FINANCIAL SERVICES FINANCE RECEIVABLES

Our Financial Services segment, primarily Ford Credit, manages finance receivables as “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables, net were as follows (in millions):



	December 31, 2016			September 30, 2017
Consumer
Retail financing, gross	$	68,121		$	75,452
Unearned interest supplements	(2,783		)	(3,136		)
Consumer finance receivables	65,338			72,316
Non-Consumer
Dealer financing	31,336			32,123
Non-Consumer finance receivables	31,336			32,123
Total recorded investment	$	96,674		$	104,439

Recorded investment in finance receivables	$	96,674		$	104,439
Allowance for credit losses	(484		)	(575		)
Finance receivables, net	$	96,190		$	103,864

Current portion	$	46,266		$	49,541
Non-current portion	49,924			54,323
Finance receivables, net	$	96,190		$	103,864

Net finance receivables subject to fair value (a)	$	94,066		$	100,773
Fair value	94,785			100,552

__________


(a)	At December 31, 2016 and September 30, 2017, Finance receivables, net includes $2.1 billion and $3.1 billion, respectively, of direct financing leases that are not subject to fair value disclosure requirements. The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Excluded from finance receivables at both December 31, 2016 and September 30, 2017, was $223 million of accrued uncollected interest, which is reported as Other assets in the current assets section of our consolidated balance sheet.

Included in the recorded investment in finance receivables at December 31, 2016 and September 30, 2017 were consumer receivables of $32.5 billion and $35.2 billion, respectively, and non-consumer receivables of $26 billion and $23.6 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. The receivables are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of Ford Credit’s other creditors. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

NOTE 8. FINANCIAL SERVICES FINANCE RECEIVABLES (Continued)

Aging

For all finance receivables, we define “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date. The recorded investment of consumer receivables greater than 90 days past due and still accruing interest was $21 million and $28 million at December 31, 2016 and September 30, 2017, respectively. The recorded investment of non-consumer receivables greater than 90 days past due and still accruing interest was de minimis and $1 million at December 31, 2016 and September 30, 2017, respectively.

The aging analysis of our finance receivables balances were as follows (in millions):



	December 31, 2016		September 30, 2017
Consumer
31-60 days past due	$	760	$	682
61-90 days past due	114		111
91-120 days past due	34		40
Greater than 120 days past due	39		37
Total past due	947		870
Current	64,391		71,446
Consumer finance receivables	65,338		72,316

Non-Consumer
Total past due	107		135
Current	31,229		31,988
Non-Consumer finance receivables	31,336		32,123
Total recorded investment	$	96,674	$	104,439

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on aging. Refer to the aging table above.

Consumer receivables credit quality ratings are as follows:


•	Pass – current to 60 days past due


•	Special Mention – 61 to 120 days past due and in intensified collection status


•	Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral less costs to sell

Non-Consumer Portfolio. Dealers are assigned to one of four groups according to risk ratings as follows:


•	Group I – strong to superior financial metrics


•	Group II – fair to favorable financial metrics


•	Group III – marginal to weak financial metrics


•	Group IV – poor financial metrics, including dealers classified as uncollectible

NOTE 8. FINANCIAL SERVICES FINANCE RECEIVABLES (Continued)

The credit quality analysis of our dealer financing receivables was as follows (in millions):



	December 31, 2016		September 30, 2017
Dealer Financing
Group I	$	24,315	$	24,911
Group II	5,552		5,581
Group III	1,376		1,479
Group IV	93		152
Total recorded investment	$	31,336	$	32,123

Impaired Receivables. Impaired consumer receivables include accounts that have been rewritten or modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code that are considered to be Troubled Debt Restructurings (“TDRs”), as well as all accounts greater than 120 days past due. Impaired non-consumer receivables represent accounts with dealers that have weak or poor financial metrics or dealer financing that has been modified in TDRs. The recorded investment of consumer receivables that were impaired at December 31, 2016 and September 30, 2017 was $367 million, or 0.6% of consumer receivables, and $387 million, or 0.5% of consumer receivables, respectively. The recorded investment of non-consumer receivables that were impaired at December 31, 2016 and September 30, 2017 was $107 million, or 0.3% of non-consumer receivables, and $152 million, or 0.5% of non-consumer receivables, respectively. Impaired finance receivables are evaluated both collectively and specifically.