JP Morgan Chase 2015 Annual Report Download - page 130

Management’s discussion and analysis
120 JPMorgan Chase & Co./2015 Annual Report
carrying value of non-PCI loans modified in step-rate
modifications was $4 billion at December 31, 2015, with
$447 million that experienced the initial interest rate
increase in 2015 and $1 billion that is scheduled to
experience the initial interest rate increase in each of 2016
and 2017. The unpaid principal balance of PCI loans
modified in step-rate modifications was $10 billion at
December 31, 2015, with $1 billion that experienced the
initial interest rate increase in 2015, and $3 billion and $2
billion scheduled to experience the initial interest rate
increase in 2016 and 2017, respectively. The Firm
continues to monitor this risk exposure to ensure that it is
appropriately considered in the allowance for loan losses.
The following table presents information as of
December 31, 2015 and 2014, relating to modified
retained residential real estate loans for which concessions
have been granted to borrowers experiencing financial
difficulty. Modifications of PCI loans continue to be
accounted for and reported as PCI loans, and the impact of
the modification is incorporated into the Firm’s quarterly
assessment of estimated future cash flows. Modifications of
consumer loans other than PCI loans are generally
accounted for and reported as TDRs. For further
information on modifications for the years ended
December 31, 2015 and 2014, see Note 14.
Modified residential real estate loans
2015 2014
December 31,
(in millions)
Retained
loans
Nonaccrual
retained
loans(d)
Retained
loans
Nonaccrual
retained
loans(d)
Modified residential real
estate loans, excluding
PCI loans(a)(b)
Home equity – senior lien $ 1,048 $ 581 $ 1,101 $ 628
Home equity – junior lien 1,310 639 1,304 632
Prime mortgage,
including option ARMs 4,826 1,287 6,145 1,559
Subprime mortgage 1,864 670 2,878 931
Total modified
residential real estate
loans, excluding PCI
loans $ 9,048 $ 3,177 $ 11,428 $ 3,750
Modified PCI loans(c)
Home equity $ 2,526 NA $ 2,580 NA
Prime mortgage 5,686 NA 6,309 NA
Subprime mortgage 3,242 NA 3,647 NA
Option ARMs 10,427 NA 11,711 NA
Total modified PCI loans $ 21,881 NA $ 24,247 NA
(a) Amounts represent the carrying value of modified residential real estate loans.
(b) At December 31, 2015 and 2014, $3.8 billion and $4.9 billion, respectively, of
loans modified subsequent to repurchase from Ginnie Mae in accordance with
the standards of the appropriate government agency (i.e., FHA, VA, RHS) are not
included in the table above. When such loans perform subsequent to
modification in accordance with Ginnie Mae guidelines, they are generally sold
back into Ginnie Mae loan pools. Modified loans that do not re-perform become
subject to foreclosure. For additional information about sales of loans in
securitization transactions with Ginnie Mae, see Note 16.
(c) Amounts represent the unpaid principal balance of modified PCI loans.
(d) As of December 31, 2015 and 2014, nonaccrual loans included $2.5 billion and
$2.9 billion, respectively, of TDRs for which the borrowers were less than 90
days past due. For additional information about loans modified in a TDR that are
on nonaccrual status, see Note 14.
Nonperforming assets
The following table presents information as of
December 31, 2015 and 2014, about consumer, excluding
credit card, nonperforming assets.
Nonperforming assets(a)
December 31, (in millions) 2015 2014
Nonaccrual loans(b)
Residential real estate $ 4,792 $ 5,845
Other consumer 621 664
Total nonaccrual loans 5,413 6,509
Assets acquired in loan satisfactions
Real estate owned 277 437
Other 48 36
Total assets acquired in loan satisfactions 325 473
Total nonperforming assets $ 5,738 $ 6,982
(a) At December 31, 2015 and 2014, nonperforming assets excluded: (1) mortgage
loans insured by U.S. government agencies of $6.3 billion and $7.8 billion,
respectively, that are 90 or more days past due; (2) student loans insured by U.S.
government agencies under the FFELP of $290 million and $367 million,
respectively, that are 90 or more days past due; and (3) real estate owned
insured by U.S. government agencies of $343 million and $462 million,
respectively. These amounts have been excluded based upon the government
guarantee.
(b) Excludes PCI loans that were acquired as part of the Washington Mutual
transaction, which are accounted for on a pool basis. Since each pool is
accounted for as a single asset with a single composite interest rate and an
aggregate expectation of cash flows, the past-due status of the pools, or that of
individual loans within the pools, is not meaningful. Because the Firm is
recognizing interest income on each pool of loans, each pool is considered to be
performing.
Nonaccrual loans in the residential real estate portfolio
totaled $4.8 billion and $5.8 billion at December 31, 2015,
and 2014, respectively, of which 31% and 32%,
respectively, were greater than 150 days past due. In the
aggregate, the unpaid principal balance of residential real
estate loans greater than 150 days past due was charged
down by approximately 44% and 50% to the estimated net
realizable value of the collateral at December 31, 2015 and
2014, respectively.
Active and suspended foreclosure: For information on
loans that were in the process of active or suspended
foreclosure, see Note 14.
Nonaccrual loans: The following table presents changes in
the consumer, excluding credit card, nonaccrual loans for
the years ended December 31, 2015 and 2014.
Nonaccrual loans
Year ended December 31,
(in millions) 2015 2014
Beginning balance $ 6,509 $ 7,496
Additions 3,662 4,905
Reductions:
Principal payments and other(a) 1,668 1,859
Charge-offs 800 1,306
Returned to performing status 1,725 2,083
Foreclosures and other liquidations 565 644
Total reductions 4,758 5,892
Net additions/(reductions) (1,096) (987)
Ending balance $ 5,413 $ 6,509
(a) Other reductions includes loan sales.