Credit Loss Reserves

The table below summarizes the changes in credit loss reserves for receivables held for investment by product and the related receivable balance by product during the years ended December 31, 2016, 2015 and 2014. As previously discussed, in September 2016 we transferred the remainder of the receivables classified as held for investment to held for sale. As a result, our entire receivable portfolio is classified as held for sale at December 31, 2016 and no longer have any associated credit loss reserves as any adjustments to the carrying value are reflected in other income. See Note 7, "Receivables Held for Sale," for additional information.



	Real Estate Secured						Personal Non-Credit Card
	First Lien			Second Lien					Total
	(in millions)
Year Ended December 31, 2016:
Credit loss reserve rollforward:
Credit loss reserve balance at beginning of period	$	137		$	174		$	—	$	311
Provision for credit losses⁽¹⁾	107			514			—		621
Net charge-offs:							—
Charge-offs⁽¹⁾⁽²⁾	(247		)	(691		)	—		(938		)
Recoveries	3			3			—		6
Total net charge-offs	(244		)	(688		)	—		(932		)



	Real Estate Secured						Personal Non-Credit Card
	First Lien			Second Lien			Personal Non-Credit Card			Total
	(in millions)
Credit loss reserve balance at end of period	$	—		$	—		$	—		$	—
Year Ended December 31, 2015:
Credit loss reserve rollforward:
Credit loss reserve balance at beginning of period	$	1,898		$	319		$	—		$	2,217
Provision for credit losses⁽¹⁾	223			27			—			250
Net charge-offs:							—
Charge-offs⁽¹⁾⁽²⁾	(2,004		)	(177		)	—			(2,181		)
Recoveries	20			5			—			25
Total net charge-offs	(1,984		)	(172		)	—			(2,156		)
Credit loss reserve balance at end of period	$	137		$	174		$	—		$	311
Reserve components:
Collectively evaluated for impairment	$	40		$	39		$	—		$	79
Individually evaluated for impairment⁽³⁾	85			135			—			220
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	12			—			—			12
Total credit loss reserves	$	137		$	174		$	—		$	311
Receivables held for investment:
Collectively evaluated for impairment	$	6,363		$	1,195		$	—		$	7,558
Individually evaluated for impairment⁽³⁾	640			632			—			1,272
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	299			27			—			326
Total receivables held for investment	$	7,302		$	1,854		$	—		$	9,156

Year Ended December 31, 2014:
Credit loss reserve rollforward:
Credit loss reserve balance at beginning of period	$	2,777		$	496		$	—		$	3,273
Provision for credit losses	(308		)	(39		)	(18		)	(365		)
Net charge-offs:
Charge-offs⁽²⁾	(657		)	(197		)	—			(854		)
Recoveries	84			59			18			161
Total net charge-offs	(573		)	(138		)	18			(693		)
Other	2			—			—			2
Credit loss reserve balance at end of period	$	1,898		$	319		$	—		$	2,217
Reserve components:
Collectively evaluated for impairment	$	153		$	74		$	—		$	227
Individually evaluated for impairment⁽³⁾	1,713			244			—			1,957
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	32			1			—			33
Total credit loss reserves	$	1,898		$	319		$	—		$	2,217
Receivables held for investment:
Collectively evaluated for impairment	$	10,356		$	1,593		$	—		$	11,949
Individually evaluated for impairment⁽³⁾	9,133			895			—			10,028
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	664			29			—			693
Total receivables held for investment	$	20,153		$	2,517		$	—		$	22,670

⁽¹⁾

The provision for credit losses and charge-offs for real estate secured receivables during the year ended December 31, 2016 includes $576 million related to the initial lower of amortized cost or fair value adjustment attributable to credit factors for receivables transferred to held for sale. For the year ended December 31, 2015, the provision for credit losses and charge-offs included $234 million related to the initial lower of amortized cost or fair value adjustment attributable to credit factors for receivables transferred to held for sale. See Note 7, "Receivables Held for Sale," for additional information. During the year ended December 31, 2016, net charge-offs dollars were impacted by an out of period adjustment which decreased net charge-offs by $12 million in order to properly reflect charge-offs for receivables which received a partial forgiveness of principal as a result of an account modification in prior periods. The provision for credit losses for real estate secured receivables during the year ended December 31, 2015 was impacted by a release of approximately $19 million associated with a correction to our credit loss reserve calculation for a segment of our portfolio.

⁽²⁾

For collateral dependent receivables that are transferred to held for sale, existing credit loss reserves at the time of transfer are recognized as a charge-off. We transferred to held for sale certain real estate secured receivables during the years ended December 31, 2016, 2015 and 2014 and, accordingly, we recognized the existing credit loss reserves on these receivables as additional charge-off totaling $268 million, $1,622 million and $58 million during the years ended December 31, 2016, 2015 and 2014, respectively.

⁽³⁾

These amounts represent TDR Loans for which we evaluate reserves using a discounted cash flow methodology. Each loan is individually identified as a TDR Loan and then grouped together with other TDR Loans with similar characteristics. The discounted cash flow impairment analysis is then applied to these groups of TDR Loans. The receivable balance above excludes TDR Loans held for investment that are carried at the lower of amortized cost or fair value of the collateral less cost to sell which totaled $250 million and $517 million at December 31, 2015 and 2014, respectively. The reserve component above excludes credit loss reserves totaling $10 million and $25 million at December 31, 2015 and 2014, respectively, for TDR Loans held for investment that are carried at the lower of amortized cost or fair value of the collateral less cost to sell. These receivables and credit loss reserves are reflected within receivables and credit loss reserves carried at the lower of amortized cost or fair value of the collateral less cost to sell in the table above.