Quarterly report pursuant to Section 13 or 15(d)

MORTGAGE LOAN SALES AND SERVICING RIGHTS (Tables)

v3.20.2
MORTGAGE LOAN SALES AND SERVICING RIGHTS (Tables)
 6 Months Ended
Jun. 30, 2020
Transfers and Servicing [Abstract]  
Summarizes activity relating to loans securitized sold with servicing retained
The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the three-month and six-month periods ended June 30, 2020 and 2019:
 

Three Months Ended
June 30,
 
Six Months Ended
June 30,
(dollar amounts in millions)
 
2020
 
2019
 
2020
 
2019
Residential mortgage loans sold with servicing retained
 
$
2,287

 
$
954

 
$
3,715

 
$
1,787

Pretax gains resulting from above loan sales (1)
 
59

 
23

 
98

 
35

(1)
Recorded in mortgage banking income
Summarizes activity relating to loans sold with servicing retained using the fair value method
The following table summarizes the changes in MSRs recorded using the fair value method for the three-month and six-month periods ended June 30, 2020 and 2019 (1):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(dollar amounts in millions)
 
2020
 
2019 (1)
 
2020
 
2019 (1)
Fair value, beginning of period
 
$
165

 
$
10

 
$
7

 
$
10

Fair value election for servicing assets previously measured using the amortized method
 
—

 
—

 
205

 
—

New servicing assets created
 
26

 
—

 
40

 
—

Change in fair value during the period due to:
 
 
 
 
 
 
 
 
Time decay (2)
 
(2
)
 
—

 
(4
)
 
—

Payoffs (3)
 
(10
)
 
—

 
(16
)
 
—

Changes in valuation inputs or assumptions (4)
 
(7
)
 
(1
)
 
(60
)
 
(1
)
Fair value, end of period
 
$
172

 
$
9

 
$
172

 
$
9

Weighted-average life (years)
 
6.5

 
6.4

 
6.5

 
6.4

(1)
Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.
(2)
Represents decrease in value due to passage of time, including the impact from both regularly scheduled loan principal payments and partial loan paydowns.
(3)
Represents decrease in value associated with loans that paid off during the period.
(4)
Represents change in value resulting primarily from market-driven changes in interest rates and prepayment speeds.
Summary of key assumptions and the sensitivity of the servicing rights value to changes in the assumptions
For MSRs under the fair value method, a summary of key assumptions and the sensitivity of the MSR value to changes in these assumptions at June 30, 2020, and December 31, 2019 follows:
 
June 30, 2020
 
December 31, 2019 (1)
 
 
 
 
Decline in fair value due to
 
 
 
 
Decline in fair value due to
(dollar amounts in millions)
Actual
 
10%
adverse
change
 
20%
adverse
change
 
Actual
 
10%
adverse
change
 
20%
adverse
change
Constant prepayment rate (annualized)
17.32
%
 
 
$
(9
)
 
$
(17
)
 
8.21
%
 
 
$
—

 
$
—

Spread over forward interest rate swap rates
793

bps
 
(5
)
 
(9
)
 
824

bps
 
—

 
—


(1)
Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.