Wells Fargo 2013 Annual Report Download - page 73

If interest due on all nonaccrual loans (including loans that
were, but are no longer on nonaccrual at year end) had been
accrued under the original terms, approximately $764 million
of interest would have been recorded as income on these loans,
compared with $575 million actually recorded as interest
income in 2013, versus $938 million and $406 million,
respectively, in 2012.
Table 32 provides a summary of foreclosed assets and an
analysis of changes in foreclosed assets.
Table 32: Foreclosed Assets
Quarter ended
Dec. 31, Sept. 30, June 30, Mar. 31, Year ended Dec. 31
(in millions) 2013 2013 2013 2013 2013 2012
Government insured/guaranteed (1) $ 2,093 1,781 1,026 969 2,093 1,509
PCI loans:
Commercial 497 559 597 641 497 667
Consumer 149 125 127 179 149 219
Total PCI loans 646 684 724 820 646 886
All other loans:
Commercial 759 944 1,012 1,060 759 1,073
Consumer 439 393 378 501 439 555
Total all other loans 1,198 1,337 1,390 1,561 1,198 1,628
Total foreclosed assets $ 3,937 3,802 3,140 3,350 3,937 4,023
Analysis of changes in foreclosed assets
Balance, beginning of period $ 3,802 3,140 3,350 4,023 4,023 4,661
Net change in government insured/guaranteed (1)(2) 312 755 57 (540) 584 190
Additions to foreclosed assets (3) 428 459 406 559 1,852 2,819
Reductions:
Sales (823) (545) (647) (658) (2,673) (3,359)
Write-downs and net gains (losses) on sales 218 (7) (26) (34) 151 (288)
Total reductions (605) (552) (673) (692) (2,522) (3,647)
Balance, end of period $ 3,937 3,802 3,140 3,350 3,937 4,023
(1) Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. Both principal
and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. Increase in
balances at December 31 and September 30, 2013, reflects the impact of changes to loan modification programs, slowing foreclosures in prior quarters.
(2) Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA. The net change
in government insured/guaranteed foreclosed assets is made up of inflows from mortgages held for investment and MHFS, and outflows when we are reimbursed by FHA/VA.
Transfers from government insured/guaranteed loans to foreclosed assets amounted to $892 million, $1.3 billion, $639 million and $71 million for the quarter ended
December 31, September 30, June 30 and March 31, 2013, respectively, and $2.9 billion and $3.7 billion for the year ended December 31, 2013 and 2012, respectively.
These transfer amounts have been revised for the quarters and year ended prior to December 31, 2013 to conform with the current period presentation.
(3) Predominantly include loans moved into foreclosure from nonaccrual status, PCI loans transitioned directly to foreclosed assets and repossessed automobiles.
Foreclosed assets at December 31, 2013, included
$2.1 billion of foreclosed real estate that is predominantly FHA
insured or VA guaranteed and expected to have minimal or no
loss content. The remaining balance of $1.8 billion of
foreclosed assets has been written down to estimated net
realizable value. Foreclosed assets at December 31, 2013 were
stable, compared with December 31, 2012. At
December 31, 2013, 68% of foreclosed assets of $3.9 billion
have been in the foreclosed assets portfolio one year or less.
Given our real estate-secured loan concentrations, current
economic conditions, and recent changes to loan modification
programs slowing down foreclosures in prior periods, we
anticipate continuing to hold an elevated level of foreclosed
assets on our balance sheet.
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