##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549-1004
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2007, oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission File Number: 0-51438
  RESIDENTIAL CAPITAL,
    LLC
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-1770738(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)One Meridian Crossings
    Minneapolis, MN

55423(Zip Code)(Address of principal executive
    offices)   (952) 857-8700
 (Registrants telephone
    number, including area code)
  Securities registered pursuant
    to Section 12(b) of the Act
  None
  Securities registered pursuant
    to Section 12(g) of the Act
 Limited Liability Company Interests
   þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  o o þ o
  Rule 12b-2 o þ
      Reduced Disclosure Format
  Form 10-K




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##### 



RESIDENTIAL
    CAPITAL CORPORATION
  INDEX
  PagePART IItem 1.

Business


3Item 1A.

Risk Factors


29Item 1B.

Unresolved Staff Comments


43Item 2.

Properties


43Item 3.

Legal Proceedings


43Item 4.

Submission of Matters to a Vote of Security
    Holders


45PART IIItem 5.

Market for Registrants Common Equity and
    Related Stockholder Matters


45Item 6.

Selected Financial Data


46Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


47Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


91Item 8.

Financial Statements and Supplementary Data


97Statement of Responsibility for Preparation of
    Financial Statements


97Managements Report on Internal Control over
    Financial Reporting


98Report of Independent Registered Public
    Accounting Firm


99Consolidated Balance Sheet


100Consolidated Statement of Income


101Consolidated Statement of Changes in Equity


102Consolidated Statement of Cash Flows


103Notes to Consolidated Financial Statements


106Supplementary Financial Data


170Item 9.

Changes in Disagreements With Accountants on
    Accounting and Financial Disclosure


174Item 9A.

Controls and Procedures


174Item 9A(T).

Controls and Procedures


175Item 9B.

Other Information


175PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


175Item 11.

Executive Compensation


175Item 12.

Security Ownership of Certain Beneficial Owners
    and Management


175Item 13.

Certain Relationships and Related Transactions


175Item 14.

Principal Accountant Fees and Services


175PART IVItem 15.

Exhibits, Financial Statement Schedules


176Signatures


177Exhibit Index


178Credit AgreementPledge AgreementPromissory NotePerformance GuaranteeComputation of Ratio of Earnings to Fixed ChargesConsent of Independent Registered Public Accounting FirmCertificationCertificationCertification   2




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##### Table of Contents



Item 1.
    Business          Business
    Overview
    
    Residential Finance Group We are one of the
    largest participants in the U.S. residential real estate
    finance industry. Through this segment, we:  
    Originate, purchase, sell and securitize residential mortgage
    loans throughout the United States. We are the eighth largest
    producer of residential mortgage loans in the United States (as
    ranked by Inside Mortgage Finance), producing
    approximately $94 billion in residential mortgage loans in
    2007.
    Provide primary and master servicing to investors in our
    residential mortgage loans and securitizations. As of
    December 31, 2007, we were the seventh largest servicer of
    residential mortgage loans in the United States (as ranked by
    Inside Mortgage Finance), with a primary servicing
    portfolio of approximately $410 billion.
    Provide collateralized lines of credit, which we refer to as
    warehouse lending facilities, to other originators of loans.
    Hold a portfolio of residential mortgage loans for investment
    and interests from our securitization activities. 3




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
    Conduct banking activities through the mortgage division of our
    affiliate GMAC Bank.
    Provide complementary real estate services, including real
    estate brokerage and relocation services.  
    Business Capital Group Through our Business
    Capital Group, we provide financing and equity capital to
    residential land developers and homebuilders. We also provide
    financing to resort developers.
    International Business Group  Our
    International Business Group includes substantially all of our
    operations outside of the United States, and has businesses in
    the United Kingdom, Canada, Continental Europe, Latin America
    and Australia. We originate, purchase, sell, service and
    securitize residential mortgage loans. We also extend credit to
    companies involved in residential real estate development and
    provide commercial lending facilities. We produced approximately
    $29 billion in residential mortgage loans outside the
    United States in 2007 and we had a servicing portfolio of
    approximately $43 billion of such loans as of
    December 31, 2007.    (952) 857-8700.
  www.rescapholdings.com
  Our
    Business
  Residential
    Finance Group
      
    Originating, purchasing, selling and securitizing residential
    mortgage loans;
    Servicing residential mortgage loans for ourselves and others;
    Providing warehouse financing to residential mortgage loan
    originators and correspondent lenders to originate residential
    mortgage loans;
    Creating a portfolio of mortgage loans and interests that
    continue to be held from our securitization activities;
    Conducting banking activities through the mortgage division of
    our affiliate GMAC Bank; and
    Providing complementary real estate service, including real
    estate brokerage and relocation services.  Loan
    Origination and Acquisition
  Sources
    of Loan Production
   4




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Direct
    Lending Network
      
    GMAC Mortgage, focusing on retail, telephone and internet
    lending services; and
    ditech.com®,
    focusing on telephone and internet lending services.    Mortgage
    Brokerage Network
        Correspondent
    Lender and other Secondary Market Purchases
       5




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face-amount
  Summary
    of Production Channels
    U.S. Mortgage Loan Production by ChannelFor the Year Ended December 31,2007


2006


2005Dollar





Dollar





DollarNumber of


Amount of


Number of


Amount of


Number of


Amount ofLoans


Loans


Loans


Loans


Loans


Loans(Dollars in millions)Retail branches


76,882


$
12,260



103,139


$
15,036



126,527


$
19,097Direct lending (other than retail branches)


92,470



10,664



135,731



12,547



161,746



17,228Mortgage brokers


110,404



20,561



169,200



29,025



134,263



22,961Correspondent lender and secondary market purchases


287,084



50,420



642,169



104,960



552,624



99,776Total U.S. production


566,840


$
93,905



1,050,239


$
161,568



975,160


$
159,062   Types of
    Mortgage Loans
    
    Prime Conforming Mortgage Loans  These are prime
    credit quality first-lien mortgage loans secured by
    single-family residences that meet or conform to the
    underwriting standards established by Fannie Mae or Freddie Mac
    for inclusion in their guaranteed mortgage securities programs.
    Prime Non-Conforming Mortgage Loans  These are prime
    credit quality first-lien mortgage loans secured by
    single-family residences that either (1) do not conform to
    the underwriting standards established by Fannie Mae or Freddie
    Mac, because they have original principal amounts exceeding
    Fannie Mae and Freddie Mac limits ($417,000 in 2006 and 2007),
    which are commonly referred to as jumbo mortgage loans, or
    (2) have alternative documentation requirements and
    property or credit-related features (e.g., higher loan-to-value
    or debt-to-income ratios) but are otherwise considered prime
    credit quality due to other compensating factors.    
    Government Mortgage Loans  These are first-lien
    mortgage loans secured by single-family residences that are
    insured by the Federal Housing Administration or guaranteed by
    the Veterans Administration. 6




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
    Nonprime Mortgage Loans  These are first-lien and
    certain junior lien mortgage loans secured by single-family
    residences, made to individuals with credit profiles that do not
    qualify for a prime loan, have credit-related features that fall
    outside the parameters of traditional prime mortgage products or
    have performance characteristics that otherwise expose us to
    comparatively higher risk of loss.    
    Prime Second-Lien Mortgage Loans  These are open- and
    closed-end mortgage loans secured by a second or more junior
    lien on single-family residences, which include home equity
    mortgage loans.    U.S. Mortgage Loan Production by TypeFor the Year Ended December 31,2007


2006


2005Dollar





Dollar





DollarNumber of


Amount of


Number of


Amount of


Number of


Amount ofLoans


Loans


Loans


Loans


Loans


Loans(Dollars in millions)Prime conforming


245,953


$
47,376



233,058


$
43,350



275,351


$
50,047Prime non-conforming


78,677



27,166



193,736



60,294



192,914



55,811Government


24,528



3,605



25,474



3,665



31,164



4,251Nonprime


29,123



4,197



193,880



30,555



226,317



35,874Prime second-lien


188,559



11,561



404,091



23,704



249,414



13,079Total U.S. production


566,840


$
93,905



1,050,239


$
161,568



975,160


$
159,062     For the Year Ended December 31,2007


2006


2005(In millions)Purpose:Purchase

$
35,581


$
65,889


$
64,164Non-purchase


58,324



95,679



94,898$
93,905


$
161,568


$
159,062Interest rate type:Fixed rate

$
70,160


$
91,695


$
79,863Adjustable rate


23,745



69,873



79,199$
93,905


$
161,568


$
159,062   Underwriting
    Standards and Quality Control
    
    the borrowers capacity to repay the loan;
    the borrowers credit history; 7




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
    the relative size and characteristics of the proposed
    loan; and
    the amount of equity in the borrowers property (as
    measured by the borrowers loan-to-value ratio).    ® ® ® SM
      Sale and
    Securitization Activities
       8




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Servicing
    Activities
   9




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10




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U.S. Mortgage Loan Servicing PortfolioAs of December 31,2007


2006


2005Dollar





Dollar





DollarNumber of


Amount of


Number of


Amount of


Number of


Amount ofLoans


Loans


Loans


Loans


Loans


Loans(Dollars in millions)Prime conforming mortgage loans


1,652,933


$
267,511



1,573,270


$
244,094



1,476,483


$
212,007Prime non-conforming mortgage loans


184,154



54,993



197,466



58,479



170,245



50,759Government mortgage loans


179,475



19,382



180,667



18,789



181,083



18,057Nonprime mortgage loans


282,250



36,809



374,620



50,287



405,785



52,704Prime second-lien mortgage loans


730,866



31,523



760,063



31,576



574,073



19,813Total primary servicing portfolio*


3,029,678


$
410,218



3,086,086


$
403,225



2,807,669


$
353,340     *
    
    Excludes loans for which we acted as a subservicer. Subserviced
    loans totaled 205,019 with an unpaid principal balance of
    $44.3 billion as of December 31, 2007, 290,992 with an
    unpaid principal balance of $55.4 billion as of
    December 31, 2006, and 271,489 with an unpaid principal
    balance of $38.9 billion as of December 31, 2005.    U.S. Mortgage Loan Servicing Portfolio DelinquencyFor The Year Ended December 31,2007


2006


2005Dollar





Dollar





DollarNumber of


Amount of


Number of


Amount of


Number of


AmountLoans


Loans


Loans


Loans


Loans


of Loans(Dollars in millions)Total U.S. mortgage loans serviced


3,029,678


$
410,218



3,086,086


$
403,225



2,807,669


$
353,340Period of delinquency(1)(2) 
    30 to 59 days


107,711


$
14,304



104,951


$
13,544



92,905


$
11,08560 to 89 days


38,040



5,372



30,790



3,820



28,031



3,09990 days or more


37,038



4,477



18,472



1,869



18,761



1,673Foreclosures pending


52,084



9,427



34,883



4,694



29,274



3,210Bankruptcies


30,348



2,762



32,946



2,840



47,122



3,907Total delinquent loans


265,221


$
36,342



222,042


$
26,767



216,093


$
22,974Percent of U.S. mortgages loans serviced


8.75
%


8.86
%


7.19
%


6.64
%


7.70
%


6.50
%  11




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##### Table of Contents



(1)
    
    As used in this discussion, prime credit quality loans and some
    of our other mortgage loans are considered to be 30 or more days
    delinquent when a payment due remains unpaid as of the close of
    business on the last business day immediately prior to the next
    following monthly due date.(2)
    
    Does not include foreclosures pending and bankruptcies.    Warehouse
    Lending
        Mortgage
    Loans Held for Investment and Interests That Continue to Be Held
    by The Company
     12




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GMAC
    Bank
              Other
    Related Real Estate Finance Activities
   13




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Business
    Capital Group
          Residential
    Construction Products
  move-up
 14




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
    master commitment used to finance multiple projects under one
    facility with all projects cross-collateralized and
    cross-defaulted; or
    project specific commitment used to finance single project
    typically in a joint venture.        Residential
    Equity Products
    and/or and/or
    Model
    Home Products
     15




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Resort
    Finance
      Health
    Capital
    International
    Business Group
      International Mortgage Loan ProductionFor the Year Ended December 31,2007


2006


2005Dollar





Dollar





DollarNumber of


Amount of


Number of


Amount of


Number of


Amount ofLoans


Loans


Loans


Loans


Loans


Loans(Dollars in millions)United Kingdom


68,161


$
18,903



93,215


$
22,417



57,747


$
12,538Continental Europe


37,364



7,150



21,849



3,926



15,618



2,833Other


19,612



2,527



11,915



1,439



12,605



1,168Total international loan production


125,137


$
28,580



126,979


$
27,782



85,970


$
16,539  16




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International Servicing PortfolioAs of December 31,2007


2006


2005Dollar





Dollar





DollarNumber of


Amount of


Number of


Amount of


Number of


Amount ofLoans


Loans


Loans


Loans


Loans


Loans(Dollars in millions)United Kingdom


82,326


$
19,345



108,672


$
23,817



91,574


$
16,219Continental Europe


69,666



17,953



49,251



9,956



33,273



5,796Other


33,711



5,794



17,990



2,444



13,573



1,696Total international servicing portfolio


185,703


$
43,092



175,913


$
36,217



138,420


$
23,711     United
    Kingdom
    Continental
    Europe
  third-parties.
  Canada
   17




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Latin
    America
      Australia
    U.K.
    Securities Broker-Dealer
    Competition
  Residential
    Finance Group
    
    A significant reduction in most non-conforming loan production,
    which has adversely impacted the profitability and operational
    stability of most mortgage lenders;
    A severe reduction in overall liquidity to the entire
    residential real estate finance sector from many sources,
    including continued disruption of the non-conforming term
    securitization markets and asset-backed commercial paper markets;
    Aggressive management of credit exposure on existing facilities
    by liquidity providers as evidenced by, among other things,
    increased margin calls and decreased advance rates;
    Significant increases in repurchase requests due to alleged
    breaches of representations and warranties or early payment
    defaults;
    Increased bankruptcy and business failure of many mortgage
    market participants as well as consolidation among mortgage
    industry participants, which impacts access to mortgage products
    and profits within a sector of fewer, more sophisticated
    participants; and
    Greater regulation imposed on the industry, resulting in
    increased costs and the need for higher levels of specialization. 18




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Business
    Capital Group
     19




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International
    Business Group
    Regulation
    Residential
    Finance Group
    
    Equal Credit Opportunity Act;
    Federal
    Truth-In-Lending
    Act;
    Home Ownership and Equity Protection Act;
    Real Estate Settlement Procedures Act, or RESPA;
    Fair Credit Reporting Act;
    Fair Debt Collection Practices Act;
    Home Mortgage Disclosure Act;
    Fair Housing Act;
    Telephone Consumer Protection Act;
    Gramm-Leach-Bliley Act;
    Fair and Accurate Credit Transactions Act;
    CAN-SPAM Act;
    Flood Disaster Protection Act;
    National Flood Insurance Reform Act;
    Homeowners Protection Act;
    National Housing Act; 20




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##### Table of Contents




    Federal Trade Commission Credit Practice Rules;
    USA PATRIOT Act; and
    Federal securities laws and regulations.      
    impose licensing obligations and financial requirements on us;
    limit the interest rates, finance charges and other fees that we
    may charge or pay;
    regulate the use of credit reports and the reporting of credit
    information;
    prohibit discrimination;
    impose underwriting requirements;
    mandate disclosures and notices to consumers;
    mandate the collection and reporting of statistical data
    regarding our customers;
    regulate our marketing techniques and practices;
    require us to safeguard non-public information about our
    customers;
    regulate our servicing practices, including the assessment,
    collection, foreclosure, claims handling and investment and
    interest payments on escrow accounts; and
    require us to take precautions against money-laundering and
    doing business with suspected terrorists.    
    civil and criminal liability;
    loss of licenses and approvals;
    damage to our reputation in the industry;
    inability to sell or securitize our loans, or otherwise raise
    capital;
    demands for indemnification or loan repurchases from purchasers
    of our loans;
    fines and penalties and litigation, including class action
    lawsuits;
    governmental investigations and enforcement actions; and
    claims that an allegedly non-compliant loan is rescindable or
    unenforceable.    Privacy
    and Security
   21




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Fair
    Credit Reporting Act
    Home
    Mortgage Disclosure Act
      Predatory
    Lending Legislation
    loan-by-loan
 22




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Real
    Estate Settlement Procedures Act of 1974
    Guidance
    on Nontraditional Mortgage Product Risks
    Controlling
    the Assault of Non-Solicited Pornography and Marketing Act of
    2003
    The
    Alternative Mortgage Transactions Parity Act of 1982
   23




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Telephone
    Consumer Protection Act and Telemarketing Consumer Fraud and
    Abuse Prevention Act
    USA
    PATRIOT Act
      Non-Federally
    Chartered Entities
    GMAC
    Bank
   24




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Insurance
    of Deposit Accounts
    Capital
    Distribution Regulations
    Community
    Reinvestment Act and the Fair Lending Laws
  low-and-moderate-income
  Privacy
    Protection
   25




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Broker-Dealers
    Business
    Capital Group
    International
    Business Group
  European
    Union
    United
    Kingdom
     26




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##### Table of Contents




    lending or acting as a lender;
    administering or servicing regulated mortgage loans;
    arranging mortgage credit; and
    advising on any regulated mortgage contract.            Germany
    
    Our German banking operation is required to have a minimum
    leverage capital ratio equal to 12% of risk-adjusted
    assets; and
    The directors of our German banking operation must demonstrate
    compliance with specific independence requirements and adequate
    control over the banks business, processes and risks.   27




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The
    Netherlands
      Canada
        Mexico
   28




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Spain
    Our
    Responsible Lending Policies and Procedures
          Employees
   Item 1A.  RISK
    FACTORS.  Risks
    Related to Our Business
  Our
    business requires substantial capital, and if we are unable to
    maintain adequate financing sources our profitability and
    financial condition will suffer and jeopardize our ability to
    continue operations.     29




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Rating
    agencies may downgrade their ratings for us in the future, which
    would adversely affect our ability to raise capital in the debt
    markets at attractive rates which could negatively impact our
    results of operations and financial condition.
     30




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Recent
    developments in the residential mortgage market may continue to
    adversely affect our earnings and financial
    condition.      Recent
    negative developments in the secondary mortgage markets have led
    credit rating agencies to make requirements for rating mortgage
    securities more stringent, and market participants are still
    evaluating the impact.    We
    remain exposed to credit risk associated with the assets held in
    our portfolio of mortgage loans held for sale and investment and
    interests from our securitization activities, and higher rates
    of delinquency and default rates could adversely affect our
    profitability and financial condition.       31




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Our
    earnings may decrease because of increases or decreases in
    interest rates.    
    Rising interest rates generally reduce our residential mortgage
    loan production as borrowers become less likely to refinance and
    acquiring a new home becomes more expensive. Rising interest
    rates may also reduce demand for our other lending activities,
    including our warehouse lending and business capital activities.
    If demand for our loans decreases, our earnings may decrease.
    During periods of rising interest rates, the value and
    profitability of our mortgage loans may be harmed from the date
    of origination (or interest rate lock) or purchase commitment
    until the date we sell or securitize the mortgage loans. In
    addition, the spread between the interest we receive on our
    mortgage loans during this aggregation period and our funding
    costs may be reduced by increases in market interest rates.
    Rising interest rates will generally reduce the value of
    mortgage loans and our interests that we continue to hold from
    our securitizations in our investment portfolio. For example,
    some of the interests we retain in connection with our
    securitizations are entitled to cash-flows that primarily
    represent the difference between the amount of interest
    collected on the underlying mortgage loans and the amount of
    interest payable to the holders of senior securities in the
    related securitization. In certain of these securitizations, the
    underlying mortgage loans generally have fixed interest rates
    for the first two or three years while the interest rate payable
    to holders of the senior securities is generally based on an
    adjustable London Inter-Bank Offered Rate, or LIBOR. In other
    securitizations, the underlying mortgage loans have variable
    interest rates that are based on indices other than LIBOR while
    the interest rate payable to holders of securities is generally
    based on LIBOR. If LIBOR increases during the time that the
    mortgage loans are fixed, or increases at a faster rate than the
    rate at which the underlying loans adjust, the income and value
    of our interests from these securitizations will be reduced.
    This would reduce the amount of cash we receive over the life of
    the loans in securitizations structured as financings and from
    our interests, and could require us to reduce the carrying value
    of these interests.
    Rising interest rates will generally reduce the demand for
    residential real estate related services, including our
    brokerage and relocation services, which may reduce the income
    we receive from these services.   32




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We use
    estimates and various assumptions in determining the fair value
    of certain of our assets, and in determining our allowance for
    loan losses. If our estimates or assumptions prove to be
    incorrect, we may be required to write down the value of these
    assets or increase our allowance for loan losses, either of
    which could adversely affect our earnings and financial
    condition.    Our
    hedging strategies may not be successful in mitigating our risks
    associated with changes in interest rates.  and/or
   33




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We
    remain exposed to credit risk associated with our business
    lending activities, including our warehouse lending activities,
    and declines in the value of the collateral securing these loans
    or negative developments affecting the borrower could adversely
    affect our profitability and financial condition.    Our
    profitability and financial condition could be adversely
    affected if the assumptions underlying our risk-based
    underwriting and pricing models prove to be
    incorrect.  sm ®
  Changes
    in existing U.S. government-sponsored mortgage programs, or
    disruptions in the secondary markets in the United States or in
    other countries in which we operate, could adversely affect our
    profitability and financial condition.     34




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We
    depend on the accuracy and completeness of information about our
    customers and counterparties, and inaccuracies in such
    information could adversely affect our
    profitability.    We may
    be required to repurchase mortgage loans or indemnify investors
    if we breach representations and warranties, which could harm
    our profitability.    General
    business and economic conditions may significantly and adversely
    affect our revenues, profitability and financial
    condition.   35




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We
    face intense competition that could harm our market share,
    revenues and profitability.      Increasing
    competition in the acquisition of mortgage loans from
    correspondent lenders in the secondary market and the
    origination of loans through mortgage brokers, and recent
    consolidation in the mortgage loan industry, may harm our
    profitability.     36




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Our
    financial results could be materially adversely affected if a
    large number of homeowners to whom we have lent money were to
    suffer uninsured catastrophic damage to their property due to a
    terrorist attack or natural disaster.    Changes
    in accounting standards issued by the Financial Accounting
    Standards Board or other
    standard-setting
    bodies may adversely affect our reported revenues, profitability
    and financial condition.    An
    interruption in or breach of our information systems may result
    in lost business, regulatory actions or litigation or otherwise
    harm our reputation.    The
    success and growth of our business may be adversely affected if
    we do not adapt to and implement technological
    changes.    
    becomes non-compliant with existing industry standards or is no
    longer supported by vendors;
    fails to meet or exceed the capabilities of our
    competitors corresponding technologies or technological
    solutions; 37




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
    becomes increasingly expensive to service, retain and update; or
    becomes subject to third-party claims of copyright or patent
    infringement.    Our
    business outside the United States exposes us to additional
    risks that may cause our revenues and profitability to
    decline.    
    country specific market conditions resulting in further asset
    valuation volatility and liquidity constraints;
    multiple foreign regulatory requirements that are subject to
    change;
    differing local product preferences and product requirements;
    fluctuations in foreign currency exchange rates and interest
    rates;
    difficulty in establishing, staffing and managing foreign
    operations;
    differing legal and regulatory requirements;
    potentially negative consequences from changes in tax laws; and
    political and economic instability.    Our
    business capital activities expose us to additional risks that
    may adversely affect our revenues and
    profitability.
        
    the performance and financial strength of the developer;
    development, construction and other costs of the project not
    exceeding original estimates;
    the ability of the project to attract creditworthy buyers;
    the project being completed on schedule, which is subject to
    many factors, several of which are beyond the control of the
    developer, such as required governmental approvals, weather,
    labor conditions and material shortages; 38




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
    the continued involvement of key personnel; and
    local housing demand and competition, including the strength of
    the local and national economy and fluctuations in interest
    rates.      A
    significant portion of our business is in the State of
    California, and our business may be significantly harmed by a
    slowdown in the economy or the occurrence of a natural disaster
    in California.        If
    GMAC was to become the subject of a bankruptcy proceeding and we
    were substantively consolidated with GMAC, our assets would
    become subject to the claims of our creditors and the creditors
    of GMAC.     39




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##### Table of Contents



GMAC
    controls all fundamental matters affecting us, and its interests
    may differ from ours.      Legal and
    Regulatory Risks Related to Our Business
  The
    scope of our residential mortgage loan production and servicing
    operations exposes us to risks of noncompliance with an
    increasing and inconsistent body of complex laws and regulations
    at the federal, state and local levels in the United States and
    in the international markets in which we operate.      
    civil and criminal liability;
    loss of licenses and approvals;
    damage to our reputation in the industry;
    inability to sell or securitize our loans, or otherwise raise
    capital;
    demands for indemnification or loan repurchases from purchasers
    of our loans;
    fines and penalties and litigation, including class action
    lawsuits;
    governmental investigations and enforcement actions; and
    claims that an allegedly non-compliant loan is rescindable or
    unenforceable.    New
    legislation with respect to so-called predatory lending
    practices could restrict our ability to produce mortgage loans,
    which could harm our revenues and profitability.   40




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We may
    be subject to fines or other penalties based upon the conduct of
    independent mortgage brokers through which we originate mortgage
    loans and lenders from which we acquire mortgage
    loans.    If
    warehouse lenders and securitization underwriters face exposure
    stemming from legal violations committed by the companies to
    which they provide financing or underwriting services, this
    could increase our borrowing costs and harm the market for our
    whole loans and mortgage-backed securities.   41




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Enhanced
    reporting required by the Home Mortgage Disclosure Act may lead
    to increased litigation, investigations, media coverage and
    challenges to our reputation.      We are
    no longer able to rely on the Alternative Mortgage Transactions
    Parity Act of 1982 to preempt certain state law restrictions on
    prepayment penalties, which could harm our revenues and
    profitability.      Certain
    of our owners are subject to a regulatory agreement that may
    affect our control of GMAC Bank.
   42




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##### Table of Contents



Item
    1B.  UNRESOLVED STAFF COMMENTS.   Item
    2.  PROPERTIES.         Item
    3.  LEGAL PROCEEDINGS.    Kessler.
 43




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##### Table of Contents



Murray. Safeco Ins. Co., et al. v. Burr, et al
  Parthiban. Murray Murray.
  Mitchell.
 44




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##### Table of Contents



Federal Trade Commission.
  Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.   PART
    II  Item 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS.   45




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Item 6.
    SELECTED
    FINANCIAL DATA.    For the Years Ended December 31,2007


2006


2005


2004


2003(In millions)Statement of Income Data:Interest income

$
7,567.9


$
8,169.0


$
5,797.1


$
4,990.9


$
3,482.7Interest expense


6,560.9



6,460.2



3,872.1



2,405.0



1,402.7Net interest income


1,007.0



1,708.8



1,925.0



2,585.9



2,080.0Provision for loan losses


2,595.1



1,334.1



651.8



842.9



453.5Net interest (loss) income after provision for loan losses


(1,588.1
)


374.7



1,273.2



1,743.0



1,626.5(Loss) gain on sale of mortgage loans, net


(331.7
)


890.2



1,036.7



696.9



1,746.3Servicing fees


1,790.4



1,583.7



1,416.3



1,294.3



1,185.7Amortization and impairment of servicing rights










(762.0
)


(1,003.3
)


(2,014.9
)Servicing asset valuation and hedge activities, net


(543.7
)


(1,100.2
)


17.2



214.9



507.2Net servicing fees (loss)


1,246.7



483.5



671.5



505.9



(322.0
)(Loss) gain on investment securities, net


(747.8
)


68.7



236.4



63.7



(222.8
)Real estate related revenues, net


218.4



593.0



708.0



621.9



487.8(Loss) gain on sale of equity investments


(0.5
)


414.5



4.2



27.3



12.6Gain on extinguishment of debt


521.1















(Loss) gain on foreclosed real estate


(401.7
)


(56.0
)


38.7



21.2



22.3Automotive operating lease income


510.9



34.4











Other income


203.8



219.5



266.6



286.8



375.8Total net revenue


(368.9
)


3,022.5



4,235.3



3,966.7



3,726.5Compensation and benefits


1,224.6



1,206.3



1,406.9



1,216.5



1,188.8Professional fees


254.1



273.1



212.4



224.7



169.4Data processing and telecommunications


202.3



189.1



199.9



191.1



189.3Advertising


120.2



152.8



158.7



151.4



127.7Occupancy


146.3



137.7



121.3



107.6



99.6Goodwill impairment


454.8















Restructuring


126.6















Depreciation expense on automotive lease income


308.0



19.7











Other


1,026.7



618.2



509.2



465.1



585.8Total expenses


3,863.6



2,596.9



2,608.4



2,356.4



2,360.6(Loss) income before income tax expense (benefit) and minority
    interest


(4,232.5
)


425.6



1,626.9



1,610.3



1,365.9Income tax expense (benefit)


19.8



(289.2
)


606.3



642.1



509.1(Loss) income before minority interest


(4,252.3
)


714.8



1,020.6



968.2



856.8Minority interest


94.0



9.7











Net (loss) income

$
(4,346.3
)

$
705.1


$
1,020.6


$
968.2


$
856.8As of December 31,2007


2006


2005


2004


2003(In millions)Balance Sheet Data:Total assets

$
88,190.7


$
135,586.8


$
118,885.1


$
94,349.5


$
78,559.6Affiliate borrowings










5,177.5



10,006.2



10,683.9Collateralized borrowings in securitization trusts


16,145.7



53,299.5



56,097.8



50,708.5



39,415.6Other borrowings


46,184.2



59,880.4



42,300.5



23,703.7



20,647.6Total borrowings


62,329.9



113,179.9



103,575.8



84,418.4



70,747.1Total equity


6,030.1



7,622.1



7,464.0



4,365.7



3,186.0  46




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Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.    General
        Year Ended December 31,

2007


2006


2005(In thousands)Net (loss) incomeResidential Finance Group

$
(3,759,195
)

$
(348,793
)

$
695,047Business Capital Group


(438,836
)


398,687



200,577International Business Group


(622,297
)


170,040



90,089   
    Residential Finance Group.  Our Residential
    Finance Group originates, purchases, sells, securitizes and
    services residential mortgage loans in the United States. The
    segment originates mortgage loans through a retail branch
    network, direct lending centers and mortgage brokers. In
    addition, the segment purchases residential mortgage loans from
    correspondent lenders and other third-parties and provides
    warehouse lending. The loans produced or purchased by this
    segment cover a broad credit spectrum. Prime credit quality
    loans that are produced in conformity with the underwriting
    guidelines of Fannie Mae and Freddie Mac are generally sold to
    one of these government-sponsored enterprises in the form of
    agency guaranteed securitizations. This segment also produces a
    variety of loans that do not conform to the underwriting
    guidelines of Fannie Mae and Freddie Mac. These loans include
    prime non-conforming, nonprime and prime second-lien loans,
    which are generally securitized though the issuance of
    non-agency mortgage-backed and mortgage related asset-backed
    securities. These activities, however, have been significantly
    reduced in response to market conditions. This segment also
    provides collateralized lines of credit to other originators of
    residential mortgage loans, which we refer to as warehouse
    lending. This activity has also been reduced during 2007. Our
    limited banking activities through the mortgage division of GMAC
    Bank and our real estate brokerage and relocation business are
    included in this segment. This segment generated approximately
    86.5% of our recorded net loss in 2007.
    Business Capital Group.  Our Business Capital
    Group provides financing and equity capital to residential land
    developers and homebuilders and financing to resort developers.
    Due to current market conditions, the origination activities of
    this business are limited. This segment generated approximately
    10.1% of our recorded net loss in 2007. 47




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
    International Business Group.  Our
    International Business Group includes substantially all of our
    operations outside of the United States. This segment generated
    approximately 14.3% of our recorded net loss in 2007.      Overview
            48




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49




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Understanding
    our Financial Results
    On-
    and Off-Balance Sheet Arrangements
    Securitizations
       50




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Other
    arrangements
      Variable Interest Entities Consolidation of Variable Interest Entities
  Net
    Interest Income
    Net
    Servicing Fees
  Accounting for Servicing
    of Financial Assets
 51




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
    Servicing fees the income earned for servicing a
    loan. This includes the contractual servicing fee as well as
    ancillary servicing items such as late fees. Servicing fees are
    generally calculated as a percentage of the loan balance.
    Amortization and impairment of servicing rights an
    expense item that amortizes the capitalized mortgage servicing
    right over the estimated life of the servicing cash flows
    expected to be received from servicing the mortgage loan.
    Impairment relates to charges taken for temporary impairment of
    the mortgage servicing rights. The adoption of
    SFAS No. 156 eliminated the amortization and
    impairment of servicing rights.
    Servicing asset valuation and hedge activities
    changes in valuation inputs or assumptions used in the valuation
    models include all changes due to a revaluation by a model or by
    a benchmarking exercise. This line item also includes changes in
    fair value due to a change in valuation assumptions
    and/or model
    calculations. Other changes in fair value primarily include the
    accretion of the present value of the discount related to
    forecasted cash flows and the economic run-off of the portfolio.
    In addition this line includes the income statement effect of
    financial instruments hedging the mortgage servicing rights for
    both economic and accounting hedges as well as any related fair
    value adjustment of the mortgage servicing rights resulting from
    the application of hedge accounting prior to the adoption of
    SFAS No. 156.    Critical
    Accounting Estimates
      Determination
    of the Allowance for Loan Losses
     52




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Valuation
    of Mortgage Servicing Rights
           53




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
    Prepayments The most significant driver of
    mortgage servicing rights value is actual and anticipated
    portfolio prepayment behavior. Prepayment speeds represent the
    rate at which borrowers repay their mortgage loans prior to
    scheduled maturity. As interest rates rise, prepayment speeds
    generally slow, and as interest rates decline, prepayment speeds
    generally accelerate. When mortgage loans are paid or expected
    to be paid earlier than originally estimated, the expected
    future cash flows associated with servicing such loans are
    reduced. We primarily use third-party models to project
    residential mortgage loan payoffs. In other cases, we estimate
    prepayment speeds based on historical and expected future
    prepayment rates. We measure model performance by comparing
    prepayment predictions against actual results at both the
    portfolio and product level.
    Discount rate The mortgage servicing rights cash
    flows are discounted at prevailing market rates which include an
    appropriate risk-adjusted spread.
    Base mortgage rate The base mortgage rate
    represents the current market interest rate for newly originated
    mortgage loans. This rate is a key component in estimating
    prepayment speeds of our portfolio because the difference
    between the current base mortgage rate and the interest rates on
    existing loans in our portfolio is an indication of the
    borrowers likelihood to refinance.
    Cost to Service In general, servicing cost
    assumptions are based on actual expenses directly related to
    servicing. These servicing cost assumptions are compared to
    market servicing costs when market information is available. Our
    servicing cost assumptions include expenses associated with our
    activities related to loans in default.
    Volatility Volatility represents the expected rate
    of change of interest rates. The volatility assumption used in
    our valuation methodology is intended to place a band around the
    potential interest rate movements from one period to the next.
    We use implied volatility assumptions in connection with the
    valuation of our mortgage servicing rights. Implied volatility
    is defined as the expected rate of change in interest rates
    derived from the prices at which options on interest rate swaps,
    or swaptions, are trading. We update our volatility assumptions
    for the change in implied swaption volatility during the period,
    adjusted by the ratio of historical mortgage to swaption
    volatility.    
    Review and compare recent bulk mortgage servicing right
    acquisition activity.We evaluate market trades
    for reliability and relevancy and then consider, as appropriate,
    our estimate of fair value of each significant deal to the
    traded price. Currently, there is a lack of comparable
    transactions between willing buyers and sellers in the bulk
    acquisition market, which are the best indicators of fair value.
    However, we continue to monitor and track market activity on an
    ongoing basis.
    Review and compare recent flow servicing
    trades.  We evaluate market trades of flow
    transactions to compare prices on our mortgage servicing rights.
    Fair values of flow market transactions may differ from our fair
    value estimate for several reasons, including age/credit
    seasoning of product, perceived profit margin/discount assumed
    by aggregators, economy of scale benefits and cross-sell
    benefits.
    Review and compare fair value
    price/multiples.  We evaluate and compare our fair
    value price/multiples to market fair value price/multiples
    quoted in external surveys produced by third parties.
    Reconcile actual monthly cash flows to
    projections.  We reconcile actual monthly cash
    flows to those projected in the mortgage servicing rights
    valuation. Based upon the results of this reconciliation, we
    assess 54




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the need to modify the individual assumptions used in the
    valuation. This process ensures the model is calibrated to
    actual servicing cash flow results.      Valuation
    of Interests in Securitized Assets
        
    Prepayments Similar to mortgage servicing rights,
    estimated prepayment speeds significantly impact the valuation
    of our interests that continue to be held by the Company in
    securitized assets because changes in actual and expected
    prepayment speed may significantly change the expected cash
    flows from these securities. For certain securities, we are able
    to obtain market information from third parties to estimate
    prepayment speeds. In other cases, we estimate prepayment speeds
    based upon historical and expected future prepayment rates.
    Credit Losses Expected credit losses on loans
    underlying mortgage-backed and mortgage-related asset-backed
    securities also significantly impact the estimated fair value of
    the related subordinate interests we retain. Credit losses can
    be impacted by many economic variables including unemployment,
    housing prices and other regional factors. The types of loan
    product and the interest rate environment are also key variables
    impacting our credit loss assumptions. For certain securities,
    market information for similar investments is available to
    estimate credit losses and collateral defaults (for example,
    dealer-quoted credit spreads). For other securities, we estimate
    future credit losses using internally-developed credit loss
    models, which generate indicative credit losses on the basis of
    our historical credit loss frequency and severity. 55




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##### Table of Contents




    Discount Rate Discount rate assumptions are
    affected primarily by changes in the assessed risk on the sold
    assets or similar assets and market interest rate movements. We
    determine discount rate assumptions using data obtained from
    market participants, where available, or based on current
    relevant treasury rates, plus an appropriate risk-adjusted
    spread, based on analysis of historical spreads on similar types
    of securities.
    Interest Rates Estimates of interest rates on
    variable- and adjustable-rate loans are based on spreads over an
    appropriate benchmark interest rate, usually LIBOR, using
    market-based yield curves. The movement in interest rates can
    also have a significant impact on the valuation of our interests
    from securitizations.      Results
    of Operations
  Consolidated
    Results
  Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
      
    The capital and secondary markets have experienced continued
    stress throughout 2007. These markets have offered a declining
    appetite for mortgage-related products, particularly nonprime
    products, causing limited market liquidity. In response to these
    market conditions, our loan production decreased 35.3% in 2007.
    The decrease in our loan production is reflective of our
    inability to sell or otherwise fund our loan production in the
    capital and secondary markets, and further negatively impacts
    our ability to generate income and cash flow.
    Interest rates continued to increase during the first half
    of 2007. Rising interest rates negatively impact mortgage
    affordability. In addition, long-term rates remained low during
    this period relative to short-term rates (i.e., a flattening of
    the yield curve) and, in some instances, have been lower than
    short-term rates (i.e., an inverted yield curve). This results
    in a reduction in our net interest margin and generally has a
    negative effect on our hedging results. Interest rates began to
    fall in the second half of 2007, specifically, short-term rates
    declined faster than long-term rates (i.e. steepening of the
    yield curve). However, this positive impact was more than offset
    by liquidity concerns in the secondary markets and stricter
    mortgage underwriting guidelines.
    Housing prices in many parts of the United States have also
    declined or stopped appreciating, after extended periods of
    significant appreciation, which increased the actual and
    estimated losses related to our loans. We have experienced an
    increase in loan delinquencies causing us to record a
    significant provision for loan losses and an increase in
    nonaccrual loans as a percentage of our mortgage loans held for
    investment and lending receivable portfolios. A reduction in
    home sales and an increase in the inventory of homes for sale
    are also increasing the estimated number of loans that we expect
    to ultimately foreclose upon and estimated incurred losses. The
    domestic housing market slowdown has also negatively impacted
    our real estate related activities. 56




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57




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58




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Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
    
    Interest rates have steadily increased since the middle of 2005.
    Rising rates have the impact of decreasing mortgage
    affordability. In addition, long-term rates have remained low
    relative to short-term rates (i.e., a flattening of the yield
    curve) and, in some instances, have been lower than short-term
    rates (i.e., an inverted yield curve). This results in a
    reduction in our net interest margin and generally has a
    negative effect on our hedging results. 59




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
    The level of home price appreciation declined to a five-year low
    in the fourth quarter of 2006 and, in some areas, home values
    declined, which increased the actual and estimated losses
    related to our loans. A reduction in home sales and an increase
    in the inventory of homes for sale are also increasing the
    estimated number of loans that we expect to ultimately foreclose
    upon and estimated incurred losses. The domestic housing market
    slowdown has also negatively impacted our real estate related
    activities.
    The nonprime securitization market significantly deteriorated
    during the fourth quarter of 2006. Pricing for nonprime loans in
    the secondary market declined significantly due to the changing
    market conditions and our ability to securitize delinquent
    nonprime loans was severely restricted. This had a significant
    negative impact on nonprime sales margins and impacted the fair
    value of our delinquent loans in our mortgage loans held for
    sale portfolio.
    In the fourth quarter of 2006, nonprime delinquencies rose
    significantly. The combination of lower home prices and loan
    defaults has put significant pressure on a number of nonprime
    lenders, including our nonprime warehouse lending customers.
    This resulted in a significant provision for loan losses due to
    the decline in value of the collateral for our warehouse lending
    receivables.           60




---



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30-year
             61




---



##### Table of Contents



Segment
    Results
  Residential
    Finance Group
    Year Ended December 31,2007


2006


2005(In millions)Net interest income

$
855.3


$
1,402.3


$
1,617.7Provision for loan losses


(2,184.7
)


(1,272.9
)


(624.3
)Gain (loss) on sales of mortgage loans, net


7.5



653.2



761.3Servicing fees


1,728.6



1,576.1



1,415.8Amortization and impairment of servicing rights










(760.8
)Servicing asset valuation and hedge activities, net


(541.7
)


(1,098.4
)


17.2Net servicing fees


1,186.9



477.7



672.2Other (loss) income


(520.3
)


504.7



971.1Operating expenses


(2,952.7
)


(2,284.6
)


(2,243.2
)Income tax (expense) benefit


(151.2
)


170.8



(459.8
)Net  (loss) income

$
(3,759.2
)

$
(348.8
)

$
695.0  62




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##### Table of Contents



Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
    
    The capital and secondary mortgage markets experienced a
    signification reduction in liquidity for non-conforming mortgage
    products, especially nonprime mortgages. We have actively
    managed our product offerings in light of the changing market
    conditions and significantly reduced our non-conforming product
    offerings, including an effective elimination of our nonprime
    product offering. Accordingly, loan production was
    $93.9 billion for the year ended December 31, 2007,
    compared to $161.6 billion for 2006, a reduction of 41.9%.
    The significant majority of our production as we ended the year
    came from prime conforming and prime jumbo product offerings.
    To further reduce our exposure to the nonprime and
    non-conforming market, we completed a deconsolidation of certain
    securitization trusts in the third and fourth quarters of 2007,
    resulting in the decrease of approximately $25.9 billion of
    mortgage loans held for investment, net of allowance for loan
    loss of approximately $1.5 billion and associated
    collateralized borrowings.
    We have experienced an increase in loan delinquencies causing
    significant provision for loan losses and an increase in
    nonaccrual loans as a percentage of our mortgage loans held for
    investment and lending receivables portfolio.
    To reduce our exposure in our lending receivables portfolio, we
    have significantly reduced our total level of commitments and
    outstandings, especially those lending receivables secured by
    nonprime mortgage collateral.       63




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Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
     64




---



##### Table of Contents



30-year
     65




---



##### Table of Contents



Business
    Capital Group
    Year Ended December 31,2007


2006


2005(In millions)Net interest income

$
96.8


$
88.8


$
147.9Provision for loan losses


(322.7
)


(28.4
)


(25.9
)Other (loss) income


(137.4
)


655.8



280.6Operating expenses


(75.1
)


(71.1
)


(81.2
)Income tax expense


(0.4
)


(246.4
)


(120.8
)Net (loss) income

$
(438.8
)

$
398.7


$
200.6   Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
             66




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Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
          International
    Business Group
    Year Ended December 31,2007


2006


2005(In millions)Net interest income

$
87.3


$
172.2


$
152.2Provision for loan losses


(72.2
)


(32.4
)


(1.7
)(Loss) gain on sales of mortgage loans, net


(339.2
)


240.1



210.8Servicing fees


61.8



7.6



(3.5
)Amortization and impairment of servicing rights










(0.3
)Servicing asset valuation and hedge activities, net


(2.0
)


(1.9
)


Net servicing fees (loss)


59.8



5.7



(3.8
)Other (loss) income


(70.8
)


77.0



25.1Operating expenses


(476.3
)


(246.0
)


(253.3
)Income tax benefit (expense)


189.1



(46.6
)


(39.2
)Net (loss) income

$
(622.3
)

$
170.0


$
90.1   Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
   67




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Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
         68




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Corporate
    and Other
          Asset
    Quality
  Allowance
    for Loan Losses
       69




---



##### Table of Contents



Mortgage LoansHeld for


LendingInvestment


Receivables


Other


Total(In millions)Balance at January 1, 2005

$
872.9


$
141.8


$



$
1,014.7Provision for loan losses


599.8



52.0







651.8Charge-offs


(443.8
)


(6.8
)






(450.6
)Recoveries


37.0



0.4







37.4Balance at December 31, 2005


1,065.9



187.4







1,253.3Consolidation of IB Finance Holding Company LLC










25.7



25.7Provision for loan losses


1,116.4



217.3



0.4



1,334.1Charge-offs


(720.8
)


(9.3
)


(0.4
)


(730.5
)Recoveries


46.9



1.2



0.1



48.2Balance at December 31, 2006


1,508.4



396.6



25.8



1,930.8Provision for loan losses


2,088.5



492.5



14.1



2,595.1Charge-offs


(1,282.0
)


(413.2
)


(11.9
)


(1,707.1
)Reduction of allowance due to deconsolidation


(1,539.9
)










(1,539.9
)Recoveries


57.3



9.3



5.3



71.9Balance at December 31, 2007

$
832.3


$
485.2


$
33.3


$
1,350.8Allowance as a percentage of total related asset class:December 31, 2005


1.55
%


1.38
%



%


1.52
%December 31, 2006


2.17
%


2.66
%


1.03
%


2.22
%December 31, 2007


1.97
%


5.46
%


1.06
%


2.49
%  70




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##### Table of Contents



Allowance for Loan LossesAs of December 31,2007


2006


2007


2006($ In thousands)Nonprime mortgage loans

$
589,088


$
1,396,545



1.40%



2.01%Prime second-lien mortgage loans


132,973



65,978



0.32



0.10Prime non-conforming mortgage loans


102,167



44,797



0.24



0.06Prime conforming mortgage loans


6,114



1,024



0.01



0.00Government mortgage loans


1,932



17



0.00



0.00Total

$
832,274


$
1,508,361



1.97%



2.17%     Year Ended December 31,2007


2006


2005(In millions)Mortgage loans:Prime conforming

$
(3.7
)

$
(1.1
)

$
(0.1
)Prime non-conforming


(49.0
)


(29.6
)


(29.5
)Prime second-lien


(160.0
)


(45.2
)


(7.2
)Government


(0.1
)






Nonprime


(1,011.9
)


(598.0
)


(370.0
)Lending receivables:Warehouse


(371.7
)


(0.8
)


(0.5
)Construction


(12.0
)


(2.3
)


(1.9
)Other


(20.2
)


(5.0
)


(4.0
)Other


(6.6
)


(0.3
)


Total Net Charge-Offs

$
(1,635.2
)

$
(682.3
)

$
(413.2
)  71




---



##### Table of Contents



Nonperforming
    Assets
      As of December 31,2007


2006(Dollars in millions)Nonaccrual loans:Mortgage loans:Prime conforming

$
84.7


$
11.3Prime non-conforming


908.0



419.4Government


79.8



0.2Prime second-lien


233.2



142.1Nonprime*


4,040.2



6,736.2Lending receivables:Warehouse**


70.8



1,317.7Construction***


550.2



68.8Other


10.4



0.1Total nonaccrual loans


5,977.3



8,695.8Restructured loans


32.1



7.8Foreclosed assets


1,115.5



1,140.7Total nonperforming assets

$
7,124.9


$
9,844.3Total nonaccrual loans as a percentage of total mortgage loans
    held for investment and lending receivables


11.7
%


10.3
%Total nonperforming assets as a percentage of total consolidated
    assets


8.1
%


7.3
%     *
    
    Includes $1.1 billion as of December 31, 2007 and
    $414.7 million as of December 31, 2006 of loans that
    were purchased distressed and already in nonaccrual status. In
    addition, includes $15.7 million of nonaccrual loans as of
    December 31, 2007 and $3.3 million of nonaccrual loans
    as of December 31, 2006 that are not included in
    Restructured Loans.**
    
    Includes $0.0 million of nonaccrual restructured loans as of
    December 31, 2007 and $10.1 million of nonaccrual
    restructured loans as of December 31, 2006 that are not
    included in Restructured Loans.***
    
    Includes $47.2 million as of December 31, 2007 and
    $18.8 million as of December 31, 2006 of nonaccrual
    restructured loans, that are not included in Restructured
    Loans.     72




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##### Table of Contents



As of December 31,2007


2006Percent of





Percent ofAmount


Total


Amount


Total(Dollars in millions)Current

$
35,558



82.6
%

$
55,964



81.3
%Past due:30 to 59 days


1,784



4.1



4,273



6.260 to 89 days


946



2.2



1,818



2.690 days or more


2,179



5.1



3,403



5.0Foreclosures pending


1,846



4.3



2,132



3.1Bankruptcies


735



1.7



1,219



1.8Total unpaid principal balance


43,048



100.0
%


68,809



100.0
%Net (discounts) premiums


(885
)






627Total

$
42,163






$
69,436        73




---



##### Table of Contents



As of December 31,2007


2006Percent of





Percent ofAmount


Total


Amount


Total(Dollars in millions)Current

$
12,014



67.7
%

$
39,909



76.8
%Past due:30 to 59 days


1,263



7.1



4,007



7.760 to 89 days


693



3.9



1,722



3.390 days or more


1,445



8.1



3,132



6.1Foreclosures pending


1,642



9.3



2,027



3.9Bankruptcies


690



3.9



1,154



2.2Total unpaid principal balance


17,747



100.00
%


51,951



100.0
%Net (discounts) premiums


(843
)






390Total

$
16,904






$
52,341      74




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##### Table of Contents



Unpaid Principalas of December 31,2007


2006(In millions)Mortgage Loans Held for Sale DomesticInterest-only mortgage loans

$
493.2


$
4,999.8Payment option adjustable rate mortgage loans


1.1



1,838.1High loan-to-value (100% or more) mortgage loans


71.5



770.3Below market initial rate mortgage loans






24.9Mortgage Loans Held for
    Investment DomesticInterest-only mortgage loans

$
11,555.0


$
12,521.3Payment option adjustable rate mortgage loans


1,694.0



117.0High loan-to-value (100% or more) mortgage loans


3,569.2



11,043.3Below market initial rate  mortgage loans


0.6



167.2Mortgage Loans Held for Sale and
    Investment  InternationalInterest-only mortgage loans

$
6,170.1


$
4,895.1Payment option adjustable rate mortgage loans






High loan-to-value (100% or more) mortgage loans


2,182.6



164.2Below market initial rate  mortgage loans






     Loan Productionfor the YearEnded December 31,2007


2006(In millions)Interest-only mortgage loans

$
30,058.3


$
48,335.2Payment option adjustable rate mortgage loans


7,595.0



18,308.2High loan-to-value (100% or more) mortgage loans


5,897.4



8,768.3Below market initial rate mortgage loans


38.0



257.0    75




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##### Table of Contents



Liquidity
    and Capital Resources
  Liquidity
    Management
    
    Maintaining sufficient reserve liquidity:  We
    maintain a portfolio of money market instruments to support cash
    fluctuations, which we consider our liquidity portfolio. As of
    December 31, 2007, our liquidity portfolio totaled
    $2.2 billion compared with $1.1 billion as of
    December 31, 2006. The Company views its liquidity
    portfolio as cash readily available to cover operating demands
    from across its business operations. In our view, liquidity
    differs from cash and cash equivalents of $4.4 billion in
    that liquidity does not include cash balances within GMAC Bank
    and operating cash maintained within business segments to cover
    timing related outflows. In addition to our liquidity portfolio,
    we maintain domestic unsecured revolving bank credit facilities
    that are available to cover contingent funding needs. We have an
    $875.0 million
    364-day
    revolving bank credit facility that matures in June 2008 and an
    $875.0 million
    3-year
    revolving bank credit facility that matures in June 2010. Under
    the terms of the 364-day revolver, we have the ability to draw
    funds and the ability to convert the revolver into a term loan
    for one additional year with a minimum notice of one business
    day prior to the termination of the initial 364-day commitment.
    Maintaining sufficient short- and long-term
    financing:  We have significant short- and
    long-term financing needs. We manage our liquidity by financing
    our assets in a manner consistent with their liquidity profile.  -
    Short-term financing:  We require short-term
    funding to finance our mortgage loans held for sale, lending
    receivables and various other liquid assets. We forecast our
    cash position and our potential 76




---



##### Table of Contents



funding needs daily, taking into account debt maturities and
    potential peak balance sheet levels over a medium-term time
    horizon. We also manage the timing of all debt maturities to
    limit any concentrations at any given time. As of
    December 31, 2007, the outstanding balance of short-term
    borrowings totaled $17.2 billion, as compared with
    $30.2 billion as of December 31, 2006.  -
    Long-term financing:  Our long-term financing
    needs arise primarily from our mortgage loans held for
    investment, mortgage servicing rights, real estate investments
    and assets used for over-collateralization of our funding
    conduits. We manage our long-term debt maturities and credit
    facility expirations to minimize refinancing risk and maturity
    concentrations. Further, we endeavor to obtain an appropriate
    debt funding mix to complement our equity capital. We regularly
    assess the term structure of our assets and liabilities and
    interest rate risk and we limit the liability maturities in any
    one period (monthly, quarterly and annually). Consequently, we
    have achieved what we believe is a well-laddered unsecured
    maturity profile. Our long-term debt typically consists of
    collateralized borrowings in securitization trusts and unsecured
    debt issued in the public debt capital markets.    Year Ending December 31,2016and2008


2009


2010


2011


2012


2013


2014


2015


Thereafter


Total(In millions)Domestic senior unsecured notes

$
2,354.9


$
1,750.0


$
2,377.8


$
1,331.2


$
1,091.6


$
1,747.2


$



$
613.0


$



$
11,265.7Domestic subordinated unsecured notes






758.3































758.3Domestic third-party bank credit facility


1,750.0



































1,750.0International unsecured notes










826.3







942.4



712.8



803.2











3,284.7Other unsecured
    long-term debt


255.7



233.8



8.7







164.8



















663.0Total

$
4,360.6


$
2,742.1


$
3,212.8


$
1,331.2


$
2,198.8


$
2,460.0


$
803.2


$
613.0


$



$
17,721.7   
    Maintaining diversified sources of
    funding:  The funding sources utilized are
    primarily determined by the type of asset financed and
    associated with a particular product or business. We diversify
    our financing programs, credit providers, debt investors and
    dealers to reduce reliance upon any one source of liquidity and
    distribution. These sources of liquidity include:  -
    Secured funding programs:  A majority of our
    assets are pledged as collateral to support various funding
    programs. As a result, sources of funding have been developed in
    the mortgage and asset-backed securities markets. Also, we
    obtain liquidity and long-term funding in the term
    securitization market for our held for investment mortgage loan
    portfolio.-
    Unsecured funding sources at the ResCap parent
    level:  ResCap has historically had access to the
    unsecured debt market to further diversify its funding sources.
    Since the June 2007 issuances of 600 million
    3.25-year floating rate note and £400 million
    7-year fixed
    rate note (total of $1.6 billion U.S. dollars) the
    company has been unable to access the long-term unsecured
    markets due to its weakened liquidity position and corporate
    performance driven by the illiquidity of the capital markets.
    Where legal entity, regulatory, country differences or other
    business segment considerations make reliance on parent funding
    impractical, some business segments enter into their own
    financing arrangements. We regularly assess the reliability and
    concentrations of our funding sources.-
    Our ability to access the funding capacity of GMAC
    Bank:  GMAC Bank provides us with another source
    of liquidity through its ability to accept deposits to obtain
    Federal Home Loan Bank (FHLB) advances and federal
    funds purchased. The FHLBs financing support is
    uncommitted and requests for additional advances are evaluated
    at the time they are received. 77




---



##### Table of Contents



Year Ending December 31,2016and2008


2009


2010


2011


2012


2013


2014


2015


Thereafter


Total(In millions)FHLB advances

$
1,658.0


$
1,572.0


$
1,556.0


$
945.0


$
2,516.0


$
524.0


$
1,210.0


$
245.0


$
1,123.0


$
11,349.0     
    Maintaining an active dialogue with the rating
    agencies:Our ability to meet our funding needs
    is influenced by the rating agencies requirements. These
    requirements impact our capital structure and growth rate. We
    have obtained ratings from four agencies and maintain an active
    dialogue with each throughout the year. Changes in the business
    environment and our performance may further negatively impact
    ratings.
    Prudent management oversight/governance
    process:  In order to ensure that both daily and
    strategic funding activities are appropriate and consistent with
    policy, as well as to actively monitor the risk associated with
    our funding needs and capital structure, we have established the
    following oversight and control:  -
    Liquidity and Funding Committee
    (LFC):  The LFC reviews the optimal
    financial structure of ResCap and its principal businesses,
    reviews funding plans for business units, sets frameworks on
    funding and liquidity, facilitates liquidity and funding
    discussions across ResCap, and coordinates appropriate standards
    of care for all ResCap funding sources in order to have a
    coordinated relationship across the enterprise.-
    Global Treasury Function:  Liquidity is managed
    locally by our business unit treasurers with an active corporate
    oversight function and surveillance. Our global treasury
    operations meet regularly to review overall liquidity, track
    asset levels, collateral and funding availability in order to
    maintain flexibility to meet our financial commitments and make
    recommendations to senior management.-
    Daily Liquidity Management:  Liquidity is
    managed centrally in conjunction with each business segment.
    These operations review the projected cash position, funding
    plans and funding pipeline and manage our daily cash needs.  
    Interest Rate Management:  The interest rate
    risk profile of our liquidity can be separated from the actual
    debt issuances using derivative financial products. We issue
    both fixed and variable rate debt in a range of currencies. We
    use derivative contracts, primarily interest rate swaps, to
    effectively convert a portion of our fixed rate debt to variable
    rate debt and variable rate debt to fixed rate debt. The
    maturity structure of the derivatives generally corresponds to
    the maturity structure of the debt being hedged. In addition, we
    use other derivative contracts to manage the foreign exchange
    impact of certain debt issuances.  Capital
    Management     78




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##### Table of Contents



Liquidity
    and Capital Management Highlights through December 31,
    2007
      
    Increased our net secured committed capacity by
    $3.8 billion as of December 31, 2007.  We were able to
    successfully execute $11.1 billion in new and renewed
    secured commitments partially offset by matured and expired
    secured commitments totaling $7.3 billion.
    During the quarter ended June 30, 2007, we issued the
    following senior long-term unsecured notes: a May 2007 issuance
    of $2.25 billion dual-tranche transaction ($1 billion
    2-year
    floating rate debt and $1.25 billion
    5-year fixed
    rate debt), and a June 2007 issuance of 600 million
    3.25-year floating rate note and £400 million
    7-year fixed
    rate note (total of $1.6 billion U.S. dollars). In
    addition, in June 2007 we issued 1.8 billion MXN pesos of
    medium-term notes ($0.2 billion U.S. dollars).
    On November 21, 2007 the Company announced it commenced a
    cash tender offer for several of its debt securities. We offered
    to purchase up to $750 million aggregate principal amount
    (the maximum tender amount) of the notes. Upon the offers
    expiration (12:00PM midnight EST Dec. 19, 2007),
    $389.1 million face value was tendered and accepted for
    payment. Total cash outflow (principal and accrued interest) to
    the bondholders totaled $240.8 million.
    During November and December 2007, GMAC executed a program of
    open market repurchases of our publicly traded debt. The open
    market repurchase program resulted in the repurchase of debt
    with a book value of approximately $1.3 billion for a cost
    of $895 million, including accrued interest. On
    December 28, 2007, our debt with a face value of
    approximately $1.1 billion and a GMAC cost basis of
    approximately $740 million was contributed to us by GMAC as
    a capital injection. As a result, we recorded a gain on
    extinguishment of debt of $369 million.
    In June 2007, we renewed facilities comprised of a
    $875 million
    364-day
    revolver which now matures in June 2008 and a $875 million
    3-year
    syndicated revolver which now matures in June 2010. Under the
    terms of the 364-day revolver, we have the ability to draw funds
    and the ability to convert the revolver into a term loan for one
    additional year with a minimum notice of one business day prior
    to the termination of the initial 364-day commitment. 79




---



##### Table of Contents




    We eliminated exposure to extendable commercial paper conduit
    liquidity due to market dislocation by moving collateral to
    alternative financing sources including our Mortgage Asset
    Lending Agreement (MALA)/Receivables Lending
    Agreement (RLA) facilities and committed whole loan
    repurchase agreements.
    We secured $4.0 billion of new committed repurchase
    agreements to primarily fund conforming mortgage production.
    In August 2007, we executed the sale of substantially all of the
    assets and operations comprising our healthcare finance business
    to GMAC Commercial Finance LLC, for $900.5 million.
    On November 5, 2007, GMAC Residential Funding of Canada
    Limited, our subsidiary completed the purchase of ResMor
    Trust Company, a leading provider of mortgages through
    Canadas broker community. ResMor Trust Company is a
    federally licensed trust company operating across Canada focused
    on residential mortgage lending, mortgage servicing and deposit
    products. It currently has $4 billion of mortgages under
    administration representing almost 24,000 homeowners. ResMor
    originates all of its products through the brokerage community.
    In addition, ResMor is a member institution of Canada Deposit
    Insurance Corporation (CDIC).
    During 2007, we received $2.0 billion in cash capital
    contributions from GMAC ($1.0 billion in the
    3rd quarter ending September 30, 2007,
    $500.0 million in the 2nd quarter ending June 30,
    2007, and $500.0 million in the 1st quarter ending
    March 31, 2007), excluding the contribution to the auto
    division of GMAC Bank; GMAC also contributed $256.0 million
    of capital to GMAC Bank isolated to its auto division.
    We increased funding of loan originations at GMAC Bank which
    offers a competitive cost of funding via its relationship with
    the Federal Home Loan Bank of Pittsburgh and its ability to
    leverage customer deposits and escrows.
    GMAC entered into an agreement with a financial service lender,
    effective September 6, 2007, pursuant to which the entity
    has committed to provide up to $21.4 billion in various
    asset-backed funding facilities (the Facilities)
    through September 2008. A total of $14.4 billion became
    available for immediate funding upon execution of the
    Facilities, with an additional $7.0 billion becoming
    available if and when the Facilities are syndicated to other
    lenders. As of December 31, 2007, approximately
    $2.0 billion has been syndicated. Up to $8.0 billion
    of the Facilities, depending on GMACs usage of the
    facilities, can be made available to us to fund mortgage assets.
    As of December 31, 2007, we established $3.5 billion
    of the new Facilities to fund mortgage servicing rights of
    $1.5 billion and an additional $2.0 billion in secured
    committed capacity to fund conforming and certain non-conforming
    mortgage collateral.    2008
    Liquidity and Capital Management Focus
  renewals/extensions.
   80




---



##### Table of Contents



Borrowings Outstanding as ofDecember 31,


December 31,2007


2006(In millions)Collateralized borrowings in securitization trusts 
    long-term(a)

$
16,145.7


$
53,299.5Senior unsecured notes  long-term(a)


14,550.4



12,408.8Subordinated unsecured note  long-term(a)


758.3



1,000.0Term loans and revolvers  long-term(a)


1,750.0



1,750.0Bank lines  short-term


278.3



756.0Bank lines  long-term(a)


33.2



21.8Other unsecured  short-term


347.0



392.7Other unsecured  long-term(a)


629.8



643.6Subtotal unsecured borrowings


18,347.0



16,972.9Secured  short-term


15,560.5



29,065.9Secured  long-term(a)


927.7



6,562.6FHLB  short-term


1,050.0



FHLB  long-term (a)


10,299.0



7,279.0Subtotal secured borrowings


27,837.2



42,907.5Total borrowings


62,329.9



113,179.9Bank deposits


13,349.8



9,851.0Total borrowings and deposits


75,679.7



123,030.9Off-balance sheet financings


136,108.3



119,295.8Total

$
211,788.0


$
242,326.7   (a)
    
    Represents borrowings with an original contractual maturity in
    excess of one year.  Funding
    Sources
  Collateralized
    Borrowings in Securitization Trusts   81




---



##### Table of Contents



Unsecured
    and Secured Funding Facilities
    As of December 31, 2007


As of December 31, 2006Committed


Uncommitted


Total


Committed


Uncommitted


Total(In millions)Unsecured funding facilities

$
3,517.5


$
891.3


$
4,408.8


$
3,860.8


$
1,770.2


$
5,631.0Secured funding facilities


33,178.8



21,583.4



54,762.2



29,371.1



73,276.7



102,647.8        82




---



##### Table of Contents



Unsecured
    Funding Facilities
    Unsecured Committed FacilitiesAs of December 31, 2007


As of December 31, 2006Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Syndicated bank credit facilities

$



$
875.0


$
875.0


$



$
875.0


$
875.0364-day bank
    credit facilities revolver






875.0



875.0







875.0



875.0International bank lines


17.5







17.5



216.3



144.5



360.8Bank term loan


1,750.0







1,750.0



1,750.0







1,750.0Total

$
1,767.5


$
1,750.0


$
3,517.5


$
1,966.3


$
1,894.5


$
3,860.8   364-day
    Unsecured Uncommitted FacilitiesAs of December 31, 2007


As of December 31, 2006Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Lines of credit

$
243.8


$
23.2


$
267.0


$
161.8


$
125.4


$
287.2International commercial paper


301.4







301.4



186.2



90.6



276.8GMAC Bank Fed Funds


0.1



219.9



220.0







506.0



506.0Other


100.9



2.0



102.9



606.2



94.0



700.2Total

$
646.2


$
245.1


$
891.3


$
954.2


$
816.0


$
1,770.2       Secured
    Funding Facilities
   83




---



##### Table of Contents



and/or
    Secured Committed FacilitiesAs of December 31, 2007


As of December 31, 2006Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Mortgage Interest Networking Trust (MINT)

$



$



$



$



$
5.0


$
5.0Repurchase agreements


3,605.2



5,313.7



8,918.9



4,950.8



1,704.3



6,655.1Receivables Lending Agreement (RLA)


170.0



5,292.6



5,462.6



5,250.0



322.8



5,572.8Mortgage Asset Lending Agreement (MALA)


70.0



3,146.4



3,216.4



1,120.0



1,836.3



2,956.3Bank facilities for construction lending receivables


1,804.8



45.4



1,850.2



1,745.0







1,745.0Bank facility for mortgage servicing rights


1,444.0



656.0



2,100.0



1,275.0



25.0



1,300.0Other


8,633.9



2,996.8



11,630.7



7,178.3



3,958.6



11,136.9Total

$
15,727.9


$
17,450.9


$
33,178.8


$
21,519.1


$
7,852.0


$
29,371.1   MINT: Series 2003-2
  Repurchase agreements:
  RLA and MALA:
   84




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##### Table of Contents



Bank facilities:
  Other:
  Bilateral secured facility:
    Secured Uncommitted FacilitiesAs of December 31, 2007


As of December 31, 2006Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Mortgage Interest Networking Trust (MINT)

$



$



$



$
1,402.9


$
23,592.1


$
24,995.0MINT II, LLC














5,831.2



19,168.8



25,000.0Repurchase agreements


368.3



7,430.7



7,799.0



6,554.7



6,109.1



12,663.8Other


392.0



803.3



1,195.3



320.6



713.0



1,033.6Total excluding FHLB advances


760.3



8,234.0



8,994.3



14,109.4



49,583.0



63,692.4FHLB advances


11,349.0



1,240.1



12,589.1



7,279.0



2,305.3



9,584.3Total

$
12,109.3


$
9,474.1


$
21,583.4


$
21,388.4


$
51,888.3


$
73,276.7   MINT I: MINT I, LLC on-balance
 85




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##### Table of Contents



MINT II: MINT II, LLC
  FHLB Advances:
    As of December 31, 2007Secured


Secured


TotalSecured


Secured


Total


Committed


Uncommitted


SecuredCommitted


Uncommitted


Secured


Unused


Unused


UnusedOutstanding


Outstanding


Outstanding


Capacity


Capacity


Capacity(In millions)Mortgage loans and warehouse lending(a)

$
11,687.7


$
12,014.1


$
23,701.8


$
16,140.8


$
9,474.1


$
25,614.9Other lending receivables(b)


1,804.8







1,804.8



45.4







45.4Mortgage servicing rights(c)


1,444.0







1,444.0



656.0







656.0Other


791.4



95.2



886.6



608.7







608.7Total

$
15,727.9


$
12,109.3


$
27,837.2


$
17,450.9


$
9,474.1


$
26,925.0   86




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##### Table of Contents



As of December 31, 2006Secured


Secured


TotalSecured


Secured


Total


Committed


Uncommitted


SecuredCommitted


Uncommitted


Secured


Unused


Unused


UnusedOutstanding


Outstanding


Outstanding


Capacity


Capacity


Capacity(In millions)Mortgage loans and warehouse lending(a)

$
17,815.3


$
21,388.4


$
39,203.7


$
7,655.7


$
51,888.3


$
59,544.0Other lending receivables(b)


1,700.0







1,700.0











Mortgage servicing rights(c)


1,275.0







1,275.0



25.0







25.0Other


728.8







728.8



171.3







171.3Total

$
21,519.1


$
21,388.4


$
42,907.5


$
7,852.0


$
51,888.3


$
59,740.3     (a)
    Mortgage loans and warehouse lending is comprised of MINT, MINT
    I, MINT II, MALA, RLA, repurchase agreements, the Facilities,
    and FHLB advances.  (b)
    Facilities that fund construction and commercial business
    lending receivables.  (c)
    Facilities to fund mortgage serving rights.  International
    Funding Facilities
  on-balance
    International FacilitiesAs of December 31, 2007


As of December 31, 2006Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Committed international facilities

$
8,460.1


$
2,428.8


$
10,888.9


$
6,815.3


$
4,486.4


$
11,301.7Uncommitted international facilities


937.2



826.6



1,763.8



593.4



978.0



1,571.4   Bank
    Deposits
     87




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##### Table of Contents



Off-Balance
    Sheet Financings
        
    Walnut Grove Funding was a secured aggregation facility that
    funded home equity loans, home equity lines of credit, high
    loan-to-value mortgage loans and certain non-conforming fixed
    rate mortgage loans through the issuance of asset-backed
    commercial paper. Walnut Grove Funding provided
    $0.0 million of funding as of December 31, 2007 and
    $275.4 million as of December 31, 2006, and was
    permitted to finance a maximum of $0.0 million as of
    December 31, 2007 and $900.0 million as of
    December 31, 2006
    Horsham Funding was a facility that funded defaulted government
    insured or guaranteed residential mortgage loans repurchased
    from securitized pools through borrowings from third-party
    asset-backed commercial paper conduits. Horsham Funding provided
    $0.0 million of funding as of December 31, 2007 and
    $102.4 million as of December 31, 2006, and was
    permitted to finance a maximum amount of $0.0 million as of
    December 31, 2007 and $200.0 as of December 31, 2006.  Credit
    Ratings
    Commercial





Date ofRating Agency

Paper

Senior Debt

Outlook

Last ActionFitch


B



BB+


Watch ratings-negative

August 16, 2007Moodys


NP



B2


Negative

February 5, 2008S&P


C



B


Negative

February 22, 2008DBRS


R-4



B(High
)

Negative

November 9, 2007      88




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##### Table of Contents



Purchase
    Obligations and Options
            
    Asset Performance Conditional Calls  In
    certain of our securitizations, we retain the option (but not an
    obligation) to purchase specific mortgage loans that become
    delinquent beyond a specified period of time, as set forth in
    the transaction legal documents (typically 90 days).
    Mortgage loans are purchased after the option becomes
    exercisable when it is in our economic interest to do so. We
    purchased an aggregate of $607 million of mortgage loans in
    2007 and $324 million in 2006 under these provisions.
    Cleanup Calls  In each of our securitizations,
    we retain a cleanup call option that allows the servicer to
    purchase the remaining transferred assets once such assets reach
    a minimal level and the cost of servicing those assets becomes
    burdensome in relation to the benefits of servicing (defined as
    a specified percentage of the original principal balance). We
    choose to exercise cleanup calls when it is in our economic
    interest to do so. We purchased $253.8 million of assets
    under these cleanup call provisions in 2007 and
    $1.1 billion of such assets in 2006.   89




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##### Table of Contents



Guarantees
    Aggregate
    Contractual Obligations
  Payments Due by PeriodLess than








More ThanAs of December 31, 2007

Total


1 Year


1-3 Years


3-5 Years


5 Years(In millions)Description of obligation:Debt and associated interestUnsecured

$
18,346.9


$
4,985.0


$
5,955.7


$
3,530.1


$
3,876.1Secured


43,982.9



17,438.5



3,740.5



3,607.5



19,196.4Scheduled interest payments for fixed rate long-term debt


3.5



0.8



1.4



0.9



0.4Expected interest payments for variable rate long-term debt


0.7



0.4



0.3







Estimated payment obligations (net) under interest rate swap


0.2



0.1



0.1







Lease commitments


432.7



102.7



134.5



95.7



99.8Mortgage purchase commitments


18,421.9



15,618.5



2,803.4







Lending commitments


8,062.6



3,041.4



1,630.7



307.5



3,083.0Commitments to provide capital to equity method investees


251.3















251.3Purchase obligations*


2,283.0



2,220.1



45.7



17.2



Commitments to fund development of lots and/or model homes


127.0



6.6



120.4







Bank certificates of deposit


8,116.2



5,903.7



2,004.3



208.2



Total

$
100,028.9


$
49,317.8


$
16,437.0


$
7,767.1


$
26,507.0     *
    
    Includes purchase obligations covered by non-cancellable
    contracts and contracts containing cancellation fees.    Debt and associated interest
 90




---



##### Table of Contents



Lease commitments
  Mortgage purchase commitments
  Lending commitments 
  Commitments to provide capital to equity method
    investees
  Commitments to fund development of lots
    and/or model
    homes
  Bank certificate of deposits
  Recently
    Issued Accounting Standards
  Refer to Note 2 of the Notes to the Consolidated Financial
    Statements.
  Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.       91




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##### Table of Contents



Interest
    Rate Lock Commitments and Mortgage Loans Held for
    Sale
    Mortgage
    Servicing Rights and Our Interests From Our
    Securitizations
      U.S. Treasury Securities:
  Principal-Only Securities:
  Long Interest Rate Futures Contracts:
  Long Call Options on U.S. Treasuries or Interest Rate
    Swaps:
  Long Put Options on U.S. Treasuries or Interest Rate
    Swaps:
  Long Mortgage-Backed Securities, U.S. Treasury and LIBOR
    Futures:
 92




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##### Table of Contents



Interest Rate Floors:
  Interest Rate Caps:
  Receiver Swaptions:
  Interest Rate Swaps:
  Debt
    Securities
    Value
    at Risk
      Year Ended December 31,2007


2006(In millions)Value at RiskMaximum

$
134.5


$
80.7Average


83.1



42.7Minimum


39.8



14.7    93




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##### Table of Contents



Sensitivity
    Analysis    As of December 31,2007


2006Non-Trading


Trading


Non-Trading


Trading(In millions)Estimated net fair value of financial instruments exposed to
    changes in interest rates

$
(4,859
)

$
2,091


$
(10,622
)

$
4,562Impact of a 10% adverse change in rates


(1,483
)


(17
)


(546
)


(110
)     Impact
    of Changes in Interest Rates on the Net Value of the
    Companys Interest Rate-Sensitive Financial
    Instruments
    option-pricing cash-flow
 94




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##### Table of Contents



Change in Fair Value as ofDecember 31, 2007Change in Interest Rate (basis points)

−100


−50


+50


+100(In millions)Mortgage servicing rights and other financial instruments:Mortgage servicing rights and interests from our securitizations

$
(1,551
)

$
(814
)

$
696


$
1,202Impact of servicing hedge:Swap  based


1,656



778



(679
)


(1,267
)Treasury-based


121



61



(60
)


(120
)Others


114



56



(52
)


(97
)Mortgage servicing rights and interests from our
    securitizations, net


340



81



(95
)


(282
)Committed pipeline


47



37



(74
)


(181
)Mortgage loan inventory


187



100



(117
)


(249
)Impact of associated derivative instruments:Mortgage-based


(146
)


(85
)


112



246Eurodollar-based


(12
)


(6
)


6



12Others


(34
)


(18
)


20



42Committed pipeline and mortgage loan inventory, net


42



28



(53
)


(130
)Net change in fair value related to other businesses


4



2



2



2GMAC Bank (mortgage division only):Securities portfolio


12



6



(6
)


(12
)Mortgage loans


289



166



(195
)


(409
)Deposit liabilities


10



5



(4
)


(7
)Federal Home Loan Bank advances


(255
)


(129
)


136



283Other liabilities


(11
)


(5
)


5



11GMAC Bank, net


45



43



(64
)


(134
)Notes payable and capital securities


(266
)


(132
)


129



254Impact of associated derivative instruments:Swap-based


257



127



(124
)


(244
)Notes payable and capital securities, net


(9
)


(5
)


5



10Insurance company investment portfolios


2



1



(1
)


(2
)Net change in fair value related to mortgage servicing rights
    and other financial instruments

$
424


$
150


$
(206
)

$
(536
)Net change in fair value related to broker-dealer
    trading securities

$



$



$



$
Net change in fair value related to GMAC Auto Bank

$
33


$
16


$
(17
)

$
(33
)   95




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##### Table of Contents



Change in Fair Value as ofDecember 31, 2006Change in Interest Rate (basis points)

−100


−50


+50


+100(In millions)Mortgage servicing rights and other financial instruments:Mortgage servicing rights and interests from our securitizations

$
(1,251
)

$
(584
)

$
405


$
656Impact of servicing hedge:Swap  based


652



291



(211
)


(356
)Treasury-based


117



57



(54
)


(106
)Others


415



200



(193
)


(381
)Mortgage servicing rights and interests from our
    securitizations, net


(67
)


(36
)


(53
)


(187
)Committed pipeline


44



30



(55
)


(131
)Mortgage loan inventory


263



141



(169
)


(372
)Impact of associated derivative instruments:Mortgage-based


(104
)


(63
)


88



198Eurodollar-based


(21
)


(10
)


10



21Others


(145
)


(78
)


90



191Committed pipeline and mortgage loan inventory, net


37



20



(36
)


(93
)Net change in fair value related to other businesses


2



1



(1
)


(4
)GMAC Bank (mortgage division only):Securities portfolio


2



1



(1
)


(2
)Mortgage loans


152



92



(113
)


(242
)Deposit liabilities


(11
)


(5
)


5



10Federal Home Loan Bank advances


(185
)


(95
)


101



207Other liabilities


(18
)


(9
)


9



18GMAC Bank, net


(60
)


(16
)


1



(9
)Notes payable and capital securities


(279
)


(138
)


134



265Impact of associated derivative instruments:Swap-based


310



153



(149
)


(295
)Notes payable and capital securities, net


31



15



(15
)


(30
)Insurance company investment portfolios


3



1



(1
)


(3
)Net change in fair value related to mortgage servicing rights
    and other financial instruments

$
(54
)

$
(15
)

$
(105
)

$
(326
)Net change in fair value related to broker-dealer
    trading securities

$
(4
)

$
(2
)

$
1


$
1    96




---



##### Table of Contents



Item
    8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA. STATEMENT
    OF RESPONSIBILITY FOR PREPARATION

OF FINANCIAL STATEMENTS        /s/ James G. Jones

/s/ Sanjiv KhattriJames G. Jones

Sanjiv KhattriChief Executive Officer

Chief Financial OfficerFebruary 27, 2008

February 27, 2008  97




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING  Rule 13a-15(f).
      Internal Control-Integrated Framework
      /s/ James G. Jones

/s/ Sanjiv KhattriJames G. Jones

Sanjiv KhattriChief Executive Officer

Chief Financial OfficerFebruary 27, 2008

February 27, 2008  98




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Internal Control 
    Integrated Framework Form 10-K.
      PricewaterhouseCoopers LLP
    99




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONSOLIDATED BALANCE SHEET
 December 31, 2007 and 2006
  2007


2006(Dollars in thousands)ASSETSCash and cash equivalents

$
4,415,913


$
2,018,847Mortgage loans held for sale


11,998,236



27,007,382Trading securities


2,090,690



4,562,073Mortgage loans held for investment, net


41,330,322



67,927,951Lending receivables, net


8,406,495



14,530,104Mortgage servicing rights


4,702,862



4,930,061Accounts receivable


3,187,913



2,561,200Investments in real estate and other


1,629,717



2,622,149Goodwill






471,463Other assets


10,428,516



8,955,589Total assets

$
88,190,664


$
135,586,819LIABILITIESBorrowings:Collateralized borrowings in securitization trusts

$
16,145,741


$
53,299,518Other borrowings


46,184,150



59,880,378Total borrowings


62,329,891



113,179,896Deposit liabilities


13,349,844



9,851,026Other liabilities


5,141,052



4,374,006Total liabilities


80,820,787



127,404,928Minority interest


1,339,760



559,778EQUITYMembers interest


6,624,344



3,837,943(Accumulated deficit) retained earnings


(694,756
)


3,651,935Accumulated other comprehensive income


100,529



132,235Total equity


6,030,117



7,622,113Total liabilities, minority interest and equity

$
88,190,664


$
135,586,819    100




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONSOLIDATED STATEMENT OF INCOME
 Years Ended December 31, 2007, 2006, and 2005
  2007


2006


2005(Dollars in thousands)RevenueInterest income

$
7,567,883


$
8,169,034


$
5,797,097Interest expense


6,560,846



6,460,220



3,872,102Net interest income


1,007,037



1,708,814



1,924,995Provision for loan losses


2,595,143



1,334,084



651,796Net interest (loss) income after provision for loan losses


(1,588,106
)


374,730



1,273,199(Loss) gain on sale of mortgage loans, net


(331,731
)


890,216



1,036,669Servicing fees


1,790,403



1,583,674



1,416,280Amortization and impairment of servicing rights










(761,988
)Servicing asset valuation and hedge activities, net


(543,651
)


(1,100,232
)


17,186Net servicing fees


1,246,752



483,442



671,478(Loss) gain on investment securities, net


(747,830
)


68,665



236,362Real estate related revenues, net


218,434



593,040



707,961(Loss) gain on sale of equity investments


(542
)


414,508



4,213Gain on extinguishment of debt


521,088







(Loss) gain on foreclosed real estate


(401,672
)


(56,044
)


38,752Automotive operating lease income


510,927



34,438



Other income


203,764



219,514



266,626Total net revenue


(368,916
)


3,022,509



4,235,260ExpensesCompensation and benefits


1,224,580



1,206,339



1,406,930Professional fees


254,071



273,056



212,410Data processing and telecommunications


202,246



189,152



199,849Advertising


120,241



152,792



158,688Occupancy


146,282



137,687



121,301Goodwill impairment


454,828







Restructuring


126,646







Depreciation expense on automotive lease income


307,984



19,726



Other


1,026,726



618,183



509,156Total expenses


3,863,604



2,596,935



2,608,334(Loss) income before income tax expense (benefit) and minority
    interest


(4,232,520
)


425,574



1,626,926Income tax expense (benefit)


19,790



(289,173
)


606,300(Loss) income before minority interest


(4,252,310
)


714,747



1,020,626Minority interest


94,028



9,654



Net (loss) income

$
(4,346,338
)

$
705,093


$
1,020,626    101




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 Years Ended December 31, 2007, 2006, and 2005
  CommonStock











Accumulatedand











OtherPaid-in


Members


Retained


Comprehensive


Comprehensive


TotalCapital


Interest


Earnings


Income


Income


Equity(Dollars in thousands)Balance at January 1, 2005

$
1,246,778


$



$
2,959,961






$
159,006


$
4,365,745Net income










1,020,626


$
1,020,626







1,020,626Capital contributions


2,120,899



















2,120,899Other comprehensive income, net of tax:Unrealized loss on investment securities














(24,451
)






(24,451
)Foreign currency translation adjustment














(33,103
)






(33,103
)Unrealized gain on cash flow hedges














14,254







14,254Other comprehensive income














(43,300
)


(43,300
)


Comprehensive income













$
977,326







Balance at December 31, 2005


3,367,677







3,980,587







115,706



7,463,970Cumulative effect of change in accounting principle as of
    January 1, 2006, net of tax:Transfer of unrealized loss for certain available for sale
    securities to trading securities










(16,717
)

$




16,717



Recognize mortgage servicing rights at fair value










3,850



3,850







3,850Net income










705,093



705,093







705,093Capital contributions


101,429



368,837















470,266Conversion of common stock to members interest on
    October 24, 2006


(3,469,106
)


3,469,106















Dividends










(1,020,878
)










(1,020,878
)Other comprehensive income, net of tax:Unrealized gain on available for sale securities














1,738







1,738Foreign currency translation adjustment














49,225







49,225Unrealized loss on cash flow hedges














(51,151
)






(51,151
)Other comprehensive income














(188
)


(188
)


Comprehensive income













$
708,755







Balance at December 31, 2006






3,837,943



3,651,935







132,235



7,622,113Cumulative effect of change in accounting principle as of
    January 1, 2007, net of tax:Adoption of Financial Accounting Standards Board Interpretation
    No. 48










(353
)










(353
)Net loss










(4,346,338
)

$
(4,346,338
)






(4,346,338
)Capital contributions






2,786,401















2,786,401Other comprehensive income, net of tax:Unrealized gain on available for sale securities














1,814







1,814Foreign currency translation adjustment














8,298







8,298Unrealized loss on cash flow hedges














(62,518
)






(62,518
)Other comprehensive income














(52,406
)


(52,406
)


Comprehensive income













$
(4,398,744
)






Adoption of Financial Standards Board Statement No. 158,
    net of tax


















20,700



20,700Balance at December 31, 2007

$



$
6,624,344


$
(694,756
)





$
100,529


$
6,030,117    102




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONSOLIDATED STATEMENT OF CASH FLOWS
 Years Ended December 31, 2007, 2006, and 2005
  2007


2006


2005(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income

$
(4,346,338
)

$
705,093


$
1,020,626Reconciliation of net (loss) income to net cash provided by
    (used in) operating activities:Amortization and impairment of mortgage servicing rights










761,988Depreciation and amortization


1,151,147



665,774



605,579Provision for loan losses


2,595,143



1,334,084



651,796Loss (gain) on sale of mortgage loans, net


331,731



(890,216
)


(1,036,669
)Loss (gain) on sale of equity investments


542



(414,508
)


(4,213
)Net loss (gain) on sale of other assets


275,859



17,262



(41,559
)Goodwill impairment


454,828







Gain on extinguishment of debt


(521,088
)






Pension curtailment gain






(42,630
)


Minority interest


94,028



9,654



Loss (gain) on investment securities, net


747,830



(68,665
)


(236,362
)Equity in loss (earnings) of investees in excess of cash received


79,252



(85,445
)


(137,671
)Loss (gain) on valuation of mortgage servicing rights


1,259,529



819,353



(86,328
)Originations and purchases of mortgage loans held for sale


(115,234,401
)


(176,541,708
)


(159,280,861
)Proceeds from sales and repayments of mortgage loans held for
    sale


115,457,868



156,424,705



133,222,847Deferred income tax


175,738



(345,444
)


226,526Net change in:Trading securities


1,500,310



298,856



(952,969
)Accounts receivable


(696,016
)


(647,150
)


152,081Other assets


(286,171
)


(1,356,070
)


(344,510
)Other liabilities


540,630



13,383



(667,417
)Net cash provided by (used in) operating activities


3,580,421



(20,103,672
)


(26,147,116
)CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease (increase) in lending receivables


5,188,500



(1,200,420
)


(3,974,763
)Originations and purchases of mortgage loans held for investment


(8,590,547
)


(15,318,790
)


(20,081,860
)Proceeds from sales and repayments of mortgage loans held for
    investment


16,931,905



25,186,643



27,528,658Purchases of available for sale securities


(72,018
)


(54,273
)


(598,613
)Proceeds from sales and repayments of available for sale
    securities


28,605



24,328



747,215Additions to mortgage servicing rights


(3,192
)


(11,780
)


(266,589
)Sales of mortgage servicing rights


563,709







207,591Purchase of and advances to investments in real estate and other


(210,792
)


(1,695,102
)


(1,249,253
)Proceeds from sales of and returns of investments in real estate
    and other


849,548



1,378,210



923,924Consolidation of IB Finance Holding Company LLC






251,347



Acquisitions, net of cash acquired


103,743



(2,551
)


(3,988
)Other, net


1,176,654



981,459



724,699Net cash provided by investing activities


15,966,115



9,539,071



3,957,021(Continued on next page) 103




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  CONSOLIDATED STATEMENT OF CASH FLOWS
 Years Ended December 31, 2007, 2006, and
    2005  (Continued)
  2007


2006


2005(Dollars in thousands)CASH FLOWS FROM FINANCING ACTIVITIES:Net decrease in affiliate borrowings

$



$
(5,177,462
)

$
(2,828,433
)Net (decrease) increase in other short-term borrowings


(13,009,476
)


2,730,803



4,242,935Proceeds from issuance of collateralized borrowings in
    securitization trusts


5,634,817



19,317,561



28,361,997Repayments of collateralized borrowings in securitization trusts


(15,929,834
)


(22,605,088
)


(22,682,856
)Proceeds from secured aggregation facilities, long-term


12,358,635



29,071,067



7,896,054Repayments of secured aggregation facilities, long-term


(17,411,381
)


(27,942,989
)


(3,157,448
)Proceeds from other long-term borrowings


10,197,770



14,298,047



9,625,279Repayments of other long-term borrowings


(5,192,486
)


(568,430
)


(210,000
)Payments of debt issuance costs


(43,370
)


(109,680
)


(121,413
)Dividends paid






(580,752
)


Capital contributions


2,256,000







Disposal of healthcare business, net


898,794







Increase in deposit liabilities


3,130,793



1,742,878



2,458,334Net cash (used in) provided by financing activities


(17,109,738
)


10,175,955



23,584,449Effect of foreign exchange rates on cash and cash equivalents


(39,732
)


140,740



(26,684
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


2,397,066



(247,906
)


1,367,670CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


2,018,847



2,266,753



899,083CASH AND CASH EQUIVALENTS AT END OF YEAR

$
4,415,913


$
2,018,847


$
2,266,753(Continued on next page) 104




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  CONSOLIDATED STATEMENT OF CASH FLOWS
 Years Ended December 31, 2007, 2006, and
    2005  (Continued)
  2007


2006


2005(Dollars in thousands)SUPPLEMENTAL DISCLOSURES:Interest paid

$
6,645,328


$
6,628,857


$
3,835,316Taxes paid


56,696



487,626



713,321Non-cash transactions:Available for sale securities transferred to trading securities






927,141



Mortgage loans held for sale transferred to mortgage loans held
    for investment


13,794,278



14,549,018



19,963,930Mortgage loans held for investment transferred to mortgage loans
    held for sale


810,219



3,236,630



3,904,330Mortgage loans held for investment transferred to other assets


2,950,376



1,762,912



930,672Deconsolidation of loans, net


25,855,681







Deconsolidation of collateralized borrowings


26,599,105







Originations of mortgage servicing rights from sold loans


1,596,543



1,722,895



1,272,126Capital contributions of lending receivables


422,390



139,928



120,899Capital contribution through forgiveness of unsecured and
    affiliate borrowings


740,666







2,000,000Capital contribution from limited liability company election for
    federal income tax purposes






330,338



Dividend due to limited liability company election for federal
    income tax purposes






433,378



Dividend of non-cash assets of the former GMAC Bank






92,550



Consolidation of non-cash assets of IB Finance Holding Company
    LLC






4,643,219



Other disclosures:Proceeds from sales and repayments of mortgage loans held for
    investment for mortgage loans originally designated as held for
    sale


6,789,620



7,561,986



2,062,975Reconciliation of mortgage loans held for sale:Mortgage loans held for sale at beginning of year

$
27,007,382


$
19,521,566


$
14,032,781Originations and purchases of mortgage loans held for sale


115,234,401



176,541,708



159,280,861Gain on sale of mortgage loans


(591,633
)


899,108



1,045,496Proceeds from sales and repayments of mortgage loans held for
    sale


(115,457,868
)


(156,424,705
)


(133,222,847
)Proceeds from sales and repayments of loans transferred from
    mortgage loans held for investment


(422,769
)


(1,206,396
)


(4,231,189
)Originations of mortgage servicing rights


(1,596,543
)


(1,722,895
)


(1,272,126
)Transfers to mortgage loans held for investment


(13,794,278
)


(14,549,012
)


(19,963,930
)Transfers from mortgage loans held for investment


810,219



3,236,630



3,904,330Other


809,325



711,378



(51,810
)Mortgage loans held for sale at end of year

$
11,998,236


$
27,007,382


$
19,521,566    105




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Organization
    and Operations               106




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        2.
    Significant
    Accounting Policies  Consolidation
    and Basis of Presentation          Use of
    Estimates and Assumptions   107




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Allowance
    for Loan Losses  Accounting
    by Creditors for Impairment of a Loan Accounting for
    Contingencies
    charged-off
  Mortgage
    Servicing Rights     108




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Accounting for
    Servicing of Financial Assets
        Securitizations
    and Interests that Continue to be Held by the Company  mortgage-backed interest-only principal-only
   109




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    risk-adjusted
  (on-balance off-balance on-balance
   110




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Cash and
    Cash Equivalents    Mortgage
    Loans Held for Sale    Investment
    Securities   111




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  available-for-sale
  Mortgage
    Loans Held for Investment and Lending Receivables        Accounts
    Receivable    Goodwill  two-step
 112




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Disclosures about Segments
    of an Enterprise and Related Information
  Foreclosed
    Assets    Property
    and Equipment  straight-line straight-line
  Derivative
    Instruments and Hedging Activities  Accounting for Derivative Instruments and
    Hedging Activities
 113




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Loan
    Commitments  Application of
    Accounting Principles to Loan Commitments
  Liability
    for Assets Sold with Recourse    Reinsurance
    Arrangements   114




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Income
    Taxes    Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
      Reclassifications    Recently
    Issued Accounting Standards  Statement of Financial Accounting Standards
    No. 157 Fair Value Measurements
 115




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Statement of Financial Accounting Standards
    No. 158 Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
  Statement of Financial Accounting Standards
    No. 159 The
    Fair Value Option for Financial Assets and Financial Liabilities
  Statement of Financial Accounting Standards
    No. 141(R) Business
    Combinations.
  Statement of Financial Accounting Standards
    No. 160 Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51
 116




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    FASB Staff Position (FSP)
    FIN No. 39-1 FIN No. 39-1, Amendment of FASB Interpretation No. 39. FIN No. 39-1 FIN No. 39-1
  FSP
    FIN No. 48-1 FIN No. 48-1, Definition of Settlement in FASB Interpretation No. 48. FIN No. 48-1 FIN No. 48-1 Accounting for Uncertainty in Income
    Taxes (FIN No. 48) FIN No. 48-1
  SEC Staff Accounting
    Bulletin No. 109 Written Loan Commitments Recorded at Fair Value Through
    Earnings Application of Accounting Principles to Loan Commitments
    FSP
    FAS No. 140-3 No. 140-3, Accounting for Transfers of Financial Assets and Repurchase
    Financing Transactions, FAS No. 140-3
 117




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  3.
    Mortgage
    Loans Held for Sale    December 31,

2007


2006(In thousands)Prime conforming

$
3,054,747


$
2,171,782Prime non-conforming


5,376,538



12,606,382Nonprime


2,026,078



8,548,213Prime second-lien


723,369



2,991,471Government


817,504



689,534Total

$
11,998,236


$
27,007,382       4.
    Trading
    Securities    December 31,

2007


2006(In thousands)U.S. Treasury securities

$
257,320


$
400,962Mortgage and asset-backed securities


905,292



1,748,328Residual interests


684,701



1,018,895Principal-only securities


46,390



956,741Interest-only securities


181,138



369,484Other


15,849



67,663Total

$
2,090,690


$
4,562,073Net unrealized losses

$
(635,140
)

$
(10,118
)Pledged as collateral

$
751,575


$
3,681,269        118




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  5.
    Mortgage
    Loans Held for Investment    December 31,

2007


2006(In thousands)Prime conforming

$
1,070,890


$
988,448Prime non-conforming


16,709,924



9,060,112Nonprime


16,904,428



52,340,739Prime second-lien


7,292,788



7,046,301Government


184,566



712Total


42,162,596



69,436,312Less allowance for loan losses


(832,274
)


(1,508,361
)Total, net

$
41,330,322


$
67,927,951            119




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    California


17.4
%United Kingdom


9.2Central Europe


7.4Florida


6.4Michigan


3.9All other


55.7100.0
%       30-year 15-year 30-year 15-year
   120




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    6.
    Lending
    Receivables    December 31,

2007


2006(In thousands)Construction:Residential

$
2,844,647


$
2,697,171Residential mezzanine


357,512



380,830Resort


277,052



133,716Total construction


3,479,211



3,211,717Warehouse


1,669,583



8,804,803Commercial business


2,614,692



1,699,694Healthcare






761,983Commercial real estate


1,031,937



335,938Other


96,298



112,610Total


8,891,721



14,926,745Less allowance for loan losses


(485,226
)


(396,641
)Total, net

$
8,406,495


$
14,530,104       Mexico


24.8
%California


11.6United Kingdom


7.8Florida


7.1Arizona


5.2All other


43.5100.0
%    121




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        December 31,

2007


2006(In thousands)Lending receivables considered to be impaired without allowance

$



$
2,779Lending receivables considered to be impaired with allowance


531,788



1,409,367Total loans considered to be impaired

$
531,788


$
1,412,146Allowance for loan losses on impaired lending receivables

$
300,252


$
213,631Impaired lending receivables which are on nonaccrual status

$
528,814


$
1,386,581Average balance of impaired lending receivables during the year

$
270,697


$
310,696        122




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  7.
    Allowance
    for Loan Losses    Mortgage LoansHeld for


LendingInvestment


Receivables


Other


Total(In thousands)Balance at January 1, 2005

$
872,954


$
141,723


$



$
1,014,677Provision for loan losses


599,785



52,011







651,796Charge-offs


(443,815
)


(6,792
)






(450,607
)Recoveries


36,982



465







37,447Balance at December 31, 2005


1,065,906



187,407







1,253,313Consolidation of IB Finance Holding Company LLC










25,667



25,667Provision for loan losses


1,116,350



217,310



424



1,334,084Charge-offs


(720,783
)


(9,287
)


(463
)


(730,533
)Recoveries


46,888



1,211



129



48,228Balance at December 31, 2006


1,508,361



396,641



25,757



1,930,759Provision for loan losses


2,088,470



492,512



14,161



2,595,143Charge-offs


(1,281,955
)


(413,241
)


(11,953
)


(1,707,149
)Reduction of allowance due to deconsolidation (See Note 5)


(1,539,846
)










(1,539,846
)Recoveries


57,244



9,314



5,331



71,889Balance at December 31, 2007

$
832,274


$
485,226


$
33,296


$
1,350,796     8.
    Mortgage
    Servicing Rights   123




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Mortgage Servicing Rights Managed ByGMAC


GMAC-RFC


InternationalResidential


Holding


BusinessHolding


(Domestic Only)


Group


Eliminations


Total(In thousands)Estimated fair value at January 1, 2006

$
3,056,446


$
959,708


$
4,850


$



$
4,021,004Additions obtained from sales of mortgage loans


1,152,727



561,141



9,027







1,722,895Additions from purchases of servicing assets


11,780















11,780Changes in fair value:Due to changes in valuation inputs or assumptions used in the
    valuation model


(5,750
)


(37,469
)


(414
)






(43,633
)Other changes in fair value


(462,470
)


(311,797
)


(1,453
)






(775,720
)Other changes that affect the balance






(6,998
)


733







(6,265
)Estimated fair value at December 31, 2006


3,752,733



1,164,585



12,743







4,930,061Additions obtained from sales of mortgage loans(a)


1,223,899



366,189



6,455







1,596,543Additions from purchases of servicing assets


12,483











(9,291
)


3,192Subtractions from disposals


(563,709
)














(563,709
)Changes in fair value:Due to changes in valuation inputs or assumptions used in the
    valuation model


(672,371
)


(13,281
)


(1,352
)






(687,004
)Other changes in fair value


(238,364
)


(333,483
)


(678
)






(572,525
)Other changes that affect the balance






(13,345
)


358



9,291



(3,696
)Estimated fair value at December 31, 2007

$
3,514,671


$
1,170,665


$
17,526


$



$
4,702,862     and/or
 124




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  clean-up
    GMAC


GMAC-RFC


InternationalResidential


Holding


BusinessDecember 31, 2007

Holding


(Domestic Only)


Group(Dollars in thousands)Weighted average prepayment speed


18.6
%


27.3
%


8.3
%Range of prepayment speeds (constant prepayment rate)


11.7-49.1
%


17.6-44.9
%


0.0-28.4
%Impact on fair value of 10% adverse change

$
(205,857
)

$
(59,134
)

$
(416
)Impact on fair value of 20% adverse change


(391,479
)


(108,907
)


(737
)Weighted average discount rate


8.4
%


11.4
%


11.7
%Range of discount rates


5.0-24.6
%


6.2-29.0
%


8.0-13.0
%Impact on fair value of 10% adverse change

$
(47,592
)

$
(17,901
)

$
(552
)Impact on fair value of 20% adverse change


(83,442
)


(35,166
)


(995
)    GMAC


GMAC-RFC


InternationalResidential


Holding


BusinessDecember 31, 2006

Holding


(Domestic Only)


Group(Dollars in thousands)Weighted average prepayment speed


15.6
%


28.8
%


9.9
%Range of prepayment speeds (constant prepayment rate)


14.0-43.2
%


13.8-38.3
%


1.0-19.6
%Impact on fair value of 10% adverse change

$
(192,036
)

$
(34,397
)

$
(283
)Impact on fair value of 20% adverse change


(350,944
)


(61,686
)


(572
)Weighted average discount rate


8.5
%


12.5
%


8.0
%Range of discount rates


8.2-13.0
%


12.0-14.0
%


8.0-8.0
%Impact on fair value of 10% adverse change

$
(36,090
)

$
(30,933
)

$
(271
)Impact on fair value of 20% adverse change


(71,237
)


(60,011
)


(530
)       GMAC


GMAC-RFC


InternationalResidential


Holding


BusinessYear Ended December 31, 2007

Holding


(Domestic Only)


GroupRange of prepayment speeds (constant prepayment rate)


9.6-45.2
%


12.0-50.2
%


0.4-14.1
%Range of discount rates


5.0-24.6
%


6.1-27.4
%


8.0-12.5
%    125




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  GMAC


GMAC-RFC


InternationalResidential


Holding


BusinessYear Ended December 31, 2006

Holding


(domestic only)


GroupRange of prepayment speeds (constant prepayment rate)


11.6-44.5
%


8.4- 40.1
%


1.0-10.4
%Range of discount rates


8.1-13.5
%


11.0- 29.0
%


8.0-8.0
%   and/or
    2007


2006(In thousands)Contractual servicing fees (net of guarantee fees and including
    subservicing)

$
1,516,501


$
1,326,896Late fees


163,950



130,023Ancillary fees


109,952



126,755Total

$
1,790,403


$
1,583,674      126




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  9.
    Investments
    In Real Estate and Other    December 31,

2007


2006(In thousands)Residential real estate:Acquired through sale and leaseback agreements

$
636,228


$
1,045,328Construction in progress


114,064



152,712Real estate held for development


376,116



813,6541,126,408



2,011,694Accumulated depreciation


(16,008
)


(13,426
)Total residential real estate


1,110,400



1,998,268Other investments:Investments in partnerships


4,724



18,199Investments in real estate projects


418,554



410,490Other equity investments


96,039



195,192Total

$
1,629,717


$
2,622,149       California


25.9
%Florida


19.9Texas


11.2Nevada


11.0Minnesota


6.1All other


25.9Total


100.0
%     Year Ending December 31,(In thousands)2008

$
44,7302009


7042010


1462011


2012


Thereafter


$
45,580    127




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Year Ended December 31,

2007


2006


2005(In thousands)Investments in partnerships

$
(5,712
)

$
6,739


$
24,077Investments in real estate projects


41,722



26,625



36,822Other equity investments


(104,419
)


45,365



95,721   10.
    Goodwill    Residential


Business


InternationalFinance


Capital


BusinessGroup


Group


Group


Total(In thousands)Balance at January 1, 2006

$
381,235


$
10,748


$
67,785


$
459,768Additions


596







3,304



3,900Disposals














Foreign currency translation adjustments










7,795



7,795Balance at December 31, 2006

$
381,831


$
10,748


$
78,884


$
471,463Additions


22











22Impairment losses


(381,853
)


(8,363
)


(64,612
)


(454,828
)Foreign currency translation adjustments










(14,272
)


(14,272
)Disposal of healthcare business (See Note 23)






(2,385
)






(2,385
)Balance at December 31, 2007

$



$



$



$
    128




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  11.
    Other
    Assets    December 31,


December 31,2007


2006(In thousands)Property and equipment at cost

$
761,038


$
754,183Accumulated depreciation


(539,586
)


(521,451
)Net property and equipment


221,452



232,732Automobile loans and lease financing, net


3,103,028



2,470,395Investments in automobile operating leases, net


2,522,027



2,026,353Available for sale securities


275,671



229,469Repossessed and foreclosed real estate


1,165,293



1,073,938Other assets


3,141,045



2,922,702Total other assets

$
10,428,516


$
8,955,589     12.
    Borrowings    Weighted-AverageInterest RatesDecember 31,

2007


2006


2007


2006(In thousands)Collateralized borrowings in securitization trusts(a)


5.6
%


5.6
%

$
16,145,741


$
53,299,518Other borrowings:Secured aggregation facilities  short-term


6.8



5.6



7,588,253



13,079,221Secured aggregation facilities  long-term(a)


5.4



5.9



813,938



5,866,684Repurchase agreements  short-term


5.6



5.7



3,954,909



10,961,850Repurchase agreements  long-term(a)


5.7



6.8



18,569



543,675Senior unsecured notes(a)(b)


7.6



6.3



14,550,385



12,408,822Subordinated unsecured notes(a)


8.0



7.2



758,321



1,000,000FHLB advances  short-term


4.4







1,050,000



FHLB advances  long-term(a)


5.2



5.0



10,299,000



7,279,000Third-party bank credit facilities  short-term


1.0



5.0



50,000



475,000Third-party bank credit facilities  long-term(a)


6.6



6.1



1,750,000



1,750,000Debt collateralized by mortgage loans


7.0



5.9



1,782,039



3,017,961Servicing advances


5.8



6.0



791,300



728,750Investor custodial funds














131,709Other  short-term


7.3



6.1



2,019,264



1,820,111Other  long-term(a)


6.8



6.0



758,172



817,595Total other borrowings


6.5



5.8



46,184,150



59,880,378Total borrowings


6.3
%


5.7
%

$
62,329,891


$
113,179,896     (a)
    
    Represents borrowings with an original contractual maturity in
    excess of one year.(b)
    
    December 31, 2007 total includes $200.0 million purchased
    and held by GMAC. See Note 23 Related Party Transactions, for
    further details. 129




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      December 31,

2007


2006(In thousands)Cash and cash equivalents

$
1,411,317


$
506,570Mortgage loans held for investment


39,081,151



68,480,110Mortgage loans held for sale


10,436,521



22,833,819Trading securities


751,575



3,639,702Mortgage servicing rights


2,673,771



2,447,084Lending receivables


6,372,760



11,804,708Accounts receivable


1,297,891



951,721Other assets


7,724,872



6,429,825Total assets restricted as collateral

$
69,749,858


$
117,093,539Related secured debt

$
43,982,894


$
96,206,963       December 31,

2007


2006(In thousands)Mortgage loans held for sale

$
2,365,646


$
5,513,015Mortgage loans held for investment


3,958,384



1,667,978Trading securities


426,194



2,945,653Investments in real estate and other


8,597



48,193Total

$
6,758,821


$
10,174,839  130




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ending December 31,(In thousands)2008

$
5,188,6312009


4,314,0912010


5,381,3072011


2,276,2322012


4,714,9112013 and thereafter


7,073,213Long-term principal


28,948,385Unamortized discount


(120,323
)Total long-term debt

$
28,828,062     Collateralized
    borrowings in securitization trusts
      Other
    borrowings
  Secured aggregation facilities
   131




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Repurchase agreements
  Senior unsecured notes 
    FHLB advances
  Third-party bank credit facilities
  Debt collateralized by mortgage loans
 132




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Investor custodial funds
  13.
    Income
    Taxes      Year Ended December 31,

2007


2006


2005(In thousands)Current income tax expense (benefit):Federal

$
(16,277
)

$
(68,574
)

$
317,897State and local


(5,733
)


51,093



48,501Foreign


(133,938
)


73,752



13,376(155,948
)


56,271



379,774Deferred income tax expense (benefit):Federal


218,125



(240,649
)


132,971State and local


12,526



(75,380
)


49,981Foreign


(54,913
)


(29,415
)


43,574175,738



(345,444
)


226,526Total income tax expense (benefit)

$
19,790


$
(289,173
)

$
606,300  133




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,

2007


2006(In thousands)Deferred tax assets:Allowance for loan losses

$
33,753


$
7,173Accruals not currently deductible


1,177



6,543Basis difference in mortgage loans and securities


24,658



48Securitization activity


535



18,242Loss carryforwards


66,226



52,926Depreciation


7,038



8,168Available for sale securities






32Other


2,183



934Gross deferred tax assets


135,570



94,066Valuation allowance


(20,126
)


Net deferred tax assets


115,444



94,066Deferred tax liabilities:Mortgage servicing rights


13,922



15,568Basis difference in mortgage loans and securities






48,418Securitization activity






496Cash flow hedges






137Amortization of intangibles


2,581



2,715Expenses deductible when paid


515



5,015Auto lease activity


295,472



77,031Available for sale securities


297



Other


15



446Total deferred tax liabilities


312,802



149,826Net deferred tax liability

$
(197,358
)

$
(55,760
)      134




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Accounting for Uncertainty in Income Taxes,
  (In thousands)Balance at January 1, 2007

$
9,210Additions for tax positions of prior years


1,226Reductions for tax positions of prior years


(525
)Additions based on tax positions related to the current year


Reductions based on tax positions related to the current year


Settlements


(174
)Lapses in statutes of limitations


Balance at December 31, 2007

$
9,737            135




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        2007


2006


2005Year Ended December 31,

Amount


Percent


Amount


Percent


Amount


Percent(Dollars in thousands)Computed income tax expense

$
(1,481,381
)


35.0
%

$
148,951



35.0
%

$
569,424



35.0
%State taxes, net of federal benefit if applicable


(6,410
)


0.2



46,887



11.0



64,942



4.0LLC losses not subject to federal tax


1,328,789



(31.4
)


60,226



14.2







0.0LLC conversion deferred tax write-off






0.0



(523,168
)


(122.8
)






0.0Impact of foreign operations


130,079



(3.1
)


(23,316
)


(5.6
)


(18,565
)


(1.1
)Valuation allowance


20,126



(0.5
)






0.0







0.0Other, net


28,587



(0.7
)


1,247



0.3



(9,501
)


(0.6
)Total income tax expense (benefit)

$
19,790



(0.5
)%

$
(289,173
)


(67.9
)%

$
606,300



37.3
%   14.
    Deposit
    Liabilities    December 31,

2007


2006(In thousands)Non-interest bearing deposits

$
1,569,517


$
1,358,630NOW and money-market checking accounts


3,664,168



1,806,156Certificates of deposit


8,116,159



6,686,240Total

$
13,349,844


$
9,851,026      136




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ending December 31,(In thousands)2008

$
4,822,9172009


1,235,3642010


413,2782011


114,6992012


13,5242013 and thereafter


Total brokered deposits

$
6,599,782   15.
    Employee
    Benefit Plans      Year Ended December 31,

2007


2006


2005(In thousands)Defined benefit plan

$
(7,040
)

$
(30,299
)

$
17,139Defined contribution plan


41,150



25,601



22,398Total

$
34,110


$
(4,698
)

$
39,537     Year Ended December 31,

2007


2006(In thousands)Benefit obligation

$
210,000


$
202,000Fair value of plan assets


267,200



240,500Funded status

$
57,200


$
38,500     December 31,



December 31,2007 Prior to

SFAS No. 158

2007 afterSFAS No. 158

Adjustments

SFAS No. 158(In thousands)Other assets

$
36,500


$
20,700


$
57,200Accumulated other comprehensive income


79,829



20,700



100,529  137




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ended December 31,

2007


2006Discount rate


6.00
%


5.75
%Expected long-term return on plan assets


8.75
%


8.75
%Rate of compensation increase


5.00
%


5.38
%   16.
    Off-Balance
    Sheet Securitization Transactions        PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageYear Ended December 31, 2007

Mortgage Loans


Loans


Loans


LoansPrepayment speeds


0.6-32.9
%


18.2-31.9
%


12.0-43.4
%


15.0
%Weighted average life (years)


5.6-14.0



1.9-3.4



1.7-3.0



1.1Expected credit losses


0.0-4.1
%


1.8-14.5
%


1.0-13.2
%


4.8
%Discount rate


4.3-23.8
%


12.8-32.6
%


5.0-32.0
%


6.5
%   PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageYear Ended December 31, 2006

Mortgage Loans


Loans


Loans


LoansPrepayment speeds


0.9-22.0
%


0.0-90.0
%


31.0-44.2
%


15.0
%Weighted average life (years)


3.6-10.5



2.1-6.6



1.7-2.4



1.1Expected credit losses


0.0-1.6
%


1.2-18.3
%


1.1-2.3
%


4.0
%Discount rate


7.8-25.0
%


12.5-16.5
%


11.7-12.5
%


7.0
%  138




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageYear Ended December 31, 2007

Mortgage Loans


Loans


Loans


Loans(In millions)Cash inflows:Proceeds from new securitizations

$
25,746.4


$
6,732.9


$
3,292.9


$
88.7Servicing fees received


233.4



236.7



74.1



0.5Other cash flows received on interests that continue to be held
    by the Company


214.9



52.6



115.3



17.7Proceeds from collections reinvested in revolving securitizations






79.3



42.3



Repayments of servicing advances


492.5



487.2



7.3



Cash outflows:Servicing advances


(500.5
)


(511.4
)


(11.3
)


Purchase obligations and options:Mortgage loans under conditional call option














(147.5
)Representations and warranties obligations


(241.2
)


(168.6
)


(47.4
)


Administor or servicer actions






(0.4
)


(53.7
)


Asset performance conditional calls


(428.1
)


(166.4
)


(12.3
)


Clean-up
    calls






(243.8
)


(10.0
)


Net cash flow

$
25,517.4


$
6,498.1


$
3,397.2


$
(40.6
)   PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageYear Ended December 31, 2006

Mortgage Loans


Loans


Loans


Loans(In millions)Cash inflows:Proceeds from new securitizations

$
28,361.2


$
30,612.0


$
6,655.0


$
58.4Servicing fees received


221.8



192.6



65.0



0.6Other cash flows received on interests that continue to be held
    by the Company


154.4



297.2



122.9



12.4Repayments of servicing advances


461.9



709.9



27.6



Cash outflows:Servicing advances


(490.5
)


(773.0
)


(1.1
)


Purchase obligations and options:Mortgage loans under conditional call option














(20.0
)Representations and warranties obligations


(55.4
)


(38.2
)


(0.4
)


Asset performance conditional calls


(33.9
)


(37.5
)


(10.1
)


Clean-up
    calls


(23.2
)


(939.9
)


(91.9
)


Administrator or servicer actions










(59.5
)


Net cash flow

$
28,596.3


$
30,023.1


$
6,707.5


$
51.4   139




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageYear Ended December 31, 2005

Mortgage Loans


Loans


Loans


Loans(In millions)Cash inflows:Proceeds from new securitizations

$
27,548.2


$
9,311.6


$
5,071.3


$
56.1Servicing fees received


135.2



69.0



40.0



0.8Other cash flows received on interests that continue to be held
    by the Company


142.2



285.2



133.0



22.3Repayments of servicing advances


336.3



755.7



22.7



0.7Cash outflows:Servicing advances


(353.5
)


(807.2
)


(2.1
)


(0.6
)Purchase obligations and options:Mortgage loans under conditional call option














(8.5
)Representations and warranties obligations


(10.0
)


(17.6
)


(1.7
)


Asset performance conditional calls


(19.1
)


(50.3
)


(29.9
)


Clean-up
    calls


(118.2
)


(1,889.0
)


(195.2
)


Net cash flow

$
27,661.1


$
7,657.4


$
5,038.1


$
70.8     PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageDecember 31, 2007

Mortgage Loans


Loans


Loans


Loans(Dollars in millions)Carrying amount/fair value of interest securities that continue
    to be held by the Company

$
651.9


$
26.5


$
233.6


$
Prepayment speeds


0.0-36.6
%


5.0-46.0
%


12.0-60.7
%


Impact on fair value of 10% adverse change

$
(21.8
)

$
(1.1
)

$
(3.5
)

$
Impact on fair value of 20% adverse change


(42.8
)


(1.5
)


(5.0
)


Weighted average life (years)


2.2-9.4



1.5-35.5



1.6-2.7



Expected credit losses


0.0-4.9
%


0.3-38.0
%


0.2-25.5
%


Impact on fair value of 10% adverse change

$
(2.5
)

$
(2.8
)

$
(41.3
)

$
Impact on fair value of 20% adverse change


(4.9
)


(4.8
)


(76.6
)


Discount rate


4.4-16.5
%


15.0
%


4.4-33.9
%


Impact on fair value of 10% adverse change

$
(26.5
)

$
(1.2
)

$
(12.6
)

$
Impact on fair value of 20% adverse change


(50.7
)


(2.0
)


(22.8
)


Interest rates on variable and adjustable contracts

Forward benchmark interest rate yield curve plus contractual
    spreadImpact on fair value of 10% adverse change

$
(0.8
)

$
(1.1
)

$
(10.9
)

$
Impact on fair value of 20% adverse change


(1.6
)


(1.2
)


(20.5
)


   140




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  PrimePrime


Nonprime


Second-Lien


GovernmentNon-Conforming


Mortgage


Mortgage


MortgageDecember 31, 2006

Mortgage Loans


Loans


Loans


Loans(Dollars in millions)Carrying amount/fair value of interest securities that continue
    to be held by the Company

$
669.7


$
308.8


$
429.3


$
12.5Prepayment speeds


1.0-28.4
%


0-90.0
%


33.4-51.7
%


15.0
%Impact on fair value of 10% adverse change

$
(31.5
)

$
(2.7
)

$
(20.3
)

$
Impact on fair value of 20% adverse change


(58.9
)


(5.8
)


(37.7
)


Weighted average life (years)


2.7-8.9



1.8-6.5



1.5-2.2



1.1Expected credit losses


0-1.6
%


0.1-12.8
%


0.6-2.6
%


3.6
%Impact on fair value of 10% adverse change

$
(5.0
)

$
(17.8
)

$
(13.4
)

$
(0.4
)Impact on fair value of 20% adverse change


(9.9
)


(32.3
)


(26.7
)


(0.8
)Discount rate


7.5-25.0
%


12.5-43.5
%


13.0-20.0
%


6.5
%Impact on fair value of 10% adverse change

$
(28.2
)

$
(12.0
)

$
(11.1
)

$
(0.1
)Impact on fair value of 20% adverse change


(53.1
)


(18.9
)


(21.6
)


(0.1
)Interest rates on variable and adjustable contracts

Forward benchmark interest rate yield curve plus contractual
    spreadImpact on fair value of 10% adverse change

$



$
(18.7
)

$
(18.3
)

$
(0.7
)Impact on fair value of 20% adverse change






(36.1
)


(36.1
)


(1.4
)       December 31,

2007


2006


2005Prime non-conforming


0.0-4.9
%


0.0-1.6
%


0.0-2.0
%Nonprime


0.3-38.0



0.1-12.8



0.0-16.9Prime second-lien


0.2-25.5



0.6-2.6



0.7-2.8Government


0.0



3.6



4.9  141




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year EndedDecember 31,At December 31, 2007


2007Total Principal


Loans 60 Days or


Net CreditType of Mortgage Loan

Amount of Loans


More Past Due


Losses(In millions)Prime conforming

$
4,126


$
91


$
10Prime non-conforming


119,407



4,639



79Nonprime


46,335



6,547



3,831Prime second-lien


21,708



602



378Government


1,002



481



3Total managed loans(a)


192,578


$
12,360


$
4,301Less:Mortgage loans securitized and sold


138,418Mortgage loans held for sale


11,998Mortgage loans held for investment

$
42,162     (a)
    
    Total managed loans represent loans retained on the balance
    sheet or that have been securitized and sold, excluding
    securitized loans that the Company continues to service but has
    no other continuing involvement.  Year EndedDecember 31,At December 31, 2006


2006Total Principal


Loans 60 Days or


Net CreditType of Mortgage Loan

Amount of Loans


More Past Due


Losses(In millions)Prime conforming

$
3,165


$
53


$
1Prime non-conforming


102,081



1,480



43Nonprime


90,463



12,967



849Prime second-lien


21,463



238



83Government


800



437



5Total managed loans(a)


217,972


$
15,175


$
981Less:Mortgage loans securitized and sold


121,512Mortgage loans held for sale


27,024Mortgage loans held for investment

$
69,436     (a)
    
    Total managed loans represent loans retained on the balance
    sheet or that have been securitized and sold, excluding
    securitized loans that the Company continues to service but has
    no other continuing involvement. 142




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  17.
    Variable
    Interest Entities  Consolidation of Variable Interest
    Entities
  IB Finance Holding Company, LLC
    and/or
    Mortgage Warehouse Funding Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of
    Liabilities
   143




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Warehouse Lending and/or
    Collateralized Debt Obligations (CDO)
      Construction and Real Estate Lending
     144




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Other Relationships
  18.
    Other
    Comprehensive Income    Unrealized Gain











Accumulated(Loss) on


Foreign








OtherAvailable for


Currency


Unrealized Gain


Defined Benefit


ComprehensiveSale


Translation


(Loss) on Cash


Pension Plans Over


IncomeSecurities(a)


Adjustment(b)


Flow Hedges(c)


Funded(d)


(Loss)(In thousands)Balance at January 1, 2005

$
7,767


$
47,535


$
103,704


$



$
159,0062005 net change


(24,451
)


(33,103
)


14,254







(43,300
)Balance at December 31, 2005


(16,684
)


14,432



117,958







115,7062006 net change


18,455



49,225



(51,151
)






16,529Balance at December 31, 2006


1,771



63,657



66,807







132,2352007 net change


1,814



8,298



(62,518
)


20,700



(31,706
)Balance at December 31, 2007

$
3,585


$
71,955


$
4,289


$
20,700


$
100,529     (a)
    
    Represents the after-tax difference between the fair value and
    amortized cost of the available for sale securities portfolio.
    In conjunction with the adoption of SFAS No. 156 on January 1,
    2006, the Company made a one-time reclassification of $927.1
    million of available for sale securities to trading securities
    for securities identified as offsetting the Companys
    exposure to changes in the fair value of surviving assets or
    liabilities. The transfer resulted in $16.7 million of
    unrealized loss being transferred to retained earnings.

(b)
    
    Includes after-tax gains and losses on foreign currency
    translation from operations for which the functional currency is
    other than the U.S. dollar. Net change amounts were net of taxes
    totaling $(0.3), $(0.1) and $0.1 million for the years ended
    December 31, 2007, 2006 and 2005, respectively.(c)
    
    Includes $40.1 million in 2007 net change as a result of
    the discontinuance of the Companys cash flow hedge program.(d)
    
    Includes net of tax impact for the overfunded status of the
    Companys defined benefit plan with the adoption of SFAS
    No. 158 at December 31, 2007. 145




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Year Ended December 31,

Pretax


Tax Effect


Net of Tax(In thousands)2007Available for sale securities:Net unrealized gains arising during the year

$
2,332


$
(340
)

$
1,992Reclassification of net gains included in net income


(178
)






(178
)Net unrealized gains arising during the year, net of
    reclassification adjustment

$
2,154


$
(340
)

$
1,814Cash flow hedges:Net unrealized losses arising during the year

$
(22,375
)

$
8,124


$
(14,251
)Reclassification of net gains included in net income


(60,050
)


11,783



(48,267
)Net unrealized losses arising during the year net of
    reclassification adjustment

$
(82,425
)

$
19,907


$
(62,518
)2006Available for sale securities:Net unrealized gains arising during the year

$
2,557


$
(833
)

$
1,724Reclassification of net losses included in net income


22



(8
)


14Net unrealized gains arising during the year, net of
    reclassification adjustment

$
2,579


$
(841
)

$
1,738Cash flow hedges:Net unrealized losses arising during the year

$
(91,596
)

$
41,992


$
(49,604
)Reclassification of net gains included in net income


(2,375
)


828



(1,547
)Net unrealized losses arising during the year, net of
    reclassification adjustment

$
(93,971
)

$
42,820


$
(51,151
)2005Available for sale securities:Net unrealized losses arising during the year

$
(25,742
)

$
9,010


$
(16,732
)Reclassification of net gains included in net income


(11,780
)


4,061



(7,719
)Net unrealized losses arising during the year, net of
    reclassification adjustment

$
(37,522
)

$
13,071


$
(24,451
)Cash flow hedges:Net unrealized gains arising during the year

$
27,136


$
(8,627
)

$
18,509Reclassification of net gains included in net income


(6,548
)


2,293



(4,255
)Net unrealized gains arising during the year, net of
    reclassification adjustment

$
20,588


$
(6,334
)

$
14,254  146




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  19.
    Fair
    Value of Financial Instruments      2007


2006Carrying


Estimated


Carrying


EstimatedDecember 31,

Amount


Fair Value


Amount


Fair Value(In thousands)AssetsCash and cash equivalents

$
4,415,913


$
4,415,913


$
2,018,847


$
2,018,847Mortgage loans held for sale


11,998,236



12,013,018



27,007,382



27,297,762Trading securities


2,090,690



2,090,690



4,562,073



4,562,073Available for sale securities


275,671



275,671



229,469



229,469Mortgage loans held for investment, net


41,330,322



39,493,965



67,927,951



68,974,164Lending receivables, net


8,406,495



8,277,514



14,530,104



14,531,788Derivatives − asset position


1,465,498



1,465,498



585,341



585,341Other assets


3,724,653



3,595,313



3,248,726



3,195,354LiabilitiesCollateralized borrowings in securitization trusts

$
16,145,741


$
15,401,363


$
53,299,518


$
53,204,062Other borrowings


46,184,150



40,973,617



59,880,378



59,951,118Deposit liabilities


13,349,844



13,436,826



9,851,026



9,829,241Derivatives  liability position


182,687



182,687



384,213



384,213Other liabilities


493,292



493,292



3,792,621



3,792,621  147




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2007


2006Estimated





EstimatedDecember 31,

Notional


Fair Value


Notional


Fair Value(In thousands)Unfunded commitments to extend credit:Home equity lines of credit

$
3,295,384


$



$
3,199,259


$
Warehouse lending receivables


1,733,494







5,815,294



Construction lending receivables


1,658,468







1,683,594



Commercial business lending receivables


1,375,783







1,166,003



Healthcare lending receivables










353,810



Residential construction loans


127,044







351,880



Commitments to provide capital to equity method investees


251,343







264,586



Commitments to originate mortgage loans held for investment


303,017



(9,727
)


2,911



Standby letters of credit


56,224



(107
)


65,264



(203
)Set-aside letters


120,472



(171
)


167,732



(508
)     Cash and cash equivalents, lending receivables and other
    assets and/or
  Mortgage loans held for sale
  Trading and available for sale securities
  Mortgage loans held for investment and/or
  Derivative financial instruments
  Collateralized borrowings
 148




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Other borrowings
  Deposit liabilities
  Other liabilities
  Unfunded commitments to extend credit and commitments to
    provide capital to equity method investees
  Commitments to originate mortgage loans held for investment
  Standby letters of credit and set-aside letters
  20.  Derivative
    Instruments
    Fair
    Value Hedges
    Mortgage Servicing Rights
    Mortgage Loans Held for Sale
 149




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Commitments to Purchase Mortgages
      Senior Unsecured Notes
    Cash
    Flow Hedges
   150




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Derivatives
    Not Designated as Accounting Hedges
      Income
    Statement Presentation
    Year Ended December 31,

2007


2006


2005


Income Statement Classification(In thousands)Fair value hedge ineffectiveness gain (loss):Mortgage servicing rights

$



$



$
56,791


Servicing asset valuation and hedge activitiesMortgage loans held for sale


(716
)


(7,292
)


(22,680
)

Gain on sale of mortgage loansSenior unsecured notes






286



(1,553
)

Gain (loss) on investment securitiesDebt obligations


24,743










Gain (loss) on investment securitiesCash flow hedge ineffectiveness gain (loss):Issuance of collateralized borrowings






102



5,773


Interest expenseTotal

$
24,027


$
(6,904
)

$
38,331     Year Ended December 31,

2007

2006

2005(In thousands)Net gain on fair value hedges excluded from assessment of
    effectiveness (time component)

$



$



$
59,233Expected reclassifications from other comprehensive income to
    earnings in the next 12 months

$
3,705


$
8,543


$
10,716   21.
    Restructuring
    Charges   151




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Liability


Restructuring


Cost Paid


LiabilityBalance at


Charges Through


or Otherwise Settled Through


Balance atOctober 1, 2007


December 31, 2007


December 31, 2007


December 31, 2007(In thousands)Restructuring charges:Employee severance

$



$
58,191


$
(34,543
)

$
23,648Lease terminations and fixed asset write-offs(a)






68,455



(22,721
)


45,734Total

$



$
126,646


$
(57,264
)

$
69,382     (a)
    Includes $22.6 million of non-cash fixed assets write-offs.  22.
    Guarantees,
    Commitments, and Contingencies  Guarantees
    2007


2006Carrying





CarryingMaximum


Value


Maximum


ValueDecember 31,

Liability


of Liability


Liability


of Liability(In thousands)Standby letters of credit

$
56,224


$
107


$
65,264


$
203HLTV and international securitizations


66,834







107,765



Agency loan program


6,004,529







6,390,481



Servicing advances


*



5,181



*



3,211Set-aside letters


120,472



171



167,732



508Repurchase guarantees


135,447



197



204,278



219Credit enhancement guarantees


3,577



67



4,246



66Performance guarantees










3,252



Other


18,176



7,552



47,698



     *
    
    The maximum obligation for servicing advances cannot be
    determined. At any point in time, the maximum obligation would
    be the difference between the amount advanced to the owners of
    the mortgage loans and the amount received from mortgagees.  Standby letters of credit
  HLTV and international securitizations
 152




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Agency loan program
  Servicing advances 
  Third-party debt guarantees
  Set-aside letters
  Repurchase guarantees
  Credit enhancement guarantees
  Performance guarantees
  Other
   153




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Commitments
    and Contingencies
    Year Ending December 31,(In thousands)2008

$
102,7402009


73,3642010


61,1042011


50,6632012


45,0022013 and thereafter


99,796$
432,669         23.  Related
    Party Transactions
         154




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
                       155




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    24.  Mortgage
    Loans Serviced
    Weighted-


Weighted-Unpaid


Weighted-


Average


AverageNumber


Principal


Average


Remaining


Serviceof Loans


Balance


Coupon


Maturity Months


Fees(Dollars in millions)Prime conforming


1,652,933


$
267,511



6.24
%


307



0.41
%Prime non-conforming


295,143



82,260



6.27



315



0.23Government


179,475



19,382



6.42



316



0.36Nonprime


356,421



52,584



9.21



307



0.42Prime second-lien


731,409



31,573



9.10



258



0.31Total


3,215,381


$
453,310     California


19.7
%Florida


6.1United Kingdom


4.3Texas


4.1New Jersey


4.0All other


61.8Total


100.0
%        156




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    25.  Segment
    and Geographic Information
    and/or
      Residential


Business


InternationalFinance


Capital


Business


Corporate andYear Ended December 31,

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)2007Net interest income (expense)

$
855,348


$
96,786


$
87,283


$
(32,380
)

$



$
1,007,037Provision for loan losses


(2,184,727
)


(322,700
)


(72,254
)


(15,462
)






(2,595,143
)Other revenue


674,025



(137,453
)


(350,068
)


1,032,686







1,219,190Total net revenue


(655,354
)


(363,367
)


(335,039
)


984,844







(368,916
)Operating expenses


2,952,679



75,092



476,333



359,500







3,863,604Income (loss) before income tax expense and minority interest


(3,608,033
)


(438,459
)


(811,372
)


625,344







(4,232,520
)Income tax expense (benefit)


151,162



377



(189,075
)


57,326







19,790Income (loss) before minority interest


(3,759,195
)


(438,836
)


(622,297
)


568,018







(4,252,310
)Minority interest














94,028







94,028Net loss

$
(3,759,195
)

$
(438,836
)

$
(622,297
)

$
473,990


$



$
(4,346,338
)Total assets

$
55,527,555


$
5,565,943


$
17,902,973


$
30,505,479


$
(21,311,286
)

$
88,190,664Net interest income (expense) from other segments

$
(623,354
)

$
(284,656
)

$
(148,078
)

$
1,056,088


$



$
   157




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Residential


Business


InternationalFinance


Capital


Business


Corporate andYear Ended December 31,

Group


Group


Group


Other


Eliminations


Consolidated2006Net interest income

$
1,402,334


$
88,778


$
172,161


$
45,541


$



$
1,708,814Provision for loan losses


(1,272,932
)


(28,414
)


(32,383
)


(355
)






(1,334,084
)Other revenue


1,635,589



655,850



322,879



33,461







2,647,779Total net revenue


1,764,991



716,214



462,657



78,647







3,022,509Operating expenses


2,284,599



71,089



245,979



(4,732
)






2,596,935(Loss) income before income tax (benefit) expense  and minority
    interest


(519,608
)


645,125



216,678



83,379







425,574Income tax (benefit) expense


(170,815
)


246,438



46,638



(411,434
)






(289,173
)(Loss) income before minority interest


(348,793
)


398,687



170,040



494,813







714,747Minority interest














9,654







9,654Net (loss) income

$
(348,793
)

$
398,687


$
170,040


$
485,159


$



$
705,093Total assets

$
108,088,470


$
7,476,675


$
13,982,377


$
28,281,859


$
(22,242,562
)

$
135,586,819Net interest income (expense) from other segments

$
(550,408
)

$
(282,214
)

$
(52,207
)

$
884,829


$



$
   Residential


Business


InternationalFinance


Capital


Business


Corporate andYear Ended December 31,

Group


Group


Group


Other


Eliminations


Consolidated2005Net interest income

$
1,617,677


$
147,894


$
152,156


$
7,268


$



$
1,924,995Provision for loan losses


(624,306
)


(25,847
)


(1,678
)


35







(651,796
)Other revenue


2,404,757



280,552



232,068



44,684







2,962,061Total net revenue


3,398,128



402,599



382,546



51,987







4,235,260Operating expenses


2,243,242



81,213



253,298



30,581







2,608,334Income before income tax expense


1,154,886



321,386



129,248



21,406







1,626,926Income tax expense (benefit)


459,839



120,809



39,159



(13,507
)






606,300Net income

$
695,047


$
200,577


$
90,089


$
34,913


$



$
1,020,626Total assets

$
100,632,363


$
5,545,713


$
10,694,661


$
18,956,611


$
(16,944,256
)

$
118,885,092Net interest income (expense) from other segments

$
(305,150
)

$
(144,566
)

$
2,709


$
447,007


$



$
  158




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Long-LivedYear Ended December 31,

Revenue


Assets(In thousands)2007Europe

$
(388,974
)

$
63,600Canada


6,722



15,069Latin America


47,421



2,330Asia Pacific


6,425



5,341Total foreign


(328,406
)


86,340Total domestic


(40,510
)


2,657,139Total

$
(368,916
)

$
2,743,4792006Europe

$
387,936


$
34,679Canada


49,103



8,768Latin America


32,435



1,833Asia Pacific


2,778



1,687Total foreign


472,252



46,967Total domestic


2,550,257



2,212,118Total

$
3,022,509


$
2,259,0852005Europe

$
321,555


$
31,040Canada


35,272



1,084Latin America


99,756



773Asia Pacific


1,207



100Total foreign


457,790



32,997Total domestic


3,777,470



162,830Total

$
4,235,260


$
195,827   26.
    Regulatory
    Matters     159




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Minimum to beActual


Well CapitalizedDecember 31, 2007

Amount


Ratio


Amount


Ratio(Dollars in


(Dollars inmillions)


millions)Total capital (Tier 1 + Tier 2) to risk weighted
    assets

$
3,425.9



16.2
%

$
2,109.6



10.0
%Tier 1 capital to risk weighted assets


3,325.2



15.8
%


1,265.1



6.0
%Tier 1 capital to average assets (leveraged ratio)


3,325.2



11.5
%


1,444.5



5.0
%   Minimum to beActual


Well CapitalizedDecember 31, 2006

Amount


Ratio


Amount


Ratio(Dollars in


(Dollars inmillions)


millions)Total capital (Tier 1 + Tier 2) to risk weighted
    assets

$
2,197.7



15.1
%

$
1,460.2



10.0
%Tier 1 capital to risk weighted assets


2,148.2



14.7
%


876.1



6.0
%Tier 1 capital to average assets (leveraged ratio)


2,148.2



10.7
%


1,599.7



8.0
%       27.
    Supplemental
    Financial Information     160




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2007
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)ASSETSCash and cash equivalents

$
1,894,921


$
210,624


$
2,342,853


$
(32,485
)

$
4,415,913Mortgage loans held for sale






2,650,115



9,384,745



(36,624
)


11,998,236Trading securities






689,244



1,401,446







2,090,690Mortgage loans held for investment, net






4,903,185



36,470,445



(43,308
)


41,330,322Lending receivables, net






491,729



7,914,948



(182
)


8,406,495Mortgage servicing rights






4,565,791



137,071







4,702,862Accounts receivable


19,595



1,924,664



1,793,111



(549,457
)


3,187,913Investments in real estate and other






79,852



1,549,865







1,629,717Goodwill


















Other assets


478,526



7,486,469



7,853,774



(5,390,253
)


10,428,516Investment in and loans to subsidiaries


21,186,294



385,223







(21,571,517
)


Total assets

$
23,579,336


$
23,386,896


$
68,848,258


$
(27,623,826
)

$
88,190,664LIABILITIESBorrowings:Affiliate borrowings

$



$
10,024,360


$
3,981,971


$
(14,006,331
)

$
Collateralized borrowings in securitization trusts










16,145,741







16,145,741Other borrowings


17,058,706



4,603,923



25,065,874



(544,353
)


46,184,150Total borrowings


17,058,706



14,628,283



45,193,586



(14,550,684
)


62,329,891Deposit liabilities










13,482,329



(132,485
)


13,349,844Other liabilities


490,513



3,563,723



6,397,577



(5,310,761
)


5,141,052Total liabilities


17,549,219



18,192,006



65,073,492



(19,993,930
)


80,820,787Minority interest










1,339,760







1,339,760EQUITYCommon stock and paid-in capital










427,671



(427,671
)


Members interest


6,624,344



7,147,771



2,686,606



(9,834,377
)


6,624,344Accumulated deficit


(694,756
)


(2,053,704
)


(758,838
)


2,812,542



(694,756
)Accumulated other comprehensive income


100,529



100,823



79,567



(180,390
)


100,529Total equity


6,030,117



5,194,890



2,435,006



(7,629,896
)


6,030,117Total liabilities, minority interest and equity

$
23,579,336


$
23,386,896


$
68,848,258


$
(27,623,826
)

$
88,190,664  161




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2006
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)ASSETSCash and cash equivalents

$
832,600


$
456,895


$
756,225


$
(26,873
)

$
2,018,847Mortgage loans held for sale






8,064,094



18,944,066



(778
)


27,007,382Trading securities






2,234,692



2,327,381







4,562,073Mortgage loans held for investment, net






2,224,615



65,779,753



(76,417
)


67,927,951Lending receivables, net






2,875,468



11,653,240



1,396



14,530,104Mortgage servicing rights






4,917,319



12,742







4,930,061Accounts receivable


3,450



1,618,758



1,458,948



(519,956
)


2,561,200Investments in real estate and other






124,394



2,497,755







2,622,149Goodwill






218,803



252,660







471,463Other assets


305,541



6,731,222



7,347,829



(5,429,003
)


8,955,589Investment in and loans to subsidiaries


22,107,251



4,328,440







(26,435,691
)


Total assets

$
23,248,842


$
33,794,700


$
111,030,599


$
(32,487,322
)

$
135,586,819LIABILITIESBorrowings:Affiliate borrowings

$



$
12,688,000


$
1,767,326


$
(14,455,326
)

$
Collateralized borrowings in securitization trusts










53,299,518







53,299,518Other borrowings


15,233,823



10,895,543



34,767,610



(1,016,598
)


59,880,378Total borrowings


15,233,823



23,583,543



89,834,454



(15,471,924
)


113,179,896Deposit liabilities










9,892,899



(41,873
)


9,851,026Other liabilities


392,906



2,559,232



6,366,431



(4,944,563
)


4,374,006Total liabilities


15,626,729



26,142,775



106,093,784



(20,458,360
)


127,404,928Minority interest










559,778







559,778EQUITYCommon stock and paid-in capital






1



163,665



(163,666
)


Members interest


3,837,943



4,459,598



2,610,663



(7,070,261
)


3,837,943Retained earnings


3,651,935



3,060,108



1,472,143



(4,532,251
)


3,651,935Accumulated other comprehensive income


132,235



132,218



130,566



(262,784
)


132,235Total equity


7,622,113



7,651,925



4,377,037



(12,028,962
)


7,622,113Total liabilities, minority interest and equity

$
23,248,842


$
33,794,700


$
111,030,599


$
(32,487,322
)

$
135,586,819  162




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    Year Ended December 31, 2007
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)RevenueInterest income

$
1,251,875


$
1,364,991


$
6,125,414


$
(1,174,397
)

$
7,567,883Interest expense


1,222,016



1,214,622



5,322,166



(1,197,958
)


6,560,846Net interest income


29,859



150,369



803,248



23,561



1,007,037Provision for loan losses






814,597



1,784,906



(4,360
)


2,595,143Net interest income (loss) after provision for loan losses


29,859



(664,228
)


(981,658
)


27,921



(1,588,106
)Gain (loss) on sale of mortgage loans, net






(536,005
)


238,464



(34,190
)


(331,731
)Servicing fees






1,747,772



50,425



(7,794
)


1,790,403Servicing asset valuation and hedge activities, net






(537,062
)


(6,589
)






(543,651
)Net servicing fees






1,210,710



43,836



(7,794
)


1,246,752Loss on investment securities, net


(770
)


(362,704
)


(384,356
)






(747,830
)Real estate related revenues






6,461



211,973







218,434Loss on sale of equity investments










(542
)






(542
)Gain on extinguishment of debt


521,088















521,088Loss on foreclosed real estate






(165,023
)


(236,649
)






(401,672
)Automotive operating lease income










510,927







510,927Other income


(1,776
)


64,804



232,109



(91,373
)


203,764Total net revenue


548,401



(445,985
)


(365,896
)


(105,436
)


(368,916
)ExpensesCompensation and benefits






688,677



535,903







1,224,580Professional fees






188,898



65,173







254,071Data processing and telecommunications






140,106



62,140







202,246Advertising


4



82,219



38,018







120,241Occupancy






80,734



65,548







146,282Goodwill impairment






215,378



239,450







454,828Restructuring






119,057



7,589







126,646Depreciation expense on automotive lease income










307,984







307,984Other


4,488



681,732



429,613



(89,107
)


1,026,726Total expenses


4,492



2,196,801



1,751,418



(89,107
)


3,863,604Income (loss) before income tax expense, minority interest and
    equity in net earnings (losses) of subsidiaries


543,909



(2,642,786
)


(2,117,314
)


(16,329
)


(4,232,520
)Income tax expense


2,000



2,376



15,652



(238
)


19,790Income (loss) before minority interest and equity in net
    earnings (losses) of subsidiaries


541,909



(2,645,162
)


(2,132,966
)


(16,091
)


(4,252,310
)Minority interest










94,028







94,028Income (loss) before equity in net earnings (losses) of
    subsidiaries


541,909



(2,645,162
)


(2,226,994
)


(16,091
)


(4,346,338
)Equity in net losses of subsidiaries


(4,888,247
)


(2,440,493
)






7,328,740



Net loss

$
(4,346,338
)

$
(5,085,655
)

$
(2,226,994
)

$
7,312,649


$
(4,346,338
)  163




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    Year Ended December 31, 2006
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)RevenueInterest income

$
919,261


$
1,503,331


$
6,608,713


$
(862,271
)

$
8,169,034Interest expense


916,433



1,059,986



5,390,501



(906,700
)


6,460,220Net interest income


2,828



443,345



1,218,212



44,429



1,708,814Provision for loan losses






286,903



1,049,703



(2,522
)


1,334,084Net interest income after provision for loan losses


2,828



156,442



168,509



46,951



374,730(Loss) gain on sale of mortgage loans, net


(1,283
)


687,199



241,872



(37,572
)


890,216Servicing fees






1,598,017



(6,903
)


(7,440
)


1,583,674Servicing asset valuation and hedge activities, net






(1,098,374
)


(1,858
)






(1,100,232
)Net servicing fees






499,643



(8,761
)


(7,440
)


483,442Gain (loss) on investment securities, net


286



(65,288
)


133,667







68,665Real estate related revenues






54,179



538,861







593,040Gain on sale of equity investments






414,508











414,508Loss on foreclosed real estate






(8,048
)


(47,996
)






(56,044
)Automotive operating lease income










34,438







34,438Other income


2,096



188,221



124,530



(95,333
)


219,514Total net revenue


3,927



1,926,856



1,185,120



(93,394
)


3,022,509ExpensesCompensation and benefits






695,093



511,246







1,206,339Professional fees






216,873



56,183







273,056Data processing and telecommunications






135,916



53,236







189,152Advertising






117,687



35,105







152,792Occupancy






86,270



51,417







137,687Depreciation expense on automotive lease income










19,726







19,726Other


5,253



409,485



308,665



(105,220
)


618,183Total expenses


5,253



1,661,324



1,035,578



(105,220
)


2,596,935(Loss) income before income tax expense and minority interest


(1,326
)


265,532



149,542



11,826



425,574Income tax (benefit) expense


(454
)


(574,759
)


220,849



65,191



(289,173
)(Loss) income before minority interest


(872
)


840,291



(71,307
)


(53,365
)


714,747Minority interest










9,654







9,654(Loss) income before equity in net earnings (losses) of
    subsidiaries


(872
)


840,291



(80,961
)


(53,365
)


705,093Equity in net earnings (losses) of subsidiaries


705,965



(134,326
)






(571,639
)


Net income (loss)

$
705,093


$
705,965


$
(80,961
)

$
(625,004
)

$
705,093  164




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    Year Ended December 31, 2005
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)RevenueInterest income

$
422,721


$
1,133,814


$
4,664,518


$
(423,956
)

$
5,797,097Interest expense


406,437



746,299



3,164,078



(444,712
)


3,872,102Net interest income


16,284



387,515



1,500,440



20,756



1,924,995Provision for loan losses






149,577



512,403



(10,184
)


651,796Net interest income after provision for loan losses


16,284



237,938



988,037



30,940



1,273,199Gain on sale of mortgage loans, net






727,633



339,986



(30,950
)


1,036,669Servicing fees






1,420,086



(1,296
)


(2,510
)


1,416,280Amortization and impairment of servicing rights






(761,674
)


(314
)






(761,988
)Servicing asset valuation and hedge gain, net






17,186











17,186Net servicing fees






675,598



(1,610
)


(2,510
)


671,478(Loss) gain on investment securities, net


(1,553
)


134,859



102,493



563



236,362Real estate related revenues






132,345



575,616







707,961Gain on sale of equity investments










4,213







4,213Gain on foreclosed real estate






13,764



24,988







38,752Other income






179,954



191,083



(104,411
)


266,626Total net revenue


14,731



2,102,091



2,224,806



(106,368
)


4,235,260ExpensesCompensation and benefits






866,030



540,900







1,406,930Professional fees


15



165,688



46,707







212,410Data processing and telecommunications






139,208



60,641







199,849Advertising






131,766



26,922







158,688Occupancy






75,015



46,286







121,301Other


4,677



322,868



299,542



(117,931
)


509,156Total expenses


4,692



1,700,575



1,020,998



(117,931
)


2,608,334Income before income tax expense


10,039



401,516



1,203,808



11,563



1,626,926Income tax expense


3,840



169,775



422,283



10,402



606,300Income before equity in net earnings of subsidiaries


6,199



231,741



781,525



1,161



1,020,626Equity in net earnings of subsidiaries


1,014,427



782,686







(1,797,113
)


Net income

$
1,020,626


$
1,014,427


$
781,525


$
(1,795,952
)

$
1,020,626  165




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    Year Ended December 31, 2007
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

$
198,987


$
(4,418,824
)

$
7,771,129


$
29,129


$
3,580,421CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in lending receivables






1,999,350



3,189,150







5,188,500Originations and purchases of mortgage loans held for investment






(2,320,121
)


(6,321,099
)


50,673



(8,590,547
)Proceeds from sales and repayments of mortgage loans held for
    investment






968,754



15,969,718



(6,567
)


16,931,905Purchases of available for sale securities






(28
)


(71,990
)






(72,018
)Proceeds from sales and repayments of available for sale
    securities






1,564



27,041







28,605Additions to mortgage servicing rights, net






(9,291
)


(3,192
)


9,291



(3,192
)Sale of mortgage servicing rights, net






563,709











563,709Purchases of and advances to investments in real estate and other






(6,802
)


(203,990
)






(210,792
)Proceeds from sales of and returns of investments in real estate
    and other






27,818



821,730







849,548Acquisitions, net of cash acquired










103,743







103,743Payment of capital contribution


(202,595
)


(384,015
)






586,610



Net increase in affiliate lending


(3,662,664
)










3,662,664



Other, net






3,849,180



(2,672,526
)






1,176,654Net cash (used in) provided by investing activities


(3,865,259
)


4,690,118



10,838,585



4,302,671



15,966,115CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in affiliate borrowings






1,031,100



2,631,564



(3,662,664
)


Net decrease in other short-term borrowings


(75,000
)


(6,286,360
)


(6,648,116
)






(13,009,476
)Proceeds from issuance of collateralized borrowings in
    securitization trusts






4,736,243



898,574







5,634,817Repayments of collateralized borrowings in securitization trusts










(15,929,834
)






(15,929,834
)Proceeds from secured aggregation facilities, long-term










12,358,635







12,358,635Repayments of secured aggregation facilities, long-term










(17,411,381
)






(17,411,381
)Proceeds from other long-term borrowings


3,853,195







6,344,575







10,197,770Repayments of other long-term borrowings


(1,240,767
)






(3,951,719
)






(5,192,486
)Payments of debt issuance costs


(12,626
)






(30,744
)






(43,370
)Proceeds from capital contribution


2,000,000



2,595



840,015



(586,610
)


2,256,000Disposal of healthcare business










898,794







898,794Dividends paid










(2,474
)


2,474



Decrease in deposit liabilities










3,221,405



(90,612
)


3,130,793Net cash provided by (used in) financing activities


4,524,802



(516,422
)


(16,780,706
)


(4,337,412
)


(17,109,738
)Effect of foreign exchange rates on cash and cash equivalents


203,791



(1,143
)


(242,380
)






(39,732
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


1,062,321



(246,271
)


1,586,628



(5,612
)


2,397,066CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


832,600



456,895



756,225



(26,873
)


2,018,847CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
1,894,921


$
210,624


$
2,342,853


$
(32,485
)

$
4,415,913              166




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    Year Ended December 31, 2006
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

$
1,282,196


$
(13,581,729
)

$
(5,517,145
)

$
(2,286,994
)

$
(20,103,672
)CASH FLOWS FROM INVESTING ACTIVITIES:Net (increase) decrease in lending receivables






(1,348,836
)


148,416







(1,200,420
)Originations and purchases of mortgage loans held for investment


(59,438
)


(9,553,024
)


(7,109,349
)


1,403,021



(15,318,790
)Proceeds from sales and repayments of mortgage loans held for
    investment






3,276,931



23,320,568



(1,410,856
)


25,186,643Purchases of available for sale securities






(26
)


(54,247
)






(54,273
)Proceeds from sales and repayments of available for sale
    securities






1,825



22,503







24,328Additions to mortgage servicing rights






(11,780
)










(11,780
)Purchase of and advances to investments in real estate and other






(45,757
)


(1,649,345
)






(1,695,102
)Proceeds from sales of and returns of investments in real estate
    and other






637,536



740,674







1,378,210Consolidation of IB Finance Holding Company LLC










251,347







251,347Acquisitions, net of cash acquired










(2,551
)






(2,551
)Payment of capital contribution


(100,000
)


(461,314
)






561,314



Net increase in affiliate lending


(3,998,484
)










3,998,484



Purchase of non-voting interests and additional capital
    contributions in IB Finance Holding Company LLC


(1,463,500
)










1,463,500



Other, net






224,398



756,799



262



981,459Net cash (used in) provided by  investing activities


(5,621,422
)


(7,280,047
)


16,424,815



6,015,725



9,539,071CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in affiliate borrowings


(4,130,000
)


2,259,372



691,650



(3,998,484
)


(5,177,462
)Net increase in other short-term borrowings


75,000



720,965



1,932,223



2,615



2,730,803Proceeds from issuance of collateralized borrowings in
    securitization trusts






19,247,419



70,142







19,317,561Repayments of collateralized borrowings in securitization trusts










(22,605,088
)






(22,605,088
)Proceeds from secured aggregation facilities, long-term










29,071,067







29,071,067Repayments of secured aggregation facilities, long-term










(27,942,989
)






(27,942,989
)Proceeds from other long-term borrowings


8,204,465







6,093,582







14,298,047Repayments of other long-term borrowings










(568,430
)






(568,430
)Payments of debt issuance costs


(46,182
)






(63,498
)






(109,680
)Proceeds from capital contribution






100,000



1,924,814



(2,024,814
)


Dividends paid


(580,752
)


(1,167,252
)


(1,124,700
)


2,291,952



(580,752
)Increase in deposit liabilities










1,695,271



47,607



1,742,878Net cash provided by (used in) financing activities


3,522,531



21,160,504



(10,825,956
)


(3,681,124
)


10,175,955Effect of foreign exchange rates on cash and cash equivalents


22,481







118,259







140,740NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(794,214
)


298,728



199,973



47,607



(247,906
)CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


1,626,814



158,167



556,252



(74,480
)


2,266,753CASH AND CASH EQUIVALENTS AT END OF YEAR

$
832,600


$
456,895


$
756,225


$
(26,873
)

$
2,018,847          167




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    Year Ended December 31, 2005
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

$
20,529


$
(23,247,733
)

$
(2,657,083
)

$
(262,829
)

$
(26,147,116
)CASH FLOWS FROM INVESTING ACTIVITIES:Net (increase) decrease in lending receivables






414,063



(4,388,826
)






(3,974,763
)Originations and purchases of mortgage loans held for investment






(14,818,629
)


(5,347,369
)


84,138



(20,081,860
)Proceeds from sales and repayments of mortgage loans held for
    investment






5,078,443



22,450,215







27,528,658Purchases of available for sale securities






(551,489
)


(47,124
)






(598,613
)Proceeds from sales and repayments of available for sale
    securities






724,436



22,779







747,215Additions to mortgage servicing rights






(263,737
)


(2,852
)






(266,589
)Sales of mortgage servicing rights






207,591











207,591Purchase of and advances to investments in real estate and other






(47,300
)


(1,201,953
)






(1,249,253
)Proceeds from sales of and returns of investments in real estate
    and other






120,757



803,167







923,924Acquisitions, net of cash acquired










(3,988
)






(3,988
)Payment of capital contribution






(39,487
)






39,487



Net (increase) decrease in affiliate lending


(3,477,487
)










3,477,487



Other, net


(4,100
)


156,373



572,426







724,699Net cash (used in) provided by investing activities


(3,481,587
)


(9,018,979
)


12,856,475



3,601,112



3,957,021CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in affiliate borrowings


(1,879,000
)


3,310,972



(841,433
)


(3,418,972
)


(2,828,433
)Net increase in other short-term borrowings






2,052,041



2,193,509



(2,615
)


4,242,935Proceeds from issuance of collateralized borrowings in
    securitization trusts






26,413,355



1,937,191



11,451



28,361,997Repayments of collateralized borrowings in securitization trusts










(22,682,856
)






(22,682,856
)Proceeds from secured aggregation facilities, long-term










7,896,054







7,896,054Repayments of secured aggregation facilities, long-term










(3,157,448
)






(3,157,448
)Proceeds from other long-term borrowings


7,003,053







2,622,226







9,625,279Repayments of other long-term borrowings










(210,000
)






(210,000
)Payments of debt issuance costs


(36,181
)






(85,232
)






(121,413
)Proceeds from capital contribution










39,487



(39,487
)


Dividends paid










(80,000
)


80,000



Increase in deposit liabilities










2,458,334







2,458,334Net cash provided by (used in) financing activities


5,087,872



31,776,368



(9,910,168
)


(3,369,623
)


23,584,449Effect of foreign exchange rates on cash and cash equivalents










(26,684
)






(26,684
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


1,626,814



(490,344
)


262,540



(31,340
)


1,367,670CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR






648,511



293,712



(43,140
)


899,083CASH AND CASH EQUIVALENTS AT END OF YEAR

$
1,626,814


$
158,167


$
556,252


$
(74,480
)

$
2,266,753        168




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  28.
    Quarterly
    Financial Data (Unaudited)  Three Months EndedMarch 31,


June 30,


September 30,


December 31,(In thousands)Year ended December 31, 2007Total net revenue

$
71,685


$
646,111


$
(1,182,900
)

$
96,188Operating expenses


892,431



810,718



1,172,908



987,547Income tax expense (benefit)


70,641



64,988



(119,442
)


3,603Minority interest


19,089



24,401



24,561



25,977Net (loss) income

$
(910,476
)

$
(253,996
)

$
(2,260,927
)

$
(920,939
)Year ended December 31, 2006Total net revenue

$
941,876


$
1,573,832


$
792,641


$
(285,840
)Operating expenses


602,409



695,066



643,670



655,790Income tax expense (benefit)


137,973



330,618



65,538



(823,302
)Minority interest














9,654Net income (loss)

$
201,494


$
548,148


$
83,433


$
(127,982
)  169




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  SUPPLEMENTARY
    FINANCIAL DATA
 SCHEDULE I
     CONDENSED FINANCIAL INFORMATION OF PARENT
    COMPANY
  CONDENSED
    BALANCE SHEET
  December 31,
    2007 and 2006
 (In thousands)
  2007


2006ASSETSCash and cash equivalents

$
1,894,921


$
832,600Accounts receivable


19,595



3,450Other assets


478,526



305,541Investments in and loans to subsidiaries


21,186,294



22,107,251Total assets

$
23,579,336


$
23,248,842LIABILITIESBorrowings

$
17,058,706


$
15,233,823Other liabilities


490,513



392,906Total liabilities


17,549,219



15,626,729EQUITYMembers interest


6,624,344



3,837,943(Accumulated deficit) Retained earnings


(694,756
)


3,651,935Accumulated other comprehensive income


100,529



132,235Total equity


6,030,117



7,622,113Total liabilities and equity

$
23,579,336


$
23,248,842  170




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  SUPPLEMENTARY
    FINANCIAL DATA
 SCHEDULE I
     CONDENSED FINANCIAL INFORMATION OF
    PARENT COMPANY  (Continued)
  CONDENSED
    STATEMENT OF INCOME
  Years
    Ended December 31, 2007, 2006 and 2005
 (In thousands)
  2007


2006


2005RevenueInterest income

$
1,251,875


$
919,261


$
422,721Interest expense


1,222,016



916,433



406,437Net interest income


29,859



2,828



16,284Loss on sale of mortgage loans, net






(1,283
)


(Loss) gain on investment securities, net


(770
)


286



(1,553
)Gain on extinguishment of debt


521,088







Other income


(1,776
)


2,096



Total net revenue


548,401



3,927



14,731ExpensesProfessional fees










15Other


4,492



5,253



4,677Total expenses


4,492



5,253



4,692Income (loss) before income tax expense


543,909



(1,326
)


10,039Income tax expense (benefit)


2,000



(454
)


3,840Income (loss) before equity in net earnings of subsidiaries


541,909



(872
)


6,199Equity in net (losses) earnings of subsidiaries


(4,888,247
)


705,965



1,014,427Net (loss) income

$
(4,346,338
)

$
705,093


$
1,020,626  171




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  SUPPLEMENTARY
    FINANCIAL DATA
 SCHEDULE I
     CONDENSED FINANCIAL INFORMATION OF
    PARENT COMPANY  (Continued)
  CONDENSED
    STATEMENT OF CASH FLOWS
  Years
    Ended December 31, 2007, 2006 and 2005
  2007


2006


2005(In thousands)NET CASH PROVIDED BY OPERATING ACTIVITIES

$
198,987


$
1,282,196


$
20,529CASH FLOWS FROM INVESTING ACTIVITIES:Originations and purchases of mortgage loans held for investment






(59,438
)


Net increase in affiliate lending


(3,662,664
)


(3,998,484
)


(3,477,487
)Purchase of non-voting interests and additional capital
    contributions in IB Finance Holding Company LLC






(1,463,500
)


Payment of capital contribution


(202,595
)


(100,000
)


Other, net










(4,100
)Net cash used in investing activities


(3,865,259
)


(5,621,422
)


(3,481,587
)CASH FLOWS FROM FINANCING ACTIVITIES:Net decrease in affiliate borrowings






(4,130,000
)


(1,879,000
)Net (decrease) increase in other short-term borrowings


(75,000
)


75,000



Proceeds from other long-term borrowings


3,853,195



8,204,465



7,003,053Repayments of other long-term borrowings


(1,240,767
)Payments of debt issuance costs


(12,626
)


(46,182
)


(36,181
)Proceeds from capital contributions


2,000,000Dividends paid






(580,752
)


Net cash provided by financing activities


4,524,802



3,522,531



5,087,872Effect of foreign exchange rates on cash and cash equivalents


203,791



22,481



NET INCREASE (DECREASE) IN CASH AND CASHEQUIVALENTS


1,062,321



(794,214
)


1,626,814CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


832,600



1,626,814



CASH AND CASH EQUIVALENTS AT END OF YEAR

$
1,894,921


$
832,600


$
1,626,814  172




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  SCHEDULE II
    - VALUATION AND QUALIFYING ACCOUNTS
  Column A

Column B


Column C


Column D


Column EAdditionsBalance at


Charged to


Charged to





Balance atBeginning of


Costs and


Other





End ofPeriod


Expenses


Accounts


Deductions(1)


Period(In thousands)Year ended December 31, 2007Allowance for loan losses

$
1,930,759


$
2,595,143


$



$
3,175,106


$
1,350,796Allowance for uncollectible servicing advances


4,545



4,731



5,568



2,852



11,992Allowance for trade and other receivables


8,104



4,412







244



12,272Liability for assets sold with recourse


102,147



258,611







102,674



258,084$
2,045,555


$
2,862,897


$
5,568


$
3,280,876


$
1,633,144Year ended December 31, 2006Allowance for loan losses

$
1,253,313


$
1,334,084


$
25,667


$
682,305


$
1,930,759Allowance for uncollectible servicing advances


4,690



3,405







3,550



4,545Allowance for trade and other receivables


5,432



3,256







584



8,104Liability for assets sold with recourse


37,015



71,868







6,736



102,147$
1,300,450


$
1,412,613


$
25,667


$
693,175


$
2,045,555Year ended December 31, 2005Allowance for loan losses

$
1,014,677


$
651,796


$



$
413,160


$
1,253,313Allowance for uncollectible servicing advances


3,169



3,157







1,636



4,690Allowance for trade and other receivables


6,383



1,305







2,256



5,432Liability for assets sold with recourse


58,835



(8,402
)






13,418



37,015$
1,083,064


$
647,856


$



$
430,470


$
1,300,450     (1)
    
    Actual losses charged against the valuation allowance, net of
    recoveries and reclassification. 173




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##### Table of Contents



Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    Item 9A.
    CONTROLS
    AND PROCEDURES.  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e)
    Remediation
    of a Previously Reported Material Weakness
  Form 10-Qs
      Form 10-K.
 174




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##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
  Form 10-K.
 Item 9A(T).  CONTROLS
    AND PROCEDURES.    Item 9B.
    OTHER
    INFORMATION.   PART III  Item 10.
    DIRECTORS
    AND OFFICERS OF THE REGISTRANT.    Item 11.
    EXECUTIVE
    COMPENSATION.    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.    Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS.    Item 14.  PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.      Year Ended December 31,

2007

2006(in thousands)Audit fees(a)

$
13,550

$
14,045Audit-related fees(b)


111


660Tax fees(c)


532


813All other fees





Total principal accountant fees

$
14,193

$
15,518      (a)
    Audit fees pertain to the audit of our annual
    Consolidated Financial Statements, including reviews of the
    interim financial statements contained in our Quarterly Reports
    on
    Form 10-Q,
    completion of statutory reports, comfort letters to underwriters
    in connection with debt issuances, attest services, consents to
    the incorporation of the PwC audit report in publicly filed
    documents and assistance with and review of documents filed with
    the SEC. 175




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##### Table of Contents



(b)
    Audit-related fees pertain to assurance and related
    services that are traditionally performed by the principal
    accountant, including employee benefit plan audits, due
    diligence related to mergers and acquisitions, accounting
    consultations and audits in connection with proposed or
    consummated acquisitions, internal control reviews, attest
    services that are not required by statute or regulation and
    consultation concerning financial accounting and reporting
    standards  (c)
    Tax fees pertain to services performed for tax
    compliance, tax planning and tax advice, including preparation
    of tax returns and claims for refund and tax payment-planning
    services. Tax planning and advice also includes assistance with
    tax audits and appeals, and tax advice related to specific
    transactions.  pre-approved
     PART IV  Item 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES.   176




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##### Table of Contents



SIGNATURES       By:
    /s/  James
    G. Jones       Signatures

Title/s/  Michael
    E. RossiMichael
    E. Rossi

Chairman and Director/s/  James
    G. JonesJames
    G. Jones

President, Chief Executive Officer and Director/s/  Sanjiv
    KhattriSanjiv
    Khattri

Chief Financial Officer and Director/s/  James
    N. YoungJames
    N. Young

Deputy Chief Financial Officer and
    Principal Accounting Officer/s/  Paul
    T. BossidyPaul
    T. Bossidy

Director/s/  Alvaro
    G. de MolinaAlvaro
    G. de Molina

Director/s/  Eric
    A. FeldsteinEric
    A. Feldstein

Director/s/  Thomas
    JacobThomas
    Jacob

Director/s/  Ronald
    J. KravitRonald
    J. Kravit

Director/s/  Thomas
    C. MelzerThomas
    C. Melzer

Director/s/  David
    C. WalkerDavid
    C. Walker

Director/s/  Linda
    K. ZukauckasLinda
    K. Zukauckas

Director  177




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##### Table of Contents



EXHIBIT
    INDEX  ExhibitNo

Description2
.1

Purchase and Assumption Agreement between GMAC Bank and GMAC
    Automotive Bank, dated November 20, 2006. (Incorporated by
    reference to Exhibit 2.1 to the Registrants Current
    Report on
    Form 8-K,
    filed on November 27, 2006.)2
.2

Equity Purchase Agreement between GMAC LLC and Residential
    Capital, LLC, dated November 20, 2006. (Incorporated by
    reference to Exhibit 2.2 to the Registrants Current
    Report on
    Form 8-K,
    filed on November 27, 2006.)3
.1

Certificate of Formation of Residential Capital, LLC.
    (Incorporated by reference to Exhibit 3.1 to the
    Registrants Current Report on
    Form 8-K,
    filed on October 25, 2006.)3
.2

Certificate of Conversion to Limited Liability Company of
    Residential Capital, LLC. (Incorporated by reference to
    Exhibit 3.2 to the Registrants Current Report on Form
    8-K, filed on October 25, 2006.)3
.3

Limited Liability Company Agreement of Residential Capital, LLC.
    (Incorporated by reference to Exhibit 3.3 to the
    Registrants Current Report on
    Form 8-K,
    filed on October 25, 2006.)3
.4

Certificate of Formation of GMAC Residential Holding Company,
    LLC.3
.5

Limited Liability Company Agreement of GMAC Residential Holding
    Company, LLC.3
.6

Certificate of Formation of GMAC-RFC Holding Company, LLC.3
.7

Limited Liability Company Agreement of GMAC-RFC Holding Company,
    LLC.3
.8

Certificate of Formation of GMAC Mortgage, LLC.3
.9

Limited Liability Company Agreement of GMAC Mortgage, LLC.3
.10

Certificate of Formation of Residential Funding Company, LLC.3
.11

Limited Liability Company Agreement of Residential Funding
    Company, LLC.3
.12

Certificate of Formation of HomeComings Financial, LLC.3
.13

Limited Liability Company Agreement of HomeComings Financial,
    LLC.4
.1

Indenture among Residential Capital Corporation, the guarantors
    party thereto and Deutsche Bank Trust Company Americas, dated
    June 24, 2005. (Incorporated by reference to
    Exhibit 10.3 to the Registrants Registration
    Statement on
    Form S-4
    (File
    No. 333-126640),
    filed on September 20, 2005.)4
.2

Supplemental Indenture among Residential Capital Corporation,
    the guarantors party thereto and Deutsche Bank Trust Company
    Americas, dated June 24, 2005. (Incorporated by reference
    to Exhibit 10.3 to the Registrants Registration
    Statement on
    Form S-4
    (File
    No. 333-126640),
    filed on September 20, 2005.)4
.3

Second Supplemental Indenture among Residential Capital
    Corporation, the guarantors party thereto and Deutsche Bank
    Trust Company Americas, dated November 21, 2005.
    (Incorporated by reference to Exhibit 4.3 to the
    Registrants Annual Report on Form 10-K for the year ended
    December 31, 2005, filed on March 28, 2006.)10
.1

Amended and Restated Operating Agreement between GMAC LLC and
    Residential Capital, LLC, dated November 27, 2006.
    (Incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on November 30, 2006.)10
.2

Subordinated Note Agreement between Residential Capital
    Corporation and General Motors Acceptance Corporation, dated
    June 24, 2005. (Incorporated by reference to
    Exhibit 10.2 to the Registrants Registration
    Statement on
    Form S-4
    (File
    No. 333-126640),
    filed on September 2, 2005.)10
.3

Tax Allocation Agreement between Residential Capital Corporation
    and General Motors Acceptance Corporation, dated June 24,
    2005. (Incorporated by reference to Exhibit 10.3 to the
    Registrants Registration Statement on
    Form S-4
    (File
    No. 333-126640),
    filed on September 20, 2005.)10
.4

Trademark License Agreement among Residential Capital
    Corporation, General Motors Corporation and General Motors
    Acceptance Corporation, dated June 24, 2005. (Incorporated
    by reference to Exhibit 10.4 to the Registrants
    Registration Statement on
    Form S-4
    (File
    No. 333-126640),
    filed on September 2, 2005.) 178




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##### Table of Contents



ExhibitNo

Description10
.5

Termination Agreement terminating Trademark License Agreement
    between Residential Capital, LLC and GMAC LLC, dated
    November 30, 2006. (Incorporated by reference to
    Exhibit 10.3 to the Registrants Current Report on
    Form 8-K,
    filed on November 30, 2006.)10
.6

Intellectual Property Sublicense Agreement between Residential
    Capital, LLC and GMAC LLC, dated November 30, 2006.
    (Incorporated by reference to Exhibit 10.4 to the
    Registrants Current Report on
    Form 8-K,
    filed on November 30, 2006.)10
.7

Amended and Restated Services and Facilities Agreement between
    Residential Capital, LLC and GMAC LLC, dated November 30,
    2006. (Incorporated by reference to Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K,
    filed on November 30, 2006.)10
.8

Revolving Credit Facility among Residential Capital Corporation,
    the several lenders from time to time parties thereto and
    General Motors Acceptance Corporation, as Agent, dated
    June 24, 2005. (Incorporated by reference to
    Exhibit 10.6 to the Registrants Registration
    Statement on
    Form S-4
    (File
    No. 333-126640),
    filed on September 2, 2005.)10
.9

Asset Purchase Agreement between Residential Funding Company,
    LLC, Equity Investments II, LLC and GMAC Commercial Finance LLC,
    dated August 27, 2007. (Incorporated by reference to
    Exhibit 10.1 to the Registrants Report on Form 10-Q
    filed on November 7, 2007.)10
.10

Credit Agreement among Residential Funding company, LLC, the
    several lenders from time to time parties thereto, and GMAC LLC,
    as agent, dated February 21, 200810
.11

Pledge Agreement, dated as of February 21, 2008, among
    Residential Funding Company, LLC and GMAC LLC, as Agent (filed
    as Exhibit A to Exhibit 10.10)10
.12

Promissory Note, dated February 21, 200810
.13

Performance Guarantee, dated February 21, 2008, of Residential
    Capital, LLC in favor of GMAC LLC, as Agent for the Lenders12
.1

Computation of Ratio of Earnings to Fixed Charges.23
.1

Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Principal Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a).31
.2

Certification of Principal Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a).The following exhibit shall not be deemed filed for
    purposes of Section 18 of the Securities Exchange Act of
    1934 or otherwise subject to the liability of that Section. In
    addition Exhibit No. 32.1 shall not be deemed incorporated
    into any filing under the Securities Act of 1933 or the
    Securities Exchange Act of 1934.32
.1

Certification of Principal Executive Officer and Principal
    Financial Officer pursuant to 18 U.S.C. Section 1350.  179