JP Morgan Chase 2015 Annual Report Download - page 128

Management’s discussion and analysis
118 JPMorgan Chase & Co./2015 Annual Report
The following table provides a summary of lifetime principal loss estimates included in either the nonaccretable difference or
the allowance for loan losses.
Summary of lifetime principal loss estimates
December 31, (in billions) Lifetime loss estimates(a) LTD liquidation losses(b)
2015 2014 2015 2014
Home equity $ 14.5 $ 14.6 $ 12.7 $ 12.4
Prime mortgage 4.0 3.8 3.7 3.5
Subprime mortgage 3.3 3.3 3.0 2.8
Option ARMs 10.0 9.9 9.5 9.3
Total $ 31.8 $ 31.6 $ 28.9 $ 28.0
(a) Includes the original nonaccretable difference established in purchase accounting of $30.5 billion for principal losses plus additional principal losses recognized
subsequent to acquisition through the provision and allowance for loan losses. The remaining nonaccretable difference for principal losses was $1.5 billion and $2.3
billion at December 31, 2015 and 2014, respectively.
(b) Life-to-date (“LTD”) liquidation losses represent both realization of loss upon loan resolution and any principal forgiven upon modification.
For further information on the Firm’s PCI loans, including write-offs, see Note 14.
Geographic composition of residential real estate loans
At December 31, 2015, $123.0 billion, or 61% of total retained residential real estate loan portfolio, excluding mortgage
loans insured by U.S. government agencies and PCI loans, were concentrated in California, New York, Illinois, Texas and Florida,
compared with $94.3 billion, or 63%, at December 31, 2014. California had the greatest concentration of retained residential
loans with 28% at December 31, 2015, compared with 26% at December 31, 2014. The unpaid principal balance of PCI loans
concentrated in these five states represented 74% of total PCI loans at both December 31, 2015, and December 31, 2014. For
further information on the geographic composition of the Firm’s residential real estate loans, see Note 14.
Current estimated loan-to-values (“LTVs”) of
residential real estate loans
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 59% at both
December 31, 2015 and 2014.
Although home prices continue to recover, the decline in
home prices since 2007 has had a significant impact on the
collateral values 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 greater 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 a risk.