Loans and Allowance for Credit Losses | Note 5: Loans and Allowance for Credit Losses Table 5.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include a total net reduction of $5.3 billion and $3.8 billion at March 31, 2016 , and December 31, 2015 , respectively, for unearned income, net deferred loan fees, and unamortized discounts and premiums. Outstanding balances at March 31, 2016 also reflect the acquisition of various loans and capital leases from GE Capital as described in Note 2 (Business Combinations). Table 5.1: Loans Outstanding (in millions) Mar 31, Dec 31, Commercial: Commercial and industrial $ 321,547 299,892 Real estate mortgage 124,711 122,160 Real estate construction 22,944 22,164 Lease financing 19,003 12,367 Total commercial 488,205 456,583 Consumer: Real estate 1-4 family first mortgage 274,734 273,869 Real estate 1-4 family junior lien mortgage 51,324 53,004 Credit card 33,139 34,039 Automobile 60,658 59,966 Other revolving credit and installment 39,198 39,098 Total consumer 459,053 459,976 Total loans $ 947,258 916,559 Our foreign loans are reported by respective class of financing receivable in the table above. Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign primarily based on whether the borrower’s primary address is outside of the United States. Table 5.2 presents total commercial foreign loans outstanding by class of financing receivable. Table 5.2: Commercial Foreign Loans Outstanding (in millions) Mar 31, Dec 31, Commercial foreign loans: Commercial and industrial $ 51,884 49,049 Real estate mortgage 8,367 8,350 Real estate construction 311 444 Lease financing 983 274 Total commercial foreign loans $ 61,545 58,117 Loan Purchases, Sales, and Transfers Table 5.3 summarizes the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale at lower of cost or fair value. This loan activity primarily includes loans purchased and sales of whole loan or participating interests, whereby we receive or transfer a portion of a loan after origination. The table excludes PCI loans and loans for which we have elected the fair value option, including loans originated for sale because their loan activity normally does not impact the allowance for credit losses. Table 5.3: Loan Purchases, Sales, and Transfers Quarter ended March 31, 2016 2015 (in millions) Commercial Consumer Total Commercial Consumer Total Purchases (1)(2) $ 24,646 — 24,646 1,091 — 1,091 Sales (1) (223 ) (272 ) (495 ) (206 ) (29 ) (235 ) Transfers to MHFS/LHFS (1) (32 ) (3 ) (35 ) (7 ) (2 ) (9 ) (1) All categories exclude activity in government insured/guaranteed real estate 1-4 family first mortgage loans. As servicer, we are able to buy delinquent insured/guaranteed loans out of the Government National Mortgage Association (GNMA) pools, and manage and/or resell them in accordance with applicable requirements. These loans are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Accordingly, these loans have limited impact on the allowance for loan losses. (2) Purchases in first quarter 2016 include loans and capital leases from the GE Capital acquisitions as described in Note 2 (Business Combinations). Commitments to Lend A commitment to lend is a legally binding agreement to lend funds to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law. We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. These temporary advance arrangements totaled approximately $77 billion at March 31, 2016 and $75 billion at December 31, 2015 . We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At March 31, 2016 , and December 31, 2015 , we had $1.2 billion and $1.1 billion , respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 10 (Guarantees, Pledged Assets and Collateral) for additional information on standby letters of credit. When we make commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are expected to expire without being used by the customer. In addition, we manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities. For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, autos, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure. The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 5.4 . The table excludes the standby and commercial letters of credit and temporary advance arrangements described above. Table 5.4: Unfunded Credit Commitments (in millions) Mar 31, Dec 31, Commercial: Commercial and industrial $ 298,498 296,710 Real estate mortgage 7,472 7,378 Real estate construction 18,563 18,047 Total commercial 324,533 322,135 Consumer: Real estate 1-4 family first mortgage 38,264 34,621 Real estate 1-4 family junior lien mortgage 43,264 43,309 Credit card 101,973 98,904 Other revolving credit and installment 27,604 27,899 Total consumer 211,105 204,733 Total unfunded credit commitments $ 535,638 526,868 Allowance for Credit Losses Table 5.5 presents the allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments. Table 5.5: Allowance for Credit Losses Quarter ended March 31, (in millions) 2016 2015 Balance, beginning of period $ 12,512 13,169 Provision for credit losses 1,086 608 Interest income on certain impaired loans (1) (48 ) (52 ) Loan charge-offs: Commercial: Commercial and industrial (349 ) (133 ) Real estate mortgage (3 ) (23 ) Real estate construction — (1 ) Lease financing (4 ) (3 ) Total commercial (356 ) (160 ) Consumer: Real estate 1-4 family first mortgage (137 ) (130 ) Real estate 1-4 family junior lien mortgage (133 ) (179 ) Credit card (314 ) (278 ) Automobile (211 ) (195 ) Other revolving credit and installment (175 ) (154 ) Total consumer (970 ) (936 ) Total loan charge-offs (1,326 ) (1,096 ) Loan recoveries: Commercial: Commercial and industrial 76 69 Real estate mortgage 32 34 Real estate construction 8 10 Lease financing 3 3 Total commercial 119 116 Consumer: Real estate 1-4 family first mortgage 89 47 Real estate 1-4 family junior lien mortgage 59 56 Credit card 52 39 Automobile 84 94 Other revolving credit and installment 37 36 Total consumer 321 272 Total loan recoveries 440 388 Net loan charge-offs (886 ) (708 ) Other 4 (4 ) Balance, end of period $ 12,668 13,013 Components: Allowance for loan losses $ 11,621 12,176 Allowance for unfunded credit commitments 1,047 837 Allowance for credit losses $ 12,668 13,013 Net loan charge-offs (annualized) as a percentage of average total loans 0.38 % 0.33 Allowance for loan losses as a percentage of total loans 1.23 1.41 Allowance for credit losses as a percentage of total loans 1.34 1.51 (1) Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize reductions in the allowance as interest income. Table 5.6 summarizes the activity in the allowance for credit losses by our commercial and consumer portfolio segments. Table 5.6: Allowance Activity by Portfolio Segment 2016 2015 (in millions) Commercial Consumer Total Commercial Consumer Total Quarter ended March 31, Balance, beginning of period $ 6,872 5,640 12,512 6,377 6,792 13,169 Provision for credit losses 714 372 1,086 9 599 608 Interest income on certain impaired loans (5 ) (43 ) (48 ) (5 ) (47 ) (52 ) Loan charge-offs (356 ) (970 ) (1,326 ) (160 ) (936 ) (1,096 ) Loan recoveries 119 321 440 116 272 388 Net loan charge-offs (237 ) (649 ) (886 ) (44 ) (664 ) (708 ) Other 4 — 4 (4 ) — (4 ) Balance, end of period $ 7,348 5,320 12,668 6,333 6,680 13,013 Table 5.7 disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology. Table 5.7: Allowance by Impairment Methodology Allowance for credit losses Recorded investment in loans (in millions) Commercial Consumer Total Commercial Consumer Total March 31, 2016 Collectively evaluated (1) $ 6,155 3,328 9,483 480,745 421,036 901,781 Individually evaluated (2) 1,191 1,992 3,183 5,736 19,423 25,159 PCI (3) 2 — 2 1,724 18,594 20,318 Total $ 7,348 5,320 12,668 488,205 459,053 947,258 December 31, 2015 Collectively evaluated (1) $ 5,999 3,436 9,435 452,063 420,705 872,768 Individually evaluated (2) 872 2,204 3,076 3,808 20,012 23,820 PCI (3) 1 — 1 712 19,259 19,971 Total $ 6,872 5,640 12,512 456,583 459,976 916,559 (1) Represents loans collectively evaluated for impairment in accordance with Accounting Standards Codification (ASC) 450-20, Loss Contingencies (formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans. (2) Represents loans individually evaluated for impairment in accordance with ASC 310-10, Receivables (formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans. (3) Represents the allowance and related loan carrying value determined in accordance with ASC 310-30 , Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly SOP 03-3) and pursuant to amendments by ASU 2010-20 regarding allowance for PCI loans. Credit Quality We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/combined LTV (CLTV).We obtain FICO scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). Generally, the LTV and CLTV indicators are updated in the second month of each quarter, with updates no older than December 31, 2015 . See the “Purchased Credit-Impaired Loans” section in this Note for credit quality information on our PCI portfolio. COMMERCIAL CREDIT QUALITY INDICATORS In addition to monitoring commercial loan concentration risk, we manage a consistent process for assessing commercial loan credit quality. Generally, commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to Pass and Criticized categories. The Criticized category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies. Table 5.8 provides a breakdown of outstanding commercial loans by risk category. Of the $6.7 billion in criticized commercial real estate (CRE) loans at March 31, 2016 , $1.0 billion has been placed on nonaccrual status and written down to net realizable collateral value. CRE loans have a high level of monitoring in place to manage these assets and mitigate loss exposure. Table 5.8: Commercial Loans by Risk Category (in millions) Commercial and industrial Real estate mortgage Real estate construction Lease financing Total March 31, 2016 By risk category: Pass $ 290,451 118,117 22,313 17,280 448,161 Criticized 29,943 6,111 543 1,723 38,320 Total commercial loans (excluding PCI) 320,394 124,228 22,856 19,003 486,481 Total commercial PCI loans (carrying value) 1,153 483 88 — 1,724 Total commercial loans $ 321,547 124,711 22,944 19,003 488,205 December 31, 2015 By risk category: Pass $ 281,356 115,025 21,546 11,772 429,699 Criticized 18,458 6,593 526 595 26,172 Total commercial loans (excluding PCI) 299,814 121,618 22,072 12,367 455,871 Total commercial PCI loans (carrying value) 78 542 92 — 712 Total commercial loans $ 299,892 122,160 22,164 12,367 456,583 Table 5.9 provides past due information for commercial loans, which we monitor as part of our credit risk management practices. Table 5.9: Commercial Loans by Delinquency Status (in millions) Commercial and industrial Real estate mortgage Real estate construction Lease financing Total March 31, 2016 By delinquency status: Current-29 DPD and still accruing $ 316,922 123,172 22,749 18,773 481,616 30-89 DPD and still accruing 537 152 42 131 862 90+ DPD and still accruing 24 8 2 — 34 Nonaccrual loans 2,911 896 63 99 3,969 Total commercial loans (excluding PCI) 320,394 124,228 22,856 19,003 486,481 Total commercial PCI loans (carrying value) 1,153 483 88 — 1,724 Total commercial loans $ 321,547 124,711 22,944 19,003 488,205 December 31, 2015 By delinquency status: Current-29 DPD and still accruing $ 297,847 120,415 21,920 12,313 452,495 30-89 DPD and still accruing 507 221 82 28 838 90+ DPD and still accruing 97 13 4 — 114 Nonaccrual loans 1,363 969 66 26 2,424 Total commercial loans (excluding PCI) 299,814 121,618 22,072 12,367 455,871 Total commercial PCI loans (carrying value) 78 542 92 — 712 Total commercial loans $ 299,892 122,160 22,164 12,367 456,583 CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique risks. Loan delinquency, FICO credit scores and LTV for loan types are common credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit losses for the consumer portfolio segment. Many of our loss estimation techniques used for the allowance for credit losses rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses. Table 5.10 provides the outstanding balances of our consumer portfolio by delinquency status. Table 5.10: Consumer Loans by Delinquency Status (in millions) Real estate 1-4 family first mortgage Real estate 1-4 family junior lien mortgage Credit card Automobile Other revolving credit and installment Total March 31, 2016 By delinquency status: Current-29 DPD $ 228,403 50,201 32,381 59,550 38,818 409,353 30-59 DPD 1,797 306 211 870 158 3,342 60-89 DPD 743 157 158 175 93 1,326 90-119 DPD 317 96 137 59 87 696 120-179 DPD 373 125 251 3 24 776 180+ DPD 2,994 379 1 1 18 3,393 Government insured/guaranteed loans (1) 21,573 — — — — 21,573 Total consumer loans (excluding PCI) 256,200 51,264 33,139 60,658 39,198 440,459 Total consumer PCI loans (carrying value) 18,534 60 — — — 18,594 Total consumer loans $ 274,734 51,324 33,139 60,658 39,198 459,053 December 31, 2015 By delinquency status: Current-29 DPD $ 225,195 51,778 33,208 58,503 38,690 407,374 30-59 DPD 2,072 325 257 1,121 175 3,950 60-89 DPD 821 184 177 253 107 1,542 90-119 DPD 402 110 150 84 86 832 120-179 DPD 460 145 246 4 21 876 180+ DPD 3,376 393 1 1 19 3,790 Government insured/guaranteed loans (1) 22,353 — — — — 22,353 Total consumer loans (excluding PCI) 254,679 52,935 34,039 59,966 39,098 440,717 Total consumer PCI loans (carrying value) 19,190 69 — — — 19,259 Total consumer loans $ 273,869 53,004 34,039 59,966 39,098 459,976 (1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $11.4 billion at March 31, 2016 , compared with $12.4 billion at December 31, 2015 . Of the $4.9 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at March 31, 2016 , $769 million was accruing, compared with $5.5 billion past due and $867 million accruing at December 31, 2015 . Real estate 1-4 family first mortgage loans 180 days or more past due totaled $3.0 billion , or 1.2% of total first mortgages (excluding PCI), at March 31, 2016 , compared with $3.4 billion , or 1.3% , at December 31, 2015 . Table 5.11 provides a breakdown of our consumer portfolio by FICO. The majority of our portfolio is underwritten with a FICO score of 680 and above. FICO is not available for certain loan types and may not be obtained if we deem it unnecessary due to strong collateral and other borrower attributes, primarily security-based loans of $7.2 billion at March 31, 2016 , and $7.0 billion at December 31, 2015 . Table 5.11: Consumer Loans by FICO (in millions) Real estate 1-4 family first mortgage Real estate 1-4 family junior lien mortgage Credit card Automobile Other revolving credit and installment Total March 31, 2016 By FICO: < 600 $ 8,894 3,192 2,986 9,680 985 25,737 600-639 6,681 2,300 2,834 6,788 1,093 19,696 640-679 12,777 4,357 5,252 10,156 2,373 34,915 680-719 24,324 7,460 6,782 11,025 4,387 53,978 720-759 37,513 10,568 6,923 8,336 5,977 69,317 760-799 94,066 15,813 5,494 7,703 8,259 131,335 800+ 46,099 6,790 2,728 6,546 6,588 68,751 No FICO available 4,273 784 140 424 2,367 7,988 FICO not required — — — — 7,169 7,169 Government insured/guaranteed loans (1) 21,573 — — — — 21,573 Total consumer loans (excluding PCI) 256,200 51,264 33,139 60,658 39,198 440,459 Total consumer PCI loans (carrying value) 18,534 60 — — — 18,594 Total consumer loans $ 274,734 51,324 33,139 60,658 39,198 459,053 December 31, 2015 By FICO: < 600 $ 8,716 3,025 2,927 9,260 965 24,893 600-639 6,961 2,367 2,875 6,619 1,086 19,908 640-679 13,006 4,613 5,354 10,014 2,416 35,403 680-719 24,460 7,863 6,857 10,947 4,388 54,515 720-759 38,309 10,966 7,017 8,279 6,010 70,581 760-799 92,975 16,369 5,693 7,761 8,351 131,149 800+ 44,452 6,895 3,090 6,654 6,510 67,601 No FICO available 3,447 837 226 432 2,395 7,337 FICO not required — — — — 6,977 6,977 Government insured/guaranteed loans (1) 22,353 — — — — 22,353 Total consumer loans (excluding PCI) 254,679 52,935 34,039 59,966 39,098 440,717 Total consumer PCI loans (carrying value) 19,190 69 — — — 19,259 Total consumer loans $ 273,869 53,004 34,039 59,966 39,098 459,976 (1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. CLTV refers to the combination of first mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties. Table 5.12 shows the most updated LTV and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our allowance for credit losses. In the event of a default, any loss should be limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV primarily due to industry data availability and portfolios acquired from or serviced by other institutions. Table 5.12: Consumer Loans by LTV/CLTV March 31, 2016 December 31, 2015 (in millions) Real estate 1-4 family first mortgage by LTV Real estate 1-4 family junior lien mortgage by CLTV Total Real estate 1-4 family first mortgage by LTV Real estate 1-4 family junior lien mortgage by CLTV Total By LTV/CLTV: 0-60% $ 109,138 15,390 124,528 109,558 15,805 125,363 60.01-80% 93,772 16,155 109,927 92,005 16,579 108,584 80.01-100% 24,089 10,979 35,068 22,765 11,385 34,150 100.01-120% (1) 4,225 5,331 9,556 4,480 5,545 10,025 > 120% (1) 1,950 2,871 4,821 2,065 3,051 5,116 No LTV/CLTV available 1,453 538 1,991 1,453 570 2,023 Government insured/guaranteed loans (2) 21,573 — 21,573 22,353 — 22,353 Total consumer loans (excluding PCI) 256,200 51,264 307,464 254,679 52,935 307,614 Total consumer PCI loans (carrying value) 18,534 60 18,594 19,190 69 19,259 Total consumer loans $ 274,734 51,324 326,058 273,869 53,004 326,873 (1) Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV. (2) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. NONACCRUAL LOANS Table 5.13 provides loans on nonaccrual status. PCI loans are excluded from this table because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms. Table 5.13: Nonaccrual Loans (in millions) Mar 31, Dec 31, Commercial: Commercial and industrial $ 2,911 1,363 Real estate mortgage 896 969 Real estate construction 63 66 Lease financing 99 26 Total commercial 3,969 2,424 Consumer: Real estate 1-4 family first mortgage (1) 6,683 7,293 Real estate 1-4 family junior lien mortgage 1,421 1,495 Automobile 114 121 Other revolving credit and installment 47 49 Total consumer 8,265 8,958 Total nonaccrual loans (excluding PCI) $ 12,234 11,382 (1) Includes MHFS of $157 million and $177 million at March 31, 2016 , and December 31, 2015 , respectively. LOANS IN PROCESS OF FORECLOSURE Our recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was $10.3 billion and $11.0 billion at March 31, 2016 and December 31, 2015 , respectively, which included $5.7 billion and $6.2 billion , respectively, of loans that are government insured/guaranteed. We commence the foreclosure process on consumer real estate loans when a borrower becomes 120 days delinquent in accordance with Consumer Finance Protection Bureau Guidelines. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law. LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain loans 90 days or more past due as to interest or principal are still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of $2.7 billion at March 31, 2016 , and $2.9 billion at December 31, 2015 , are not included in these past due and still accruing loans even though they are 90 days or more contractually past due. These PCI loans are considered to be accruing because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms. Table 5.14 shows non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. Table 5.14: Loans 90 Days or More Past Due and Still Accruing (in millions) Mar 31, 2016 Dec 31, 2015 Loans 90 days or more past due and still accruing: Total (excluding PCI): $ 13,060 14,380 Less: FHA insured/guaranteed by the VA (1)(2) 12,233 13,373 Less: Student loans guaranteed under the FFELP (3) 24 26 Total, not government insured/guaranteed $ 803 981 By segment and class, not government insured/guaranteed: Commercial: Commercial and industrial $ 24 97 Real estate mortgage 8 13 Real estate construction 2 4 Total commercial 34 114 Consumer: Real estate 1-4 family first mortgage (2) 167 224 Real estate 1-4 family junior lien mortgage (2) 55 65 Credit card 389 397 Automobile 55 79 Other revolving credit and installment 103 102 Total consumer 769 867 Total, not government insured/guaranteed $ 803 981 (1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. (2) Includes mortgage loans held for sale 90 days or more past due and still accruing. (3) Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP. IMPAIRED LOANS Table 5.15 summarizes key information for impaired loans. Our impaired loans predominantly include loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans generally have estimated losses which are included in the allowance for credit losses. We have impaired loans with no allowance for credit losses when loss content has been previously recognized through charge-offs and we do not anticipate additional charge-offs or losses, or certain loans are currently performing in accordance with their terms and for which no loss has been estimated. Impaired loans exclude PCI loans. Table 5.15 includes trial modifications that totaled $380 million at March 31, 2016 , and $402 million at December 31, 2015 . For additional information on our impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2015 Form 10-K. Table 5.15: Impaired Loans Summary Recorded investment (in millions) Unpaid principal balance (1) Impaired loans Impaired loans with related allowance for credit losses Related allowance for credit losses March 31, 2016 Commercial: Commercial and industrial $ 4,421 3,778 3,598 772 Real estate mortgage 2,234 1,734 1,708 371 Real estate construction 256 122 120 24 Lease financing 112 102 102 24 Total commercial 7,023 5,736 5,528 1,191 Consumer: Real estate 1-4 family first mortgage 18,942 16,594 10,906 1,449 Real estate 1-4 family junior lien mortgage 2,622 2,354 1,784 428 Credit card 295 295 295 94 Automobile 165 98 37 6 Other revolving credit and installment 89 82 74 15 Total consumer (2) 22,113 19,423 13,096 1,992 Total impaired loans (excluding PCI) $ 29,136 25,159 18,624 3,183 December 31, 2015 Commercial: Commercial and industrial $ 2,746 1,835 1,648 435 Real estate mortgage 2,369 1,815 1,773 405 Real estate construction 262 131 112 23 Lease financing 38 27 27 9 Total commercial 5,415 3,808 3,560 872 Consumer: Real estate 1-4 family first mortgage 19,626 17,121 11,057 1,643 Real estate 1-4 family junior lien mortgage 2,704 2,408 1,859 447 Credit card 299 299 299 94 Automobile 173 105 41 5 Other revolving credit and installment 86 79 71 15 Total consumer (2) 22,888 20,012 13,327 2,204 Total impaired loans (excluding PCI) $ 28,303 23,820 16,887 3,076 (1) Excludes the unpaid principal balance for loans that have been fully charged off or otherwise have zero recorded investment. (2) Periods ended March 31, 2016 and December 31, 2015 each include the recorded investment of $1.8 billion of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an allowance. Impaired loans may also have limited, if any, allowance when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification. Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to $364 million and $363 million at March 31, 2016 and December 31, 2015 , respectively. Table 5.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class. Table 5.16: Average Recorded Investment in Impaired Loans Quarter ended March 31, 2016 2015 (in millions) Average recorded investment Recognized interest income Average recorded investment Recognized interest income Commercial: Commercial and industrial $ 2,766 19 1,000 20 Real estate mortgage 1,772 32 2,421 43 Real estate construction 130 2 291 4 Lease financing 75 — 21 — Total commercial 4,743 53 3,733 67 Consumer: Real estate 1-4 family first mortgage 16,911 221 18,486 231 Real estate 1-4 family junior lien mortgage 2,382 34 2,522 35 Credit card 297 9 332 10 Automobile 101 3 126 4 Other revolving credit and installment 82 1 45 1 Total consumer 19,773 268 21,511 281 Total impaired loans (excluding PCI) $ 24,516 321 25,244 348 Interest income: Cash basis of accounting $ 95 108 Other (1) 226 240 Total interest income $ 321 348 (1) Includes interest recognized on accruing TDRs, interest recognized related to certain impaired loans which have an allowance calculated using discounting, and amortization of purchase accounting adjustments related to certain impaired loans. TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR. We do not consider any loans modified through a loan resolution such as foreclosure or short sale to be a TDR. We may require some consumer borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms. The planned modifications for these arrangements predominantly involve interest rate reductions or other interest rate concessions; however, the exact concession type and resulting financial effect are usually not finalized and do not take effect until the loan is permanently modified. The trial period terms are developed in accordance with our proprietary programs or the U.S. Treasury’s Making Home Affordable programs for real estate 1-4 family first lien (i.e. Home Affordable Modification Program – HAMP) and junior lien (i.e. Second Lien Modification Program – 2MP) mortgage loans. At March 31, 2016 , the loans in trial modification period were $143 million under HAMP, $32 million under 2MP and $205 million under proprietary programs, compared with $130 million , $32 million and $240 million at December 31, 2015 , respectively. Trial modifications with a recorded investment of $129 million at March 31, 2016 , and $136 million at December 31, 2015 , were accruing loans and $251 million and $266 million , respectively, were nonaccruing loans. Our experience is that substantially all of the mortgages that enter a trial payment period program are successful in completing the program requirements and are then permanently modified at the end of the trial period. Our allowance process considers the i |