PNC Bank 2010 Annual Report Download - page 80
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Please find page 80 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.Bank-Owned Consumer Residential Loan Modification Re-Default by Vintage
Six Months Nine Months 12 Months
December 31,
2010
Dollars in millions
Number of
Accounts
%of
Vintage
Modified
Number of
Accounts
%of
Vintage
Modified
Number of
Accounts
%of
Vintage
Modified
Unpaid
Principal
Balance
Permanent
Conforming Mortgages
Second Quarter 2010 354 23.9% $57
First Quarter 2010 312 23.3 468 35.0% 70
Fourth Quarter 2009 242 26.7 333 36.7 420 46.3% 62
Non-Prime Mortgages
Second Quarter 2010 104 23.5 15
First Quarter 2010 68 20.0 80 23.5 11
Fourth Quarter 2009 133 19.7 205 30.3 216 32.0 22
Residential Construction (a)
Second Quarter 2010 38 13.6 12
First Quarter 2010 5 12.5 6 15.0 4
Home Equity
Second Quarter 2010 (b) 2 12.5
First Quarter 2010 (b) 1 2.3 5 11.6
Fourth Quarter 2009 (b) 1 9.1 3 27.3
Temporary
Home Equity
Second Quarter 2010 169 7.6% $14
First Quarter 2010 243 8.3 402 13.8% 30
Fourth Quarter 2009 199 8.7 334 14.5 432 18.8% 30
(a) No re-defaults for the fourth quarter of 2009.
(b) Unpaid principal balance totals less than $1 million.
In addition to temporary modifications, PNC may make
available to a borrower a payment plan or a HAMP trial
payment period. Under a payment plan or a HAMP trial
payment period, there is no change to the loan’s contractual
terms so the borrower remains legally responsible for payment
of the loan under its original terms. A payment plan involves
the borrower making payments that differ from the contractual
payment amount for a short period of time, generally three
months. PNC’s motivation is to allow for repayment of an
outstanding past due amount through payment of additional
amounts over the short period of time. These payment plans
are generally for three months during which time a borrower
is brought current. Due to the short term of the payment plan
and the expectation that all contractual principal and interest
will be collected, there is a minimal impact to the ALLL.
Under a HAMP trial payment period, we allow a borrower to
demonstrate successful payment performance before
contractually establishing an alternative payment amount.
Subsequent to successful borrower performance under a
HAMP trial payment period, we will change a loan’s
contractual terms and the loan would be classified as a TDR.
Additionally, we note that a borrower often is already
delinquent at the time he/she begins participating in the
HAMP trial payment period. As such, upon successful
completion, there is not a significant increase in the ALLL. If
the trial payment period is unsuccessful, the loan will be
charged-off, at the end of the trial payment period, to its
estimated fair value of the underlying collateral less costs to
sell. As of December 31, 2010 and 2009, 1,027 or $262
million and 42 or $15 million, respectively, of residential real
estate loans have been modified under the HAMP and were
still outstanding on our balance sheet.
Residential conforming and certain residential construction
loans have been permanently modified under HAMP or, if
they do not qualify for a HAMP modification, under PNC
developed programs, which in some cases may operate similar
to HAMP. These programs require first, a reduction of the
interest rate, followed by an extension of term and, if
appropriate, deferral or forgiveness of principal payments. In
October 2010, we signed a Service Provider Agreement for
the government-sponsored Second Lien Modification Program
and have begun modifying loans under this program. PNC
does not re-modify a defaulted modified loan except for
subsequent significant life events, as defined by the OCC in
Memorandum 2009-7. A re-modified loan continues to be
classified as a TDR for the remainder of its term regardless of
subsequent payment performance.
Loan modifications are evaluated and subject to classification
as a troubled debt restructuring (TDR) if the borrower is
experiencing financial difficulty and we grant a concession to
the borrower. TDRs typically result from our loss mitigation
activities and could include rate reductions and/or principal
forgiveness intended to minimize the economic loss and to
avoid foreclosure or repossession of collateral. Total
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