Question-and-Answer Session
Operator
Thank you. (Operator Instructions). We will take our first questions today from Steven Alexopoulos with J. P. Morgan.
Steven Alexopoulos
Hi. Good morning guys.
Gerald L. Baker
Hey Steve, good morning.
Bryan Jordan
Good morning, Steve.
Steven Alexopoulos
Bryan, I am curious with the reserve doubling over the past two quarters, why, when you expect to not to continue to increase, giving you the impression the loan portfolio, I am now referring to your comments to expect provision and net charges-offs to be about equal in the next couple of quarters?
Bryan Jordan
Yeah. Couple of factors and that: one, and maybe foremost is with respect to the National Lending portfolio, particularly the construction portfolios, Homebuilder Finance, One-Time Close and in the home equity portfolios, those are the portfolios that were not increasing at all. Essentially they are in run-off mode. So, we look at them and over time have the expectation as they require and the reserve we set aside will be used for charge-offs and as a result won't necessitate the re-provisioning or rebuilding of reserves. The total of those portfolios is roughly 9 to $10 billion as we see here today.
Second to this is Gerry and I both commented in the call, we have spent tremendous amount of time looking at the portfolio, trying to factor in our expectations around the near-term realizability of assets. We have got new appraisals on a lot of properties. We have done a top to bottom review of all of our One-Time Close portfolios. We have tried to make conservative assumptions about net realizable value. So we think we have built a fair amount of reserves for the portfolios as they stand today.
I will use the example of our One-Time Close portfolio. Typically we are seeing severities on the One-Time Close portfolio in the high 20%s range. If you take the existing portfolio and you look at the reserves we have build for, which is something like $118 million, a little over 6%, you got reserves set out that the results says you can have 25% or so with the portfolio default and you can incur 25 to 30% losses on that and still have adequate reserves. So we think as these portfolios liquidate that's going to necessitate that reserves will come down over time, but won't be replenished.
Steven Alexopoulos
That’s very helpful. Just one another question, given how much mortgage banking seems to be moving next quarter, each quarter ex-servicing, are you considering closure of the businesses one of your strategic alternatives?
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