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Loans
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Loans Loans
Loans consisted of the following:
At December 31,20202019
 (in millions)
Commercial loans:
Real estate, including construction$10,464 $11,501 
Business and corporate banking(1)
13,479 13,479 
Global banking(2)
13,519 17,915 
Other commercial:
Affiliates(3)
1,100 2,343 
Other3,037 2,973 
Total other commercial4,137 5,316 
Total commercial41,599 48,211 
Consumer loans:
Residential mortgages18,377 17,801 
Home equity mortgages727 853 
Credit cards1,066 1,405 
Other consumer(4)
319 283 
Total consumer20,489 20,342 
Total loans$62,088 $68,553 
(1)Includes loans funded under the PPP which totaled $1,043 million at December 31, 2020. PPP loans are fully guaranteed by the Small Business Administration, if certain conditions are met.
(2)Represents large multinational firms including globally focused U.S. corporate and financial institutions, U.S. dollar lending to multinational banking clients managed by HSBC on a global basis and complex large business clients supported by Global Banking and Markets relationship managers.
(3)See Note 23, "Related Party Transactions," for additional information regarding loans to HSBC affiliates.
(4)Includes certain student loans that we have elected to designate under the fair value option and are therefore carried at fair value, which totaled $32 million at December 31, 2020. See Note 16, "Fair Value Option," for further details.
We have loans outstanding to certain executive officers and directors. The loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collectibility. The aggregate amount of such loans did not exceed 5 percent of total equity at either December 31, 2020 or 2019.
Net deferred origination costs totaled $57 million and $79 million at December 31, 2020 and 2019, respectively. At December 31, 2020 and 2019, we had a net unamortized premium on our loans of $9 million and $3 million, respectively.
COVID-19 Loan Forbearance Initiatives We have implemented various loan modification payment deferral programs to provide borrowers relief from the economic impacts of the COVID-19 pandemic. Substantially all of the loans under these programs are not classified as TDR Loans at December 31, 2020 due to our election to suspend TDR Loan classification under the CARES Act or their short-term nature as discussed under the Interagency Statement. In addition, under the Interagency Statement, for COVID-19 related loan modifications in the form of a payment deferral, the borrower’s past due status will not be affected during the deferral period and, if the loan was accruing at the time the relief was granted, the loan will generally not be placed on nonaccrual status as long as the borrower utilizes a payment deferral of six months or less. For consumer mortgage loans, when a borrower utilizes a payment deferral of more than six months, the loan will generally be placed on nonaccrual status and, if the loan does not meet the criteria in the CARES Act, assessed for TDR Loan classification. We have not modified our commercial loan nonaccrual policies as a result of this guidance. See Note 2, "Summary of Significant Accounting Policies and New Accounting Pronouncements," for further discussion.
Aging Analysis of Past Due Loans  The following table summarizes the past due status of our loans at December 31, 2020 and 2019. The aging of past due amounts is determined based on the contractual delinquency status of payments under the loan. An account is generally considered to be contractually delinquent when payments have not been made in accordance with the loan terms. Delinquency status is affected by customer account management policies and practices such as re-age, which results in the re-setting of the contractual delinquency status to current. For COVID-19 related loan modifications in the form of a payment deferral, the borrower’s past due status will not be affected during the deferral period.
 Past DueTotal Past Due 30 Days or More  
30 - 89 Days90+ Days
Current(1)
Total Loans
 (in millions)
At December 31, 2020
Commercial loans:
Real estate, including construction$78 $— $78 $10,386 $10,464 
Business and corporate banking
126 19 145 13,334 13,479 
Global banking— 60 60 13,459 13,519 
Other commercial24 — 24 4,113 4,137 
Total commercial228 79 307 41,292 41,599 
Consumer loans:
Residential mortgages
435 311 746 17,631 18,377 
Home equity mortgages11 22 33 694 727 
Credit cards23 19 42 1,024 1,066 
Other consumer7 6 13 306 319 
Total consumer476 358 834 19,655 20,489 
Total loans$704 $437 $1,141 $60,947 $62,088 
At December 31, 2019
Commercial loans:
Real estate, including construction$7 $1 $8 $11,493 $11,501 
Business and corporate banking
60 35 95 13,384 13,479 
Global banking— — — 17,915 17,915 
Other commercial22 — 22 5,294 5,316 
Total commercial89 36 125 48,086 48,211 
Consumer loans:
Residential mortgages
342 272 614 17,187 17,801 
Home equity mortgages10 24 34 819 853 
Credit cards24 24 48 1,357 1,405 
Other consumer5 5 10 273 283 
Total consumer381 325 706 19,636 20,342 
Total loans$470 $361 $831 $67,722 $68,553 
(1)Loans less than 30 days past due are presented as current.
Contractual Maturities  Contractual maturities of loans outstanding at December 31, 2020 were as follows:
  
20212022202320242025ThereafterTotal
 (in millions)
Commercial loans:
Real estate, including construction$5,791 $2,452 $1,256 $584 $167 $214 $10,464 
Business and corporate banking7,460 3,158 1,617 753 215 276 13,479 
Global banking7,482 3,167 1,622 755 215 278 13,519 
Other commercial2,290 969 496 231 66 85 4,137 
Consumer loans:
Residential mortgages563 468 486 501 500 15,859 18,377 
Home equity mortgages(1)
322 154 93 57 37 64 727 
Credit cards(2)
— 1,066 — — — — 1,066 
Other consumer252 59 1 3 2 2 319 
Total$24,160 $11,493 $5,571 $2,884 $1,202 $16,778 $62,088 
(1)Home equity mortgage maturities reflect estimates based on historical payment patterns.
(2)As credit card receivables do not have stated maturities, the table reflects an average estimate based on historical payment patterns.
As a substantial portion of consumer loans, based on our experience, will be renewed or repaid prior to contractual maturity, the above maturity schedule should not be regarded as a forecast of future cash collections. The following table summarizes contractual maturities of loans outstanding at December 31, 2020 due after one year by repricing characteristic:
December 31, 2020After One But
Within Five Years		After Five Years
 (in millions)
Receivables at predetermined interest rates$1,802 $5,233 
Receivables at floating or adjustable rates19,348 11,545 
Total$21,150 $16,778 
Nonperforming Loans  Nonperforming loans, including nonaccrual loans and accruing loans contractually 90 days or more past due, consisted of the following:
Nonaccrual LoansAccruing Loans Contractually Past Due 90 Days or MoreNonaccrual Loans With No Allowance For Credit Losses
 (in millions)
At December 31, 2020
Commercial:
Real estate, including construction$44 $— $31 
Business and corporate banking163 — 1 
Global banking337 — 93 
Total commercial544 — 125 
Consumer:
Residential mortgages(1)(2)(3)
1,079 — 241 
Home equity mortgages(1)(2)
63 — 34 
Credit cards— 19 — 
Other consumer— 2 — 
Total consumer1,142 21 275 
Total nonperforming loans$1,686 $21 $400 
At December 31, 2019
Commercial:
Real estate, including construction$6 $— $3 
Business and corporate banking82 1 19 
Global banking149 — 117 
Total commercial237 1 139 
Consumer:
Residential mortgages(1)(2)(3)
381 — 257 
Home equity mortgages(1)(2)
46 — 32 
Credit cards— 24 — 
Other consumer— 5 — 
Total consumer427 29 289 
Total nonperforming loans$664 $30 $428 
(1)At December 31, 2020 and 2019, nonaccrual consumer mortgage loans include $375 million and $289 million, respectively, of loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell. The decrease in nonaccrual consumer mortgage loans with no allowance for credit losses at December 31, 2020 reflects the impact of adopting new accounting guidance which requires expected recoveries related to subsequent increases in the fair value of collateral for collateral-dependent loans to be recognized in the allowance for credit losses beginning January 1, 2020. See Note 2, "Summary of Significant Accounting Policies and New Accounting Pronouncements," for additional discussion.
(2)Nonaccrual consumer mortgage loans include all loans which are 90 or more days contractually delinquent as well as loans discharged under Chapter 7 bankruptcy and not re-affirmed and second lien loans where the first lien loan that we own or service is 90 or more days contractually delinquent. At December 31, 2020, nonaccrual consumer mortgage loans also include $590 million of loans under COVID-19 related payment deferral programs where the borrowers utilized a payment deferral of more than six months and, as a result, have been placed on nonaccrual status.
(3)Nonaccrual consumer mortgage loans for all periods does not include guaranteed loans purchased from the Government National Mortgage Association. Repayment of these loans is predominantly insured by the Federal Housing Administration and as such, these loans have different risk characteristics from the rest of our consumer loan portfolio.
The following table provides additional information on our nonaccrual loans:
Year Ended December 31,202020192018
(in millions)
Interest income that would have been recorded if the nonaccrual loans had been current in accordance with contractual terms during the period$43 $35 $46 
Interest income that was recorded on nonaccrual loans and included in interest income during the period12 15 31 
Collateral-Dependent Loans Loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty are considered to be collateral-dependent loans. Collateral can have a significant financial effect in mitigating our exposure to credit risk.
Collateral-dependent residential mortgage loans are carried at the lower of amortized cost or fair value of the collateral less costs to sell, with any excess in the carrying amount of the loan generally charged off at the time foreclosure is initiated or when settlement is reached with the borrower, but not to exceed the end of the month in which the account becomes six months contractually delinquent. Collateral values are based on broker price opinions or appraisals which are updated at least every 180 days less estimated costs to sell. During the quarterly period between updates, real estate price trends are reviewed on a geographic basis and incorporated as necessary. At December 31, 2020 and 2019, we had collateral-dependent residential mortgage loans totaling $817 million and $803 million, respectively.
For collateral-dependent commercial loans, the allowance for expected credit losses is individually assessed based on the fair value of the collateral. Various types of collateral are used, including real estate, inventory, equipment, accounts receivable, securities and cash, among others. For commercial real estate loans, collateral values are generally based on appraisals which are updated based on management judgment under the specific circumstances on a case-by-case basis. In situations where an appraisal is not used, borrower-specific factors such as operating results, cash flows and debt service ratios are reviewed along with relevant market data of comparable properties in order to create a 10-year cash flow model to be discounted at appropriate rates to present value. The collateral value for securities is based on their quoted market prices or broker quotes. The collateral value for other financial assets is generally based on appraisals or is estimated using a discounted cash flow analysis. Commercial loan balances are charged off at the time all or a portion of the balance is deemed uncollectible. At December 31, 2020 and 2019, we had collateral-dependent commercial loans totaling $456 million and $227 million, respectively.
Troubled debt restructurings  TDR Loans represent loans for which the original contractual terms have been modified to provide for terms that are less than what we would be willing to accept for new loans with comparable risk because of deterioration in the borrower's financial condition.
Modifications for consumer or commercial loans may include changes to one or more terms of the loan, including, but not limited to, a change in interest rate, extension of the amortization period, reduction in payment amount and partial forgiveness or deferment of principal, accrued interest or other loan covenants. A substantial amount of our modifications involve interest rate reductions on consumer loans, which lower the amount of interest income we are contractually entitled to receive in future periods. Through lowering the interest rate and other loan term changes, we believe we are able to increase the amount of cash flow that will ultimately be collected from the loan, given the borrower's financial condition. Once a consumer loan is classified as a TDR Loan, it continues to be reported as such until it is paid off or charged-off. For commercial loans, if subsequent performance is in accordance with the new terms and the loan is upgraded, it is possible the loan will no longer be reported as a TDR Loan at the earliest one year after the restructuring. During 2020 and 2018, there were no commercial loans removed from TDR Loan classification. During 2019, a $12 million commercial loan met this criteria and was removed from TDR Loan classification.
As previously discussed, we have implemented various loan modification payment deferral programs to provide borrowers relief from the economic impacts of COVID-19. Substantially all of the loans under these programs are not classified as TDR Loans at December 31, 2020 due to our election to suspend TDR Loan classification under the CARES Act or their short-term nature as discussed under the Interagency Statement.
The following table summarizes our TDR Loans at December 31, 2020 and 2019:
At December 31,20202019
 (in millions)
Commercial loans:
Business and corporate banking$94 $36 
Global banking74 68 
Total commercial(1)(2)
168 104 
Consumer loans:
Residential mortgages(3)(4)
582 580 
Home equity mortgages(3)(4)
31 32 
Credit cards5 4 
Total consumer618 616 
Total TDR Loans(5)
$786 $720 
(1)Additional commitments to lend to commercial borrowers whose loans have been modified in TDR Loans totaled $107 million and $222 million at December 31, 2020 and 2019, respectively.
(2)Not included in the table at December 31, 2020 are $924 million of commercial loans that were exempted from TDR assessment due to our CARES Act election.
(3)At December 31, 2020 and 2019, the carrying value of consumer mortgage TDR Loans includes $487 million and $557 million, respectively, of loans that are recorded at the lower of amortized cost or fair value of the collateral less cost to sell.
(4)Not included in the table at December 31, 2020 are $736 million of consumer mortgage loans under COVID-19 related payment deferral programs where the borrowers were provided with extended payment deferral relief of more than six months that were exempted from TDR assessment due to our CARES Act election.
(5)At December 31, 2020 and 2019, the carrying value of TDR Loans includes $463 million and $230 million, respectively, of loans which are classified as nonaccrual.
The following table presents information about loans which were modified during 2020, 2019 and 2018 and as a result of this action became classified as TDR Loans:
Year Ended December 31,202020192018
(in millions)
Commercial loans:
Business and corporate banking$95 $— $6 
Global banking44 — — 
Total commercial139 — 6 
Consumer loans:
Residential mortgages78 8 26 
Home equity mortgages3 1 5 
Credit cards4 3 4 
Total consumer85 12 35 
Total$224 $12 $41 
The weighted-average contractual rate reduction for consumer loans which became classified as TDR Loans during 2020, 2019 and 2018 was 1.75 percent, 2.18 percent and 1.93 percent, respectively. The weighted-average contractual rate reduction for commercial loans was not significant in either the number of loans or rate.
The following table presents consumer loans which were classified as TDR Loans during the previous 12 months which subsequently became 60 days or greater contractually delinquent during the years ended December 31, 2020, 2019 and 2018:
Year Ended December 31,202020192018
(in millions)
Consumer loans:
Residential mortgages$5 $3 $8 
Home equity mortgages— — 2 
Total consumer$5 $3 $10 
During the years ended December 31, 2020, 2019 and 2018, there were no commercial TDR Loans which were classified as TDR Loans during the previous 12 months which subsequently became 90 days or greater contractually delinquent.
Commercial Loan Credit Quality Indicators  The following credit quality indicators are utilized to monitor our commercial loan portfolio:
Criticized loans  Criticized loan classifications presented in the table below are determined by the assignment of various criticized facility grades based on the risk rating standards of our regulator. The following facility grades are deemed to be criticized:
Special Mention - generally includes loans that are protected by collateral and/or the credit worthiness of the customer, but are potentially weak based upon economic or market circumstances which, if not checked or corrected, could weaken our credit position at some future date.
Substandard - includes loans that are inadequately protected by the underlying collateral and/or general credit worthiness of the customer. These loans present a distinct possibility that we will sustain some loss if the deficiencies are not corrected.
Doubtful - includes loans that have all the weaknesses exhibited by substandard loans, with the added characteristic that the weaknesses make collection or liquidation in full of the recorded loan highly improbable. However, although the possibility of loss is extremely high, certain factors exist which may strengthen the credit at some future date, and therefore the decision to charge-off the loan is deferred. Loans graded as doubtful are required to be placed in nonaccrual status.
The following table summarizes our criticized commercial loans, including a disaggregation of the loans by year of origination as of December 31, 2020 and in total as of December 31, 2019:
20202019201820172016PriorRevolving
Loans		Revolving Loans Converted to Term LoansTotal at Dec. 31, 2020Total at Dec. 31, 2019
 (in millions)
Real estate, including construction:
Special mention$— $306 $115 $171 $85 $437 $— $— $1,114 $516 
Substandard— 186 169 — 86 — — 441 203 
Doubtful— — — — — — — — — — 
Total real estate, including construction— 492 115 340 85 523 — — 1,555 719 
Business and corporate banking:
Special mention17 71 43 32 10 390 600 48 1,211 467 
Substandard1 44 25 23 31 181 435 1 741 386 
Doubtful— — — 41 57 — 98 23 
Total business and corporate banking18 115 68 55 41 612 1,092 49 2,050 876 
Global banking:
Special mention— — — — — 142 98 — 240 184 
Substandard— — 48 — — 131 477 — 656 196 
Doubtful— — — 82 160 — 242 15 
Total global banking— — 48 — — 355 735 — 1,138 395 
Other commercial:
Special mention— — — — — 44 40 — 84 11 
Substandard— — — — — 70 — — 70 — 
Doubtful— — — — — — — — 
Total other commercial— — — — — 114 40 — 154 11 
Total commercial:
Special mention17 377 158 203 95 1,013 738 48 2,649 1,178 
Substandard1 230 73 192 31 468 912 1 1,908 785 
Doubtful— — — — — 123 217 — 340 38 
Total commercial$18 $607 $231 $395 $126 $1,604 $1,867 $49 $4,897 $2,001 
Nonperforming  The following table summarizes the nonperforming status of our commercial loan portfolio, including a disaggregation of the loans by year of origination as of December 31, 2020 and in total as of December 31, 2019:
20202019201820172016PriorRevolving
Loans		Revolving Loans Converted to Term LoansTotal at Dec. 31, 2020Total at Dec. 31, 2019
 (in millions)
Real estate, including construction:
Performing loans$545 $3,775 $2,775 $1,368 $264 $1,594 $79 $20 $10,420 $11,495 
Nonaccrual loans— — 24 — — 20 — — 44 6 
Accruing loans contractually past due 90 days or more— — — — — — — — — — 
Total real estate, including construction545 3,775 2,799 1,368 264 1,614 79 20 10,464 11,501 
Business and corporate banking:
Performing loans1,079 606 253 275 151 3,485 7,145 322 13,316 13,396 
Nonaccrual loans1 15 12 60 1 3 71 — 163 82 
Accruing loans contractually past due 90 days or more— — — — — — — — — 1 
Total business and corporate banking1,080 621 265 335 152 3,488 7,216 322 13,479 13,479 
Global banking:
Performing loans507 495 190 231 104 6,023 5,632 — 13,182 17,766 
Nonaccrual loans— — — — — 127 210 — 337 149 
Accruing loans contractually past due 90 days or more— — — — — — — — — — 
Total global banking507 495 190 231 104 6,150 5,842 — 13,519 17,915 
Other commercial:
Performing loans378 431 215 105 119 630 2,259 — 4,137 5,316 
Nonaccrual loans— — — — — — — — — — 
Accruing loans contractually past due 90 days or more— — — — — — — — — — 
Total other commercial378 431 215 105 119 630 2,259 — 4,137 5,316 
Total commercial:
Performing loans2,509 5,307 3,433 1,979 638 11,732 15,115 342 41,055 47,973 
Nonaccrual loans1 15 36 60 1 150 281 — 544 237 
Accruing loans contractually past due 90 days or more— — — — — — — — — 1 
Total commercial$2,510 $5,322 $3,469 $2,039 $639 $11,882 $15,396 $342 $41,599 $48,211 
Credit risk profile  Commercial loans are assigned a credit rating based on the estimated probability of default. Investment grade includes loans with credit ratings of at least BBB- or above or the equivalent based on our internal credit rating system. The following table shows the credit risk profile of our commercial loan portfolio, including a disaggregation of the loans by year of origination as of December 31, 2020 and in total as of December 31, 2019:
20202019201820172016PriorRevolving
Loans		Revolving Loans Converted to Term LoansTotal at Dec. 31, 2020Total at Dec. 31, 2019
 (in millions)
Real estate, including construction:
Investment grade$339 $1,123 $817 $318 $179 $640 $6 $— $3,422 $6,332 
Non-investment grade206 2,652 1,982 1,050 85 974 73 20 7,042 5,169 
Total real estate, including construction545 3,775 2,799 1,368 264 1,614 79 20 10,464 11,501 
Business and corporate banking:
Investment grade342 147 37 34 23 1,486 2,499 47 4,615 6,029 
Non-investment grade738 474 228 301 129 2,002 4,717 275 8,864 7,450 
Total business and corporate banking1,080 621 265 335 152 3,488 7,216 322 13,479 13,479 
Global banking:
Investment grade464 477 46 231 30 4,618 4,281 — 10,147 12,981 
Non-investment grade43 18 144 — 74 1,532 1,561 — 3,372 4,934 
Total global banking507 495 190 231 104 6,150 5,842 — 13,519 17,915 
Other commercial:
Investment grade372 163 117 105 116 525 1,932 — 3,330 4,649 
Non-investment grade6 268 98 — 3 105 327 — 807 667 
Total other commercial378 431 215 105 119 630 2,259 — 4,137 5,316 
Total commercial:
Investment grade1,517 1,910 1,017 688 348 7,269 8,718 47 21,514 29,991 
Non-investment grade993 3,412 2,452 1,351 291 4,613 6,678 295 20,085 18,220 
Total commercial$2,510 $5,322 $3,469 $2,039 $639 $11,882 $15,396 $342 $41,599 $48,211 
Consumer Loan Credit Quality Indicators  The following credit quality indicators are utilized to monitor our consumer loan portfolio:
Delinquency  The following table summarizes dollars of two-months-and-over contractual delinquency for our consumer loan portfolio, including a disaggregation of the loans by year of origination as of December 31, 2020 and in total as of December 31, 2019:
20202019201820172016PriorRevolving
Loans		Total at Dec. 31, 2020Total at Dec. 31, 2019
 (in millions)
Residential mortgages(1)(2)
$3 $15 $13 $25 $19 $329 $— $404 $350 
Home equity mortgages(1)(2)
— — — — — 25 — 25 25 
Credit cards28 28 34 
Other consumer1 1 — — — 4 2 8 7 
Total consumer$4 $16 $13 $25 $19 $358 $30 $465 $416 
(1)At December 31, 2020 and 2019, consumer mortgage loan delinquency includes $281 million and $256 million, respectively, of loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell.
(2)At December 31, 2020 and 2019, consumer mortgage loans include $109 million and $142 million, respectively, of loans that were in the process of foreclosure.
Nonperforming  The following table summarizes the nonperforming status of our consumer loan portfolio, including a disaggregation of the loans by year of origination as of December 31, 2020 and in total as of December 31, 2019:
20202019201820172016PriorRevolving
Loans		Total at Dec. 31, 2020Total at Dec. 31, 2019
 (in millions)
Residential mortgages:
Performing loans$4,491 $2,369 $1,338 $1,572 $1,852 $5,676 $— $17,298 $17,420 
Nonaccrual loans
38 107 93 86 78 677 — 1,079 381 
Total residential mortgages4,529 2,476 1,431 1,658 1,930 6,353 — 18,377 17,801 
Home equity mortgages:
Performing loans50 51 33 34 45 451 — 664 807 
Nonaccrual loans
— — 1 1 2 59 — 63 46 
Total home equity mortgages50 51 34 35 47 510 — 727 853 
Credit cards:
Performing loans— — — — — — 1,047 1,047 1,381 
Accruing loans contractually past due 90 days or more
— — — — — — 19 19 24 
Total credit cards— — — — — — 1,066 1,066 1,405 
Other consumer:
Performing loans87 39 — 1 8 128 54 317 278 
Accruing loans contractually past due 90 days or more
— — — — — — 2 2 5 
Total other consumer87 39 — 1 8 128 56 319 283 
Total consumer:
Performing loans4,628 2,459 1,371 1,607 1,905 6,255 1,101 19,326 19,886 
Nonaccrual loans38 107 94 87 80 736 — 1,142 427 
Accruing loans contractually past due 90 days or more
— — — — — — 21 21 29 
Total consumer$4,666 $2,566 $1,465 $1,694 $1,985 $6,991 $1,122 $20,489 $20,342 
Troubled debt restructurings  The following table summarizes TDR Loans in our consumer loan portfolio, including a disaggregation of the loans by year of origination as of December 31, 2020 and in total as of December 31, 2019:
20202019201820172016PriorRevolving
Loans		Total at Dec. 31, 2020Total at Dec. 31, 2019
 (in millions)
Residential mortgages$3 $5 $6 $3 $2 $563 $— $582 $580 
Home equity mortgages— — — — — 31 — 31 32 
Credit cards— — — — — — 5 5 4 
Total consumer$3 $5 $6 $3 $2 $594 $5 $618 $616 
Concentration of Credit Risk  At December 31, 2020 and 2019, our loan portfolios included interest-only residential mortgage and home equity mortgage loans totaling $3,597 million and $3,362 million, respectively. An interest-only residential mortgage loan allows a customer to pay the interest-only portion of the monthly payment for a period of time which results in lower payments during the initial loan period. However, subsequent events affecting a customer's financial position could affect the ability of customers to repay the loan in the future when the principal payments are required which increases the credit risk of this loan type.