STI 2018 Annual Report

Notes to Consolidated Financial Statements, continued 123 To the extent that the securitization entity incurs losses on its assets, the securitization entity has recourse to the guarantor of the underlying loan, which is backed by the Department of Education up to a maximum guarantee of 98%, or in the event of death, disability, or bankruptcy, 100%. When not fully guaranteed, losses reduce the amount of available cash payable to theCompany as the owner of the residual interest. To the extent that losses result from a breach of servicing responsibilities, the Company, which functions as the master servicer, may be required to repurchase the defaulted loan(s) at par value. If the breach was caused by the subservicer, the Company would seek reimbursement from the subservicer up to the guaranteed amount. The Company’s maximum exposure to loss related to the securitization entitywould arise froma breach of its servicing responsibilities. To date, loss claims filed with the guarantor that have been denied due to servicing errors have either been, or are in the process of being cured, or reimbursement has been provided to the Company by the subservicer, or in limited cases, absorbed by the Company. Commercial Loans The Company originates and sells certain commercial mortgage loans to Fannie Mae and Freddie Mac, originates FHA insured loans, and issues and sells GinnieMae commercial MBS secured by FHA insured loans. The Company transferred commercial loans to these Agencies and GSEs, which resulted in pre-tax net gains of $35 million and $37 million for the years ended December 31, 2018 and 2017, respectively. No associated gains or losses were recognized for the year ended December 31, 2016. The loans are exchanged for cash or securities that are readily redeemable for cash, with servicing rights retained. The Company has made certain representations and warranties with respect to the transfer of these loans and has entered into a loss share guarantee related to certain loans transferred to Fannie Mae. See Note 18, “Guarantees,” for additional information regarding the commercial mortgage loan loss share guarantee. The Company's total managed loans, including the LHFI portfolio and other transferred loans (securitized and unsecuritized), are presented in the following table by portfolio balance and delinquency status (accruing loans 90 days ormore past due and all nonaccrual loans) at December 31, 2018 and 2017, as well as the related net charge-offs for the years ended December 31, 2018 and 2017. Portfolio Balance Past Due and Nonaccrual Net Charge-offs December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Year Ended December 31 (Dollars in millions) 2018 2017 LHFI portfolio: Commercial $80,940 $75,477 $175 $247 $107 $127 Consumer 70,899 67,704 2,003 1,832 231 240 Total LHFI portfolio 151,839 143,181 2,178 2,079 338 367 Managed securitized loans: Commercial 1 6,399 5,760 — — — — Consumer 139,809 134,160 146 171 5 2 8 2 Total managed securitized loans 146,208 139,920 146 171 5 8 Managed unsecuritized loans 3 1,134 2,200 152 340 — — Total managed loans $299,181 $285,301 $2,476 $2,590 $343 $375 1 Comprised of commercial mortgages sold through Fannie Mae, Freddie Mac, and Ginnie Mae securitizations, whereby servicing has been retained by the Company. 2 Amounts associated with $387 million and $602 million of managed securitized loans at December 31, 2018 and 2017, respectively. Net charge-off data is not reported to the Company for the remaining balance of $139.4 billion and $133.6 billion of managed securitized loans at December 31, 2018 and 2017, respectively. 3 Comprised of unsecuritized loans the Company originated and sold to private investors with servicing rights retained. Net charge-offs on these loans are not presented in the table as the data is not reported to the Company by the private investors that own these related loans. Other Variable Interest Entities In addition to exposure to VIEs arising from transfers of financial assets, the Company also has involvement with VIEs from other business activities. Tax Credit Investments The following table provides information related to the Company's investments in tax credit VIEs that it does not consolidate: Community Development Investments Renewable Energy Partnerships (Dollars in millions) December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Carrying value of investments 1 $1,636 $1,272 $86 $— Maximum exposure to loss related to investments 2 2,207 1,905 138 — 1 At December 31, 2018 and 2017, the carrying value of community development investments excludes $68 million and $59 million of investments in funds that do not qualify for tax credits, respectively. 2 At December 31, 2018 and 2017, the Company's maximum exposure to loss related to community development investments includes $422 million and $354 million of loans and $639 million and $627 million of unfunded equity commitments, respectively. At December 31, 2018, the Company's maximum exposure to loss related to renewable energy partnerships includes $52 million of unfunded equity commitments.