Huntington National Bank 2010 Annual Report Download - page 73

Table 19 — Selected Home Equity and Residential Mortgage Portfolio Data
Secured
by
first-lien
Secured
by
second-lien
Home Equity
Residential
Mortgages(3)
December 31, 2010
(Dollar amounts in millions)
Ending balance............................................ $3,055 $4,658 $4,500
Portfolio weighted average LTV ratio(1) ......................... 70% 80% 77%
Portfolio weighted average FICO score(2) ........................ 745 733 721
Secured
by
first-lien
Secured
by
second-lien
Home Equity
Residential
Mortgages(3)
Year Ended December 31, 2010
Originations .............................................. $1,310 $754 $1,607
Origination weighted average LTV ratio(1) ....................... 69% 79% 81%
Origination weighted average FICO score(2) ...................... 767 756 759
(1) The LTV ratios for home equity loans and home equity lines-of-credit are cumulative and reflect the bal-
ance of any senior loans. LTV ratios reflect collateral values at the time of loan origination.
(2) Portfolio weighted average FICO scores reflect currently updated customer credit scores whereas origina-
tion weighted average FICO scores reflect the customer credit scores at the time of loan origination.
(3) Represents only owned-portfolio originations.
Home Equity Portfolio
Our home equity portfolio (loans and lines-of-credit) consists of both first- and second- mortgage loans
with underwriting criteria based on minimum credit scores, debt-to-income ratios, and LTV ratios. We offer
closed-end home equity loans which are generally fixed-rate with principal and interest payments, and
variable-rate interest-only home equity lines-of-credit which do not require payment of principal during the
10-year revolving period of the line-of-credit.
At December 31, 2010, approximately 40% of our home equity portfolio was secured by first-mortgage
liens. The credit risk profile is substantially reduced when we hold a first-mortgage lien position. During 2010,
more than 65% of our home equity portfolio originations were secured by a first-mortgage lien. We focus on
high-quality borrowers primarily located within our footprint. The majority of our home equity line-of-credit
borrowers consistently pay more than the required interest-only amount. Additionally, since we focus on
developing complete relationships with our customers, many of our home equity borrowers are utilizing other
products and services.
We believe we have underwritten credit conservatively within this portfolio. We have not originated
“stated income” home equity loans or lines-of-credit that allow negative amortization. Also, we have not
originated home equity loans or lines-of-credit with an LTV at origination greater than 100%, except for
infrequent situations with high-quality borrowers. However, continued declines in housing prices have likely
decreased the value of the collateral for this portfolio and it is likely some loans with an original LTV ratio of
less than 100% currently have an LTV ratio greater than 100%.
For certain home equity loans and lines-of-credit, we may utilize an automated valuation model (AVM)
or other model-driven value estimate during the credit underwriting process. We utilize a series of credit
parameters to determine the appropriate valuation methodology. While we believe an AVM estimate is an
appropriate valuation source for a portion of our home equity lending activities, we continue to re-evaluate all
of our policies on an on-going basis. Regardless of the estimate methodology, we supplement our underwriting
with a third party fraud detection system to limit our exposure to “flipping,” and outright fraudulent
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