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NOTE 8 MORTGAGE SERVICING
 12 Months Ended
Dec. 31, 2011
Schedule of Servicing Assets at Amortized Value [Table Text Block]

NOTE 8 MORTGAGE SERVICING


Servicing Assets. Servicing assets, or MSRs, are comprised of a single residential class. We no longer own commercial servicing assets following the sale of those assets in 2008. The following table summarizes the activity in the carrying value of residential servicing assets for the years ended December 31, 2009, 2010 and 2011:


Balance at December 31, 2008   $ 139,500  
Purchases     10,241  
Servicing transfers and adjustments     (20 )
Decrease in impairment valuation allowance     670  
Amortization (1)     (32,589 )
Balance at December 31, 2009     117,802  
Purchases (2)     107,749  
Servicing transfers and adjustments     (29 )
Decrease in impairment valuation allowance     90  
Amortization (1)     (31,627 )
Balance at December 31, 2010     193,985  
Purchases (3)     144,314  
Decrease in impairment valuation allowance     574  
Amortization (1)     (45,721 )
Balance at December 31, 2011   $ 293,152  

(1) In the Consolidated Statement of Operations, Amortization of mortgage servicing rights is reported net of the amortization of servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations.
   
(2) Purchases for 2010 include $84,324 of residential MSRs acquired as part of the HomEq Acquisition.
   
(3) Purchases for 2011 represent the residential MSRs acquired as a part of the Litton Acquisition.

The estimated amortization expense for MSRs, calculated based on assumptions used at December 31, 2011, is projected as follows over the next five years:


2012   $ 57,148  
2013     46,094  
2014     37,178  
2015     29,986  
2016     24,186  

The following table presents the composition of our servicing and subservicing portfolios by type of property serviced as measured by UPB. The servicing portfolio represents purchased MSRs while subservicing generally represents all other MSRs.


UPB of Assets Serviced:  

Residential

   

Commercial

   

Total

 
Balance at December 31, 2009                  
Servicing   $ 27,408,436     $ —     $ 27,408,436  
Subservicing     22,571,641       211,603       22,783,244  
    $ 49,980,077     $ 211,603     $ 50,191,680  
Balance at December 31, 2010                        
Servicing   $ 51,252,380     $ —     $ 51,252,380  
Subservicing     22,634,011       434,305       23,068,316  
    $ 73,886,391     $ 434,305     $ 74,320,696  
Balance at December 31, 2011                        
Servicing   $ 78,675,160     $ —     $ 78,675,160  
Subservicing     23,524,062       290,863       23,814,925  
    $ 102,199,222     $ 290,863     $ 102,490,085  

(1) Residential assets serviced consist principally of mortgage loans, primarily subprime, but also include foreclosed real estate. Commercial assets subserviced consist of foreclosed real estate.

At December 31, 2011, the geographic distribution of the UPB and count of residential loans and real estate we serviced was as follows:


   

Amount

   

Count

 
California   $ 20,605,264       74,944  
Florida     11,338,397       72,393  
New York     9,204,876       37,687  
Texas     5,341,919       63,003  
Illinois     4,547,186       30,658  
Other (1)     51,161,580       392,938  
    $ 102,199,222       671,623  

(1) Consisted of loans and properties in 45 other states, the District of Columbia and two U.S. territories. No other single location had aggregate loans and properties over $3,700,655.

Valuation Allowance for Impairment. During 2008, we established a valuation allowance for impairment of $3,624 on the high-loan-to-value stratum of our mortgage servicing rights as the estimated fair value was less than the carrying value. Changes in the valuation allowance for impairment are reflected in Servicing and origination expenses in the Consolidated Statement of Operations. Net of the valuation allowance of $2,290 and $2,864, the carrying value of this stratum was $214 and $334 at December 31, 2011 and 2010, respectively. For all other strata, the fair value exceeded the carrying value.


The estimated fair value of residential MSRs at December 31, 2011, 2010 and 2009 was $340,015, $237,407 and $127,268, respectively.


Servicing Liabilities. Servicing liabilities are included in Other liabilities. See Note 17 for additional information.