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Guarantees | 12 Months Ended
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Dec. 31, 2019
Guarantees [Abstract] |
Guarantees [Text Block] | NOTE 26 – GUARANTEES At December 31, 2019 and 2018, the unamortized balance of the obligations undertaken in issuing the guarantees under standby letters of credit represented a liability of $47.3 million and $23.9 million, respectively. Oriental has a liability for residential mortgage loans sold subject to credit recourse pursuant to FNMA’s residential mortgage loan sales and securitization programs. At December 31, 2019 and 2018, the unpaid principal balance of residential mortgage loans sold subject to credit recourse was $147.4 million and $5.4 mi llion, respectively, $142.5 million related to the Scotiabank PR & USVI Acquisition. The following table shows the changes in Oriental’s liability for estimated losses from these credit recourse agreements, included in the consolidated statements of finan cial condition during the years ended December 31, 2019, 2018 and 2017.
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
| (In thousands)
Balance at beginning of year | $ | 346 |  | $ | 358 |  | $ | 710
Additions from Scotiabank PR & USVI Acquisition |  | 710 |  |  | - |  |  | -
Net (charge-offs/terminations) recoveries |  | (71) |  |  | (12) |  |  | (352)
Balance at end of year | $ | 985 |  | $ | 346 |  | $ | 358
The estimated losses to be absorbed under the credit recourse arrangements were recorded as a liability when the credit recourse was assumed and are updated on a quarterly basis. The expected loss, which represents the amount expected to be lost on a given loan, considers the probability of default and loss severity. The probability of default represents the probability that a loan in good standin g would become 120 days delinquent, in which case Oriental is obligated to repurchase the loan. If a borrower defaults, pursuant to the credit recourse provided, Oriental is required to repurchase the loan or reimburse the third-party investor for the in curred loss. The maximum potential amount of future payments that Oriental would be required to make under the recourse arrangements is equivalent to the total outstanding balance of the residential mortgage loans serviced with recourse and interest, if ap plicable. During 2019, Oriental did no t repurchase any mortgage loans subject to the credit recourse provision. During 2018, Oriental repurchased approximately $705 thousand of unpaid principal balance in mortgage loans subject to the credit recourse provisions. During 2017, Oriental repurchased approximately $107 thousand of unpaid principal balance in mortgage loans subject to the credit recourse provisions. If a borrower defaults, Oriental has rights to the underlying collateral securing the mo rtgage loan. Oriental suffers losses on these mortgage loans when the proceeds from a foreclosure sale of the collateral property are less than the outstanding principal balance of the loan, any uncollected interest advanced, and the costs of holding and d isposing the related property. At December 31, 2019, Oriental’s liability for estimated credit losses related to loans sold with credit recourse amounted to $985 thousand (December 31, 2018– $346 thousand). When Oriental sells or securitizes mortgage loa ns, it generally makes customary representations and warranties regarding the characteristics of the loans sold. Oriental's mortgage operations division groups conforming mortgage loans into pools which are exchanged for FNMA and GNMA mortgage-backed secur ities, which are generally sold to private investors, or are sold directly to FNMA or other private investors for cash. As required under such mortgage backed securities programs, quality review procedures are performed by Oriental to ensure that asset gui deline qualifications are met. To the extent the loans do not meet specified characteristics, Oriental may be required to repurchase such loans or indemnify for losses and bear any subsequent loss related to the loans. During the years ended December 31, 2019, Oriental repurchased $12 million (December 31, 2018 – $7.7 million) of unpaid principal balance in mortgage loans, excluding mortgage loans subject to credit recourse provision referred above. At December 31, 2019, Oriental had $4.6 million liabilit y for the estimated credit losses related to these loans. During the years ended December 31, 2019, 2018, 2017, Oriental recognized $17 thousand, $556 thousand and $260 thousand, respectively, in losses from the repurchase of residential mortgage loans sold subject to credit recourse, and $123 thousand, $160 thousand and $477 thousand, respectively, in losses from the repurchase of residential mortgage loans as a result of breaches of customary representations and warranties. Servicing agreements relating to the mortgage-backed securities programs of FNMA and GNMA, and to mortgage loans sold or serviced to certain other investors, including the FHLMC, require Oriental to advance funds to make scheduled payments of principal, interest, taxes and insurance, if such payments have not been received from the borrowers. At December 31, 2019, Oriental serviced $4.4 billion (December 31, 2018 - $895.6 million) in mortgage loans for third parties. Oriental generally recovers funds adv anced 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, Orien tal must absorb the cost of the funds it advances during the time the advance is outstanding. Oriental 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 Oriental would not receive any future servicing income with respect to that loan. At December 31, 2019, the outstanding balance of funds advanced by Oriental under such mortgage loan servicing agreements was approximately $3.6 million (December 31, 2018 - $706 thousand). To the extent the mortgage loans underlying Oriental's servicing portfolio experience increased delinquencies, Oriental would be required to dedicate additional cash r esources to comply with its obligation to advance funds as well as incur additional administrative costs related to increases in collection efforts.

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- Definition The entire disclosure for each guarantee obligation, or each group of similar guarantee obligations, including (a) the nature of the guarantee, including its term, how it arose, and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments (undiscounted) the guarantor could be required to make under the guarantee; (c) the current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee; and (d) the nature of any recourse provisions under the guarantee, and any assets held either as collateral or by third parties, and any relevant related party disclosure. Excludes disclosures about product warranties. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -URI http://asc.fasb.org/topic&trid=2155896 + Details
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