Wells Fargo 2010 Annual Report Download - page 140

Note 6: Loans and Allowance for Credit Losses (continued)
LTV refers to the ratio comparing the loan’s unpaid principal
balance to the property’s collateral value. CLTV refers to the
combination of first mortgage and junior lien mortgage ratios.
LTVs and CLTVs are updated quarterly using a cascade approach
which first uses values provided by automated valuation models
(AVMs) for the property. If an AVM is not available, then the
value is estimated using the original appraised value adjusted by
the change in Home Price Index (HPI) for the property location.
If an HPI is not available, the original appraised value is used.
The HPI value is normally the only method considered for high
value properties as the AVM values have proven less accurate for
these properties.
The following table shows the most updated LTV and CLTV
distribution of the real estate 1-4 family first and junior lien
mortgage loan portfolios excluding PCI loans. In recent years,
the residential real estate markets have experienced significant
declines in property values and several markets, particularly
California and Florida have experienced declines that turned out
to be more significant than the national decline. These trends are
considered in the way that we monitor credit risk and establish
our allowance for credit losses. LTV does not necessarily reflect
the likelihood of performance of a given loan, but does provide
an indication of collateral value. In the event of a default, any
loss should be limited to the portion of the loan amount in excess
of the net realizable value of the underlying real estate collateral
value. Certain loans do not have an LTV or CLTV primarily due
to industry data availability and portfolios acquired from or
serviced by other institutions.
December 31, 2010
Real estate Real estate
1-4 family 1-4 family
first
junior lien
mortgage mortgage
(in millions) by LTV by CLTV Total
By LTV/CLTV:
0-60% $ 48,905 14,814 63,719
60.01-80% 46,453 17,744 64,197
80.01-100% 44,892 24,255 69,147
100.01-120% (1) 28,587 17,887 46,474
> 120% (1) 24,578 18,628 43,206
No LTV/CLTV available 3,575 2,571 6,146
Total (excluding PCI) $ 196,990 95,899 292,889
(1) Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the
event of default, the loss content would generally be limited to only the amount
in excess of 100% LTV/CLTV.
NONACCRUAL LOANS The following table provides loans on
nonaccrual status. PCI loans are excluded from this table due to
the existence of the accretable yield.
December 31,
(in millions) 2010 2009
Commercial:
Commercial and industrial $ 3,213 4,397
Real estate mortgage 5,227 3,696
Real estate construction 2,676 3,313
Lease financing 108 171
Foreign 127 146
Total commercial (1) 11,351 11,723
Consumer:
Real estate 1-4 family first mortgage (2) 12,289 10,100
Real estate 1-4 family junior lien mortgage 2,302 2,263
Other revolving credit and installment 300 332
Total consumer 14,891 12,695
Total nonaccrual loans
(excluding PCI) $ 26,242 24,418
(1) Includes LHFS of $3 million and $27 million at December 31, 2010 and 2009,
respectively.
(2) Includes MHFS of $426 million and $339 million at December 31, 2010 and
2009, respectively.
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