Other Assets and Liabilities

Other assets at December 31, 2018 and December 31, 2017 are summarized in the following table.

Table 12.1 – Components of Other Assets



(In Thousands)	December 31, 2018		December 31, 2017
Margin receivable	$	100,773	$	85,044
FHLBC stock	43,393		43,393
Pledged collateral	42,433		42,615
Investment receivable	6,959		1,147
Fixed assets and leasehold improvements ⁽¹⁾	5,106		2,645
REO	3,943		3,354
Other	15,218		16,768
Total Other Assets	$	217,825	$	194,966


(1)	Fixed assets and leasehold improvements had a basis of $10 million and accumulated depreciation of $5 million at December 31, 2018.

Accrued expenses and other liabilities at December 31, 2018 and December 31, 2017 are summarized in the following table.

Table 12.2 – Components of Accrued Expenses and Other Liabilities



(In Thousands)	December 31, 2018		December 31, 2017
Accrued compensation	$	19,769	$	24,025
Guarantee obligations	16,711		19,487
Payable to minority partner	14,331		—
Deferred tax liabilities	9,022		11,764
Residential loan and MSR repurchase reserve	4,189		4,916
Legal reserve	2,000		2,000
Unsettled trades	1,494		13
Margin payable	835		390
Accrued taxes payable	423		—
Other	9,945		5,134
Total Accrued Expenses and Other Liabilities	$	78,719	$	67,729

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.

FHLBC 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 15 for additional information on this borrowing agreement.

Pledged Collateral and Guarantee Obligations

The pledged collateral 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 16 for additional information on our risk-sharing arrangements.

Investment Receivable

At December 31, 2018, investment receivable primarily consisted of $5 million of trade receivables related to real estate securities sales. 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, 2018, was $4 million, which includes the net effect of $4 million related to transfers into REO during the year ended December 31, 2018, offset by $4 million of REO liquidations and $0.5 million of unrealized gains resulting from market valuation adjustments. At December 31, 2018 and December 31, 2017, there were 13 and 14 REO properties, respectively, recorded on our consolidated balance sheets, all of which were owned at consolidated Legacy Sequoia entities.

Legal and Repurchase Reserves

See Note 16 for additional information on the legal and residential repurchase reserves.

Payable to Minority Partner

In December 2018, Redwood and a third-party co-investor, through two partnership entities consolidated by Redwood, purchased servicer advances and excess MSRs related to a portfolio of residential mortgage loans serviced by the co-investor (see Note 4 and Note 10 for additional information on the partnership entities and associated investments). We account for the co-investor’s interests in the entities as liabilities and at December 31, 2018, the carrying value of their interests was $14 million, representing their current economic interest in the entities. Earnings from the partnership entities are allocated to the co-investors on a proportional basis and during the three months ended December 31, 2018, we allocated less than $0.1 million of losses to the co-investors, which was recorded in Other income, net on our consolidated statements of income.