loans
outstanding at December 31, 2015, as shown in Table 27, 39
percent were originated as interest-only loans. The outstanding
balance of interest-only residential mortgage loans that have
entered the amortization period was $12.0 billion, or 22 percent
at December 31, 2015. Residential mortgage loans that have
entered the amortization period generally have experienced a
higher rate of early stage delinquencies and nonperforming status
compared to the residential mortgage portfolio as a whole. At
December 31, 2015, $214 million, or two percent of outstanding
interest-only residential mortgages that had entered the
amortization period were accruing past due 30 days or more
compared to $1.6 billion, or one percent for the entire residential
mortgage portfolio. In addition, at December 31, 2015, $712
million, or six percent of outstanding interest-only residential
mortgage loans that had entered the amortization period were
nonperforming, of which $348 million were contractually current,