8. Mortgage Servicing Assets

We originate and periodically sell commercial mortgage loans but continue to service those loans for the buyers. We also may purchase the right to service commercial mortgage loans for other lenders. We record a servicing asset if we purchase or retain the right to service loans in exchange for servicing fees that exceed the going market servicing rate and are considered more than adequate compensation for servicing. Changes in the carrying amount of mortgage servicing assets are summarized as follows:


	Three months ended March 31,
in millions	2015			2014
Balance at beginning of period	$	323		$	332
Servicing retained from loan sales		10			6
Purchases		15			7
Amortization		(24	)		(25	)

Balance at end of period	$	324		$	320

Fair value at end of period	$	423		$	373

The fair value of mortgage servicing assets is determined by calculating the present value of future cash flows associated with servicing the loans. This calculation uses a number of assumptions that are based on current market conditions. The range and weighted-average of the significant unobservable inputs used to fair value our mortgage servicing assets at March 31, 2015, and March 31, 2014, along with the valuation techniques, are shown in the following table:


March 31, 2015 dollars in millions	Valuation Technique	Significant Unobservable Input	Range (Weighted-Average)
Mortgage servicing assets	Discounted cash flow	Prepayment speed		1.60 - 13.10% (4.80%)
		Expected defaults		1.00 - 3.00% (1.80%)
		Residual cash flows discount rate		7.00 - 15.00% (7.80%)
		Escrow earn rate		0.70 - 3.10% (1.90%)
		Servicing cost		$150 - $2,735 ($1,059)
		Loan assumption rate		0.20 - 3.00% (1.43%)
		Percentage late		0.00 - 2.00% (0.33%)

March 31, 2014 dollars in millions	Valuation Technique	Significant Unobservable Input	Range (Weighted-Average)
Mortgage servicing assets	Discounted cash flow	Prepayment speed		1.90 - 11.30% (4.90%)
		Expected defaults		1.00 - 3.00% (2.00%)
		Residual cash flows discount rate		7.00 - 14.00% (7.80%)
		Escrow earn rate		0.40 - 3.10% (1.80%)
		Servicing cost		$150 - $2,600 ($963)
		Loan assumption rate		0.20 - 3.00% (1.58%)
		Percentage late		0.00 - 2.00% (0.33%)

If these economic assumptions change or prove incorrect, the fair value of mortgage servicing assets may also change. The volume of loans serviced, expected credit losses, and the value assigned to escrow deposits are critical to the valuation of servicing assets. At March 31, 2015, a 1.00% decrease in the value assigned to the escrow deposits would cause a $54 million decrease in the fair value of our mortgage servicing assets. An increase in the assumed default rate of commercial mortgage loans of 1.00% would cause a $7 million decrease in the fair value of our mortgage servicing assets.

Contractual fee income from servicing commercial mortgage loans totaled $13 million for the three-month period ended March 31, 2015, and $15 million for the three-month period ended March 31, 2014. We have elected to account for servicing assets using the amortization method. The amortization of servicing assets is determined in proportion to, and over the period of, the estimated net servicing income. The amortization of servicing assets for each period, as shown in the table at the beginning of this note, is recorded as a reduction to fee income. Both the contractual fee income and the amortization are recorded in “mortgage servicing fees” on the income statement.

Additional information pertaining to the accounting for mortgage and other servicing assets is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Servicing Assets” on page 122 of our 2014 Form 10-K.