Other Assets and Liabilities

Other assets at December 31, 2016 and December 31, 2015, are summarized in the following table.

Table 11.1 – Components of Other Assets



(In Thousands)	December 31, 2016		December 31, 2015
Margin receivable	$	68,038	$	83,191
FHLBC stock	43,393		34,437
Pledged collateral	42,875		53,600
REO	5,533		4,896
Guarantee asset	4,092		5,697
Fixed assets and leasehold improvements ⁽¹⁾	2,750		4,117
Prepaid expenses	1,639		3,640
Investment receivable	1,068		3,870
Other	9,857		4,438
Total Other Assets	$	179,245	$	197,886


(1)	Fixed assets and leasehold improvements have a basis of $5 million and accumulated depreciation of $3 million at December 31, 2016.

Accrued expenses and other liabilities at December 31, 2016 and December 31, 2015 are summarized in the following table.

Table 11.2 – Components of Accrued Expenses and Other Liabilities



(In Thousands)	December 31, 2016		December 31, 2015
Guarantee obligations	$	21,668	$	22,704
Accrued compensation	18,830		17,527
Margin payable	12,783		6,415
Residential loan and MSR repurchase reserve	5,432		6,403
Accrued operating expenses	4,493		1,845
Restructuring liabilities	2,297		—
Legal reserve	2,000		2,000
Current accounts payable	1,151		4,764
Deferred tax liability	898		—
Other	2,876		8,239
Total Other Liabilities	$	72,428	$	69,897

Margin Receivable and Payable

Margin receivable and payable resulted from margin calls between us and our counterparties under derivatives, master repurchase agreements, and warehouse facilities, whereby we or the counterparty posted collateral.

FHLB Stock

In accordance with our FHLB-member subsidiary's borrowing agreement with the FHLBC, our subsidiary is required to purchase and hold stock in the FHLBC. See Note 14 for additional detail.

Guarantee Asset, Pledged Collateral, and Guarantee Obligations

The pledged collateral, guarantee asset, and guarantee obligations presented in the tables above are related to our risk sharing arrangements with Fannie Mae and Freddie Mac. In accordance with these arrangements, we are required to pledge collateral to secure our guarantee obligations. See Note 3 and Note 15 for additional information on our risk sharing arrangements.

Investment Receivable and Unsettled Trades

In accordance with our policy to record purchases and sales of securities on the trade date, if the trade and settlement of a purchase or sale crosses over a quarterly reporting period, we will record an investment receivable for sales and an unsettled trades liability for purchases.

REO

The carrying value of REO at December 31, 2016, was $6 million, which includes the net effect of $12 million related to transfers into REO during the year ended December 31, 2016, offset by $13 million of REO liquidations and $2 million of unrealized gains resulting from market valuation adjustments. At both December 31, 2016 and December 31, 2015, there were 23 REO properties recorded on our consolidated balance sheets, all of which were owned at consolidated Sequoia entities.

Legal and Repurchase Reserves

See Note 15 for additional information on the legal and residential repurchase reserves.

Restructuring Accruals

In January 2016, we announced plans to restructure certain aspects of our residential mortgage loan operations by ceasing the acquisition and aggregation of conforming loans for resale to the Agencies. Additionally, in February 2016, we announced our plans to restructure our commercial business and no longer originate commercial loans. Finally, in March 2016, we announced the departure of our President effective July 1, 2016. These restructuring activities were substantially completed during the second quarter of 2016.

In connection with these activities, we incurred restructuring expenses, including one-time termination benefits, contract termination costs, and other associated costs. During the first quarter of 2016, we established a restructuring liability and recorded restructuring charges totaling $10 million in Operating expenses on our consolidated statements of income, which included $9 million of severance related charges (including $3 million of equity compensation expense) and $2 million of contract termination costs. We currently expect the remaining liabilities to be substantially settled during the next seven months in accordance with the terms of outstanding contracts and employment agreements. For segment reporting, we consider these restructuring charges as corporate charges and included them in the Corporate/Other reconciling column in our business segment financial information tables in Note 22 — Segment Information.

The following table presents our restructuring activities and the associated liabilities during the year ended December 31, 2016.

Table 11.3 – Activities of Restructuring Liabilities



	Year Ended December 31, 2016
(In Thousands)	Termination Benefits			Contract Termination Costs			Total Restructuring Liabilities
Beginning balance	$	—		$	—		$	—
Costs incurred and expensed	8,746			1,655			10,401
Costs paid/settled	(3,019		)	(1,599		)	(4,618		)
Other costs ⁽¹⁾	(3,486		)	—			(3,486		)
Ending Balance	$	2,241		$	56		$	2,297


(1)	Amount represents equity compensation expense recorded during the year ended December 31, 2016 related to equity awards that were accelerated, and have been distributed or will be distributed in future periods.