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Receivables (Tables)
 6 Months Ended
Jun. 30, 2013
Text Block [Abstract]  
Receivables
Receivables consisted of the following:

June 30, 2013
 
December 31, 2012
 
(in millions)
Real estate secured:
 
 
 
First lien
$
25,798

 
$
29,301

Second lien
3,314

 
3,638

Total real estate secured receivables
29,112

 
32,939

HSBC acquisition purchase accounting fair value adjustments
40

 
43

Accrued finance income
879

 
909

Credit loss reserve for receivables
(4,098
)
 
(4,607
)
Total receivables, net
$
25,933

 
$
29,284
Aging Analysis of Past Due Loans
The following tables summarize the past due status of our receivables at June 30, 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.
 
Days Past Due
 
Total Past Due
 
 
 
Total Receivables(2)
June 30, 2013
30 – 89 days
 
90+ days
 
Current(1)
 
 
(in millions)
Real estate secured:
 
 
 
 
 
 
 
 
 
First lien
$
2,563

 
$
1,522

 
$
4,085

 
$
21,713

 
$
25,798

Second lien
258

 
186

 
444

 
2,870

 
3,314

Total real estate secured receivables(3)
$
2,821

 
$
1,708

 
$
4,529

 
$
24,583

 
$
29,112

 
Days Past Due
 
Total
Past Due
 
 
 
Total
Receivables(2)
December 31, 2012
30 – 89 days
 
90+ days
 
Current(1)
 
 
(in millions)
Real estate secured:
 
 
 
 
 
 
 
 
 
First lien
$
2,759

 
$
2,748

 
$
5,507

 
$
23,794

 
$
29,301

Second lien
316

 
239

 
555

 
3,083

 
3,638

     Total real estate secured receivables(3)
$
3,075

 
$
2,987

 
$
6,062

 
$
26,877

 
$
32,939

 
(1) 
Receivables less than 30 days past due are presented as current.
(2) 
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 of dollars of two-months-and-over contractual delinquency and nonperforming receivable account balances.
(3) 
Our real estate secured receivables have historically been maintained on two mortgage loan servicing platforms which resulted 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 resulted in the substantial majority of our real estate secured receivables utilizing the same platform. While we experienced an increase in dollars of two-months-and-over contractual delinquency as of June 30, 2013 for the receivables that were moved to the different platform, much of the increase has been offset by improvements in credit quality in other parts of our real estate secured receivable portfolio.
Nonaccrual Receivables
Nonaccrual receivables and nonaccrual receivables held for sale are summarized in the following table.
 
June 30, 2013
 
December 31, 2012
 
(in millions)
Nonaccrual receivable portfolios:
 
 
 
Real estate secured(1)
$
1,579

 
$
3,032

Receivables held for sale
3,726

 
2,161

Total nonaccrual receivables
$
5,305

 
$
5,193

 
(1) 
At June 30, 2013 and December 31, 2012, nonaccrual real estate secured receivables held for investment include $642 million 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. See Note 6, "Receivables Held for Sale," for discussion of a transfer of a pool of real estate secured receivables that are carried at the lower of amortized cost or fair value of the collateral less cost to sell to held for sale during the second quarter of 2013.
Additional Information on Nonaccrual Receivables
The following table provides additional information on our total nonaccrual receivables:
Six Months Ended June 30,
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
$
405

 
$
462

Interest income that was recorded on nonaccrual receivables included in interest income on nonaccrual loans during the period
55

 
80
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 and six months ended June 30, 2013 and 2012 became classified as TDR Loans.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,

2013
 
2012
 
2013
 
2012
 
(in millions)
Real estate secured:
 
 
 
 
 
 
 
First lien
$
492

 
$
779

 
$
988

 
$
2,010

Second lien
43

 
70

 
94

 
215

Total real estate secured
535

 
849

 
1,082

 
2,225

Personal non-credit card(1)
—

 
93

 
28

 
240

Total(2)
$
535

 
$
942

 
$
1,110

 
$
2,465

 
(1) 
As discussed more fully in Note 6, "Receivables Held for Sale," we sold our personal non-credit card receivable portfolio on April 1, 2013.
(2) 
The following summarizes the actions taken during the three and six months ended June 30, 2013 and 2012 which resulted in the above receivables being classified as a TDR Loan.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,

2013
 
2012
 
2013
 
2012
 
(in millions)
Interest rate modification
$
173

 
$
497

 
$
392

 
$
1,225

Re-age of past due account
362

 
445

 
718

 
1,240

Total
$
535

 
$
942

 
$
1,110

 
$
2,465
TDR Loans
The following table presents information about receivables and receivables held for sale reported as TDR Loans as of June 30, 2013 and December 31, 2012.
 
June 30, 2013
 
December 31, 2012
 
(in millions)
TDR Loans:(1)(2)(3)
 
 
 
Real estate secured:
 
 
 
First lien
$
14,813

 
$
14,607

Second lien
1,145

 
1,205

Total real estate secured(4)
15,958

 
15,812

Personal non-credit card
—

 
592

Total TDR Loans
$
15,958

 
$
16,404

 
 
 
 
Credit loss reserves for TDR Loans:
 
 
 
Real estate secured:
 
 
 
First lien
$
2,826

 
$
3,104

Second lien
458

 
523

Total credit loss reserves for real estate secured TDR Loans(3)(5)
$
3,284

 
$
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:
 
June 30, 2013
 
December 31, 2012
 
(in millions)
Real estate secured:
 
 
 
First lien
$
18,102

 
$
18,451

Second lien
1,289

 
1,345

Total real estate secured
19,391

 
19,796

Personal non-credit card
—

 
1,139

Total TDR Loans
$
19,391

 
$
20,935


(3) 
At June 30, 2013 and December 31, 2012, $3.5 billion of real estate secured receivables and $2.5 billion (of which $1.9 billion are 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 June 30, 2013 and December 31, 2012, TDR Loans held for investment totaling $726 million 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 and six months ended June 30, 2013 and 2012.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,

2013
 
2012
 
2013
 
2012
 
(in millions)
Real estate secured:
 
 
 
 
 
 
 
First lien
$
290

 
$
608

 
$
630

 
$
1,430

Second lien
28

 
70

 
64

 
155

Total real estate secured
318

 
678

 
694

 
1,585

Personal non-credit card
—

 
75

 
21

 
202

Total
$
318

 
$
753

 
$
715

 
$
1,787
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
June 30,
 
Six Months Ended
June 30,
 
2013
 
2012
 
2013
 
2012
 
(in millions)
Average balance of TDR Loans:
 
 
 
 
 
 
 
Real estate secured:
 
 
 
 
 
 
 
First lien
$
14,784

 
$
14,021

 
$
14,755

 
$
13,864

Second lien
1,159

 
1,155

 
1,175

 
1,143

Total real estate secured
15,943

 
15,176

 
15,930

 
15,007

Personal non-credit card
—

 
1,200

 
—

 
1,278

Total average balance of TDR Loans
$
15,943

 
$
16,376

 
$
15,930

 
$
16,285

Interest income recognized on TDR Loans:
 
 
 
 
 
 
 
Real estate secured:
 
 
 
 
 
 
 
First lien
$
243

 
$
226

 
$
485

 
$
402

Second lien
28

 
27

 
56

 
48

Total real estate secured
271

 
253

 
541

 
450

Personal non-credit card
—

 
46

 
40

 
88

Total interest income recognized on TDR Loans
$
271

 
$
299

 
$
581

 
$
538
Summary of Contractual Delinquency and Delinquency Ratio
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:
 
June 30, 2013
 
December 31, 2012
  
Dollars of
Delinquency
 
Delinquency
Ratio
 
Dollars of
Delinquency
 
Delinquency
Ratio
 
(dollars are in millions)
Real estate secured:
 
 
 
 
 
 
 
First lien(1)
$
6,041

 
19.62
%
 
$
5,821

 
18.01
%
Second lien
274

 
8.25

 
349

 
9.59

Total real estate secured
6,315

 
18.52

 
6,170

 
17.16

Personal non-credit card
—

 
—

 
103

 
3.24

Total
$
6,315

 
18.52
%
 
$
6,273

 
16.03
%

 
(1)
Dollars of delinquency for first lien real estate secured receivables includes $3.8 billion and $2.2 billion of real estate secured receivables classified as held for sale at June 30, 2013 and December 31, 2012, respectively.
Nonperforming Consumer Receivable Portfolio
The status of receivables and receivables held for sale is summarized in the following table:
 
Accruing Loans
 
Nonaccrual
Loans
 
Total
 
(in millions)
At June 30, 2013
 
 
 
 
 
Real estate secured(1)(2)
$
27,533

 
$
1,579

 
$
29,112

Receivables held for sale
1,265

 
3,726

 
4,991

Total
$
28,798

 
$
5,305

 
$
34,103

At December 31, 2012
 
 
 
 
 
Real estate secured(1)(2)
$
29,907

 
$
3,032

 
$
32,939

Receivables held for sale
4,042

 
2,161

 
6,203

Total
$
33,949

 
$
5,193

 
$
39,142

 
(1) 
At June 30, 2013 and December 31, 2012, nonaccrual real estate secured receivables held for investment include $642 million 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 June 30, 2013 and December 31, 2012, nonaccrual real estate secured receivables held for investment include $1.2 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
Percentage Of Receivables By State Table
The following table reflects the percentage of consumer receivables by state which individually account for 5 percent or greater of our portfolio.
 
Percentage of Receivables at
 
Percentage of Receivables at
  
June 30, 2013
 
December 31, 2012
Real Estate
Secured
 
Personal Non-Credit Card
 
Total
 
Real Estate
Secured
 
Personal Non-Credit Card
 
Total
California
9.4
%
 
—
%
 
9.4
%
 
9.4
%
 
4.5
%
 
9.0
%
New York
7.4

 
—

 
7.4

 
7.4

 
6.8

 
7.4

Pennsylvania
6.2

 
—

 
6.2

 
6.2

 
7.0

 
6.3

Florida
6.0

 
—

 
6.0

 
5.8

 
5.8

 
5.8

Ohio
5.6

 
—

 
5.6

 
5.5

 
6.5

 
5.6

Virginia
5.2

 
—

 
5.2

 
5.3

 
3.1

 
5.1