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Receivables Held for Sale (Tables)
 3 Months Ended
Mar. 31, 2017
Receivables [Abstract]  
Summary of Real Estate Secured Receivables Held for Sale
Receivables held for sale, which are carried at the lower of amortized cost or fair value, are comprised of the following:
 
March 31, 2017
 
December 31, 2016
 
(in millions)
Real estate secured receivables held for sale:
 
 
 
First lien
$
1,860

 
$
4,699

Second lien
51

 
975

Total real estate secured receivables held for sale(1)(2)
$
1,911

 
$
5,674


 
(1) 
At March 31, 2017 and December 31, 2016, receivables held for sale includes $716 million and $750 million, respectively, of closed-end real estate secured receivables which are part of a collateralized funding transaction. These receivables will be sold when they are contractually released as collateral under the public trust and become available for sale. See Note 10, "Variable Interest Entities," for further discussion of our collateralized funding transactions.
(2) 
At March 31, 2017 and December 31, 2016, contractually delinquent real estate secured receivables held for sale includes $203 million and $235 million, respectively, that are in the process of foreclosure.
Schedule of Receivables Sold to Third-party Investors
The following table summarizes receivables sold to third party investors during the three months ended March 31, 2017. There were no receivable sales during the three months ended March 31, 2016.
Three Months Ended March 31,
2017
 
(in millions)
Unpaid principal balance at the time of sale
$
4,363

 
 
Aggregate cash consideration received
$
4,307

Aggregate carrying value at the time of sale
3,665

Transaction costs
25

Gain on sale of real estate secured receivables
$
617
Summary of Activity in Receivables Held for Sale
The following table summarizes the activity in receivables held for sale during the three months ended March 31, 2017 and 2016:
Three Months Ended March 31,
2017
 
2016
 
(in millions)
Real estate secured receivables held for sale at beginning of period
$
5,674

 
$
8,265

Transfer of real estate secured receivables into held for sale at the lower of amortized cost or fair value(1)(2)
—

 
230

Real estate secured receivable sales
(3,665
)
 
—

Lower of amortized cost or fair value adjustment on real estate secured receivables held for sale subsequent to initial transfer to held for sale
113

 
(51
)
Carrying value of real estate secured receivables held for sale transferred to real estate owned ("REO")
(11
)
 
(14
)
Carrying value of real estate secured receivables held for sale settled through short sale
(8
)
 
(8
)
Change in real estate secured receivable balance, including collections
(192
)
 
(237
)
Real estate secured receivables held for sale at end of period(3)
$
1,911

 
$
8,185

 
(1) 
During the three months ended March 31, 2016, the initial lower of amortized cost or fair value adjustment recorded on receivables transferred into held for sale totaled $17 million.
(2) 
Amount includes any accrued interest associated with the receivable.
(3) 
Real estate secured receivables held for sale in the table above are presented net of the valuation allowance.
Allowance for Credit Losses on Financing Receivables
The following table provides a rollforward of our valuation allowance for the three months ended March 31, 2017 and 2016. See Note 11, "Fair Value Measurements," for a discussion of the factors impacting the fair value of these receivables.
Three Months Ended March 31,
2017
 
2016
 
(in millions)
Balance at beginning of period
$
174

 
$
13

Initial valuation allowance for real estate secured receivables transferred to held for sale during the period
—

 
4

Increase (decrease) in valuation allowance resulting from changes in fair value
(108
)
 
68

Change in valuation allowance for collections, charged-off, transferred to REO or short sale
(5
)
 
1

Balance at end of period
$
61

 
$
86
Summary of Components of Cumulative Lower of Amortized Cost or Fair Value Adjustment
The following table summarizes the components of the lower of amortized cost or fair value adjustment during the three months ended March 31, 2017 and 2016:
 
Lower of Amortized Cost or Fair Value Adjustments Associated With
 
 
(Income)/Expense
Fair Value
 
Settlement(1)
 
Total
 
(in millions)
Three Months Ended March 31, 2017:
 
 
 
 
 
Lower of amortized cost or fair value adjustment recorded through other revenues(2)
$
(108
)
 
$
(5
)
 
$
(113
)
Total lower of amortized cost or fair value adjustment
$
(108
)
 
$
(5
)
 
$
(113
)
Three Months Ended March 31, 2016:
 
 
 
 
 
Lower of amortized cost or fair value adjustments recorded as a component of:
 
 
 
 
 
Provision for credit losses(3)
$
13

 
$
—

 
$
13

Other revenues:
 
 
 
 
 
Initial lower of amortized cost or fair value adjustment(4)
4

 
—

 
4

Subsequent to initial transfer to held for sale
68

 
(17
)
 
51

Lower of amortized cost or fair value adjustment recorded through other revenues
72

 
(17
)
 
55

Total lower of amortized cost or fair value adjustment
$
85

 
$
(17
)
 
$
68

 

(1) 
Reflects receivable settlements due to either receivable payoffs (including short sales) or transfers of receivables to REO and reflects either a reversal of the non-credit fair value adjustment previously recorded on these receivables or an additional lower of amortized cost or fair value adjustment required at the time of settlement.
(2) 
As all of our receivables are classified as held for sale at March 31, 2017 and December 31, 2016, for the three months ended March 31, 2017 and for all future periods, any lower of amortized cost or fair value adjustments will relate to either changes in fair value subsequent to classification as held for sale or settlements of receivables as discussed above.
(3) 
Represents the portion of the initial lower of amortized cost or fair value adjustment attributable to credit factors which are recorded as provision for credit losses in the consolidated statement of income (loss).
(4) 
Represents the portion of the initial lower of amortized cost or fair value adjustment attributable to non-credit factors which are recorded as a component of total other revenues in the consolidated statement income (loss) as it reflects the impact on value caused by current marketplace conditions including changes in interest rates.