The following table includes a summary of residential mortgage loans managed or securitized and related delinquencies and net charge-offs:


	June 30, 2011		December 31, 2010
	(Dollars in millions)
Mortgage loans managed or securitized (1)	$	22,963	$	23,692
Less: Loans securitized and transferred to securities available for sale		4		4
Loans held for sale		1,745		3,068
Covered mortgage loans		1,378		1,446
Mortgage loans sold with recourse		1,464		1,624

Mortgage loans held for investment	$	18,372	$	17,550

Mortgage loans on nonaccrual status (2)	$	292	$	466
Mortgage loans 90 days past due and still accruing interest (2)		90		143
Mortgage loans net charge-offs (3)		181		390

(1)	Balances exclude loans serviced for others, with no other continuing involvement.

(2)	Includes amounts related to residential mortgage loans held for sale and excludes amounts related to government guaranteed loans. Refer to Note 3 for additional disclosures related to past due government guaranteed loans.

(3)	Net charge-offs for June 30, 2011 reflect six months.

The unpaid principal balances of BB&T's total residential mortgage servicing portfolio were $86.8 billion and $83.6 billion at June 30, 2011 and December 31, 2010, respectively. The unpaid principal balances of residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans and totaled $65.9 billion and $61.8 billion at June 30, 2011 and December 31, 2010, respectively. Mortgage loans serviced for others are not included in loans on the accompanying Consolidated Balance Sheets.

During the six months ended June 30, 2011 and 2010, BB&T sold residential mortgage loans from the held for sale portfolio with unpaid principal balances of $8.6 billion and $8.7 billion, respectively, and recognized pre-tax gains of $61 million and $86 million, respectively, including the impact of interest rate lock commitments. These gains are recorded in noninterest income as a component of mortgage banking income. BB&T retained the related mortgage servicing rights and receives servicing fees.

At June 30, 2011 and 2010, the approximate weighted average servicing fee was 0.34% and 0.36%, respectively, of the outstanding balance of the residential mortgage loans serviced for others. The weighted average coupon interest rate on the portfolio of mortgage loans serviced for others was 5.14% and 5.43% at June 30, 2011 and 2010, respectively. BB&T recognized servicing fees of $118 million and $111 million during the first six months of 2011 and 2010, respectively, as a component of mortgage banking income.

At June 30, 2011 and December 31, 2010, BB&T had $1.5 billion and $1.6 billion, respectively, of residential mortgage loans sold with recourse liability. In the event of nonperformance by the borrower, BB&T has maximum recourse exposure of approximately $557 million and $597 million as of June 30, 2011 and December 31, 2010, respectively. At June 30, 2011 and December 31, 2010, BB&T has recorded $7 million and $6 million, respectively of reserves related to these recourse exposures. Payments made to date have been immaterial.

BB&T also issues standard representations and warranties related to mortgage loan sales to government-sponsored entities. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these warranties would materially change the financial condition or results of operations of BB&T. BB&T has recorded $20 million and $15 million of reserves related to potential losses resulting from repurchases of loans sold at June 30, 2011 and December 31, 2010, respectively.

Residential mortgage servicing rights are recorded on the Consolidated Balance Sheets at fair value with changes in fair value recorded as a component of mortgage banking income in the Consolidated Statements of Income for each period. BB&T uses various derivative instruments to mitigate the income statement effect of changes in fair value, due to changes in valuation inputs and assumptions, of its residential mortgage servicing rights. The following is an analysis of the activity in BB&T's residential mortgage servicing rights for the six months ended June 30, 2011 and 2010:


	Residential Mortgage Servicing Rights Six Months Ended June 30,
	2011			2010
	(Dollars in millions)
Carrying value, January 1,	$	830		$	832
Additions		126			122
Increase (decrease) in fair value:
Due to changes in valuation inputs or assumptions		(20	)		(227	)
Other changes (1)		(57	)		(62	)

Carrying value, June 30,	$	879		$	665

(1)	Represents the realization of expected net servicing cash flows, expected borrower payments and the passage of time.

During the second quarter of 2011, management revised its servicing costs assumption in the valuation of residential mortgage servicing rights. The impact of this change was a $10 million reduction in the value of residential mortgage servicing rights.

BB&T uses assumptions and estimates in determining the fair value of mortgage servicing rights. Refer to Note 14 for additional disclosures related to the assumptions and estimates used in determining the fair value of residential mortgage servicing rights. At June 30, 2011, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% adverse changes in key economic assumptions are included in the accompanying table:

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 this table, the effect of an adverse variation in a particular assumption on the fair value of the mortgage servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

BB&T also arranges and services commercial real estate mortgages through Grandbridge Real Estate Capital, LLC ("Grandbridge") the commercial mortgage banking subsidiary of Branch Bank. During the six months ended June 30, 2011 and 2010, Grandbridge originated $1.9 billion and $908 million, respectively, of commercial real estate mortgages, the majority of which were arranged for third party investors. As of June 30, 2011 and December 31, 2010, Grandbridge's portfolio of commercial real estate mortgages serviced for others totaled $24.4 billion and $24.1 billion, respectively. Commercial real estate mortgage loans serviced for others are not included in loans on the accompanying Consolidated Balance Sheets. Grandbridge had $4.5 billion and $4.4 billion in loans serviced for others that were covered by recourse provisions at June 30, 2011 and December 31, 2010, respectively. At both June 30, 2011 and December 31, 2010, Grandbridge's maximum exposure to loss for these loans was approximately $1.2 billion. BB&T has recorded $21 million and $19 million of reserves related to these recourse exposures at June 30, 2011 and December 31, 2010, respectively.

Commercial mortgage servicing rights are recorded as other assets on the Consolidated Balance Sheets at the lower of cost or market and amortized in proportion to and over the estimated period that net servicing income is expected to be received based on projections of the amount and timing of estimated future net cash flows. The following is an analysis of the activity in BB&T's commercial mortgage servicing rights for the six months ended June 30, 2011 and 2010:

At June 30, 2011, the sensitivity of the current fair value of the capitalized commercial mortgage servicing rights to adverse changes in key economic assumptions are included in the accompanying table:

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 this table, the effect of an adverse variation in a particular assumption on the fair value of the mortgage servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in increased value of escrow deposits), which may magnify or counteract the effect of the change.