PNC Bank 2010 Annual Report Download - page 79
Download and view the complete annual report
Please find page 79 of the 2010 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Loan Modifications and Troubled Debt Restructurings
We modify loans under government and PNC-developed
programs based upon our commitment to help eligible
homeowners avoid foreclosure, where appropriate. Initially, a
borrower is evaluated for a modification under a government
program. If a borrower does not qualify under a government
program, the borrower is evaluated under a PNC program.
PNC programs utilize both temporary and permanent
modifications and typically reduce the interest rate, extend the
term and/or defer or forgive principal. Temporary and
permanent modifications under programs involving a
contractual change to loan terms are classified as TDRs,
regardless of the period of time for which the modified terms
apply, as discussed in more detail below.
A temporary modification, with a term between three and 60
months, involves a change in original loan terms for a period
of time and reverts to original loan terms as of a specific date
or the occurrence of an event, such as a failure to pay in
accordance with the terms of the modification. Typically,
these modifications are for a period of up to 24 months after
which the interest rate reverts to the original loan rate. A
permanent modification, with a term greater than 60 months,
is one in which the terms of the original loan are changed, but
could revert back to the original loan terms. Permanent
modifications primarily include the government-created Home
Affordable Modification Program (HAMP) or PNC-developed
HAMP-like modification programs.
For consumer loan programs (e.g., residential mortgages,
home equity loans and lines, etc.), PNC will enter into a
temporary modification when the borrower has indicated a
temporary hardship and a willingness to bring current the
delinquent loan balance. Examples of this situation often
include delinquency due to illness or death in the family, or a
loss of employment. Permanent modifications are entered into
when it is confirmed that the borrower does not possess the
income necessary to continue making loan payments at the
current amount, but our expectation is that payments at lower
amounts can be made.
Home equity loans and lines have been modified with changes
in contractual terms for up to 60 months, although the
majority involve periods of 3 to 24 months. The change to
terms may include a reduced interest rate and/or an extension
of the amortization period. Additionally, certain residential
construction and non-prime loans have been modified by
changing payment terms from principal and interest to
interest-only for a period of up to two years before reverting
back to the original terms. As of August 2010, such interest-
only modifications have been discontinued.
The following table provides the number and unpaid principal balance of modified consumer loans.
Active Bank-Owned Loss Mitigation Consumer Loan Modifications
December 31, 2010 December 31, 2009
Dollars in millions
Number of
Accounts
Unpaid
Principal
Balance
Number of
Accounts
Unpaid
Principal
Balance
Conforming Mortgages
Permanent Modifications 5,517 $1,137 1,517 $ 267
Non-Prime Mortgages
Permanent Modifications 3,405 441 2,714 313
Residential Construction
Permanent Modifications 470 235 30 20
Home Equity
Temporary Modifications 12,643 1,151 4,340 421
Permanent Modifications 163 17 59 7
Total Home Equity 12,806 1,168 4,399 428
Total Active Bank-Owned Loss Mitigation Consumer Loan Modifications 22,198 $2,981 8,660 $1,028
We monitor the success rates/delinquency status of our modification programs to assess their effectiveness in serving our
customers’ needs while mitigating credit losses. The following table provides the number and unpaid principal balance of modified
loans that were 60 days or more past due as of six months, nine months and 12 months after the modification date.
71