PNC Bank 2014 Annual Report Download - page 95

Based upon outstanding balances, and excluding purchased
impaired loans, at December 31, 2014, for home equity lines
of credit for which the borrower can no longer draw (e.g.,
draw period has ended or borrowing privileges have been
terminated), approximately 3% were 30-89 days past due and
approximately 5% were 90 days or more past due. Generally,
when a borrower becomes 60 days past due, we terminate
borrowing privileges and those privileges are not subsequently
reinstated. At that point, we continue our collection/recovery
processes, which may include loan modification resulting in a
loan that is classified as a TDR.
See Note 3 Asset Quality in the Notes To Consolidated
Financial Statements of this Report for additional information.
Loan Modifications and Troubled Debt Restructurings
Consumer Loan Modifications
We modify loans under government and PNC-developed
programs based upon our commitment to help eligible
homeowners and borrowers 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 then
evaluated under a PNC program. Our programs utilize both
temporary and permanent modifications and typically reduce
the interest rate, extend the term and/or defer principal. Loans
that are either temporarily or permanently modified under
programs involving a change to loan terms are generally
classified as TDRs. Further, loans that have certain types of
payment plans and trial payment arrangements which do not
include a contractual change to loan terms may be classified
as TDRs. Additional detail on TDRs is discussed below as
well as in Note 3 Asset Quality in the Notes To Consolidated
Financial Statements of this Report.
A temporary modification, with a term between 3 and 24
months, involves a change in original loan terms for a period
of time and reverts to a calculated exit rate for the remaining
term of the loan as of a specific date. A permanent
modification, with a term greater than 24 months, is a
modification in which the terms of the original loan are
changed. Permanent modification programs primarily include
the government-created Home Affordable Modification
Program (HAMP) and PNC-developed HAMP-like
modification programs.
For home equity lines of credit, we 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 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 the borrower can make payments at a lower
amount.
We also monitor the success rates and delinquency status of
our loan modification programs to assess their effectiveness in
serving our customers’ needs while mitigating credit losses.
Table 37 provides the number of accounts and unpaid
principal balance of modified consumer real estate related
loans at the end of each year presented and Table 38 provides
the number of accounts and unpaid principal balance of
modified loans that were 60 days or more past due as of six
months, nine months, twelve months and fifteen months after
the modification date.
Table 37: Consumer Real Estate Related Loan Modifications
December 31, 2014 December 31, 2013
Dollars in millions
Number of
Accounts
Unpaid
Principal
Balance
Number of
Accounts
Unpaid
Principal
Balance
Home equity
Temporary Modifications 5,346 $ 417 6,683 $ 539
Permanent Modifications 13,128 968 11,717 889
Total home equity 18,474 1,385 18,400 1,428
Residential Mortgages
Permanent Modifications 5,876 1,110 7,397 1,445
Non-Prime Mortgages
Permanent Modifications 4,358 611 4,400 621
Residential Construction
Permanent Modifications 2,292 629 2,260 763
Total Consumer Real Estate Related Loan Modifications 31,000 $3,735 32,457 $4,257
The PNC Financial Services Group, Inc. – Form 10-K 77