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Investments in Securities

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Investments in SecuritiesTrading Securities

Trading securities are recorded at fair value with subsequent changes in fair value recorded as “Fair value gains (losses), net” in our consolidated statements of operations and comprehensive income. The following table displays our investments in trading securities.



	As of December 31,
	2018		2017
	(Dollars in millions)
Mortgage-related securities:
Fannie Mae⁽¹⁾	$	1,467	$	3,876
Other agency	3,503		1,118
Private-label and other mortgage securities⁽¹⁾	1,306		463
Total mortgage-related securities	6,276		5,457
Non-mortgage-related securities:
U.S. Treasury securities	35,502		29,222
Other securities	89		—
Total non-mortgage-related securities	35,591		29,222
Total trading securities	$	41,867	$	34,679

⁽¹⁾

The increase in private-label and other mortgage securities from December 31, 2017 to December 31, 2018 was due to the dissolution in the first quarter of 2018 of a Fannie Mae-wrapped private-label securities trust. The Fannie Mae-wrapped private-label securities had been classified as Fannie Mae mortgage-related securities prior to the dissolution.The following table displays information about our net trading gains (losses).



	For the Year Ended December 31,
	2018			2017		2016
	(Dollars in millions)
Net trading gains		$	126	$	190		$	28
Net trading gains (losses) recognized in the period related to securities still held at period end		55		161			(19		)

Available-for-Sale Securities

We record AFS securities at fair value with unrealized gains and losses, recorded net of tax, as a component of “Other comprehensive loss” and we recognize realized gains and losses from the sale of AFS securities in “Investment gains, net” in our consolidated statements of operations and comprehensive income.

The following table displays the gross realized gains and proceeds on sales of AFS securities.



	For the Year Ended December 31,
	2018		2017		2016
	(Dollars in millions)
Gross realized gains	$	375	$	487	$	1,043
Total proceeds (excludes initial sale of securities from new portfolio securitizations)	662		1,780		10,993

The following tables display the amortized cost, gross unrealized gains and losses, and fair value by major security type for AFS securities.



	As of December 31, 2018
	Total Amortized Cost⁽¹⁾			Gross Unrealized Gains			Gross Unrealized Losses⁽²⁾				Total Fair Value
	(Dollars in millions)
Fannie Mae		$	1,754		$	69		$	(26	)	$	1,797
Other agency		239			17			—			256
Alt-A and subprime private-label securities		325			267			—			592
Mortgage revenue bonds		425			13			(4		)	434
Other mortgage-related securities		336			14			—			350
Total		$	3,079		$	380		$	(30	)	$	3,429



	As of December 31, 2017
	Total Amortized Cost⁽¹⁾			Gross Unrealized Gains			Gross Unrealized Losses⁽²⁾				Total Fair Value
	(Dollars in millions)
Fannie Mae		$	2,044		$	102		$	(27	)	$	2,119
Other agency		332			25			—			357
Alt-A and subprime private-label securities		662			652			—			1,314
CMBS		15			—			—			15
Mortgage revenue bonds		655			20			(4		)	671
Other mortgage-related securities		350			17			—			367
Total		$	4,058		$	816		$	(31	)	$	4,843


⁽¹⁾	Amortized cost consists of unpaid principal balance, unamortized premiums, discounts and other cost basis adjustments, as well as OTTI recognized in “Investment gains, net” in our consolidated statements of operations and comprehensive income.

⁽²⁾

Represents the gross unrealized losses on securities for which we have not recognized OTTI, as well as the noncredit component of OTTI and cumulative changes in fair value of securities for which we previously recognized the credit component of OTTI in “Accumulated other comprehensive income” in our consolidated balance sheets.The following tables display additional information regarding gross unrealized losses and fair value by major security type for AFS securities in an unrealized loss position.



	As of December 31, 2018
	Less Than 12 Consecutive Months						12 Consecutive Months or Longer
	Gross Unrealized Losses				Fair Value		Gross Unrealized Losses				Fair Value
	(Dollars in millions)
Fannie Mae		$	—		$	—		$	(26	)	$	487
Mortgage revenue bonds		(1		)	24			(3		)	19
Total		$	(1	)	$	24		$	(29	)	$	506

	As of December 31, 2017
	Less Than 12 Consecutive Months						12 Consecutive Months or Longer
	Gross Unrealized Losses				Fair Value		Gross Unrealized Losses				Fair Value
	(Dollars in millions)
Fannie Mae		$	(1	)	$	134		$	(26	)	$	461
Mortgage revenue bonds		—			—			(4		)	3
Total		$	(1	)	$	134		$	(30	)	$	464

Other-Than-Temporary Impairments

For AFS securities, OTTI is considered to have occurred when the fair value of a debt security is below its amortized cost basis and we intend to sell or it is more likely than not that we will be required to sell the security before recovery. Additionally, OTTI is considered to have occurred if we do not expect to recover the entire amortized cost basis of a debt security even if we do not intend to sell the security or it is not more likely than not we will be required to sell the security before recovery.

The balance of the unrealized credit loss component of AFS debt securities held by us and recognized in our consolidated statements of operations and comprehensive income was $635 million, $1.1 billion and $1.9 billion as of December 31, 2018, 2017 and 2016, respectively. The decrease for the year ended 2018 was primarily driven by securities that we no longer hold in our portfolio. The decrease for the year ended 2017 was primarily driven by securities with a change in intent where it was more likely than not we would sell before recovery of our amortized cost basis.Maturity Information

The following table displays the amortized cost and fair value of our AFS securities by major security type and remaining contractual maturity, assuming no principal prepayments. The contractual maturity of mortgage-backed securities is not a reliable indicator of their expected life because borrowers generally have the right to prepay their obligations at any time.



	As of December 31, 2018
	Total Amortized Cost				Total Fair Value		One Year or Less						After One Year Through Five Years						After Five Years Through Ten Years						After Ten Years
	Total Amortized Cost				Total Fair Value		Amortized Cost				Fair Value		Amortized Cost				Fair Value		Amortized Cost				Fair Value		Amortized Cost				Fair Value
	(Dollars in millions)
Fannie Mae		$	1,754		$	1,797		$	—		$	—		$	13		$	14		$	72		$	76		$	1,669		$	1,707
Other agency		239			256			—			—			24			25			25			27			190			204
Alt-A and subprime private-label securities		325			592			—			—			—			—			1			1			324			591
Mortgage revenue bonds		425			434			2			2			30			30			55			56			338			346
Other mortgage-related securities		336			350			—			—			—			—			6			6			330			344
Total		$	3,079		$	3,429		$	2		$	2		$	67		$	69		$	159		$	166		$	2,851		$	3,192
Weighted average yield ⁽¹⁾		6.99		%				4.37		%				5.68		%				6.24		%				7.07		%

⁽¹⁾

Yields are determined by dividing interest income (including amortization and accretion of premiums, discounts and other cost basis adjustments) by amortized cost balances as of year-end. Yields on tax-exempt obligations have been computed on a tax equivalent basis.