FHN originates mortgage loans for sale into the secondary market. These loans primarily consist of residential first lien mortgages that conform to standards established by GSEs that are major investors in U.S. home mortgages, but can also consist of junior lien and jumbo loans secured by residential property. These loans are primarily sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. Gains and losses on these mortgage loans are included in mortgage banking and title income on the Consolidated Statements of Income.

Prior to the IBKC merger, FHN’s mortgage banking operations were not significant. At March 31, 2023, FHN

had approximately $38 million of loans that remained from pre-2009 mortgage business operations of legacy First Horizon. Activity related to the pre-2009 mortgage loans was primarily limited to payments and write-offs in 2023 and 2022, with no new originations or loan sales, and only an insignificant amount of repurchases. These loans are excluded from the disclosure below.

The following table summarizes activity relating to residential mortgage loans held for sale as of and for the three months ended March 31, 2023 and the year ended December 31, 2022.


MORTGAGE LOAN ACTIVITY
(Dollars in millions)	March 31, 2023		December 31, 2022
Balance at beginning of period	$	44	$	250

Originations and purchases	120		1,275
Sales, net of gains	(103)		(1,481)
Mortgage loans transferred from (to) held for investment	—		—
Balance at end of period	$	61	$	44

Mortgage Servicing Rights

FHN records mortgage servicing rights at the lower of cost or market value and amortizes them over the remaining servicing life of the loans, with consideration given to prepayment assumptions.

Mortgage servicing rights are included in other assets on the Consolidated Balance Sheets. Mortgage servicing rights had the following carrying values as of the periods indicated.


MORTGAGE SERVICING RIGHTS
	March 31, 2023						December 31, 2022
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$	21	$	(5)	$	16		$	21	$	(5)	$	16

In addition, there was an insignificant amount of non-mortgage and commercial servicing rights as of March 31, 2023 and December 31, 2022. Total mortgage servicing fees included in mortgage banking and title income were $1 million and $2 million for the three months ended March 31, 2023 and 2022, respectively.