XML 29 R13.htm IDEA: XBRL DOCUMENT
v3.10.0.1

MORTGAGE BANKING | 6 Months Ended
--- | ---
Jun. 30, 2018
Mortgage Banking [Abstract] |
MORTGAGE BANKING | MORTGAGE BANKING In its mortgage banking business, the Company sells residential mortgages to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. The Company retains no beneficial interests in these sales, but may retain the servicing rights for the loans sold. The Company is obligated to subsequently repurchase a loan if the purchaser discovers a standard representation or warranty violation such as noncompliance with eligibility requirements, customer fraud, or servicing violations. This primarily occurs during a loan file review. Information related to residential mortgage loan sales and the Company's mortgage banking activity is presented below:
| Three Months Ended June 30, | Six Months Ended June 30,
(in millions) | 2018 |  |  | 2017 |  | 2018 |  |  | 2017 |
Residential mortgage loan sale proceeds |  | $670 |  |  |  | $729 |  |  | $1,325 |  |  |  | $1,544 |
Gain on sales | 17 |  |  | 19 |  | 30 |  |  | 29 |
Mortgage servicing fees | 16 |  |  | 14 |  | 31 |  |  | 27 |
Repurchased residential mortgages | — |  |  | — |  | 2 |  |  | 1 |
Valuation recoveries | — |  |  | 1 |  | 3 |  |  | 1 |
MSRs are presented in other assets on the Consolidated Balance Sheets. Changes related to MSRs are presented below:
| As of and for the Three Months Ended June 30, |  | As of and for the Six Months Ended June 30,
(in millions) | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
MSRs: |  |  |  |  |  |  |
Balance as of beginning of period |  | $201 |  |  |  | $170 |  |  |  | $201 |  |  |  | $168 |
Amount capitalized | 8 |  |  | 8 |  |  | 15 |  |  | 18 |
Purchases | 16 |  |  | — |  |  | 16 |  |  | — |
Amortization | (8 | ) |  | (8 | ) |  | (15 | ) |  | (16 | )
Carrying amount before valuation allowance | 217 |  |  | 170 |  |  | 217 |  |  | 170 |
Valuation allowance for servicing assets: |  |  |  |  |  |  |
Balance as of beginning of period | — |  |  | 5 |  |  | 3 |  |  | 5 |
Valuation recoveries | — |  |  | (1 | ) |  | (3 | ) |  | (1 | )
Balance at end of period | — |  |  | 4 |  |  | — |  |  | 4 |
Net carrying value of MSRs |  | $217 |  |  |  | $166 |  |  |  | $217 |  |  |  | $166 |
The fair value of MSRs is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors, which are determined based on current market conditions. The valuation model uses a static discounted cash flow methodology incorporating current market interest rates. A static model does not attempt to forecast or predict the future direction of interest rates; rather it estimates the amount and timing of future servicing cash flows using current market interest rates. The current mortgage interest rate influences the expected prepayment rate and therefore, the length of the cash flows associated with the servicing asset, while the discount rate determines the present value of those cash flows. Expected mortgage loan prepayment assumptions are obtained using the QRM Multi-Component prepayment model. The Company periodically obtains third-party valuations of its MSRs to assess the reasonableness of the fair value calculated by the valuation model. The key economic assumptions used to estimate the value of MSRs are presented in the following table:
| June 30, 2018 |  | December 31, 2017
| Weighted Average |  |  | Weighted Average |
(dollars in millions) | Range |  | Range
Fair value | $254 | Min | Max |  | $218 | Min | Max
Weighted average life (in years) | 6.4 | 2.4 | 8.7 |  | 5.9 | 2.3 | 8.4
Weighted average constant prepayment rate | 9.4% | 6.0% | 20.8% |  | 10.0% | 6.6% | 20.1%
Weighted average discount rate | 9.8% | 9.1% | 12.1% |  | 9.9% | 9.1% | 12.1%
The key economic assumptions used in estimating the fair value of MSRs capitalized during the period are presented below:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Weighted average life (in years) | 7.3 |  | 6.2 |  | 7.4 |  | 6.6
Weighted average constant prepayment rate | 7.6% |  | 11.1% |  | 7.5% |  | 9.9%
Weighted average discount rate | 9.8% |  | 9.9% |  | 9.8% |  | 9.9%
The sensitivity analysis below presents the impact to current fair value of an immediate 50 basis point and 100 basis point adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical, with the effect of a variation in a particular assumption on the fair value of the mortgage servicing rights calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment rates, could result in changes in the discount rates), which may amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.
(in millions) | June 30, 2018 |  | December 31, 2017
Prepayment rate: |  |  |
Decline in fair value from a 50 basis point decrease in interest rates |  | $16 |  |  |  | $22 |
Decline in fair value from a 100 basis point decrease in interest rates | 47 |  |  | 46 |
Weighted average discount rate: |  |  |
Decline in fair value from a 50 basis point increase in weighted average discount rate |  | $5 |  |  |  | $4 |
Decline in fair value from a 100 basis point increase in weighted average discount rate | 9 |  |  | 8 |

X
- Definition The entire disclosure for an entity’s mortgage banking operations. + References No definition available. + Details
Name: | cfg_MortgageServicingRightsTextBlock
Namespace Prefix: | cfg_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_MortgageBankingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration