Intangible Assets

9 Months Ended

Sep. 30, 2011

Intangible Assets And Goodwill [Abstract]

Intangible Assets

9.  Intangible Assets

Intangible assets consisted of the following:

	September 30,		December 31,
	2011		2010
	(in millions)
Mortgage servicing rights	$	245	$	403
Other		16		21
Intangible assets	$	261	$	424

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, which are addressed in more detail in the 2010 Form 10-K.

Residential mortgage servicing rights Residential MSRs are initially measured at fair value at the time that the related loans are sold and are remeasured at fair value at each reporting date (the fair value measurement method). Changes in fair value of the asset 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, including current costs of servicing. The reasonableness of these valuation models is periodically validated by reference to external independent broker valuations and industry surveys.

Fair value of residential MSRs is calculated using the following critical assumptions:

	September 30,			December 31,
	2011			2010
Annualized constant prepayment rate (“CPR”)		22.9	%		14.1	%
Constant discount rate		11.4	%		13.6	%
Weighted average life		3.2 years			4.9 years

Residential MSRs activity is summarized in the following table:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(in millions)
Fair value of MSRs:
Beginning balance	$	363		$	317		$	394		$	450
Additions related to loan sales		7			10			32			36
Changes in fair value due to:
Change in valuation inputs or assumptions used in the valuation models		(110	)		1			(132	)		(113	)
Realization of cash flows		(23	)		(30	)		(57	)		(75	)
Ending balance	$	237		$	298		$	237		$	298

Information regarding residential mortgage loans serviced for others, which are not included in the consolidated balance sheet, is summarized in the following table:

	September 30,		December 31,
	2011		2010
	(in millions)
Outstanding principal balances at period end	$	41,442	$	44,407
Custodial balances maintained and included in noninterest bearing deposits at period end	$	859	$	960

Servicing fees collected are included in residential mortgage banking revenue and totaled $27 million and $83 million during the three and nine months ended September 30, 2011, respectively. Servicing fees totaled $30 million and $92 million during the three and nine months ended September 30, 2010, respectively.

Commercial Mortgage Servicing Rights Commercial MSRs, which are accounted for using the lower of amortized cost or fair value method, totaled $8 and $9 million at September 30, 2011 and December 31, 2010, respectively.

Other Intangible Assets Other intangible assets, which result from business combinations, are comprised of favorable lease arrangements of $12 million and $16 million at September 30, 2011 and December 31, 2010, respectively, and customer lists in the amount of $4 million and $5 million at September 30, 2011 and December 31, 2010, respectively.