SunTrust 2013 Annual Report Download - page 83

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collateral may be sold could require us to significantly decrease or increase the level of the Allowance for Credit Losses. Such
an adjustment could materially affect net income as a result of the change in provision for credit losses. For additional discussion
of the ALLL see the “Allowance for Credit Losses” and “Nonperforming Assets” sections in this MD&A as well as Note 6,
“Loans,” and Note 7, “Allowance for Credit Losses,” to the Consolidated Financial Statements in this Form 10-K.
Mortgage Repurchase Reserve
We sell residential mortgage loans to investors through whole loan sales in the normal course of our business. The investors
are primarily GSEs; however, approximately 10% of the population of total loans sold between January 1, 2005 and December
31, 2013 were sold to non-agency investors, some in the form of securitizations. In association with these transactions, we
provide representations and warranties to the third party investors that these loans meet certain requirements as agreed to in
investor guidelines. We have experienced significantly fewer repurchase claims and losses related to loans sold since 2009
as a result of stronger credit performance, more stringent credit guidelines, and underwriting process improvements.
During the third quarter of 2013, we reached agreements in principle with Freddie Mac and Fannie Mae relieving us of certain
existing and future repurchase obligations related to 2000-2008 vintages for Freddie Mac and 2000-2012 vintages for Fannie
Mae. The incremental cost of these settlements was recognized in the repurchase reserve as an additional provision of $63
million in the third quarter of 2013. Repurchase requests have declined significantly in the fourth quarter of 2013 as a result
of the settlements, as illustrated in the below table.
Repurchase Requests by Investor Table 23
Quarter ended
(Dollars in millions)
March 31,
2013
June 30,
2013
September 30,
2013
December 31,
2013 Total
Repurchase requests received from:
GSEs $487 $432 $420 $154 $1,493
Non-agency investors 467118
Repurchase requests received since 2005, at December 31, 2013 totaled $8.5 billion which includes Ginnie Mae
indemnification losses. The following table summarizes demand activity for the years ended December 31:
Repurchase Request Activity Table 24
(Dollars in millions) 2013 2012 2011
Beginning pending repurchase requests $655 $590 $293
Repurchase requests received 1,511 1,726 1,736
Repurchase requests resolved:
Repurchased (1,134) (769)(789)
Cured (906) (892)(650)
Total resolved (2,040) (1,661)(1,439)
Ending pending repurchase requests $126 $655 $590
Percent from non-agency investors:
Repurchase requests received 1.2% 1.2% 2.9%
Pending repurchase requests 2.8 2.5 2.0
As presented in the table above, repurchase requests decreased in 2013 compared to 2012. Repurchase requests received
during 2013 were primarily related to loans sold in 2007.
Our current estimated liability for contingent losses related to loans sold (i.e., our mortgage repurchase reserve) was $78
million at December 31, 2013. The liability is recorded in other liabilities in the Consolidated Balance Sheets, and the related
repurchase provision is recognized in mortgage production related income/(loss) in the Consolidated Statements of Income.
The current liability reserves are deemed to be sufficient to cover probable estimated losses related to exclusions due to certain
defects (MI related reasons, excessive seller contribution, ineligible property and other charter violations) as outlined in the