Intangible Assets

Intangible assets consisted of the following:



At December 31,	2016		2015
	(in millions)
Mortgage servicing rights	$	—	$	140
Purchased credit card relationships	34		41
Total intangible assets	$	34	$	181

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. Prior to our agreement with PHH Mortgage, we recognized the right to service residential mortgage loans as a separate and distinct asset at the time they were acquired or when originated loans were sold. Following the conversion of our mortgage processing and servicing operations to PHH Mortgage in 2013, we sell our agency eligible originations directly to PHH Mortgage on a servicing released basis, resulting in no new mortgage servicing rights being recognized.

During the fourth quarter of 2016, we sold our remaining MSRs portfolio, which was in run-off for several years, and related servicing advances to a third party. The resulting loss on sale, including transaction costs, was not significant.

The following table summarizes MSRs activity during 2016 and 2015:



Year Ended December 31,	2016			2015
	(in millions)
Fair value of MSRs:
Beginning balance	$	140		$	159
Changes in fair value due to changes in valuation inputs or assumptions	(27		)	1
Reductions related to customer payments	(17		)	(20		)
Reduction related to sale of MSRs	(96		)	—
Ending balance	$	—		$	140

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

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

The following table summarizes the critical assumptions that were used to calculate the fair value of MSRs at December 31, 2015:



At December 31,	2015
Annualized constant prepayment rate	13.8	%
Constant discount rate	12.6	%
Weighted average life (in years)	4.5

The outstanding principal balance of mortgages serviced for others, which were not included in the consolidated balance sheet, totaled $18,930 million at December 31, 2015.

Servicing fees collected were included in residential mortgage banking revenue and totaled $36 million, $57 million and $68 million during 2016, 2015 and 2014, respectively.

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 Bank, National Association and was written off at the time of sale. 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.