Receivables, net

Receivables consisted of the following:



	March 31, 2016			December 31, 2015
	(in millions)
Real estate secured:
First lien	$	6,807		$	7,302
Second lien	1,766			1,854
Total real estate secured receivables	8,573			9,156
Accrued interest income and other	132			142
Credit loss reserve for receivables	(272		)	(311		)
Total receivables, net	$	8,433		$	8,987

Deferred origination fees, net of costs, totaled $68 million and $71 million at March 31, 2016 and December 31, 2015, respectively, and are included in the receivables balance. Net unamortized premium on our receivables totaled $31 million and $35 million at March 31, 2016 and December 31, 2015, respectively, and are also included in the receivables balance.

Collateralized funding transactions Secured financings previously issued under public trusts with a balance of $694 million at March 31, 2016 are secured by $1,305 million of closed-end real estate secured receivables. Secured financings previously issued under public trusts with a balance of $879 million at December 31, 2015 were secured by $1,654 million of closed-end real estate secured receivables.

Aging Analysis of Past Due Receivables The following tables summarize the past due status of our receivables (excluding receivables held for sale) at March 31, 2016 and December 31, 2015. The aging of past due amounts is determined based on the contractual delinquency status of payments made under the terms of 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 is affected by customer account management policies and practices such as re-aging.



	Past Due				Total Past Due				Total Receivables⁽²⁾
March 31, 2016	30 – 89 days		90+ days		Total Past Due		Current⁽¹⁾		Total Receivables⁽²⁾
	(in millions)
Real estate secured:
First lien	$	141	$	168	$	309	$	6,498	$	6,807
Second lien	78		48		126		1,640		1,766
Total real estate secured receivables	$	219	$	216	$	435	$	8,138	$	8,573



	Past Due				Total Past Due				Total Receivables⁽²⁾
December 31, 2015	30 – 89 days		90+ days		Total Past Due		Current⁽¹⁾		Total Receivables⁽²⁾
	(in millions)
Real estate secured:
First lien	$	179	$	219	$	398	$	6,904	$	7,302
Second lien	98		62		160		1,694		1,854
Total real estate secured receivables	$	277	$	281	$	558	$	8,598	$	9,156


⁽¹⁾	Receivables less than 30 days past due are presented as current.

⁽²⁾

The receivable balances included in this table reflect the principal amount outstanding on the loan net of any charge-off recorded in accordance with our existing charge-off policies and include certain basis adjustments to the loan such as unearned income, unamortized 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, nonaccrual receivable and nonperforming receivable account balances.

Nonaccrual receivables Nonaccrual receivables and nonaccrual receivables held for sale are all receivables which are 90 or more days contractually delinquent as well as second lien receivables (regardless of delinquency status) where the first lien receivable that we own or service is 90 or more days contractually delinquent. Nonaccrual receivables do not include receivables which have made qualifying payments and have been re-aged such that the contractual delinquency status has been reset to current. If a re-aged receivable subsequently experiences payment default and becomes 90 or more days contractually delinquent, it will be reported as nonaccrual.

Nonaccrual receivables and nonaccrual receivables held for sale consisted of the following:



	March 31, 2016		December 31, 2015
	(in millions)
Nonaccrual receivable portfolios⁽¹⁾:
Real estate secured⁽²⁾	$	222	$	283
Receivables held for sale	444		386
Total nonaccrual receivables⁽³⁾	$	666	$	669

⁽¹⁾

The receivable balances included in this table reflect the principal amount outstanding on the loan net of any charge-off recorded in accordance with our existing charge-off policies but exclude any basis adjustments to the loan such as unearned income, unamortized deferred fees and costs on originated loans, purchase accounting fair value adjustments and premiums or discounts on purchased loans. Additionally, the balances in this table related to receivables which have been classified as held for sale have been reduced by the lower of amortized cost or fair value adjustment recorded as well as the credit loss reserves associated with these receivables prior to the transfer.


⁽²⁾	At March 31, 2016 and December 31, 2015, nonaccrual real estate secured receivables held for investment include $149 million and $187 million, respectively, of receivables that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.


⁽³⁾	Nonaccrual receivables do not include receivables totaling $541 million and $501 million at March 31, 2016 and December 31, 2015, respectively, which are less than 90 days contractually delinquent and not accruing interest.

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



Three Months Ended March 31,	2016		2015
	(in millions)
Interest income that would have been recorded if the nonaccrual receivable had been current in accordance with contractual terms during the period	$	18	$	39
Interest income that was recorded on nonaccrual receivables included in interest income on nonaccrual receivables during the period	2		5

Troubled Debt Restructurings We report as troubled debt restructurings ("TDR Loans") substantially all receivables modified as a result of a financial difficulty, regardless of whether the modification was permanent or temporary, including all modifications with trial periods. Additionally, we report as TDR Loans all re-ages, except first time early stage delinquency re-ages where the customer has not been granted a prior re-age or modification. TDR Loans also include receivables discharged under Chapter 7 bankruptcy and not re-affirmed. TDR Loans are considered to be impaired loans. The TDR Loan balances in the tables below reflect the principal amount outstanding on the receivable net of any charge-off recorded in accordance with our existing charge-off policies and include all basis adjustments on the receivable, such as unearned income, unamortized deferred fees and costs on originated loans and premiums or discounts on purchased receivables. 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. TDR Loans are considered to be impaired loans regardless of their accrual status.

Modifications for real estate secured receivables may include changes to one or more terms of the loan, including, but not limited to, a change in interest rate, an extension of the amortization period, a reduction in payment amount, partial forgiveness or deferment of principal or other loan covenants. A substantial amount of our modifications involve interest rate reductions which lower the amount of interest income we are contractually entitled to receive for a period of time in future periods. By lowering the interest rate and making other changes to the loan terms, we believe we are able to increase the amount of cash flow that will ultimately be collected from the loan, given the borrower's financial condition. Re-aging is an account management action that results in the resetting of the contractual delinquency status of an account to current which generally requires the receipt of two qualifying payments. TDR Loans are reserved for based on the present value of expected future cash flows discounted at the loans' original effective interest rate which generally results in a higher reserve requirement for these loans. The portion of the credit loss reserves on TDR Loans that is associated with the discounting of cash flows is released from credit loss reserves over the life of the TDR Loan. There are no credit loss reserves associated with TDR Loans classified as held for sale as they are carried at the lower of amortized cost or fair value.

The following table presents information about receivables held for investment and receivables held for sale which as a result of any account management action taken during the three months ended March 31, 2016 and 2015 became classified as TDR Loans as well as a summary of the type of account management action taken.



Three Months Ended March 31,	2016		2015
	(in millions)
Real estate secured receivables classified as TDR Loans during the period:
First lien held for investment	$	18	$	125
Second lien held for investment	23		16
Real estate secured receivables held for sale	71		10
Total	$	112	$	151

Types of account management actions taken during the period:
Modifications, primarily interest rate modifications	$	56	$	60
Re-age of past due account	56		91
Total	$	112	$	151

The tables below present information about our TDR Loans and TDR Loans held for sale, including the related allowance for credit losses.



	March 31, 2016				December 31, 2015
	Carrying Value		Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance
	(in millions)
TDR Loans:⁽¹⁾
Real estate secured:
First lien⁽²⁾	$	722	$	834	$	870	$	1,003
Second lien⁽²⁾	641		712		652		732
Real estate secured receivables held for sale⁽³⁾	6,105		7,381		6,044		7,317
Total real estate secured TDR Loans	$	7,468	$	8,927	$	7,566	$	9,052

Credit loss reserves for TDR Loans:⁽⁴⁾
Real estate secured:
First lien	$	72			$	95
Second lien	133				135
Total credit loss reserves for real estate secured TDR Loans⁽³⁾	$	205			$	230


⁽¹⁾	At March 31, 2016 and December 31, 2015, the unpaid principal balance reflected above includes $757 million and $740 million, respectively, which have received a reduction in the unpaid principal balance as part of an account management action.


⁽²⁾	At March 31, 2016 and December 31, 2015, the carrying value of TDR Loans held for investment totaling $211 million and $250 million, respectively, are recorded at the lower of amortized cost or fair value of the collateral less cost to sell.


⁽³⁾	There are no credit loss reserves associated with receivables classified as held for sale as they are carried at the lower of amortized cost or fair value.


⁽⁴⁾	Included in credit loss reserves.

The following table provides additional information about the average balance and interest income recognized on TDR Loans and TDR Loans held for sale.



Three Months Ended March 31,	2016		2015
	(in millions)
Average balance of TDR Loans:
Real estate secured:
First lien	$	6,775	$	10,207
Second lien	750		900
Total average balance of TDR Loans	$	7,525	$	11,107
Interest income recognized on TDR Loans:
Real estate secured:
First lien	$	137	$	180
Second lien	20		22
Total interest income recognized on TDR Loans	$	157	$	202

The following table discloses receivables and receivables held for sale which were classified as TDR Loans during the previous 12 months which subsequently became sixty days or greater contractually delinquent during the three months ended March 31, 2016 and 2015.



Three Months Ended March 31,	2016		2015
	(in millions)
Real estate secured:
First lien	$	4	$	55
Second lien	4		9
Real estate secured receivables held for sale	20		2
Total	$	28	$	66

Consumer Receivable Credit Quality Indicators Credit quality indicators used for consumer receivables include a loan’s delinquency status, whether the loan is performing and whether the loan is a TDR Loan.

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 receivable portfolio.



	March 31, 2016				December 31, 2015
	Dollars of Delinquency		Delinquency Ratio		Dollars of Delinquency		Delinquency Ratio
	(dollars are in millions)
Real estate secured receivables⁽¹⁾:
First lien	$	209	3.07	%	$	272	3.73	%
Second lien	72		4.08		94		5.07
Real estate secured receivables held for sale	596		7.28		569		6.88
Total real estate secured receivables⁽²⁾	$	877	5.23	%	$	935	5.37	%

⁽¹⁾

The receivable balances included in this table reflect the principal amount outstanding on the loan net of any charge-off recorded in accordance with our existing charge-off policies but exclude any basis adjustments to the loan such as unearned income, unamortized deferred fees and costs on originated loans, purchase accounting fair value adjustments and premiums or discounts on purchased loans. Additionally, the balances in this table related to receivables which have been classified as held for sale have been reduced by the lower of amortized cost or fair value adjustment recorded as well as the credit loss reserves associated with these receivables prior to the transfer.


⁽²⁾	At March 31, 2016 and December 31, 2015, total real estate secured receivables include $382 million and $363 million, respectively, that are in the process of foreclosure.

Nonperforming The following table summarizes the status of receivables and receivables held for sale.



	Accruing Loans		Nonaccrual Loans⁽⁴⁾		Total
	(in millions)
At March 31, 2016⁽¹⁾
Real estate secured⁽²⁾⁽³⁾	$	8,351	$	222	$	8,573
Real estate secured receivables held for sale	7,741		444		8,185
Total	$	16,092	$	666	$	16,758
At December 31, 2015⁽¹⁾
Real estate secured⁽²⁾⁽³⁾	$	8,873	$	283	$	9,156
Real estate secured receivables held for sale	7,879		386		8,265
Total	$	16,752	$	669	$	17,421

⁽¹⁾

The balances included in this table reflect the principal amount outstanding on the loan net of any charge-off recorded in accordance with our existing charge-off policies but exclude any basis adjustments to the loan such as unearned income, unamortized deferred fees and costs on originated loans, purchase accounting fair value adjustments and premiums or discounts on purchased receivables. Additionally, the balances in this table related to receivables which have been classified as held for sale have been reduced by the lower of amortized cost or fair value adjustment recorded as well as the credit loss reserves associated with these receivables prior to the transfer.


⁽²⁾	At March 31, 2016 and December 31, 2015, nonperforming real estate secured receivables held for investment include $149 million and $187 million, respectively, of receivables that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.


⁽³⁾	At March 31, 2016 and December 31, 2015, nonperforming real estate secured receivables held for investment include $139 million and $178 million, respectively, of TDR Loans, some of which may also be carried at fair value of the collateral less cost to sell.


⁽⁴⁾	Nonperforming receivables do not include receivables totaling $541 million and $501 million at March 31, 2016 and December 31, 2015, respectively, which are less than 90 days contractually delinquent and not accruing interest.

Troubled debt restructurings See discussion of TDR Loans above for further details on this credit quality indicator.