Receivables Held for Investment, net (Tables)

9 Months Ended

Sep. 30, 2016

Receivables held for investment, net consisted of the following:



	September 30, 2016		December 31, 2015
	(in millions)
Real estate secured:
First lien	$	—	$	7,302
Second lien	—		1,854
Total real estate secured receivables⁽¹⁾⁽²⁾	—		9,156
Accrued interest income and other	—		142
Credit loss reserve for receivables	—		(311		)
Total receivables held for investment, net	$	—	$	8,987


⁽¹⁾	At December 31, 2015, amount includes $1,654 million of closed-end real estate secured receivables which serve as collateral for secured financings previously issued under public trusts with an outstanding balance of $879 million at December 31, 2015. See Note 11, "Variable Interest Entities," for additional information.


⁽²⁾	At December 31, 2015, amount includes deferred origination fees, net of costs, totaling $71 million and net unamortized premium on our receivables totaling $35 million.

Aging Analysis of Past Due Loans



	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 held for investment	$	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 consisted of the following:



	September 30, 2016		December 31, 2015
	(in millions)
Nonaccrual receivable portfolios⁽¹⁾:
Real estate secured receivables held for investment⁽²⁾	$	—	$	283
Receivables held for sale	405		386
Total nonaccrual receivables⁽³⁾	$	405	$	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 December 31, 2015, nonaccrual real estate secured receivables held for investment includes $187 million 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 $424 million and $501 million at September 30, 2016 and December 31, 2015, respectively, which are less than 90 days contractually delinquent and not accruing interest.

Additional Information on Nonaccrual Receivables

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



Nine Months Ended September 30,	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	$	59	$	125
Interest income that was recorded on nonaccrual receivables during the period	18		37

Receivables Classified as Trouble Debt Restructuring Loans

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 and nine months ended September 30, 2016 and 2015 became classified as TDR Loans as well as a summary of the type of account management action taken.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in millions)
Real estate secured receivables classified as TDR Loans during the period:
First lien held for investment	$	—	$	19	$	33	$	161
Second lien held for investment	—		13		33		41
Real estate secured receivables held for sale	58		68		171		155
Total	$	58	$	100	$	237	$	357

Types of account management actions taken during the period:
Modifications, primarily interest rate modifications	$	33	$	41	$	115	$	141
Re-age of past due account	25		59		122		216
Total	$	58	$	100	$	237	$	357

TDR Loans

The table below presents information about our TDR Loans and TDR Loans held for sale, including the related allowance for credit losses. The TDR Loan carrying value trend in the table below reflects the impact of the transfer of the remainder of our receivables classified as held for investment to held for sale in September 2016 as well as receivable sales during the first nine months of 2016.



	September 30, 2016				December 31, 2015
	Carrying Value		Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance
	(in millions)
TDR Loans:⁽¹⁾
Real estate secured:
First lien held for investment⁽²⁾	$	—	$	—	$	870	$	1,003
Second lien held for investment⁽²⁾	—		—		652		732
Real estate secured receivables held for sale⁽³⁾	3,554		4,575		6,044		7,317
Total real estate secured TDR Loans	$	3,554	$	4,575	$	7,566	$	9,052

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


⁽¹⁾	At September 30, 2016 and December 31, 2015, the unpaid principal balance reflected above includes $711 million and $740 million, respectively, which have received a reduction in the unpaid principal balance as part of an account management action.


⁽²⁾	At December 31, 2015, the carrying value of TDR Loans held for investment includes $250 million that 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.

Additional Information Relating To Trouble Debt Restructuring Loans

The following table provides additional information about the average balance and interest income recognized on TDR Loans and TDR Loans held for sale. At September 30, 2016, all of our TDR Loans are classified as held for sale.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in millions)
Average balance of TDR Loans held for investment and held for sale:
Real estate secured:
First lien	$	3,281	$	8,281	$	4,998	$	9,408
Second lien	628		804		697		858
Total average balance of TDR Loans	$	3,909	$	9,085	$	5,695	$	10,266
Interest income recognized on TDR Loans held for investment and held for sale:
Real estate secured:
First lien	$	63	$	170	$	275	$	525
Second lien	17		21		55		65
Total interest income recognized on TDR Loans	$	80	$	191	$	330	$	590

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 subsequently became sixty days or greater contractually delinquent during the three and nine months ended September 30, 2016 and 2015.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in millions)
Real estate secured:
First lien held for investment	$	—	$	6	$	7	$	68
Second lien held for investment	—		6		8		20
Real estate secured receivables held for sale	19		32		57		71
Total	$	19	$	44	$	72	$	159

Summary of Contractual Delinquency and Delinquency Ratio

The table below 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.



	September 30, 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 held for investment	$	—	—	%	$	272	3.73	%
Second lien held for investment	—		—		94		5.07
Real estate secured receivables held for sale	545		5.37		569		6.88
Total real estate secured receivables⁽²⁾	$	545	5.37	%	$	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 September 30, 2016 and December 31, 2015, total real estate secured receivables include $249 million and $363 million, respectively, that are in the process of foreclosure.

Nonperforming Consumer Receivable Portfolio

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



	Accruing Receivables		Nonaccrual Receivables⁽⁴⁾		Total
	(in millions)
At September 30, 2016⁽¹⁾
Real estate secured receivables held for investment	$	—	$	—	$	—
Real estate secured receivables held for sale	9,743		405		10,148
Total	$	9,743	$	405	$	10,148
At December 31, 2015⁽¹⁾
Real estate secured receivables held for investment⁽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 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 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 December 31, 2015, nonperforming real estate secured receivables held for investment include $187 million of receivables that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.


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


⁽⁴⁾	Nonaccrual receivables do not include receivables totaling $424 million and $501 million at September 30, 2016 and December 31, 2015, respectively, which are less than 90 days contractually delinquent and not accruing interest.