Company: WFC-PC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000072971-25-000201
Chunk: 150

Company: WELLS FARGO & COMPANY/MN
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 6
Chunk 150
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Note 6:  Mortgage Banking Activities Mortgage banking activities consist of residential and commercial mortgage originations, sales and servicing.We apply the fair value method to residential mortgage servicing rights (MSRs) and apply the amortization method to commercial MSRs. Table 6.1 presents MSRs, including the changes in MSRs measured using the fair value method and the amortization method.Table 6.1:  Mortgage Servicing RightsQuarter ended June 30,Six months ended June 30,(in millions)2025202420252024Residential MSRs at fair value, beginning of period$6,536 7,249 $6,844 7,468 Originations/purchases26 20 51 39 Sales and other(37)(34)(113)(297)Net reductions(11)(14)(62)(258)Changes in fair value:Due to valuation inputs or assumptions:Market interest rates (1)(2)90 (125)367 Servicing and foreclosure costs(7)(13)(2)(29)Discount rates(1)(45)(1)(53)Prepayment estimates and other (2)98 28 148 26 Net changes in valuation inputs or assumptions88 60 20 311  Changes due to collection/realization of expected cash flows (3)(196)(234)(385)(460)Total changes in fair value(108)(174)(365)(149)Residential MSRs at fair value, end of period6,417 7,061 6,417 7,061 Commercial MSRs at amortized cost, end of period (4)631 966 631 966 Total MSRs$7,048 8,027 $7,048 8,027 (1)Includes prepayment rate changes due to changes in market interest rates. Residential MSRs are economically hedged with derivative instruments to reduce exposure to changes in market interest rates.(2)Represents other changes in valuation model inputs or assumptions, including prepayment rate estimation changes that are independent of mortgage interest rate changes.(3)Represents the reduction in the residential MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.(4)The estimated fair value of commercial MSRs was $755 million and $1.7 billion at June 30, 2025 and 2024, respectively. In first quarter 2025, we sold the non