Huntington National Bank 2013 Annual Report Download - page 53

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The table below summarizes our home equity line-of-credit portfolio by maturity date:
Table 12 - Maturity Schedule of Home Equity Line-of-Credit Portfolio
December 31, 2013
More than
(dollar amounts in millions) 1 Year or Less 1 to 2 years 2 to 3 years 3 to 4 years 4 years Total
Secured by first-lien $ 52 $ 29 $ --- $ --- $ 2,383 $ 2,464
Secured by junior-lien 229 216 130 112 2,301 2,988
Total home equity line-of-credit $ 281 $ 245 $ 130 $ 112 $ 4,684 $ 5,452
The amounts in the above table maturing in four years or less primarily consist of balloon payment structures and represent the
most significant maturity risk. The amounts maturing in more than four years primarily consist of exposure with a 20-year
amortization period after the 10-year draw period.
Historically, less than 30% of our home equity lines-of-credit that are one year or less from maturity actually reach the maturity
date, and we anticipate this percentage will decline in future periods as our proactive approach to managing maturity risk continues to
evolve.
Residential Mortgages Portfolio
We focus on higher quality borrowers and underwrite all applications centrally. We do not originate residential mortgages that
allow negative amortization or allow the borrower multiple payment options. We have incorporated regulatory requirements and
guidance into our underwriting process, and will continue to evaluate the impact of the QM requirements impact on the industry.
All residential mortgages are originated based on a completed full appraisal during the credit underwriting process. We update
values on a regular basis in compliance with applicable regulations to facilitate our portfolio management, as well as our workout and
loss mitigation functions.
Generally, our practice is to sell a significant portion of our fixed-rate originations in the secondary market. As such, at
December 31, 2013, 46% of our total residential mortgage portfolio were ARMs. These ARMs primarily consist of a fixed-rate of
interest for the first 3 to 5 years, and then adjust annually. At December 31, 2013, ARM loans that were expected to have rates reset
through 2016 totaled $1.5 billion. These loans scheduled to reset are primarily associated with loans originated subsequent to 2007,
and as such, are not subject to the most significant declines in underlying property value. Given the quality of our borrowers, the
relatively low current interest rates, and the results of our continued analysis (including possible impacts of changes in interest rates),
we believe that we have a relatively limited exposure to ARM reset risk. Nonetheless, we have taken actions to mitigate our risk
exposure. We initiate borrower contact at least six months prior to the interest rate resetting and have been successful in converting
many ARMs to fixed-rate loans through this process. Given the relatively low current interest rates, many fixed-rate products
currently offer a better interest rate to our ARM borrowers. We are subject to repurchase risk associated with residential mortgage
loans sold in the secondary market. An appropriate level of reserve for representations and warranties related to residential mortgage
loans sold has been established to address this repurchase risk inherent in the portfolio (see Operational Risk discussion).
Several government programs continued to impact the residential mortgage portfolio, including various refinance programs such
as HAMP and HARP, which positively affected the availability of credit for the industry. During the year ended December 31, 2013,
we closed $600 million in HARP residential mortgages and $6.0 million in HAMP residential mortgages. The HARP residential
mortgage loans are considered current and are either part of our residential mortgage portfolio or serviced for others. The HAMP
refinancings are associated with residential mortgages that are serviced for others.
Credit Quality
(This section should be read in conjunction with Note 3 of the Notes to Consolidated Financial Statements.)
We believe the most meaningful way to assess overall credit quality performance is through an analysis of credit quality
performance ratios. This approach forms the basis of most of the discussion in the sections immediately following: NPAs and NALs,
TDRs, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, and product segmentation
in the analysis of our credit quality performance.