v3.26.1
Guarantees
 3 Months Ended
Mar. 31, 2026
Guarantees  
Guarantees
Note 17 – Guarantees
The Corporation
 
has obligations
 
upon the
 
occurrence of
 
certain events
 
under financial
 
guarantees provided
 
in certain
 
contractual
agreements.
 
Also,
 
from
 
time
 
to
 
time,
 
the
 
Corporation
 
securitized
 
mortgage
 
loans
 
into
 
guaranteed
 
mortgage-backed
 
securities
subject in certain instances, to
 
lifetime credit recourse on the
 
loans that serve as collateral
 
for the mortgage-backed securities. The
Corporation has
 
not sold
 
any mortgage
 
loans subject
 
to credit
 
recourse since
 
2009. Also,
 
from time
 
to time,
 
the Corporation
 
may
sell, in
 
bulk sale
 
transactions, residential
 
mortgage loans
 
and Small
 
Business Administration
 
(“SBA”) commercial
 
loans subject
 
to
credit
 
recourse
 
or
 
to
 
certain
 
representations
 
and
 
warranties
 
from
 
the
 
Corporation
 
to
 
the
 
purchaser.
 
These
 
representations
 
and
warranties may
 
relate, for
 
example, to
 
borrower creditworthiness,
 
loan documentation,
 
collateral,
 
prepayment and
 
early payment
defaults. The
 
Corporation may
 
be required
 
to
 
repurchase the
 
loans under
 
the credit
 
recourse agreements
 
or
 
representation and
warranties.
At March 31, 2026,
 
the Corporation serviced $
414
 
million (December 31, 2025
 
- $
429
 
million) in residential mortgage loans
 
subject
to credit recourse provisions, principally loans associated
 
with FNMA and FHLMC residential mortgage
 
loan securitization programs.
 
In the event of any customer default,
 
pursuant to the credit recourse provided, the Corporation is required
 
to repurchase the loan or
reimburse
 
the
 
third
 
party
 
investor
 
for
 
the
 
incurred loss.
 
The maximum
 
potential amount
 
of
 
future payments
 
that
 
the
 
Corporation
would be required
 
to make under
 
the recourse arrangements in
 
the event of
 
nonperformance by the
 
borrowers is equivalent to
 
the
total outstanding balance of the
 
residential mortgage loans serviced with recourse
 
and the interest, if applicable.
 
During the quarter
ended
 
March
 
31,
 
2026,
 
the
 
Corporation
 
repurchased
 
approximately
 
$
0.2
 
million
 
of
 
unpaid
 
principal
 
balance
 
in
 
mortgage
 
loans
subject
 
to
 
the
 
credit
 
recourse
 
provisions
 
(March
 
31,
 
2025
 
-
 
$
0.3
 
million).
 
In
 
the
 
event
 
of
 
nonperformance
 
by
 
the
 
borrower,
 
the
Corporation has
 
rights to
 
the
 
underlying collateral
 
securing the
 
mortgage loan.
 
The
 
Corporation suffers
 
ultimate losses
 
on these
loans when the proceeds from a foreclosure sale of the property underlying a defaulted mortgage loan are less than the outstanding
principal balance of the loan plus any uncollected interest advanced and the
 
costs of holding and disposing the related property.
 
At
March 31, 2026,
 
the Corporation’s liability
 
established to cover the
 
estimated credit loss
 
exposure related to loans
 
sold or serviced
with credit recourse amounted to $
2
 
million (December 31, 2025 - $
3
 
million).
From
 
time
 
to
 
time, the
 
Corporation sells
 
loans and
 
agrees to
 
indemnify the
 
purchaser for
 
credit
 
losses
 
or
 
any
 
breach
 
of
 
certain
representations and warranties made in connection
 
with the sale.
Servicing agreements
 
relating to
 
the mortgage-backed
 
securities programs
 
of FNMA,
 
FHLMC and
 
GNMA, and
 
to mortgage
 
loans
sold or serviced to certain other investors, including FHLMC,
 
require the Corporation to advance funds to
 
make scheduled payments
of principal,
 
interest, taxes
 
and insurance,
 
if such
 
payments have
 
not been
 
received from
 
the borrowers.
 
At March
 
31, 2026,
 
the
Corporation serviced $
8.0
 
billion in mortgage loans for third parties, including the loans serviced with credit recourse (December 31,
2025 - $
8.2
 
billion). The Corporation generally recovers funds advanced pursuant to these arrangements from
 
the mortgage owner,
from liquidation proceeds when the mortgage
 
loan is foreclosed or,
 
in the case of FHA/VA
 
loans, under the applicable FHA
 
and
VA
insurance
 
and guarantees
 
programs. However,
 
in the
 
meantime, the
 
Corporation must
 
absorb the
 
cost
 
of the
 
funds
 
it
 
advances
during the
 
time the
 
advance is
 
outstanding. The
 
Corporation must
 
also bear
 
the costs
 
of attempting
 
to collect
 
on delinquent
 
and
defaulted
 
mortgage
 
loans.
 
In
 
addition,
 
if
 
a
 
defaulted
 
loan
 
is
 
not
 
cured,
 
the
 
mortgage
 
loan
 
would
 
be
 
canceled
 
as
 
part
 
of
 
the
foreclosure proceedings and the
 
Corporation would not
 
receive any future servicing
 
income with respect
 
to that loan.
 
At March 31,
2026,
 
the
 
outstanding balance
 
of
 
funds
 
advanced
 
by
 
the
 
Corporation under
 
such
 
mortgage
 
loan servicing
 
agreements was
 
$
28
million
 
(December
 
31,
 
2025
 
-
 
$
30
 
million).
 
To
 
the
 
extent
 
the
 
mortgage
 
loans
 
underlying
 
the
 
Corporation’s
 
servicing
 
portfolio
experience
 
increased delinquencies,
 
the
 
Corporation would
 
be
 
required to
 
dedicate
 
additional cash
 
resources to
 
comply
 
with its
obligation to advance funds as well as incur additional
 
administrative costs related to increases in collection
 
efforts.
Popular,
 
Inc. Holding
 
Company (“PIHC”) fully
 
and unconditionally guarantees
 
certain borrowing
 
obligations issued by
 
certain of
 
its
100
%
 
owned
 
consolidated
 
subsidiaries
 
amounting
 
to
 
$
94
 
million
 
at
 
March
 
31,
 
2026
 
and
 
December
 
31,
 
2025,
 
respectively.
 
In
addition, at both March 31, 2026 and
 
December 31, 2025, PIHC fully and unconditionally guaranteed on
 
a subordinated basis $
193
million
 
of
 
capital
 
securities
 
(trust
 
preferred
 
securities)
 
issued
 
by
 
wholly-owned issuing
 
trust
 
entities to
 
the
 
extent
 
set
 
forth
 
in
 
the
applicable
 
guarantee
 
agreement.
 
Refer
 
to
 
Note
 
17
 
to
 
the
 
Consolidated Financial
 
Statements
 
in
 
the
 
2025
 
Form
 
10-K
 
for
 
further
information on the trust preferred securities.