Financial Guarantees

3 Months Ended

Mar. 31, 2018

We recognize a guaranty obligation for our obligation to stand ready to perform on our guarantees to unconsolidated trusts and other guaranty arrangements. These off-balance sheet guarantees expose us to credit losses primarily relating to the unpaid principal balance of our unconsolidated Fannie Mae MBS and other financial guarantees. The remaining contractual terms of our guarantees range from 8 days to 34 years; however, the actual term of each guaranty may be significantly less than the contractual term based on the prepayment characteristics of the related mortgage loans. The following table displays our maximum exposure, guaranty obligation recognized in our condensed consolidated balance sheets, and the maximum potential recovery from third parties through available credit enhancements and recourse related to our financial guarantees.



	As of
	March 31, 2018						December 31, 2017
	Maximum Exposure		Guaranty Obligation		Maximum Recovery⁽¹⁾		Maximum Exposure		Guaranty Obligation		Maximum Recovery⁽¹⁾
	(Dollars in millions)
Unconsolidated Fannie Mae MBS	$	7,944	$	31	$	7,201	$	10,876	$	127	$	7,340
Other guaranty arrangements⁽²⁾	13,960		138		2,356		14,265		131		2,404
Total	$	21,904	$	169	$	9,557	$	25,141	$	258	$	9,744

__________


⁽¹⁾	Recoverability of such credit enhancements and recourse is subject to, among other factors, our mortgage insurers’ and financial guarantors’ ability to meet their obligations to us. For information on our mortgage insurers and financial guarantors, see “Note 13, Concentrations of Credit Risk” in our 2017 Form 10-K and “Note 11, Concentrations of Credit Risk” in this report.


⁽²⁾	Primarily consists of credit enhancements and long-term standby commitments.

The fair value of our guaranty obligations associated with the Fannie Mae MBS included in “Investments in securities” in our condensed consolidated balance sheets was $8 million and $276 million as of March 31, 2018 and December 31, 2017, respectively. These Fannie Mae MBS consist primarily of private-label wraps where our guaranty arrangement is with an unconsolidated MBS trust.