FINANCE RECEIVABLES

We segment finance receivables into “consumer” and “non-consumer” receivables. The receivables are generally secured by the vehicles, inventory, or other property being financed.

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



	June 30, 2015			December 31, 2014
Consumer
Retail financing, gross (a)	$	57,646		$	55,856
Less: Unearned interest supplements (b)	(1,739		)	(1,760		)
Consumer finance receivables	55,907			54,096

Non-Consumer
Dealer financing (a)(c)	32,757			31,875
Other financing	1,214			1,265
Non-Consumer finance receivables	33,971			33,140

Total recorded investment (d)	$	89,878		$	87,236

Recorded investment in finance receivables (d)	$	89,878		$	87,236
Less: Allowance for credit losses (e)	(335		)	(321		)
Finance receivables, net	$	89,543		$	86,915

Net finance receivables subject to fair value (f)	$	87,773		$	85,242
Fair value	89,062			86,715

__________

(a)

At June 30, 2015 and December 31, 2014, includes consumer receivables of $26.9 billion and $24.4 billion, respectively, and non-consumer receivables of $23.1 billion and $21.8 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 our other obligations or the claims of our other creditors. We hold 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. See Note 5 for additional information.


(b)	Ford-sponsored special financing programs attributable to retail financing.


(c)	At June 30, 2015 and December 31, 2014, includes $664 million and $535 million, respectively, of dealer financing receivables with entities (primarily dealers) that are reported as consolidated subsidiaries of Ford. The associated vehicles that are being financed by us are reported as inventory on Ford’s balance sheet.


(d)	At June 30, 2015 and December 31, 2014, excludes $185 million and $192 million, respectively, of accrued uncollected interest, which we report in Other assets on our balance sheet.


(e)	See Note 4 for additional information related to our allowance for credit losses.


(f)	At June 30, 2015 and December 31, 2014, excludes $1.8 billion and $1.7 billion, respectively, of certain receivables (primarily direct financing leases) that are not subject to fair value disclosure requirements.

NOTE 2. 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 $13 million and $17 million at June 30, 2015 and December 31, 2014, respectively. The recorded investment of non-consumer receivables greater than 90 days past due and still accruing interest was $1 million and $3 million at June 30, 2015 and December 31, 2014, respectively.

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



	June 30, 2015		December 31, 2014
Consumer
31-60 days past due	$	566	$	718
61-90 days past due	85		97
91-120 days past due	23		29
Greater than 120 days past due	39		52
Total past due	713		896
Current	55,194		53,200
Consumer finance receivables	55,907		54,096

Non-Consumer
Total past due	110		117
Current	33,861		33,023
Non-Consumer finance receivables	33,971		33,140

Total recorded investment	$	89,878	$	87,236

Credit Quality

Consumer Segment

Credit quality ratings for consumer receivables are based on our aging analysis. 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

Non-Consumer Segment

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 2. FINANCE RECEIVABLES (Continued)

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



	June 30, 2015		December 31, 2014
Dealer financing
Group I	$	24,738	$	23,641
Group II	6,510		6,360
Group III	1,406		1,787
Group IV	103		87
Total recorded investment	$	32,757	$	31,875

Other financing receivables are excluded from our credit quality reporting since the performance of this group of receivables is generally guaranteed by Ford.

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 June 30, 2015 and December 31, 2014 was $380 million, or 0.7% of consumer receivables, and $415 million, or 0.8% of consumer receivables, respectively. The recorded investment of non-consumer receivables that were impaired at June 30, 2015 and December 31, 2014 was $126 million, or 0.4% of non-consumer receivables, and $110 million, or 0.3% of non-consumer receivables, respectively. Impaired finance receivables are evaluated both collectively and specifically.

The accrual of revenue is discontinued at the time a receivable is determined to be uncollectible. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

A restructuring of debt constitutes a TDR if we grant a concession to a debtor for economic or legal reasons related to the debtor’s financial difficulties that we otherwise would not consider. Consumer and non-consumer receivables that have a modified interest rate below market rate or that were modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code, except non-consumer receivables that are current with minimal risk of loss, are considered to be TDRs. We do not grant concessions on the principal balance of our receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven. Finance receivables involved in TDRs are specifically assessed for impairment.