Receivables (Tables)

3 Months Ended

Mar. 31, 2013

Receivables consisted of the following:



	March 31, 2013			December 31, 2012
	(in millions)
Real estate secured:
First lien	$	28,461		$	29,301
Second lien	3,469			3,638
Total real estate secured receivables	31,930			32,939
HSBC acquisition purchase accounting fair value adjustments	41			43
Accrued finance income	886			909
Credit loss reserve for receivables	(4,313		)	(4,607		)
Total receivables, net	$	28,544		$	29,284

Aging Analysis of Past Due Loans

The following tables summarize the past due status of our receivables at March 31, 2013 and December 31, 2012. The aging of past due amounts is determined based on the contractual delinquency status of payments made under the receivable. An account is generally considered to be contractually delinquent when payments have not been made in accordance with the loan terms. Delinquency status may be affected by customer account management policies and practices such as re-age or modification. Additionally, delinquency status is also impacted by payment requirements which vary between servicing platforms.



	Days Past Due						Total Past Due				Total Receivables⁽¹⁾
March 31, 2013	1 – 29 days		30 – 89 days		90+ days		Total Past Due		Current		Total Receivables⁽¹⁾
	(in millions)
Real estate secured:
First lien	$	4,264	$	2,314	$	2,649	$	9,227	$	19,234	$	28,461
Second lien	573		254		207		1,034		2,435		3,469
Total real estate secured receivables⁽²⁾	$	4,837	$	2,568	$	2,856	$	10,261	$	21,669	$	31,930



	Days Past Due						Total Past Due				Total Receivables⁽¹⁾
December 31, 2012	1 – 29 days		30 – 89 days		90+ days		Total Past Due		Current		Total Receivables⁽¹⁾
	(in millions)
Real estate secured:
First lien	$	4,644	$	2,759	$	2,748	$	10,151	$	19,150	$	29,301
Second lien	652		316		239		1,207		2,431		3,638
Total real estate secured receivables⁽²⁾	$	5,296	$	3,075	$	2,987	$	11,358	$	21,581	$	32,939

⁽¹⁾

The receivable balances included in this table reflects the principal amount outstanding on the loan and certain basis adjustments to the loan such as deferred fees and costs on originated loans, purchase accounting fair value adjustments and premiums or discounts on purchased loans. However, these basis adjustments on the loans are excluded in other presentations regarding delinquent account balances.

⁽²⁾

Our real estate secured receivables are currently maintained on two mortgage loan servicing platforms which results in differences relating to how contractual delinquency is measured. In April 2013, we moved all closed-end real estate secured receivables onto one platform which will result in the substantial majority of our real estate secured receivables utilizing the same platform going forward.

Nonaccrual Receivables

Nonaccrual receivables and nonaccrual receivables held for sale are summarized in the following table.



	March 31, 2013		December 31, 2012
	(in millions)
Nonaccrual receivable portfolios:
Real estate secured⁽¹⁾	$	2,894	$	3,032
Receivables held for sale	2,332		2,161
Total nonaccrual receivables	$	5,226	$	5,193


⁽¹⁾	At March 31, 2013 and December 31, 2012, nonaccrual real estate secured receivables held for investment include $1.9 billion and $1.7 billion, respectively, of receivables that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.

Additional Information on Nonaccrual Receivables

The following table provides additional information on our total nonaccrual receivables:



Three Months Ended March 31,	2013		2012
	(in millions)
Interest income that would have been recorded if the nonaccrual receivable had been current in accordance with contractual terms during the period	$	199	$	213
Interest income that was recorded on nonaccrual receivables included in interest income on nonaccrual loans during the period	14		19

Receivables Classified as Trouble Debt Restructuring Loans

The following table presents information about receivables and receivables held for sale which as a result of any account management action taken during the three months ended March 31, 2013 and 2012 became classified as TDR Loans.



Three Months Ended March 31,	2013		2012
	(in millions)
Real estate secured:
First lien	$	496	$	1,231
Second lien	51		145
Total real estate secured	547		1,376
Personal non-credit card	28		147
Total⁽¹⁾	$	575	$	1,523


⁽¹⁾	The following summarizes the actions taken during the three months ended March 31, 2013 and 2012 which resulted in the above receivables being classified as a TDR Loan.



Three Months Ended March 31,	2013		2012
	(in millions)
Interest rate modification	$	219	$	728
Re-age of past due account	356		795
Total	$	575	$	1,523

TDR Loans

The following table presents information about receivables and receivables held for sale reported as TDR Loans as of March 31, 2013 and December 31, 2012.



	March 31, 2013		December 31, 2012
	(in millions)
TDR Loans:^(1)(2)(3)
Real estate secured:
First lien	$	14,843	$	14,607
Second lien	1,177		1,205
Total real estate secured⁽⁴⁾	16,020		15,812
Personal non-credit card	547		592
Total TDR Loans⁽⁵⁾	$	16,567	$	16,404

Credit loss reserves for TDR Loans:
Real estate secured:
First lien	$	2,953	$	3,104
Second lien	486		523
Total real estate secured	3,439		3,627
Total credit loss reserves for TDR Loans⁽³⁾⁽⁵⁾	$	3,439	$	3,627


⁽¹⁾	TDR Loans are considered to be impaired loans regardless of accrual status.

⁽²⁾

The TDR Loan balances included in the table above reflect the current carrying amount of TDR Loans and includes all basis adjustments on the loan, such as unearned income, unamortized deferred fees and costs on originated loans and premiums or discounts on purchased loans as well as any charge-off recorded in accordance with our existing charge-off policies. Additionally, the carrying amount of TDR Loans classified as held for sale has been reduced by both the lower of amortized cost or fair value adjustment as well as the credit loss reserves associated with these receivables prior to the transfer. The following table reflects the unpaid principal balance of TDR Loans:



	March 31, 2013		December 31, 2012
	(in millions)
Real estate secured:
First lien	$	18,402	$	18,451
Second lien	1,321		1,345
Total real estate secured	19,723		19,796
Personal non-credit card	1,071		1,139
Total TDR Loans	$	20,794	$	20,935


⁽³⁾	At March 31, 2013 and December 31, 2012, $2.7 billion (including $2.2 billion of real estate secured receivables) and $2.5 billion (including $1.9 billion of real estate secured receivables) of TDR Loans were reported as receivables held for sale for which there are no credit loss reserves as they are carried at the lower of amortized cost or fair value.


⁽⁴⁾	At March 31, 2013 and December 31, 2012, TDR Loans held for investment totaling $1.7 billion and $1.5 billion, respectively, are recorded at the lower of amortized cost or fair value of the collateral less cost to sell.


⁽⁵⁾	Included in credit loss reserves.

Receivables Classified as Trouble Debt Restructuring Loan

The following table discloses receivables and receivables held for sale which were classified as TDR Loans during the previous 12 months which became sixty days or greater contractually delinquent during the three months ended March 31, 2013 and 2012.



Three Months Ended March 31,	2013		2012
Real estate secured:
First lien	$	340	$	821
Second lien	36		85
Total real estate secured	376		906
Personal non-credit card	21		128
Total	$	397	$	1,034

Additional Information Relating to Trouble Debt Restructuring Loan

Additional information relating to TDR Loans, including TDR Loans held for sale, is presented in the table below:



Three Months Ended March 31,	2013		2012
	(in millions)
Average balance of TDR Loans:
Real estate secured:
First lien	$	14,730	$	13,722
Second lien	1,190		1,131
Total real estate secured	15,920		14,853
Personal non-credit card	574		1,357
Total average balance of TDR Loans	$	16,494	$	16,210
Interest income recognized on TDR Loans:
Real estate secured:
First lien	$	242	$	176
Second lien	28		22
Total real estate secured	270		198
Personal non-credit card	40		41
Total interest income recognized on TDR Loans	$	310	$	239

Summary of Contractual Delinquency and Delinquency Ratio

Delinquency The following table summarizes dollars of two-months-and-over contractual delinquency and as a percent of total receivables and receivables held for sale (“delinquency ratio”) for our loan portfolio:



	March 31, 2013				December 31, 2012
	Dollars of Delinquency		Delinquency Ratio		Dollars of Delinquency		Delinquency Ratio
	(dollars are in millions)
Real estate secured:
First lien	$	5,789	18.16	%	$	5,821	18.01	%
Second lien	297		8.57		349		9.59
Total real estate secured	6,086		17.22		6,170		17.16
Personal non-credit card	42		1.44		103		3.24
Total	$	6,128	16.01	%	$	6,273	16.03	%

Nonperforming Consumer Receivable Portfolio

The status of receivables and receivables held for sale is summarized in the following table:



	Accruing Loans		Nonaccrual Loans		Total
At March 31, 2013
Real estate secured⁽¹⁾⁽²⁾	$	29,036	$	2,894	$	31,930
Receivables held for sale	4,022		2,332		6,354
Total	$	33,058	$	5,226	$	38,284
At December 31, 2012
Real estate secured⁽¹⁾⁽²⁾	$	29,907	$	3,032	$	32,939
Personal non-credit card	4,042		2,161		6,203
Total	$	33,949	$	5,193	$	39,142


⁽¹⁾	At March 31, 2013 and December 31, 2012, nonperforming real estate secured receivables held for investment include $1.9 billion and $1.7 billion, respectively, of receivables that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.


⁽²⁾	At March 31, 2013 and December 31, 2012, nonperforming real estate secured receivables held for investment include $2.0 billion and $2.1 billion, respectively, of TDR Loans, some of which may also be carried at fair value of the collateral less cost to sell