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Loan Servicing
 3 Months Ended
Mar. 31, 2019
Transfers and Servicing [Abstract]  
Loan Servicing Loan Servicing

Residential Mortgage Banking Activities

The following tables summarize residential mortgage banking activities:
(Dollars in millions)
 
Mar 31, 2019
 
Dec 31, 2018
UPB of residential mortgage loan servicing portfolio
 
$
117,980

 
$
118,605

UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate
 
86,119

 
87,270

Mortgage loans sold with recourse
 
404

 
419

Maximum recourse exposure from mortgage loans sold with recourse liability
 
217

 
223

Indemnification, recourse and repurchase reserves
 
22

 
24

 
 


 


As of / For the Three Months Ended March 31,
(Dollars in millions)
 
2019
 
2018
UPB of residential mortgage loans sold from LHFS
 
$
1,300

 
$
2,553

Pre-tax gains recognized on mortgage loans sold and held for sale
 
17

 
39

Servicing fees recognized from mortgage loans serviced for others
 
61

 
65

Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others
 
0.28
%
 
0.28
%
Weighted average interest rate on mortgage loans serviced for others
 
4.06

 
4.00



The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:
Three Months Ended March 31,
(Dollars in millions)
 
2019
 
2018
Residential MSRs, carrying value, January 1
 
$
957

 
$
914

Additions
 
15

 
28

Change in fair value due to changes in valuation inputs or assumptions:
 
 
 
 
Prepayment speeds
 
(55
)
 
61

OAS
 
4

 
2

Servicing costs
 
—

 
—

Realization of expected net servicing cash flows, passage of time and other
 
(33
)
 
(32
)
Residential MSRs, carrying value, March 31
 
$
888

 
$
973

Gains (losses) on derivative financial instruments used to mitigate the income statement effect of changes in residential MSR fair value
 
$
52

 
$
(63
)

 
The sensitivity of the fair value of the residential MSRs to changes in key assumptions is presented in the following table:
 
 
March 31, 2019
 
December 31, 2018
 
 
Range
 
Weighted Average
 
Range
 
Weighted Average
(Dollars in millions)
 
Min
 
Max
 
 
Min
 
Max
 
Prepayment speed
 
9.7
%
 
12.0
%
 
11.2
%
 
9.1
%
 
10.5
%
 
9.9
%
Effect on fair value of a 10% increase
 
 
 
 
 
$
(36
)
 
 
 
 
 
$
(34
)
Effect on fair value of a 20% increase
 
 
 
 
 
(70
)
 
 
 
 
 
(66
)
OAS
 
6.5
%
 
8.2
%
 
6.8
%
 
6.6
%
 
8.3
%
 
7.0
%
Effect on fair value of a 10% increase
 
 
 
 
 
$
(22
)
 
 
 
 
 
$
(24
)
Effect on fair value of a 20% increase
 
 
 
 
 
(42
)
 
 
 
 
 
(47
)
Composition of loans serviced for others:
 
 
 
 
 
 
 
 
 
 
Fixed-rate residential mortgage loans
 
 
 
 
 
99.2
%
 
 
 
 
 
99.2
%
Adjustable-rate residential mortgage loans
 
 
 
 
 
0.8

 
 
 
 
 
0.8

Total
 
 

 
 

 
100.0
%
 
 
 
 
 
100.0
%
Weighted average life
 
 

 
 

 
5.6 years

 
 
 
 
 
6.1 years



The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in one assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change.
 
Commercial Mortgage Banking Activities

The following table summarizes commercial mortgage banking activities for the periods presented:
(Dollars in millions)
Mar 31, 2019
 
Dec 31, 2018
UPB of CRE mortgages serviced for others
$
27,749

 
$
27,761

CRE mortgages serviced for others covered by recourse provisions
4,685

 
4,699

Maximum recourse exposure from CRE mortgages sold with recourse liability
1,312

 
1,317

Recorded reserves related to recourse exposure
6

 
6

CRE mortgages originated during the year-to-date period
1,261

 
7,072

Commercial MSRs at fair value
148

 
151