Bank of America 2015 Annual Report Download - page 70

68 Bank of America 2015
compared to $4.8 billion, or three percent for the entire residential
mortgage portfolio, of which $1.6 billion were contractually current.
Loans that have yet to enter the amortization period in our interest-
only residential mortgage portfolio are primarily well-collateralized
loans to our wealth management clients and have an interest-only
period of three to ten years. Approximately 75 percent of these
loans that have yet to enter the amortization period will not be
required to make a fully-amortizing payment until 2019 or later.
Table 27 presents outstandings, nonperforming loans and net
charge-offs by certain state concentrations for the residential
mortgage portfolio. The Los Angeles-Long Beach-Santa Ana
Metropolitan Statistical Area (MSA) within California represented
14 percent and 13 percent of outstandings at December 31, 2015
and 2014. Loans within this MSA contributed net recoveries of
$13 million and $81 million within the residential mortgage
portfolio during 2015 and 2014. In the New York area, the New
York-Northern New Jersey-Long Island MSA made up 11 percent
of outstandings at both December 31, 2015 and 2014. Loans
within this MSA contributed net charge-offs of $101 million and
$27 million within the residential mortgage portfolio during 2015
and 2014.
Table 27 Residential Mortgage State Concentrations
December 31
Outstandings (1) Nonperforming (1) Net Charge-offs (2)
(Dollars in millions) 2015 2014 2015 2014 2015 2014
California $ 48,865 $ 45,496 $977 $ 1,459 $ (49) $ (280)
New York (3) 12,696 11,826 399 477 57 15
Florida (3) 10,001 10,116 534 858 53 (43)
Texas 6,208 6,635 185 269 10 1
Virginia 4,097 4,402 164 244 20 4
Other U.S./Non-U.S. 56,901 57,600 2,544 3,582 382 189
Residential mortgage loans (4) $ 138,768 $136,075 $ 4,803 $ 6,889 $473 $ (114)
Fully-insured loan portfolio 37,077 64,970
Purchased credit-impaired residential mortgage loan portfolio (5) 12,066 15,152
Total residential mortgage loan portfolio $ 187,911 $216,197
(1) Outstandings and nonperforming loans exclude loans accounted for under the fair value option.
(2) Net charge-offs exclude $634 million of write-offs in the residential mortgage PCI loan portfolio in 2015 compared to $545 million in 2014. For additional information, see Consumer Portfolio Credit
Risk Management – Purchased Credit-impaired Loan Portfolio on page 71.
(3) In these states, foreclosure requires a court order following a legal proceeding (judicial states).
(4) Amounts exclude the PCI residential mortgage and fully-insured loan portfolios.
(5) Forty-seven percent and 45 percent of PCI residential mortgage loans were in California at December 31, 2015 and 2014. There were no other significant single state concentrations.
The Community Reinvestment Act (CRA) encourages banks to
meet the credit needs of their communities for housing and other
purposes, particularly in neighborhoods with low or moderate
incomes. Our CRA portfolio was $8.0 billion and $9.0 billion at
December 31, 2015 and 2014, or six percent and seven percent
of the residential mortgage portfolio. The CRA portfolio included
$552 million and $986 million of nonperforming loans at
December 31, 2015 and 2014, representing 11 percent and
14 percent of total nonperforming residential mortgage loans. In
2015, net charge-offs in the CRA portfolio were $85 million of the
$473 million total net charge-offs for the residential mortgage
portfolio. In 2014, net charge-offs in the CRA portfolio were $52
million compared to net recoveries of $114 million for the
residential mortgage portfolio.
Home Equity
At December 31, 2015, the home equity portfolio made up 17
percent of the consumer portfolio and is comprised of home equity
lines of credit (HELOCs), home equity loans and reverse
mortgages.
At December 31, 2015, our HELOC portfolio had an
outstanding balance of $66.1 billion, or 87 percent of the total
home equity portfolio compared to $74.2 billion, or 87 percent,
at December 31, 2014. HELOCs generally have an initial draw
period of 10 years and the borrowers typically are only required to
pay the interest due on the loans on a monthly basis. After the
initial draw period ends, the loans generally convert to 15-year
amortizing loans.
At December 31, 2015, our home equity loan portfolio had an
outstanding balance of $7.9 billion, or 10 percent of the total home
equity portfolio compared to $9.8 billion, or 11 percent, at
December 31, 2014. Home equity loans are almost all fixed-rate
loans with amortizing payment terms of 10 to 30 years and of the
$7.9 billion at December 31, 2015, 54 percent have 25- to 30-
year terms. At December 31, 2015, our reverse mortgage portfolio
had an outstanding balance, excluding loans accounted for under
the fair value option, of $2.0 billion, or three percent of the total
home equity portfolio compared to $1.7 billion, or two percent, at
December 31, 2014. We no longer originate reverse mortgages.
At December 31, 2015, approximately 56 percent of the home
equity portfolio was included in Consumer Banking, 34 percent
was included in LAS and the remainder of the portfolio was primarily
in GWIM. Outstanding balances in the home equity portfolio,
excluding loans accounted for under the fair value option,
decreased $9.8 billion in 2015 primarily due to paydowns and
charge-offs outpacing new originations and draws on existing lines.
Of the total home equity portfolio at December 31, 2015 and 2014,
$20.3 billion and $20.6 billion, or 27 percent and 24 percent,
were in first-lien positions (28 percent and 26 percent excluding
the PCI home equity portfolio). At December 31, 2015, outstanding
balances in the home equity portfolio that were in a second-lien
or more junior-lien position and where we also held the first-lien
loan totaled $12.9 billion, or 18 percent of our total home equity
portfolio excluding the PCI loan portfolio.
Unused HELOCs totaled $50.3 billion and $53.7 billion at
December 31, 2015 and 2014. The decrease was primarily due
to customers choosing to close accounts, as well as accounts
reaching the end of their draw period, which automatically
eliminates open line exposure. Both of these more than offset
customer paydowns of principal balances and the impact of new