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Loans
 12 Months Ended
Dec. 31, 2014
Loans and Leases Receivable Disclosure [Line Items]  
Loans
Loans
Loan accounting framework
The accounting for a loan depends on management’s strategy for the loan, and on whether the loan was credit-impaired at the date of acquisition. The Firm accounts for loans based on the following categories:
•
Originated or purchased loans held-for-investment (i.e., “retained”), other than purchased credit-impaired (“PCI”) loans
•
Loans held-for-sale
•
Loans at fair value
•
PCI loans held-for-investment
The following provides a detailed accounting discussion of these loan categories:
Loans held-for-investment (other than PCI loans)
Originated or purchased loans held-for-investment, other than PCI loans, are measured at the principal amount outstanding, net of the following: allowance for loan losses; net charge-offs; interest applied to principal (for loans accounted for on the cost recovery method); unamortized discounts and premiums; and net deferred loan fees or costs. Credit card loans also include billed finance charges and fees net of an allowance for uncollectible amounts.
Interest income
Interest income on performing loans held-for-investment, other than PCI loans, is accrued and recognized as interest income at the contractual rate of interest. Purchase price discounts or premiums, as well as net deferred loan fees or costs, are amortized into interest income over the life of the loan to produce a level rate of return.
Nonaccrual loans
Nonaccrual loans are those on which the accrual of interest has been suspended. Loans (other than credit card loans and certain consumer loans insured by U.S. government agencies) are placed on nonaccrual status and considered nonperforming when full payment of principal and interest is in doubt, or when principal and interest has been in default for a period of 90 days or more, unless the loan is both well-secured and in the process of collection. A loan is determined to be past due when the minimum payment is not received from the borrower by the contractually specified due date or for certain loans (e.g., residential real estate loans), when a monthly payment is due and unpaid for 30 days or more. Finally, collateral-dependent loans are typically maintained on nonaccrual status.
On the date a loan is placed on nonaccrual status, all interest accrued but not collected is reversed against interest income. In addition, the amortization of deferred amounts is suspended. Interest income on nonaccrual loans may be recognized as cash interest payments are received (i.e., on a cash basis) if the recorded loan balance is deemed fully collectible; however, if there is doubt regarding the ultimate collectibility of the recorded loan balance, all interest cash receipts are applied to reduce the carrying value of the loan (the cost recovery method). For consumer loans, application of this policy typically results in the Firm recognizing interest income on nonaccrual consumer loans on a cash basis.
A loan may be returned to accrual status when repayment is reasonably assured and there has been demonstrated performance under the terms of the loan or, if applicable, the terms of the restructured loan.
As permitted by regulatory guidance, credit card loans are generally exempt from being placed on nonaccrual status; accordingly, interest and fees related to credit card loans continue to accrue until the loan is charged off or paid in full. However, the Firm separately establishes an allowance for the estimated uncollectible portion of accrued interest and fee income on credit card loans. The allowance is established with a charge to interest income and is reported as an offset to loans.
Allowance for loan losses
The allowance for loan losses represents the estimated probable credit losses inherent in the held-for-investment loan portfolio at the balance sheet date. Changes in the allowance for loan losses are recorded in the provision for credit losses on the Firm’s Consolidated statements of income. See Note 15 for further information on the Firm’s accounting policies for the allowance for loan losses.
Charge-offs
Consumer loans, other than risk-rated business banking, risk-rated auto and PCI loans, are generally charged off or charged down to the net realizable value of the underlying collateral (i.e., fair value less costs to sell), with an offset to the allowance for loan losses, upon reaching specified stages of delinquency in accordance with standards established by the Federal Financial Institutions Examination Council (“FFIEC”). Residential real estate loans, non-modified credit card loans and scored business banking loans are generally charged off at 180 days past due. In the second quarter of 2013, the Firm revised its policy to charge-off modified credit card loans that do not comply with their modified payment terms at 120 days past due rather than 180 days past due. Auto and student loans are charged off no later than 120 days past due.
Certain consumer loans will be charged off earlier than the FFIEC charge-off standards in certain circumstances as follows:
•
A charge-off is recognized when a loan is modified in a TDR if the loan is determined to be collateral-dependent. A loan is considered to be collateral-dependent when repayment of the loan is expected to be provided solely by the underlying collateral, rather than by cash flows from the borrower’s operations, income or other resources.
•
Loans to borrowers who have experienced an event (e.g., bankruptcy) that suggests a loss is either known or highly certain are subject to accelerated charge-off standards. Residential real estate and auto loans are charged off when the loan becomes 60 days past due, or sooner if the loan is determined to be collateral-dependent. Credit card and scored business banking loans are charged off within 60 days of receiving notification of the bankruptcy filing or other event. Student loans are generally charged off when the loan becomes 60 days past due after receiving notification of a bankruptcy.
•
Auto loans are written down to net realizable value upon repossession of the automobile and after a redemption period (i.e., the period during which a borrower may cure the loan) has passed.
Other than in certain limited circumstances, the Firm typically does not recognize charge-offs on government-guaranteed loans.
Wholesale loans, risk-rated business banking loans and risk-rated auto loans are charged off when it is highly certain that a loss has been realized, including situations where a loan is determined to be both impaired and collateral-dependent. The determination of whether to recognize a charge-off includes many factors, including the prioritization of the Firm’s claim in bankruptcy, expectations of the workout/restructuring of the loan and valuation of the borrower’s equity or the loan collateral.
When a loan is charged down to the estimated net realizable value, the determination of the fair value of the collateral depends on the type of collateral (e.g., securities, real estate). In cases where the collateral is in the form of liquid securities, the fair value is based on quoted market prices or broker quotes. For illiquid securities or other financial assets, the fair value of the collateral is estimated using a discounted cash flow model.
For residential real estate loans, collateral values are based upon external valuation sources. When it becomes likely that a borrower is either unable or unwilling to pay, the Firm obtains a broker’s price opinion of the home based on an exterior-only valuation (“exterior opinions”), which is then updated at least every six months thereafter. As soon as practicable after the Firm receives the property in satisfaction of a debt (e.g., by taking legal title or physical possession), generally, either through foreclosure or upon the execution of a deed in lieu of foreclosure transaction with the borrower, the Firm obtains an appraisal based on an inspection that includes the interior of the home (“interior appraisals”). Exterior opinions and interior appraisals are discounted based upon the Firm’s experience with actual liquidation values as compared to the estimated values provided by exterior opinions and interior appraisals, considering state- and product-specific factors.
For commercial real estate loans, collateral values are generally based on appraisals from internal and external valuation sources. Collateral values are typically updated every six to twelve months, either by obtaining a new appraisal or by performing an internal analysis, in accordance with the Firm’s policies. The Firm also considers both borrower- and market-specific factors, which may result in obtaining appraisal updates or broker price opinions at more frequent intervals.
Loans held-for-sale
Held-for-sale loans are measured at the lower of cost or fair value, with valuation changes recorded in noninterest revenue. For consumer loans, the valuation is performed on a portfolio basis. For wholesale loans, the valuation is performed on an individual loan basis.
Interest income on loans held-for-sale is accrued and recognized based on the contractual rate of interest.
Loan origination fees or costs and purchase price discounts or premiums are deferred in a contra loan account until the related loan is sold. The deferred fees and discounts or premiums are an adjustment to the basis of the loan and therefore are included in the periodic determination of the lower of cost or fair value adjustments and/or the gain or loss recognized at the time of sale.
Held-for-sale loans are subject to the nonaccrual policies described above.
Because held-for-sale loans are recognized at the lower of cost or fair value, the Firm’s allowance for loan losses and charge-off policies do not apply to these loans.
Loans at fair value
Loans used in a market-making strategy or risk managed on a fair value basis are measured at fair value, with changes in fair value recorded in noninterest revenue.
For these loans, the earned current contractual interest payment is recognized in interest income. Changes in fair value are recognized in noninterest revenue. Loan origination fees are recognized upfront in noninterest revenue. Loan origination costs are recognized in the associated expense category as incurred.
Because these loans are recognized at fair value, the Firm’s nonaccrual, allowance for loan losses, and charge-off policies do not apply to these loans.
See Note 4 for further information on the Firm’s elections of fair value accounting under the fair value option. See Note 3 and Note 4 for further information on loans carried at fair value and classified as trading assets.
PCI loans
PCI loans held-for-investment are initially measured at fair value. PCI loans have evidence of credit deterioration since the loan’s origination date and therefore it is probable, at acquisition, that all contractually required payments will not be collected. Because PCI loans are initially measured at fair value, which includes an estimate of future credit losses, no allowance for loan losses related to PCI loans is recorded at the acquisition date. See page 251 of this Note for information on accounting for PCI loans subsequent to their acquisition.
Loan classification changes
Loans in the held-for-investment portfolio that management decides to sell are transferred to the held-for-sale portfolio at the lower of cost or fair value on the date of transfer. Credit-related losses are charged against the allowance for loan losses; non-credit related losses such as those due to changes in interest rates or foreign currency exchange rates are recognized in noninterest revenue.
In the event that management decides to retain a loan in the held-for-sale portfolio, the loan is transferred to the held-for-investment portfolio at the lower of cost or fair value on the date of transfer. These loans are subsequently assessed for impairment based on the Firm’s allowance methodology. For a further discussion of the methodologies used in establishing the Firm’s allowance for loan losses, see Note 15.
Loan modifications
The Firm seeks to modify certain loans in conjunction with its loss-mitigation activities. Through the modification, JPMorgan Chase grants one or more concessions to a borrower who is experiencing financial difficulty in order to minimize the Firm’s economic loss, avoid foreclosure or repossession of the collateral, and to ultimately maximize payments received by the Firm from the borrower. The concessions granted vary by program and by borrower-specific characteristics, and may include interest rate reductions, term extensions, payment deferrals, principal forgiveness, or the acceptance of equity or other assets in lieu of payments.
Such modifications are accounted for and reported as troubled debt restructurings (“TDRs”). A loan that has been modified in a TDR is generally considered to be impaired until it matures, is repaid, or is otherwise liquidated, regardless of whether the borrower performs under the modified terms. In certain limited cases, the effective interest rate applicable to the modified loan is at or above the current market rate at the time of the restructuring. In such circumstances, and assuming that the loan subsequently performs under its modified terms and the Firm expects to collect all contractual principal and interest cash flows, the loan is disclosed as impaired and as a TDR only during the year of the modification; in subsequent years, the loan is not disclosed as an impaired loan or as a TDR so long as repayment of the restructured loan under its modified terms is reasonably assured.
Loans, except for credit card loans, modified in a TDR are generally placed on nonaccrual status, although in many cases such loans were already on nonaccrual status prior to modification. These loans may be returned to performing status (the accrual of interest is resumed) if the following criteria are met: (a) the borrower has performed under the modified terms for a minimum of six months and/or six payments, and (b) the Firm has an expectation that repayment of the modified loan is reasonably assured based on, for example, the borrower’s debt capacity and level of future earnings, collateral values, loan-to-value (“LTV”) ratios, and other current market considerations. In certain limited and well-defined circumstances in which the loan is current at the modification date, such loans are not placed on nonaccrual status at the time of modification.
Because loans modified in TDRs are considered to be impaired, these loans are measured for impairment using the Firm’s established asset-specific allowance methodology, which considers the expected re-default rates for the modified loans. A loan modified in a TDR remains subject to the asset-specific allowance methodology throughout its remaining life, regardless of whether the loan is performing and has been returned to accrual status and/or the loan has been removed from the impaired loans disclosures (i.e., loans restructured at market rates). For further discussion of the methodology used to estimate the Firm’s asset-specific allowance, see Note 15.
Foreclosed property
The Firm acquires property from borrowers through loan restructurings, workouts, and foreclosures. Property acquired may include real property (e.g., residential real estate, land, and buildings) and commercial and personal property (e.g., automobiles, aircraft, railcars, and ships).
The Firm recognizes foreclosed property upon receiving assets in satisfaction of a loan (e.g., by taking legal title or physical possession). For loans collateralized by real property, the Firm generally recognizes the asset received at foreclosure sale or upon the execution of a deed in lieu of foreclosure transaction with the borrower. Foreclosed assets are reported in other assets on the Consolidated balance sheets and initially recognized at fair value less costs to sell. Each quarter the fair value of the acquired property is reviewed and adjusted, if necessary, to the lower of cost or fair value. Subsequent adjustments to fair value are charged/credited to noninterest revenue. Operating expense, such as real estate taxes and maintenance, are charged to other expense.

Loan portfolio
The Firm’s loan portfolio is divided into three portfolio segments, which are the same segments used by the Firm to determine the allowance for loan losses: Consumer, excluding credit card; Credit card; and Wholesale. Within each portfolio segment, the Firm monitors and assesses the credit risk in the following classes of loans, based on the risk characteristics of each loan class:
Consumer, excluding
credit card(a)
 
Credit card
 
Wholesale(c)
Residential real estate – excluding PCI
• Home equity – senior lien
• Home equity – junior lien
• Prime mortgage, including
     option ARMs
• Subprime mortgage
Other consumer loans
• Auto(b)
• Business banking(b)
• Student and other
Residential real estate – PCI
• Home equity
• Prime mortgage
• Subprime mortgage
• Option ARMs
 
• Credit card loans
 
• Commercial and industrial
• Real estate
• Financial institutions
• Government agencies
• Other(d)
(a)
Includes loans held in CCB, prime mortgage and home equity loans held in AM and prime mortgage loans held in Corporate.
(b)
Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included with the other consumer loan classes.
(c)
Includes loans held in CIB, CB, AM and Corporate. Excludes prime mortgage and home equity loans held in AM and prime mortgage loans held in Corporate. Classes are internally defined and may not align with regulatory definitions.
(d)
Other primarily includes loans to SPEs and loans to private banking clients. See Note 1 for additional information on SPEs.
The following tables summarize the Firm’s loan balances by portfolio segment.
December 31, 2014
Consumer, excluding credit card
Credit card(a)
Wholesale
Total
 
(in millions)
 
Retained
 
$
294,979

 
 
$
128,027

 
 
$
324,502

 
 
$
747,508

(b) 
Held-for-sale
 
395

 
 
3,021

 
 
3,801

 
 
7,217

 
At fair value
 
—

 
 
—

 
 
2,611

 
 
2,611

 
Total
 
$
295,374

 
 
$
131,048

 
 
$
330,914

 
 
$
757,336

 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
Consumer, excluding credit card
 
Credit card(a)
 
 
Wholesale
 
 
Total
 
(in millions)
 
Retained
 
$
288,449

 
 
$
127,465

 
 
$
308,263

 
 
$
724,177

(b) 
Held-for-sale
 
614

 
 
326

 
 
11,290

 
 
12,230

 
At fair value
 
—

 
 
—

 
 
2,011

 
 
2,011

 
Total
 
$
289,063

 
 
$
127,791

 
 
$
321,564

 
 
$
738,418

 
(a)
Includes billed finance charges and fees net of an allowance for uncollectible amounts.
(b)
Loans (other than PCI loans and those for which the fair value option has been elected) are presented net of unearned income, unamortized discounts and premiums, and net deferred loan costs of $1.3 billion and $1.9 billion at December 31, 2014 and 2013, respectively.
The following tables provide information about the carrying value of retained loans purchased, sold and reclassified to held-for-sale during the periods indicated. These tables exclude loans recorded at fair value. The Firm manages its exposure to credit risk on an ongoing basis. Selling loans is one way that the Firm reduces its credit exposures.
 
 
 
2014
Year ended December 31,
(in millions)
 
Consumer, excluding
credit card
Credit card
Wholesale
Total
Purchases
 
 
$
7,434

(a)(b) 
 
$
—

 
 
$
885

 
 
$
8,319

Sales
 
 
6,655

 
 
291

 
 
7,381

 
 
14,327

Retained loans reclassified to held-for-sale
 
 
1,190

 
 
3,039

 
 
581

 
 
4,810

 
 
 
2013
Year ended December 31,
(in millions)
 
Consumer, excluding
credit card
Credit card
Wholesale
Total
Purchases
 
 
$
7,616

(a)(b) 
 
$
328

 
 
$
697

 
 
$
8,641

Sales
 
 
4,845

 
 
—

 
 
4,232

 
 
9,077

Retained loans reclassified to held-for-sale
 
 
1,261

 
 
309

 
 
5,641

 
 
7,211

 
 
 
2012
Year ended December 31,
(in millions)
 
Consumer, excluding
credit card
Credit card
Wholesale
Total
Purchases
 
 
$
6,601

(a)(b) 
 
$
—

 
 
$
827

 
 
$
7,428

Sales
 
 
1,852

 
 
—

 
 
3,423

 
 
5,275

Retained loans reclassified to held-for-sale
 
 
—

 
 
1,043

 
 
504

 
 
1,547

(a)
Purchases predominantly represent the Firm’s voluntary repurchase of certain delinquent loans from loan pools as permitted by Ginnie Mae guidelines. The Firm typically elects to repurchase these delinquent loans as it continues to service them and/or manage the foreclosure process in accordance with applicable requirements of Ginnie Mae, the Federal Housing Administration (“FHA”), Rural Housing Services (“RHS”) and/or the U.S. Department of Veterans Affairs (“VA”).
(b)
Excluded retained loans purchased from correspondents that were originated in accordance with the Firm’s underwriting standards. Such purchases were $15.1 billion, $5.7 billion and $1.4 billion for the years ended December 31, 2014, 2013 and 2012, respectively.
The following table provides information about gains and losses, including lower of cost or fair value adjustments, on loan sales by portfolio segment.
Year ended December 31, (in millions)
2014
2013
2012
Net gains/(losses) on sales of loans (including lower of cost or fair value adjustments)(a)
 
 
 
Consumer, excluding credit card
$
341

$
313

$
122

Credit card
(241
)
3

(9
)
Wholesale
101

(76
)
180

Total net gains/(losses) on sales of loans (including lower of cost or fair value adjustments)
$
201

$
240

$
293

(a)
Excludes sales related to loans accounted for at fair value.
Consumer, excluding credit card  
Loans and Leases Receivable Disclosure [Line Items]  
Loans
Consumer, excluding credit card, loan portfolio
Consumer loans, excluding credit card loans, consist primarily of residential mortgages, home equity loans and lines of credit, auto loans, business banking loans, and student and other loans, with a focus on serving the prime consumer credit market. The portfolio also includes home equity loans secured by junior liens, prime mortgage loans with an interest-only payment period, and certain payment-option loans originated by Washington Mutual that may result in negative amortization.
The table below provides information about retained consumer loans, excluding credit card, by class.
December 31, (in millions)
2014
2013
Residential real estate – excluding PCI
 
 
Home equity:
 
 
Senior lien
$
16,367

$
17,113

Junior lien
36,375

40,750

Mortgages:
 
 
Prime, including option ARMs
104,921

87,162

Subprime
5,056

7,104

Other consumer loans
 
 
Auto
54,536

52,757

Business banking
20,058

18,951

Student and other
10,970

11,557

Residential real estate – PCI
 
 
Home equity
17,095

18,927

Prime mortgage
10,220

12,038

Subprime mortgage
3,673

4,175

Option ARMs
15,708

17,915

Total retained loans
$
294,979

$
288,449


Delinquency rates are a primary credit quality indicator for consumer loans. Loans that are more than 30 days past due provide an early warning of borrowers who may be experiencing financial difficulties and/or who may be unable or unwilling to repay the loan. As the loan continues to age, it becomes more clear that the borrower is likely either unable or unwilling to pay. In the case of residential real estate loans, late-stage delinquencies (greater than 150 days past due) are a strong indicator of loans that will ultimately result in a foreclosure or similar liquidation transaction. In addition to delinquency rates, other credit quality indicators for consumer loans vary based on the class of loan, as follows:
•
For residential real estate loans, including both non-PCI and PCI portfolios, the current estimated LTV ratio, or the combined LTV ratio in the case of junior lien loans, is an indicator of the potential loss severity in the event of default. Additionally, LTV or combined LTV can provide insight into a borrower’s continued willingness to pay, as the delinquency rate of high-LTV loans tends to be greater than that for loans where the borrower has equity in the collateral. The geographic distribution of the loan collateral also provides insight as to the credit quality of the portfolio, as factors such as the regional economy, home price changes and specific events such as natural disasters, will affect credit quality. The borrower’s current or “refreshed” FICO score is a secondary credit-quality indicator for certain loans, as FICO scores are an indication of the borrower’s credit payment history. Thus, a loan to a borrower with a low FICO score (660 or below) is considered to be of higher risk than a loan to a borrower with a high FICO score. Further, a loan to a borrower with a high LTV ratio and a low FICO score is at greater risk of default than a loan to a borrower that has both a high LTV ratio and a high FICO score.
•
For scored auto, scored business banking and student loans, geographic distribution is an indicator of the credit performance of the portfolio. Similar to residential real estate loans, geographic distribution provides insights into the portfolio performance based on regional economic activity and events.
•
Risk-rated business banking and auto loans are similar to wholesale loans in that the primary credit quality indicators are the risk rating that is assigned to the loan and whether the loans are considered to be criticized and/or nonaccrual. Risk ratings are reviewed on a regular and ongoing basis by Credit Risk Management and are adjusted as necessary for updated information about borrowers’ ability to fulfill their obligations. For further information about risk-rated wholesale loan credit quality indicators, see page 255 of this Note.
Residential real estate – excluding PCI loans
The following table provides information by class for residential real estate – excluding retained PCI loans in the consumer, excluding credit card, portfolio segment.
The following factors should be considered in analyzing certain credit statistics applicable to the Firm’s residential real estate – excluding PCI loans portfolio: (i) junior lien home equity loans may be fully charged off when the loan becomes 180 days past due, and the value of the collateral does not support the repayment of the loan, resulting in relatively high charge-off rates for this product class; and (ii) the lengthening of loss-mitigation timelines may result in higher delinquency rates for loans carried at the net realizable value of the collateral that remain on the Firm’s Consolidated balance sheets.
Residential real estate – excluding PCI loans
 
 
 
 
 
 
 
 
 
 
 
Home equity
 
Mortgages
 
 
 
December 31,
(in millions, except ratios)
Senior lien
 
Junior lien
 
Prime, including option ARMs
 
Subprime
 
Total residential real estate – excluding PCI
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
Loan delinquency(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
$
15,730

$
16,470

 
$
35,575

$
39,864

 
$
93,951

$
76,108

 
$
4,296

$
5,956

 
$
149,552

$
138,398

30–149 days past due
275

298

 
533

662

 
4,091

3,155

 
489

646

 
5,388

4,761

150 or more days past due
362

345

 
267

224

 
6,879

7,899

 
271

502

 
7,779

8,970

Total retained loans
$
16,367

$
17,113

 
$
36,375

$
40,750

 
$
104,921

$
87,162

 
$
5,056

$
7,104

 
$
162,719

$
152,129

% of 30+ days past due to total retained loans(b)
3.89
%
3.76
%
 
2.20
%
2.17
%
 
1.42
%
2.32
%
 
15.03
%
16.16
%
 
2.27
%
3.09
%
90 or more days past due and still accruing
$
—

$
—

 
$
—

$
—

 
$
—

$
—

 
$
—

$
—

 
$
—

$
—

90 or more days past due and government guaranteed(c)
—

—

 
—

—

 
7,544

7,823

 
—

—

 
7,544

7,823

Nonaccrual loans
938

932

 
1,590

1,876

 
2,190

2,666

 
1,036

1,390

 
5,754

6,864

Current estimated LTV ratios(d)(e)(f)(g)
 
 
 
 
 
 
 
 
 
 
Greater than 125% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
$
21

$
40

 
$
467

$
1,101

 
$
120

$
236

 
$
10

$
52

 
$
618

$
1,429

Less than 660
10

22

 
138

346

 
103

281

 
51

197

 
302

846

101% to 125% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
134

212

 
3,149

4,645

 
648

1,210

 
118

249

 
4,049

6,316

Less than 660
69

107

 
923

1,407

 
340

679

 
298

597

 
1,630

2,790

80% to 100% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
633

858

 
6,481

7,995

 
3,863

4,749

 
432

614

 
11,409

14,216

Less than 660
226

326

 
1,780

2,128

 
1,026

1,590

 
770

1,141

 
3,802

5,185

Less than 80% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
13,048

13,186

 
20,030

19,732

 
81,805

59,634

 
1,586

1,961

 
116,469

94,513

Less than 660
2,226

2,362

 
3,407

3,396

 
4,906

5,071

 
1,791

2,293

 
12,330

13,122

U.S. government-guaranteed
—

—

 
—

—

 
12,110

13,712

 
—

—

 
12,110

13,712

Total retained loans
$
16,367

$
17,113

 
$
36,375

$
40,750

 
$
104,921

$
87,162

 
$
5,056

$
7,104

 
$
162,719

$
152,129

Geographic region
 
 
 
 
 
 
 
 
 
 
California
$
2,232

$
2,397

 
$
8,144

$
9,240

 
$
28,133

$
21,876

 
$
718

$
1,069

 
$
39,227

$
34,582

New York
2,805

2,732

 
7,685

8,429

 
16,550

14,085

 
677

942

 
27,717

26,188

Illinois
1,306

1,248

 
2,605

2,815

 
6,654

5,216

 
207

280

 
10,772

9,559

Florida
861

847

 
1,923

2,167

 
5,106

4,598

 
632

885

 
8,522

8,497

Texas
1,845

2,044

 
1,087

1,199

 
4,935

3,565

 
177

220

 
8,044

7,028

New Jersey
654

630

 
2,233

2,442

 
3,361

2,679

 
227

339

 
6,475

6,090

Arizona
927

1,019

 
1,595

1,827

 
1,805

1,385

 
112

144

 
4,439

4,375

Washington
506

555

 
1,216

1,378

 
2,410

1,951

 
109

150

 
4,241

4,034

Michigan
736

799

 
848

976

 
1,203

998

 
121

178

 
2,908

2,951

Ohio
1,150

1,298

 
778

907

 
615

466

 
112

161

 
2,655

2,832

All other(h)
3,345

3,544

 
8,261

9,370

 
34,149

30,343

 
1,964

2,736

 
47,719

45,993

Total retained loans
$
16,367

$
17,113

 
$
36,375

$
40,750

 
$
104,921

$
87,162

 
$
5,056

$
7,104

 
$
162,719

$
152,129


(a)
Individual delinquency classifications include mortgage loans insured by U.S. government agencies as follows: current included $2.6 billion and $4.7 billion; 30–149 days past due included $3.5 billion and $2.4 billion; and 150 or more days past due included $6.0 billion and $6.6 billion at December 31, 2014 and 2013, respectively.
(b)
At December 31, 2014 and 2013, Prime, including option ARMs loans excluded mortgage loans insured by U.S. government agencies of $9.5 billion and $9.0 billion, respectively. These amounts have been excluded from nonaccrual loans based upon the government guarantee.
(c)
These balances, which are 90 days or more past due but insured by U.S. government agencies, are excluded from nonaccrual loans. In predominantly all cases, 100% of the principal balance of the loans is insured and interest is guaranteed at a specified reimbursement rate subject to meeting agreed-upon servicing guidelines. These amounts have been excluded from nonaccrual loans based upon the government guarantee. At December 31, 2014 and 2013, these balances included $4.2 billion and $4.7 billion, respectively, of loans that are no longer accruing interest because interest has been curtailed by the U.S. government agencies although, in predominantly all cases, 100% of the principal is still insured. For the remaining balance, interest is being accrued at the guaranteed reimbursement rate.
(d)
Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates.
(e)
Junior lien represents combined LTV, which considers all available lien positions, as well as unused lines, related to the property. All other products are presented without consideration of subordinate liens on the property.
(f)
Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(g)
The prior period prime, including option ARMs have been revised. This revision had no impact on the Firm’s Consolidated balance sheets or its results of operations.
(h)
At December 31, 2014 and 2013, included mortgage loans insured by U.S. government agencies of $12.1 billion and $13.7 billion, respectively.
The following tables represent the Firm’s delinquency statistics for junior lien home equity loans and lines as of December 31, 2014 and 2013.
 
 
Delinquencies
 
 
 
Total 30+ day delinquency rate
December 31, 2014
 
30–89 days past due
 
90–149 days past due
 
150+ days
 past due
 
Total loans
 
(in millions, except ratios)
 
 
 
 
 
HELOCs:(a)
 
 
 
 
 
 
 
 
 
 
Within the revolving period(b)
 
$
233

 
$
69

 
$
141

 
$
25,252

 
1.75
%
Beyond the revolving period
 
108

 
37

 
107

 
7,979

 
3.16

HELOANs
 
66

 
20

 
19

 
3,144

 
3.34

Total
 
$
407

 
$
126

 
$
267

 
$
36,375

 
2.20
%
 
 
Delinquencies
 
 
 
Total 30+ day delinquency rate
December 31, 2013
 
30–89 days past due
 
90–149 days past due
 
150+ days
 past due
 
Total loans
 
(in millions, except ratios)
 
 
 
 
 
HELOCs:(a)
 
 
 
 
 
 
 
 
 
 
Within the revolving period(b)
 
$
341

 
$
104

 
$
162

 
$
31,848

 
1.91
%
Beyond the revolving period
 
84

 
21

 
46

 
4,980

 
3.03

HELOANs
 
86

 
26

 
16

 
3,922

 
3.26

Total
 
$
511

 
$
151

 
$
224

 
$
40,750

 
2.17
%
(a) These HELOCs are predominantly revolving loans for a 10-year period, after which time the HELOC converts to a loan with a 20-year amortization period, but also include HELOCs originated by Washington Mutual that require interest-only payments beyond the revolving period.
(b) The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are experiencing financial difficulty or when the collateral does not support the loan amount.
Home equity lines of credit (“HELOCs”) beyond the revolving period and home equity loans (“HELOANs”) have higher delinquency rates than do HELOCs within the revolving period. That is primarily because the fully-amortizing payment that is generally required for those products is higher than the minimum payment options
available for HELOCs within the revolving period. The higher delinquency rates associated with amortizing HELOCs and HELOANs are factored into the loss estimates produced by the Firm’s delinquency roll-rate methodology, which estimates defaults based on the current delinquency status of a portfolio.
Impaired loans
The table below sets forth information about the Firm’s residential real estate impaired loans, excluding PCI loans. These loans are considered to be impaired as they have been modified in a TDR. All impaired loans are evaluated for an asset-specific allowance as described in Note 15.
 
Home equity
 
Mortgages
 
Total residential
 real estate
– excluding PCI
December 31,
(in millions)
Senior lien
 
Junior lien
 
Prime, including
option ARMs
 
Subprime
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
Impaired loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance
$
552

$
567

 
$
722

$
727

 
$
4,949

$
5,871

 
$
2,239

$
2,989

 
$
8,462

$
10,154

Without an allowance(a)
549

579

 
582

592

 
1,196

1,133

 
639

709

 
2,966

3,013

Total impaired loans(b)(c)
$
1,101

$
1,146

 
$
1,304

$
1,319

 
$
6,145

$
7,004

 
$
2,878

$
3,698

 
$
11,428

$
13,167

Allowance for loan losses related to impaired loans
$
84

$
94

 
$
147

$
162

 
$
127

$
144

 
$
64

$
94

 
$
422

$
494

Unpaid principal balance of impaired loans(d)
1,451

1,515

 
2,603

2,625

 
7,813

8,990

 
4,200

5,461

 
16,067

18,591

Impaired loans on nonaccrual status(e)
628

641

 
632

666

 
1,559

1,737

 
931

1,127

 
3,750

4,171


(a)
Represents collateral-dependent residential mortgage loans that are charged off to the fair value of the underlying collateral less cost to sell. The Firm reports, in accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower (“Chapter 7 loans”) as collateral-dependent nonaccrual TDRs, regardless of their delinquency status. At December 31, 2014, Chapter 7 residential real estate loans included approximately 19% of senior lien home equity, 12% of junior lien home equity, 25% of prime mortgages, including option ARMs, and 18% of subprime mortgages that were 30 days or more past due.
(b)
At December 31, 2014 and 2013, $4.9 billion and $7.6 billion, respectively, of loans modified subsequent to repurchase from Government National Mortgage Association (“Ginnie Mae”) in accordance with the standards of the appropriate government agency (i.e., FHA, VA, RHS) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure.
(c)
Predominantly all residential real estate impaired loans, excluding PCI loans, are in the U.S.
(d)
Represents the contractual amount of principal owed at December 31, 2014 and 2013. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs, net deferred loan fees or costs; and unamortized discounts or premiums on purchased loans.
(e)
As of December 31, 2014 and 2013, nonaccrual loans included $2.9 billion and $3.0 billion, respectively, of TDRs for which the borrowers were less than 90 days past due. For additional information about loans modified in a TDR that are on nonaccrual status refer to the Loan accounting framework on pages 238–240 of this Note.

The following table presents average impaired loans and the related interest income reported by the Firm.
Year ended December 31,
Average impaired loans
 
Interest income on
impaired loans(a)
 
Interest income on impaired
loans on a cash basis(a)
(in millions)
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
Home equity
 
 
 
 
 
 
 
 
 
 
 
Senior lien
$
1,122

$
1,151

$
610

 
$
55

$
59

$
27

 
$
37

$
40

$
12

Junior lien
1,313

1,297

848

 
82

82

42

 
53

55

16

Mortgages
 
 
 
 
 
 
 
 
 
 
 
Prime, including option ARMs
6,730

7,214

5,989

 
262

280

238

 
54

59

28

Subprime
3,444

3,798

3,494

 
182

200

183

 
51

55

31

Total residential real estate – excluding PCI
$
12,609

$
13,460

$
10,941

 
$
581

$
621

$
490

 
$
195

$
209

$
87

(a)
Generally, interest income on loans modified in TDRs is recognized on a cash basis until such time as the borrower has made a minimum of six payments under the new terms.

Loan modifications
The Firm is required to provide borrower relief under the terms of certain Consent Orders and settlements entered into by the Firm related to its mortgage servicing, originations and residential mortgage-backed securities activities. This borrower relief includes reductions of principal and forbearance.
Modifications of residential real estate loans, excluding PCI loans, are generally accounted for and reported as TDRs. There were no additional commitments to lend to borrowers whose residential real estate loans, excluding PCI loans, have been modified in TDRs.
The following table presents new TDRs reported by the Firm.
Year ended December 31,
(in millions)
2014
2013
2012
Home equity:
 
 
 
Senior lien
$
110

$
210

$
835

Junior lien
211

388

711

Mortgages:
 
 
 
Prime, including option ARMs
287

770

2,918

Subprime
124

319

1,043

Total residential real estate – excluding PCI
$
732

$
1,687

$
5,507



Nature and extent of modifications
Making Home Affordable (“MHA”), as well as the Firm’s proprietary modification programs, generally provide various concessions to financially troubled borrowers including, but not limited to, interest rate reductions, term or payment extensions and deferral of principal and/or interest payments that would otherwise have been required under the terms of the original agreement.
The following table provides information about how residential real estate loans, excluding PCI loans, were modified under the Firm’s loss mitigation programs during the periods presented. This table excludes Chapter 7 loans where the sole concession granted is the discharge of debt.
Year ended Dec. 31,
Home equity
 
Mortgages
 
Total residential real estate
 - excluding PCI
Senior lien
 
Junior lien
 
Prime, including
option ARMs
 
Subprime
 
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
Number
of loans approved
for a trial modification
939

1,719

1,695

 
626

884

918

 
1,052

2,846

3,895

 
2,056

4,233

4,841

 
4,673

9,682

11,349

Number
of loans permanently modified
1,171

1,765

4,385

 
2,813

5,040

7,430

 
2,507

4,356

9,043

 
3,141

5,364

9,964

 
9,632

16,525

30,822

Concession granted:(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate reduction
53
%
70
%
83
%
 
84
%
88
%
88
%
 
43
%
73
%
74
%
 
47
%
72
%
69
%
 
58
%
77
%
77
%
Term or payment extension
67

76

47

 
83

80

76

 
51

73

57

 
53

56

41

 
63

70

55

Principal and/or interest deferred
16

12

6

 
23

24

17

 
19

30

16

 
12

13

7

 
18

21

12

Principal forgiveness
36

38

11

 
22

32

23

 
51

38

29

 
53

48

42

 
41

39

29

Other(b)
—

—

—

 
—

—

—

 
10

23

29

 
10

14

8

 
6

11

11

(a)
Represents concessions granted in permanent modifications as a percentage of the number of loans permanently modified. The sum of the percentages exceeds 100% because predominantly all of the modifications include more than one type of concession. A significant portion of trial modifications include interest rate reductions and/or term or payment extensions.
(b)
Represents variable interest rate to fixed interest rate modifications.
Financial effects of modifications and redefaults
The following table provides information about the financial effects of the various concessions granted in modifications of residential real estate loans, excluding PCI, under the Firm’s loss mitigation programs and about redefaults of certain loans modified in TDRs for the periods presented. Because the specific types and amounts of concessions offered to borrowers frequently change between the trial modification and the permanent modification, the following table presents only the financial effects of permanent modifications. This table also excludes Chapter 7 loans where the sole concession granted is the discharge of debt.
Year ended
December 31,
(in millions, except weighted-average data and number of loans)
Home equity
 
Mortgages
 
Total residential real estate – excluding PCI
Senior lien
 
Junior lien
 
Prime, including
option ARMs
 
Subprime
 
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
 
2014
2013
2012
Weighted-average interest rate of loans with interest rate reductions – before TDR
6.38
%
6.35
%
7.20
%
 
4.81
%
5.05
%
5.45
%
 
4.82
%
5.28
%
6.14
%
 
7.16
%
7.33
%
7.73
%
 
5.61
%
5.88
%
6.57
%
Weighted-average interest rate of loans with interest rate reductions – after TDR
3.03

3.23

4.61

 
2.00

2.14

1.94

 
2.69

2.77

3.67

 
3.37

3.52

4.14

 
2.78

2.92

3.69

Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR
17

19

18

 
19

20

20

 
25

25

25

 
24

24

24

 
23

23

24

Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR
30

31

28

 
35

34

32

 
37

37

36

 
36

35

32

 
36

36

34

Charge-offs recognized upon permanent modification
$
2

$
7

$
8

 
$
25

$
70

$
65

 
$
9

$
16

$
35

 
$
3

$
5

$
29

 
$
39

$
98

$
137

Principal deferred
5

7

4

 
11

24

23

 
39

129

133

 
19

43

43

 
74

203

203

Principal forgiven
14

30

20

 
21

51

58

 
83

206

249

 
89

218

324

 
207

505

651

Balance of loans that redefaulted within one year of permanent modification(a)
$
19

$
26

$
30

 
$
10

$
20

$
46

 
$
121

$
164

$
255

 
$
93

$
106

$
156

 
$
243

$
316

$
487

(a)
Represents loans permanently modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The dollar amounts presented represent the balance of such loans at the end of the reporting period in which such loans defaulted. For residential real estate loans modified in TDRs, payment default is deemed to occur when the loan becomes two contractual payments past due. In the event that a modified loan redefaults, it is probable that the loan will ultimately be liquidated through foreclosure or another similar type of liquidation transaction. Redefaults of loans modified within the last 12 months may not be representative of ultimate redefault levels.
At December 31, 2014, the weighted-average estimated remaining lives of residential real estate loans, excluding PCI loans, permanently modified in TDRs were 6 years for senior lien home equity, 8 years for junior lien home equity, 9 years for prime mortgages, including option ARMs, and 8 years for subprime mortgage. The estimated remaining lives of these loans reflect estimated prepayments, both voluntary and involuntary (i.e., foreclosures and other forced liquidations).
Active and suspended foreclosure
At December 31, 2014 and 2013, the Firm had non-PCI residential real estate loans, excluding those insured by U.S. government agencies, with a carrying value of $1.5 billion and $2.1 billion, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.

Other consumer loans
The table below provides information for other consumer retained loan classes, including auto, business banking and student loans.
December 31,
(in millions, except ratios)
Auto
 
Business banking
 
Student and other
 
Total other consumer
 
2014
 
2013
 
2014
2013
 
2014
 
2013
 
2014
 
2013
 
Loan delinquency(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
$
53,866

 
$
52,152

 
$
19,710

$
18,511

 
$
10,080

 
$
10,529

 
$
83,656

 
$
81,192

 
30–119 days past due
663

 
599

 
208

280

 
576

 
660

 
1,447

 
1,539

 
120 or more days past due
7

 
6

 
140

160

 
314

 
368

 
461

 
534

 
Total retained loans
$
54,536

 
$
52,757

 
$
20,058

$
18,951

 
$
10,970

 
$
11,557

 
$
85,564

 
$
83,265

 
% of 30+ days past due to total retained loans
1.23
%
 
1.15
%
 
1.73
%
2.32
%
 
2.15
%
(d) 
2.52
%
(d) 
1.47
%
(d) 
1.60
%
(d) 
90 or more days past due and still accruing (b)
$
—

 
$
—

 
$
—

$
—

 
$
367

 
$
428

 
$
367

 
$
428

 
Nonaccrual loans
115

 
161

 
279

385

 
270

 
86

 
664

 
632

 
Geographic region
 
 
 
 
 
 
 
 
 
California
$
6,294

 
$
5,615

 
$
3,008

$
2,374

 
$
1,143

 
$
1,112

 
$
10,445

 
$
9,101

 
New York
3,662

 
3,898

 
3,187

3,084

 
1,259

 
1,218

 
8,108

 
8,200

 
Illinois
3,175

 
2,917

 
1,373

1,341

 
729

 
740

 
5,277

 
4,998

 
Florida
2,301

 
2,012

 
827

646

 
521

 
539

 
3,649

 
3,197

 
Texas
5,608

 
5,310

 
2,626

2,646

 
868

 
878

 
9,102

 
8,834

 
New Jersey
1,945

 
2,014

 
451

392

 
378

 
397

 
2,774

 
2,803

 
Arizona
2,003

 
1,855

 
1,083

1,046

 
239

 
252

 
3,325

 
3,153

 
Washington
1,019

 
950

 
258

234

 
235

 
227

 
1,512

 
1,411

 
Michigan
1,633

 
1,902

 
1,375

1,383

 
466

 
513

 
3,474

 
3,798

 
Ohio
2,157

 
2,229

 
1,354

1,316

 
629

 
708

 
4,140

 
4,253

 
All other
24,739

 
24,055

 
4,516

4,489

 
4,503

 
4,973

 
33,758

 
33,517

 
Total retained loans
$
54,536

 
$
52,757

 
$
20,058

$
18,951

 
$
10,970

 
$
11,557

 
$
85,564

 
$
83,265

 
Loans by risk ratings(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncriticized
$
9,822

 
$
9,968

 
$
14,619

$
13,622

 
NA

 
NA

 
$
24,441

 
$
23,590

 
Criticized performing
35

 
54

 
708

711

 
NA

 
NA

 
743

 
765

 
Criticized nonaccrual
—

 
38

 
213

316

 
NA

 
NA

 
213

 
354

 
(a)
Individual delinquency classifications included loans insured by U.S. government agencies under the Federal Family Education Loan Program (“FFELP”) as follows: current included $4.3 billion and $4.9 billion; 30-119 days past due included $364 million and $387 million; and 120 or more days past due included $290 million and $350 million at December 31, 2014 and 2013, respectively.
(b)
These amounts represent student loans, which are insured by U.S. government agencies under the FFELP. These amounts were accruing as reimbursement of insured amounts is proceeding normally.
(c)
For risk-rated business banking and auto loans, the primary credit quality indicator is the risk rating of the loan, including whether the loans are considered to be criticized and/or nonaccrual.
(d)
December 31, 2014 and 2013, excluded loans 30 days or more past due and still accruing, which are insured by U.S. government agencies under the FFELP, of $654 million and $737 million, respectively. These amounts were excluded as reimbursement of insured amounts is proceeding normally.

Other consumer impaired loans and loan modifications
The table below sets forth information about the Firm’s other consumer impaired loans, including risk-rated business banking and auto loans that have been placed on nonaccrual status, and loans that have been modified in TDRs.
December 31,
(in millions)
2014
2013
Impaired loans
 
 
With an allowance
$
557

$
571

Without an allowance(a)
35

47

Total impaired loans(b)(c)
$
592

$
618

Allowance for loan losses related to impaired loans
$
117

$
107

Unpaid principal balance of impaired loans(d)
719

788

Impaired loans on nonaccrual status
456

441

(a)
When discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged off and/or there have been interest payments received and applied to the loan balance.
(b)
Predominantly all other consumer impaired loans are in the U.S.
(c)
Other consumer average impaired loans were $599 million, $648 million and $733 million for the years ended December 31, 2014, 2013 and 2012, respectively. The related interest income on impaired loans, including those on a cash basis, was not material for the years ended December 31, 2014, 2013 and 2012.
(d)
Represents the contractual amount of principal owed at December 31, 2014 and 2013. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs; interest payments received and applied to the principal balance; net deferred loan fees or costs; and unamortized discounts or premiums on purchased loans.

Loan modifications
The following table provides information about the Firm’s other consumer loans modified in TDRs. All of these TDRs are reported as impaired loans in the tables above.
December 31,
(in millions)
2014
2013
Loans modified in troubled debt restructurings(a)(b)
$
442

$
378

TDRs on nonaccrual status
306

201

(a)
The impact of these modifications was not material to the Firm for the years ended December 31, 2014 and 2013.
(b)
Additional commitments to lend to borrowers whose loans have been modified in TDRs as of December 31, 2014 and 2013 were immaterial.
Other consumer new TDRs were $291 million, $156 million, and $249 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Financial effects of modifications and redefaults
For auto loans, TDRs typically occur in connection with the bankruptcy of the borrower. In these cases, the loan is modified with a revised repayment plan that typically incorporates interest rate reductions and, to a lesser extent, principal forgiveness.
For business banking loans, concessions are dependent on individual borrower circumstances and can be of a short-term nature for borrowers who need temporary relief or longer term for borrowers experiencing more fundamental financial difficulties. Concessions are predominantly term or payment extensions, but also may include interest rate reductions.
The balance of business banking loans modified in TDRs that experienced a payment default, and for which the payment default occurred within one year of the modification, was $25 million, $43 million and $42 million, during the years ended December 31, 2014, 2013 and 2012, respectively. The balance of auto loans modified in TDRs that experienced a payment default, and for which the payment default occurred within one year of the modification, was $43 million, $54 million, and $46 million, during the years ended December 31, 2014, 2013, and 2012, respectively. A payment default is deemed to occur as follows: (1) for scored auto and business banking loans, when the loan is two payments past due; and (2) for risk-rated business banking loans and auto loans, when the borrower has not made a loan payment by its scheduled due date after giving effect to the contractual grace period, if any.
In May 2014 the Firm began extending the deferment period for up to 24 months for certain student loans, which resulted in extending the maturity of the loans at their original contractual interest rates. These modified loans are considered TDRs and placed on nonaccrual status.

Purchased credit-impaired loans
PCI loans are initially recorded at fair value at acquisition. PCI loans acquired in the same fiscal quarter may be aggregated into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. With respect to the Washington Mutual transaction, all of the consumer PCI loans were aggregated into pools of loans with common risk characteristics.
On a quarterly basis, the Firm estimates the total cash flows (both principal and interest) expected to be collected over the remaining life of each pool. These estimates incorporate assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that reflect then-current market conditions. Probable decreases in expected cash flows (i.e., increased credit losses) trigger the recognition of impairment, which is then measured as the present value of the expected principal loss plus any related foregone interest cash flows, discounted at the pool’s effective interest rate. Impairments are recognized through the provision for credit losses and an increase in the allowance for loan losses. Probable and significant increases in expected cash flows (e.g., decreased credit losses, the net benefit of modifications) would first reverse any previously recorded allowance for loan losses with any remaining increases recognized prospectively as a yield adjustment over the remaining estimated lives of the underlying loans. The impacts of (i) prepayments, (ii) changes in variable interest rates, and (iii) any other changes in the timing of expected cash flows are recognized prospectively as adjustments to interest income.
The Firm continues to modify certain PCI loans. The impact of these modifications is incorporated into the Firm’s quarterly assessment of whether a probable and significant change in expected cash flows has occurred, and the loans continue to be accounted for and reported as PCI loans. In evaluating the effect of modifications on expected cash flows, the Firm incorporates the effect of any foregone interest and also considers the potential for redefault. The Firm develops product-specific probability of default estimates, which are used to compute expected credit losses. In developing these probabilities of default, the Firm considers the relationship between the credit quality characteristics of the underlying loans and certain assumptions about home prices and unemployment based upon industry-wide data. The Firm also considers its own historical loss experience to-date based on actual redefaulted modified PCI loans.
The excess of cash flows expected to be collected over the carrying value of the underlying loans is referred to as the accretable yield. This amount is not reported on the Firm’s Consolidated balance sheets but is accreted into interest income at a level rate of return over the remaining estimated lives of the underlying pools of loans.
If the timing and/or amounts of expected cash flows on PCI loans were determined not to be reasonably estimable, no interest would be accreted and the loans would be reported as nonaccrual loans; however, since the timing and amounts of expected cash flows for the Firm’s PCI consumer loans are reasonably estimable, interest is being accreted and the loans are being reported as performing loans.
The liquidation of PCI loans, which may include sales of loans, receipt of payment in full by the borrower, or foreclosure, results in removal of the loans from the underlying PCI pool. When the amount of the liquidation proceeds (e.g., cash, real estate), if any, is less than the unpaid principal balance of the loan, the difference is first applied against the PCI pool’s nonaccretable difference for principal losses (i.e., the lifetime credit loss estimate established as a purchase accounting adjustment at the acquisition date). When the nonaccretable difference for a particular loan pool has been fully depleted, any excess of the unpaid principal balance of the loan over the liquidation proceeds is written off against the PCI pool’s allowance for loan losses. Beginning in the fourth quarter of 2014, write-offs of PCI loans also include other adjustments, primarily related to interest forgiveness modifications. Because the Firm’s PCI loans are accounted for at a pool level, the Firm does not recognize charge-offs of PCI loans when they reach specified stages of delinquency (i.e., unlike non-PCI consumer loans, these loans are not charged off based on FFIEC standards).
The PCI portfolio affects the Firm’s results of operations primarily through: (i) contribution to net interest margin; (ii) expense related to defaults and servicing resulting from the liquidation of the loans; and (iii) any provision for loan losses. The PCI loans acquired in the Washington Mutual transaction were funded based on the interest rate characteristics of the loans. For example, variable-rate loans were funded with variable-rate liabilities and fixed-rate loans were funded with fixed-rate liabilities with a similar maturity profile. A net spread will be earned on the declining balance of the portfolio, which is estimated as of December 31, 2014, to have a remaining weighted-average life of 8 years.

Residential real estate – PCI loans
The table below sets forth information about the Firm’s consumer, excluding credit card, PCI loans.
December 31,
(in millions, except ratios)
Home equity
 
Prime mortgage
 
Subprime mortgage
 
Option ARMs
 
Total PCI
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
Carrying value(a)
$
17,095

$
18,927

 
$
10,220

$
12,038

 
$
3,673

$
4,175

 
$
15,708

$
17,915

 
$
46,696

$
53,055

Related allowance for loan losses(b)
1,758

1,758

 
1,193

1,726

 
180

180

 
194

494

 
3,325

4,158

Loan delinquency (based on unpaid principal balance)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
$
16,295

$
18,135

 
$
8,912

$
10,118

 
$
3,565

$
4,012

 
$
13,814

$
15,501

 
$
42,586

$
47,766

30–149 days past due
445

583

 
500

589

 
536

662

 
858

1,006

 
2,339

2,840

150 or more days past due
1,000

1,112

 
837

1,169

 
551

797

 
1,824

2,716

 
4,212

5,794

Total loans
$
17,740

$
19,830

 
$
10,249

$
11,876

 
$
4,652

$
5,471

 
$
16,496

$
19,223

 
$
49,137

$
56,400

% of 30+ days past due to total loans
8.15
%
8.55
%
 
13.05
%
14.80
%
 
23.37
%
26.67
%
 
16.26
%
19.36
%
 
13.33
%
15.31
%
Current estimated LTV ratios (based on unpaid principal balance)(c)(d)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater than 125% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
$
513

$
1,168

 
$
45

$
240

 
$
34

$
115

 
$
89

$
301

 
$
681

$
1,824

Less than 660
273

662

 
97

290

 
160

459

 
150

575

 
680

1,986

101% to 125% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
2,245

3,248

 
456

1,017

 
215

316

 
575

1,164

 
3,491

5,745

Less than 660
1,073

1,541

 
402

884

 
509

919

 
771

1,563

 
2,755

4,907

80% to 100% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
4,171

4,473

 
2,154

2,787

 
519

544

 
2,418

3,311

 
9,262

11,115

Less than 660
1,647

1,782

 
1,316

1,699

 
1,006

1,197

 
1,996

2,769

 
5,965

7,447

Lower than 80% and refreshed FICO scores:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equal to or greater than 660
5,824

5,077

 
3,663

2,897

 
719

521

 
6,593

5,671

 
16,799

14,166

Less than 660
1,994

1,879

 
2,116

2,062

 
1,490

1,400

 
3,904

3,869

 
9,504

9,210

Total unpaid principal balance
$
17,740

$
19,830

 
$
10,249

$
11,876

 
$
4,652

$
5,471

 
$
16,496

$
19,223

 
$
49,137

$
56,400

Geographic region (based on unpaid principal balance)
 
 
 
 
 
 
 
 
 
 
California
$
10,671

$
11,937

 
$
5,965

$
6,845

 
$
1,138

$
1,293

 
$
9,190

$
10,419

 
$
26,964

$
30,494

New York
876

962

 
672

807

 
463

563

 
933

1,196

 
2,944

3,528

Illinois
405

451

 
301

353

 
229

283

 
397

481

 
1,332

1,568

Florida
1,696

1,865

 
689

826

 
432

526

 
1,440

1,817

 
4,257

5,034

Texas
273

327

 
92

106

 
281

328

 
85

100

 
731

861

New Jersey
348

381

 
279

334

 
165

213

 
553

701

 
1,345

1,629

Arizona
323

361

 
167

187

 
85

95

 
227

264

 
802

907

Washington
959

1,072

 
225

266

 
95

112

 
395

463

 
1,674

1,913

Michigan
53

62

 
166

189

 
130

145

 
182

206

 
531

602

Ohio
20

23

 
48

55

 
72

84

 
69

75

 
209

237

All other
2,116

2,389

 
1,645

1,908

 
1,562

1,829

 
3,025

3,501

 
8,348

9,627

Total unpaid principal balance
$
17,740

$
19,830

 
$
10,249

$
11,876

 
$
4,652

$
5,471

 
$
16,496

$
19,223

 
$
49,137

$
56,400

(a)
Carrying value includes the effect of fair value adjustments that were applied to the consumer PCI portfolio at the date of acquisition.
(b)
Management concluded as part of the Firm’s regular assessment of the PCI loan pools that it was probable that higher expected credit losses would result in a decrease in expected cash flows. As a result, an allowance for loan losses for impairment of these pools has been recognized.
(c)
Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property.
(d)
Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
Approximately 20% of the PCI home equity portfolio are senior lien loans; the remaining balance are junior lien HELOANs or HELOCs. The following tables set forth delinquency statistics for PCI junior lien home equity loans and lines of credit based on unpaid principal balance as of December 31, 2014 and 2013.
 
 
Delinquencies
 
 
 
Total 30+ day delinquency rate
December 31, 2014
 
30–89 days past due
 
90–149 days past due
 
150+ days
 past due
 
Total loans
 
(in millions, except ratios)
 
 
 
 
 
HELOCs:(a)
 
 
 
 
 
 
 
 
 
 
Within the revolving period(b)
 
$
155

 
$
50

 
$
371

 
$
8,972

 
6.42
%
Beyond the revolving period(c)
 
76

 
24

 
166

 
4,143

 
6.42

HELOANs
 
20

 
7

 
38

 
736

 
8.83

Total
 
$
251

 
$
81

 
$
575

 
$
13,851

 
6.55
%
 
 
Delinquencies
 
 
 
Total 30+ day delinquency rate
December 31, 2013
 
30–89 days past due
 
90–149 days past due
 
150+ days
 past due
 
Total loans
 
(in millions, except ratios)
 
 
 
 
 
 
HELOCs:(a)
 
 
 
 
 
 
 
 
 
 
Within the revolving period(b)
 
$
243

 
$
88

 
$
526

 
$
12,670

 
6.76
%
Beyond the revolving period(c)
 
54

 
21

 
82

 
2,336

 
6.72

HELOANs
 
24

 
11

 
39

 
908

 
8.15

Total
 
$
321

 
$
120

 
$
647

 
$
15,914

 
6.84
%
(a)
In general, these HELOCs are revolving loans for a 10-year period, after which time the HELOC converts to an interest-only loan with a balloon payment at the end of the loan’s term.
(b)
Substantially all undrawn HELOCs within the revolving period have been closed.
(c)
Includes loans modified into fixed-rate amortizing loans.
The table below sets forth the accretable yield activity for the Firm’s PCI consumer loans for the years ended December 31, 2014, 2013 and 2012, and represents the Firm’s estimate of gross interest income expected to be earned over the remaining life of the PCI loan portfolios. The table excludes the cost to fund the PCI portfolios, and therefore the accretable yield does not represent net interest income expected to be earned on these portfolios.
Year ended December 31,
(in millions, except ratios)
Total PCI
2014
 
2013
 
2012
Beginning balance
$
16,167

 
$
18,457

 
$
19,072

Accretion into interest income
(1,934
)
 
(2,201
)
 
(2,491
)
Changes in interest rates on variable-rate loans
(174
)
 
(287
)
 
(449
)
Other changes in expected cash flows(a)
533

 
198

 
2,325

Balance at December 31
$
14,592

 
$
16,167

 
$
18,457

Accretable yield percentage
4.19
%
 
4.31
%
 
4.38
%
(a)
Other changes in expected cash flows may vary from period to period as the Firm continues to refine its cash flow model and periodically updates model assumptions. For the year ended December 31, 2014, other changes in expected cash flows were driven by changes in prepayment assumptions. For the year ended December 31, 2013, other changes in expected cash flows were due to refining the expected interest cash flows on HELOCs with balloon payments, partially offset by changes in prepayment assumptions. For the year ended December 31, 2012, other changes in expected cash flows were principally driven by the impact of modifications, but also related to changes in prepayment assumptions.

The factors that most significantly affect estimates of gross cash flows expected to be collected, and accordingly the accretable yield balance, include: (i) changes in the benchmark interest rate indices for variable-rate products such as option ARM and home equity loans; and (ii) changes in prepayment assumptions.
Since the date of acquisition, the decrease in the accretable yield percentage has been primarily related to a decrease in interest rates on variable-rate loans and, to a lesser extent, extended loan liquidation periods. Certain events, such as extended or shortened loan liquidation periods, affect the timing of expected cash flows and the accretable yield percentage, but not the amount of cash expected to be received (i.e., the accretable yield balance). While extended loan liquidation periods reduce the accretable yield percentage (because the same accretable yield balance is recognized against a higher-than-expected loan balance over a longer-than-expected period of time), shortened loan liquidation periods would have the opposite effect.
Active and suspended foreclosure
At December 31, 2014 and 2013, the Firm had PCI residential real estate loans with an unpaid principal balance of $3.2 billion and $4.8 billion, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.
Credit card  
Loans and Leases Receivable Disclosure [Line Items]  
Loans
Credit card loan portfolio
The credit card portfolio segment includes credit card loans originated and purchased by the Firm. Delinquency rates are the primary credit quality indicator for credit card loans as they provide an early warning that borrowers may be experiencing difficulties (30 days past due); information on those borrowers that have been delinquent for a longer period of time (90 days past due) is also considered. In addition to delinquency rates, the geographic distribution of the loans provides insight as to the credit quality of the portfolio based on the regional economy.
While the borrower’s credit score is another general indicator of credit quality, the Firm does not view credit scores as a primary indicator of credit quality because the borrower’s credit score tends to be a lagging indicator. However, the distribution of such scores provides a general indicator of credit quality trends within the portfolio. Refreshed FICO score information, which is obtained at least quarterly, for a statistically significant random sample of the credit card portfolio is indicated in the table below; FICO is considered to be the industry benchmark for credit scores.
The Firm generally originates new card accounts to prime consumer borrowers. However, certain cardholders’ FICO scores may decrease over time, depending on the performance of the cardholder and changes in credit score technology.
The table below sets forth information about the Firm’s credit card loans.
As of or for the year ended December 31,
(in millions, except ratios)
2014
2013
Net charge-offs
$
3,429

$
3,879

% of net charge-offs to retained loans
2.75
%
3.14
%
Loan delinquency
 
 
Current and less than 30 days past due
and still accruing
$
126,189

$
125,335

30–89 days past due and still accruing
943

1,108

90 or more days past due and still accruing
895

1,022

Nonaccrual loans
—

—

Total retained credit card loans
$
128,027

$
127,465

Loan delinquency ratios
 
 
% of 30+ days past due to total retained loans
1.44
%
1.67
%
% of 90+ days past due to total retained loans
0.70

0.80

Credit card loans by geographic region
 
 
California
$
17,940

$
17,194

Texas
11,088

10,400

New York
10,940

10,497

Illinois
7,497

7,412

Florida
7,398

7,178

New Jersey
5,750

5,554

Ohio
4,707

4,881

Pennsylvania
4,489

4,462

Michigan
3,552

3,618

Virginia
3,263

3,239

All other
51,403

53,030

Total retained credit card loans
$
128,027

$
127,465

Percentage of portfolio based on carrying value with estimated refreshed FICO scores
 
 
Equal to or greater than 660
85.7
%
85.1
%
Less than 660
14.3

14.9


Credit card impaired loans and loan modifications
The table below sets forth information about the Firm’s impaired credit card loans. All of these loans are considered to be impaired as they have been modified in TDRs.
December 31, (in millions)
2014
2013
Impaired credit card loans with an allowance(a)(b)
 
 
Credit card loans with modified payment terms(c)
$
1,775

$
2,746

Modified credit card loans that have reverted to pre-modification payment terms(d)
254

369

Total impaired credit card loans(e)
$
2,029

$
3,115

Allowance for loan losses related to impaired credit card loans
$
500

$
971

(a)
The carrying value and the unpaid principal balance are the same for credit card impaired loans.
(b)
There were no impaired loans without an allowance.
(c)
Represents credit card loans outstanding to borrowers enrolled in a credit card modification program as of the date presented.
(d)
Represents credit card loans that were modified in TDRs but that have subsequently reverted back to the loans’ pre-modification payment terms. At December 31, 2014 and 2013, $159 million and $226 million, respectively, of loans have reverted back to the pre-modification payment terms of the loans due to noncompliance with the terms of the modified loans. The remaining $95 million and $143 million at December 31, 2014 and 2013, respectively, of these loans are to borrowers who have successfully completed a short-term modification program. The Firm continues to report these loans as TDRs since the borrowers’ credit lines remain closed.
(e)
Predominantly all impaired credit card loans are in the U.S.
The following table presents average balances of impaired credit card loans and interest income recognized on those loans.
Year ended December 31,
(in millions)
 
2014
2013
2012
Average impaired credit card loans
 
$
2,503

$
3,882

$
5,893

Interest income on
  impaired credit card loans
 
123

198

308


Loan modifications
JPMorgan Chase may offer one of a number of loan modification programs to credit card borrowers who are experiencing financial difficulty. Most of the credit card loans have been modified under long-term programs for borrowers who are experiencing financial difficulties. Modifications under long-term programs involve placing the customer on a fixed payment plan, generally for 60 months. The Firm may also offer short-term programs for borrowers who may be in need of temporary relief; however, none are currently being offered. Modifications under all short- and long-term programs typically include reducing the interest rate on the credit card. Substantially all modifications are considered to be TDRs.
If the cardholder does not comply with the modified payment terms, then the credit card loan agreement reverts back to its pre-modification payment terms. Assuming that the cardholder does not begin to perform in accordance with those payment terms, the loan continues to age and will ultimately be charged-off in accordance with the Firm’s standard charge-off policy. In addition, if a borrower successfully completes a short-term modification program, then the loan reverts back to its pre-modification payment terms. However, in most cases, the Firm does not reinstate the borrower’s line of credit.
New enrollments in these loan modification programs for the years ended December 31, 2014, 2013 and 2012, were $807 million, $1.2 billion and $1.7 billion, respectively.

Financial effects of modifications and redefaults
The following table provides information about the financial effects of the concessions granted on credit card loans modified in TDRs and redefaults for the periods presented.
Year ended December 31,
(in millions, except
weighted-average data)
 
2014
2013
2012
Weighted-average interest rate of loans – before TDR
 
14.96
%
15.37
%
15.67
%
Weighted-average interest rate of loans – after TDR
 
4.40

4.38

5.19

Loans that redefaulted within one year of modification(a)
 
$
119

$
167

$
309

(a)
Represents loans modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The amounts presented represent the balance of such loans as of the end of the quarter in which they defaulted.
For credit card loans modified in TDRs, payment default is deemed to have occurred when the loans become two payments past due. A substantial portion of these loans is expected to be charged-off in accordance with the Firm’s standard charge-off policy. Based on historical experience, the estimated weighted-average default rate for credit card loans modified was expected to be 27.91%, 30.72% and 38.23% as of December 31, 2014, 2013 and 2012, respectively.
Wholesale  
Loans and Leases Receivable Disclosure [Line Items]  
Loans
Wholesale loan portfolio
Wholesale loans include loans made to a variety of customers, ranging from large corporate and institutional clients to high-net-worth individuals.
The primary credit quality indicator for wholesale loans is the risk rating assigned each loan. Risk ratings are used to identify the credit quality of loans and differentiate risk within the portfolio. Risk ratings on loans consider the probability of default (“PD”) and the loss given default (“LGD”). The PD is the likelihood that a loan will default and not be fully repaid by the borrower. The LGD is the estimated loss on the loan that would be realized upon the default of the borrower and takes into consideration collateral and structural support for each credit facility.
Management considers several factors to determine an appropriate risk rating, including the obligor’s debt capacity and financial flexibility, the level of the obligor’s earnings, the amount and sources for repayment, the level and nature of contingencies, management strength, and the industry and geography in which the obligor operates. The Firm’s definition of criticized aligns with the banking regulatory definition of criticized exposures, which consist of special mention, substandard and doubtful categories. Risk ratings generally represent ratings profiles similar to those defined by S&P and Moody’s. Investment-grade ratings range from “AAA/Aaa” to “BBB-/Baa3.” Noninvestment-grade ratings are classified as noncriticized (“BB+/Ba1 and B-/B3”) and criticized (“CCC+”/“Caa1 and below”), and the criticized portion is further subdivided into performing and nonaccrual loans, representing management’s assessment of the collectibility of principal and interest. Criticized loans have a higher probability of default than noncriticized loans.
Risk ratings are reviewed on a regular and ongoing basis by Credit Risk Management and are adjusted as necessary for updated information affecting the obligor’s ability to fulfill its obligations.
As noted above, the risk rating of a loan considers the industry in which the obligor conducts its operations. As part of the overall credit risk management framework, the Firm focuses on the management and diversification of its industry and client exposures, with particular attention paid to industries with actual or potential credit concern. See Note 5 for further detail on industry concentrations.

The table below provides information by class of receivable for the retained loans in the Wholesale portfolio segment.
As of or for the year ended December 31,
(in millions, except ratios)
Commercial
and industrial
 
Real estate
 
Financial
institutions
 
Government agencies
 
Other(d)
 
Total
retained loans
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
Loans by risk ratings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade
$
63,069

$
57,690

 
$
61,006

$
52,195

 
$
27,111

$
26,712

 
$
8,393

$
9,979

 
$
82,087

$
79,494

 
$
241,666

$
226,070

Noninvestment grade:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncriticized
44,117

43,477

 
16,541

14,381

 
7,085

6,674

 
300

440

 
10,075

10,992

 
78,118

75,964

Criticized performing
2,251

2,385

 
1,313

2,229

 
316

272

 
3

42

 
236

480

 
4,119

5,408

Criticized nonaccrual
188

294

 
253

346

 
18

25

 
—

1

 
140

155

 
599

821

Total noninvestment grade
46,556

46,156

 
18,107

16,956

 
7,419

6,971

 
303

483

 
10,451

11,627

 
82,836

82,193

Total retained loans
$
109,625

$
103,846

 
$
79,113

$
69,151

 
$
34,530

$
33,683

 
$
8,696

$
10,462

 
$
92,538

$
91,121

 
$
324,502

$
308,263

% of total criticized to total retained loans
2.22
%
2.58
%
 
1.98
 %
3.72
%
 
0.97
 %
0.88
 %
 
0.03
%
0.41
%
 
0.41
 %
0.70
%
 
1.45
%
2.02
%
% of nonaccrual loans to total retained loans
0.17

0.28

 
0.32

0.50

 
0.05

0.07

 
—

0.01

 
0.15

0.17

 
0.18

0.27

Loans by geographic distribution(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-U.S.
$
33,739

$
34,440

 
$
2,099

$
1,369

 
$
20,944

$
22,726

 
$
1,122

$
2,146

 
$
42,961

$
43,376

 
$
100,865

$
104,057

Total U.S.
75,886

69,406

 
77,014

67,782

 
13,586

10,957

 
7,574

8,316

 
49,577

47,745

 
223,637

204,206

Total retained loans
$
109,625

$
103,846

 
$
79,113

$
69,151

 
$
34,530

$
33,683

 
$
8,696

$
10,462

 
$
92,538

$
91,121

 
$
324,502

$
308,263

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs/(recoveries)
$
22

$
99

 
$
(9
)
$
6

 
$
(12
)
$
(99
)
 
$
25

$
1

 
$
(14
)
$
9

 
$
12

$
16

% of net charge-offs/(recoveries) to end-of-period retained loans
0.02
%
0.10
%
 
(0.01
)%
0.01
%
 
(0.04
)%
(0.29
)%
 
0.29
%
0.01
%
 
(0.02
)%
0.01
%
 
—
%
0.01
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan delinquency(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current and less than 30 days past due and still accruing
$
108,857

$
103,357

 
$
78,552

$
68,627

 
$
34,408

$
33,426

 
$
8,627

$
10,421

 
$
91,168

$
89,717

 
$
321,612

$
305,548

30–89 days past due and still accruing
566

181

 
275

164

 
104

226

 
69

40

 
1,201

1,233

 
2,215

1,844

90 or more days past due and still accruing(c)
14

14

 
33

14

 
—

6

 
—

—

 
29

16

 
76

50

Criticized nonaccrual
188

294

 
253

346

 
18

25

 
—

1

 
140

155

 
599

821

Total retained loans
$
109,625

$
103,846

 
$
79,113

$
69,151

 
$
34,530

$
33,683

 
$
8,696

$
10,462

 
$
92,538

$
91,121

 
$
324,502

$
308,263

(a)
The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b)
The credit quality of wholesale loans is assessed primarily through ongoing review and monitoring of an obligor’s ability to meet contractual obligations rather than relying on the past due status, which is generally a lagging indicator of credit quality. For a discussion of more significant risk factors, see pages 255–256 of this Note.
(c)
Represents loans that are considered well-collateralized and therefore still accruing interest.
(d)
Other primarily includes loans to SPEs and loans to private banking clients. See Note 1 for additional information on SPEs.
The following table presents additional information on the real estate class of loans within the Wholesale portfolio segment for the periods indicated. The real estate class primarily consists of secured commercial loans mainly to borrowers for multi-family and commercial lessor properties. Multifamily lending specifically finances apartment buildings. Commercial lessors receive financing specifically for real estate leased to retail, office and industrial tenants. Commercial construction and development loans represent financing for the construction of apartments, office and professional buildings and malls. Other real estate loans include lodging, real estate investment trusts (“REITs”), single-family, homebuilders and other real estate.
December 31,
(in millions, except ratios)
Multifamily
 
Commercial lessors
 
Commercial construction and development
 
Other
 
Total real estate loans
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
Real estate retained loans
$
51,049

$
44,389

 
$
17,438

$
15,949

 
$
4,264

$
3,674

 
$
6,362

$
5,139

 
$
79,113

$
69,151

Criticized
652

1,142

 
841

1,323

 
42

81

 
31

29

 
1,566

2,575

% of criticized to total real estate retained loans
1.28
%
2.57
%
 
4.82
%
8.30
%
 
0.98
%
2.20
%
 
0.49
%
0.56
%
 
1.98
%
3.72
%
Criticized nonaccrual
$
126

$
191

 
$
110

$
143

 
$
—

$
3

 
$
17

$
9

 
$
253

$
346

% of criticized nonaccrual to total real estate retained loans
0.25
%
0.43
%
 
0.63
%
0.90
%
 
—
%
0.08
%
 
0.27
%
0.18
%
 
0.32
%
0.50
%


Wholesale impaired loans and loan modifications
Wholesale impaired loans are comprised of loans that have been placed on nonaccrual status and/or that have been modified in a TDR. All impaired loans are evaluated for an asset-specific allowance as described in Note 15.
The table below sets forth information about the Firm’s wholesale impaired loans.
December 31,
(in millions)
Commercial
and industrial
 
Real estate
 
Financial
institutions
 
Government
 agencies
 
Other
 
Total
retained loans
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
2013
 
2014
 
2013
 
Impaired loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance
$
174

$
236

 
$
193

$
258

 
$
15

$
17

 
$
—

$
1

 
$
89

$
85

 
$
471

 
$
597

 
Without an allowance(a)
24

58

 
87

109

 
3

8

 
—

—

 
52

73

 
166

 
248

 
Total impaired loans
$
198

$
294

 
$
280

$
367

 
$
18

$
25

 
$
—

$
1

 
$
141

$
158

 
$
637

(c) 
$
845

(c) 
Allowance for loan losses related to impaired loans
$
34

$
75

 
$
36

$
63

 
$
4

$
16

 
$
—

$
—

 
$
13

$
27

 
$
87

 
$
181

 
Unpaid principal balance of impaired loans(b)
266

448

 
345

454

 
22

24

 
—

1

 
202

241

 
835

 
1,168

 
(a)
When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the loan balance.
(b)
Represents the contractual amount of principal owed at December 31, 2014 and 2013. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs; interest payments received and applied to the carrying value; net deferred loan fees or costs; and unamortized discount or premiums on purchased loans.
(c)
Based upon the domicile of the borrower, predominantly all wholesale impaired loans are in the U.S.

The following table presents the Firm’s average impaired loans for the years ended 2014, 2013 and 2012.
Year ended December 31, (in millions)
2014
2013
2012
Commercial and industrial
$
243

$
412

$
873

Real estate
297

484

784

Financial institutions
20

17

17

Government agencies
—

—

9

Other
155

211

277

Total(a)
$
715

$
1,124

$
1,960

(a)
The related interest income on accruing impaired loans and interest income recognized on a cash basis were not material for the years ended December 31, 2014, 2013 and 2012.

Certain loan modifications are considered to be TDRs as they provide various concessions to borrowers who are experiencing financial difficulty. All TDRs are reported as impaired loans in the tables above. TDRs were not material as of December 31, 2014 and 2013.