XML 50 R29.htm IDEA: XBRL DOCUMENT v3.25.2
Guarantees
 6 Months Ended
Jun. 30, 2025
Guarantees  
Guarantees
Note 19 – Guarantees
The Corporation
 
has obligations
 
upon the
 
occurrence of
 
certain events
 
under financial
 
guarantees provided
 
in certain
 
contractual
agreements.
 
Also,
 
from
 
time
 
to
 
time,
 
the
 
Corporation
 
securitized
 
mortgage
 
loans
 
into
 
guaranteed
 
mortgage-backed
 
securities
subject in certain instances, to
 
lifetime credit recourse on the
 
loans that serve as collateral
 
for the mortgage-backed securities. The
Corporation has
 
not sold
 
any mortgage
 
loans subject
 
to credit
 
recourse since
 
2009. Also,
 
from time
 
to time,
 
the Corporation
 
may
sell, in
 
bulk sale
 
transactions, residential
 
mortgage loans
 
and Small
 
Business Administration
 
(“SBA”) commercial
 
loans subject
 
to
credit
 
recourse
 
or
 
to
 
certain
 
representations
 
and
 
warranties
 
from
 
the
 
Corporation
 
to
 
the
 
purchaser.
 
These
 
representations
 
and
warranties may
 
relate, for
 
example, to
 
borrower creditworthiness,
 
loan documentation,
 
collateral,
 
prepayment and
 
early payment
defaults. The
 
Corporation may
 
be required
 
to
 
repurchase the
 
loans under
 
the credit
 
recourse agreements
 
or
 
representation and
warranties
At June 30, 2025, the Corporation serviced $
460
 
million (December 31, 2024 - $
495
 
million) in residential mortgage loans subject to
credit recourse provisions, principally loans associated
 
with FNMA and FHLMC residential mortgage loan
 
securitization programs. In
the event
 
of any
 
customer default,
 
pursuant to
 
the credit
 
recourse provided,
 
the Corporation
 
is required
 
to repurchase
 
the loan
 
or
reimburse
 
the
 
third-party investor
 
for
 
the
 
loss
 
incurred. The
 
maximum
 
potential amount
 
of
 
future payments
 
that
 
the
 
Corporation
would be required
 
to make under
 
the recourse arrangements in
 
the event of
 
nonperformance by the
 
borrowers is equivalent to
 
the
total outstanding balance of the residential mortgage loans serviced with recourse and
 
interest, if applicable. During the quarter and
six
 
months
 
ended
 
June
 
30,
 
2025,
 
the
 
Corporation
 
repurchased
 
$
0.5
 
million
 
and
 
$
0.8
 
million,
 
respectively,
 
of
 
unpaid
 
principal
balance in mortgage loans subject
 
to the credit recourse provisions
 
(June 30, 2024
-
$
0.5
 
million and $
1.1
 
million, respectively).
 
In
the event
 
of nonperformance
 
by the
 
borrower,
 
the Corporation
 
has rights
 
to the
 
underlying collateral
 
securing the
 
mortgage loan.
The
 
Corporation suffers
 
ultimate losses
 
on
 
these
 
loans
 
when the
 
proceeds
 
from
 
a foreclosure
 
sale
 
of
 
the
 
property
 
underlying a
defaulted mortgage loan are less
 
than the outstanding principal balance of
 
the loan plus any uncollected interest
 
advanced and the
costs of holding
 
and disposing the related
 
property. At
 
June 30, 2025,
 
the Corporation’s liability
 
established to cover
 
the estimated
credit loss exposure related to loans sold or serviced
 
with credit recourse amounted to $
2
 
million (December 31, 2024 - $
3
 
million).
The following table shows the changes in the Corporation’s liability of estimated losses related to loans serviced with credit recourse
provisions during the quarters and six months ended
 
June 30, 2025 and 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters ended June 30,
Six months ended June 30,
(In thousands)
2025
2024
2025
2024
Balance as of beginning of period
$
2,397
$
4,353
$
2,611
$
4,211
Provision (benefit) for recourse liability
(205)
(204)
(375)
40
Net charge-offs
(21)
(91)
(65)
(193)
Balance as of end of period
$
2,171
$
4,058
$
2,171
$
4,058
From time
 
to
 
time, the
 
Corporation sells
 
loans and
 
agrees to
 
indemnify the
 
purchaser for
 
credit
 
losses or
 
any
 
breach of
 
certain
representations and warranties made in connection
 
with the sale.
Servicing agreements
 
relating to
 
the mortgage-backed
 
securities programs
 
of FNMA,
 
FHLMC and
 
GNMA, and
 
to mortgage
 
loans
sold or serviced to certain other investors, including FHLMC,
 
require the Corporation to advance funds to
 
make scheduled payments
of
 
principal, interest,
 
taxes
 
and
 
insurance, if
 
such
 
payments have
 
not
 
been
 
received from
 
the
 
borrowers. At
 
June
 
30,
 
2025, the
Corporation serviced $
8.6
 
billion in mortgage loans for third-parties, including the loans serviced with credit recourse (December 31,
2024 - $
9.0
 
billion). The Corporation generally recovers funds advanced pursuant to these arrangements from
 
the mortgage owner,
from liquidation proceeds when the mortgage
 
loan is foreclosed or,
 
in the case of FHA/VA
 
loans, under the applicable FHA
 
and
VA
insurance
 
and guarantees
 
programs. However,
 
in the
 
meantime, the
 
Corporation must
 
absorb the
 
cost
 
of the
 
funds
 
it
 
advances
during the
 
time the
 
advance is
 
outstanding. The
 
Corporation must
 
also bear
 
the costs
 
of attempting
 
to collect
 
on delinquent
 
and
defaulted
 
mortgage
 
loans.
 
In
 
addition,
 
if
 
a
 
defaulted
 
loan
 
is
 
not
 
cured,
 
the
 
mortgage
 
loan
 
would
 
be
 
canceled
 
as
 
part
 
of
 
the
foreclosure proceedings
 
and the
 
Corporation would
 
not receive
 
any future
 
servicing income
 
with respect
 
to that
 
loan. At
 
June 30,
2025,
 
the
 
outstanding balance
 
of
 
funds
 
advanced
 
by
 
the
 
Corporation under
 
such
 
mortgage
 
loan servicing
 
agreements was
 
$
36
million
 
(December
 
31,
 
2024
 
-
 
$
44
 
million).
 
To
 
the
 
extent
 
the
 
mortgage
 
loans
 
underlying
 
the
 
Corporation’s
 
servicing
 
portfolio
experience
 
increased delinquencies,
 
the
 
Corporation would
 
be
 
required to
 
dedicate
 
additional cash
 
resources to
 
comply
 
with its
obligation to advance funds as well as incur additional
 
administrative costs related to increases in collection
 
efforts.
Popular,
 
Inc. Holding
 
Company (“PIHC”) fully
 
and unconditionally guarantees
 
certain borrowing
 
obligations issued by
 
certain of
 
its
100
% owned consolidated subsidiaries amounting to $
94
 
million at June 30, 2025 and December 31, 2024, respectively. In addition,
at both June
 
30, 2025 and December
 
31, 2024, PIHC fully
 
and unconditionally guaranteed on a
 
subordinated basis $
193
 
million of
capital securities
 
(trust preferred
 
securities) issued
 
by wholly-owned
 
issuing trust
 
entities to
 
the extent
 
set forth
 
in the
 
applicable
guarantee agreement. Refer to
 
Note 17 to
 
the Consolidated Financial Statements
 
in the 2024
 
Form 10-K for
 
further information on
the trust preferred securities.