JP Morgan Chase 2010 Annual Report Download - page 133

JPMorgan Chase & Co./2010 Annual Report 133
Geographic composition and current estimated LTVs of residential real estate loans
California
TexasTexas New York
41.0%
24.2%
5.4%
Florida
16.4%
6.7%
6.3%
IllinoisIllinois
All other
(a) Represents residential real estate loans retained, excluding purchased credit-impaired loans acquired in the Washington Mutual transaction and loans insured by U.S. government agencies.
California
TexasTexas
New York
41.4%
24.6%
5.4% Florida
15.8%
6.9%
5.9%
IllinoisIllinois
All other
Top 5 States - Residential Real Estate
(at December 31, 2009)
(a)
Top 5 States - Residential Real Estate
(at December 31, 2010)
(a)
The consumer credit portfolio is geographically diverse. The great-
est concentration of residential real estate loans is in California.
Excluding mortgage loans insured by U.S. government agencies and
PCI loans, California-based loans retained represented 24% of total
residential real estate loans retained at December 31, 2010, com-
pared with 25% at December 31, 2009. Of the total residential real
estate loan portfolio retained, excluding mortgage loans insured by
U.S. government agencies and PCI loans, $86.4 billion, or 54%,
were concentrated in California, New York, Arizona, Florida and
Michigan at December 31, 2010, compared with $95.9 billion, or
54%, at December 31, 2009.
The current estimated average LTV ratio for residential real estate
loans retained, excluding mortgage loans insured by U.S. government
agencies and PCI loans, was 83% at December 31, 2010, compared
with 81% at December 31, 2009. Excluding mortgage loans insured
by U.S. government agencies and PCI loans, 24% of the retained
portfolio had a current estimated LTV ratio greater than 100%, and
10% of the retained portfolio had a current estimated LTV ratio
greater than 125% at December 31, 2010, compared with 22% with
a current estimated LTV ratio greater than 100%, and 9% with a
current estimated LTV ratio greater than 125%, at December 31,
2009. The decline in home prices had a significant impact on the
collateral value underlying the Firm’s residential real estate loan
portfolio. In general, the delinquency rate for loans with high LTV
ratios is greater than the delinquency rate for loans in which the
borrower has equity in the collateral. While a large portion of the
loans with current estimated LTV ratios greater than 100% continue
to pay and are current, the continued willingness and ability of these
borrowers to pay remains uncertain.
The following table presents the current estimated LTV ratio, as well as the ratio of the carrying value of the underlying loans to the current
estimated collateral value, for PCI loans. Because such loans were initially measured at fair value, the ratio of the carrying value to the current
estimated collateral value will be lower than the current estimated LTV ratio, which is based on the unpaid principal balance. The estimated
collateral values used to calculate these ratios do not represent actual appraised loan-level collateral values; as such, the resulting ratios are
necessarily imprecise and should therefore be viewed as estimates.
LTV ratios and ratios of carrying values to current estimated collateral values – PCI loans
December 31, 2010
(in millions, except ratios)
Unpaid principal
balance(a)
Current estimated
LTV ratio(b)
Carrying
value(d)
Ratio of carrying value
to current esti
mated
collateral value(e)
Home equity $ 28,312 117%
(
c)
$ 24,459 95 %
Prime mortgage 18,928 109 17,322 90
Subprime mortgage 8,042 113 5,398 74
Option ARMs 30,791 111 25,584 87
December 31, 2009
(in millions, except ratios)
Unpaid principal
balance(a)
Current estimated
LTV ratio(b)
Carrying
value(d)
Ratio of carrying value
to current esti
mated
collateral value(e)
Home equity $ 32,958
113%
(c)
$ 26,520 91 %
Prime mortgage 21,972 103 19,693 87
Subprime mortgage 9,021 107 5,993 71
Option ARMs 37,379 111 29,039 85
(a) Represents the contractual amount of principal owed at December 31, 2010 and 2009.