Intangible Assets

Intangible assets consisted of the following:



	March 31, 2015		December 31, 2014
	(in millions)
Mortgage servicing rights	$	140	$	159
Purchased credit card relationships	46		47
Total intangible assets	$	186	$	206

Mortgage Servicing Rights ("MSRs") A servicing asset is a contract under which estimated future revenues from contractually specified cash flows, such as servicing fees and other ancillary revenues, are expected to exceed the obligation to service the financial assets. We recognize the right to service mortgage loans as a separate and distinct asset at the time they are acquired or when originated loans are sold.

MSRs are subject to credit, prepayment and interest rate risk, in that their value will fluctuate as a result of changes in these economic variables. Interest rate risk is mitigated through an economic hedging program that uses securities and derivatives to offset changes in the fair value of MSRs. Since the hedging program involves trading activity, risk is quantified and managed using a number of risk assessment techniques.

MSRs are initially measured at fair value at the time that the related loans are sold and remeasured at fair value at each reporting date. Changes in fair value of MSRs are reflected in residential mortgage banking revenue in the period in which the changes occur. Fair value is determined based upon the application of valuation models and other inputs. The valuation models incorporate assumptions market participants would use in estimating future cash flows. The reasonableness of these valuation models is periodically validated by reference to external independent broker valuations and industry surveys.

The following table summarizes the critical assumptions used to calculate the fair value of MSRs:



	March 31, 2015		December 31, 2014
Annualized constant prepayment rate ("CPR")	18.2	%	15.9	%
Constant discount rate	14.0	%	14.1	%
Weighted average life (in years)	3.7		4.1

The following table summarizes MSRs activity:



Three Months Ended March 31,	2015			2014
	(in millions)
Fair value of MSRs:
Beginning balance	$	159		$	227
Changes in fair value due to changes in valuation model inputs or assumptions	(11		)	(12		)
Reductions related to customer payments	(8		)	(10		)
Ending balance	$	140		$	205

The outstanding principal balance of serviced for others mortgages, which are not included in the consolidated balance sheet, totaled $22,244 million and $23,101 million at March 31, 2015 and December 31, 2014, respectively.

Servicing fees collected are included in residential mortgage banking revenue and totaled $15 million and $18 million during the three months ended March 31, 2015 and 2014, respectively.

During 2013, we completed the conversion of our mortgage processing and servicing operations to PHH Mortgage. Under the terms of the agreement, PHH Mortgage provides us with mortgage origination processing services as well as the sub-servicing of our portfolio of owned and serviced for others mortgages with an outstanding principal balance of $40,319 million and $40,889 million at March 31, 2015 and December 31, 2014, respectively. Although we continue to own both the mortgages on our balance sheet and the mortgage servicing rights associated with the serviced loans at the time of conversion, we now sell our agency eligible originations to PHH Mortgage on a servicing released basis which results in no new mortgage servicing rights being recognized.

Purchased credit card relationships In 2012, we purchased from HSBC Finance the account relationships associated with $746 million of credit card receivables which were not included in the sale to Capital One Financial Corporation at a fair value of $108 million. Approximately $43 million of this value was associated with the credit card receivables sold to First Niagara. The remaining $65 million was included in intangible assets and is being amortized over the estimated useful life of the credit card relationships which is ten years.