Troubled Debt Restructures and Nonperforming Receivables

Troubled Debt Restructurings We report substantially all loans modified as a result of a financial difficulty as troubled debt restructurings ("TDR Loans"), 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 loans discharged under Chapter 7 bankruptcy and not re-affirmed. TDR Loans are considered to be impaired loans regardless of their accrual status.

Modifications for real estate secured receivables include changes to the terms of the loan and have historically included, but were 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. Beginning May 1, 2017, we revised our modification program to only include changes in interest rates. Interest rate reductions 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, we believe we are able to increase the amount of cash flow that we expect to ultimately collect 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.

As previously discussed, as of September 30, 2017 we have sold substantially all of our receivables held for sale and expect that the remaining receivables will be sold before December 31, 2017. As a result, beginning October 1, 2017 we ceased offering modifications and modifications re-ages. We will continue to offer collection re-ages to borrowers until the associated receivable is sold.

The following table presents information about our TDR Loans at September 30, 2017 and December 31, 2016. As all of our TDR Loans are classified as held for sale as of September 30, 2017 and December 31, 2016 and carried at the lower of amortized cost or fair value, there are no credit loss reserves associated with TDR Loans.



	September 30, 2017		December 31, 2016
	(in millions)
Carrying value	$	136	$	1,691
Unpaid principal balance⁽¹⁾	168		2,323


⁽¹⁾	At September 30, 2017 and December 31, 2016, the unpaid principal balance reflected above includes $6 million and $271 million, respectively, which have received a reduction in the unpaid principal balance as part of an account management action.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(in millions)
Average balance of TDR Loans	$	470	$	3,909	$	990	$	5,695
Interest income recognized on TDR Loans	2		80		35		330

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



	Accruing Receivables		Nonaccrual Receivables⁽¹⁾		Total
	(in millions)
At September 30, 2017	$	232	$	24	$	256
At December 31, 2016	5,293		381		5,674

⁽¹⁾

Nonaccrual receivables 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 do not include receivables totaling $35 million and $252 million at September 30, 2017 and December 31, 2016, respectively, which are less than 90 days contractually delinquent and not accruing interest.

The following table provides additional information on nonaccrual receivables:



Nine Months Ended September 30,	2017		2016
	(in millions)
Interest income that would have been recorded if the nonaccrual receivable had been current in accordance with contractual terms during the period	$	15	$	59
Interest income that was recorded on nonaccrual receivables during the period	2		18