7. LENDING ACTIVITIES

The following table presents the composition of Mortgage and other loans receivable, net:

	September 30,			December 31,
(in millions)		2016		2015
Commercial mortgages^*	$	24,010	$	22,067
Residential mortgages		3,557		2,758
Commercial loans, other loans and notes receivable		2,635		2,451
Life insurance policy loans		2,510		2,597
Total mortgage and other loans receivable		32,712		29,873
Allowance for credit losses		(299)		(308)
Mortgage and other loans receivable, net	$	32,413	$	29,565

* Commercial mortgages primarily represent loans for offices, apartments and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 23 percent and 13 percent, respectively, at September 30, 2016, and 22 percent and 12 percent, respectively, at December 31, 2015).

Credit Quality of Commercial Mortgages

The following table presents debt service coverage ratios and loan-to-value ratios for commercial mortgages:

	Debt Service Coverage Ratios^(a)
(in millions)		>1.20X		1.00X - 1.20X		<1.00X		Total
September 30, 2016
Loan-to-Value Ratios^(b)
Less than 65%	$	13,111	$	1,949	$	228	$	15,288
65% to 75%		5,391		589		87		6,067
76% to 80%		1,445		184		47		1,676
Greater than 80%		362		412		205		979
Total commercial mortgages	$	20,309	$	3,134	$	567	$	24,010

December 31, 2015
Loan-to-Value Ratios^(b)
Less than 65%	$	10,283	$	1,704	$	150	$	12,137
65% to 75%		6,361		611		45		7,017
76% to 80%		1,370		169		81		1,620
Greater than 80%		646		226		421		1,293
Total commercial mortgages	$	18,660	$	2,710	$	697	$	22,067

(a) The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest.

(b) The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan.

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total^(c)	Total $
September 30, 2016
Credit Quality Performance Indicator:
In good standing	801	$	5,197	$	7,884	$	5,127	$	1,824	$	2,430	$	1,381	$	23,843	99	%
Restructured^(a)	4		-		133		18		-		16		-		167	1
90 days or less delinquent	-		-		-		-		-		-		-		-	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total^(b)	805	$	5,197	$	8,017	$	5,145	$	1,824	$	2,446	$	1,381	$	24,010	100	%
Allowance for credit losses:
Specific		$	-	$	3	$	1	$	6	$	1	$	-	$	11	-	%
General			31		73		41		7		13		13		178	1
Total allowance for credit losses		$	31	$	76	$	42	$	13	$	14	$	13	$	189	1	%

December 31, 2015
Credit Quality Performance Indicator:
In good standing	830	$	3,916	$	7,484	$	4,809	$	1,902	$	2,082	$	1,435	$	21,628	98	%
Restructured^(a)	9		-		156		25		6		16		6		209	1
90 days or less delinquent	1		-		-		4		-		-		-		4	-
>90 days delinquent or in
process of foreclosure	9		3		205		-		6		-		12		226	1
Total^(b)	849	$	3,919	$	7,845	$	4,838	$	1,914	$	2,098	$	1,453	$	22,067	100	%
Allowance for credit losses:
Specific		$	-	$	16	$	1	$	6	$	1	$	-	$	24	-	%
General			35		47		29		8		15		13		147	1
Total allowance for credit losses		$	35	$	63	$	30	$	14	$	16	$	13	$	171	1	%

(a) Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings, see Note 6 to the Consolidated Financial Statements in the 2015 Annual Report.

(b) Does not reflect allowance for credit losses.

(c) Approximately all of the commercial mortgages held at such respective dates were current as to payments of principal and interest. There were no significant amounts of nonperforming commercial mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented.

Allowance for Credit Losses

See Note 6 to the Consolidated Financial Statements in the 2015 Annual Report for a discussion of our accounting policy for evaluating Mortgage and other loans receivable for impairment.

The following table presents a rollforward of the changes in the allowance for losses on Mortgage and other loans receivable:

	2016						2015
Nine Months Ended September 30,		Commercial		Other				Commercial		Other
(in millions)		Mortgages		Loans		Total		Mortgages		Loans		Total
Allowance, beginning of year	$	171	$	137	$	308	$	159	$	112	$	271
Loans charged off		(13)		(2)		(15)		(23)		(6)		(29)
Recoveries of loans previously charged off		11		-		11		4		1		5
Net charge-offs		(2)		(2)		(4)		(19)		(5)		(24)
Provision for loan losses		20		(25)		(5)		22		(66)		(44)
Other		-		-		-		-		3		3
Allowance, end of period	$	189 ^*	$	110	$	299	$	162 ^*	$	44	$	206

* Of the total allowance, $11 million and $24 million relate to individually assessed credit losses on $292 million and $512 million of commercial mortgages at September 30, 2016 and 2015, respectively.

Loans that had been modified in troubled debt restructurings during the nine month period ended September 30, 2016 have been fully paid off. For the nine-month period ended September 30, 2015, loans with a carrying value of $42 million, were modified in troubled debt restructurings.