We define our timeshare financing receivables portfolio segments as (i) originated and (ii) acquired. The following table presents the components of each portfolio segment by class of timeshare financing receivables.


	Originated(2)						Acquired(2)
	December 31,			December 31,			December 31,			December 31,
($ in millions)	2021			2020			2021			2020
Securitized	$	587		$	805		$	523		$	—
Unsecuritized(1)		810			380			515			—
Timeshare financing receivables, gross	$	1,397		$	1,185		$	1,038		$	—
Unamortized non-credit acquisition premium(3)		—			—			74			—
Less: allowance for financing receivables losses		(280	)		(211	)		(482	)		—
Timeshare financing receivables, net	$	1,117		$	974		$	630		$	—

____________________

(1) Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility (“Timeshare Facility”) as well as amounts held as future collateral for upcoming securitization activities.

(2) Acquired timeshare financing receivables include all timeshare financing receivables of Legacy-Diamond as of the Acquisition Date. Originated timeshare financing receivables include all Legacy-HGV timeshare financing receivables and Legacy-Diamond timeshare financing receivables originated after the Acquisition Date.

(3) A non-credit premium of $97 million was recognized at the Acquisition Date. $74 million of this premium remains unamortized as of December 31, 2021.

As of December 31, 2021 and 2020, we had timeshare financing receivables with a carrying value of $131 million and $17 million, respectively, securing the Timeshare Facility. In connection with the acquisition of Diamond, we also gained access to two additional conduit facilities in anticipation of future financing activities. We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale. We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance. During the year ended December 31, 2021, we recorded an adjustment to our estimate of variable consideration of $121 million. During the year ended December 31, 2020, we recorded an adjustment to our estimate of variable consideration of $75 million, which includes an incremental $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.

We recognize interest income on our timeshare financing receivables as earned. As of December 31, 2021 and 2020, we had interest receivable outstanding of $9 million and $7 million, respectively, on our originated timeshare financing receivables, which represents all Legacy-HGV timeshare financing receivables and timeshare financing receivables originated by Legacy-Diamond subsequent to the Acquisition Date. As of December 31, 2021, we had interest receivable outstanding of $7 million related to the Legacy-Diamond timeshare financing receivables that were acquired on the Acquisition Date. Interest receivable is included in Other Assets within our consolidated balance sheets. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. As of December 31, 2021, our originated timeshare financing receivables had interest rates ranging from 1.5 percent to 25 percent, an average interest rate of 13.3 percent, a weighted-average remaining term of 9.7 years and maturities through 2036. Our acquired timeshare financing receivables had interest rates ranging from 3 percent to 25 percent, a weighted-average interest rate of 15.6 percent, a weighted-average remaining term of 7.9 years and maturities through 2031.

As part of the Diamond Acquisition, we acquired existing portfolios of timeshare financing receivables. Acquired timeshare financing receivables include all timeshare financing receivables of Legacy-Diamond as of the Acquisition Date and were deemed to be purchase credit deteriorated financial assets. These notes receivable were initially recognized at their purchase price, represented by the acquisition date fair value, and subsequently “grossed- up” by our acquisition date assessment of the allowance for credit losses. The difference over which par value of the acquired purchased credit deteriorated assets exceeds the purchase price plus the initial allowance for credit losses is reflected as a non-credit premium and is amortized as a reduction to interest income under the effective interest method.

The fair value of our acquired timeshare financing receivables as of the Acquisition Date was determined using a discounted cash flow method, which calculated a present value of expected future cash flows based on scheduled principal and interest payments over the term of the respective timeshare financing receivables, while considering anticipated defaults and early repayments based on historical experience. Consequently, the fair value of the acquired timeshare financing receivables recorded on our balance sheet as of the Acquisition Date included an estimate of expected credit losses which became the historical cost basis for that portfolio going forward.

The allowance for credit losses for our acquired timeshare financing receivables is remeasured at each period end and takes into consideration an estimated measure of anticipated defaults and early repayments. We consider historical Legacy-Diamond timeshare financing receivables performance and the current economic environment in the re-measurement of the allowance for credit losses for our acquired timeshare financing receivables. Subsequent changes to the allowance for credit losses are recorded as additions to or reversals of credit losses in our consolidated statements of operations through provision for credit losses.

Our acquired timeshare financing receivables as of December 31, 2021 mature as follows:


	Acquired Timeshare Financing Receivables
($ in millions)	Securitized		Unsecuritized		Total
Year
2022	$	51	$	36	$	87
2023		56		40		96
2024		61		45		106
2025		66		50		116
2026		70		55		125
Thereafter		219		289		508
	$	523	$	515	$	1,038

Originated timeshare financing receivables represent all Legacy-HGV timeshare financing receivables and timeshare financing receivables originated by Legacy-Diamond subsequent to the Acquisition Date. Our originated timeshare financing receivables as of December 31, 2021 mature as follows:


	Originated Timeshare Financing Receivables
($ in millions)	Securitized		Unsecuritized		Total
Year
2022	$	82	$	67	$	149
2023		85		60		145
2024		86		67		153
2025		84		73		157
2026		78		81		159
Thereafter		172		462		634
	$	587	$	810	$	1,397

The changes in our allowance for financing receivables losses were as follows:



($ in millions)	Originated			Acquired
Balance as of December 31, 2018	$	172		$	—
Provisions for financing receivables losses(1)		74			—
Securitizations		—			—
Write-offs		(62	)		—
Balance as of December 31, 2019	$	184		$	—
Provisions for financing receivables losses(1)		75			—
Securitizations		—			—
Write-offs		(48	)		—
Balance as of December 31, 2020	$	211		$	—
Initial allowance for PCD financing receivables acquired during the period(2)		—			512
Provision for financing receivables losses(1)		121			—
Write-offs		(79	)		(11	)
Upgrades(3)		27			(19	)
Balance as of December 31, 2021	$	280		$	482

(1) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

(2) The initial gross allowance determined for receivables with credit deterioration was $512 million as of the Acquisition Date. Of this amount, approximately $249 million relates to net uncollectible balances such as loans that were fully written-off prior to the Acquisition. Therefore, the net impact to the allowance related to acquired loans not previously written off was an increase of $263 million.

(3) Represents the initial change in allowance resulting from upgrades of Acquired loans. Upgraded Acquired loans and their related allowance are included in the Originated portfolio segment.

We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the collectability of our receivables on an ongoing basis. There are no significant concentrations of collection risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for determining our allowance for financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

The following table details our gross Legacy-HGV timeshare financing receivables by the origination year and average FICO score as of December 31, 2021:


($ in millions)	2021		2020		2019		2018		2017		Prior		Total
FICO score
700+	$	249	$	81	$	138	$	93	$	63	$	79	$	703
600-699		80		31		49		33		21		34		248
<600		11		5		7		4		3		5		35
No score(1)		41		25		36		24		13		27		166
	$	381	$	142	$	230	$	154	$	100	$	145	$	1,152

We apply payments we receive for loans, including those in non-accrual status, to amounts due in the following order: servicing fees; interest; principal; and late charges. Once a loan is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point. We resume interest accrual for loans for which we had previously ceased accruing interest once the loan is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the loan is 121 days past due and, subsequently, we write off the uncollectible note against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.

As of December 31, 2021 and 2020, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $83 and $117 million, respectively. The following tables detail an aged analysis of our gross timeshare financing receivables balance:


	Legacy-HGV Timeshare Financing Receivables
	December 31, 2021
($ in millions)	Securitized		Unsecuritized		Total
Current	$	569	$	488	$	1,057
31 - 90 days past due		6		6		12
91 - 120 days past due		2		2		4
121 days and greater past due		2		77		79
	$	579	$	573	$	1,152


	Legacy-HGV Timeshare Financing Receivables
	December 31, 2020
($ in millions)	Securitized		Unsecuritized		Total
Current	$	783	$	265	$	1,048
31 - 90 days past due		11		9		20
91 - 120 days past due		5		3		8
121 days and greater past due		6		103		109
	$	805	$	380	$	1,185

We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the collectability of our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

The following tables details our Legacy-Diamond acquired and originated timeshare financing receivables by the origination year and average FICO score as of December 31, 2021:


Legacy-Diamond Acquired Timeshare Financing Receivables
($ in millions)	2021		2020		2019		2018		2017		Prior		Total
FICO score
700+	$	125	$	128	$	146	$	94	$	58	$	50	$	601
600-699		64		70		89		50		34		49		356
<600		14		18		14		6		3		15		70
No score(1)		2		2		2		1		1		3		11
	$	205	$	218	$	251	$	151	$	96	$	117	$	1,038


Legacy-Diamond Originated Timeshare Financing Receivables
($ in millions)	2021		2020		2019		2018		2017		Prior		Total
FICO score
700+	$	172	$	—	$	—	$	—	$	—	$	—	$	172
600-699		60		—		—		—		—		—		60
<600		11		—		—		—		—		—		11
No score(1)		2		—		—		—		—		—		2
	$	245	$	—	$	—	$	—	$	—	$	—	$	245

The accrued interest on our Legacy-Diamond timeshare financing receivables is accrued based on the contractual provisions of the loan documents, which is suspended at the earlier of (i) the customer’s account becoming over 90 days delinquent, or (ii) the completion of cancellation or foreclosure proceedings. Once suspended, we reverse all prior recognized interest income as well. We resume interest accrual for receivables for which we had previously ceased accruing interest once the receivable is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the receivable is 121 days past due and, subsequently, we write off the uncollectible balance against the reserve once the foreclosure process is complete and we become owner of the deed for the foreclosed unit.

As of December 31, 2021 we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $369 million. The following tables detail an aged analysis of our gross timeshare receivables balance:


	Legacy-Diamond Timeshare Financing Receivables
	December 31, 2021
($ in millions)	Securitized		Unsecuritized		Total
Current	$	496	$	385	$	881
31 - 90 days past due		15		18		33
91 - 120 days past due		6		5		11
121 days and greater past due		14		344		358
	$	531	$	752	$	1,283