Mortgage banking net revenue was $258 million in the fourth quarter of 2012, a 29 percent increase from the third quarter of 2012 and a 65 percent increase from the fourth quarter of 2011. Fourth quarter 2012 originations were $7.0 billion, compared with $5.8 billion in the previous quarter and $7.1 billion in the fourth quarter of 2011. Fourth quarter 2012 originations resulted in gains of $239 million on mortgages sold, reflecting higher mortgage sales revenue partially offset by lower gain on sale margins. This compares with gains of $226 million during the previous quarter and $152 million during the fourth quarter of 2011. Mortgage servicing fees this quarter were $64 million, compared with $62 million in the previous quarter and $58 million in the fourth quarter of 2011. Mortgage banking net revenue is also affected by net servicing asset value adjustments, which include mortgage servicing rights (MSR) amortization and MSR valuation adjustments (including mark-to-market adjustments on free-standing derivatives used to economically hedge the MSR portfolio). These net servicing asset valuation adjustments were negative $45 million in the fourth quarter of 2012 (reflecting MSR amortization of $52 million and MSR valuation adjustments of positive $7 million); negative $88 million in the third quarter of 2012 (MSR amortization of $48 million and MSR valuation adjustments of negative $40 million); and negative $54 million in the fourth quarter of 2011 (MSR amortization of $47 million and MSR valuation adjustments of negative $7 million). The mortgage servicing asset, net of the valuation reserve, was $697 million at quarter end on a servicing portfolio of $62 billion.
Net losses on securities held as non-qualifying hedges for the MSR portfolio were $2 million in the fourth quarter of 2012, compared with net gains of $5 million in the third quarter of 2012 and net losses of $3 million in the fourth quarter of 2011.
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