Other Assets and Liabilities

Other assets at December 31, 2017 and December 31, 2016, are summarized in the following table.

Table 10.1 – Components of Other Assets



(In Thousands)	December 31, 2017		December 31, 2016
Margin receivable	$	85,044	$	68,038
FHLBC stock	43,393		43,393
Pledged collateral	42,615		42,875
MSR holdback receivable	8,141		1,862
REO	3,354		5,533
Guarantee asset	2,869		4,092
Fixed assets and leasehold improvements ⁽¹⁾	2,645		2,750
Commercial loans	—		2,700
Other	6,905		10,702
Total Other Assets	$	194,966	$	181,945


(1)	Fixed assets and leasehold improvements had a basis of $6 million and accumulated depreciation of $4 million at December 31, 2017.

Accrued expenses and other liabilities at December 31, 2017 and December 31, 2016 are summarized in the following table.

Table 10.2 – Components of Accrued Expenses and Other Liabilities



(In Thousands)	December 31, 2017		December 31, 2016
Accrued compensation	$	24,025	$	18,830
Guarantee obligations	19,487		21,668
Deferred tax liabilities	11,764		898
Residential loan and MSR repurchase reserve	4,916		5,432
Legal reserve	2,000		2,000
Accrued operating expenses	1,481		4,493
Current accounts payable	1,339		1,151
Margin payable	390		12,783
Restructuring liabilities	—		2,297
Other	2,327		2,876
Total Other Liabilities	$	67,729	$	72,428

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 3 and Note 13 for additional information on this borrowing agreement.

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 14 for additional information on our risk-sharing arrangements.

MSR Holdback Receivable

MSR holdback receivable represents amounts owed to us from third parties related to the sale of MSRs.

REO

The carrying value of REO at December 31, 2017, was $3 million, which includes the net effect of $4 million related to transfers into REO during the year ended December 31, 2017, offset by $10 million of REO liquidations and $3 million of unrealized gains resulting from market valuation adjustments. At December 31, 2017 and December 31, 2016, there were 14 and 23 REO properties, respectively, recorded on our consolidated balance sheets, all of which were owned at consolidated Legacy Sequoia entities.

Commercial Loans

Prior to 2017, we originated and acquired commercial loans for our investment portfolio and for sale through our commercial mortgage banking activities. During 2016, we sold nearly all of our commercial loans as we wound down our commercial mortgage banking and commercial investment activities. In 2016, we recorded a reversal of provision for loan losses related to the sale of our commercial loan investments and recorded any net gains or losses from the sale of commercial loans in Mortgage banking activities, net and Investment fair value changes, net on our consolidated statements of income.

At December 31, 2016, we held one commercial loan at the lower of cost or fair value with $3 million in outstanding principal balance, a carrying value of $3 million, and an estimated net fair value of $3 million. This loan prepaid in full during 2017.

Legal and Repurchase Reserves

See Note 14 for additional information on the legal and residential repurchase reserves.

Restructuring Liabilities

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. 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 for the year ended December 31, 2016, we 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. The remaining restructuring liability was settled in 2017 and no further adjustments were recorded. 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 21 — Segment Information.