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Receivables Held for Sale (Tables)
 9 Months Ended
Sep. 30, 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:
 
September 30, 2017
 
December 31, 2016
 
(in millions)
Real estate secured receivables held for sale:
 
 
 
First lien
$
235

 
$
4,699

Second lien
21

 
975

Total real estate secured receivables held for sale(1)
$
256

 
$
5,674


 
(1) 
At September 30, 2017 and December 31, 2016, contractually delinquent real estate secured receivables held for sale includes $14 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 and nine months ended September 30, 2017 and 2016.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,

2017
 
2016
 
2017
 
2016
 
(in millions)
Unpaid principal balance at the time of sale
$
1,244

 
$
930

 
$
6,228

 
$
5,652

 
 
 
 
 
 
 
 
Aggregate cash consideration received
$
1,196

 
$
715

 
$
6,059

 
$
5,382

Aggregate carrying value at the time of sale
1,048

 
714

 
5,267

 
4,933

Transaction costs
9

 
6

 
38

 
31

Gain (loss) on sale of real estate secured receivables
$
139

 
$
(5
)
 
$
754

 
$
418
Summary of Activity in Receivables Held for Sale
The following table summarizes the activity in receivables held for sale during the three and nine months ended September 30, 2017 and 2016:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,

2017
 
2016
 
2017
 
2016
 
(in millions)
Real estate secured receivables held for sale at beginning of period
$
1,346

 
$
3,796

 
$
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)
—

 
7,281

 
—

 
7,574

Real estate secured receivable sales
(1,048
)
 
(714
)
 
(5,267
)
 
(4,933
)
Lower of amortized cost or fair value adjustment on real estate secured receivables held for sale subsequent to initial transfer to held for sale
(16
)
 
(3
)
 
155

 
(108
)
Carrying value of real estate secured receivables held for sale transferred to real estate owned ("REO")
(2
)
 
(11
)
 
(19
)
 
(45
)
Carrying value of real estate secured receivables held for sale settled through short sale
(2
)
 
(8
)
 
(17
)
 
(26
)
Change in real estate secured receivable balance, including collections
(22
)
 
(193
)
 
(270
)
 
(579
)
Real estate secured receivables held for sale at end of period(3)
$
256

 
$
10,148

 
$
256

 
$
10,148

 
(1) 
During the three and nine months ended September 30, 2016, the initial lower of amortized cost or fair value adjustment recorded on receivables transferred into held for sale totaled $562 million and $587 million, respectively.
(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 and nine months ended September 30, 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
September 30,
 
Nine Months Ended
September 30,

2017
 
2016
 
2017
 
2016
 
(in millions)
Balance at beginning of period
$
3

 
$
150

 
$
174

 
$
13

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

 
5

 
—

 
11

Increase (decrease) in valuation allowance resulting from changes in fair value
10

 
15

 
(153
)
 
145

Change in valuation allowance for receivables sold
(5
)
 
(81
)
 
(5
)
 
(81
)
Change in valuation allowance for collections, charged-off, transferred to REO or short sale
(1
)
 
(1
)
 
(9
)
 
—

Balance at end of period
$
7

 
$
88

 
$
7

 
$
88
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 and nine months ended September 30, 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 September 30, 2017:
 
 
 
 
 
Lower of amortized cost or fair value adjustment recorded through other revenues(2)
$
10

 
$
6

 
$
16

Total lower of amortized cost or fair value adjustment
$
10

 
$
6

 
$
16

Three Months Ended September 30, 2016:
 
 
 
 
 
Lower of amortized cost or fair value adjustments recorded as a component of:
 
 
 
 
 
Provision for credit losses(3)
$
557

 
$
—

 
$
557

Other revenues:
 
 
 
 
 
Initial lower of amortized cost or fair value adjustment(4)
5

 
—

 
5

Subsequent to initial transfer to held for sale
15

 
(12
)
 
3

Lower of amortized cost or fair value adjustment recorded through other revenues
20

 
(12
)
 
8

Total lower of amortized cost or fair value adjustment
$
577

 
$
(12
)
 
$
565

Nine Months Ended September 30, 2017:
 
 
 
 
 
Lower of amortized cost or fair value adjustment recorded through other revenues(2)
$
(153
)
 
$
(2
)
 
$
(155
)
Total lower of amortized cost or fair value adjustment
$
(153
)
 
$
(2
)
 
$
(155
)
Nine Months Ended September 30, 2016:
 
 
 
 
 
Lower of amortized cost or fair value adjustments recorded as a component of:
 
 
 
 
 
Provision for credit losses(3)
$
576

 
$
—

 
$
576

Other revenues:
 
 
 
 
 
Initial lower of amortized cost or fair value adjustment(4)
11

 
—

 
11

Subsequent to initial transfer to held for sale
145

 
(37
)
 
108

Lower of amortized cost or fair value adjustment recorded through other revenues
156

 
(37
)
 
119

Total lower of amortized cost or fair value adjustment
$
732

 
$
(37
)
 
$
695

 

(1) 
Reflects receivable settlements due to either receivable charge-off or payoff (including short sales) or transfer 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 September 30, 2017 and December 31, 2016, for the three and nine months ended September 30, 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.