JP Morgan Chase 2014 Annual Report Download - page 120

Management’s discussion and analysis
118 JPMorgan Chase & Co./2014 Annual Report
The following table presents information as of
December 31, 2014 and 2013, relating to modified
retained residential real estate loans for which concessions
have been granted to borrowers experiencing financial
difficulty. Modifications of PCI loans continue to be
accounted for and reported as PCI loans, and the impact of
the modification is incorporated into the Firm’s quarterly
assessment of estimated future cash flows. Modifications of
consumer loans other than PCI loans are generally
accounted for and reported as troubled debt restructurings
(“TDRs”). For further information on modifications for the
years ended December 31, 2014 and 2013, see Note 14.
Modified residential real estate loans
2014 2013
December 31,
(in millions)
On–
balance
sheet
loans
Nonaccrual
on–balance
sheet
loans(d)
On–
balance
sheet
loans
Nonaccrual
on–balance
sheet
loans(d)
Modified residential
real estate loans,
excluding PCI
loans(a)(b)
Home equity –
senior lien $ 1,101 $ 628 $ 1,146 $ 641
Home equity –
junior lien 1,304 632 1,319 666
Prime mortgage,
including option
ARMs 6,145 1,559 7,004 1,737
Subprime mortgage 2,878 931 3,698 1,127
Total modified
residential real
estate loans,
excluding PCI
loans $ 11,428 $ 3,750 $ 13,167 $ 4,171
Modified PCI loans(c)
Home equity $ 2,580 NA $ 2,619 NA
Prime mortgage 6,309 NA 6,977 NA
Subprime mortgage 3,647 NA 4,168 NA
Option ARMs 11,711 NA 13,131 NA
Total modified PCI
loans $ 24,247 NA $ 26,895 NA
(a) Amounts represent the carrying value of modified residential real
estate loans.
(b) At December 31, 2014 and 2013, $4.9 billion and $7.6 billion,
respectively, of loans modified subsequent to repurchase from Ginnie
Mae in accordance with the standards of the appropriate government
agency (i.e., FHA, VA, RHS) are not included in the table above. When
such loans perform subsequent to modification in accordance with
Ginnie Mae guidelines, they are generally sold back into Ginnie Mae
loan pools. Modified loans that do not re-perform become subject to
foreclosure. For additional information about sales of loans in
securitization transactions with Ginnie Mae, see Note 16.
(c) Amounts represent the unpaid principal balance of modified PCI loans.
(d) As of December 31, 2014 and 2013, nonaccrual loans included $2.9
billion and $3.0 billion, respectively, of TDRs for which the borrowers
were less than 90 days past due. For additional information about
loans modified in a TDR that are on nonaccrual status, see Note 14.
Nonperforming assets
The following table presents information as of
December 31, 2014 and 2013, about consumer, excluding
credit card, nonperforming assets.
Nonperforming assets(a)
December 31, (in millions) 2014 2013
Nonaccrual loans(b)
Residential real estate $ 5,845 $ 6,864
Other consumer 664 632
Total nonaccrual loans 6,509 7,496
Assets acquired in loan satisfactions
Real estate owned 437 614
Other 36 41
Total assets acquired in loan satisfactions 473 655
Total nonperforming assets $ 6,982 $ 8,151
(a) At December 31, 2014 and 2013, nonperforming assets excluded: (1)
mortgage loans insured by U.S. government agencies of $7.8 billion
and $8.4 billion, respectively, that are 90 or more days past due; (2)
student loans insured by U.S. government agencies under the FFELP of
$367 million and $428 million, respectively, that are 90 or more days
past due; and (3) real estate owned insured by U.S. government
agencies of $462 million and $2.0 billion, respectively. These amounts
have been excluded based upon the government guarantee.
(b) Excludes PCI loans that were acquired as part of the Washington
Mutual transaction, which are accounted for on a pool basis. Since
each pool is accounted for as a single asset with a single composite
interest rate and an aggregate expectation of cash flows, the past-due
status of the pools, or that of individual loans within the pools, is not
meaningful. Because the Firm is recognizing interest income on each
pool of loans, they are all considered to be performing.
Nonaccrual loans in the residential real estate portfolio
totaled $5.8 billion and $6.9 billion at December 31, 2014
and December 31, 2013, respectively, of which 32% and
34%, respectively, were greater than 150 days past due. In
the aggregate, the unpaid principal balance of residential
real estate loans greater than 150 days past due was
charged down by approximately 50% to the estimated net
realizable value of the collateral at both December 31,
2014 and 2013. The elongated foreclosure processing
timelines are expected to continue to result in elevated
levels of nonaccrual loans in the residential real estate
portfolios.
Active and suspended foreclosure: For information on
loans that were in the process of active or suspended
foreclosure, see Note 14.
Nonaccrual loans: The following table presents changes in
the consumer, excluding credit card, nonaccrual loans for
the years ended December 31, 2014 and 2013.
Nonaccrual loans
Year ended December 31,
(in millions) 2014 2013
Beginning balance $ 7,496 $ 9,174
Additions 4,905 6,618
Reductions:
Principal payments and other(a) 1,859 1,559
Charge-offs 1,306 1,869
Returned to performing status 2,083 3,793
Foreclosures and other liquidations 644 1,075
Total reductions 5,892 8,296
Net additions/(reductions) (987) (1,678)
Ending balance $ 6,509 $ 7,496
(a) Other reductions includes loan sales.