JP Morgan Chase 2015 Annual Report Download - page 259

JPMorgan Chase & Co./2015 Annual Report 249
The following table represent the Firm’s delinquency statistics for junior lien home equity loans and lines as of December 31,
2015 and 2014.
Total loans Total 30+ day delinquency rate
December 31,
2015 2014 2015 2014(in millions, except ratios)
HELOCs:(a)
Within the revolving period(b) $ 17,050 $ 25,252 1.57% 1.75%
Beyond the revolving period 11,252 7,979 3.10 3.16
HELOANs 2,409 3,144 3.03 3.34
Total $ 30,711 $ 36,375 2.25% 2.20%
(a) These HELOCs are predominantly revolving loans for a 10-year period, after which time the HELOC converts to a loan with a 20-year amortization period, but also
include HELOCs originated by Washington Mutual that allow interest-only payments beyond the revolving period.
(b) The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are
experiencing financial difficulty or when the collateral does not support the loan amount.
Home equity lines of credit (“HELOCs”) beyond the
revolving period and home equity loans (“HELOANs”) have
higher delinquency rates than do HELOCs within the
revolving period. That is primarily because the fully-
amortizing payment that is generally required for those
products is higher than the minimum payment options
available for HELOCs within the revolving period. The higher
delinquency rates associated with amortizing HELOCs and
HELOANs are factored into the loss estimates produced by
the Firm’s delinquency roll-rate methodology, which
estimates defaults based on the current delinquency status
of a portfolio.
Impaired loans
The table below sets forth information about the Firm’s residential real estate impaired loans, excluding PCI loans. These loans
are considered to be impaired as they have been modified in a TDR. All impaired loans are evaluated for an asset-specific
allowance as described in Note 15.
Home equity Mortgages Total residential
real estate
– excluding PCI
December 31,
(in millions)
Senior lien Junior lien
Prime, including
option ARMs Subprime
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Impaired loans
With an allowance $ 557 $ 552 $ 736 $ 722 $ 3,850 $ 4,949 $ 1,393 $ 2,239 $ 6,536 $ 8,462
Without an allowance(a) 491 549 574 582 976 1,196 471 639 2,512 2,966
Total impaired loans(b)(c) $ 1,048 $ 1,101 $ 1,310 $ 1,304 $ 4,826 $ 6,145 $ 1,864 $ 2,878 $ 9,048 $ 11,428
Allowance for loan losses
related to impaired loans $53$84$85$ 147 $93$ 127 $15$64$ 246 $ 422
Unpaid principal balance of
impaired loans(d) 1,370 1,451 2,590 2,603 6,225 7,813 2,857 4,200 13,042 16,067
Impaired loans on
nonaccrual status(e) 581 628 639 632 1,287 1,559 670 931 3,177 3,750
(a) Represents collateral-dependent residential mortgage loans that are charged off to the fair value of the underlying collateral less cost to sell. The Firm reports, in
accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower
(“Chapter 7 loans”) as collateral-dependent nonaccrual TDRs, regardless of their delinquency status. At December 31, 2015, Chapter 7 residential real estate loans
included approximately 17% of senior lien home equity, 9% of junior lien home equity, 18% of prime mortgages, including option ARMs, and 15% of subprime
mortgages that were 30 days or more past due.
(b) At December 31, 2015 and 2014, $3.8 billion and $4.9 billion, respectively, of loans modified subsequent to repurchase from Government National Mortgage
Association (“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.
(c) Predominantly all residential real estate impaired loans, excluding PCI loans, are in the U.S.
(d) Represents the contractual amount of principal owed at December 31, 2015 and 2014. The unpaid principal balance differs from the impaired loan balances due to
various factors, including charge-offs, net deferred loan fees or costs; and unamortized discounts or premiums on purchased loans.
(e) 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 refer to the Loan accounting framework on pages 242–244 of this
Note.