Navy Federal Credit Union 2015 Annual Report Download - page 46

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Financial Section 27
2015—SHARED SUCCESS
Servicing: Navy Federal retains mortgage servicing rights on loans transferred in sale transactions
and securitizations. Mortgage servicing rights are recognized at fair value on the date of sale or
securitization. See Note 7: Mortgage Servicing Rights for details. As of December 31, 2015 and
2014, the amount of loans serviced by Navy Federal for outside investors was $22.3 billion and
$20.1 billion, respectively.
Navy Federal earns servicing and other ancillary fees for our role as servicer. Navy Federal’s
servicing fees are priced based on minimum rates required by FNMA, FHLMC and the GNMA.
During the years ended December 31, 2015 and 2014, Navy Federal’s servicing revenue was $84.8
million and $79.3 million, respectively, for mortgage loan servicing fees, which is included in
Mortgage servicing revenue in the Consolidated Statements of Income. During the years ended
December 31, 2015 and 2014, Navy Federal received $1.5 million and $1.2 million, respectively,
of late charges and miscellaneous fees, which is included in Other income in the Consolidated
Statements of Income.
Navy Federal’s responsibilities as servicer typically include collecting and remitting monthly
principal and interest payments, maintaining escrow deposits, performing loss mitigation and
foreclosure activities, and in certain instances, funding servicing advances that have not yet been
collected from the borrower. Navy Federal recognizes servicing advances that are reimbursable
as Accounts receivable in its Consolidated Statements of Financial Condition. Servicing advances
as of December 31, 2015 and 2014 were as follows:
(dollars in thousands) 2015 2014
Escrow advances $ 17,003 $ 15,666
Principal and interest advances 806 1,461
Other advances(1) 6,323 8,724
Total $ 24,132 $ 25,851
(1)Includes recoverable advances related to mortgage defaults, such as bankruptcy attorney fees and foreclosure costs.
The following table provides a summary of the cash flows exchanged between Navy Federal and
transferees on all loans transferred during the years ended December 31, 2015 and 2014:
(dollars in thousands) 2015 2014
Cash from sale of mortgage loans and
mortgage-backed securities $ 5,145,466 $ 2,818,283
Repurchase of previously transferred loans 6,599 8,995
Contractual servicing fees received 84,839 79,336
The following table provides the outstanding and delinquent loan balances of transferred
loans for which Navy Federal retains servicing rights. These amounts are excluded from the
Consolidated Statements of Financial Position as they meet the definition of sale under ASC
860-10, Transfers and Servicing.
(dollars in thousands) 2015 2014
Principal balances of loans serviced $ 22,321,616 $ 20,060,421
Delinquent loans(1) 162,581 166,584
(1)Serviced delinquent loans are 60 days or more past due.