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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549-1004

FORM 10-Q/A

(Amendment No. 1)



|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



| | For the quarterly period ended September 30, 2008, or
| | -----------------------------------------------------



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



| | For 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

(Address of principal executive offices)

(Zip Code)

(952) 857-8700

(Registrants telephone number, including area code)

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90
days.    Yes  þ    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No   ̈

Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act. (Check one):



|                                              |  |                      |  |                          |  |                             
|--------------------------------------------- |  | -------------------- |  | ------------------------ |  | ----------------------------
|Large accelerated filer   ̈                    |  | Accelerated filer   ̈ |  | Non-accelerated filer  þ |  | Smaller reporting company   ̈
|(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  þ

As of September 30, 2008, there were outstanding 1,000 common limited liability company interests of the registrant.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.









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EXPLANATORY NOTE

Residential Capital, LLC (the Company) is filing this Amendment No. 1 on Form 10-Q/A (the Form 10-Q/A) to the Companys Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2008 (the Original Filing), to reflect the inclusion of an additional note to the condensed consolidated financial statements disclosing supplemental financial information for its guarantor and
non-guarantor subsidiaries. See Note 21, Supplemental Financial Information to the condensed consolidated financial statements contained in this Form 10-Q/A.

For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing in its entirety. However, this Form 10-Q/A only amends
Item 1 of Part I of the Original Filing, to include the additional note, and no other information in the Original Filing is amended hereby. In addition, Item 6 of Part II of the Original Filing has been amended to contain
currently dated certifications from the Companys Chief Executive Officer and Chief Financial Officer. The certifications of the Companys Chief Executive Officer and Chief Financial Officer are attached to this Form 10-Q/A as
Exhibits 31.1, 31.2 and 32.

Except for the foregoing amended information, this Form 10-Q/A continues to speak as of the date of the
Original Filing, and the Company has not updated the disclosures contained herein to reflect events that occurred at a later date. Other events occurring after the filing of the Original Filing or other disclosures necessary to reflect subsequent
events have been or will be addressed in the Companys amended Annual Report on Form 10-K/A for the year ended December 31, 2008 and Quarterly Report on Form 10-Q/A for the quarterly periods ended March 31, 2009 and June 30,
2009 which are being filed concurrently with the filing of this Form 10-Q/A, and any reports filed with the SEC subsequent to the date of this filing.



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RESIDENTIAL CAPITAL, LLC

INDEX



|                  |  |                                                                                                              |  |     
|----------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|                  |  |                                                                                                              |  | Page
|                  |  | PART I  FINANCIAL INFORMATION                                                                               |  |     
|Item 1.           |  | Financial Statements (unaudited)                                                                             |  | 4   
|                  |  | Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007                         |  | 4   
|                  |  | Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2008 and 2007  |  | 5   
|                  |  | Condensed Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2008 and 2007 |  | 6   
|                  |  | Condensed Consolidated Statements of Cash Flows for the Nine Months EndedSeptember 30, 2008 and 2007         |  | 7   
|                  |  | Notes to Condensed Consolidated Financial Statements                                                         |  | 9   
|Item 2.           |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 59  
|Item 3.           |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 97  
|Item 4.           |  | Controls and Procedures                                                                                      |  | 100 
|                  |  | PART II  OTHER INFORMATION                                                                                  |  |     
|Item 1.           |  | Legal Proceedings                                                                                            |  | 101 
|Item 1A.          |  | Risk Factors                                                                                                 |  | 103 
|Item 2.           |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                  |  | 119 
|Item 3.           |  | Defaults Upon Senior Securities                                                                              |  | 120 
|Item 4.           |  | Submission of Matters to a Vote of Security Holders                                                          |  | 120 
|Item 5.           |  | Other Information                                                                                            |  | 120 
|Item 6.           |  | Exhibits                                                                                                     |  | 120 
|Signatures        |  | 121                                                                                                         
|Index of Exhibits |  | 122                                                                                                         



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PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

RESIDENTIAL CAPITAL, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



|                                                                                                    |  |                   |            |   |                  |   |            |  
|--------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                    |  | September 30,2008 |            |   | December 31,2007 |  
|                                                                                                    |  | (Unaudited)       |            |   |                  |  
|ASSETS                                                                                              |  |                   |            |   |                  |   |            |  
|Cash and cash equivalents                                                                           |  | $                 | 6,884,843  |   |                  | $ | 4,415,913  |  
|Mortgage loans held for sale                                                                        |  |                   | 4,153,005  |   |                  |   | 11,998,236 |  
|Trading securities                                                                                  |  |                   | 867,590    |   |                  |   | 2,090,690  |  
|Mortgage loans held for investment, net ($2,209,831 at fair value at September 30, 2008)            |  |                   | 28,842,249 |   |                  |   | 41,330,322 |  
|Lending receivables, net                                                                            |  |                   | 6,541,539  |   |                  |   | 8,406,495  |  
|Mortgage servicing rights                                                                           |  |                   | 4,724,561  |   |                  |   | 4,702,862  |  
|Accounts receivable, net                                                                            |  |                   | 3,445,542  |   |                  |   | 3,187,913  |  
|Investments in real estate and other                                                                |  |                   | 681,487    |   |                  |   | 1,629,717  |  
|Other assets                                                                                        |  |                   | 10,374,471 |   |                  |   | 11,657,769 |  
|                                                                                                    |  |                   |            |   |                  |   |            |  
|Total assets                                                                                        |  | $                 | 66,515,287 |   |                  | $ | 89,419,917 |  
|                                                                                                    |  |                   |            |   |                  |   |            |  
|LIABILITIES                                                                                         |  |                   |            |   |                  |   |            |  
|Borrowings:                                                                                         |  |                   |            |   |                  |   |            |  
|Borrowings from parent                                                                              |  | $                 | 3,270,583  |   |                  | $ |           |  
|Borrowings from affiliates                                                                          |  |                   | 874,979    |   |                  |   |           |  
|Collateralized borrowings in securitization trusts ($2,466,006 at fair value at September 30, 2008) |  |                   | 7,008,655  |   |                  |   | 16,145,741 |  
|Other borrowings                                                                                    |  |                   | 28,143,826 |   |                  |   | 46,184,150 |  
|                                                                                                    |  |                   |            |   |                  |   |            |  
|Total borrowings                                                                                    |  |                   | 39,298,043 |   |                  |   | 62,329,891 |  
|Deposit liabilities                                                                                 |  |                   | 18,234,788 |   |                  |   | 13,349,844 |  
|Other liabilities                                                                                   |  |                   | 4,712,526  |   |                  |   | 6,370,305  |  
|                                                                                                    |  |                   |            |   |                  |   |            |  
|Total liabilities                                                                                   |  |                   | 62,245,357 |   |                  |   | 82,050,040 |  
|Minority interest                                                                                   |  |                   | 1,954,495  |   |                  |   | 1,339,760  |  
|                                                                                                    |  |                  
|EQUITY                                                                                              |  |                   |            |   |                  |   |            |  
|Members interest                                                                                   |  |                   | 6,962,487  |   |                  |   | 6,624,344  |  
|Preferred membership interests                                                                      |  |                   | 806,344    |   |                  |   |           |  
|Accumulated deficit                                                                                 |  |                   | (5,480,822 | ) |                  |   | (694,756   | )
|Accumulated other comprehensive income                                                              |  |                   | 27,426     |   |                  |   | 100,529    |  
|                                                                                                    |  |                   |            |   |                  |   |            |  
|Total equity                                                                                        |  |                   | 2,315,435  |   |                  |   | 6,030,117  |  
|                                                                                                    |  |                   |            |   |                  |   |            |  
|Total liabilities, minority interest and equity                                                     |  | $                 | 66,515,287 |   |                  | $ | 89,419,917 |  
|                                                                                                    |  |                   |            |   |                  |   |            |  

The Notes to the Condensed Consolidated Financial Statements are an integral part of these
statements.



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RESIDENTIAL CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME



|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|--------------------------------------------------------- | ---------------------------------- | ------------------------------- | ---------- | ---- | ------------------------------ | - | ---------- | - |  | ---- | ---------- | - |  | - | ---------- | -
|                                                          |                                    | Three Months EndedSeptember 30, |            |      | Nine Months EndedSeptember 30, |  
|                                                          | 2008                               |                                 |            | 2007 |                                |   | 2008       |   |  | 2007 |           
|                                                          | (Unaudited) (Dollars in thousands) |                                
|Revenue                                                   |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Interest income                                           |                                    | $                               | 954,091    |      |                                | $ | 1,886,006  |   |  | $    | 3,315,798  |   |  | $ | 5,989,448  |  
|Automotive operating lease income                         |                                    |                                 | 144,949    |      |                                |   | 135,373    |   |  |      | 440,745    |   |  |   | 369,988    |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Total financing revenue                                   |                                    |                                 | 1,099,040  |      |                                |   | 2,021,379  |   |  |      | 3,756,543  |   |  |   | 6,359,436  |  
|Interest expense                                          |                                    |                                 | 894,505    |      |                                |   | 1,680,746  |   |  |      | 3,041,928  |   |  |   | 5,082,307  |  
|Depreciation expense on automotive operating lease income |                                    |                                 | 86,485     |      |                                |   | 81,616     |   |  |      | 259,146    |   |  |   | 219,373    |  
|Impairment of investment in automotive operating leases   |                                    |                                 |           |      |                                |   |           |   |  |      | 92,035     |   |  |   |           |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Net financing revenue                                     |                                    |                                 | 118,050    |      |                                |   | 259,017    |   |  |      | 363,434    |   |  |   | 1,057,756  |  
|Other revenue                                             |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Loss on mortgage loans, net                               |                                    |                                 | (138,177   | )    |                                |   | (569,589   | ) |  |      | (1,947,678 | ) |  |   | (630,712   | )
|Servicing fees                                            |                                    |                                 | 369,444    |      |                                |   | 451,420    |   |  |      | 1,153,571  |   |  |   | 1,350,741  |  
|Servicing asset valuation and hedge activities, net       |                                    |                                 | (260,822   | )    |                                |   | (123,439   | ) |  |      | (36,169    | ) |  |   | (577,326   | )
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Net servicing fees                                        |                                    |                                 | 108,622    |      |                                |   | 327,981    |   |  |      | 1,117,402  |   |  |   | 773,415    |  
|Loss on investment securities, net                        |                                    |                                 | (41,898    | )    |                                |   | (332,511   | ) |  |      | (575,782   | ) |  |   | (349,051   | )
|Real estate related revenues, net                         |                                    |                                 | (24,970    | )    |                                |   | 23,505     |   |  |      | (34,258    | ) |  |   | 292,393    |  
|Gain on extinguishment of debt                            |                                    |                                 | 42,199     |      |                                |   |           |   |  |      | 1,168,818  |   |  |   |           |  
|Loss on foreclosed real estate                            |                                    |                                 | (49,381    | )    |                                |   | (137,644   | ) |  |      | (209,700   | ) |  |   | (229,822   | )
|Other (loss) income                                       |                                    |                                 | (64,655    | )    |                                |   | 48,938     |   |  |      | (425,429   | ) |  |   | 161,184    |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Total other revenue                                       |                                    |                                 | (168,260   | )    |                                |   | (639,320   | ) |  |      | (906,627   | ) |  |   | 17,407     |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Total net revenue                                         |                                    |                                 | (50,210    | )    |                                |   | (380,303   | ) |  |      | (543,193   | ) |  |   | 1,075,163  |  
|Provision for loan losses                                 |                                    |                                 | 660,882    |      |                                |   | 884,213    |   |  |      | 1,430,203  |   |  |   | 1,759,640  |  
|Non-interest expense                                      |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Compensation and benefits                                 |                                    |                                 | 228,510    |      |                                |   | 306,034    |   |  |      | 740,102    |   |  |   | 990,825    |  
|Professional fees                                         |                                    |                                 | 84,709     |      |                                |   | 57,119     |   |  |      | 310,277    |   |  |   | 172,621    |  
|Data processing and telecommunications                    |                                    |                                 | 36,598     |      |                                |   | 64,126     |   |  |      | 117,776    |   |  |   | 157,492    |  
|Advertising                                               |                                    |                                 | 19,992     |      |                                |   | 29,700     |   |  |      | 56,990     |   |  |   | 95,217     |  
|Occupancy                                                 |                                    |                                 | 28,204     |      |                                |   | 34,345     |   |  |      | 85,414     |   |  |   | 108,320    |  
|Restructuring                                             |                                    |                                 | 72,729     |      |                                |   |           |   |  |      | 110,624    |   |  |   |           |  
|Goodwill impairment                                       |                                    |                                 |           |      |                                |   | 454,828    |   |  |      |           |   |  |   | 454,828    |  
|Other                                                     |                                    |                                 | 688,270    |      |                                |   | 145,140    |   |  |      | 1,100,815  |   |  |   | 677,381    |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Total non-interest expense                                |                                    |                                 | 1,159,012  |      |                                |   | 1,091,292  |   |  |      | 2,521,998  |   |  |   | 2,656,684  |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Loss before income tax expense and minority interest      |                                    |                                 | (1,870,104 | )    |                                |   | (2,355,808 | ) |  |      | (4,495,394 | ) |  |   | (3,341,161 | )
|Income tax expense (benefit)                              |                                    |                                 | 4,932      |      |                                |   | (119,442   | ) |  |      | 88,089     |   |  |   | 16,187     |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Loss before minority interest                             |                                    |                                 | (1,875,036 | )    |                                |   | (2,236,366 | ) |  |      | (4,583,483 | ) |  |   | (3,357,348 | )
|Minority interest                                         |                                    |                                 | 37,135     |      |                                |   | 24,561     |   |  |      | 47,297     |   |  |   | 68,051     |  
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  
|Net loss                                                  |                                    | $                               | (1,912,171 | )    |                                | $ | (2,260,927 | ) |  | $    | (4,630,780 | ) |  | $ | (3,425,399 | )
|                                                          |                                    |                                 |            |      |                                |   |            |   |  |      |            |   |  |   |            |  

The Notes to the Condensed Consolidated Financial Statements are an integral part of these
statements.



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RESIDENTIAL CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Nine Months Ended September 30, 2008 and 2007



|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|--------------------------------------------------------------------------------------- | ---------------------------------- | ---------------- | --------- | ---------------------------- | - | ------------------------------------ |  | - | -------------------------- | - |  | ----------------------------------- | ---------- | - | ----------- | - | ------- | - |  | - | ---------- | -
|                                                                                        |                                    | MembersInterest |           | PreferredMembershipInterests |   | (AccumulatedDeficit)RetainedEarnings |  |   | ComprehensiveIncome (Loss) |   |  | AccumulatedOtherComprehensiveIncome |            |   | TotalEquity |  
|                                                                                        | (Unaudited) (Dollars in thousands) |                 
|Balance at January 1, 2008                                                              |                                    | $                | 6,624,344 |                              | $ |                                     |  | $ | (694,756                   | ) |  |                                     |            |   |             | $ | 100,529 |   |  | $ | 6,030,117  |  
|Cumulative effect of change in accounting principles as of January 1, 2008, net of tax: |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Adoption of Financial Accounting Standards Board No. 157                                |                                    |                  |          |                              |   |                                     |  |   | 23,218                     |   |  |                                     |            |   |             |   |         |   |  |   | 23,218     |  
|Adoption of Financial Accounting Standards Board No. 159                                |                                    |                  |          |                              |   |                                     |  |   | (178,504                   | ) |  |                                     |            |   |             |   |         |   |  |   | (178,504   | )
|Net loss                                                                                |                                    |                  |          |                              |   |                                     |  |   | (4,630,780                 | ) |  | $                                   | (4,630,780 | ) |             |   |         |   |  |   | (4,630,780 | )
|Capital contributions                                                                   |                                    |                  | 338,143   |                              |   | 806,344                              |  |   |                           |   |  |                                     |           |   |             |   |         |   |  |   | 1,144,487  |  
|Other comprehensive income, net of tax:                                                 |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Unrealized loss on available for sale securities                                        |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (2,221     | ) |             |   |         |   |  |   | (2,221     | )
|Foreign currency translation adjustment                                                 |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (53,671    | ) |             |   |         |   |  |   | (53,671    | )
|Unrealized loss on cash flow hedges                                                     |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (4,171     | ) |             |   |         |   |  |   | (4,171     | )
|Pension adjustment Financial Accounting Standards Board No. 158                         |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (13,040    | ) |             |   |         |   |  |   | (13,040    | )
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Other comprehensive loss                                                                |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (73,103    | ) |             |   | (73,103 | ) |  |   |           |  
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Comprehensive loss                                                                      |                                    |                  |          |                              |   |                                     |  |   |                           |   |  | $                                   | (4,703,883 | ) |             |   |         |   |  |   |           |  
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Balance at September 30, 2008                                                           |                                    | $                | 6,962,487 |                              | $ | 806,344                              |  | $ | (5,480,822                 | ) |  |                                     |            |   |             | $ | 27,426  |   |  | $ | 2,315,435  |  
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Balance at January 1, 2007                                                              |                                    | $                | 3,837,943 |                              | $ |                                     |  | $ | 3,651,935                  |   |  |                                     |            |   |             | $ | 132,235 |   |  | $ | 7,622,113  |  
|Cumulative 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                                                                                |                                    |                  |          |                              |   |                                     |  |   | (3,425,399                 | ) |  | $                                   | (3,425,399 | ) |             |   |         |   |  |   | (3,425,399 | )
|Capital contribution                                                                    |                                    |                  | 2,023,741 |                              |   |                                     |  |   |                           |   |  |                                     |           |   |             |   |         |   |  |   | 2,023,741  |  
|Other comprehensive income, net of tax:                                                 |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Unrealized gain on available for sale securities                                        |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | 1,639      |   |             |   |         |   |  |   | 1,639      |  
|Foreign currency translation adjustment                                                 |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | 4,533      |   |             |   |         |   |  |   | 4,533      |  
|Unrealized loss on cash flow hedges                                                     |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (54,719    | ) |             |   |         |   |  |   | (54,719    | )
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Other comprehensive loss                                                                |                                    |                  |          |                              |   |                                     |  |   |                           |   |  |                                     | (48,547    | ) |             |   | (48,547 | ) |  |   |           |  
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Comprehensive loss                                                                      |                                    |                  |          |                              |   |                                     |  |   |                           |   |  | $                                   | (3,473,946 | ) |             |   |         |   |  |   |           |  
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  
|Balance at September 30, 2007                                                           |                                    | $                | 5,861,684 |                              | $ |                                     |  | $ | 226,183                    |   |  |                                     |            |   |             | $ | 83,688  |   |  | $ | 6,171,555  |  
|                                                                                        |                                    |                  |           |                              |   |                                      |  |   |                            |   |  |                                     |            |   |             |   |         |   |  |   |            |  

The Notes to the Condensed Consolidated Financial Statements are an integral part of these
statements.



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RESIDENTIAL CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2008 and 2007



|                                                                           |  |                                    |             |   |      |   |             |  
|-------------------------------------------------------------------------- |  | ---------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                           |  | 2008                               |             |   | 2007 |  
|                                                                           |  | (Unaudited) (Dollars in thousands) |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                      |  |                                    |             |   |      |   |             |  
|Net loss                                                                   |  | $                                  | (4,630,780  | ) |      | $ | (3,425,399  | )
|Reconciliation of net loss to net cash provided by operating activities:   |  |                                    |             |   |      |   |             |  
|Depreciation and amortization                                              |  |                                    | 382,130     |   |      |   | 704,151     |  
|Provision for loan losses                                                  |  |                                    | 1,430,203   |   |      |   | 1,759,640   |  
|Loss on sale of mortgage loans, net                                        |  |                                    | 1,947,678   |   |      |   | 630,712     |  
|Net loss on sale of other assets                                           |  |                                    | 526,429     |   |      |   | 224,109     |  
|Goodwill impairment                                                        |  |                                    |            |   |      |   | 454,828     |  
|Minority interest                                                          |  |                                    | 47,297      |   |      |   | 68,051      |  
|Gain on extinguishment of debt                                             |  |                                    | (1,168,818  | ) |      |   |            |  
|Loss on investment securities, net                                         |  |                                    | 575,782     |   |      |   | 349,051     |  
|Equity in earnings of investees in excess of cash received                 |  |                                    | (4,329      | ) |      |   | (9,825      | )
|Loss on mortgage servicing rights, net                                     |  |                                    | 529,373     |   |      |   | 521,783     |  
|Originations and purchases of mortgage loans held for sale                 |  |                                    | (48,781,077 | ) |      |   | (96,722,925 | )
|Proceeds from sales and repayments of mortgage loans held for sale         |  |                                    | 54,942,096  |   |      |   | 99,257,968  |  
|Deferred income tax                                                        |  |                                    | 180,390     |   |      |   | (80,990     | )
|Net change in:                                                             |  |                                    |             |   |      |   |             |  
|Trading securities                                                         |  |                                    | 846,650     |   |      |   | 301,914     |  
|Accounts receivable                                                        |  |                                    | (238,209    | ) |      |   | (96,478     | )
|Other assets                                                               |  |                                    | 1,701,594   |   |      |   | 559,850     |  
|Other liabilities                                                          |  |                                    | (1,683,783  | ) |      |   | (2,595,531  | )
|                                                                           |  |                                    |             |   |      |   |             |  
|Net cash provided by operating activities                                  |  |                                    | 6,602,626   |   |      |   | 1,900,909   |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                      |  |                                    |             |   |      |   |             |  
|Net decrease in lending receivables                                        |  |                                    | 443,862     |   |      |   | 5,183,237   |  
|Originations and purchases of mortgage loans held for investment           |  |                                    | (3,635,743  | ) |      |   | (6,733,288  | )
|Proceeds from sales and repayments of mortgage loans held for investment   |  |                                    | 4,780,487   |   |      |   | 14,136,594  |  
|Sales of mortgage servicing rights                                         |  |                                    | 484,291     |   |      |   | 165,557     |  
|Purchase of and advances to investments in real estate and other           |  |                                    | (16,852     | ) |      |   | (197,769    | )
|Proceeds from sales of and returns of investments in real estate and other |  |                                    | 359,903     |   |      |   | 619,105     |  
|Other, net                                                                 |  |                                    | 907,389     |   |      |   | 1,847,370   |  
|                                                                           |  |                                    |             |   |      |   |             |  
|Net cash provided by investing activities                                  |  |                                    | 3,323,337   |   |      |   | 15,020,806  |  

The Notes to the Condensed Consolidated Financial Statements are an integral part of these
statements.



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RESIDENTIAL CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended
September 30, 2008 and 2007  (Continued)



|                                                                                                                 |                                    |      |             |   |      |   |             |  
|---------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                 |                                    | 2008 |             |   | 2007 |  
|                                                                                                                 | (Unaudited) (Dollars in thousands) |     
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                             |                                    |      |             |   |      |   |             |  
|Net increase in borrowings from parent                                                                           |                                    | $    | 4,122,124   |   |      | $ |            |  
|Net increase in affiliate borrowings                                                                             |                                    |      | 874,979     |   |      |   |            |  
|Net decrease in other short-term borrowings                                                                      |                                    |      | (10,918,506 | ) |      |   | (11,663,051 | )
|Proceeds from issuance of collateralized borrowings in securitization trusts                                     |                                    |      |            |   |      |   | 3,937,055   |  
|Repayments of collateralized borrowings in securitization trusts                                                 |                                    |      | (2,407,607  | ) |      |   | (13,467,761 | )
|Proceeds from secured aggregation facilities, long-term                                                          |                                    |      | 160,000     |   |      |   | 12,158,635  |  
|Repayments of secured aggregation facilities, long-term                                                          |                                    |      | (465,114    | ) |      |   | (16,210,746 | )
|Proceeds from other long-term borrowings                                                                         |                                    |      | 2,975,000   |   |      |   | 7,860,770   |  
|Repayments of other long-term borrowings                                                                         |                                    |      | (4,964,210  | ) |      |   | (2,654,264  | )
|Payment of debt issuance costs                                                                                   |                                    |      | (46,252     | ) |      |   | (21,308     | )
|Extinguishment of long-term borrowings                                                                           |                                    |      | (2,060,829  | ) |      |   |            |  
|Proceeds from capital contributions                                                                              |                                    |      | 14,254      |   |      |   | 2,256,000   |  
|Disposal of subsidiary, net.                                                                                     |                                    |      | 163,310     |   |      |   | 898,794     |  
|Increase in deposit liabilities                                                                                  |                                    |      | 4,884,944   |   |      |   | 4,637,235   |  
|                                                                                                                 |                                    |      |             |   |      |   |             |  
|Net cash used in financing activities                                                                            |                                    |      | (7,667,907  | ) |      |   | (12,268,641 | )
|Effect of foreign exchange rates on cash and cash equivalents                                                    |                                    |      | 210,874     |   |      |   | (152,433    | )
|                                                                                                                 |                                    |      |             |   |      |   |             |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                        |                                    |      | 2,468,930   |   |      |   | 4,500,641   |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                                 |                                    |      | 4,415,913   |   |      |   | 2,018,847   |  
|                                                                                                                 |                                    |      |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                                       |                                    | $    | 6,884,843   |   |      | $ | 6,519,488   |  
|                                                                                                                 |                                    |      |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:                                                              |                                    |      |             |   |      |   |             |  
|Mortgage loans held for sale transferred to mortgage loans held for investment                                   |                                    | $    | 842,141     |   |      | $ | 8,376,506   |  
|Mortgage loans held for investment transferred to mortgage loans held for sale                                   |                                    |      | 3,768,346   |   |      |   | 645,877     |  
|Mortgage loans held for investment transferred to other assets                                                   |                                    |      | 1,095,209   |   |      |   | 2,295,243   |  
|Deconsolidation of loans                                                                                         |                                    |      |            |   |      |   | 5,358,653   |  
|Deconsolidation of collateralized borrowings                                                                     |                                    |      |            |   |      |   | 5,440,595   |  
|Originations of mortgage servicing rights from sold loans                                                        |                                    |      | 1,024,503   |   |      |   | 1,303,752   |  
|Capital contributions of lending receivables to the minority interest entity                                     |                                    |      | 387,809     |   |      |   | 264,749     |  
|Capital contributions through forgiveness of unsecured borrowings in exchange for preferred membership interests |                                    |      | 806,344     |   |      |   |            |  
|Capital contributions through forgiveness of unsecured borrowings                                                |                                    |      | 217,537     |   |      |   |            |  
|Capital contribution through forgiveness of borrowings from parent                                               |                                    |      | 101,541     |   |      |   |            |  
|Decrease in mortgage loans held for investment upon initial adoption of SFAS No. 159                             |                                    |      | 3,846,775   |   |      |   |            |  
|Decrease in collateralized borrowings upon initial adoption of SFAS No. 159                                      |                                    |      | 3,667,522   |   |      |   |            |  
|OTHER DISCLOSURES:                                                                                               |                                    |      |             |   |      |   |             |  
|Proceeds from sales and repayments of mortgage loans held for investment originally designated as held for sale  |                                    |      | 1,510,946   |   |      |   | 5,487,750   |  
|Proceeds from capital contribution to the minority interest entity                                               |                                    |      | 14,254      |   |      |   | 256,000     |  

The Notes to the Condensed Consolidated Financial Statements are an integral part of these
statements.



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED
FINANCIAL STATEMENTS

(Unaudited)



|1. | Basis of Presentation
|-- | ---------------------

Residential Capital, LLC
(the Company or ResCap) is a wholly-owned subsidiary of GMAC Mortgage Group, LLC, which is a wholly-owned subsidiary of GMAC LLC (GMAC).

The condensed consolidated financial statements as of September 30, 2008 and for the three- and nine-month periods ended September 30, 2008 and 2007 are unaudited but, in managements opinion, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Certain 2007 amounts have been reclassified to conform to the 2008 presentation. Upon the adoption of Financial Accounting
Standards Board (FASB) Staff Position FIN No. 39-1, Amendment of FASB Interpretation No. 39(FIN No. 39-1), the Company increased December 31, 2007 Other Assets and Other Liabilities equally by approximately $1.2 billion.

The Company has filed an Amendment No. 1 on Form 10-Q/A to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008 to reflect the inclusion of an additional note to the condensed consolidated financial statements disclosing supplemental condensed financial information for its guarantor and non-guarantor subsidiaries. See Note 21,
Supplemental Financial Information to the condensed consolidated financial statements.

Effective for the quarter ended
June 30, 2008, based on changes in the management structure, the Principal Investment Activity business, previously reported as part of the Residential Financial Group segment, is now consolidated into the Companys Corporate and Other
segment. As a result, as required by Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, prior year financial data has been changed to reflect the current period
presentation.

The interim period consolidated financial statements, including the related notes, are condensed and do not include all
disclosures required by accounting principles generally accepted in the United States of America (GAAP). These interim period condensed consolidated financial statements should be read in conjunction with the Companys audited consolidated
financial statements, which are included in the Companys Annual Report on Form 10-K for the year ended December 31, 2007, filed with the United States Securities and Exchange Commission (SEC).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and income and expenses during the reporting period. The Companys estimates and assumptions primarily arise from risks and uncertainties associated with prepayment estimates,
interest rate volatility and credit exposure. In developing the estimates and assumptions, management uses all available evidence. Because of uncertainties associated with estimating the amounts, timing and likelihood of possible outcomes, actual
results could differ from the Companys estimates. The Companys critical accounting estimates include the allowance for loan losses, valuation of mortgage servicing rights, valuation of securitized interests that continue to be held by
the Company and the valuation of certain assets and liabilities in which the Company elected to measure at fair value upon adoption of SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities.

The Company has been negatively impacted by the events and conditions in the mortgage banking industry and the broader economy. The market deterioration
has led to fewer sources of, and significantly reduced levels of, liquidity available to finance the Companys operations. Most recently, the widely publicized credit defaults and/or acquisitions of large financial institutions in the
marketplace has further restricted credit in the United States and international lending markets. The Company is highly leveraged relative to its cash flow and continues to recognize substantial losses resulting in a significant deterioration in
capital. On September 30, 2008, GMAC LLC, the Companys parent, forgave $196.8 million of the Companys debt owed to them which resulted in an



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



increase to the tangible net worth of the same amount. Accordingly, the Companys consolidated tangible net worth, as defined, was $350.0 million as of
September 30, 2008 and remained in compliance with its credit facility financial covenants, among other covenants, requiring the Company to maintain a monthly consolidated tangible net worth of $250.0 million. For this purpose, consolidated
tangible net worth is defined as the Companys consolidated equity, excluding intangible assets and any equity in GMAC Bank to the extent included in the Companys consolidated balance sheet. There continues to be a risk that the Company
will not be able to meet its debt service obligations, default on its financial debt covenants due to insufficient capital and/or be in a negative liquidity position in 2008.

The Company actively manages the Companys liquidity and capital positions and is continually working on initiatives to address the Companys
debt covenant compliance and liquidity needs, including debt maturing in the next twelve months and the identified risks and uncertainties. The accompanying consolidated financial statements of the Company were prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Companys
initiatives include, but are not limited to, the following: continue to work with the Companys key credit providers to optimize all available liquidity options; continued reduction of assets and other restructuring activities; focused
production on government and prime conforming products, explore strategic alternatives such as alliances, joint ventures and other transactions with potential third-parties, pursuit of possible liquidity and capital benefits from the Troubled Asset
Relief Program (the TARP) and continue to explore opportunities for funding and capital support from the Companys parent and affiliates. Most of these initiatives are outside of the Companys control resulting in an increased
uncertainty as to their successful execution. There are currently no substantive binding contracts, agreements or understandings with respect to any particular transaction outside the normal course of business other than those disclosed in Note 18
 Subsequent Events.

The Company remains heavily dependent on its parent and affiliates for funding and capital support and there can
be no assurance that the Companys parent or affiliates will continue such actions. If additional financing or capital were to be obtained from the Companys parent, affiliates and/or third-parties, the terms may contain covenants that
restrict the Companys freedom to operate its business. Additionally, the Companys ability to participate in any governmental investment program or the TARP, either directly or indirectly through the Companys parent, is unknown at
this time.

In light of the Companys liquidity and capital needs, combined with volatile conditions in the marketplace, there is
substantial doubt about the Companys ability to continue as a going concern. If the parent no longer continues to support the capital or liquidity needs of the Company or the Company is unable to successfully execute its other
initiatives, it would have a material adverse effect on the Companys business, results of operations and financial position.

Recently Issued Accounting Standards

Statement of Financial Accounting Standards No. 141(R) In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations(SFAS No. 141(R)), which replaces SFAS No. 141, Business Combinations.SFAS No. 141(R) establishes principles and requirements for
how an acquiring company (1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree,(2) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase, and (3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is
effective for business combinations occurring on or after the beginning of fiscal years beginning on or after December 15, 2008. SFAS No. 141(R), effective for the Company on January 1, 2009,



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



applies to all transactions or other events in which the Company obtains control in one or more businesses. Management will assess each transaction on a
case-by-case basis as they occur.

Statement of Financial Accounting Standards No. 160  In December 2007, the FASB
also issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51 (SFAS No. 160), which requires the ownership interests in subsidiaries held by parties
other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parents equity. It also requires the amount of consolidated net income attributable to
the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008, and early adoption is prohibited. SFAS No. 160 shall be applied prospectively as of the beginning of the fiscal year in which it is initially applied, except for the presentation and disclosure requirements. The
presentation and disclosure requirements shall be applied retrospectively for all periods presented. Management is currently assessing the retrospective impact of adoption and will assess new transactions as they occur.

FASB Staff Position (FSP) FAS No. 140-3 In February 2008, the FASB issued FSP FAS No. 140-3, Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions, which provides a consistent framework for the evaluation of a transfer of a financial asset and subsequent repurchase agreement entered into with the same counterparty. FSP FAS
No. 140-3 provides guidelines that must be met in order for an initial transfer and subsequent repurchase agreement to not be considered linked for evaluation. If the transactions do not meet the specified criteria, they are required to be
accounted for as one transaction. This FSP is effective for fiscal years beginning after November 15, 2008, and shall be applied prospectively to initial transfers and repurchase financings for which the initial transfer is executed on or after
adoption. Management is currently assessing impacts of adoption.

Statement of Financial Accounting Standards No. 161 In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities(SFAS No. 161). SFAS No. 161 requires specific disclosures regarding the location and amounts of derivative
instruments in the financial statements; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect the financial position, financial performance, and cash flows. SFAS
No. 161 is effective for financial statements issued and for fiscal years and interim periods beginning after November 15, 2008; however, early application is permitted. Because SFAS No. 161 impacts the disclosure and not the
accounting treatment for derivative instruments and related hedged items, the adoption of SFAS No. 161 will not have an impact on the Companys consolidated financial condition or results of operations.

Statement of Financial Accounting Standards No. 162 In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles(SFAS No. 162). SFAS No. 162 identifies a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity
with U.S. generally accepted accounting principles for nongovernmental entities (the Hierarchy). The Hierarchy within SFAS No. 162 is consistent with that previously defined in the AICPA Statement on Auditing Standards No. 69,
The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles(SAS No. 69). SFAS No. 162 is effective 60 days following the SEC approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The adoption of SFAS No. 162 will not have a material effect on the Consolidated Financial Statements because the Company has
utilized the guidance within SAS No. 69.



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



FASB Staff Position (FSP) FAS No. 142-3 In April 2008, the FASB directed the FASB
Staff to issue FASB Staff Position (FSP) FAS No. 142-3, Determination of the Useful Life of Intangible Assets. FAS No. 142-3 amends the factors that should be considered in developing a renewal or extension assumptions used for
purposes of determining the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets(SFAS No. 142). FSP FAS No. 142-3 is intended to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other GAAP. FSP FAS No. 142-3 is effective for fiscal years
beginning after December 15, 2008. Earlier application is not permitted. The Company believes the impact of adopting FSP FAS No. 142-3 will not have a material effect on the Consolidated Financial Statements.

FSP FAS No. 133-1 and FIN No. 45-4 In September 2008, the FASB directed the FASB Staff to issue FSP FAS No. 133-1 and FIN
No. 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161.FSP FAS
No. 133-1 and FIN No. 45-4 amends FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activitiesto require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid
instrument. This FSP also amends FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Othersto require an additional disclosure about the
current status of the payment/performance risk of a guarantee. Further, this FSP clarifies the Boards intent about the effective date of FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging. FSP FAS
No. 133-1 and FIN No. 45-4 are effective for annual and interim reporting periods ending after November 15, 2008. In addition, this FSP encourages that the amendments be applied in periods earlier than the effective date to facilitate
comparisons at initial adoption. Because this impacts the disclosure and not the accounting treatment for credit derivative instruments and other guarantees, the adoption of this FSP will not have an impact on the consolidated financial condition or
results of operations.

EITF Issue No. 08-5 In September 2008, The Emerging Issues Task Force (EITF) issued
EITF No. 08-5, Issuers Accounting for Liabilities at Fair Value with a Third-Party Credit Enhancement(Issue No, 08-5). Issue No. 08-5 states that the issuer of debt with a third-party credit enhancement that is
inseparable from the debt instrument shall not include the effect of the credit enhancement in the fair value measurement of the liability. This Issue is effective on a prospective basis for periods beginning after December 15, 2008. The impact
of adopting Issue No. 08-5 is not expected to have a material impact on the consolidated financial condition or results of operations.



|2. | Recently Adopted Accounting Standards
|-- | -------------------------------------

Statement
of Financial Accounting Standards No. 157 On January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements(SFAS No. 157). SFAS No. 157 provides a definition of fair value,
establishes a framework for measuring fair value under GAAP, and requires expanded disclosures about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value and, therefore, does
not expand the use of fair value in any new circumstance. The Company adopted SFAS No. 157 on a prospective basis. SFAS No. 157 required retrospective adoption of the recision of Emerging Issues Task Force issue No. 02-3, Issues
Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities(EITF 02-3) and certain other guidance. The impact of adopting SFAS No. 157 and
the recision of EITF 02-3 on January 1, 2008, was an increase to beginning retained earnings through a cumulative effect of a change in accounting principle of approximately $23.2 million, related to the recognition of day-one gains on
purchased mortgage servicing rights and certain residential loan commitments. Refer to Note 16  Fair Value  for further detail.



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RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



Statement of Financial Accounting Standards No. 159 On January 1, 2008, the
Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities(SFAS No. 159). SFAS No. 159 permits entities to choose to measure at fair value many financial instruments and
certain other items that are not currently required to be measured at fair value. Subsequent changes in fair value for designated items are required to be reported in earnings in the current period. SFAS No. 159 also establishes presentation
and disclosure requirements for similar types of assets and liabilities measured at fair value. The Company elected to measure at fair value certain financial assets and liabilities, including certain collateralized debt obligations and certain
mortgage loans held for investment and debt held in financing securitization structures. The cumulative effect to beginning retained earnings was a decrease through a cumulative effect of a change in accounting principle of approximately $178.5
million on January 1, 2008. Refer to Note 16  Fair Value  for further detail.

SEC Staff Accounting Bulletin
No. 109 On January 1, 2008, the Company adopted Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value Through Earnings(SAB No. 109). SAB No. 109 provides the SEC
staffs views on the accounting for written loan commitments recorded at fair value under GAAP, and revises and rescinds portions of SAB No. 105, Application of Accounting Principles to Loan Commitments(SAB
No. 105). SAB No. 105 provided the views of the SEC staff regarding derivative loan commitments that are accounted for at fair value through earnings pursuant to SFAS No. 133. SAB No. 105 states that in measuring the fair
value of a derivative loan commitment, the staff believed it would be inappropriate to incorporate the expected net future cash flows related to the associated servicing of the loan. SAB No. 109 supersedes SAB No. 105 and expresses the
current view of the SEC staff that, consistent with the guidance in SFAS No. 156, Accounting for Servicing of Financial Assets,and SFAS No. 159, the expected net future cash flows related to the associated servicing of the loan
should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. SAB No. 105 also indicated that the SEC staff believed that internally developed intangible assets (such as customer
relationship intangible assets) should not be recorded as part of the fair value of a derivative loan commitment. SAB No. 109 retains that SEC staff view and broadens its application to all written loan commitments that are accounted for at
fair value through earnings. The prospective adoption of SAB No. 109 did not have a material impact on the Companys consolidated financial condition or results of operations.

FASB Staff Position (FSP) FIN No. 39-1 On January 1, 2008, The Company adopted FIN No. 39-1, Amendment of FASB
Interpretation No. 39. FIN No. 39-1 defines right of setoff and specifies what conditions must be met for a derivative contract to qualify for this right of setoff. It also addresses the applicability of a right of setoff
to derivative instruments and clarifies the circumstances in which it is appropriate to offset amounts recognized for those instruments in the statement of financial position. In addition, this FSP requires an entity to make an election related to
the offsetting of fair value amounts recognized for multiple derivative instruments executed with the same counterparty under a master netting arrangement and fair value amounts recognized for the right to reclaim cash collateral (a receivable) or
the obligation to return cash collateral (a payable) arising from the same master netting arrangement as the derivative instruments without regard to the companys intent to settle the transactions on a net basis. The Company has elected to
present these items gross. Therefore, upon adoption of FSP FIN No. 39-1, the Company increased December 31, 2007, Other assets and Other liabilities equally by approximately $1.2 billion.

FSP FAS 157-3 In October 2008, the FASB directed the FASB Staff to issue FSP FAS No. 157-3,Determining Fair Value of a Financial
Asset in a Market that is Not Active.This FSP applies to financial assets within the scope of all accounting pronouncements that require or permit fair value measurements in accordance with SFAS No. 157. This FSP clarifies the application
of SFAS No. 157 in a market that is not active and provides key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. This FSP is effective upon issuance, including prior
periods for which financial statements



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



have not been issued. Revisions resulting from a change in the valuation technique or its application shall be accounted for as a change in accounting
estimate (FASB Statement No. 154, Accounting Changes and Error Corrections,paragraph 19). The disclosure provisions of Statement No. 154 for a change in accounting estimate are not required for revisions resulting from a change in
valuation technique or its application. The impact of adopting FSP FAS No. 157-3 did not have a material impact on the Companys consolidated financial condition or results of operations.



|3. | Mortgage Loans Held for Sale
|-- | ----------------------------

Residential mortgage
loans held for sale were as follows:



|                                       |  |                   |            |   |                  |   |            |  
|-------------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|                                       |  | September 30,2008 |            |   | December 31,2007 |  
|                                       |  | (In thousands)    |           
|Prime conforming                       |  | $                 | 508,230    |   |                  | $ | 3,072,593  |  
|Prime non-conforming                   |  |                   | 2,648,273  |   |                  |   | 5,537,946  |  
|Prime second-lien                      |  |                   | 7,056      |   |                  |   | 729,323    |  
|Government                             |  |                   | 997,077    |   |                  |   | 816,285    |  
|Nonprime                               |  |                   | 1,204,347  |   |                  |   | 2,090,433  |  
|                                       |  |                   |            |   |                  |   |            |  
|Total unpaid principal balance         |  |                   | 5,364,983  |   |                  |   | 12,246,580 |  
|Net (discounts) premiums               |  |                   | (16,720    | ) |                  |   | (20,064    | )
|Lower of cost or fair value adjustment |  |                   | (1,195,258 | ) |                  |   | (228,280   | )
|                                       |  |                   |            |   |                  |   |            |  
|Total, net                             |  | $                 | 4,153,005  |   |                  | $ | 11,998,236 |  
|                                       |  |                   |            |   |                  |   |            |  

The net carrying values by loan type were as follows:



|                     |  |                   |           |                  |   |           
|-------------------- |  | ----------------- | --------- | ---------------- | - | ----------
|                     |  | September 30,2008 |           | December 31,2007
|                     |  | (In thousands)   
|Prime conforming     |  | $                 | 501,813   |                  | $ | 3,054,747 
|Prime non-conforming |  |                   | 1,891,481 |                  |   | 5,376,538 
|Prime second-lien    |  |                   | 6,380     |                  |   | 723,369   
|Government           |  |                   | 1,008,284 |                  |   | 817,504   
|Nonprime             |  |                   | 745,047   |                  |   | 2,026,078 
|                     |  |                   |           |                  |   |           
|Total, net           |  | $                 | 4,153,005 |                  | $ | 11,998,236
|                     |  |                   |           |                  |   |           

At September 30, 2008, the Company pledged mortgage loans held for sale of $4.2 billion in
unpaid principal balance as collateral for certain borrowings (see Note 11).

At September 30, 2008 and December 31, 2007, the
nonprime mortgage loans held for sale include $1.1 and $2.0 billion in unpaid principal balance of internationally held loans, respectively. In the United Kingdom and certain international jurisdictions, offering a reduced introductory rate to
borrowers is customary market practice and thus the interest rate would not be considered below market.



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CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



For the nine months ended September 30, 2008, the Company reclassified $3.8 billion of mortgage
loans previously categorized as held for investment to mortgage loans held for sale. The Company determined during this period it no longer had the ability to hold these loans for the foreseeable future based on the longest reasonably reliable net
income, liquidity and capital forecast period. As such, the loans transferred were either sold prior to September 30, 2008 or intend to be sold in the near term. The carrying value of these loans was transferred and the loans were revalued
resulting in a loss on mortgage loans of approximately $1.2 billion.



|4. | Trading Securities
|-- | ------------------

Trading securities were as
follows:



|                                                          |  |                      |            |   |                  |   |           |  
|--------------------------------------------------------- |  | -------------------- | ---------- | - | ---------------- | - | --------- | -
|                                                          |  | September 30,2008(a) |            |   | December 31,2007 |  
|                                                          |  | (In thousands)       |           
|Mortgage and asset-backed securities(a)                   |  | $                    | 385,989    |   |                  | $ | 905,292   |  
|U.S. Treasury securities                                  |  |                      |           |   |                  |   | 257,320   |  
|Principal-only securities                                 |  |                      | 16,821     |   |                  |   | 46,390    |  
|Residual interests                                        |  |                      | 346,217    |   |                  |   | 684,701   |  
|Interest-only securities                                  |  |                      | 117,735    |   |                  |   | 181,138   |  
|Other                                                     |  |                      | 828        |   |                  |   | 15,849    |  
|                                                          |  |                      |            |   |                  |   |           |  
|Total                                                     |  | $                    | 867,590    |   |                  | $ | 2,090,690 |  
|                                                          |  |                      |            |   |                  |   |           |  
|Net unrealized losses on securities held at end of period |  | $                    | (1,136,615 | ) |                  | $ | (635,140  | )
|Pledged as collateral                                     |  | $                    | 346,687    |   |                  | $ | 751,575   |  



|(a) | See Note 16  Fair Value  includes $172.3 million of securities held by collateralized debt obligations for which the related debt is recorded at fair value under SFAS
No. 159 as of September 30, 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interests that continue to be held by the Company from off-balance sheet
securitizations are retained in the form of mortgage-backed securities, residual interests, interest-only strips and principal-only strips. At September 30, 2008, trading securities totaling $610.9 million are interests that continue to be held
by the Company from off-balance sheet securitizations.



|5. | Mortgage Loans Held for Investment
|-- | ----------------------------------

Mortgage loans
held for investment were as follows:



|                               |  |                      |            |                  |   |           
|------------------------------ |  | -------------------- | ---------- | ---------------- | - | ----------
|                               |  | September 30,2008(a) |            | December 31,2007
|                               |  | (In thousands)      
|Prime conforming               |  | $                    | 880,308    |                  | $ | 1,099,221 
|Prime non-conforming           |  |                      | 17,294,949 |                  |   | 18,057,688
|Prime second-lien              |  |                      | 6,182,516  |                  |   | 5,928,662 
|Government                     |  |                      | 166,919    |                  |   | 215,507   
|Nonprime                       |  |                      | 12,746,506 |                  |   | 17,747,020
|                               |  |                      |            |                  |   |           
|Total unpaid principal balance |  |                      | 37,271,198 |                  |   | 43,048,098



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|                                   |  |                      |            |   |                  |   |            |  
|---------------------------------- |  | -------------------- | ---------- | - | ---------------- | - | ---------- | -
|                                   |  | September 30,2008(a) |            |   | December 31,2007 |  
|                                   |  | (In thousands)       |           
|Net (discounts) premiums           |  |                      | (525,440   | ) |                  |   | (885,502   | )
|SFAS No. 159 fair value adjustment |  |                      | (6,928,038 | ) |                  |   |           |  
|Allowance for loan losses          |  |                      | (975,471   | ) |                  |   | (832,274   | )
|                                   |  |                      |            |   |                  |   |            |  
|Total, net                         |  | $                    | 28,842,249 |   |                  | $ | 41,330,322 |  
|                                   |  |                      |            |   |                  |   |            |  

The net carrying values by loan type were as follows:



|                     |  |                      |            |                  |   |           
|-------------------- |  | -------------------- | ---------- | ---------------- | - | ----------
|                     |  | September 30,2008(a) |            | December 31,2007
|                     | 
|                     |  | (In thousands)      
|Prime conforming     |  | $                    | 812,329    |                  | $ | 1,064,777 
|Prime non-conforming |  |                      | 16,601,000 |                  |   | 17,943,448
|Prime second-lien    |  |                      | 4,955,327  |                  |   | 5,824,123 
|Government           |  |                      | 142,273    |                  |   | 182,634   
|Nonprime             |  |                      | 6,331,320  |                  |   | 16,315,340
|                     |  |                      |            |                  |   |           
|Total, net           |  | $                    | 28,842,249 |                  | $ | 41,330,322
|                     |  |                      |            |                  |   |           



|(a) | See Note 16  Fair Value  $9.2 billion of total unpaid principal balance is recorded at a fair value of $2.2 billion under SFAS No. 159 as of September 30,
2008.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

At September 30, 2008, the unpaid principal balance of mortgage loans held for investment relating to
securitization transactions accounted for as collateralized borrowings in securitization trusts and pledged as collateral totaled $13.8 billion. The investors in these on-balance sheet securitizations and the securitization trusts have no recourse
to the Companys other assets beyond the loans pledged as collateral. Additionally at September 30, 2008, the Company pledged mortgage loans held for investment of $21.5 billion as collateral for other secured borrowings.

At September 30, 2008, mortgage loans held for investment on nonaccrual status totaled $5.9 billion. If nonaccrual mortgage loans held for investment
had performed in accordance with their original terms, the Company would have recorded additional interest income of approximately $176.9 and $282.6 million during the nine months ended September 30, 2008, and 2007, respectively.

The Company mitigates some of the credit risk associated with holding certain of the mortgage loans held for investment by purchasing mortgage insurance.
Mortgage loans with an unpaid principal balance of $710.0 million at September 30, 2008 have limited protection through this insurance.



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|6. | Lending Receivables
|-- | -------------------

The composition of lending
receivables was as follows:



|                               |  |                   |           |   |                  |   |           |  
|------------------------------ |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                               |  | September 30,2008 |           |   | December 31,2007 |  
|                               | 
|                               |  | (In thousands)    |          
|Construction:                  |  |                   |           |   |                  |   |           |  
|Residential                    |  | $                 | 2,282,770 |   |                  | $ | 2,844,647 |  
|Residential mezzanine          |  |                   | 263,427   |   |                  |   | 357,512   |  
|Resort                         |  |                   |          |   |                  |   | 277,052   |  
|                               |  |                   |           |   |                  |   |           |  
|Total construction             |  |                   | 2,546,197 |   |                  |   | 3,479,211 |  
|Warehouse                      |  |                   | 1,309,090 |   |                  |   | 1,669,583 |  
|Commercial business            |  |                   | 1,644,737 |   |                  |   | 2,614,692 |  
|Commercial real estate         |  |                   | 1,582,708 |   |                  |   | 1,031,937 |  
|Other                          |  |                   | 25,388    |   |                  |   | 96,298    |  
|                               |  |                   |           |   |                  |   |           |  
|Total                          |  |                   | 7,108,120 |   |                  |   | 8,891,721 |  
|Less allowance for loan losses |  |                   | (566,581  | ) |                  |   | (485,226  | )
|                               |  |                   |           |   |                  |   |           |  
|Total, net                     |  | $                 | 6,541,539 |   |                  | $ | 8,406,495 |  
|                               |  |                   |           |   |                  |   |           |  

At September 30, 2008, the Company pledged lending receivables of $6.4 billion unpaid
principal balance as collateral for certain borrowings.

At September 30, 2008, lending receivables on nonaccrual status totaled $1.6
billion. If lending receivables had performed in accordance with their original terms, the Company would have recorded additional interest income of approximately $65.1 and $59.6 million during the nine months ended September 30, 2008 and 2007,
respectively.



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|7. | Allowance for Loan Losses
|-- | -------------------------

The following is a
summary of the activity in the allowance for loan losses for the nine months ended September 30, 2008 and 2007:



|                                                            |                |                                  |           |   |                    |   |          |       |  |   |         |   |  |   |            |  
|----------------------------------------------------------- | -------------- | -------------------------------- | --------- | - | ------------------ | - | -------- | ----- |  | - | ------- | - |  | - | ---------- | -
|                                                            |                | Mortgage LoansHeld forInvestment |           |   | LendingReceivables |   |          | Other |  |   | Total   |  
|                                                            | (In thousands) |                                 
|Balance at January 1, 2008                                  |                | $                                | 832,274   |   |                    | $ | 485,226  |       |  | $ | 33,296  |   |  | $ | 1,350,796  |  
|Reduction to allowance due to fair value option election(a) |                |                                  | (488,982  | ) |                    |   |         |       |  |   |        |   |  |   | (488,982   | )
|Provision for loan losses                                   |                |                                  | 1,157,878 |   |                    |   | 257,295  |       |  |   | 15,030  |   |  |   | 1,430,203  |  
|Charge-offs                                                 |                |                                  | (556,750  | ) |                    |   | (164,924 | )     |  |   | (16,272 | ) |  |   | (737,946   | )
|Recoveries                                                  |                |                                  | 31,051    |   |                    |   | 16,269   |       |  |   | 6,772   |   |  |   | 54,092     |  
|Resort Finance sale to GMAC Commercial Finance(b)           |                |                                  |          |   |                    |   | (27,285  | )     |  |   |        |   |  |   | (27,285    | )
|                                                            |                |                                  |           |   |                    |   |          |       |  |   |         |   |  |   |            |  
|Balance at September 30, 2008                               |                | $                                | 975,471   |   |                    | $ | 566,581  |       |  | $ | 38,826  |   |  | $ | 1,580,878  |  
|                                                            |                |                                  |           |   |                    |   |          |       |  |   |         |   |  |   |            |  
|Balance at January 1, 2007                                  |                | $                                | 1,508,361 |   |                    | $ | 396,641  |       |  | $ | 25,757  |   |  | $ | 1,930,759  |  
|Provision for loan losses                                   |                |                                  | 1,436,316 |   |                    |   | 313,465  |       |  |   | 9,859   |   |  |   | 1,759,640  |  
|Charge-offs                                                 |                |                                  | (943,880  | ) |                    |   | (393,088 | )     |  |   | (8,069  | ) |  |   | (1,345,037 | )
|Recoveries                                                  |                |                                  | 39,894    |   |                    |   | 8,917    |       |  |   | 3,674   |   |  |   | 52,485     |  
|Reduction of allowance due to deconsolidation(c)            |                |                                  | (306,474  | ) |                    |   |         |       |  |   |        |   |  |   | (306,474   | )
|                                                            |                |                                  |           |   |                    |   |          |       |  |   |         |   |  |   |            |  
|Balance at September 30, 2007                               |                | $                                | 1,734,217 |   |                    | $ | 325,935  |       |  | $ | 31,221  |   |  | $ | 2,091,373  |  
|                                                            |                |                                  |           |   |                    |   |          |       |  |   |         |   |  |   |            |  



|(a) | See Note 16  Fair Value  $489.0 million of allowance for loan losses was removed upon SFAS No. 159 election.
|--- | --------------------------------------------------------------------------------------------------------------



|(b) | In the third quarter of 2008, the Resort Finance sale was completed to GMAC Commercial Finance. Upon completion, $27.3 million of allowance for loan loss was removed from the
consolidated balance sheet.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | During the three months ended September 30, 2007, the Company completed the sale of residual cash flows related to a number of on-balance sheet securitizations. The Company
completed the approved actions to cause the securitization trusts to satisfy the qualifying special purpose entity (or QSPE) requirements of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (SFAS No. 140). These actions resulted in the deconsolidation of various securitization trusts and the removal of $5.1 billion in mortgage loans held for investment, net of the related allowance
for loan loss of $306.5 million, $5.2 billion of collateralized borrowings, capitalization of $33.3 million of mortgage servicing rights and gains on sale totaling $88.2 million in the third quarter of 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|8. | Mortgage Servicing Rights
|-- | -------------------------

The Company defines its
classes of mortgage servicing rights based on both the availability of market inputs and the manner in which the Company manages its risks of its servicing assets and liabilities. The Company manages its servicing rights at the legal entity level
domestically and the reportable operating segment level internationally. Sufficient market inputs exist to determine the fair value of the Companys recognized servicing assets and servicing liabilities. GMAC Banks mortgage servicing
assets of $591.5 million are included in GMAC Residential Holding for presentational purposes. The following table summarizes the Companys activity related to mortgage servicing rights carried at fair value:



|                                                                                    |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  
|----------------------------------------------------------------------------------- | ---------------------- | ------------------------------------ | --------- | ------------------------------ | ------------ | - | -------------------------- | ----- |  | - | ------- | - |  | - | ------ | - |  | - | --------- | -
|                                                                                    |                        | Mortgage Servicing Rights Managed By |           |                                | Eliminations |   |                            | Total | 
|                                                                                    | GMACResidentialHolding |                                      |           | GMAC-RFCHolding(domestic only) |              |   | InternationalBusinessGroup |       |  |  
|                                                                                    | (In thousands)         |                                     
|Estimated fair value at January 1, 2008                                             |                        | $                                    | 3,514,671 |                                |              | $ | 1,170,665                  |       |  | $ | 17,526  |   |  | $ |       |   |  | $ | 4,702,862 |  
|Additions obtained from sales of mortgage loans                                     |                        |                                      | 1,019,854 |                                |              |   | 4,302                      |       |  |   | 347     |   |  |   |       |   |  |   | 1,024,503 |  
|Additions from purchases of servicing assets                                        |                        |                                      |          |                                |              |   | 421                        |       |  |   |        |   |  |   |       |   |  |   | 421       |  
|Subtractions from sales of servicing assets                                         |                        |                                      | (311,193  | )                              |              |   | (173,098                   | )     |  |   |        |   |  |   |       |   |  |   | (484,291  | )
|Changes in fair value:                                                              |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  
|Recognized day one gains on previously purchased MSRs upon adoption of SFAS No. 157 |                        |                                      | 10,552    |                                |              |   |                           |       |  |   |        |   |  |   |       |   |  |   | 10,552    |  
|Due to changes in valuation inputs or assumptions used in the valuation model       |                        |                                      | 278,599   |                                |              |   | (148,534                   | )     |  |   | (5,348  | ) |  |   |       |   |  |   | 124,717   |  
|Other changes in fair value                                                         |                        |                                      | (538,960  | )                              |              |   | (104,160                   | )     |  |   | (11,075 | ) |  |   |       |   |  |   | (654,195  | )
|Other changes that affect the balance                                               |                        |                                      |          |                                |              |   |                           |       |  |   | (8      | ) |  |   |       |   |  |   | (8        | )
|                                                                                    |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  
|Estimated fair value at September 30, 2008                                          |                        | $                                    | 3,973,523 |                                |              | $ | 749,596                    |       |  | $ | 1,442   |   |  | $ |       |   |  | $ | 4,724,561 |  
|                                                                                    |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  
|Estimated fair value at January 1, 2007                                             |                        | $                                    | 3,752,733 |                                |              | $ | 1,164,585                  |       |  | $ | 12,743  |   |  | $ |       |   |  | $ | 4,930,061 |  
|Additions obtained from sales of mortgage loans                                     |                        |                                      | 975,479   |                                |              |   | 323,282                    |       |  |   | 4,991   |   |  |   |       |   |  |   | 1,303,752 |  
|Additions from purchases of servicing assets                                        |                        |                                      | 12,483    |                                |              |   |                           |       |  |   |        |   |  |   | (9,291 | ) |  |   | 3,192     |  
|Subtractions from sales of servicing assets                                         |                        |                                      | (165,557  | )                              |              |   |                           |       |  |   |        |   |  |   |       |   |  |   | (165,557  | )
|Changes in fair value:                                                              |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  
|Due to changes in valuation inputs or assumptions used in the valuation model       |                        |                                      | (112,396  | )                              |              |   | 58,060                     |       |  |   | (1,352  | ) |  |   |       |   |  |   | (55,688   | )
|Other changes in fair value                                                         |                        |                                      | (216,086  | )                              |              |   | (246,928                   | )     |  |   | (3,081  | ) |  |   |       |   |  |   | (466,095  | )
|Other changes that affect the balance                                               |                        |                                      |          |                                |              |   | (12,959                    | )     |  |   | 1,037   |   |  |   | 9,291  |   |  |   | (2,631    | )
|                                                                                    |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  
|Estimated fair value at September 30, 2007                                          |                        | $                                    | 4,246,656 |                                |              | $ | 1,286,040                  |       |  | $ | 14,338  |   |  | $ |       |   |  | $ | 5,547,034 |  
|                                                                                    |                        |                                      |           |                                |              |   |                            |       |  |   |         |   |  |   |        |   |  |   |           |  



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RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



Changes in fair value due to 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. 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, during the three months ended September 30, 2008, the International Business Group recognized a $9.4 million valuation write-down to the servicing asset included in other changes in fair value related to the
Companys servicer obligations contingent on actions taken by bond holders in the securitizations. As the servicer obligation is within the underlying servicing contracts, this loss was reflected as write-down to the servicing assets held by
the International Business Group. Other changes that affect the balance primarily include foreign currency adjustments and the extinguishment of mortgage servicing rights related to the exercise of clean-up calls of certain securitization
transactions.

The following are key assumptions used by the Company in valuing its mortgage servicing rights:



|                                  |  |                        |   |  |                                |   |  |                            |  
|--------------------------------- |  | ---------------------- | - |  | ------------------------------ | - |  | -------------------------- | -
|September 30, 2008                |  | GMACResidentialHolding |   |  | GMAC-RFCHolding(domestic only) |   |  | InternationalBusinessGroup |  
|Weighted average prepayment speed |  | 15.8                   | % |  | 24.2                           | % |  | 8.5                        | %
|Range of prepayment speeds        |  | 5.2-46.5               | % |  | 7.0-39.1                       | % |  | 0.7-27.8                   | %
|Weighted average discount rate    |  | 9.1                    | % |  | 9.8                            | % |  | 24.7                       | %
|Range of discount rates           |  | 5.1-31.3               | % |  | 4.8-31.6                       | % |  | 8.0-30.5                   | %
|                                  |  |                        |  
|September 30, 2007                |  | GMACResidentialHolding |   |  | GMAC-RFCHolding(domestic only) |   |  | InternationalBusinessGroup |  
|Weighted average prepayment speed |  | 16.6                   | % |  | 26.7                           | % |  | 8.5                        | %
|Range of prepayment speeds        |  | 15.4-40.4              | % |  | 15.3-53.6                      | % |  | 0.4-28.4                   | %
|Weighted average discount rate    |  | 8.0                    | % |  | 10.7                           | % |  | 11.7                       | %
|Range of discount rates           |  | 7.7-12.9               | % |  | 9.5-11.2                       | % |  | 8.0-13.0                   | %

The key economic assumptions used by the Company in valuing its mortgage servicing rights at the
date of their initial recording were as follows:



|                                                      |  |                        |   |  |                                |   |  |                            |  
|----------------------------------------------------- |  | ---------------------- | - |  | ------------------------------ | - |  | -------------------------- | -
|Nine Months Ended September 30, 2008                  |  | GMACResidentialHolding |   |  | GMAC-RFCHolding(domestic only) |   |  | InternationalBusinessGroup |  
|Range of prepayment speeds (constant prepayment rate) |  | 7.5-48.5               | % |  | 0.5-42.8                       | % |  | 1.2-15.7                   | %
|Range of discount rates                               |  | 4.4-23.6               | % |  | 13.5-16.6                      | % |  | 12.5-24.0                  | %
|                                                      |  |                        |  
|Nine Months Ended September 30, 2007                  |  | GMACResidentialHolding |   |  | GMAC-RFCHolding(domestic only) |   |  | InternationalBusinessGroup |  
|Range of prepayment speeds (constant prepayment rate) |  | 12.6-41.6              | % |  | 13.6-47.5                      | % |  | 0.4-11.1                   | %
|Range of discount rates                               |  | 7.5-13.9               | % |  | 9.6-16.8                       | % |  | 8.0-12.5                   | %

The primary risk associated with the Companys servicing rights is interest rate risk and the
resulting impact on prepayments. A significant decline in interest rates could lead to higher than expected prepayments, which could reduce the value of the mortgage servicing rights. Historically, the Company has economically hedged the income
statement impact of these risks with both derivative and non-derivative financial instruments. These instruments include interest rate swaps, caps, and floors, options to purchase these items, futures and forward



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(Unaudited)  (Continued)



contracts, and/or purchasing or selling U.S. Treasury and principal-only securities. At September 30, 2008, the fair value of derivative financial
instruments used to mitigate these risks amounted to $369.0 million. There were no non-derivative instruments used to mitigate these risks at September 30, 2008. At September 30, 2007, the fair value of derivative financial instruments and
non-derivative financial instruments used to mitigate these risks amounted to $533.5 million and $838.7 million, respectively. The change in the fair value of the derivative financial instruments amounted to a gain of $493.2 million for the nine
months ended September 30, 2008 and a loss of $57.7 million for the nine months ended September 30, 2007 and is included in servicing asset valuation and hedge activities, net in the Condensed Consolidated Statements of Income.

The components of servicing fees were as follows:



|                                                                              |                |                                 |         |                                |      |         |      |   |           |  |   |          
|----------------------------------------------------------------------------- | -------------- | ------------------------------- | ------- | ------------------------------ | ---- | ------- | ---- | - | --------- |  | - | ---------
|                                                                              |                | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                                              | 2008           |                                 | 2007    |                                | 2008 |         | 2007
|                                                                              | (In thousands)
|Contractual servicing fees (net of guarantee fees and including subservicing) |                | $                               | 307,081 |                                | $    | 390,935 |      | $ | 958,631   |  | $ | 1,154,784
|Late fees                                                                     |                |                                 | 26,872  |                                |      | 35,187  |      |   | 93,948    |  |   | 109,709  
|Ancillary fees                                                                |                |                                 | 35,491  |                                |      | 25,298  |      |   | 100,992   |  |   | 86,248   
|                                                                              |                |                                 |         |                                |      |         |      |   |           |  |   |          
|Total                                                                         |                | $                               | 369,444 |                                | $    | 451,420 |      | $ | 1,153,571 |  | $ | 1,350,741
|                                                                              |                |                                 |         |                                |      |         |      |   |           |  |   |          

At September 30, 2008, the Company had pledged mortgage servicing rights of $4.3 billion as
collateral for borrowings.

During the third quarter of 2008, the Companys consolidated tangible net worth, as defined, fell below
$1.0 billion, giving Fannie Mae the right to pursue certain remedies under the master agreement and contract between GMAC Mortgage, LLC and Fannie Mae. In light of the decline in the Companys consolidated tangible net worth, as defined, Fannie
Mae has requested additional security for some of the Companys potential obligations under its agreements with them. The Company has reached an agreement in principle with Fannie Mae, under the terms of which the Company will provide them
additional collateral valued at $200 million, and agree to sell and transfer the servicing on mortgage loans having an unpaid principal balance of approximately $12.7 billion, or approximately 9% of the total principal balance of loans the Company
services for them. Fannie Mae has indicated that in return for these actions, they will agree to forbear, until January 31, 2009, from exercising contractual remedies otherwise available due to the decline in consolidated tangible net worth, as
defined. Actions based on these remedies could have included, among other things, reducing the Companys ability to sell loans to them, reducing its capacity to service loans for them, or requiring it to transfer servicing of loans the Company
services for them. Management believes that selling the servicing related to the loans described above will have an incremental positive impact on the Companys liquidity and overall cost of servicing, since the Company will no longer be
required to advance delinquent payments on those loans. Meeting Fannie Maes collateral request will have a negative impact on the Companys liquidity. Moreover, if Fannie Mae deems the Companys consolidated tangible net worth, as
defined, to be inadequate following the expiration of the forbearance period referred to above, and if Fannie Mae then determines to exercise their contractual remedies as described above, it would adversely affect the Companys profitability
and financial condition.



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CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|9. | Investments In Real Estate and Other
|-- | ------------------------------------

Investments
in real estate and other were as follows:



|                                               |                |                   |         |   |                  |   |           |  
|---------------------------------------------- | -------------- | ----------------- | ------- | - | ---------------- | - | --------- | -
|                                               |                | September 30,2008 |         |   | December 31,2007 |  
|                                               | (In thousands) |                  
|Residential real estate:                       |                |                   |         |   |                  |   |           |  
|Acquired through sale and leaseback agreements |                | $                 | 129,745 |   |                  | $ | 636,228   |  
|Construction in progress                       |                |                   | 63,232  |   |                  |   | 114,064   |  
|Real estate held for development               |                |                   | 67,481  |   |                  |   | 376,116   |  
|                                               |                |                   |         |   |                  |   |           |  
|                                               |                |                   | 260,458 |   |                  |   | 1,126,408 |  
|Accumulated depreciation                       |                |                   | (2,907  | ) |                  |   | (16,008   | )
|                                               |                |                   |         |   |                  |   |           |  
|Total residential real estate                  |                |                   | 257,551 |   |                  |   | 1,110,400 |  
|Other investments:                             |                |                   |         |   |                  |   |           |  
|Investments in partnerships                    |                |                   | 193     |   |                  |   | 4,724     |  
|Investments in real estate projects            |                |                   | 414,529 |   |                  |   | 418,554   |  
|Other equity investments                       |                |                   | 9,214   |   |                  |   | 96,039    |  
|                                               |                |                   |         |   |                  |   |           |  
|Total                                          |                | $                 | 681,487 |   |                  | $ | 1,629,717 |  
|                                               |                |                   |         |   |                  |   |           |  

Depreciation expense related to the sale and leaseback agreements was $1.0 and $5.5 million for the
nine months ended September 30, 2008 and 2007, respectively.

At September 30, 2008, the Company had pledged investments in real
estate and other of $161.6 million as collateral for borrowings.



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CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|10. | Other Assets
|--- | ------------

Other assets were as follows:



|                                                |                |                   |            |   |                  |   |            |  
|----------------------------------------------- | -------------- | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                |                | September 30,2008 |            |   | December 31,2007 |  
|                                                | (In thousands) |                  
|Property and equipment at cost                  |                | $                 | 648,123    |   |                  | $ | 761,038    |  
|Accumulated depreciation and amortization       |                |                   | (491,068   | ) |                  |   | (539,586   | )
|                                                |                |                   |            |   |                  |   |            |  
|Net property and equipment                      |                |                   | 157,055    |   |                  |   | 221,452    |  
|Automotive loans and lease financing, net       |                |                   | 3,411,692  |   |                  |   | 3,103,028  |  
|Investments in automotive operating leases, net |                |                   | 2,214,606  |   |                  |   | 2,522,027  |  
|Available for sale securities                   |                |                   | 414,263    |   |                  |   | 275,671    |  
|Repossessed, foreclosed and owned real estate   |                |                   | 1,051,136  |   |                  |   | 1,165,293  |  
|Derivative assets                               |                |                   | 1,244,885  |   |                  |   | 1,733,486  |  
|Restricted cash                                 |                |                   | 510,459    |   |                  |   | 484,445    |  
|Non-marketable equity securities                |                |                   | 644,459    |   |                  |   | 615,166    |  
|Other assets                                    |                |                   | 725,916    |   |                  |   | 1,537,201  |  
|                                                |                |                   |            |   |                  |   |            |  
|Total other assets                              |                | $                 | 10,374,471 |   |                  | $ | 11,657,769 |  
|                                                |                |                   |            |   |                  |   |            |  

At September 30, 2008, the Company pledged other assets with a carrying value of $7.6 billion
as collateral for certain borrowings.



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CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|11. | Borrowings
|--- | ----------

Borrowings were as follows:



|                                                                     |                |                   |            |                  |   |           
|-------------------------------------------------------------------- | -------------- | ----------------- | ---------- | ---------------- | - | ----------
|                                                                     |                | September 30,2008 |            | December 31,2007
|                                                                     | (In thousands)
|Secured borrowings:                                                  |                |                   |            |                  |   |           
|Borrowings from parent  short-term                                  |                | $                 | 1,098,459  |                  | $ |          
|Borrowings from parent  long-term(a)                                |                |                   | 2,172,124  |                  |   |          
|Borrowings from affiliates  long-term(a)                            |                |                   | 874,979    |                  |   |          
|Collateralized borrowings in securitization trusts  long-term(a)(b) |                |                   | 7,008,655  |                  |   | 16,145,741
|Other secured borrowings:                                            |                |                   |            |                  |   |           
|Senior secured notes  long-term(a)                                  |                |                   | 1,690,491  |                  |   |          
|Junior secured notes  long-term(a)                                  |                |                   | 5,069,986  |                  |   |          
|Secured aggregation facilities  short-term                          |                |                   | 2,975,001  |                  |   | 7,588,253 
|Secured aggregation facilities  long-term(a)                        |                |                   |           |                  |   | 813,938   
|Repurchase agreements  short-term                                   |                |                   | 687,013    |                  |   | 3,626,502 
|Repurchase agreements  long-term(a)                                 |                |                   |           |                  |   | 18,569    
|FHLB advances  short-term                                           |                |                   |           |                  |   | 1,050,000 
|FHLB advances  long-term(a)                                         |                |                   | 10,517,000 |                  |   | 10,299,000
|Mortgage servicing rights facilities  short-term                    |                |                   | 1,248,000  |                  |   | 1,444,000 
|Servicing advances  short-term                                      |                |                   | 700,000    |                  |   | 791,300   
|Debt collateralized by mortgage loans  short-term                   |                |                   | 16,919     |                  |   | 1,782,039 
|Other  long-term(a)                                                 |                |                   | 335,734    |                  |   | 423,552   
|                                                                     |                |                   |            |                  |   |           
|Subtotal secured borrowings                                          |                |                   | 34,394,361 |                  |   | 43,982,894
|                                                                     |                |                   |            |                  |   |           
|Unsecured borrowings:                                                |                |                   |            |                  |   |           
|Senior unsecured notes  long-term(a)(c)                             |                |                   | 4,030,841  |                  |   | 14,550,385
|Subordinated unsecured notes  long-term(a)                          |                |                   | 205,448    |                  |   | 758,321   
|Medium-term unsecured notes  long-term(a)                           |                |                   | 367,112    |                  |   | 624,567   
|Third-party bank credit facilities  short-term.                     |                |                   |           |                  |   | 50,000    
|Third-party bank credit facilities  long-term(a)                    |                |                   |           |                  |   | 1,750,000 
|Other  short-term                                                   |                |                   | 272,302    |                  |   | 575,264   
|Other  long-term(a)                                                 |                |                   | 27,979     |                  |   | 38,460    
|                                                                     |                |                   |            |                  |   |           
|Subtotal unsecured borrowings                                        |                |                   | 4,903,682  |                  |   | 18,346,997
|                                                                     |                |                   |            |                  |   |           
|Total borrowings                                                     |                | $                 | 39,298,043 |                  | $ | 62,329,891
|                                                                     |                |                   |            |                  |   |           



|(a) | Represents borrowings with an original contractual maturity in excess of one year.
|--- | ----------------------------------------------------------------------------------



|(b) | At September 30, 2008, collateralized borrowings with an outstanding balance of $9.1 billion are recorded at a fair value of $2.5 billion under SFAS No. 159  see
Note 16  Fair Value.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | The December 31, 2007 total includes approximately $200.0 million of senior unsecured notes purchased and held by GMAC.
|--- | -----------------------------------------------------------------------------------------------------------------------



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



The following table presents the scheduled maturity of borrowings at September 30, 2008 and
December 31, 2007, assuming that no early redemptions occur. The actual payments of secured borrowings may vary based on the payment activity of the related pledged asset.



|                                                      |                |                   |            |                  |   |           
|----------------------------------------------------- | -------------- | ----------------- | ---------- | ---------------- | - | ----------
|Maturities of Borrowings                              |                | September 30,2008 |            | December 31,2007
|                                                      | (In thousands)
|Short-term borrowings                                 |                | $                 | 6,997,694  |                  | $ | 16,907,358
|Long-term borrowings:                                 |                |                   |            |                  |   |           
|2008                                                  |                |                   | 540,717    |                  |   | 5,188,631 
|2009                                                  |                |                   | 2,184,223  |                  |   | 4,314,091 
|2010                                                  |                |                   | 7,743,136  |                  |   | 5,381,307 
|2011                                                  |                |                   | 1,162,498  |                  |   | 2,276,232 
|2012                                                  |                |                   | 2,334,668  |                  |   | 4,714,911 
|2013 and thereafter                                   |                |                   | 11,326,452 |                  |   | 7,401,620 
|Collateralized borrowings in securitization trusts(a) |                |                   | 7,008,655  |                  |   | 16,145,741
|                                                      |                |                   |            |                  |   |           
|Total long-term borrowings                            |                |                   | 32,300,349 |                  |   | 45,422,533
|                                                      |                |                   |            |                  |   |           
|Total borrowings                                      |                | $                 | 39,298,043 |                  | $ | 62,329,891
|                                                      |                |                   |            |                  |   |           



|(a) | Collateralized borrowings in securitization trusts: The principal on the debt securities is paid using cash flows from underlying collateral (mortgage loans). Accordingly, the
timing of the principal payments on these debt securities is dependent on the payments received.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Certain of the
Companys credit facilities contain certain financial covenants, among other covenants, requiring the Company to maintain consolidated tangible net worth of $250.0 million as of the end of each month and consolidated liquidity of $750.0
million, subject to applicable grace periods. These financial covenants are also included in certain of the Companys bilateral facilities. In addition, certain of the Companys facilities are subject to sequential declines in advance
rates if consolidated tangible net worth falls below $1.5, $1.0 and $0.5 billion, respectively. For these purposes, consolidated tangible net worth is defined as the Companys consolidated equity, excluding intangible assets and any equity in
GMAC Bank to the extent included in the Companys consolidated balance sheet, and consolidated liquidity is defined as consolidated cash and cash equivalents, excluding cash and cash equivalents of GMAC Bank to the extent included in the
Companys consolidated balance sheet. As of September 30, 2008, the Company had consolidated tangible net worth of $350.0 million and remained in compliance with the most restrictive consolidated tangible net worth covenant minimum of
$250.0 million. In addition, the Company complied with its consolidated liquidity requirement of $750.0 million. The September 30, 2008 consolidated tangible net worth, as defined, of $350.0 million will result in declines in advance rates to
certain facilities which will reduce the amount the Company can borrow and will require a repayment of a portion of the facilities in the three months ending December 31, 2008. For the three months ended September 30, 2008, the Company was
required to provide cash of $14.8 million to facility counterparties as a result of the advance rate declines. On October 31, 2008, the Company received a waiver of this requirement from a certain lender which resulted in an extension until
November 13, 2008 before advance rates are reduced.

On June 6, 2008, the Company closed its previously announced private debt
tender and exchange offers for a certain amount of its outstanding unsecured notes. As a result, the Company issued approximately $5.7 billion



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



of new senior and junior secured notes (the New Notes) in exchange for approximately $8.6 billion of its outstanding unsecured notes. Of the $8.6
billion of unsecured notes that were exchanged, approximately $1.8 billion were repurchased for $1.2 billion in cash pursuant to a modified Dutch auction tender offer. The repurchases of the unsecured notes resulted in a gain on
extinguishment of debt of approximately $599.5 million recorded in the second quarter of 2008.

In accordance with SFAS No. 15,
Accounting by Debtors and Creditors for Troubled Debt Restructurings, the Company deferred the concession recognized in the exchange offer through an adjustment to the carrying value of the New Notes. The senior and junior secured notes
interest rates are 8.5% and 9.625%, respectively. The deferred concession of $1.2 billion will be amortized over the life of the New Notes through a reduction to interest expense using an effective yield methodology. Approximately $16.9 million of
the concession was recognized as a troubled debt restructuring gain in order to write down the carrying value of the bonds to an amount equal to the New Notes undiscounted contractual payments. This gain was presented in the Consolidated Statement
of Income as a gain on extinguishment of debt during the second quarter of 2008. During the third quarter of 2008, an additional $60.2 million was amortized as a reduction of interest expense.

The following summarizes assets that are restricted, pledged or for which a security interest has been granted as collateral for the payment of certain
debt obligations:



|                                        |                |                   |            |                  |   |           
|--------------------------------------- | -------------- | ----------------- | ---------- | ---------------- | - | ----------
|                                        |                | September 30,2008 |            | December 31,2007
|                                        | (In thousands)
|Cash and cash equivalents(a)            |                | $                 | 5,011,854  |                  | $ | 1,411,317 
|Mortgage loans held for sale(b)         |                |                   | 4,243,794  |                  |   | 10,436,521
|Trading securities(a)                   |                |                   | 346,687    |                  |   | 751,575   
|Mortgage loans held for investment(b)   |                |                   | 35,293,418 |                  |   | 39,081,151
|Lending receivables(b)                  |                |                   | 6,370,975  |                  |   | 6,372,760 
|Mortgage servicing rights(a)            |                |                   | 4,297,968  |                  |   | 2,673,771 
|Accounts receivable(a)                  |                |                   | 1,876,655  |                  |   | 1,297,891 
|Investments in real estate and other(a) |                |                   | 161,632    |                  |   | 231,561   
|Other assets(a)                         |                |                   | 7,633,064  |                  |   | 7,493,311 
|                                        |                |                   |            |                  |   |           
|Total assets restricted as collateral   |                | $                 | 65,236,047 |                  | $ | 69,749,858
|                                        |                |                   |            |                  |   |           
|Related secured debt(c)                 |                | $                 | 41,035,851 |                  | $ | 43,982,894
|                                        |                |                   |            |                  |   |           



|(a) | Disclosed at carrying value or fair value of the underlying collateral.
|--- | -----------------------------------------------------------------------



|(b) | Disclosed at unpaid principal balance of the underlying collateral.
|--- | -------------------------------------------------------------------



|(c) | Disclosed at carrying value, excluding the SFAS No. 159 fair value adjustment.
|--- | ------------------------------------------------------------------------------

The Company also pledges equity interests to the $3.5 billion GMAC Senior Secured Credit Facility for some of the Companys affiliates. At September 30, 2008 there was $1.4 billion of equity interests for
these affiliates pledged against this facility.

GMAC Bank has entered into an advances agreement with the Federal Home Loan Bank of
Pittsburgh (FHLB). Under the agreement, as of September 30, 2008 and December 31, 2007, GMAC Bank had assets pledged and restricted as collateral totaling $32.9 and $28.4 billion under the FHLBs existing security interest
on all GMAC Bank assets. However, the FHLB will allow GMAC Bank to encumber any assets restricted as



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(Unaudited)  (Continued)



collateral not needed to collateralize existing FHLB advances. As of September 30, 2008 and December 31, 2007, GMAC Bank had $15.0 and $12.8
billion of assets pledged under the security interest that were available to be encumbered elsewhere.

On September 11, 2008 GMAC Bank
was granted access to the Federal Reserves Discount Window and Term Auction Facility (TAF). The Discount Window is the primary credit facility under which the Federal Reserve extends collateralized loans to depository institutions
at terms from overnight up to ninety days. The TAF program auctions a pre-announced quantity of collateralized credit starting with a minimum bid for term funds of 28-day or 84-day maturity. GMAC Bank has pledged $5.2 billion of automotive loans and
lease financings to participate in the Discount Window and TAF programs at varying collateral requirements. These assets were available to be encumbered under the FHLBs existing blanket lien. At September 30, 2008, GMAC Bank had no
outstanding borrowings under these programs.

The assets that were pledged as collateral in the preceding table include assets that can be
sold or repledged by the secured party. The assets that could be sold or repledged were as follows:



|                                   |                |                   |         |                  |   |          
|---------------------------------- | -------------- | ----------------- | ------- | ---------------- | - | ---------
|                                   |                | September 30,2008 |         | December 31,2007
|                                   | (In thousands)
|Mortgage loans held for sale       |                | $                 | 414,408 |                  | $ | 2,365,646
|Trading securities                 |                |                   | 15,905  |                  |   | 426,194  
|Mortgage loans held for investment |                |                   | 479,278 |                  |   | 3,958,384
|Accounts receivable                |                |                   | 5,204   |                  |   |         
|Other assets                       |                |                   |        |                  |   | 8,597    
|                                   |                |                   |         |                  |   |          
|Total                              |                | $                 | 914,795 |                  | $ | 6,758,821
|                                   |                |                   |         |                  |   |          



|12. | Deposit Liabilities
|--- | -------------------

Deposit liabilities were as
follows:



|                                       |                |                   |            |                  |   |           
|-------------------------------------- | -------------- | ----------------- | ---------- | ---------------- | - | ----------
|                                       |                | September 30,2008 |            | December 31,2007
|                                       | (In thousands)
|Non-interest bearing deposits          |                | $                 | 2,246,485  |                  | $ | 1,569,517 
|NOW and money-market checking accounts |                |                   | 4,098,509  |                  |   | 3,664,168 
|Certificates of deposit                |                |                   | 11,889,794 |                  |   | 8,116,159 
|                                       |                |                   |            |                  |   |           
|Total                                  |                | $                 | 18,234,788 |                  | $ | 13,349,844
|                                       |                |                   |            |                  |   |           

At September 30, 2008 and December 31, 2007, deposit liabilities include $8.8 and $6.3
billion of GMAC Bank automotive division liabilities.

Non-interest bearing deposits primarily represent third-party escrows associated with
the Companys loan servicing portfolio. The escrow deposits are not subject to an executed agreement and can be withdrawn without penalty at any time. At September 30, 2008, certificates of deposit included $8.8 billion of brokered
certificates of deposit.



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(Unaudited)  (Continued)



|13. | Income Taxes
|--- | ------------

The Company, including the majority
of its domestic subsidiaries, is a pass-through entity for U.S. tax purposes and therefore, does not provide for federal income tax. However, the LLCs do incur and provide for taxes in a few local jurisdictions within the U.S. where the LLCs are
taxed as entities despite their pass-through status for federal tax purposes. The Companys banking and foreign businesses generally operate as corporations and continue to be subject to and provide for U.S. federal, state and/or foreign income
tax.

The consolidated effective tax rate is an expense of 0.3% and 2.0% for the three and nine months ended September 30, 2008,
respectively, compared to a benefit of 5.1% and an expense of 0.5% during the same time periods in 2007. For the three and nine months ended September 30, 2008, the Company recognized a decrease in effective tax rate related to a reduction in
pre-tax earnings and tax expense of the federally-taxable Company entities. This decrease in effective tax rate is offset by an increase in effective tax rate within the International Business Group due to the establishment of additional deferred
tax valuation allowances during the three and nine months ended September 30, 2008 of $99.1 and $764.0 million, respectively. These valuation allowances related to deferred tax assets of certain foreign operations, primarily in Continental
Europe, United Kingdom, Canada and Australia. These valuation allowances were established because, based on historical losses and expected future taxable income, it was no longer more-likely-than-not that these net deferred tax assets would be
realized.

With respect to FIN No. 48, Accounting for Uncertainty in Income Taxes,gross unrecognized tax benefits totaled $8.9
million at September 30, 2008, a decrease of $15.0 million for the three months ended September 30, 2008 and $4.3 million for the nine months ended September 30, 2008. The decrease of $15.0 million for the three months ended
September 30, 2008 was due to a decrease in unrecognized tax benefits of $15.3 million and an accrual for the payment of interest and penalties of $0.3 million. The decrease in unrecognized tax benefits is primarily due to the reversal of an
unrecognized tax benefit established in the three months ended June 30, 2008. This benefit was reversed in the three months ended September 30, 2008 after further review, discussion and acceptance of the tax benefit by the Internal Revenue
Service. For the nine months ended September 30, 2008, the decrease in unrecognized tax benefits is primarily due to the completion of the Internal Revenue Service examination of the Companys U.S. income tax returns for the years 2001
through 2003. The amount of unrecognized tax benefits that, if recognized, would affect the Companys effective tax rate is approximately $6.4 million. Related interest and penalties accrued for uncertain tax positions are recorded in interest
expense and other operating expenses, respectively. As of September 30, 2008, the Company had approximately $2.5 million accrued for the payment of interest and penalties.

With few exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign income tax examinations by tax authorities for years
before 2004. The Company anticipates the Internal Revenue Service examination of its U.S. income tax returns for 2004 through 2006, along with examinations by various state and local jurisdictions, will be completed by the end of 2009. Therefore, no
reduction in unrecognized tax benefits is anticipated over the next twelve months.



|14. | Derivative Instruments
|--- | ----------------------

The Companys risk
management objectives are to minimize market risk and cash flow volatility associated with interest rate, prepayment, basis and foreign currency risks related to certain assets and liabilities. Derivative financial instruments are used as part of
the Companys risk management policy to manage risk related to specific groups of assets and liabilities, including trading securities, mortgage loans held for sale, mortgage loans held for investment, mortgage servicing rights and
collateralized borrowings in securitization trusts. The Company also utilizes foreign currency swaps and forward contracts to hedge foreign currency denominated assets and liabilities. In addition, the Company holds derivative instruments, such as
commitments to purchase or



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originate mortgage loans, that it has entered into in the normal course of business. The use of derivative instruments for purposes of economic hedges has
been reduced in 2008 in consideration of liquidity needs and contraction in market alternatives.

During the three months ended
September 30, 2007, the Company discontinued its cash flow hedge program associated with the existing and forecasted variable rate debt. This decision was made due to the deteriorating economic conditions in the nonprime mortgage market and the
resulting determination that it is probable the originally forecasted transactions related to this hedge program will not occur.

The
following table summarizes the pretax earnings impact of the ineffectiveness portion of the changes in fair value for each type of accounting hedge classification segregated by the asset or liability hedged:



|                                       |               |      |      |   |      |   |      |                                 |  |                                     
|-------------------------------------- | ------------- | ---- | ---- | - | ---- | - | ---- | ------------------------------- |  | ------------------------------------
|Nine Months Ended September 30,        |               | 2008 |      |   | 2007 |   |      | Income Statement Classification
|                                       | (In millions) |      |      |  
|Fair value hedge ineffectiveness loss: |               |      |      |   |      |   |      |                                 |  |                                     
|Debt obligations                       |               | $    | (6.3 | ) |      | $ | (0.8 | )                               |  | Gain (loss) on investment securities
|Mortgage loans held for sale           |               |      |     |   |      |   | (0.7 | )                               |  | Gain (loss) on mortgage loans, net  
|                                       |               |      |      |   |      |   |      |                                 |  |                                     
|Total                                  |               | $    | (6.3 | ) |      | $ | (1.5 | )                               |  |                                     
|                                       |               |      |      |   |      |   |      |                                 |  |                                     

There were no net gains on fair value hedges excluded from assessment of effectiveness for the nine
months ended September 30, 2008 and 2007.



|15. | Restructuring Charges
|--- | ---------------------

On September 3, 2008,
the Company announced additional restructuring initiatives to optimize the mortgage business as the downturn in the credit and mortgage markets persist. In response to these conditions, the Company has enacted a plan to significantly streamline its
operations, reduce costs, adjust its lending footprint and refocus the Companys resources on strategic lending and servicing. In the third quarter of 2008, the Company recorded $76.2 million of pretax restructuring costs related to this plan,
of which $22.8 million was paid or settled as of September 30, 2008. The majority of the remaining restructuring accrual is expected to be paid or settled in the fourth quarter of 2008.

Previously, on October 17, 2007, the Company announced a restructuring plan that would reduce the workforce, streamline operations and revise the
cost structure. In the fourth quarter of 2007, the Company incurred pretax restructuring costs of $126.6 million, of which $57.2 million was paid or settled by December 31, 2007. In the first nine months of 2008, the Company incurred additional
pretax restructuring costs totaling $34.4 million, primarily related to severance and related costs associated with the continuation of the workforce reduction plans in the United Kingdom, Continental Europe and Australia.

The charges for employee severance, lease terminations and fixed asset write-offs were recorded in restructuring expense. The charges related to the
September 3, 2008 restructuring plan were recorded in the corporate and other business segment as the Companys chief operating decision maker did not consider these charges when evaluating the performance of the Companys other three
business segments. The charges related to the October 17, 2007 restructuring plan incurred in 2007 and through the first nine months of 2008 were recorded within the impacted business segments.



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The following tables summarize by plan and category the Companys restructuring charge activity
for the nine months ended September 30, 2008:



|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|--------------------------------------------- |  | --------------------------------- | ------ | -------------------------------------------- | - | ------- | ---------------------------------------------------- |  | - | ------------------------------------ | - |  | - | ------
|                                              |  | LiabilityBalance atJanuary 1,2008 |        | RestructuringChargesThroughSeptember 30,2008 |   |         | Cost Paid orOtherwiseSettledThroughSeptember 30,2008 |  |   | LiabilityBalance atSeptember 30,2008
|                                              |  | (In thousands)                   
|Restructuring charges from the:               |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Fourth quarter 2007 plan:                     |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Employee severance                            |  | $                                 | 23,648 |                                              | $ | 34,390  |                                                      |  | $ | (40,049                              | ) |  | $ | 17,989
|Lease terminations and fixed asset write-offs |  |                                   | 45,734 |                                              |   | (5      | )                                                    |  |   | (21,909                              | ) |  |   | 23,820
|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Sub-total                                     |  |                                   | 69,382 |                                              |   | 34,385  |                                                      |  |   | (61,958                              | ) |  |   | 41,809
|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Third quarter 2008 plan:                      |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Employee severance                            |  |                                   |       |                                              |   | 48,558  |                                                      |  |   | (10,508                              | ) |  |   | 38,050
|Lease terminations and fixed asset write-offs |  |                                   |       |                                              |   | 27,681  |                                                      |  |   | (12,276                              | ) |  |   | 15,405
|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Sub-total                                     |  |                                   |       |                                              |   | 76,239  |                                                      |  |   | (22,784                              | ) |  |   | 53,455
|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Total restructuring charges:                  |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Employee severance                            |  |                                   | 23,648 |                                              |   | 82,948  |                                                      |  |   | (50,557                              | ) |  |   | 56,039
|Lease terminations and fixed asset write-offs |  |                                   | 45,734 |                                              |   | 27,676  |                                                      |  |   | (34,185                              | ) |  |   | 39,225
|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       
|Total                                         |  | $                                 | 69,382 |                                              | $ | 110,624 |                                                      |  | $ | (84,742                              | ) |  | $ | 95,264
|                                              |  |                                   |        |                                              |   |         |                                                      |  |   |                                      |   |  |   |       



|16. | Fair Value
|--- | ----------

Fair Value Measurements (SFAS
No. 157)

The Company adopted SFAS No. 157 on January 1, 2008, which provides a definition of fair value, establishes
a framework for measuring fair value, and requires expanded disclosures about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value and, therefore, does not expand the use of
fair value in any new circumstance.

SFAS No. 157 nullified guidance in EITF 02-3. EITF 02-3 required the deferral of day-one gains on
derivative contracts, unless the fair value of the derivative contracts were supported by quoted market prices or similar current market transactions. In accordance with EITF 02-3, the Company previously deferred day-one gains on purchased mortgage
servicing rights and certain residential loan commitments. When SFAS No. 157 was adopted, the day-one gains previously deferred under EITF 02-3 were recognized as a cumulative effect adjustment that increased beginning retained earnings by
approximately $23.2 million.

SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 clarifies that fair value should be based on the assumptions market participants would use when pricing an asset or liability and
establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e. observable inputs) and the lowest priority
to data lacking transparency (i.e. unobservable inputs). Additionally, SFAS



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No. 157 requires an entity to consider all aspects of nonperformance risk, including the entitys own credit standing, when measuring fair value of
a liability.

SFAS No. 157 establishes a three level hierarchy to be used when measuring and disclosing fair value. An
instruments categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. Following is a description of the three levels:



|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date. Additionally, the entity must have the ability to access the active market and the
quoted prices cannot be adjusted by the entity.                                                                                                                                              
|        | 
|Level 2 |  | Inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable
or can be corroborated by observable market data by correlation or other means for substantially the full-term of the assets or liabilities.                                             
|        | 
|Level 3 |  | Unobservable inputs are supported by little or no market activity. The unobservable inputs represent managements best assumptions of how market participants would price the assets and
liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation.

Following are descriptions of the valuation methodologies used to measure material assets and
liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized.

Mortgage
loans held for sale The Company originates or purchases mortgage loans in the U.S. that it intends to sell to Fannie Mae, Freddie Mac, and Ginne Mae (collectively the Agencies). Additionally, the Company originates or
purchases mortgage loans in the U.S. and internationally that it intends to sell into the secondary markets via whole loan sales or securitizations. The entire mortgage loans held for sale portfolio is accounted for at the lower of cost or market
(LOCOM), as required under GAAP. Only those loans that are currently being carried at market under LOCOM are included within the Companys nonrecurring fair value measurement tables. Mortgage loans held for sale account for 24% of all recurring
and nonrecurring assets reported at fair value at September 30, 2008.

Mortgage loans held for sale are typically pooled together and
sold into certain exit markets, depending upon underlying attributes of the loan, such as agency eligibility (domestic only), product type, interest rate, and credit quality. Two valuation methodologies are used to determine the fair value of
mortgage loans held for sale. The methodology used depends on the exit market as described below.

Loans valued using observable market
prices for identical or similar assets This includes all domestic mortgage loans that can be sold to the Agencies, which are valued predominantly by published forward agency prices. This will also include all non-agency domestic loans or
international loans where recently negotiated market prices for the loan pool exist with a counterparty (which approximates fair value), or quoted market prices for similar loans are available. As these valuations are derived from quoted market
prices, the Company classifies these valuations as Level 2 in the fair value disclosures. As of September 30, 2008, 85% of the Companys mortgage loans held for sale that are currently being carried at market under LOCOM are classified as
Level 2. Due to the illiquidity of the mortgage market place, it may be necessary to look for alternative sources of value, including the whole loan purchase market for similar loans, and place more reliance on the valuations using internal models.



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Loans valued using internal models To the extent observable market prices are not
available, the Company will determine the fair value of mortgage loans held for sale using internally developed valuation models. These valuation models estimate the exit price the Company expects to receive in the loans principal market,
which depending upon characteristics of the loan, may be the whole loan or securitization market. Although the Company utilizes and gives priority to market observable inputs such as interest rates and market spreads within these models, the Company
typically is required to utilize internal inputs, such as prepayment speeds, credit losses, and discount rates. While numerous controls exist to calibrate, corroborate and validate these internal inputs, these internal inputs require the use of
judgment by the Company and can have a significant impact on the determination of the loans fair value. Accordingly, the Company classifies these valuations as Level 3 in the fair value disclosures. As of September 30, 2008, 15% of the
Companys mortgage loans held for sale that are currently being carried at market under LOCOM are classified as Level 3.

Due to
limited sales activity and periodically unobservable prices in certain of the Companys markets, certain mortgage loans held for sale portfolios may transfer between Level 2 and Level 3 in future periods.

Trading securities Trading securities are recorded at fair value and include retained interests in assets sold through off-balance sheet
securitizations and purchased securities. The securities may be mortgage-backed or mortgage-related asset-backed securities (including senior and subordinated interests), interest-only, principal-only, or residual interests and may be investment
grade, non-investment grade or unrated securities. The Company bases its valuation of trading securities on observable market prices when available; however, observable market prices are not available for a significant portion of these assets due to
illiquidity in the markets. When observable prices are not available, the Company primarily bases valuations on internally developed discounted cash flow models that use a market-based discount rate. The valuation considers recent market
transactions, experience with similar securities, current business conditions and analysis of the underlying collateral, as available. In order to estimate cash flows, the Company utilizes various significant assumptions, including market observable
inputs such as forward interest rates, as well as internally developed inputs such as prepayment speeds, delinquency levels, and credit losses. Accordingly, the Company classified 90% of the trading securities reported at fair value as Level 3 at
September 30, 2008. Trading securities account for 6% of all recurring and nonrecurring assets reported at fair value at September 30, 2008.

Mortgage loans held for investment Under SFAS No. 159, the Company elected the fair value option for certain mortgage loans held for investment. These loans serve as collateral for the
Companys on-balance sheet securitization debt as of January 1, 2008 in which the Company estimated that credit reserves pertaining to securitized assets could or already had exceeded the Companys economic exposure. The remaining
held for investment mortgage loans are reported on the balance sheet at their principal amount outstanding, net of charge-offs, allowance for loan losses, and net deferred loan fees.

Mortgage loans held for investment used as collateral for securitization debt have been legally isolated from the Company and are beyond the reach of the
Companys creditors. These loans are measured at fair value by the Company using a portfolio approach or an in-use premise. The objective in fair valuing these loans and related securitization debt is to properly account for the Companys
retained economic interest in the securitizations. As a result of reduced liquidity in capital markets, values of both these held for investment mortgage loans and the securitized bonds are expected to be volatile.

As a result of the Companys use of significant unobservable inputs in this fair value measurement, the Company classifies these loans as Level 3.
These loans account for 15% of all recurring and nonrecurring assets reported at fair value at September 30, 2008.

Mortgage
servicing rights (MSRs) The Company typically will retain MSRs when it sells assets into the secondary market. MSRs do not trade in an active market with observable prices. Therefore, the Company



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uses internally developed discounted cash flow models to estimate the fair value of MSRs and classifies all MSRs as Level 3. These internal valuation models
estimate net cash flows based on internal operating assumptions that the Company believes would be used by market participants, combined with market-based assumptions for loan prepayment rates, interest rates and discount rates that management
believes approximate yields required by investors in this asset. Cash flows primarily include servicing fees, float income and late fees, in each case less operating costs to service the loans. The estimated cash flows are discounted using an
option-adjusted spread derived discount rate. All MSRs are classified as Level 3 and account for 32% of all recurring and nonrecurring assets reported at fair value at September 30, 2008.

Derivative instruments The Company manages risk through its balance of loan production and servicing businesses while using portfolios of
financial instruments, including derivatives, to manage risk related specifically to the value of mortgage loans held for sale, mortgage loans held for investment, MSRs, foreign currency debt and off balance sheet securitizations. During the
nine months ended September 30, 2008, the Company recorded a gain on economic hedges totaling $740 million. Derivatives hedging MSRs accounted for 67% of the year-to-date gains related to all economic hedges. The remaining 33% consisted
primarily of gains on economic hedges for mortgage loans held for investment, mortgage loans held for sale and foreign currency debt.

The
Company enters into a variety of derivative financial instruments as part of its hedging strategies. Certain of these derivatives are exchange traded, such as Eurodollar futures, or traded within highly active dealer markets, such as agency
to-be-announced securities. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract; and therefore, these contracts are classified as Level 1.
The Company classified 3% of the derivative assets and 26% of the derivative liabilities reported at fair value as Level 1 at September 30, 2008.

The Company also executes over-the-counter derivative contracts, such as interest rate swaps, floors, caps, corridors, and swaptions. The Company utilizes third-party developed valuation models that are widely
accepted in the market to value these over-the-counter derivative contracts. The specific terms of the contract are entered into the model, as well as market observable inputs such as interest rate forward curves and interpolated volatility
assumptions. As all significant inputs into these models are market observable, these over-the-counter derivative contracts are classified as Level 2. The Company classified 94% of the derivative assets and 62% of the derivative liabilities reported
at fair value as Level 2 at September 30, 2008.

The Company holds certain derivative contracts that are structured specifically to
meet a particular hedging objective. These derivative contracts often are utilized to hedge risks inherent within certain of the Companys on balance sheet securitizations. In order to hedge risks on particular bond classes or securitization
collateral, the derivatives notional amount is often indexed to the hedged item. As a result, the Company typically is required to use internally developed prepayment assumptions as an input into the model, in order to forecast future notional
amounts on these structured derivative contracts. Accordingly, these derivative contracts are classified as Level 3. The Company classified 3% of the derivative assets and 12% of the derivative liabilities reported at fair value as Level 3 at
September 30, 2008.

The Company has netting arrangements (ISDAs) in place with all derivative counterparties. Additionally, both the
Company and the counterparty are required to post cash collateral based upon the net underlying market value of the Companys open positions with the counterparty. Posting of cash collateral typically occurs daily, subject to certain dollar
thresholds. Due to the existence of netting arrangements, as well as frequent cash collateral posting at low posting thresholds, credit exposure to the Company and/or to the counterparty is considered materially mitigated and therefore the Company
does not provide any additional adjustment to derivative valuations specifically for credit.



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Repossessed, foreclosed and owned assets (other real estate owned) Through the normal
course of business, the Company may foreclose upon real estate assets to the extent borrowers default under the terms of their agreements with the Company. Under GAAP, these foreclosed properties are required to be carried on the balance sheet at
the lower of cost or fair value less costs to sell. Only those assets that are being carried at fair value less costs to sell are included in the fair value disclosures. These foreclosed properties are carried within other assets on the
Companys condensed consolidated balance sheets.

The Company determines the fair value of the repossessed, foreclosed and owned
properties on a periodic basis. Properties that are valued based upon independent third-party appraisers less costs to sell are classified as Level 2. When third-party appraisals are not obtained, valuations are typically obtained from a third-party
broker price opinion; however, depending upon the circumstances, the property list price or other sales price information may be used in lieu of a broker price opinion. The Company typically adjusts a broker price opinion, or other price source as
appropriate, downward in order to take into account damage and other factors that typically cause the actual liquidation value of foreclosed properties to be less than broker price opinion or other price source. This valuation adjustment is based
upon the Companys historical experience and is necessary to ensure the valuation ascribed to these assets takes into account the unique factors and circumstances surrounding a foreclosed asset. As a result of the Company applying an internally
developed adjustment to the third-party provided valuation of the foreclosed property, these assets are classified as Level 3 in the fair value disclosures. As of September 30, 2008, 43% and 57% of the Companys other real estate owned
that are being carried at fair value less costs to sell are classified as Level 2 and Level 3, respectively.

On-balance sheet
securitization debt Under SFAS No. 159, the Company elected the fair value option for certain mortgage loans held for investment and securitization debt contained in a portion of its on-balance sheet securitizations. In particular,
the Company elected the fair value option on securitization debt issued by its domestic on-balance sheet securitization vehicles as of January 1, 2008 in which the Company estimated that credit reserves pertaining to securitized assets could or
already had exceeded the Companys economic exposure. A complete description of the securitizations is provided in the On-balance sheet securitizationssection later in this Note. The objective in measuring these loans and related
securitization debt at fair value is to approximate the Companys retained economic interest and economic exposure to the collateral securing the securitization debt. The remaining on-balance sheet securitization debt that was not elected under
SFAS No. 159 is reported on the balance sheet at cost, net of premiums or discounts and issuance costs.

The Company values
securitization debt that was elected pursuant to the fair value option as well as any economically retained positions, using market observable prices whenever possible. The securitization debt is principally in the form of asset backed and mortgage
backed securities collateralized by the underlying mortgage loans held for investment. Due to the attributes of the underlying collateral and current capital market conditions, observable prices for these instruments are typically not available in
active markets. In these situations, the Company considers observed transactions as Level 2 inputs in its discounted cash flow models. Additionally, the Companys discounted cash flow models utilize other market observable inputs such as
interest rates, and internally derived inputs such as prepayment speeds, credit losses, and discount rates. As a result of the reliance on significant assumptions and estimates for model inputs, fair value option elected financing securitization
debt is classified as Level 3. On-balance sheet securitization debt accounts for 84% of all liabilities reported at fair value at September 30, 2008. As a result of reduced liquidity in capital markets, values of both held for investment
mortgage loans and the securitized bonds are expected to be volatile.

Collateralized Debt Obligations (CDOs) The Company
elected the fair value option for certain CDOs. A complete description of the CDOs is given in Collateralized Debt Obligationssection later in this Note. These CDOs are collateralized by trading securities, which are already carried at fair
value. Due to greater availability



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of market information on the CDO collateral, the Company derives the fair value of the CDO debt using the CDO collateral fair value and adjusting accordingly
for any retained economic positions. While a portion of the CDO collateral may utilize market observable prices for valuation purposes, the majority of the CDO collateral is valued using valuation models that utilize significant internal inputs.
Further, the retained economic positions also use valuation models that utilize significant internal inputs. As a result, the fair value option elected CDO debt is classified as Level 3. CDOs account for 7% of all liabilities reported at fair value
at September 30, 2008.

Recurring Fair Value

The following table displays the assets and liabilities measured at fair value on a recurring basis, including financial instruments elected for the fair
value option under SFAS No. 159. The Company often economically hedges the fair value change of its assets or liabilities with derivatives and other financial instruments. The table below displays the hedges separately from the hedged items,
and therefore does not directly display the impact of the Companys risk management activities.



|                                       |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|-------------------------------------- | --------------------- | --------------------------------- | ------- | ------- | -------------- | - | --------- | - |  | ----- | ---------- | - |  | - | ---------- | -
|                                       |                       | Recurring Fair Value Measurements |        
|                                       | At September 30, 2008 |                                  
|                                       | Level 1               |                                   |         | Level 2 |                |   | Level 3   |   |  | Total |           
|                                       |                       |                                   |         |         | (In thousands) |   |           |   | 
|Assets                                 |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Trading securities                     |                       | $                                 | 858     |         |                | $ | 90,259    |   |  | $     | 776,473    |   |  | $ | 867,590    |  
|Mortgage loans held for investment(1)  |                       |                                   |        |         |                |   |          |   |  |       | 2,209,831  |   |  |   | 2,209,831  |  
|Mortgage servicing rights              |                       |                                   |        |         |                |   |          |   |  |       | 4,724,561  |   |  |   | 4,724,561  |  
|Other assets:                          |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Derivative assets                      |                       |                                   | 33,373  |         |                |   | 1,176,222 |   |  |       | 35,290     |   |  |   | 1,244,885  |  
|Other                                  |                       |                                   | 291,242 |         |                |   | 120,031   |   |  |       | 2,990      |   |  |   | 414,263    |  
|                                       |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Total assets                           |                       | $                                 | 325,473 |         |                | $ | 1,386,512 |   |  | $     | 7,749,145  |   |  | $ | 9,461,130  |  
|                                       |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Liabilities                            |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Collateralized borrowings:             |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|On-balance sheet securitizationdebt(1) |                       | $                                 |        |         |                | $ |          |   |  | $     | (2,284,724 | ) |  | $ | (2,284,724 | )
|Collateralized debt obligations(1)     |                       |                                   |        |         |                |   |          |   |  |       | (181,282   | ) |  |   | (181,282   | )
|Other liabilities:                     |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Derivative liabilities                 |                       |                                   | (63,425 | )       |                |   | (154,303  | ) |  |       | (30,804    | ) |  |   | (248,532   | )
|Other                                  |                       |                                   | (6,360  | )       |                |   |          |   |  |       |           |   |  |   | (6,360     | )
|                                       |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  
|Total liabilities                      |                       | $                                 | (69,785 | )       |                | $ | (154,303  | ) |  | $     | (2,496,810 | ) |  | $ | (2,720,898 | )
|                                       |                       |                                   |         |         |                |   |           |   |  |       |            |   |  |   |            |  



|(1) | These items are carried at fair value due to fair value option election under SFAS No. 159.
|--- | -------------------------------------------------------------------------------------------



35



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



The table below presents a reconciliation for all of the Companys Level 3 assets and
liabilities measured at fair value on a recurring basis. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the table below does not fully reflect the
impact of the Companys risk management activities.



|                                        |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|--------------------------------------- |  | ----------------------------------------- | ---------- | - | ----------------------------------------------- | - | -------- | ------------------------ |  | - | ------------------------------------------- | ---- |  | ------------------------------ | ---- | ----------------------------- |  | - | ---------- | - |  | - | ----- |  | - | ---------- | -
|                                        |  | Level 3 Recurring Fair Value Measurements |           
|                                        |  | Nine Months Ended September 30, 2008      |           
|                                        |  | January 1,2008Level 3Fair Value           |            |   | Total Net Gains/(Losses)Included in Net Income: |   |          | OtherComprehensiveIncome |  |   | Purchases,Sales,IssuancesandSettlements,Net |      |  | NetTransfersIn/(Out) ofLevel 3 |      | End ofPeriodLevel 3Fair Value | 
|                                        |  | RealizedGains(Losses)(b)                  |            |   | UnrealizedGains(Losses)(b)                      |   |          |                          |  |  
|                                        |  | (In thousands)                            |           
|Assets                                  |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Trading securities                      |  | $                                         | 1,642,169  |   |                                                 | $ | (52,673  | )(c)                     |  | $ | (462,930                                    | )(c) |  | $                              |     |                               |  | $ | (350,093   | ) |  | $ |      |  | $ | 776,473    |  
|Mortgage loans held for investment(a)   |  |                                           | 6,683,649  |   |                                                 |   | 897,943  | (d)                      |  |   | (3,392,421                                  | )(d) |  |                                |     |                               |  |   | (1,979,340 | ) |  |   |      |  |   | 2,209,831  |  
|Mortgage servicing rights               |  |                                           | 4,713,414  |   |                                                 |   | (19,464  | )(e)                     |  |   | (529,478                                    | )(e) |  |                                |     |                               |  |   | 560,089    |   |  |   |      |  |   | 4,724,561  |  
|Other assets:                           |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Other                                   |  |                                           | 3,558      |   |                                                 |   |         |                          |  |   |                                            |      |  |                                | (808 | )(f)                          |  |   | 240        |   |  |   |      |  |   | 2,990      |  
|                                        |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Total                                   |  | $                                         | 13,042,790 |   |                                                 | $ | 825,806  |                          |  | $ | (4,384,829                                  | )    |  | $                              | (808 | )                             |  | $ | (1,769,104 | ) |  | $ |      |  | $ | 7,713,855  |  
|                                        |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Liabilities                             |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Collateralized borrowings:              |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|On-balance sheet securitization debt(a) |  | $                                         | (6,734,448 | ) |                                                 | $ | (329,116 | )(d)                     |  | $ | 2,872,724                                   | (d)  |  | $                              |     |                               |  | $ | 1,906,116  |   |  | $ |      |  | $ | (2,284,724 | )
|Collateralized debt obligations(a)      |  |                                           | (351,226   | ) |                                                 |   | (10,501  | )(c)                     |  |   | 93,352                                      | (c)  |  |                                |     |                               |  |   | 87,093     |   |  |   |      |  |   | (181,282   | )
|Other liabilities:                      |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Derivative liabilities, net             |  |                                           | (39,064    | ) |                                                 |   | 15,049   | (c)                      |  |   | 60,118                                      | (c)  |  |                                |     |                               |  |   | (33,361    | ) |  |   | 1,744 |  |   | 4,486      |  
|                                        |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  
|Total                                   |  | $                                         | (7,124,738 | ) |                                                 | $ | (324,568 | )                        |  | $ | 3,026,194                                   |      |  | $                              |     |                               |  | $ | 1,959,848  |   |  | $ | 1,744 |  | $ | (2,461,520 | )
|                                        |  |                                           |            |   |                                                 |   |          |                          |  |   |                                             |      |  |                                |      |                               |  |   |            |   |  |   |       |  |   |            |  



|(a) | Carried at fair value due to fair value option election under SFAS No. 159.
|--- | ---------------------------------------------------------------------------



|(b) | Net income is inclusive of both realized and change in unrealized gains and losses as well as interest related to the underlying asset or liability.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | Fair value adjustment reported in (loss) gain on investment securities, net and related interest on loans and debt reported interest income and interest expense, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | Fair value adjustment reported in other (loss) income and related interest on loans and debt reported in interest income and interest expense, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



|(e) | Reported in servicing asset valuation and hedge activities, net.
|--- | ----------------------------------------------------------------



|(f) | Change in unrealized gains (losses) in available-for-sale securities recorded in equity.
|--- | ----------------------------------------------------------------------------------------



36



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



Nonrecurring Fair Value

The Company may be required to measure certain assets or liabilities at fair value from time-to-time. These periodic fair value measures typically result
from application of LOCOM or certain impairment measures under GAAP. These items would constitute nonrecurring fair value measures under SFAS No. 157.

The table below presents the items which the Company measures at fair value on a nonrecurring basis. For mortgage loans held for sale, other real estate owned and GMAC Home Services assets held for sale, LOCOM or
valuation allowance is the most relevant indicator of the impact on earnings of measuring those specific items to fair value. For lending receivables, the credit allowance which is measured using the fair value of the collateral that secures the
related lending receivable is the most relevant indicator. The carrying values of those items are inclusive of the respective valuation or credit allowance. For impairments on the model home portfolio and investments in automotive operating leases,
changes to the income statement are the most relevant indicator of the impact on earnings of measuring these specific items to fair value. The three and nine months ended September 30, 2008 losses are shown below for those items.



|                                                   |         |                                      |         |                          |                                                                                 |                                             |            |   |           |  |   |           |  |   |            |   |  |   |         |   |  |   |          |  
|-------------------------------------------------- | ------- | ------------------------------------ | ------- | ------------------------ | ------------------------------------------------------------------------------- | ------------------------------------------- | ---------- | - | --------- |  | - | --------- |  | - | ---------- | - |  | - | ------- | - |  | - | -------- | -
|                                                   |         | Nonrecurring Fair Value Measurements |         |                          | Total Gains (Losses)Included in Earningsfor the
Periods EndedSeptember 30, 2008 |                                            
|                                                   |         | As of September 30, 2008             |         |                         
|                                                   |         | Nonrecurring Fair Value Measures     |         | TotalEstimatedFair Value |                                                                                 | Lower ofCost orFair Value orCreditAllowance |            |  
|                                                   |         |                                      |         | ThreeMonths              |                                                                                 |                                             | NineMonths |  
|                                                   | Level 1 |                                      | Level 2 |                          | Level 3                                                                         |                                             |            |   |          
|                                                   |         | (In thousands)                       |        
|Mortgage loans held for sale(1)                    |         | $                                    |        |                          | $                                                                               | 3,037,400                                   |            | $ | 522,913   |  | $ | 3,560,313 |  | $ | (1,195,258 | ) |  |   |         |   |  |   |          |  
|Lending receivables(2)                             |         |                                      |        |                          |                                                                                 | 479,937                                     |            |   | 94,026    |  |   | 573,963   |  |   | (466,364   | ) |  |   |         |   |  |   |          |  
|Other assets:                                      |         |                                      |         |                          |                                                                                 |                                             |            |   |           |  |   |           |  |   |            |   |  |   |         |   |  |   |          |  
|Other real estate owned(3)                         |         |                                      |        |                          |                                                                                 | 304,953                                     |            |   | 400,336   |  |   | 705,289   |  |   | (171,346   | ) |  |   |         |   |  |   |          |  
|Model home portfolio(4)                            |         |                                      |        |                          |                                                                                 | 140,522                                     |            |   |          |  |   | 140,522   |  |   |            |   |  | $ | (29,810 | ) |  | $ | (51,160  | )
|Investments in automotive operating leases, net(5) |         |                                      |        |                          |                                                                                 |                                            |            |   |          |  |   |          |  |   |            |   |  |   |        |   |  |   | (92,035  | )
|GMAC Home Services assets held for sale(6)         |         |                                      |        |                          |                                                                                 |                                            |            |   | 182,440   |  |   | 182,440   |  |   | (13,865    | ) |  |   |         |   |  |   |          |  
|                                                   |         |                                      |         |                          |                                                                                 |                                             |            |   |           |  |   |           |  |   |            |   |  |   |         |   |  |   |          |  
|Total                                              |         | $                                    |        |                          | $                                                                               | 3,962,812                                   |            | $ | 1,199,715 |  | $ | 5,162,527 |  | $ | (1,846,833 | ) |  | $ | (29,810 | ) |  | $ | (143,195 | )
|                                                   |         |                                      |         |                          |                                                                                 |                                             |            |   |           |  |   |           |  |   |            |   |  |   |         |   |  |   |          |  



|(1) | Represents assets held for sale that are required to be measured at lower of cost or fair value in accordance with SFAS No. 65, Accounting for Certain Mortgage Banking
Activitiesor (SOP 01-6, Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others. Only assets with fair values below cost are included in the table above. The related
valuation allowance represents the cumulative adjustment to fair value of those specific loans.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The carrying value for lending receivables includes only those lending receivables that have a specific reserve established using the fair value of the underlying collateral. The
related credit allowance represents the cumulative adjustment to fair value of those specific lending receivables.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The allowance provided for other real estate owned represents any cumulative valuation adjustments recognized to adjust those respective repossessed, foreclosed and owned properties
to fair value less costs to sell.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The model home portfolio held by the Business Capital Group is accounted for as required by SFAS No. 144. The losses represent adjustments to fair value of that portfolio based
on actual sales over the last three and nine months.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



37



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|(5) | Represents assets impaired as of September 30, 2008, under SFAS No. 144, Accounting for the Impairment or Disposal of Long Lived Assets.The total loss included in
earnings for the three and nine months ended September 30, 2008, represents the fair market value adjustments on the portfolio.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | GMAC Home Services is a business unit of the Company that is under contract for sale and impaired under SFAS No. 144 held for sale treatment. The allowance amount represents
the difference between the carrying value and the estimated sale price.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fair Value Option for Financial Assets and
Financial Liabilities (SFAS No. 159)

Effective January 1, 2008, the Company adopted SFAS No. 159, which permits
entities to choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. Subsequent changes in fair value for designated items are required to be reported in
earnings in the current period. SFAS No. 159 also establishes presentation and disclosure requirements for similar types of assets and liabilities measured at fair value.

The Company elected to measure at fair value certain financial assets and liabilities held by ResCap including certain collateralized debt obligations and
certain mortgage loans held for investment and related debt held in financing securitization structures that existed as of adoption. The Companys intent in electing fair value for these items was to mitigate a divergence between accounting
losses and economic exposure for certain assets and liabilities as described in the paragraphs following the table below. The cumulative effect to retained earnings for these fair value elections was a decrease of $178.5 million on January 1,
2008.

The following table represents the carrying value of the affected instruments before and after the changes in accounting related to
the adoption of SFAS No. 159.



|                                                     |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  
|---------------------------------------------------- |  | ---------------------------------------------- | ----------- | - | ----------------------------------------------------------------------- | - | ---------- | --------------------------------------- |  | - | ---------- | -
|                                                     |  | January 1, 2008Carrying ValuePrior to Adoption |             |   | CumulativeEffectAdjustment toJanuary 1, 2008RetainedEarningsGain(Loss) |   |            | January 1, 2008Fair Value AfterAdoption | 
|                                                     |  | (In thousands)                                 |            
|Assets                                               |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  
|Mortgage loans held for investment(1)                |  | $                                              | 10,530,424  |   |                                                                         | $ | (3,846,775 | )                                       |  | $ | 6,683,649  |  
|Liabilities                                          |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  
|Collateralized borrowings:                           |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  
|On-balance sheet securitization debt                 |  |                                                | (10,367,144 | ) |                                                                         |   | 3,632,696  |                                         |  |   | (6,734,448 | )
|Collateralized debt obligations                      |  |                                                | (386,052    | ) |                                                                         |   | 34,826     |                                         |  |   | (351,226   | )
|                                                     |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  
|Pretax cumulative effect of adopting SFAS No. 159    |  |                                                |             |   |                                                                         | $ | (179,253   | )                                       |  |   |            |  
|                                                     |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  
|After-tax cumulative effect of adopting SFAS No. 159 |  |                                                |             |   |                                                                         | $ | (178,504   | )                                       |  |   |            |  
|                                                     |  |                                                |             |   |                                                                         |   |            |                                         |  |   |            |  



|(1) | Includes the removal from the balance sheet of the $489.0 million of allowance for loan losses.
|--- | -----------------------------------------------------------------------------------------------



38



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



On-balance sheet securitizations

In prior years, the Company executed certain domestic securitizations that did not meet sale criteria under SFAS No. 140 Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities  a replacement of FASB Statement No. 125(SFAS No. 140). As part of these domestic on-balance sheet securitizations, the Company typically retained the economic
residual interest in the securitization. The economic residual entitles the Company to excess cash flows that remain at each distribution date, after absorbing any credit losses in the securitization. Because sale treatment was not achieved under
SFAS No. 140, the mortgage loan collateral remained on the Companys balance sheet and was classified as mortgage loans held for investment, the securitizations debt was recorded as collateralized borrowings in securitization trusts.
After execution of the securitizations, the Company was required under GAAP to continue recording an allowance for loan losses on the mortgage loans held for investment.

As a result of market conditions and deteriorating credit performance on certain of the Companys loan products during 2007, the Companys economic exposure on certain of these domestic on-balance sheet
securitizations was reduced to zero or approximating zero, thus indicating the Company expected minimal to no future cash flows to be received on the economic residual. While the Company no longer was economically exposed to credit losses in the
securitizations, the Company was required to continue recording additional allowance for loan losses on the securitization collateral as credit performance deteriorated. Further in accordance with GAAP, the Company did not record any offsetting
reduction in the securitizations debt balances, even though any nonperformance of the assets will ultimately pass through as a reduction of amount owed to the debt holders, once they are contractually extinguished. As a result, the Company was
required to record accounting losses beyond its economic exposure.

In order to mitigate this divergence between accounting losses and
economic exposure, the Company elected the fair value option for a portion of the domestic on-balance sheet securitizations on January 1, 2008. In particular, the Company elected the fair value option for those domestic on-balance sheet
securitization vehicles in which the Company estimated that the credit reserves pertaining to securitized assets could or already had exceeded the Companys economic exposure. The fair value option election was made at a securitization level
and thus the election was made for both the mortgage loans held for investment and the related portion of on-balance sheet securitized debt for these particular securitizations.

As part of the cumulative effect of adopting SFAS No. 159, the Company removed various items that were previously included in the carrying value of
the respective mortgage loans held for investment and on-balance sheet securitization debt. The Company removed $489.0 million of allowance for loan losses and other net deferred and upfront costs included in the carrying value of the fair value
elected loans and debt. The removal of these items, as well as the adjustment required in order to have the items carrying value equal fair value at January 1, 2008, resulted in a $3.8 billion decrease recorded to beginning retained
earnings for the fair value elected mortgage loans held for investment, of which $556.0 million was the Companys estimate of the decrease in fair value due to credit quality, offset by a $3.6 billion gain related to the elected on-balance
sheet securitized debt. The impact of these fair value option elections increased the Companys deferred tax asset by $0.7 million.

Subsequent to the fair value election for mortgage loans held for investment, the Company continues to carry the fair value of these loans within mortgage loans held for investment on the balance sheet. The Company no longer records
allowance for loan losses on these fair value elected loans and amortization of net deferred costs/fees no longer occurs, because the deferred amounts were removed as part of the cumulative effect of adopting SFAS No. 159. The Companys
policy is to separately record interest income on these fair value elected loans unless they are placed on nonaccrual status when they are 60 days past due; these amounts continue be classified within interest income on the condensed consolidated
income statement. The fair value adjustment



39



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



recorded for the mortgage loans held for investment is classified within other (loss) income on the condensed consolidated income statement.

Subsequent to the fair value election for the respective on-balance sheet securitization debt, the Company no longer amortizes upfront deal costs on the
fair value elected on-balance sheet securitization debt, since these deferred amounts were removed as part of the cumulative effect of adopting SFAS No. 159. The fair value elected debt balances continue to be recorded within collateralized
borrowings in securitization trusts on the balance sheet. The Companys policy is to separately record interest expense on the fair value elected securitization debt, which continues to be classified within interest expense on the condensed
consolidated income statement. The fair value adjustment recorded for this debt is classified within other (loss) income on the condensed consolidated income statement.

Collateralized Debt Obligations

The Company executed two collateralized debt obligation
securitizations in 2004 and 2005, named CDO I and CDO II respectively (collectively the CDOs). Similar to the on-balance sheet securitizations discussed above, the Company retained certain economic interests in these CDOs which entitled
the Company to excess cash flows that remain at each distribution date, after absorbing any credit losses in the CDOs. These CDOs were required to be consolidated under FIN No. 46R  Consolidation of Variable Interest Entities, thus
the Company carries the CDO collateral on the condensed consolidated balance sheet. The Company classifies this collateral as trading securities under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securitiesand
therefore carries the collateral on the balance sheet at fair value each period, with revaluation adjustments recorded through current period earnings. The fair value adjustment recorded for the CDO trading securities is classified within gain
(loss) on investment securities, net on the condensed consolidated statement of income. The Company was required to carry the CDO debt issued to third-parties on their condensed consolidated balance sheet and classified this as collateralized
borrowings in securitization trusts. Prior to the January 1, 2008 adoption of SFAS No. 159, this debt was carried at amortized cost.

Similar to the on-balance sheet securitizations discussed above, the Company experienced significant devaluation in its retained economic interests in the on-balance sheet CDO transactions during 2007. The devaluation of retained economic
interests was primarily the result of cash flows being contractually diverted away from the Companys retained interests to build cash reserves as a direct result of certain failed securitization triggers, as well as significant market
illiquidity in the CDO market. While the Companys economic exposure was reduced to approximately zero as evidenced by its retained economic interest values, the Company continued writing down the CDO collateral with no offsetting reduction in
the associated CDO debt balances. Thus, prior to fair value option election, the Company was recording accounting losses beyond its economic exposure. In order to mitigate this divergence between accounting losses and economic exposure, the Company
elected the fair value option for the debt balances recorded for the CDOs on January 1, 2008.

As part of the cumulative effect of
adopting SFAS No. 159, the Company removed deferred upfront securitization costs related to the CDOs. The removal of the deferred costs, as well as the adjustment required in order to have the items carrying value equal fair value at
January 1, 2008, resulted in a net cumulative effect adjustment recorded to beginning retained earnings of $34.8 million. The impact of these fair value option elections did not have a material impact on the Companys deferred tax
balances.

Subsequent to the fair value option election for the CDO debt, the Company no longer amortizes upfront securitization costs for
these transactions, as these amounts were removed as part of the cumulative effect of adopting SFAS No. 159. The fair value elected CDO debt balances continue to be carried within collateralized borrowings in securitization trusts on the
condensed consolidated balance sheet. The Companys policy is to



40



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



separately record interest expense on the CDO debt, which continues to be classified within interest expense on the condensed consolidated income statement.
The fair value adjustment recorded for the CDO debt is classified within gain (loss) on investment securities, net on the condensed consolidated income statement.

The tables below display the Companys fair value option elections and information regarding the amounts recorded within earnings for each fair value option elected item.



|                                      |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     
|------------------------------------- | ------------------ | ----------------------------------------------------------------------------- | --------------- |  | - | ------------------ | - |  | -------------------------------- | ---------- | -------------------------- |  | - | -------------------------------------- |  | - | ---------- | - |  | - | -------- | ----
|Three Months Ended September 30, 2008 |                    | Changes in Fair Value Included in the Condensed Consolidated Income Statement |                
|                                      | Interest    Income |                                                                               | InterestExpense |  |   | Other(Loss) Income |   |  | Gain onInvestmentSecurities, Net |            | TotalIncluded inNet Income |  |   | Change inFair ValueDue toCreditRisk(1) | 
|                                      |                    | (In thousands)                                                                |                
|Mortgage loans held for investment    |                    | $                                                                             | 168,093         |  | $ |                   |   |  | $                                | (74,679    | )                          |  | $ |                                       |  | $ | 93,414     |   |  | $ | (258,139 | )(2)
|Collateralized borrowings:            |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     
|On-balance sheet securitizations      |                    |                                                                               |                |  |   | (90,245            | ) |  |                                  | 2,891      |                            |  |   |                                       |  |   | (87,354    | ) |  |   | 119,264  | (3) 
|Collateralized debt obligations       |                    |                                                                               |                |  |   | (2,758             | ) |  |                                  |           |                            |  |   | 50,313                                 |  |   | 47,555     |   |  |   |         | (4) 
|                                      |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     
|Total                                 |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  | $ | 53,615     |   |  |   |          |     
|                                      |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     
|                                      |                   
|Nine Months Ended September 30, 2008  |                    | Changes in Fair Value Included in the Condensed Consolidated Income Statement |                
|                                      | InterestIncome     |                                                                               | InterestExpense |  |   | Other(Loss) Income |   |  | Gain onInvestmentSecurities, Net |            | TotalIncludedin NetIncome  |  |   | Change inFair ValueDue toCreditRisk(1) | 
|                                      |                    | (In thousands)                                                                |                
|Mortgage loans held for investment    |                    | $                                                                             | 548,551         |  | $ |                   |   |  | $                                | (3,043,029 | )                          |  | $ |                                       |  | $ | (2,494,478 | ) |  | $ | (510,814 | )(2)
|Collateralized borrowings:            |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     
|On-balance sheet securitization debt  |                    |                                                                               |                |  |   | (299,695           | ) |  |                                  | 2,843,303  |                            |  |   |                                       |  |   | 2,543,608  |   |  |   | 218,103  | (3) 
|Collateralized debt obligations       |                    |                                                                               |                |  |   | (10,501            | ) |  |                                  |           |                            |  |   | 93,352                                 |  |   | 82,851     |   |  |   |         | (4) 
|                                      |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     
|Total                                 |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  | $ | 131,981    |   |  |   |          |     
|                                      |                    |                                                                               |                 |  |   |                    |   |  |                                  |            |                            |  |   |                                        |  |   |            |   |  |   |          |     



|(1) | Factors other than credit quality which impact the fair value include changes in market interest rates and the liquidity or marketability in the current marketplace. Lower levels of
observable data points in illiquid markets generally result in wide bid/offer spreads.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The credit impact for mortgage loans held for investment was quantified by applying internal credit loss assumptions to cash flow models.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------



|(3) | The credit impact for on-balance sheet securitization debt is assumed to be zero until the Companys economic interests in a particular securitization is reduced to zero, at
which point the losses on the underlying collateral will be expected to be passed through to third-party bondholders. Losses allocated to third-party bondholders, including changes in the amount of losses allocated, will result in fair value change
due to credit. The Company also monitors credit ratings and will make credit adjustments to the extent any bond classes are downgraded by rating agencies.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The credit impact for collateralized debt obligations is assumed to be zero until the Companys economic interests in the securitization is reduced to zero, at which point the
losses projected on the underlying collateral will be expected to be passed through to the securitizations bonds. The Company also monitors credit ratings and will make credit adjustments to the extent any bond classes are downgraded by rating
agencies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



Interest income on mortgage loans held for investment is measured by multiplying the unpaid principal
balance on the loans by the coupon rate and the days interest due. Interest expense on the on-balance sheet securitizations is measured by multiplying the bond principal by the coupon rate and days interest due to the investor.

Below is a table that provides the aggregate fair value and the aggregate unpaid principal balance for the Companys fair value option elected loans
and long-term debt instruments:



|                                    |  |                          |            |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  
|----------------------------------- |  | ------------------------ | ---------- | - | ------------------ | - | -------- | --------------- |  | - | ------------------- | - |  | ---------- | ---------- | - |  | - | ---------- | -
|                                    |  | As of September 30, 2008 |           
|                                    |  | UnpaidPrincipalBalance   |            |   | LoanAdvances/Other |   |          | AccruedInterest |  |   | Fair ValueAllowance |   |  | Fair Value |           
|                                    |  | (In thousands)           |           
|Mortgage Loans Held for Investment: |  |                          |            |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  
|Total loans                         |  | $                        | 9,184,051  |   |                    | $ | (142,465 | )               |  | $ | 96,283              |   |  | $          | (6,928,038 | ) |  | $ | 2,209,831  |  
|Nonaccrual loans                    |  |                          | 1,730,025  |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  
|Loans 90+ days past due             |  |                          | 1,325,444  |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  
|Collateralized Borrowings:          |  |                          |            |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  
|On-balance sheet securitizations    |  |                          | (8,773,458 | ) |                    |   | (1,560   | )               |  |   | (20,335             | ) |  |            | 6,510,629  |   |  |   | (2,284,724 | )
|Collateralized debt obligations     |  |                          | (310,922   | ) |                    |   |         |                 |  |   | (1,221              | ) |  |            | 130,861    |   |  |   | (181,282   | )
|                                    |  |                          |            |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  
|Total for collateralized borrowings |  | $                        | (9,084,380 | ) |                    | $ | (1,560   | )               |  | $ | (21,556             | ) |  | $          | 6,641,490  |   |  | $ | (2,466,006 | )
|                                    |  |                          |            |   |                    |   |          |                 |  |   |                     |   |  |            |            |   |  |   |            |  

The Company measured fair value of the mortgage loans held for investment using a portfolio
approach or an in-use premise. By utilizing exit prices at a pool level, this approach does not allow the Company to reliably estimate the fair value of nonaccrual and 90+ loans and, therefore, the fair value of those items is not included in the
table above. Unpaid principal balances are given to allow assessment of the materiality of nonaccrual and 90+ loans relative to total loans. In the table above, 90+ loans are included in nonaccrual loans which are included in total loans.



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|17. | Related Party Transactions
|--- | --------------------------

A summary of the
balance sheet effect and related interest of transactions with GMAC, Cerberus, GM, and affiliated companies follows:



|                                                             |  |                            |         |                                   |   |                   |  |                   |      |  |   |     
|------------------------------------------------------------ |  | -------------------------- | ------- | --------------------------------- | - | ----------------- |  | ----------------- | ---- |  | - | ----
|                                                             |  | PrincipalOutstanding as of |         | Interest for the NineMonths Ended
|                                                             |  | September 30,2008          |         | December 31,2007                  |   | September 30,2008 |  | September 30,2007
|                                                             |  | (In millions)             
|Borrowings:                                                  |  |                            |         |                                   |   |                   |  |                   |      |  |   |     
|GMAC senior secured credit facility                          |  | $                          | 2,172.1 |                                   | $ |                  |  | $                 | 33.5 |  | $ |    
|GMAC term loan                                               |  |                            |        |                                   |   |                  |  |                   | 9.2  |  |   |    
|GMAC senior secured credit facility  Cerberus               |  |                            | 382.5   |                                   |   |                  |  |                   | 6.5  |  |   |    
|GMAC senior secured credit facility  GM                     |  |                            | 367.5   |                                   |   |                  |  |                   | 6.3  |  |   |    
|GMAC secured MSR facility                                    |  |                            | 1,098.5 |                                   |   |                  |  |                   | 21.0 |  |   |    
|GMAC Resort Finance facility                                 |  |                            |        |                                   |   |                  |  |                   | 17.8 |  |   |    
|Cerberus model home term loan                                |  |                            | 125.0   |                                   |   |                  |  |                   | 25.3 |  |   |    
|Deposit liabilities at GMAC Bank                             |  |                            | 455.8   |                                   |   | 418.8             |  |                   | 15.6 |  |   | 11.1
|Receivables:                                                 |  |                            |         |                                   |   |                   |  |                   |      |  |   |     
|Warehousing lending receivable                               |  | $                          |        |                                   | $ | 115.9             |  | $                 | 5.6  |  | $ | 4.0 
|Mortgage loans/others receivable (purchased at market price) |  |                            | 43.0    |                                   |   | 131.6             |  |                   |     |  |   |    

A summary of the income statement effect and related interest of transactions with GMAC, Cerberus,
GM, and affiliated companies follows:



|                                                          |  |                                                                      |       |      |   |     
|--------------------------------------------------------- |  | -------------------------------------------------------------------- | ----- | ---- | - | ----
|                                                          |  | Fees and OtherIncome/(Expense)for the Nine MonthsEnded September 30,
|Fees Paid and Revenue Earned:                             |  | 2008                                                                 |       | 2007
|                                                          |  | (In millions)                                                       
|Management fees paid to GMAC(a)                           |  | $                                                                    | 49.7  |      | $ | 31.6
|Auto Bank loans, administration and other service fees(b) |  |                                                                      | 52.5  |      |   | 38.0
|                                                          |  |                                                                      |       |      |   |     
|Total fees paid                                           |  | $                                                                    | 102.2 |      | $ | 69.6
|                                                          |  |                                                                      |       |      |   |     
|Global relocation services provided to GM/GMAC            |  | $                                                                    | 9.0   |      | $ | 7.6 
|Mortgage related services provided to GM/GMAC employees   |  |                                                                      | 2.6   |      |   | 3.2 
|Risk management services provided to GMAC                 |  |                                                                      |      |      |   | 15.0
|                                                          |  |                                                                      |       |      |   |     
|Total revenue earned                                      |  | $                                                                    | 11.6  |      | $ | 25.8
|                                                          |  |                                                                      |       |      |   |     



|(a) | Includes finance, information technology, communication, corporate marketing, procurement, and services related to facilities.
|--- | ------------------------------------------------------------------------------------------------------------------------------



|(b) | Includes primarily the services related to automotive loans, commercial lending, banking and finance.
|--- | -----------------------------------------------------------------------------------------------------



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



On June 4, 2008, Residential Funding Company, LLC (RFC) and GMAC Mortgage, LLC
(GMAC Mortgage), each subsidiaries of the Company, entered into an agreement with GMAC, pursuant to which GMAC is providing to RFC and GMAC Mortgage a senior secured credit facility (the Facility) with a principal amount of
up to $3.5 billion (the Facility Limit). The proceeds of the Facility were used to repay existing indebtedness of the Company on or prior to its maturity, to acquire certain assets, and for other working capital purposes. Under the
Facility, GMAC agreed to make revolving loans to RFC and GMAC Mortgage. The aggregate outstanding principal under the Facility at any time may not exceed the lesser of the Facility Limit and the allowable borrowing base as determined in accordance
with the terms of the Facility. Advances bear interest at a floating rate equal to one-month LIBOR plus 2.75%. The Company paid the Term Loan assigned to GMAC with proceeds from a draw under the Facility on July 28, 2008. The Facility expires
on May 1, 2010. In addition, the Company has amortized $3.0 million of deferred debt issuance costs during the nine months ended September 30, 2008 related to the Facility and has $14.5 million of these deferred costs remaining on its
balance sheet as of September 30, 2008.

Also on June 4, 2008, GMAC entered into a Participation Agreement (the
Participation Agreement) with General Motors Corporation (GM) and Cerberus ResCap Financing, LLC (Cerberus Fund) collectively the Participants. Pursuant to the Participation Agreement, GMAC sold GM and
Cerberus Fund $750 million in subordinated participations in the loans made pursuant to the Facility. GM and Cerberus Fund acquired 49% and 51% of the Participations, respectively. The Participants will not be entitled to receive any principal
payments with respect to the Participations until the principal portion of the loans retained by GMAC have been paid in full. At September 30, 2008, $2.9 billion in capacity has been utilized in advances under the Facility, including the $750
million sold and assigned to GM and Cerberus Fund.

In 2008, GMAC continued its open market repurchase program initiated during the fourth
quarter of 2007 to repurchase a portion of the Companys outstanding unsecured notes. During the nine months ended September 30, 2008, GMAC forgave these notes which resulted in a gain of forgiveness of debt and capital contribution.
Accordingly, the Company recorded a capital contribution for GMACs purchase price of $1.0 billion and a gain of $552.4 million on extinguishment of debt for the difference between the carrying value and GMACs purchase price. $806.3
million of the $1.0 billion capital contribution are non-cumulative, non-participation perpetual preferred membership interests (Preferred Membership Interests) and are recorded in the equity section of the Companys balance sheet.
As of September 30, 2008, GMAC no longer holds the Companys senior secured notes.

The Preferred Membership Interests rank senior
in right of payment to the Companys common membership interests with respect to distributions and payments on liquidation or dissolution of the Company. The Preferred Membership Interests pay quarterly distributions at the rate of 13% of the
liquidation preference (the Preferred Distribution) when, as and if authorized by the Companys Board of Directors. The Company may not pay distributions on its common membership interests if any Preferred Distributions have not
been paid, or sufficient funds have not been set aside for such payment, for the then-current quarterly period. Preferred Distributions are not cumulative. The Company is currently prohibited by the Operating Agreement between it and GMAC from
paying distributions on any of its membership interests. The Preferred Membership Interests are redeemable at the Companys option on any Preferred Distribution payment date if approved by the Companys Board of Directors, including a
majority of the independent directors, in whole or in part for 100% of its liquidation preference plus any authorized but unpaid dividends on the Preferred Membership Interests being redeemed. The Preferred Membership Interests are exchangeable at
GMACs option on a unit-for-unit basis into preferred membership interests in IB Finance Holding Company, LLC at any time after January 1, 2009, so long as neither the Company nor any of its significant subsidiaries was the subject of any
bankruptcy proceeding on or before that date. The Preferred Membership Interests have no voting rights, except as required by law, and are not



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



transferable by GMAC to any party other than a wholly-owned affiliate of GMAC without the consent of the Companys Board of Directors, including a
majority of the independent directors.

On June 1, 2008, GMAC and the Company entered into an amendment to the Loan and Security
Agreement, dated as of April 18, 2008 (the MSR Facility). The amendment to the MSR Facility increased the maximum facility amount from $750 million to $1.2 billion and increased the advance rate from 50% to 85%. This facility was
due to mature on October 17, 2008. Subsequent to September 30, 2008, the GMAC Secured MSR Facility matured and was renewed to May 1, 2009 with additional amendments to the original terms. The most notable terms are the reduction in
the advance rates from 85% to 76.6% and the reduction of the amount of GMACs lending commitment by $84.0 million as of October 17, 2008, another commitment reduction of $84.0 million effective as of October 22, 2008, and further
commitment reductions equal to $101.5 million representing the outstanding indebtedness forgiven by GMAC on September 30, 2008, as a contribution of capital to the Company and its subsidiaries.

On February 21, 2008, RFC entered into a secured Credit Agreement (the Resort Finance Facility) with GMAC, as a lender and as agent, to
provide RFC with a revolving credit facility with a principal amount of up to $750.0 million. To secure the obligations of RFC under the Resort Finance Facility, RFC pledged as collateral under a Pledge Agreement (the Pledge Agreement),
among other things, its membership interest in RFC Resort Funding, LLC, a wholly-owned special purpose subsidiary of RFC, certain loans made by RFC to resort developers secured by time-share loans or agreements to purchase timeshares and certain
loans made by RFC to resort developers to fund construction of resorts and resort-related facilities and all collections with respect to the pledged loans. The entire capacity of $750.0 million was utilized as of June 30, 2008. As part of the
sale of the Resort Finance business to GMACCF in the third quarter of 2008, the Resort Finance Facility was paid in full.

On June 17,
2008, the Company and GMAC Commercial Finance, LLC (GMACCF), a subsidiary of GMAC, agreed to enter into a Receivables Factoring Facility (the Receivables Facility), whereby GMACCF agreed to purchase certain mortgage servicing advances.
The servicing advances are part of the primary collateral securing the GMAC senior secured credit facility and the New Notes. The proceeds from the Receivables Facility were reinvested in additional servicing advances that became primary collateral.
The agreement provides for the purchase of receivables that satisfy certain eligibility requirements multiplied by a purchase price rate of 85%. The maximum outstanding receivables at any point in time less the 15% discount, can not exceed $600
million. For the nine months ended September 30, 2008, GMACCF purchased $753.6 million face amount of receivables, resulting in a loss of $113.0 million for the Company. The Receivables Facility will mature on June 16, 2009.

In June 2008, Cerberus Capital Management, L.P. or its designee(s) (Cerberus) purchased certain assets of the Company with a carrying value of
approximately $479 million for consideration consisting of $230 million in cash and a Series B junior preferred membership interest in a newly-formed entity, CMH Holdings, LLC (CMH), which is not a subsidiary of the Company and the
managing member of which is an affiliate of Cerberus. CMH purchased from the Company model home and lot option assets. CMH is consolidated into Residential Capital, LLC under FIN No. 46R as the Company remains the primary beneficiary. In
conjunction with this agreement, Cerberus extended a term loan of $230 million with a guaranteed overall return of $46 million, which is to be paid down as assets are sold. The agreement also included revolving loans to CMH with a maximum limit of
$10 million that if used would bear interest at 15%. The loans are secured by a pledge of all of the assets of CMH and will mature on June 30, 2013.



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



During the second quarter of 2008, Cerberus committed to purchase certain assets at the
Companys option consisting of performing and nonperforming mortgage loans, mortgage-backed securities and other assets for net cash proceeds of $300.0 million. During the third quarter, the following transactions were completed with Cerberus:



| |  |  | On July 14 and 15, 2008, GMAC Mortgage LLC (GMAC Mortgage) agreed to sell securitized excess servicing on two populations of loans to Cerberus
consisting of $13.8 billion in unpaid principal balance of Freddie Mac loans and $24.8 billion in unpaid principal balance of Fannie Mae loans, capturing $591.2 million and $981.9 million of notional interest-only securities, respectively. The sales
closed on July 30, 2008 with net proceeds of $175.1 million to the Company and a loss on sale of $23.5 million.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 30, 2008, the Companys Business Capital Group completed the sale of certain of its model home assets to MHPool Holdings LLC (MHPool
Holdings), an affiliate of Cerberus, for cash consideration consisting of approximately $80.0 million, subject to certain adjustments, primarily relating to the sales of homes between June 30, 2008 and September 30, 2008, resulting
in a net purchase price from MHPool Holdings of approximately $59.0 million. The loss on sale was $27.3 million. The purchase price is subject to further post-closing adjustments that are not expected to be material.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These transactions entered into between ResCap and Cerberus, satisfies the previously announced commitment by Cerberus to purchase assets of $300.0
million.

In addition, Cerberus committed to make firm bids to purchase the auction assets for net cash proceeds of $650.0 million. The
Company intends, but is not obligated, to undertake an orderly sale of certain of its assets consisting of performing and nonperforming mortgage loans and mortgage-backed securities in arms-length transactions through the retention of nationally
recognized brokers.

During the three months ended September 30, 2008 the Company purchased forward derivatives from GMAC to mitigate
risk against currency fluctuation in the Euro. The net asset position of these derivatives at September 30, 2008 was $11.8 million. The gain on these derivatives for the nine months ended September 30, 2008 was $11.8 million.



|18. | Subsequent Events
|--- | -----------------

Renewal and amendment to
GMAC MSR Facility

On June 1, 2008, RFC, GMAC Mortgage and GMAC entered into an amendment to increase GMACs maximum
lending commitment under the MSR Facility from $750 million to $1.2 billion. Under the terms of the MSR Facility, RFC and GMAC Mortgage (the borrowers) were permitted to request loans from the lender until October 17, 2008, at which point the
loans would mature, unless refinanced or repaid earlier.

On October 17, 2008, the parties amended the MSR Facility to, among other
things:



| |  |  | Reduce the advance rate from 85% to 76.6%;
| | - |  | ------------------------------------------



| |  |  | Renew the MSR facility to May 1, 2009, unless ResCap obtains replacement financing from a third-party lender at an earlier date;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reduce the amount of GMACs lending commitment by $84 million as of October 17, 2008, with a subsequent commitment reduction of $84 million effective as
of October 22, 2008, and further commitment reductions equal to any amounts of the outstanding indebtedness forgiven by GMAC, including the $101.5 million forgiven on September 30, 2008, as a contribution of capital to ResCap and its
subsidiaries;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



| |  |  | Add a covenant by the borrowers to use their best efforts to provide GMAC, by November 30, 2008, with $250 million in additional collateral for the
indebtedness outstanding under the MSR facility, with a zero advance rate applicable to such collateral;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | At GMACs request, require the borrowers to resign as servicers under the underlying servicing agreements, during the existence of an event of default under
the MSR Facility; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Add an option permitting GMAC to require on two business days notice (or on one business days notice following an event of default) that servicing
collections be placed in a segregated account.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The reductions in GMACs lending commitment described above reflect
GMACs agreement to defer repayment of $168 million, required to cure a borrowing base deficiency. The borrowers collectively repaid $84 million on October 17 and the remaining $84 million on October 22, 2008 to cure the borrowing
base deficiency.

RFC and GMAC Mortgage give other representations, covenants and indemnities that are customary in similar facilities.
ResCap has entered into a Guarantee pursuant to which it guarantees the payment by the borrowers of their obligations under the MSR Facility.

GMAC forgiveness of debt

On October 31, 2008, the GMAC Board of Directors approved forgiveness of the
Companys debt related to the Secured GMAC MSR Facility equal to the amount required to maintain a consolidated tangible net worth, as defined, of $350.0 million as of October 31, 2008. As a result of this debt forgiveness, the Company
will remain in compliance with its credit facility financial covenants as of October 31, 2008, among other requirements, requiring the Company to maintain a monthly consolidated tangible net worth of $250.0 million. For this purpose,
consolidated tangible net worth is defined as the Companys consolidated equity, excluding intangible assets and equity in GMAC Bank to the extent included in the Companys consolidated balance sheet.



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|19. | Segment Information
|--- | -------------------

Financial results for the
Companys reportable operating segments were as follows:



|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------- |  | ----------------------- | ---------- | - | -------------------- | - | --------- | -------------------------- |  | - | ----------------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|Three Months Ended September 30, 2008             |  | ResidentialFinanceGroup |            |   | BusinessCapitalGroup |   |           | InternationalBusinessGroup |  |   | CorporateandOther |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  | (In thousands)          |           
|Net financing revenue                             |  | $                       | 45,493     |   |                      | $ | (20,558   | )                          |  | $ | (29,074           | ) |  | $            | 122,189    |   |              | $ |            |   |  | $ | 118,050     |  
|Other revenue                                     |  |                         | 112,016    |   |                      |   | (92,806   | )                          |  |   | (189,260          | ) |  |              | 1,790      |   |              |   |            |   |  |   | (168,260    | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total net revenue                                 |  |                         | 157,509    |   |                      |   | (113,364  | )                          |  |   | (218,334          | ) |  |              | 123,979    |   |              |   |            |   |  |   | (50,210     | )
|Provision for loan losses                         |  |                         | (208,344   | ) |                      |   | (116,773  | )                          |  |   | (257,886          | ) |  |              | (77,879    | ) |              |   |            |   |  |   | (660,882    | )
|Total non-interest expense                        |  |                         | (474,501   | ) |                      |   | (23,480   | )                          |  |   | (155,405          | ) |  |              | (505,626   | ) |              |   |            |   |  |   | (1,159,012  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before income taxes and minority interest    |  |                         | (525,336   | ) |                      |   | (253,617  | )                          |  |   | (631,625          | ) |  |              | (459,526   | ) |              |   |            |   |  |   | (1,870,104  | )
|Income tax (benefit) expense                      |  |                         | (25,368    | ) |                      |   | (635      | )                          |  |   | 6,207             |   |  |              | 24,728     |   |              |   |            |   |  |   | 4,932       |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before minority interest                     |  |                         | (499,968   | ) |                      |   | (252,982  | )                          |  |   | (637,832          | ) |  |              | (484,254   | ) |              |   |            |   |  |   | (1,875,036  | )
|Minority interest                                 |  |                         |           |   |                      |   |          |                            |  |   |                  |   |  |              | 37,135     |   |              |   |            |   |  |   | 37,135      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net loss                                          |  | $                       | (499,968   | ) |                      | $ | (252,982  | )                          |  | $ | (637,832          | ) |  | $            | (521,389   | ) |              | $ |            |   |  | $ | (1,912,171  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total assets                                      |  | $                       | 40,645,716 |   |                      | $ | 2,811,176 |                            |  | $ | 10,684,456        |   |  | $            | 28,427,992 |   |              | $ | (16,054,053 | ) |  | $ | 66,515,287  |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest (expense) income from other segments |  | $                       | (94,967    | ) |                      | $ | (11,758   | )                          |  | $ | (56,472           | ) |  | $            | 163,197    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|                                                  |  |                         |            |   |                      |  
|Three Months Ended September 30, 2007             |  | ResidentialFinanceGroup |            |   | BusinessCapitalGroup |   |           | InternationalBusinessGroup |  |   | CorporateandOther |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  | (In thousands)          |           
|Net financing revenue                             |  | $                       | 137,650    |   |                      | $ | 22,702    |                            |  | $ | 21,503            |   |  | $            | 77,162     |   |              | $ |            |   |  | $ | 259,017     |  
|Other revenue                                     |  |                         | 161,333    |   |                      |   | (78,185   | )                          |  |   | (500,437          | ) |  |              | (222,031   | ) |              |   |            |   |  |   | (639,320    | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total net revenue                                 |  |                         | 298,983    |   |                      |   | (55,483   | )                          |  |   | (478,934          | ) |  |              | (144,869   | ) |              |   |            |   |  |   | (380,303    | )
|Provision for loan losses                         |  |                         | (586,833   | ) |                      |   | (92,368   | )                          |  |   | (22,445           | ) |  |              | (182,567   | ) |              |   |            |   |  |   | (884,213    | )
|Total non-interest expense                        |  |                         | (881,733   | ) |                      |   | (24,888   | )                          |  |   | (158,363          | ) |  |              | (26,308    | ) |              |   |            |   |  |   | (1,091,292  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before income taxes and minority interest    |  |                         | (1,169,583 | ) |                      |   | (172,739  | )                          |  |   | (659,742          | ) |  |              | (353,744   | ) |              |   |            |   |  |   | (2,355,808  | )
|Income tax expense (benefit)                      |  |                         | 23,125     |   |                      |   | (849      | )                          |  |   | (161,731          | ) |  |              | 20,013     |   |              |   |            |   |  |   | (119,442    | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before minority interest                     |  |                         | (1,192,708 | ) |                      |   | (171,890  | )                          |  |   | (498,011          | ) |  |              | (373,757   | ) |              |   |            |   |  |   | (2,236,366  | )
|Minority interest                                 |  |                         |           |   |                      |   |          |                            |  |   |                  |   |  |              | 24,561     |   |              |   |            |   |  |   | 24,561      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net loss                                          |  | $                       | (1,192,708 | ) |                      | $ | (171,890  | )                          |  | $ | (498,011          | ) |  | $            | (398,318   | ) |              | $ |            |   |  | $ | (2,260,927  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total assets                                      |  | $                       | 76,059,559 |   |                      | $ | 6,490,298 |                            |  | $ | 16,478,824        |   |  | $            | 38,799,143 |   |              | $ | (21,702,956 | ) |  | $ | 116,124,868 |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest (expense) income from other segments |  | $                       | (153,229   | ) |                      | $ | (75,969   | )                          |  | $ | 11,667            |   |  | $            | 217,531    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  



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RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------- |  | ----------------------- | ---------- | - | -------------------- | - | --------- | -------------------------- |  | - | ----------------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|Nine Months Ended September 30, 2008              |  | ResidentialFinanceGroup |            |   | BusinessCapitalGroup |   |           | InternationalBusinessGroup |  |   | CorporateandOther |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  | (In thousands)          |           
|Net financing revenue                             |  | $                       | 176,667    |   |                      | $ | (45,547   | )                          |  | $ | 7,781             |   |  | $            | 224,533    |   |              | $ |            |   |  | $ | 363,434     |  
|Other revenue                                     |  |                         | 1,115,669  |   |                      |   | (521,679  | )                          |  |   | (1,906,964        | ) |  |              | 406,347    |   |              |   |            |   |  |   | (906,627    | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total net revenue                                 |  |                         | 1,292,336  |   |                      |   | (567,226  | )                          |  |   | (1,899,183        | ) |  |              | 630,880    |   |              |   |            |   |  |   | (543,193    | )
|Provision for loan losses                         |  |                         | (493,176   | ) |                      |   | (211,730  | )                          |  |   | (442,258          | ) |  |              | (283,039   | ) |              |   |            |   |  |   | (1,430,203  | )
|Total non-interest expense                        |  |                         | (1,374,444 | ) |                      |   | (63,102   | )                          |  |   | (404,166          | ) |  |              | (680,286   | ) |              |   |            |   |  |   | (2,521,998  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before income taxes and minority interest    |  |                         | (575,284   | ) |                      |   | (842,058  | )                          |  |   | (2,745,607        | ) |  |              | (332,445   | ) |              |   |            |   |  |   | (4,495,394  | )
|Income tax expense (benefit)                      |  |                         | (22,401    | ) |                      |   | (1,050    | )                          |  |   | 100,245           |   |  |              | 11,295     |   |              |   |            |   |  |   | 88,089      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before minority interest                     |  |                         | (552,883   | ) |                      |   | (841,008  | )                          |  |   | (2,845,852        | ) |  |              | (343,740   | ) |              |   |            |   |  |   | (4,583,483  | )
|Minority interest                                 |  |                         |           |   |                      |   |          |                            |  |   |                  |   |  |              | 47,297     |   |              |   |            |   |  |   | 47,297      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net loss                                          |  | $                       | (552,883   | ) |                      | $ | (841,008  | )                          |  | $ | (2,845,852        | ) |  | $            | (391,037   | ) |              | $ |            |   |  | $ | (4,630,780  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total assets                                      |  | $                       | 40,645,716 |   |                      | $ | 2,811,176 |                            |  | $ | 10,684,456        |   |  | $            | 28,427,992 |   |              | $ | (16,054,053 | ) |  | $ | 66,515,287  |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest (expense) income from other segments |  | $                       | (319,204   | ) |                      | $ | (108,622  | )                          |  | $ | (240,398          | ) |  | $            | 668,224    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|                                                  |  |                         |            |   |                      |  
|Nine Months Ended September 30, 2007              |  | ResidentialFinanceGroup |            |   | BusinessCapitalGroup |   |           | InternationalBusinessGroup |  |   | CorporateandOther |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  | (In thousands)          |           
|Net financing revenue                             |  | $                       | 647,294    |   |                      | $ | 88,683    |                            |  | $ | 81,179            |   |  | $            | 240,600    |   |              | $ |            |   |  | $ | 1,057,756   |  
|Other revenue                                     |  |                         | 563,274    |   |                      |   | 9,093     |                            |  |   | (257,985          | ) |  |              | (296,975   | ) |              |   |            |   |  |   | 17,407      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total net revenue                                 |  |                         | 1,210,568  |   |                      |   | 97,776    |                            |  |   | (176,806          | ) |  |              | (56,375    | ) |              |   |            |   |  |   | 1,075,163   |  
|Provision for loan losses                         |  |                         | (1,313,110 | ) |                      |   | (149,810  | )                          |  |   | (45,006           | ) |  |              | (251,714   | ) |              |   |            |   |  |   | (1,759,640  | )
|Total non-interest expense                        |  |                         | (2,159,491 | ) |                      |   | (62,494   | )                          |  |   | (347,849          | ) |  |              | (86,850    | ) |              |   |            |   |  |   | (2,656,684  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before income taxes and minority interest    |  |                         | (2,262,033 | ) |                      |   | (114,528  | )                          |  |   | (569,661          | ) |  |              | (394,939   | ) |              |   |            |   |  |   | (3,341,161  | )
|Income tax expense (benefit)                      |  |                         | 96,659     |   |                      |   | (531      | )                          |  |   | (131,435          | ) |  |              | 51,494     |   |              |   |            |   |  |   | 16,187      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Loss before minority interest                     |  |                         | (2,358,692 | ) |                      |   | (113,997  | )                          |  |   | (438,226          | ) |  |              | (446,433   | ) |              |   |            |   |  |   | (3,357,348  | )
|Minority interest                                 |  |                         |           |   |                      |   |          |                            |  |   |                  |   |  |              | 68,051     |   |              |   |            |   |  |   | 68,051      |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net loss                                          |  | $                       | (2,358,692 | ) |                      | $ | (113,997  | )                          |  | $ | (438,226          | ) |  | $            | (514,484   | ) |              | $ |            |   |  | $ | (3,425,399  | )
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Total assets                                      |  | $                       | 76,059,559 |   |                      | $ | 6,490,298 |                            |  | $ | 16,478,824        |   |  | $            | 38,799,143 |   |              | $ | (21,702,956 | ) |  | $ | 116,124,868 |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest (expense) income from other segments |  | $                       | (410,149   | ) |                      | $ | (222,725  | )                          |  | $ | (94,243           | ) |  | $            | 727,117    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                         |            |   |                      |   |           |                            |  |   |                   |   |  |              |            |   |              |   |             |   |  |   |             |  



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RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



|20. | Regulatory Matters
|--- | ------------------

Certain subsidiaries of the
Company associated with the Companys mortgage and real estate operations are required to maintain certain regulatory net worth requirements. Failure to meet minimum capital requirements can initiate certain mandatory actions by federal, state
and foreign agencies that could have a material effect on the Companys results of operations and financial condition. These entities were in compliance with these requirements as of September 30, 2008.

As an industrial bank chartered by the State of Utah, GMAC Bank (the Bank) is subject to various regulatory capital requirements administered by state and
federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Banks results of
operations and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets,
liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings
and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1
capital to average assets.

The FDIC requires the Bank to maintain a well capitalized categorization, under the regulatory framework (see
tables below), for the first three years of operation. To be categorized as well capitalized, the Bank must maintain minimum total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios as set forth in the table. The Banks
actual capital amounts and ratios were as follows:



|                                                        |        |                       |         |  |                               |        |  |       |         |  |      |  
|------------------------------------------------------- | ------ | --------------------- | ------- |  | ----------------------------- | ------ |  | ----- | ------- |  | ---- | -
|September 30, 2008                                      |        | Actual                |         |  | Minimum to beWell Capitalized |       
|                                                        | Amount |                       | Ratio   |  |                               | Amount |  | Ratio |        
|                                                        |        | (Dollars in millions) |         |  | (Dollars in millions)         |       
|Total capital (Tier 1 + Tier 2) to risk weighted assets |        | $                     | 3,932.0 |  | 16.4                          | %      |  | $     | 2,395.3 |  | 10.0 | %
|Tier 1 capital to risk weighted assets                  |        |                       | 3,685.6 |  | 15.4                          | %      |  |       | 1,437.2 |  | 6.0  | %
|Tier 1 capital to average assets (leveraged ratio)      |        |                       | 3,685.6 |  | 11.3                          | %      |  |       | 3,580.0 |  | 11.0 | %

On February 1, 2008, Cerberus FIM, LLC; Cerberus FIM Investors, LLC; and FIM Holdings LLC
(collectively, the FIM Entities) submitted a letter to the Federal Deposit Insurance Corporation (FDIC) requesting that the FDIC waive certain of the requirements contained in a two-year disposition agreement among each of
the FIM Entities and the FDIC that pertained to the Bank. On July 15, 2008, the FDIC determined to address the FIM Entities waiver request submitted to the FDIC on February 1, 2008 through the execution of a 10-year extension of the
existing two-year disposition requirement. Certain agreements were entered into in connection with this extension.

On July 21, 2008,
the well capitalization minimum requirements were modified in connection with the FDIC extension. Following is a summary of the modifications:



| |  |  | Each of GMAC, the FIM Entities, IB Finance Holding Company, LLC (Holdings), the Bank and the FDIC (collectively, the Contracting Parties)
entered into a Parent Company Agreement (the PA). The PA requires GMAC to maintain its capital at a level such that the ratio of its total equity to total assets is at least 5%. The PA further requires GMAC, beginning December 31,
2008, to maintain its capital at a level such that the ratio of its tangible equity to tangible assets is at least 5%. Further, the PA requires the Bank to obtain FDIC approval prior to engaging in certain affiliate transactions, and for
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



| | any major deviation or material change from its business plan for a seven-year period. The PA also requires GMAC and Holdings to submit certain periodic
reports to the FDIC and to consent to examinations by the FDIC to monitor compliance with the PA, any other agreements executed in conjunction with the 10-year extension of the existing two-year disposition requirement, and applicable law. As of
September 30, 2008, the Banks tangible equity to tangible assets ratio was 11.5%.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Contracting Parties entered into a Capital and Liquidity Maintenance Agreement (the CLMA). The CLMA requires capital at the Bank to be maintained at
a level such that GMAC Banks leverage ratio is at least 11% for a three-year period. Following the initial three-year period, GMAC Bank must continue to be well capitalized. As of September 30, 2008, the Banks leverage
ratio was 11.3%. The CLMA further requires GMAC (and such additional Contracting Parties acceptable to the FDIC) to extend a $3 billion unsecured revolving line of credit to the Bank.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the above requirements imposed by the Federal Deposit Insurance Corporation, the Bank is also required by the Utah Department of Financial
Institutions (the Department) to maintain total capital at a higher level. As of August 2, 2007, the Bank is required to maintain total capital in an amount not less than 9.25% of total assets. The Utah requirement will continue
until two full-scope safety and soundness examinations have been completed by the Department, but not later than November 22, 2008, unless the Commissioner of the Department determines that a greater amount of capital is required to protect the
depositors of the Bank.

Certain of the Companys foreign subsidiaries operate in local markets as either banks or regulated finance
companies and are subject to regulatory restrictions, including Financial Service Authority requirements. These regulatory restrictions, among other things, require that the Companys subsidiaries meet certain minimum capital requirements and
may restrict dividend distributions and ownership of certain assets. As of September 30, 2008, compliance with these various regulations has not had a material adverse effect on the Companys consolidated balance sheets, statements of
income or cash flows.



|21. | Supplemental Financial Information
|--- | ----------------------------------

The following
supplemental financial information presents the condensed consolidating balance sheet, statements of income and statements of cash flows for the Company, the guarantor and non-guarantor subsidiaries.

As a holding company, the Company is dependent upon dividends and other payments from its subsidiaries to generate the funds necessary to meet potential
future obligations. The Company and any guarantor subsidiary are able to control receipt of dividends and other payments from its respective subsidiaries subject to the satisfaction of covenants and conditions contained in any existing and future
financing documents. Certain statutory restrictions or regulatory constraints may also restrict the payment of amounts to the Company or any guarantor subsidiary.



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NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2008



|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|------------------------------------------------------------------ | ---------------------- | ------ | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | ----------- | - |  | - | ---------- | -
|                                                                   |                        | Parent |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |            
|                                                                   | (Dollars in thousands) |       
|ASSETS                                                             |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Cash and cash equivalents                                          |                        | $      | 767,266    |   |                       | $ | 367,879    |                           |  | $ | 5,771,016    |   |  | $            | (21,318     | ) |  | $ | 6,884,843  |  
|Mortgage loans held for sale                                       |                        |        |           |   |                       |   | 824,442    |                           |  |   | 3,328,604    |   |  |              | (41         | ) |  |   | 4,153,005  |  
|Trading securities                                                 |                        |        |           |   |                       |   | 99,902     |                           |  |   | 767,688      |   |  |              |            |   |  |   | 867,590    |  
|Mortgage loans held for investment, net fair value                 |                        |        |           |   |                       |   | 3,291,095  |                           |  |   | 25,559,365   |   |  |              | (8,211      | ) |  |   | 28,842,249 |  
|Lending receivables, net                                           |                        |        |           |   |                       |   | 233,176    |                           |  |   | 6,308,363    |   |  |              |            |   |  |   | 6,541,539  |  
|Mortgage servicing rights                                          |                        |        |           |   |                       |   | 4,131,597  |                           |  |   | 592,964      |   |  |              |            |   |  |   | 4,724,561  |  
|Accounts receivable, net                                           |                        |        | 714        |   |                       |   | 1,524,017  |                           |  |   | 1,920,800    |   |  |              | 11          |   |  |   | 3,445,542  |  
|Investments in real estate and other                               |                        |        |           |   |                       |   | 39,555     |                           |  |   | 641,932      |   |  |              |            |   |  |   | 681,487    |  
|Other assets                                                       |                        |        | 212,535    |   |                       |   | 5,059,824  |                           |  |   | 8,924,895    |   |  |              | (3,822,783  | ) |  |   | 10,374,471 |  
|Investment in subsidiaries                                         |                        |        | 15,963,027 |   |                       |   | (1,274,722 | )                         |  |   |             |   |  |              | (14,688,305 | ) |  |   |           |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Total assets                                                       |                        | $      | 16,943,542 |   |                       | $ | 14,296,765 |                           |  | $ | 53,815,627   |   |  | $            | (18,540,647 | ) |  | $ | 66,515,287 |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|LIABILITIES                                                        |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Borrowings:                                                        |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Borrowings from parent                                             |                        | $      | 2,172,124  |   |                       | $ | 6,911,201  |                           |  | $ | 4,370,387    |   |  | $            | (10,183,129 | ) |  | $ | 3,270,583  |  
|Borrowings from affiliates                                         |                        |        | 750,000    |   |                       |   |           |                           |  |   | 124,979      |   |  |              |            |   |  |   | 874,979    |  
|Collateralized borrowings in securitization trusts, net fair value |                        |        |           |   |                       |   |           |                           |  |   | 7,008,655    |   |  |              |            |   |  |   | 7,008,655  |  
|Other borrowings                                                   |                        |        | 10,996,766 |   |                       |   | 1,607,061  |                           |  |   | 15,539,988   |   |  |              | 11          |   |  |   | 28,143,826 |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Total borrowings                                                   |                        |        | 13,918,890 |   |                       |   | 8,518,262  |                           |  |   | 27,044,009   |   |  |              | (10,183,118 | ) |  |   | 39,298,043 |  
|Deposit liabilities                                                |                        |        |           |   |                       |   |           |                           |  |   | 18,286,106   |   |  |              | (51,318     | ) |  |   | 18,234,788 |  
|Other liabilities                                                  |                        |        | 709,217    |   |                       |   | 1,960,897  |                           |  |   | 5,876,512    |   |  |              | (3,834,100  | ) |  |   | 4,712,526  |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Total liabilities                                                  |                        |        | 14,628,107 |   |                       |   | 10,479,159 |                           |  |   | 51,206,627   |   |  |              | (14,068,536 | ) |  |   | 62,245,357 |  
|Minority interest                                                  |                        |        |           |   |                       |   |           |                           |  |   | 1,954,495    |   |  |              |            |   |  |   | 1,954,495  |  
|EQUITY                                                             |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Members interest                                                  |                        |        | 6,962,487  |   |                       |   | 11,439,569 |                           |  |   | 5,303,255    |   |  |              | (16,742,824 | ) |  |   | 6,962,487  |  
|Preferred membership interests                                     |                        |        | 806,344    |   |                       |   |           |                           |  |   |             |   |  |              |            |   |  |   | 806,344    |  
|Accumulated deficit                                                |                        |        | (5,480,822 | ) |                       |   | (7,650,544 | )                         |  |   | (4,668,471   | ) |  |              | 12,319,015  |   |  |   | (5,480,822 | )
|Accumulated other comprehensive income                             |                        |        | 27,426     |   |                       |   | 28,581     |                           |  |   | 19,721       |   |  |              | (48,302     | ) |  |   | 27,426     |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Total equity                                                       |                        |        | 2,315,435  |   |                       |   | 3,817,606  |                           |  |   | 654,505      |   |  |              | (4,472,111  | ) |  |   | 2,315,435  |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  
|Total liabilities, minority interest and equity                    |                        | $      | 16,943,542 |   |                       | $ | 14,296,765 |                           |  | $ | 53,815,627   |   |  | $            | (18,540,647 | ) |  | $ | 66,515,287 |  
|                                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |             |   |  |   |            |  



52



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2008



|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|--------------------------------------------------------- |  | ---------------------- | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | --------- | - |  | - | ---------- | -
|                                                          |  | Parent                 |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |          
|                                                          |  | (Dollars in thousands) |           
|Revenue                                                   |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Interest income                                           |  | $                      | 257,385    |   |                       | $ | 107,912    |                           |  | $ | 847,342      |   |  | $            | (258,548  | ) |  | $ | 954,091    |  
|Automotive operating lease income                         |  |                        |           |   |                       |   |           |                           |  |   | 144,949      |   |  |              |          |   |  |   | 144,949    |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total financing revenue                                   |  |                        | 257,385    |   |                       |   | 107,912    |                           |  |   | 992,291      |   |  |              | (258,548  | ) |  |   | 1,099,040  |  
|Interest expense                                          |  |                        | 190,806    |   |                       |   | 161,142    |                           |  |   | 803,432      |   |  |              | (260,875  | ) |  |   | 894,505    |  
|Depreciation expense on automotive operating lease income |  |                        |           |   |                       |   |           |                           |  |   | 86,485       |   |  |              |          |   |  |   | 86,485     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net financing revenue                                     |  |                        | 66,579     |   |                       |   | (53,230    | )                         |  |   | 102,374      |   |  |              | 2,327     |   |  |   | 118,050    |  
|Other revenue                                             |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Gain (loss) on mortgage loans, net                        |  |                        |           |   |                       |   | 15,573     |                           |  |   | (142,887     | ) |  |              | (10,863   | ) |  |   | (138,177   | )
|Servicing fees                                            |  |                        |           |   |                       |   | 320,571    |                           |  |   | 51,154       |   |  |              | (2,281    | ) |  |   | 369,444    |  
|Servicing asset valuation and hedge activities, net       |  |                        |           |   |                       |   | (225,311   | )                         |  |   | (35,511      | ) |  |              |          |   |  |   | (260,822   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net servicing fees                                        |  |                        |           |   |                       |   | 95,260     |                           |  |   | 15,643       |   |  |              | (2,281    | ) |  |   | 108,622    |  
|Gain (loss) on investment securities, net                 |  |                        | 336        |   |                       |   | (31,021    | )                         |  |   | (11,213      | ) |  |              |          |   |  |   | (41,898    | )
|Real estate related revenues, net                         |  |                        |           |   |                       |   | (3,114     | )                         |  |   | (21,856      | ) |  |              |          |   |  |   | (24,970    | )
|Gain on extinguishment of debt                            |  |                        | 42,199     |   |                       |   |           |                           |  |   |             |   |  |              |          |   |  |   | 42,199     |  
|Loss on foreclosed real estate                            |  |                        |           |   |                       |   | (27,885    | )                         |  |   | (21,496      | ) |  |              |          |   |  |   | (49,381    | )
|Other income (loss)                                       |  |                        | 697        |   |                       |   | (124,969   | )                         |  |   | 54,771       |   |  |              | 4,846     |   |  |   | (64,655    | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total other revenue                                       |  |                        | 43,232     |   |                       |   | (76,156    | )                         |  |   | (127,038     | ) |  |              | (8,298    | ) |  |   | (168,260   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total net revenue                                         |  |                        | 109,811    |   |                       |   | (129,386   | )                         |  |   | (24,664      | ) |  |              | (5,971    | ) |  |   | (50,210    | )
|Provision for loan losses                                 |  |                        |           |   |                       |   | 108,985    |                           |  |   | 551,897      |   |  |              |          |   |  |   | 660,882    |  
|Non-interest expense                                      |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Compensation and benefits                                 |  |                        |           |   |                       |   | 115,091    |                           |  |   | 113,419      |   |  |              |          |   |  |   | 228,510    |  
|Professional fees                                         |  |                        | 3,422      |   |                       |   | 61,708     |                           |  |   | 19,579       |   |  |              |          |   |  |   | 84,709     |  
|Data processing and telecommunications                    |  |                        |           |   |                       |   | 24,558     |                           |  |   | 12,040       |   |  |              |          |   |  |   | 36,598     |  
|Advertising                                               |  |                        |           |   |                       |   | 13,977     |                           |  |   | 6,015        |   |  |              |          |   |  |   | 19,992     |  
|Occupancy                                                 |  |                        |           |   |                       |   | 13,007     |                           |  |   | 15,197       |   |  |              |          |   |  |   | 28,204     |  
|Restructuring                                             |  |                        |           |   |                       |   | 48,733     |                           |  |   | 23,996       |   |  |              |          |   |  |   | 72,729     |  
|Other                                                     |  |                        | 357,855    |   |                       |   | 168,808    |                           |  |   | 174,294      |   |  |              | (12,687   | ) |  |   | 688,270    |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total non-interest expense                                |  |                        | 361,277    |   |                       |   | 445,882    |                           |  |   | 364,540      |   |  |              | (12,687   | ) |  |   | 1,159,012  |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Loss before income taxes and minority interest            |  |                        | (251,466   | ) |                       |   | (684,253   | )                         |  |   | (941,101     | ) |  |              | 6,716     |   |  |   | (1,870,104 | )
|Income tax expense                                        |  |                        | 737        |   |                       |   | 278        |                           |  |   | 3,908        |   |  |              | 9         |   |  |   | 4,932      |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Loss before minority interest                             |  |                        | (252,203   | ) |                       |   | (684,531   | )                         |  |   | (945,009     | ) |  |              | 6,707     |   |  |   | (1,875,036 | )
|Minority interest                                         |  |                        |           |   |                       |   |           |                           |  |   | 37,135       |   |  |              |          |   |  |   | 37,135     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Loss before equity in net losses of subsidiaries          |  |                        | (252,203   | ) |                       |   | (684,531   | )                         |  |   | (982,144     | ) |  |              | 6,707     |   |  |   | (1,912,171 | )
|Equity in net losses of subsidiaries                      |  |                        | (1,659,968 | ) |                       |   | (944,427   | )                         |  |   |             |   |  |              | 2,604,395 |   |  |   |           |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net loss                                                  |  | $                      | (1,912,171 | ) |                       | $ | (1,628,958 | )                         |  | $ | (982,144     | ) |  | $            | 2,611,102 |   |  | $ | (1,912,171 | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  



53



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2007



|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|--------------------------------------------------------- |  | ---------------------- | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | --------- | - |  | - | ---------- | -
|                                                          |  | Parent                 |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |          
|                                                          |  | (Dollars in thousands) |           
|Revenue                                                   |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Interest income                                           |  | $                      | 343,265    |   |                       | $ | 329,076    |                           |  | $ | 1,535,783    |   |  | $            | (322,118  | ) |  | $ | 1,886,006  |  
|Automotive operating lease income                         |  |                        |           |   |                       |   |           |                           |  |   | 135,373      |   |  |              |          |   |  |   | 135,373    |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total financing revenue                                   |  |                        | 343,265    |   |                       |   | 329,076    |                           |  |   | 1,671,156    |   |  |              | (322,118  | ) |  |   | 2,021,379  |  
|Interest expense                                          |  |                        | 339,027    |   |                       |   | 318,775    |                           |  |   | 1,349,928    |   |  |              | (326,984  | ) |  |   | 1,680,746  |  
|Depreciation expense on automotive operating lease income |  |                        |           |   |                       |   |           |                           |  |   | 81,616       |   |  |              |          |   |  |   | 81,616     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net financing revenue                                     |  |                        | 4,238      |   |                       |   | 10,301     |                           |  |   | 239,612      |   |  |              | 4,866     |   |  |   | 259,017    |  
|Other revenue                                             |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Loss on mortgage loans, net                               |  |                        |           |   |                       |   | (236,645   | )                         |  |   | (332,180     | ) |  |              | (764      | ) |  |   | (569,589   | )
|Servicing fees                                            |  |                        |           |   |                       |   | 438,935    |                           |  |   | 12,698       |   |  |              | (213      | ) |  |   | 451,420    |  
|Servicing asset valuation and hedge activities, net       |  |                        |           |   |                       |   | (121,294   | )                         |  |   | (2,145       | ) |  |              |          |   |  |   | (123,439   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net servicing fees                                        |  |                        |           |   |                       |   | 317,641    |                           |  |   | 10,553       |   |  |              | (213      | ) |  |   | 327,981    |  
|Loss on investment securities, net                        |  |                        |           |   |                       |   | (52,870    | )                         |  |   | (279,641     | ) |  |              |          |   |  |   | (332,511   | )
|Real estate related revenues, net                         |  |                        |           |   |                       |   | (13,344    | )                         |  |   | 36,849       |   |  |              |          |   |  |   | 23,505     |  
|Loss on foreclosed real estate                            |  |                        |           |   |                       |   | (65,308    | )                         |  |   | (72,336      | ) |  |              |          |   |  |   | (137,644   | )
|Other income                                              |  |                        | 1,159      |   |                       |   | 11,151     |                           |  |   | 53,020       |   |  |              | (16,392   | ) |  |   | 48,938     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total other revenue                                       |  |                        | 1,159      |   |                       |   | (39,375    | )                         |  |   | (583,735     | ) |  |              | (17,369   | ) |  |   | (639,320   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total net revenue                                         |  |                        | 5,397      |   |                       |   | (29,074    | )                         |  |   | (344,123     | ) |  |              | (12,503   | ) |  |   | (380,303   | )
|                                                          |  |                        |            |   |                      
|Provision for loan losses                                 |  |                        |           |   |                       |   | 263,055    |                           |  |   | 622,100      |   |  |              | (942      | ) |  |   | 884,213    |  
|                                                          |  |                        |            |   |                      
|Non-interest expense                                      |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Compensation and benefits                                 |  |                        |           |   |                       |   | 155,069    |                           |  |   | 150,965      |   |  |              |          |   |  |   | 306,034    |  
|Professional fees                                         |  |                        |           |   |                       |   | 39,019     |                           |  |   | 18,100       |   |  |              |          |   |  |   | 57,119     |  
|Data processing and telecommunications                    |  |                        |           |   |                       |   | 48,862     |                           |  |   | 15,264       |   |  |              |          |   |  |   | 64,126     |  
|Advertising                                               |  |                        |           |   |                       |   | 21,096     |                           |  |   | 8,604        |   |  |              |          |   |  |   | 29,700     |  
|Occupancy                                                 |  |                        |           |   |                       |   | 20,620     |                           |  |   | 13,725       |   |  |              |          |   |  |   | 34,345     |  
|Goodwill impairment                                       |  |                        |           |   |                       |   | 215,378    |                           |  |   | 239,450      |   |  |              |          |   |  |   | 454,828    |  
|Other                                                     |  |                        | 2,724      |   |                       |   | 60,549     |                           |  |   | 91,537       |   |  |              | (9,670    | ) |  |   | 145,140    |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total non-interest expense                                |  |                        | 2,724      |   |                       |   | 560,593    |                           |  |   | 537,645      |   |  |              | (9,670    | ) |  |   | 1,091,292  |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before income taxes and minority interest   |  |                        | 2,673      |   |                       |   | (852,722   | )                         |  |   | (1,503,868   | ) |  |              | (1,891    | ) |  |   | (2,355,808 | )
|Income tax benefit                                        |  |                        |           |   |                       |   | (995       | )                         |  |   | (118,445     | ) |  |              | (2        | ) |  |   | (119,442   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before minority interest                    |  |                        | 2,673      |   |                       |   | (851,727   | )                         |  |   | (1,385,423   | ) |  |              | (1,889    | ) |  |   | (2,236,366 | )
|Minority interest                                         |  |                        |           |   |                       |   |           |                           |  |   | 24,561       |   |  |              |          |   |  |   | 24,561     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before equity in net losses of subsidiaries |  |                        | 2,673      |   |                       |   | (851,727   | )                         |  |   | (1,409,984   | ) |  |              | (1,889    | ) |  |   | (2,260,927 | )
|Equity in net losses of subsidiaries                      |  |                        | (2,263,600 | ) |                       |   | (1,451,826 | )                         |  |   |             |   |  |              | 3,715,426 |   |  |   |           |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net loss                                                  |  | $                      | (2,260,927 | ) |                       | $ | (2,303,553 | )                         |  | $ | (1,409,984   | ) |  | $            | 3,713,537 |   |  | $ | (2,260,927 | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  



54



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2008



|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|--------------------------------------------------------- |  | ---------------------- | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | --------- | - |  | - | ---------- | -
|                                                          |  | Parent                 |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |          
|                                                          |  | (Dollars in thousands) |           
|Revenue                                                   |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Interest income                                           |  | $                      | 868,419    |   |                       | $ | 456,509    |                           |  | $ | 2,850,274    |   |  | $            | (859,404  | ) |  | $ | 3,315,798  |  
|Automotive operating lease income                         |  |                        |           |   |                       |   |           |                           |  |   | 440,745      |   |  |              |          |   |  |   | 440,745    |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total financing revenue                                   |  |                        | 868,419    |   |                       |   | 456,509    |                           |  |   | 3,291,019    |   |  |              | (859,404  | ) |  |   | 3,756,543  |  
|Interest expense                                          |  |                        | 787,600    |   |                       |   | 556,041    |                           |  |   | 2,560,060    |   |  |              | (861,773  | ) |  |   | 3,041,928  |  
|Depreciation expense on automotive operating lease income |  |                        |           |   |                       |   |           |                           |  |   | 259,146      |   |  |              |          |   |  |   | 259,146    |  
|Impairment of investment in automotive operating leases   |  |                        |           |   |                       |   |           |                           |  |   | 92,035       |   |  |              |          |   |  |   | 92,035     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net financing revenue                                     |  |                        | 80,819     |   |                       |   | (99,532    | )                         |  |   | 379,778      |   |  |              | 2,369     |   |  |   | 363,434    |  
|Other revenue                                             |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Loss on mortgage loans, net                               |  |                        |           |   |                       |   | (308,447   | )                         |  |   | (1,657,165   | ) |  |              | 17,934    |   |  |   | (1,947,678 | )
|Servicing fees                                            |  |                        |           |   |                       |   | 1,031,831  |                           |  |   | 126,078      |   |  |              | (4,338    | ) |  |   | 1,153,571  |  
|Servicing asset valuation and hedge activities, net       |  |                        |           |   |                       |   | 36,910     |                           |  |   | (73,079      | ) |  |              |          |   |  |   | (36,169    | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net servicing fees                                        |  |                        |           |   |                       |   | 1,068,741  |                           |  |   | 52,999       |   |  |              | (4,338    | ) |  |   | 1,117,402  |  
|Loss on investment securities, net                        |  |                        | (31,871    | ) |                       |   | (207,706   | )                         |  |   | (336,205     | ) |  |              |          |   |  |   | (575,782   | )
|Real estate related revenues, net                         |  |                        |           |   |                       |   | (14,587    | )                         |  |   | (19,671      | ) |  |              |          |   |  |   | (34,258    | )
|Gain on extinguishment of debt                            |  |                        | 1,168,818  |   |                       |   |           |                           |  |   |             |   |  |              |          |   |  |   | 1,168,818  |  
|Loss on foreclosed real estate                            |  |                        |           |   |                       |   | (125,486   | )                         |  |   | (84,214      | ) |  |              |          |   |  |   | (209,700   | )
|Other income (loss)                                       |  |                        | 543        |   |                       |   | (537,294   | )                         |  |   | 130,343      |   |  |              | (19,021   | ) |  |   | (425,429   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total other revenue                                       |  |                        | 1,137,490  |   |                       |   | (124,779   | )                         |  |   | (1,913,913   | ) |  |              | (5,425    | ) |  |   | (906,627   | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total net revenue                                         |  |                        | 1,218,309  |   |                       |   | (224,311   | )                         |  |   | (1,534,135   | ) |  |              | (3,056    | ) |  |   | (543,193   | )
|Provision for loan losses                                 |  |                        |           |   |                       |   | 388,094    |                           |  |   | 1,042,109    |   |  |              |          |   |  |   | 1,430,203  |  
|Non-interest expense                                      |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Compensation and benefits                                 |  |                        |           |   |                       |   | 368,673    |                           |  |   | 371,429      |   |  |              |          |   |  |   | 740,102    |  
|Professional fees                                         |  |                        | 77,385     |   |                       |   | 180,461    |                           |  |   | 52,431       |   |  |              |          |   |  |   | 310,277    |  
|Data processing and telecommunications                    |  |                        |           |   |                       |   | 73,454     |                           |  |   | 44,322       |   |  |              |          |   |  |   | 117,776    |  
|Advertising                                               |  |                        |           |   |                       |   | 37,795     |                           |  |   | 19,195       |   |  |              |          |   |  |   | 56,990     |  
|Occupancy                                                 |  |                        |           |   |                       |   | 37,964     |                           |  |   | 47,450       |   |  |              |          |   |  |   | 85,414     |  
|Restructuring                                             |  |                        |           |   |                       |   | 50,047     |                           |  |   | 60,577       |   |  |              |          |   |  |   | 110,624    |  
|Other                                                     |  |                        | 312,231    |   |                       |   | 453,156    |                           |  |   | 384,800      |   |  |              | (49,372   | ) |  |   | 1,100,815  |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total non-interest expense                                |  |                        | 389,616    |   |                       |   | 1,201,550  |                           |  |   | 980,204      |   |  |              | (49,372   | ) |  |   | 2,521,998  |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before income taxes and minority interest   |  |                        | 828,693    |   |                       |   | (1,813,955 | )                         |  |   | (3,556,448   | ) |  |              | 46,316    |   |  |   | (4,495,394 | )
|Income tax (benefit) expense                              |  |                        | (11,208    | ) |                       |   | (239       | )                         |  |   | 99,558       |   |  |              | (22       | ) |  |   | 88,089     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before minority interest                    |  |                        | 839,901    |   |                       |   | (1,813,716 | )                         |  |   | (3,656,006   | ) |  |              | 46,338    |   |  |   | (4,583,483 | )
|Minority interest                                         |  |                        |           |   |                       |   |           |                           |  |   | 47,297       |   |  |              |          |   |  |   | 47,297     |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before equity in net losses of subsidiaries |  |                        | 839,901    |   |                       |   | (1,813,716 | )                         |  |   | (3,703,303   | ) |  |              | 46,338    |   |  |   | (4,630,780 | )
|Equity in net losses of subsidiaries                      |  |                        | (5,470,681 | ) |                       |   | (3,652,210 | )                         |  |   |             |   |  |              | 9,122,891 |   |  |   |           |  
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net loss                                                  |  | $                      | (4,630,780 | ) |                       | $ | (5,465,926 | )                         |  | $ | (3,703,303   | ) |  | $            | 9,169,229 |   |  | $ | (4,630,780 | )
|                                                          |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  



55



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2007



|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|--------------------------------------------------------- | ---------------------- | ------ | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | --------- | - |  | - | ---------- | -
|                                                          |                        | Parent |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |          
|                                                          | (Dollars in thousands) |       
|Revenue                                                   |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Interest income                                           |                        | $      | 891,276    |   |                       | $ | 1,139,101  |                           |  | $ | 4,806,027    |   |  | $            | (846,956  | ) |  | $ | 5,989,448  |  
|Automotive operating lease income                         |                        |        |           |   |                       |   |           |                           |  |   | 369,988      |   |  |              |          |   |  |   | 369,988    |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total financing revenue                                   |                        |        | 891,276    |   |                       |   | 1,139,101  |                           |  |   | 5,176,015    |   |  |              | (846,956  | ) |  |   | 6,359,436  |  
|Interest expense                                          |                        |        | 884,012    |   |                       |   | 950,927    |                           |  |   | 4,113,392    |   |  |              | (866,024  | ) |  |   | 5,082,307  |  
|Depreciation expense on automotive operating lease income |                        |        |           |   |                       |   |           |                           |  |   | 219,373      |   |  |              |          |   |  |   | 219,373    |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net financing revenue                                     |                        |        | 7,264      |   |                       |   | 188,174    |                           |  |   | 843,250      |   |  |              | 19,068    |   |  |   | 1,057,756  |  
|Other revenue                                             |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Loss on mortgage loans, net                               |                        |        |           |   |                       |   | (528,057   | )                         |  |   | (99,165      | ) |  |              | (3,490    | ) |  |   | (630,712   | )
|Servicing fees                                            |                        |        |           |   |                       |   | 1,319,606  |                           |  |   | 34,983       |   |  |              | (3,848    | ) |  |   | 1,350,741  |  
|Servicing asset valuation and hedge activities, net       |                        |        |           |   |                       |   | (573,969   | )                         |  |   | (3,357       | ) |  |              |          |   |  |   | (577,326   | )
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net servicing fees                                        |                        |        |           |   |                       |   | 745,637    |                           |  |   | 31,626       |   |  |              | (3,848    | ) |  |   | 773,415    |  
|Loss on investment securities, net                        |                        |        | (771       | ) |                       |   | (144,153   | )                         |  |   | (204,127     | ) |  |              |          |   |  |   | (349,051   | )
|Real estate related revenues, net                         |                        |        |           |   |                       |   | (210       | )                         |  |   | 292,603      |   |  |              |          |   |  |   | 292,393    |  
|Loss on foreclosed real estate                            |                        |        |           |   |                       |   | (89,556    | )                         |  |   | (140,266     | ) |  |              |          |   |  |   | (229,822   | )
|Other income                                              |                        |        | 2,981      |   |                       |   | 102,176    |                           |  |   | 134,427      |   |  |              | (78,400   | ) |  |   | 161,184    |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total other revenue                                       |                        |        | 2,210      |   |                       |   | 85,837     |                           |  |   | 15,098       |   |  |              | (85,738   | ) |  |   | 17,407     |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total net revenue                                         |                        |        | 9,474      |   |                       |   | 274,011    |                           |  |   | 858,348      |   |  |              | (66,670   | ) |  |   | 1,075,163  |  
|                                                          |                        |        |            |   |                      
|Provision for loan losses                                 |                        |        |           |   |                       |   | 559,322    |                           |  |   | 1,203,422    |   |  |              | (3,104    | ) |  |   | 1,759,640  |  
|                                                          |                        |        |            |   |                      
|Non-interest expense                                      |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Compensation and benefits                                 |                        |        |           |   |                       |   | 569,168    |                           |  |   | 421,657      |   |  |              |          |   |  |   | 990,825    |  
|Professional fees                                         |                        |        |           |   |                       |   | 126,399    |                           |  |   | 46,222       |   |  |              |          |   |  |   | 172,621    |  
|Data processing and telecommunications                    |                        |        |           |   |                       |   | 111,721    |                           |  |   | 45,771       |   |  |              |          |   |  |   | 157,492    |  
|Advertising                                               |                        |        |           |   |                       |   | 66,074     |                           |  |   | 29,143       |   |  |              |          |   |  |   | 95,217     |  
|Occupancy                                                 |                        |        |           |   |                       |   | 67,177     |                           |  |   | 41,143       |   |  |              |          |   |  |   | 108,320    |  
|Goodwill impairment                                       |                        |        |           |   |                       |   | 215,378    |                           |  |   | 239,450      |   |  |              |          |   |  |   | 454,828    |  
|Other                                                     |                        |        | 2,565      |   |                       |   | 451,860    |                           |  |   | 299,960      |   |  |              | (77,004   | ) |  |   | 677,381    |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Total non-interest expense                                |                        |        | 2,565      |   |                       |   | 1,607,777  |                           |  |   | 1,123,346    |   |  |              | (77,004   | ) |  |   | 2,656,684  |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before income taxes and minority interest   |                        |        | 6,909      |   |                       |   | (1,893,088 | )                         |  |   | (1,468,420   | ) |  |              | 13,438    |   |  |   | (3,341,161 | )
|Income tax (benefit) expense                              |                        |        |           |   |                       |   | (5,790     | )                         |  |   | 21,876       |   |  |              | 101       |   |  |   | 16,187     |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before minority interest                    |                        |        | 6,909      |   |                       |   | (1,887,298 | )                         |  |   | (1,490,296   | ) |  |              | 13,337    |   |  |   | (3,357,348 | )
|Minority interest                                         |                        |        |           |   |                       |   |           |                           |  |   | 68,051       |   |  |              |          |   |  |   | 68,051     |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Income (loss) before equity in net losses of subsidiaries |                        |        | 6,909      |   |                       |   | (1,887,298 | )                         |  |   | (1,558,347   | ) |  |              | 13,337    |   |  |   | (3,425,399 | )
|Equity in net losses of subsidiaries                      |                        |        | (3,432,308 | ) |                       |   | (1,701,735 | )                         |  |   |             |   |  |              | 5,134,043 |   |  |   |           |  
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  
|Net loss                                                  |                        | $      | (3,425,399 | ) |                       | $ | (3,589,033 | )                         |  | $ | (1,558,347   | ) |  | $            | 5,147,380 |   |  | $ | (3,425,399 | )
|                                                          |                        |        |            |   |                       |   |            |                           |  |   |              |   |  |              |           |   |  |   |            |  



56



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##### Table of Contents

RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2008



|                                                                           |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|-------------------------------------------------------------------------- |  | ---------------------- | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                                           |  | Parent                 |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |           
|                                                                           |  | (Dollars in thousands) |           
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                  |  | $                      | 244,009    |   |                       | $ | 3,040,145  |                           |  | $ | 3,447,290    |   |  | $            | (128,818   | ) |  | $ | 6,602,626   |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                      |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net decrease in lending receivables                                        |  |                        |           |   |                       |   | 306,044    |                           |  |   | 137,818      |   |  |              |           |   |  |   | 443,862     |  
|Originations and purchases of mortgage loans held for investment           |  |                        |           |   |                       |   | (1,242,671 | )                         |  |   | (3,622,617   | ) |  |              | 1,229,545  |   |  |   | (3,635,743  | )
|Proceeds from sales and repayments of mortgage loans held for investment   |  |                        |           |   |                       |   | 1,300,462  |                           |  |   | 4,716,083    |   |  |              | (1,236,058 | ) |  |   | 4,780,487   |  
|Sales of mortgage servicing rights                                         |  |                        |           |   |                       |   | 484,196    |                           |  |   | 95           |   |  |              |           |   |  |   | 484,291     |  
|Purchase of and advances to investments in real estate and other           |  |                        |           |   |                       |   | (2,484     | )                         |  |   | (14,368      | ) |  |              |           |   |  |   | (16,852     | )
|Proceeds from sales of and returns of investments in real estate and other |  |                        |           |   |                       |   | 1,010      |                           |  |   | 358,893      |   |  |              |           |   |  |   | 359,903     |  
|Net increase in affiliate lending                                          |  |                        | (353,249   | ) |                       |   |           |                           |  |   |             |   |  |              | 353,249    |   |  |   |            |  
|Payment of capital contributions                                           |  |                        |           |   |                       |   | (8,530     | )                         |  |   |             |   |  |              | 8,530      |   |  |   |            |  
|Other, net                                                                 |  |                        | 26,350     |   |                       |   | 289,925    |                           |  |   | 591,114      |   |  |              |           |   |  |   | 907,389     |  
|                                                                           |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net cash (used in) provided by investing activities                        |  |                        | (326,899   | ) |                       |   | 1,127,952  |                           |  |   | 2,167,018    |   |  |              | 355,266    |   |  |   | 3,323,337   |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                      |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net increase (decrease) in borrowings from parent                          |  |                        | 2,172,124  |   |                       |   | (1,006,358 | )                         |  |   | 3,309,607    |   |  |              | (353,249   | ) |  |   | 4,122,124   |  
|Net increase in affiliate borrowings                                       |  |                        | 750,000    |   |                       |   |           |                           |  |   | 124,979      |   |  |              |           |   |  |   | 874,979     |  
|Net decrease in other short-term borrowings                                |  |                        |           |   |                       |   | (3,005,026 | )                         |  |   | (7,925,141   | ) |  |              | 11,661     |   |  |   | (10,918,506 | )
|Repayments of collateralized borrowings in securitization trusts           |  |                        |           |   |                       |   |           |                           |  |   | (2,407,607   | ) |  |              |           |   |  |   | (2,407,607  | )
|Proceeds from secured aggregation facilities, long-term                    |  |                        |           |   |                       |   |           |                           |  |   | 160,000      |   |  |              |           |   |  |   | 160,000     |  
|Repayments of secured aggregation facilities, long-term                    |  |                        |           |   |                       |   |           |                           |  |   | (465,114     | ) |  |              |           |   |  |   | (465,114    | )
|Proceeds from other long-term borrowings                                   |  |                        |           |   |                       |   |           |                           |  |   | 2,975,000    |   |  |              |           |   |  |   | 2,975,000   |  
|Repayments of other long-term borrowings                                   |  |                        | (1,846,190 | ) |                       |   |           |                           |  |   | (3,118,020   | ) |  |              |           |   |  |   | (4,964,210  | )
|Payments of debt issuance costs                                            |  |                        | (17,669    | ) |                       |   |           |                           |  |   | (28,583      | ) |  |              |           |   |  |   | (46,252     | )
|Extinguishment of long-term borrowings                                     |  |                        | (2,060,829 | ) |                       |   |           |                           |  |   |             |   |  |              |           |   |  |   | (2,060,829  | )
|Proceeds from capital contributions                                        |  |                        |           |   |                       |   |           |                           |  |   | 22,784       |   |  |              | (8,530     | ) |  |   | 14,254      |  
|Disposal of subsidiary, net                                                |  |                        |           |   |                       |   |           |                           |  |   | 163,310      |   |  |              |           |   |  |   | 163,310     |  
|Increase in deposit liabilities                                            |  |                        |           |   |                       |   |           |                           |  |   | 4,803,777    |   |  |              | 81,167     |   |  |   | 4,884,944   |  
|                                                                           |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net cash used in financing activities                                      |  |                        | (1,002,564 | ) |                       |   | (4,011,384 | )                         |  |   | (2,385,008   | ) |  |              | (268,951   | ) |  |   | (7,667,907  | )
|Effect of foreign exchange rates on cash and cash equivalents              |  |                        | (42,201    | ) |                       |   | 742        |                           |  |   | 198,663      |   |  |              | 53,670     |   |  |   | 210,874     |  
|                                                                           |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                       |  |                        | (1,127,655 | ) |                       |   | 157,455    |                           |  |   | 3,427,963    |   |  |              | 11,167     |   |  |   | 2,468,930   |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                           |  |                        | 1,894,921  |   |                       |   | 210,424    |                           |  |   | 2,343,053    |   |  |              | (32,485    | ) |  |   | 4,415,913   |  
|                                                                           |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 |  | $                      | 767,266    |   |                       | $ | 367,879    |                           |  | $ | 5,771,016    |   |  | $            | (21,318    | ) |  | $ | 6,884,843   |  
|                                                                           |  |                        |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  

SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:

Parent contributed $2.0 billion to guarantor subsidiaries through forgiveness of borrowings from parent.

Parent contributed
$2.2 billion to non-guarantor subsidiaries through forgiveness of borrowings from parent.



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RESIDENTIAL CAPITAL, LLC

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)  (Continued)



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2007



|                                                                             |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|---------------------------------------------------------------------------- |  | -------------- | ---------- | - | --------------------- | - | ---------- | ------------------------- |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                                             |  | Parent         |            |   | GuarantorSubsidiaries |   |            | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |           
|                                                                             |  | (In thousands) |           
|NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                          |  | $              | (1,261     | ) |                       | $ | (3,359,247 | )                         |  | $ | 5,259,024    |   |  | $            | 2,393      |   |  | $ | 1,900,909   |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                        |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net decrease in lending receivables                                          |  |                |           |   |                       |   | 1,877,740  |                           |  |   | 3,305,497    |   |  |              |           |   |  |   | 5,183,237   |  
|Originations and purchases of mortgage loans held for investment             |  |                |           |   |                       |   | (2,264,823 | )                         |  |   | (4,439,946   | ) |  |              | (28,519    | ) |  |   | (6,733,288  | )
|Proceeds from sales and repayments of mortgage loans held for investment     |  |                |           |   |                       |   | 794,022    |                           |  |   | 13,343,211   |   |  |              | (639       | ) |  |   | 14,136,594  |  
|Sales of mortgage servicing rights                                           |  |                |           |   |                       |   | 165,557    |                           |  |   |             |   |  |              |           |   |  |   | 165,557     |  
|Purchases of and advances to investments in real estate and other            |  |                |           |   |                       |   | (4,611     | )                         |  |   | (193,158     | ) |  |              |           |   |  |   | (197,769    | )
|Proceeds from sales of and returns of investments in real estate and other   |  |                |           |   |                       |   | 22,106     |                           |  |   | 596,999      |   |  |              |           |   |  |   | 619,105     |  
|Net increase in affiliate lending                                            |  |                | (2,211,230 | ) |                       |   |           |                           |  |   |             |   |  |              | 2,211,230  |   |  |   |            |  
|Payment of capital contributions                                             |  |                | (202,595   | ) |                       |   | (126,420   | )                         |  |   |             |   |  |              | 329,015    |   |  |   |            |  
|Other, net                                                                   |  |                |           |   |                       |   | 1,490,895  |                           |  |   | 347,184      |   |  |              | 9,291      |   |  |   | 1,847,370   |  
|                                                                             |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net cash (used in) provided by investing activities                          |  |                | (2,413,825 | ) |                       |   | 1,954,466  |                           |  |   | 12,959,787   |   |  |              | 2,520,378  |   |  |   | 15,020,806  |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                        |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net increase in borrowings from parent                                       |  |                |           |   |                       |   | 941,927    |                           |  |   | 1,269,303    |   |  |              | (2,211,230 | ) |  |   |            |  
|Net decrease in other short-term borrowings                                  |  |                | (75,000    | ) |                       |   | (3,757,120 | )                         |  |   | (7,830,931   | ) |  |              |           |   |  |   | (11,663,051 | )
|Proceeds from issuance of collateralized borrowings in securitization trusts |  |                |           |   |                       |   | 3,863,807  |                           |  |   | 73,248       |   |  |              |           |   |  |   | 3,937,055   |  
|Repayments of collateralized borrowings in securitization trusts             |  |                |           |   |                       |   |           |                           |  |   | (13,467,761  | ) |  |              |           |   |  |   | (13,467,761 | )
|Proceeds from secured aggregation facilities, long-term                      |  |                |           |   |                       |   |           |                           |  |   | 12,158,635   |   |  |              |           |   |  |   | 12,158,635  |  
|Repayments of secured aggregation facilities, long-term                      |  |                |           |   |                       |   |           |                           |  |   | (16,210,746  | ) |  |              |           |   |  |   | (16,210,746 | )
|Proceeds from other long-term borrowings                                     |  |                | 3,853,195  |   |                       |   |           |                           |  |   | 4,007,575    |   |  |              |           |   |  |   | 7,860,770   |  
|Repayments of other long-term borrowings                                     |  |                | (1,000,000 | ) |                       |   |           |                           |  |   | (1,654,264   | ) |  |              |           |   |  |   | (2,654,264  | )
|Payments of debt issuance costs                                              |  |                | (14,216    | ) |                       |   |           |                           |  |   | (7,092       | ) |  |              |           |   |  |   | (21,308     | )
|Proceeds from capital contributions                                          |  |                | 2,000,000  |   |                       |   |           |                           |  |   | 585,015      |   |  |              | (329,015   | ) |  |   | 2,256,000   |  
|Disposal of subsidiary, net                                                  |  |                |           |   |                       |   |           |                           |  |   | 898,794      |   |  |              |           |   |  |   | 898,794     |  
|Dividends paid                                                               |  |                |           |   |                       |   |           |                           |  |   | (2,474       | ) |  |              | 2,474      |   |  |   |            |  
|Increase in deposit liabilities                                              |  |                |           |   |                       |   |           |                           |  |   | 4,631,039    |   |  |              | 6,196      |   |  |   | 4,637,235   |  
|                                                                             |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|Net cash provided by (used in) financing activities                          |  |                | 4,763,979  |   |                       |   | 1,048,614  |                           |  |   | (15,549,659  | ) |  |              | (2,531,575 | ) |  |   | (12,268,641 | )
|Effect of foreign exchange rates on cash and cash equivalents                |  |                | 151,121    |   |                       |   |           |                           |  |   | (303,554     | ) |  |              |           |   |  |   | (152,433    | )
|                                                                             |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         |  |                | 2,500,014  |   |                       |   | (356,167   | )                         |  |   | 2,365,598    |   |  |              | (8,804     | ) |  |   | 4,500,641   |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             |  |                | 832,600    |   |                       |   | 456,895    |                           |  |   | 756,225      |   |  |              | (26,873    | ) |  |   | 2,018,847   |  
|                                                                             |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                   |  | $              | 3,332,614  |   |                       | $ | 100,728    |                           |  | $ | 3,121,823    |   |  | $            | (35,677    | ) |  | $ | 6,519,488   |  
|                                                                             |  |                |            |   |                       |   |            |                           |  |   |              |   |  |              |            |   |  |   |             |  

SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:

Transfer of $2.3 billion of mortgage loans held for investment from guarantor subsidiaries to non-guarantor subsidiaries.

Transfer of $2.2 billion of collateralized borrowings in securitization trusts from guarantor subsidiaries to non-guarantor subsidiaries.

Parent
contributed $3.0 billion to guarantor subsidiaries through forgiveness of affiliate borrowings.

Transfer to QSPEs $5.4 billion for securitization
purposes, gross.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

General

During 2007 and continuing through the first
nine months of 2008, the mortgage and capital markets have experienced severe stress due to credit concerns and housing market contractions in the United States. During the second half of 2007, these negative market conditions spread to the foreign
markets in which we operate, predominantly in the United Kingdom and Continental Europe, and to the residential homebuilders domestically. It is probable the mortgage industry will continue to experience both declining mortgage origination volumes
and reduced total mortgage indebtedness due to the deterioration of the nonprime and non-conforming mortgage market. We do not expect the current market conditions to turn favorable in the near term. The market deterioration has resulted in rating
agency downgrades of asset-backed and mortgage-backed securities which in turn has led to fewer sources of, and significantly reduced levels of, liquidity available to finance our operations. Most recently, the widely publicized credit defaults
and/or acquisitions of large financial institutions in the marketplace have further restricted credit in the United States and international lending markets.

We remain heavily dependent on our parent and affiliates for funding and capital support and there can be no assurance that our parent or affiliates will continue such actions. In light of our liquidity and capital
needs, combined with volatile conditions in the marketplace, there is substantial doubt about our ability to continue as a going concern. If our parent no longer continues to support our capital or liquidity needs or we are unable to successfully
execute our other initiatives, it would have a material adverse effect on our business, results of operations and financial position.

We
conduct our operations and manage and report our financial information primarily through four operating business segments. The following tables summarize the total net revenue and net loss of each of these business segments for the three- and
nine-month periods ended September 30, 2008 and 2007. Results of operations for each of these business segments are more fully described in the sections that follow.



|                             |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|---------------------------- |  | ------------------------------- | -------- | - | ------------------------------ | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                             |  | Three Months EndedSeptember 30, |          |   | Nine Months EndedSeptember 30, |  
|                             |  | 2008                            |          |   | 2007                           |   |          | 2008 |  |   | 2007     |  
|                             |  | (In millions)                   |         
|Net revenue                  |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Residential Finance Group    |  | $                               | 157.5    |   |                                | $ | 299.0    |      |  | $ | 1,292.3  |   |  | $ | 1,210.6  |  
|Business Capital Group       |  |                                 | (113.4   | ) |                                |   | (55.5    | )    |  |   | (567.2   | ) |  |   | 97.8     |  
|International Business Group |  |                                 | (218.3   | ) |                                |   | (478.9   | )    |  |   | (1,899.2 | ) |  |   | (176.8   | )
|Corporate and Other          |  |                                 | 124.0    |   |                                |   | (144.9   | )    |  |   | 630.9    |   |  |   | (56.4    | )
|                             |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Total                        |  | $                               | (50.2    | ) |                                | $ | (380.3   | )    |  | $ | (543.2   | ) |  | $ | 1,075.2  |  
|                             |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Net loss                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Residential Finance Group    |  | $                               | (500.0   | ) |                                | $ | (1,192.7 | )    |  | $ | (552.9   | ) |  | $ | (2,358.7 | )
|Business Capital Group       |  |                                 | (253.0   | ) |                                |   | (171.9   | )    |  |   | (841.0   | ) |  |   | (114.0   | )
|International Business Group |  |                                 | (637.8   | ) |                                |   | (498.0   | )    |  |   | (2,845.9 | ) |  |   | (438.2   | )
|Corporate and Other          |  |                                 | (521.4   | ) |                                |   | (398.3   | )    |  |   | (391.0   | ) |  |   | (514.5   | )
|                             |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Total                        |  | $                               | (1,912.2 | ) |                                | $ | (2,260.9 | )    |  | $ | (4,630.8 | ) |  | $ | (3,425.4 | )
|                             |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  



| |  |  | Residential Finance Group.Our Residential Finance Group originates, purchases, sells, securitizes and services residential mortgage
loans in the United States. As part of the restructuring plan announced in the third quarter, we closed our retail and wholesale channels in September 2008. The segment continues to originate mortgage loans through our direct lending centers and
GMAC Bank correspondents. In addition, the segment purchases residential mortgage loans from correspondent lenders and other third-parties and provides warehouse lending. Loans are primarily agency-eligible or government loans. Prime credit quality
loans that are produced in conformity with the underwriting
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | guidelines of Fannie Mae, Freddie Mac and Ginnie Mae are generally sold to one of these government-sponsored enterprises in the form of agency guaranteed
securitizations. 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 although we continue to originate prime
conforming warehouse lending through GMAC Bank. Our limited banking activities through the mortgage division of GMAC Bank and our real estate brokerage and relocation business are included in this segment. We have entered into an agreement to sell
GMAC Home Services real estate brokerage and relocation businesses in the fourth quarter of 2008.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Business Capital Group.Our Business Capital Group provides financing and equity capital to residential land developers and
homebuilders. Due to current market conditions, the origination activities of this business are substantially contracting the scope of its operations.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | International Business Group.Our International Business Group includes substantially all of our operations outside of the United
States. The mortgage loan production in the countries in which we operate have been suspended, except for insured mortgages in Canada, due to current market conditions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Corporate and Other.Our Corporate and Other Group primarily consists of the Principal Investment Activity (PIA) business
and Corporate holding company activities, including our debt issuances. The PIA business was previously reported as part of the Residential Finance Group segment. The PIA business operations primarily represent the loan portfolio management of our
purchased distressed asset portfolio as well as certain other nonperforming assets. This business terminated its strategy to purchase distressed assets and its existing portfolio is being managed into run-off. Also included in Corporate and Other
are costs associated with the restructuring initiative announced in the third quarter of 2008. Our chief operating decision maker elected to evaluate the performance of our three primary operating segments without the costs of the new restructuring
initiative. In addition, our other business operations include the automotive division of GMAC Bank, which are not significant to our results of operations. The revenues and expenses of the automotive division of GMAC Bank are eliminated from our
net results through minority interest.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On September 3, 2008, we announced a restructuring plan to significantly
streamline our operations, reduce costs, adjust our lending footprint and refocus our resources on strategic lending and servicing activities. The restructuring plan included closing all retail offices, ceasing originations through the wholesale
broker channel, further curtailing business lending and international business activities, and right-sizing functional support staff. In addition, we evaluated strategic alternatives for the GMAC Home Services business and the non-core servicing
business, which resulted in the pending sale of our GMAC Home Services business. These collective actions are expected to reduce our workforce by approximately 5,000 employees, or 60 percent. Approximately, 3,000 employees received notification
prior to September 30, 2008 related to the restructuring plan. In the three months ended September 30, 2008, we incurred pretax restructuring costs related to severance and related costs associated with the workforce reduction of $48.6
million and lease termination and fixed asset write-off costs of $27.7 million. We expect the total restructuring charge to range from $90.0 to $120.0 million upon completion of the 3,000 workforce reductions and related operational streamlining
initiatives. We expect the plan to be operationally complete by December 31, 2008. As a result of the reduction of 3,000 employees, we project we will realize an estimated annual cost reductions of $410.0 million in compensation and benefits
and a further $25.0 million of reduced rent and asset depreciation. Potential charges and cost savings related to the remaining 2,000 workforce reductions have not yet been determined.

As part of our strategy to respond to the challenging market conditions of 2007 and 2008, we have undertaken numerous initiatives to reduce our balance
sheet and funding needs. Asset sale initiatives have included, among other things, marketing of certain of our United Kingdom and Continental Europe mortgage loan portfolios, other whole loan sales and marketing of businesses and platforms that are
unrelated to our core mortgage finance business. Though we have executed a number of sales of mortgage loans and retained securities, other marketing efforts have yet to be completed, in part because of continuing adverse market conditions.



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Significant Accounting Estimates

On January 1, 2008, we adopted Statement of Financial Accounting Standard No. 157, Fair Value Measurements(SFAS No. 157) and Statement of Financial Accounting Standard SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities(SFAS No. 159). SFAS No. 157 applies to assets and liabilities required to be measured at fair value under accounting principles generally accepted in the United States
(GAAP). SFAS No. 159 permits entities to choose to measure at fair value many financial instruments and certain other items currently not required to be measured at fair value under GAAP. If an entity elects fair value for a particular
financial instrument under SFAS No. 159, the fair value measurement is within the scope of the measurement and disclosure requirements of SFAS No. 157.

SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also
establishes three levels of input to be used when measuring fair value:



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date. Additionally, the entity must have the ability to access the active market and the
quoted prices cannot be adjusted by the entity.                                                                                                                                                  
|        | 
|Level 2 |  | Inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are
observable or can be corroborated by observable market data by correlation or other means for substantially the full term of the assets or liabilities.                                                 
|        | 
|Level 3 |  | Unobservable inputs that are supported by little or no market activity. The unobservable inputs represent managements best assumptions of how market participants would price the assets
or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation.

We follow the fair value hierarchy set forth above in order to prioritize the data utilized to
measure fair value. We strive to obtain quoted market prices in active markets (Level 1 inputs). If Level 1 inputs are not available, we will attempt to obtain Level 2 inputs, observable market prices in inactive markets or derive the fair value
measurement using observable market prices for similar assets or liabilities. When neither Level 1 nor Level 2 inputs are available, we use Level 3 inputs and internal valuation models to estimate fair value measurements. At September 30, 2008,
approximately 22% of total assets, or $14.6 billion, consisted of financial instruments recorded at fair value. Approximately 13% of total assets and 61% of the assets reported at fair value were valued using Level 3 inputs. At September 30,
2008, approximately 4% of total liabilities, or $2.7 billion, consisted of financial instruments recorded at fair value. Approximately 4% of total liabilities and 92% of the liabilities reported at fair value were valued using Level 3 inputs. See
Note 16 to the Condensed Consolidated Financial Statements for descriptions of valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant
assumptions utilized.

Due the nature of our mortgage banking operations, a large percentage of our fair value assets or liabilities are
Level 3. Our mortgage banking operations can broadly be described as follows:



| |  |  | We enter into interest rate lock commitments with borrowers or mortgage purchase commitments with correspondent lenders and other sellers. These commitments
typically are considered derivative instruments under GAAP and are accounted for at fair value. Due to the underlying attributes of these mortgage loan commitments and the fact that they do not trade in any market, these derivatives typically are
Level 3 items.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We fund or purchase mortgage loans. We have not elected fair value for our mortgage loans held for sale portfolio. Rather, the loans are accounted for at lower of
cost or market under GAAP. The loans are valued differently depending upon the underlying characteristics of the loan. Generally speaking, loans that will be sold to the agencies and international loans where recently negotiated market prices for
the pool exist with a counterparty are Level 2, while domestic loans that cannot be sold to agencies and delinquent loans are Level 3 due to lack of observable market prices.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | We ultimately sell our mortgage loans included in our held for sale portfolio, either to the agencies, to whole loan purchasers, or securitization structures. When
we sell loans, we typically will retain servicing rights. We have opted to carry our servicing rights at fair value under SFAS No. 156 Accounting for Servicing of Financial Assets  an amendment of FASB Statement No. 140.
Further, when the loans are sold into off-balance sheet securitizations, we will often retain residuals and/or certain classes of bonds. These retained bonds may include interest only strips, principal only securities, or principal and interest
paying bonds (typically the subordinated bonds), all of which are carried at fair value within trading securities on our balance sheet. Due to the lack of observable market prices or data, our servicing rights and retained interests typically are
Level 3.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have previously executed certain securitizations that have not qualified for sale treatment under SFAS No. 140 Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities  a replacement of FASB Statement No. 125. The collateral in these securitizations are classified as mortgage loans held for investment and the related debt is recorded on our balance
sheet. We have elected fair value for both the collateral and debt in certain of these securitizations. Due to the characteristics of the underlying loan collateral (nonprime and home equities), the collateral and debt are both classified as Level
3.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We also have certain operations outside our mortgage banking activities that result in our holding Level 3 assets or
liabilities. These include on-balance sheet collateralized debt obligation transactions, mortgage-backed and asset-backed securities, and other financial instruments.

A significant portion of our assets and liabilities are at fair value and therefore our consolidated balance sheet and income statement are significantly impacted by fluctuations in market prices. While we execute
various hedging strategies to mitigate our exposure to changes in fair value, we cannot fully eliminate our exposure to volatility caused by fluctuations in market prices. Beginning in 2007 and continuing into 2008, the credit markets across the
globe have experienced severe dislocation. Market demand for asset-backed securities, and those backed by mortgage assets in particular, has significantly contracted and in many markets, has virtually disappeared. Further, market demand by whole
loan purchasers has also contracted. These unprecedented market conditions have adversely impacted us, as well as our competitors. As the market conditions continue, our assets and liabilities are subject to valuation adjustment as well as changes
in the inputs we utilize to measure fair value.

For the three and nine months ended September 30, 2008, certain changes in the fair
value of our assets and liabilities have been included in our financial results. As a result of further deterioration in the mortgage market and underlying collateral valuations, we experienced declines in the fair value of our mortgage loans held
for sale, resulting in significant valuation losses materially impacting our financial results. At the same time, our mortgage loans held for investment and debt held in our on- balance sheet securitizations, in which we elected the fair value
option under SFAS No. 159 experienced offsetting valuation declines. As the mortgage loan held for investment asset declines in value, resulting in losses, the securitized debt declines, resulting in offsetting valuation gains. For the nine
months ended, we have additional increases in the fair value of mortgage servicing rights and associated hedging derivatives primarily due to slower prepayment speeds enhancing the value of our mortgage servicing rights and a steeper overall yield
curve in the first quarter of 2008, resulting in a positive impact of our hedging activity, and favorable valuation of our mortgage servicing rights and derivative assets, partially offset by a projected increase in cost of servicing resulting from
higher delinquencies and loan defaults. The decrease in the fair value of trading securities for the three and nine months ended were substantially attributable to the decline in the fair value of residual interests that continue to be held by us
through our off-balance sheet securitizations, resulting from increasing credit losses rating agency downgrades, declines in value of underlying collateral, market illiquidity, and changes in discount rate assumptions in certain foreign markets.

In addition, for the three months ended June 30, 2008 certain changes in the fair value of our GMAC Banks automotive division
assets and liabilities have been included in our financial results. The revenues and expenses of the automotive division are eliminated from our net results through minority interest. A $92.0 million impairment of our investment in vehicle operating
lease assets resulted from a sharp decline in used vehicle sales prices for sport-utility vehicles and trucks in the United States, reducing our expected residual value for these vehicles.



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We have numerous internal controls in place to ensure the appropriateness of fair value measurements.
Significant fair value measures are subject to detailed analytics, management review and approval. We have an established model validation policy and program in place that covers all models used to generate fair value measurements. This model
validation program ensures a controlled environment is used for the development, implementation, and use of the models, as well as for change procedures. Further, this program uses a risk-based approach to select models to be reviewed and validated
by an independent internal risk group to ensure the models are consistent with their intended use, the logic within the models is reliable, and the inputs and outputs from these models are appropriate. Additionally, a wide array of operational
controls are in place to ensure the fair value measurements are reasonable, including controls over the inputs into and the outputs from the fair value measurement models. For example, we back test the internal assumptions used within models against
actual performance. We also monitor the market for recent trades, market surveys, or other market information that may be used to benchmark model inputs or outputs. Certain valuations will also be benchmarked to market indices when appropriate and
available. We have scheduled model and/or input recalibrations that occur on a periodic basis, but will recalibrate earlier if significant variances are observed as part of the back testing or benchmarking noted above.

Considerable judgment is used in forming conclusions from observable market data used to estimate our Level 2 fair value measurements and in estimating
inputs to our internal valuation models used to estimate our Level 3 fair value measurements. Level 3 inputs such as interest rate movements, prepayments speeds, credit losses and discount rates are inherently difficult to estimate. Changes to these
inputs can have a significant affect on fair value measurements. Accordingly, our estimates of fair value are not necessarily indicative of the amounts that would be realized on the ultimate sale or exchange.

Results of Operations

Consolidated Results

Our net loss was $1.9 and $4.6 billion for the three and nine months ended September 30, 2008, respectively, compared to a net
loss of $2.3 and $3.4 billion for the same periods in 2007. Our 2008 results were adversely affected by continued pressure in the United States housing markets and the foreign mortgage and capital markets in which we operate. These adverse
conditions resulted in lower net interest margins, high provision for loan losses, lower loan production, realized losses on sales of mortgage loans, declines in fair value of our mortgage loans held for sale and trading securities portfolio and
continued real estate investment impairments. As market conditions persist, particularly in the foreign markets, these unfavorable impacts on our results of operations may continue.

Our mortgage loan production was $11.9 and $50.8 billion for the three and nine months ended September 30, 2008, respectively, compared to $29.3 and
$101.7 billion in the same periods in 2007. Our domestic loan production decreased $9.0 billion, or 44.4%, in the three months ended September 30, 2008 and $31.5 billion, or 40.1%, in the nine months ended September 30, 2008 compared to
the same periods in 2007. Our international loan production decreased $8.4 billion, or 93.1%, in the three months ended September 30, 2008 and $19.4 billion, or 83.4%, in the nine months ended September 30, 2008 compared to the same
periods in 2007. Our domestic loan production decreased due to declines in our nonprime, prime conforming, prime non-conforming and prime second-lien products, partially offset by an increase in government product. In the three months ended
September 30, 2008, our prime conforming production significantly declined compared to the same period in 2007 due to the continued downward trend in the domestic mortgage origination market as a result of market conditions and tighter credit
standards furthered by our closure of retail and wholesale channels. Our international production decreased significantly due to discontinued loan originations in the United Kingdom, Continental Europe, Latin America, Australia and on Canadian
non-insured loans during the first half of 2008. We currently originate only prime conforming and government mortgages in the United States and high quality insured mortgages in Canada.



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The following table summarizes our domestic mortgage loan production by product type:



|                      |  |                                       |  |                                 |        |             |         |                   |   |             |  |                   |  |             |        |                   |         |  |   |       
|--------------------- |  | ------------------------------------- |  | ------------------------------- | ------ | ----------- | ------- | ----------------- | - | ----------- |  | ----------------- |  | ----------- | ------ | ----------------- | ------- |  | - | ------
|                      |  | U.S. Mortgage Loan Production by Type
|                      |  | Three Months Ended September 30,      |  | Nine Months Ended September 30,
|                      |  | 2008                                  |  | 2007                            |        | 2008        |         | 2007             
|                      |  | No. ofLoans                           |  | DollarAmt ofLoans               |        | No. ofLoans |         | DollarAmt ofLoans |   | No. ofLoans |  | DollarAmt ofLoans |  | No. ofLoans |        | DollarAmt ofLoans
|                      |  | (Dollars in millions)                
|Prime conforming      |  | 32,233                                |  | $                               | 6,766  |             | 64,116  |                   | $ | 12,174      |  | 158,712           |  | $           | 34,390 |                   | 180,882 |  | $ | 34,425
|Prime non-conforming  |  | 537                                   |  |                                 | 250    |             | 13,985  |                   |   | 4,993       |  | 4,079             |  |             | 1,838  |                   | 83,712  |  |   | 27,798
|Prime second-lien     |  | 1,199                                 |  |                                 | 86     |             | 23,546  |                   |   | 1,440       |  | 11,147            |  |             | 872    |                   | 116,710 |  |   | 6,472 
|Government            |  | 22,939                                |  |                                 | 4,137  |             | 13,241  |                   |   | 1,378       |  | 56,360            |  |             | 9,873  |                   | 70,833  |  |   | 5,458 
|Nonprime              |  |                                      |  |                                 |       |             | 3,007   |                   |   | 221         |  | 13                |  |             | 3      |                   | 30,399  |  |   | 4,246 
|                      |  |                                       |  |                                 |        |             |         |                   |   |             |  |                   |  |             |        |                   |         |  |   |       
|Total U.S. production |  | 56,908                                |  | $                               | 11,239 |             | 117,895 |                   | $ | 20,206      |  | 230,311           |  | $           | 46,976 |                   | 482,536 |  | $ | 78,399
|                      |  |                                       |  |                                 |        |             |         |                   |   |             |  |                   |  |             |        |                   |         |  |   |       

The following table summarizes our domestic mortgage loan production by purpose and interest rate
type:



|                    |  |                                 |        |                                |   |        |  |      |        |  |   |       
|------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ------
|                    |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                    |  | 2008                            |        | 2007                           |   | 2008   |  | 2007
|                    |  | (In millions)                  
|Purpose:            |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Purchase            |  | $                               | 6,291  |                                | $ | 9,409  |  | $    | 16,983 |  | $ | 29,544
|Non-purchase        |  |                                 | 4,948  |                                |   | 10,797 |  |      | 29,993 |  |   | 48,855
|                    |  |                                 |        |                                |   |        |  |      |        |  |   |       
|                    |  | $                               | 11,239 |                                | $ | 20,206 |  | $    | 46,976 |  | $ | 78,399
|                    |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Interest rate type: |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Fixed rate          |  | $                               | 10,107 |                                | $ | 16,191 |  | $    | 42,180 |  | $ | 56,231
|Adjustable rate     |  |                                 | 1,132  |                                |   | 4,015  |  |      | 4,796  |  |   | 22,168
|                    |  |                                 |        |                                |   |        |  |      |        |  |   |       
|                    |  | $                               | 11,239 |                                | $ | 20,206 |  | $    | 46,976 |  | $ | 78,399
|                    |  |                                 |        |                                |   |        |  |      |        |  |   |       

The following table summarizes our domestic mortgage loan production by channel:



|                                                     |  |                                          |  |                                 |        |             |         |                   |   |             |  |                   |  |             |        |                   |         |  |   |       
|---------------------------------------------------- |  | ---------------------------------------- |  | ------------------------------- | ------ | ----------- | ------- | ----------------- | - | ----------- |  | ----------------- |  | ----------- | ------ | ----------------- | ------- |  | - | ------
|                                                     |  | U.S. Mortgage Loan Production by Channel
|                                                     |  | Three Months Ended September 30,         |  | Nine Months Ended September 30,
|                                                     |  | 2008                                     |  | 2007                            |        | 2008        |         | 2007             
|                                                     |  | No. ofLoans                              |  | DollarAmt ofLoans               |        | No. ofLoans |         | DollarAmt ofLoans |   | No. ofLoans |  | DollarAmt ofLoans |  | No. ofLoans |        | DollarAmt ofLoans
|                                                     |  | (Dollars in millions)                   
|Retail branches                                      |  | 8,419                                    |  | $                               | 1,536  |             | 18,618  |                   | $ | 2,878       |  | 37,971            |  | $           | 6,988  |                   | 60,545  |  | $ | 9,391 
|Direct lending (other than retail branches)          |  | 6,266                                    |  |                                 | 1,060  |             | 20,402  |                   |   | 2,227       |  | 30,308            |  |             | 5,400  |                   | 80,166  |  |   | 8,753 
|Mortgage brokers                                     |  | 4,996                                    |  |                                 | 994    |             | 23,423  |                   |   | 4,372       |  | 27,989            |  |             | 5,867  |                   | 92,616  |  |   | 17,196
|Correspondent lenders and secondary market purchases |  | 37,227                                   |  |                                 | 7,649  |             | 55,452  |                   |   | 10,729      |  | 134,043           |  |             | 28,721 |                   | 249,209 |  |   | 43,059
|                                                     |  |                                          |  |                                 |        |             |         |                   |   |             |  |                   |  |             |        |                   |         |  |   |       
|Total U.S. production                                |  | 56,908                                   |  | $                               | 11,239 |             | 117,895 |                   | $ | 20,206      |  | 230,311           |  | $           | 46,976 |                   | 482,536 |  | $ | 78,399
|                                                     |  |                                          |  |                                 |        |             |         |                   |   |             |  |                   |  |             |        |                   |         |  |   |       



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The following table summarizes our international mortgage loan production:



|                               |  |                                        |  |                                 |     |             |        |                   |   |             |  |                   |  |             |       |                   |         |  |   |       
|------------------------------ |  | -------------------------------------- |  | ------------------------------- | --- | ----------- | ------ | ----------------- | - | ----------- |  | ----------------- |  | ----------- | ----- | ----------------- | ------- |  | - | ------
|                               |  | International Mortgage Loan Production
|                               |  | Three Months Ended September 30,       |  | Nine Months Ended September 30,
|                               |  | 2008                                   |  | 2007                            |     | 2008        |        | 2007             
|                               |  | No. ofLoans                            |  | DollarAmt ofLoans               |     | No. ofLoans |        | DollarAmt ofLoans |   | No. ofLoans |  | DollarAmt ofLoans |  | No. ofLoans |       | DollarAmt ofLoans
|                               |  | (Dollars in millions)                 
|United Kingdom                 |  | 144                                    |  | $                               | 32  |             | 22,192 |                   | $ | 6,538       |  | 3,360             |  | $           | 882   |                   | 58,629  |  | $ | 16,163
|Continental Europe             |  | 158                                    |  |                                 | 41  |             | 10,230 |                   |   | 1,941       |  | 3,408             |  |             | 893   |                   | 28,890  |  |   | 5,427 
|Canada                         |  | 2,621                                  |  |                                 | 484 |             | 2,035  |                   |   | 414         |  | 8,723             |  |             | 1,705 |                   | 6,636   |  |   | 1,281 
|Other                          |  | 982                                    |  |                                 | 70  |             | 2,983  |                   |   | 175         |  | 2,698             |  |             | 387   |                   | 7,895   |  |   | 387   
|                               |  |                                        |  |                                 |     |             |        |                   |   |             |  |                   |  |             |       |                   |         |  |   |       
|Total international production |  | 3,905                                  |  | $                               | 627 |             | 37,440 |                   | $ | 9,068       |  | 18,189            |  | $           | 3,867 |                   | 102,050 |  | $ | 23,258
|                               |  |                                        |  |                                 |     |             |        |                   |   |             |  |                   |  |             |       |                   |         |  |   |       

The following table presents our consolidated results of operations:



|                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|---------------------------------------------------- |  | ------------------------------- | -------- | - | ------------------------------ | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                     |  | Three Months EndedSeptember 30, |          |   | Nine Months EndedSeptember 30, |  
|                                                     |  | 2008                            |          |   | 2007                           |   |          | 2008 |  |   | 2007     |  
|                                                     |  | (In millions)                   |         
|Net financing revenue                                |  | $                               | 118.1    |   |                                | $ | 259.0    |      |  | $ | 363.4    |   |  | $ | 1,057.8  |  
|Loss on mortgage loans, net                          |  |                                 | (138.2   | ) |                                |   | (569.6   | )    |  |   | (1,947.7 | ) |  |   | (630.7   | )
|Servicing fees                                       |  |                                 | 369.4    |   |                                |   | 451.4    |      |  |   | 1,153.6  |   |  |   | 1,350.7  |  
|Servicing asset valuation and hedge activities, net  |  |                                 | (260.8   | ) |                                |   | (123.4   | )    |  |   | (36.2    | ) |  |   | (577.3   | )
|                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Net servicing fees                                   |  |                                 | 108.6    |   |                                |   | 328.0    |      |  |   | 1,117.4  |   |  |   | 773.4    |  
|Other revenue                                        |  |                                 | (138.8   | ) |                                |   | (397.7   | )    |  |   | (76.3    | ) |  |   | (125.3   | )
|Provision for loan losses                            |  |                                 | (660.9   | ) |                                |   | (884.2   | )    |  |   | (1,430.2 | ) |  |   | (1,759.6 | )
|Non-interest expense                                 |  |                                 | (1,159.0 | ) |                                |   | (1,091.3 | )    |  |   | (2,522.0 | ) |  |   | (2,656.7 | )
|                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Loss before income tax expense and minority interest |  |                                 | (1,870.2 | ) |                                |   | (2,355.8 | )    |  |   | (4,495.4 | ) |  |   | (3,341.1 | )
|Income tax (expense) benefit                         |  |                                 | (4.9     | ) |                                |   | 119.5    |      |  |   | (88.1    | ) |  |   | (16.2    | )
|                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Loss before minority interest                        |  |                                 | (1,875.1 | ) |                                |   | (2,236.3 | )    |  |   | (4,583.5 | ) |  |   | (3,357.3 | )
|Minority interest                                    |  |                                 | (37.1    | ) |                                |   | (24.6    | )    |  |   | (47.3    | ) |  |   | (68.1    | )
|                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Net loss                                             |  | $                               | (1,912.2 | ) |                                | $ | (2,260.9 | )    |  | $ | (4,630.8 | ) |  | $ | (3,425.4 | )
|                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  

Net financing revenue was $118.1 million for the three months ended September 30, 2008
compared to $259.0 million for the same period in 2007, a decrease of $140.9 million, or 54.4%. Net financing revenue was $363.4 million for the nine months ended September 30, 2008 compared to $1.1 billion for the same period in 2007, a
decrease of $694.4 million, or 65.6%. Our financing revenues and interest expense declined significantly due to declines in the average mortgage loan and lending receivable asset balances resulting from lower loan production beginning in 2007, the
deconsolidation of $27.4 billion in securitization trusts in 2007 and the related decrease in average borrowings, the sale of our Resort Finance and healthcare businesses and the continued portfolio run-off. The decrease in financing revenues was
further attributable to an increase in nonaccrual loans caused by higher delinquencies and a decrease in commercial lending yields primarily as a result of an increase in nonaccrual loans. The decrease in interest expense due to lower average
borrowings was partially offset by higher funding rates due to unfavorable market conditions, resulting in lower advance rates on our funding facilities and an increase in our cost of funds related to our refinancing initiative completed during the
second quarter of 2008 and on our unsecured debt due to the step-up in coupon resulting from ratings downgrades.

Loss on mortgage loans,
net was $138.2 million and $1.9 billion for the three and nine months ended September 30, 2008, respectively, compared to $569.6 and $630.7 million for the same periods in 2007. Losses



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in the three months ended September 30, 2008 were curtailed by focusing loan originations and sales primarily on our prime conforming and government
sponsored products. The significant losses in the remaining part of 2008 were primarily a result of the liquidation of mortgage loans in our International Business Group and distressed assets in our PIA business as part of liquidity initiatives.
Also affecting the increased losses in the nine months ended September 30, 2008 was a decline in fair value of our mortgage loans that continue to be held for sale and commitments in certain foreign markets.

Net servicing fees were $108.6 million and $1.1 billion for the three and nine months ended September 30, 2008, respectively, compared to $328.0 and
$773.4 million for the same periods in 2007. The decrease for the three months ended September 30, 2008 was primarily due to negative mortgage servicing valuations as a result of a projected increase in cost of servicing assets resulting from
higher delinquencies and defaults. The large increase in the nine months ended September 30, 2008 was primarily due to slower prepayments speeds and a steeper overall yield curve in the first three months of 2008, resulting in a favorable
valuation of our mortgage servicing rights and a positive impact on our hedging activity.

The following table sets forth the types of
residential mortgage loans comprising our primary servicing portfolio for which we hold the corresponding mortgage servicing rights:



|                                   |  |                                        |  |                   |         |             |           |                   |   |        
|---------------------------------- |  | -------------------------------------- |  | ----------------- | ------- | ----------- | --------- | ----------------- | - | -------
|                                   |  | U.S. Mortgage Loan Servicing Portfolio
|                                   |  | September 30, 2008                     |  | December 31, 2007
|                                   |  | No. ofLoans                            |  | DollarAmt ofLoans |         | No. ofLoans |           | DollarAmt ofLoans
|                                   |  | (Dollars in millions)                 
|Prime conforming                   |  | 1,568,986                              |  | $                 | 236,400 |             | 1,554,594 |                   | $ | 227,460
|Prime non-conforming               |  | 243,943                                |  |                   | 73,904  |             | 336,319   |                   |   | 103,285
|Prime second-lien                  |  | 587,525                                |  |                   | 25,698  |             | 651,260   |                   |   | 28,297 
|Government                         |  | 217,681                                |  |                   | 26,865  |             | 180,453   |                   |   | 19,454 
|Nonprime                           |  | 261,061                                |  |                   | 29,078  |             | 349,696   |                   |   | 40,105 
|                                   |  |                                        |  |                   |         |             |           |                   |   |        
|Total primary servicing portfolio* |  | 2,879,196                              |  | $                 | 391,945 |             | 3,072,322 |                   | $ | 418,601
|                                   |  |                                        |  |                   |         |             |           |                   |   |        



|* | Excludes loans for which we acted as a subservicer. Subserviced loans totaled 155,848 with an unpaid principal balance of $33.9 billion at September 30, 2008 and 205,019 with
an unpaid principal balance of $44.3 billion at December 31, 2007.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our international servicing portfolio was comprised
of $34.1 and $43.1 billion of mortgage loans as of September 30, 2008 and December 31, 2007, respectively.

Other revenue was a
loss of $138.8 and $76.3 million for the three and nine months ended September 30, 2008, respectively, compared to a loss of $397.7 and $125.3 million for the same periods in 2007. The decreases were largely driven by loss on investment
securities, net, real estate related revenues, gain on extinguishment of debt and other losses, described by the following:

Loss on investment securities, net was $41.9 million for the three months ended September 30, 2008, compared to $332.5 million for the same period in 2007 and $575.8 million for the nine months ended September 30, 2008, compared
to $349.1 million in the same period for 2007. Beginning in the third quarter of 2007 and continuing into 2008, we have experienced a significant decline in the fair value of mortgage-backed securities and residual interests that continue to be held
through off-balance sheet securitizations. This was the result of increasing credit losses, rating agency downgrades, declines in value of underlying collateral, market illiquidity, and changes in discount rate assumptions. The decrease in losses
during the three months ended September 30, 2008, compared to the same period last year was primarily due to lower negative valuation adjustments recorded on these retained interests. Impacting results for the three and nine months ended
September 30, 2008 were favorable net fair value adjustments on collateralized debt obligations elected under SFAS No. 159 of $50.3 and $93.4 million, respectively.



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Real estate related revenues, net decreased $48.5 and $326.7 million for the three and
nine months ended September 30, 2008, respectively, compared to the same periods in 2007. The decline was due to the continued stress in the mortgage and capital markets and its affect on homebuilders, resulting in a significant decline in our
real estate investments. This resulted in higher write-downs on lot option projects and model homes, increase in the loss on sale of model homes, declines in model home lease income and lot option fees and a decrease in equity earnings on real
estate projects.

Gain on extinguishment of debt totaled $42.2 million and $1.2 billion for the three and nine months ended
September 30, 2008, respectively. The gain recognized in the three months ended September 30, 2008 was due to GMACs contribution of the remaining ResCap notes it continued to hold which had been purchased previously in open market
repurchase transactions. Gains of $616.4 and $510.2 million were recognized in the first half of 2008 resulting from the private debt tender and exchange offering completed during the second quarter of 2008 and GMACs contribution of ResCap
notes that had been purchased previously in open market repurchase transactions, respectively.

Other loss was $64.7 and
$425.4 million for the three and nine months ended September 30, 2008, respectively, compared to other income of $48.9 and $161.2 million in the same periods in 2007. This decrease related to net fair value adjustments on elected assets and
related liabilities subsequent to the adoption of SFAS No. 159, resulting in negative impacts of $71.8 and $199.7 million in the three and nine months ended September 30, 2008, respectively. In addition, the sale of certain servicing
advance receivables in accordance with a Receivable Factoring Facility entered into with GMAC Commercial Finance, LLC in the second quarter of 2008 resulted in losses of $25.1 and $113.0 million in the three and nine months ended September 30,
2008, respectively. An impairment of $255.0 million was recorded in the second quarter of 2008 related to the sale of our Resort Finance business to GMAC Commercial Finance, LLC.

Provision for loan losses was $660.9 million for the three months ended September 30, 2008, compared to $884.2 million for the same period in 2007
and $1.4 billion for the nine months ended September 30, 2008, compared to $1.8 billion for the same period in 2007. The decrease is primarily driven by the deconsolidation of $27.4 billion of mortgage loans held for investment in the third and
fourth quarters of 2007 resulting in lower required allowance on a smaller portfolio. In addition, the adoption of SFAS No. 159 on January 1, 2008 decreased the required allowance for the majority of the remaining held for investment loans
in financing securitizations. Offsetting these factors were increases in provision for loan losses within our International Business Group of $235.5 and $397.3 million in the three- and nine-month periods ended September 30, 2008, primarily
caused by declines in mortgage loans held for investment credit quality in the United Kingdom and Continental Europe, including home price depreciation, higher delinquencies and increased severity and frequency assumptions. In addition, our PIA
business experienced similar deterioration in mortgage loans held for investment credit quality as a result of the domestic market conditions. Our Business Capital Group also recognized an increase in specific reserves of $39.0 and $114.0 million in
the three- and nine-month periods ended September 30, 2008 due to continued deteriorating market conditions in their commercial lending portfolio.

Total non-interest expense increased $67.7 million, or 6.2%, in the three months ended September 30, 2008 and decreased $134.7 million, or 5.1%, in the nine months ended September 30, 2008. Excluding the
$454.8 million goodwill impairment recorded during the three months ended September 30, 2007, total non-interest expense increased $522.5 and $320.1 million in the three and nine months ended September 30, 2008 compared to the same periods
in 2007. The increase in the three months ended September 30, 2008 was primarily attributable to an increase in unrealized and realized currency losses of $380.9 million resulting from the strengthening of the U.S. dollar against the Euro and
U.K. sterling and our reduced hedging position caused by the limited availability of willing counterparties to enter into forward arrangements. A restructuring was announced during the third quarter of 2008 to further streamline the business,
resulting in a charge of $76.2 million. In addition, we experienced an increase for the three- and nine-month periods ended September 30, 2008 in loan repurchase reserves of $170.8 and $74.3 million, respectively, due to credit deterioration in
the loans eligible for repurchase and loss severity of repurchased loans. The captive reinsurance reserves increased by



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$31.8 and $67.3 million, respectively, due to anticipated mortgage issuance losses in excess of contractual amounts covered by primary insurers. Offsetting
these factors was a decrease in compensation and benefits expense of $77.5 and $250.7 million for the three and nine months ended September 30, 2008, respectively, primarily due to employee staff reductions related to the restructuring plan
announced in the fourth quarter of 2007 and lower commission expense from lower loan production.

Income tax expense increased $124.4 and
$71.9 million in the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. The increase is primarily due to the International Business Group no longer recognizing a tax benefit on net operating
losses for most of its business units. A deferred tax valuation allowance was recorded in our International Business Group of $99.1 and $764.0 million in the three and nine months ended September 30, 2008, respectively, offset by a reduction in
pre-tax earnings and tax expense in the International Business Group and GMAC Bank throughout 2008 as compared to 2007. The deferred tax valuation allowance recorded in 2008 was across the majority of International Business Group business units
because of further declines in the international markets and the resulting likelihood that certain tax benefits will not be realized in future periods.

Minority interest represents the after-tax earnings of the automotive division of GMAC Bank.

Segment Results

Residential Finance Group

The following table presents the results of operations for the Residential Finance Group:



|                                                    |  |                                 |        |   |                                |   |          |      |  |   |          |   |  |   |          |  
|--------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                    |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                    |  | 2008                            |        |   | 2007                           |   |          | 2008 |  |   | 2007     |  
|                                                    |  | (In millions)                   |       
|Net financing revenue                               |  | $                               | 45.5   |   |                                | $ | 137.7    |      |  | $ | 176.7    |   |  | $ | 647.3    |  
|Gain (loss) on mortgage loans, net                  |  |                                 | 44.1   |   |                                |   | (104.5   | )    |  |   | 316.9    |   |  |   | (339.0   | )
|Servicing fees.                                     |  |                                 | 360.0  |   |                                |   | 435.3    |      |  |   | 1,116.8  |   |  |   | 1,304.3  |  
|Servicing asset valuation and hedge activities, net |  |                                 | (250.4 | ) |                                |   | (122.0   | )    |  |   | (19.8    | ) |  |   | (574.7   | )
|                                                    |  |                                 |        |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Net servicing fees                                  |  |                                 | 109.6  |   |                                |   | 313.3    |      |  |   | 1,097.0  |   |  |   | 729.6    |  
|Other revenue.                                      |  |                                 | (41.8  | ) |                                |   | (47.6    | )    |  |   | (298.3   | ) |  |   | 172.7    |  
|Provision for loan losses                           |  |                                 | (208.3 | ) |                                |   | (586.8   | )    |  |   | (493.2   | ) |  |   | (1,313.1 | )
|Non-interest expense                                |  |                                 | (474.5 | ) |                                |   | (881.7   | )    |  |   | (1,374.4 | ) |  |   | (2,159.5 | )
|Income tax benefit (expense)                        |  |                                 | 25.4   |   |                                |   | (23.1    | )    |  |   | 22.4     |   |  |   | (96.7    | )
|                                                    |  |                                 |        |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Net loss                                            |  | $                               | (500.0 | ) |                                | $ | (1,192.7 | )    |  | $ | (552.9   | ) |  | $ | (2,358.7 | )
|                                                    |  |                                 |        |   |                                |   |          |      |  |   |          |   |  |   |          |  

Residential Finance Groups net loss was $500.0 and $552.9 million for the three and nine
months ended September 30, 2008, respectively, compared to a net loss of $1.2 and $2.4 billion for the same periods in 2007. Residential Finance Groups results reflect continued deterioration of the U.S. mortgage market, characterized by
rising delinquencies, negative home price appreciation, an expanding inventory of foreclosed properties, and declining mortgage originations due to reduced product offerings and tighter credit standards. Higher projected servicing costs related to
rising delinquencies reduced the value of mortgage servicing rights in the three months ended September 30, 2008, partially offset by slower than expected prepayment speeds. Our exposure to market conditions has been reduced by limiting 2008
production to primarily agency-eligible products, and continuing to reduce the balance sheet through asset sales and the deconsolidation of a portion of our financing securitizations in the second half of 2007. The implementation of our SFAS
No. 159 elections on January 1, 2008 has resulted in lower volatility in the value of the mortgage loans held for investment portfolio, reflecting our true economic exposure related to certain financing securitizations. In response to
lower expected market activity, we announced a restructuring plan on September 3, 2008 to streamline operations and refocus resources on strategic



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lending and servicing activities. This included the closing of our retail and wholesale channels in September 2008, and the pending sale of our GMAC Home
Services unit.

Net financing revenue decreased $92.2 million, or 67.0%, for the three months ended September 30, 2008 and $470.6
million, or 72.7%, for the nine months ended September 30, 2008, compared to the same periods for 2007. These decreases are primarily due to a lower average mortgage loan portfolio resulting from the continuing strategy to reduce the balance
sheet. This strategy included the deconsolidation of certain financing securitizations, significantly reducing the held for investment portfolio in the second half of 2007, the implementation of our SFAS No. 159 elections on January 1,
2008, and the discontinuation and continued run-off of the non-agency, nonconforming portfolio. The held for investment portfolio has decreased from $50.1 billion at September 30, 2007 to $27.6 billion at December 31, 2007 to $21.6 billion
at September 30, 2008. Loan production of $47.0 billion for the nine months ended September 30, 2008 decreased $31.4 billion from the same period in 2007. The decrease this year is primarily due to the changes in the business model
eliminating the origination of non-agency, nonconforming products and the announced closing of the retail and wholesale channels. The government production increased from $5.5 to $9.9 billion over the same period. The held for sale portfolio
decreased from $4.9 billion at December 31, 2007 to $1.7 billion at September 30, 2008. The decrease in the held for sale portfolio is primarily due to the decrease in the overall market, asset sales and the shift to conforming products.
Third-party borrowings continued to decrease as a result of balance sheet reduction strategies and the ResCap debt restructuring initiative completed in June 2008.

Gain on mortgage loans, net increased $148.6 million for the three months ended September 30, 2008 and increased $655.9 million for the nine months ended September 30, 2008, compared to the same periods for
2007. In 2008, we experienced higher margins on sales due to the change in product mix to conforming and government sponsored products. In 2007, we experienced significant valuation losses on non-conforming and delinquent loans prior to transferring
mortgage loans of $6.0 billion in unpaid principal balance from held for sale to held for investment in August 2007. These favorable variances were partially offset by lower production in 2008 and gains during the third quarter of 2007 relating to
the deconsolidation of certain financing securitizations.

Net servicing fees decreased $203.7 million for the three months ended
September 30, 2008 compared to the three months ended September 30, 2007 and increased $367.4 million for the nine months ended September 30, 2008 compared to the same periods in 2007. The decrease for the three months ended
September 30, 2008 was primarily due to the impact of negative valuation from higher projected cost to service, associated with increasing delinquencies and defaults. The increase for the nine months ended September 30, 2008 was primarily
due to slower prepayments speeds and a steeper overall yield curve in the first three months of 2008, resulting in a positive impact of our hedging activity and favorable valuation of our mortgage servicing rights. The increase was partially offset
in the second and third quarters by negative valuation losses related to higher projected cost to service.

Other revenue increased $5.8
million for the three months ended September 30, 2008 and decreased $471.0 million for the nine months ended September 30, 2008, compared to the same periods in 2007. The increase for the three months ended September 30, 2008 was due
to a reduction in fair value adjustments on home equity residuals and other investment securities as the three months ended September 30, 2007 included significant valuation losses resulting from underlying collateral performance. The three
months ended September 30, 2008 increase also included lower market valuation losses on real estate owned due to lower balances following the deconsolidation of certain on-balance sheet securitizations in late 2007. These favorable increases
were partially offset by negative net fair value adjustments on assets and liabilities where we elected fair value treatment under SFAS No. 159, lower commission income on real estate related revenues due to the slow down in the residential
real estate market, an impairment charge related to the pending sale of our GMAC Home Services business and incurred losses on the sale of servicing advances under the factoring agreement. The decrease for the nine months ended September 30,
2008 was due to higher fair value losses in 2008 on home equity residuals and negative market valuations on subordinated bonds resulting from continued degradation of underlying collateral, rating agency downgrades, and liquidity concerns in the
secondary markets. The decrease also included negative net fair value adjustments on assets and liabilities where we elected fair value treatment upon the adoption of



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SFAS No. 159, loss on the sale of servicing advances under the factoring agreement, lower commission income on real estate related revenues due to
the slow down in the residential real estate market, and an impairment charge related to the pending sale of our GMAC Home Services business in the nine months ended September 30, 2008. These losses were partially offset by lower market
valuation losses on real estate owned in 2008 due to lower real estate owned balances and the release of deferred tax service revenue related to the closure of the Home Connects business in the second quarter of 2008.

Provision for loan losses decreased $378.5 million, or 64.5%, for the three months ended September 30, 2008 and $819.9 million, or 62.4%, for the
nine months ended September 30, 2008 compared to the same periods in 2007. The deconsolidation of certain financing securitizations in the second half of 2007 resulted in lower required allowance in 2008 on a smaller held for investment
portfolio. The adoption and election of SFAS No. 159 in 2008 also decreased required allowance for the majority of the remaining held for investment loans in our financing securitization portfolio. All of our held for investment portfolios not
recorded at market value, including the GMAC Bank held for investment portfolio, experienced increased delinquency and higher frequency and severity assumptions consistent with trends observed in the overall market.

Non-interest expenses decreased $407.2 million, or 46.2%, for the three months ended September 30, 2008 and $785.1 million, or 36.4%, for the nine
months ended September 30, 2008 compared to the same periods in 2007. The decreases in non-interest expense are primarily due to impairment of goodwill in the third quarter of 2007 for $381.2 million. The decreases in non-interest expenses are
also due to realization of restructuring efforts in 2007 and closing of branches in 2008 resulting in lower compensation and benefits expense of $68.5 and $219.4 million during the three and nine months ended September 30, 2008, compared to the
same periods last year. These decreases were offset by an increase in representation and warranty and captive reinsurance reserves in the three and nine months ended September 30, 2008, compared to the same periods in 2007. The increase in the
2008 representation and warranty reserves was mostly due to lower required reserves in the three months ended September 30, 2007 as a result of favorable frequency assumption movements in 2007, as well as, continued deterioration of loans
eligible for repurchase and loss severity of repurchased loans in 2008. The increases in the captive reinsurance reserve for the three and nine months ended September 30, 2008, result from anticipated mortgage insurance losses greater than the
contractual amounts covered by the primary mortgage insurers.

Business Capital Group

The following table presents the results of operations for the Business Capital Group:



|                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                          |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                          |  | 2008                            |        |   | 2007                           |   |        | 2008 |  |   | 2007   |  
|                          |  | (In millions)                   |       
|Net financing revenue     |  | $                               | (20.6  | ) |                                | $ | 22.7   |      |  | $ | (45.5  | ) |  | $ | 88.7   |  
|Other revenue             |  |                                 | (92.7  | ) |                                |   | (78.2  | )    |  |   | (521.7 | ) |  |   | 9.1    |  
|Provision for loan losses |  |                                 | (116.8 | ) |                                |   | (92.4  | )    |  |   | (211.7 | ) |  |   | (149.8 | )
|Non-interest expense      |  |                                 | (23.5  | ) |                                |   | (24.9  | )    |  |   | (63.1  | ) |  |   | (62.5  | )
|Income tax benefit        |  |                                 | 0.6    |   |                                |   | 0.9    |      |  |   | 1.0    |   |  |   | 0.5    |  
|                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net loss                  |  | $                               | (253.0 | ) |                                | $ | (171.9 | )    |  | $ | (841.0 | ) |  | $ | (114.0 | )
|                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

Business Capital Groups net loss was $253.0 and $841.0 million for the three and nine months
ended September 30, 2008, respectively, compared to a net loss of $171.9 and $114.0 million for the same periods in 2007. These decreases were primarily due to lower net financing revenue, lower real estate related revenues and higher provision
for loan losses.

Net financing revenue decreased $43.3 million, or 190.6%, in the three months ended September 30, 2008 and decreased
$134.2 million, or 151.4%, in the nine months ended September 30, 2008 compared to the same periods in 2007. Interest income decreased primarily due to a decrease in the average yield on lending



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receivables caused by a decrease in indices used to price lending receivables and a significant increase in the number of nonaccrual loans compared to the
same periods in 2007. In addition, interest income decreased due to the decline of construction, healthcare and resort lending receivables. The healthcare lending business was sold during the third quarter of 2007 and the Resort Finance business was
sold during the three months ended September 30, 2008. As of September 30, 2008, lending receivables were $1.7 billion, a decrease of $2.7 billion, or 60.4%, compared to the same period in 2007. A decrease in interest expense partially
offset the decrease in net interest income primarily due to lower borrowings related to the decline in lending receivables.

Other revenue
decreased $14.5 and $530.8 million in the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. Revenues generated on real estate investments were lower due to market pressure, nonperforming
investments and impairment on lot option projects, model homes, and equity investments. As of September 30, 2008, real estate investments totaled $678.7 million, a decrease of 53.1% compared to the same period in 2007. As a result, model home
lease income and lot option fees decreased by $27.9 and $85.8 million in the three and nine months ended September 30, 2008 compared to the same periods in 2007. Impairments on lot option projects and model homes decreased by $49.2 million and
increased by $93.3 million in the three and nine months ended September 30, 2008. Loss on sale of model homes increased $37.0 and $48.2 million in the three and nine months ended September 30, 2008, compared to the same periods in 2007,
primarily driven by loss on sale of model home assets to Cerberus in the three months ended September 30, 2008. In addition, income from equity investments decreased by $3.9 million and $46.9 million in the three and nine months ended
September 30, 2008, compared to the same periods in 2007, due to impairments on entity level equity assets. Other income also decreased due to a loss of $255.0 million, which resulted from the SFAS No. 144 held for sale impairment of the
Resort Finance business in the second quarter of 2008.

Provision for loan losses increased $24.4 and $61.9 million in the three and nine
months ended September 30, 2008, respectively, compared to the same periods in 2007. These increases were primarily due to additional specific reserves recorded during the three and nine months ended September 30, 2008 against a number of
distressed loans within the real estate lending portfolio due to continued deteriorating market conditions.

International Business
Group

The following table presents the results of operations for the International Business Group:



|                                                    |  |                                 |        |   |                                |   |        |      |  |   |          |   |  |   |        |  
|--------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | -------- | - |  | - | ------ | -
|                                                    |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                    |  | 2008                            |        |   | 2007                           |   |        | 2008 |  |   | 2007     |  
|                                                    |  | (In millions)                   |       
|Net financing revenue                               |  | $                               | (29.1  | ) |                                | $ | 21.5   |      |  | $ | 7.8      |   |  | $ | 81.2   |  
|Loss on mortgage loans, net                         |  |                                 | (170.5 | ) |                                |   | (462.5 | )    |  |   | (1,734.6 | ) |  |   | (280.2 | )
|Servicing fees                                      |  |                                 | 9.4    |   |                                |   | 16.7   |      |  |   | 37.2     |   |  |   | 47.7   |  
|Servicing asset valuation and hedge activities, net |  |                                 | (10.4  | ) |                                |   | (1.4   | )    |  |   | (16.4    | ) |  |   | (2.6   | )
|                                                    |  |                                 |        |   |                                |   |        |      |  |   |          |   |  |   |        |  
|Net servicing fees                                  |  |                                 | (1.0   | ) |                                |   | 15.3   |      |  |   | 20.8     |   |  |   | 45.1   |  
|Other revenue                                       |  |                                 | (17.7  | ) |                                |   | (53.2  | )    |  |   | (193.2   | ) |  |   | (22.9  | )
|Provision for loan losses                           |  |                                 | (257.9 | ) |                                |   | (22.4  | )    |  |   | (442.3   | ) |  |   | (45.0  | )
|Non-interest expense                                |  |                                 | (155.4 | ) |                                |   | (158.4 | )    |  |   | (404.2   | ) |  |   | (347.8 | )
|Income tax (expense) benefit                        |  |                                 | (6.2   | ) |                                |   | 161.7  |      |  |   | (100.2   | ) |  |   | 131.4  |  
|                                                    |  |                                 |        |   |                                |   |        |      |  |   |          |   |  |   |        |  
|Net loss                                            |  | $                               | (637.8 | ) |                                | $ | (498.0 | )    |  | $ | (2,845.9 | ) |  | $ | (438.2 | )
|                                                    |  |                                 |        |   |                                |   |        |      |  |   |          |   |  |   |        |  

International Business Groups net loss was $637.8 million and $2.8 billion for the three and
nine months ended September 30, 2008, respectively, compared to net losses of $498.0 and $438.2 million for the same periods in 2007. The three months ended September 30, 2008 results were impacted by further deterioration in market
conditions in the United Kingdom, Spain and Germany. These conditions include lower market prices for



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mortgages loans, falling values for residential real estate and increasing delinquency rates on mortgage loans in our portfolio. These deteriorating
conditions have been the primary drivers of unfavorable fair value adjustments on our mortgage loans held for sale and significant additional provision for loan losses on our mortgage loans held for investment.

Net financing revenue decreased $50.6 million in the three months ended September 30, 2008 and decreased $73.4 million in the nine months ended
September 30, 2008 compared to the same periods in 2007. The decreases in net financing revenue are primarily due to our cost of funds increasing more rapidly than yields on our assets and an overall increase in borrowings. Asset yields
continue to decline as a result of increasing nonaccrual loans. Cost of funds increased due to the widening of spreads on asset backed commercial paper and the reliance on other more expensive sources of funding.

Loss on mortgage loans, net was $170.5 million and $1.7 billion in the three and nine months ended September 30, 2008, respectively, compared to
losses of $462.5 and $280.2 million in the same periods in 2007. The three months ended September 30, 2008 losses are mainly attributable to the lower observed prices for mortgage loans in the United Kingdom. The significant losses in the third
quarter of 2007 and throughout 2008 were primarily a result of the sale or decreased valuation of mortgage loans due to depressed prices and weak market conditions.

Net servicing fees decreased $16.3 million in the three months ended September 30, 2008 and $24.3 million in the nine months ended September 30, 2008 compared to the same periods in 2007. The decreases are
due primarily to the changes in valuation of the servicing asset in 2008 as a result of an increase in discount rate assumptions to reflect market conditions and, in the three months ended September 30, 2008, the impact of the obligation to
repurchase loans pursuant to our servicing agreements in the Netherlands.

Other revenues increased $35.5 million in the three months ended
September 30, 2008 and decreased $170.3 million in the nine months ended September 30, 2008 compared to the same periods in 2007. The changes in other revenue for both periods were primarily a result of unfavorable fair value adjustments
recorded on our trading securities portfolio since the third quarter of 2007 due to increases in discount rate assumptions used to value the portfolio. For the three months ended September 30, 2008, the 2007 valuation losses were more severe
due to the rapidly deteriorating market conditions increasing discount rate assumptions. For the nine months ended September 30, 2008, the decrease was driven by the unfavorable fair value adjustments recorded in our trading securities and an
increase in losses recognized on residential real estate.

Provision for loan losses increased $235.5 million in the three months ended
September 30, 2008 and $397.3 million in the nine months ended September 30, 2008 compared to the same periods in 2007. The increases in provision are primarily due to declining home prices in the United Kingdom and continued increases in
mortgage loan delinquencies in Germany, Spain and United Kingdom.

Non-interest expenses decreased $3.0 million in the three months ended
September 30, 2008, and increased $56.4 million in the nine months ended September 30, 2008, compared to the same periods in 2007. The decrease in the three months ended was primarily related to reduced compensation expense as a result of
restructuring efforts executed earlier in the year and goodwill impairment recognized in the three months ended September 30, 2007 substantially offset by a reserve recorded in the three months ended September 30, 2008 for certain loan
repurchase obligations in the United Kingdom. The increase in the nine months ended September 30, 2008 is primarily due to restructuring charges and the reserve for repurchase obligations recorded in the United Kingdom offset by the goodwill
impairment recognized in the three months ended September 30, 2007.

Income tax expense was $6.2 million compared to a benefit of
$161.7 million in the three months ended September 30, 2008. For the nine months ended September 30, 2008, income tax expense was $100.2 million compared to a benefit of $131.4 million for the same period in 2007. These increases in
expense were primarily the result of the discontinued recording of tax benefits related to operating losses. During the first half of 2008, management performed a review of the deferred tax assets by country and concluded a full valuation allowance
should be recorded for the majority of our business units. The deferred tax valuation allowance recorded was $99.1 and $764.0 million in the three and nine months ended September 30, 2008, respectively.



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Corporate and Other

The following table presents the results of operations for Corporate and Other:



|                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|----------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                              |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                              |  | 2008                            |        |   | 2007                           |   |        | 2008 |  |   | 2007   |  
|                              |  | (In millions)                   |       
|Net financing revenue         |  | $                               | 122.2  |   |                                | $ | 77.2   |      |  | $ | 224.5  |   |  | $ | 240.6  |  
|Loss on mortgage loans, net   |  |                                 | (11.8  | ) |                                |   | (2.6   | )    |  |   | (530.0 | ) |  |   | (11.6  | )
|Other revenue                 |  |                                 | 13.5   |   |                                |   | (219.4 | )    |  |   | 936.4  |   |  |   | (285.3 | )
|Provision for loan losses     |  |                                 | (77.9  | ) |                                |   | (182.6 | )    |  |   | (283.0 | ) |  |   | (251.7 | )
|Non-interest expense          |  |                                 | (505.6 | ) |                                |   | (26.3  | )    |  |   | (680.3 | ) |  |   | (86.9  | )
|Income tax expense            |  |                                 | (24.7  | ) |                                |   | (20.0  | )    |  |   | (11.3  | ) |  |   | (51.5  | )
|                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Loss before minority interest |  |                                 | (484.3 | ) |                                |   | (373.7 | )    |  |   | (343.7 | ) |  |   | (446.4 | )
|Minority interest             |  |                                 | (37.1  | ) |                                |   | (24.6  | )    |  |   | (47.3  | ) |  |   | (68.1  | )
|                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net loss                      |  | $                               | (521.4 | ) |                                | $ | (398.3 | )    |  | $ | (391.0 | ) |  | $ | (514.5 | )
|                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

Corporate and Other represents our business operations outside of our three reportable operating
segments and includes the leasing and financing activities of the automotive division of GMAC Bank. The results of the automotive division of GMAC Bank are removed from our net income through minority interest. Corporate and Other also includes
certain holding company activities and other adjustments to conform the reportable segment information to our consolidated results. As of June 30, 2008, we have included our PIA business operation into Corporate and Other. The PIA business
operation previously was reported as part of the Residential Finance Group segment. Its business operations primarily represent the loan portfolio management of our previously purchased distressed assets strategy as well as certain other
nonperforming assets.

Corporate and Others net loss was $521.4 and $391.0 million for the three and nine months ended
September 30, 2008, respectively, compared to a net loss of $398.3 and $514.5 million for the same periods in 2007. Results in 2008 were significantly impacted by losses incurred from the sale of distressed assets in our PIA business, foreign
currency losses resulting from the strengthening of the U.S. dollar against the Euro and U.K. sterling, restructuring costs for severance and lease terminations associated with the restructuring plan announced in the third quarter of 2008, and
professional expenses associated with the debt tender and exchange offers completed in the second quarter of 2008. Offsetting these items were gains recorded on the extinguishment of debt as a result of GMACs open market repurchase
(OMR) of our debt and subsequent forgiveness and the debt tender and exchange initiatives undertaken in the second quarter of 2008, including the settlement of $1.8 billion of debt through a modified Dutch auction tender
offer.

Net financing revenue increased $45.0 million for the three months ended September 30, 2008 and decreased $16.1 million for the
nine months ended September 30, 2008 compared to the same periods in 2007. The automotive division of GMAC Bank represents $27.1 million of the increase and $6.9 million of the decrease for the three and nine months ended September 30,
2008, respectively. The $27.1 million increase is primarily due to increased interest and operating lease income earned by the automotive division due to a $2.4 billion increase in lending and retail automotive receivables from September 30,
2007. The $6.9 million decrease is primarily due to the automotive divisions $92.0 million impairment of investment in operating leases during the second quarter of 2008, substantially offset by higher interest and operating lease income.

Loss on mortgage loans, net increased $9.2 and $518.4 million for the three and nine months ended September 30, 2008, respectively,
compared to the same periods in 2007. The losses in 2008 are primarily the result of a significant increase in sales of our distressed assets in our PIA business. The business completed whole loan sales of $2.0 billion of unpaid principal balance in
2008 for a loss of $522.9 million compared to a loss on mortgage loans sold of $21.9 million over the same period in 2007.



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Other revenue increased $232.9 million and $1.2 billion for the three and nine months ended
September 30, 2008, respectively, compared to the same periods in 2007. The increase for the three months ended September 30, 2008 was due to gains on extinguishment of debt of $42.2 million in the third quarter of 2008 resulting from the
forgiveness by GMAC of $92.8 million in ResCap unsecured notes previously acquired through the OMR and write-downs recorded during the third quarter of 2007 related to the fair value of residual interests held by our PIA business. For the nine
months ended September 30, 2008, the increase was primarily due to gains on extinguishment of debt of $1.2 billion. This included gains of $552.4 million related to the OMR and subsequent forgiveness of ResCap unsecured notes completed by GMAC
in the first three quarters of 2008, and gains of $616.4 million related to the debt tender and exchange offers completed in the second quarter of 2008.

Provision for loan losses decreased $104.7 million for the three months ended September 30, 2008 and increased $31.3 million for the nine months ended September 30, 2008 compared to the same periods in the
prior year. The decrease for the three months ended September 30, 2008 results primarily from the SFAS No. 159 fair value election on January 1, 2008, resulting in lower provision expense on a smaller held for investment portfolio
subject to provision in our PIA business and higher losses taken in the third quarter of 2007 by PIA as compared to the same period in 2008 due to the significant deterioration in the marketplace at that time resulting in higher increases in
frequency and severity. For the nine months ended September 30, 2008, the increase was primarily due to increased levels of frequency and severity experienced in the PIA loan portfolio, partially offset by the decrease in provision during 2008
related to the implementation of SFAS No. 159 election.

Non-interest expenses increased $479.3 million for the three months ended
September 30, 2008 and $593.4 million for the nine months ended September 30, 2008 compared to the same periods in 2007. These increases in the three- and nine-month periods ended September 30, 2008 were primarily due to a significant
increase in unrealized and realized currency losses of $355.8 and $310.8 million, respectively, resulting from the strengthening U.S. dollar against the Euro and U.K. sterling and our reduced hedging position caused by the limited availability of
willing counterparties to enter into forward arrangements; restructuring costs of $76.2 million for severance and lease terminations; and professional fees of $164.6 million, primarily due to costs associated with the debt tender and exchange offers
completed in the second quarter of 2008.

Asset Quality

Allowance for Loan Losses

The deterioration of the domestic and international housing markets
has continued into the three- and nine-month periods ended September 30, 2008. Our mortgage loans held for investment credit quality has experienced significant declines due to home price depreciation and higher delinquencies resulting in
increased frequency and severity assumptions. Although our September 30, 2008 allowance for loan loss related to the mortgage loans held for investment has significantly decreased since September 30, 2007 due to a reduction in our mortgage
loans held for investment portfolio, our remaining mortgage loans held for investment, subject to allowance for loan losses, did experience increased levels of delinquencies, including our prime products.

We have reduced our mortgage loans held for investment portfolio primarily through reduced loan production as a result of the continued downward trend in
the domestic mortgage origination market due to market conditions and tighter credit standards as well as asset sales in our international business and PIA groups and our closure of retail and wholesale channels through our restructuring
initiatives. In addition, the fair value election under SFAS No. 159 on approximately $10.5 billion of mortgage loans held for investment effective January 1, 2008, eliminated the need for loss reserves against these assets.

Our remaining mortgage loans held for investment portfolio experienced increased delinquencies in our nonprime product portfolios throughout the last half
of 2007 and throughout 2008, which extended into our prime non-conforming and prime second-lien products in the second quarter of 2008. In the three months ended September 30, 2008, we experienced significant deterioration in the prime
non-conforming and prime second-lien products as well as prime conforming product where we recognized higher frequency and severity assumptions across all of our portfolios, including GMAC Bank. As a result, we recognized $533.5 million of provision
for loan losses on our mortgage loans held for investment in the three months ended September 30, 2008.



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Our lending receivables have also incurred further deterioration in credit quality throughout 2008, most
substantially in the three months ended September 30, 2008. For this three month period, $119.0 million of provision for loan losses were recognized, primarily driven by specific provisions recorded against a number of distressed loans due to
continued deteriorating market conditions.

The following table summarizes the activity related to the allowance for loan losses for the
three months ended September 30, 2008 and 2007:



|                                                  |  |                                  |         |   |                    |   |       |       |  |   |       |   |  |   |         |  
|------------------------------------------------- |  | -------------------------------- | ------- | - | ------------------ | - | ----- | ----- |  | - | ----- | - |  | - | ------- | -
|                                                  |  | Mortgage LoansHeld forInvestment |         |   | LendingReceivables |   |       | Other |  |   | Total |  
|                                                  |  | (In thousands)                   |        
|Balance at June 30, 2008                          |  | $                                | 637.9   |   |                    | $ | 485.1 |       |  | $ | 35.5  |   |  | $ | 1,158.5 |  
|Provision for loan losses                         |  |                                  | 533.5   |   |                    |   | 119.0 |       |  |   | 8.4   |   |  |   | 660.9   |  
|Charge-offs                                       |  |                                  | (206.0  | ) |                    |   | (24.8 | )     |  |   | (7.1  | ) |  |   | (237.9  | )
|Recoveries                                        |  |                                  | 10.1    |   |                    |   | 14.6  |       |  |   | 2.0   |   |  |   | 26.7    |  
|Resort Finance sale to GMAC Commercial Finance(a) |  |                                  |         |   |                    |   | (27.3 | )     |  |   |       |   |  |   | (27.3   | )
|                                                  |  |                                  |         |   |                    |   |       |       |  |   |       |   |  |   |         |  
|Balance at September 30, 2008                     |  | $                                | 975.5   |   |                    | $ | 566.6 |       |  | $ | 38.8  |   |  | $ | 1,580.9 |  
|                                                  |  |                                  |         |   |                    |   |       |       |  |   |       |   |  |   |         |  
|Balance at June 30, 2007                          |  | $                                | 1,695.6 |   |                    | $ | 274.1 |       |  | $ | 29.2  |   |  | $ | 1,998.9 |  
|Provision for loan losses                         |  |                                  | 787.5   |   |                    |   | 93.4  |       |  |   | 3.3   |   |  |   | 884.2   |  
|Charge-offs                                       |  |                                  | (452.8  | ) |                    |   | (50.0 | )     |  |   | (2.7  | ) |  |   | (505.5  | )
|Recoveries                                        |  |                                  | 10.4    |   |                    |   | 8.4   |       |  |   | 1.5   |   |  |   | 20.3    |  
|Reduction of Allowance due to deconsolidation(b)  |  |                                  | (306.5  | ) |                    |   |      |       |  |   |       |   |  |   | (306.5  | )
|                                                  |  |                                  |         |   |                    |   |       |       |  |   |       |   |  |   |         |  
|Balance at September 30, 2007                     |  | $                                | 1,734.2 |   |                    | $ | 325.9 |       |  | $ | 31.3  |   |  | $ | 2,091.4 |  
|                                                  |  |                                  |         |   |                    |   |       |       |  |   |       |   |  |   |         |  



|(a) | In the third quarter of 2008, the Resort Finance sale was completed to GMAC Commercial Finance. Upon completion, $27.3 million of allowance for loan losses was removed from the
consolidated balance sheet.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | During the three months ended September 30, 2007, we completed the sale of residual cash flows related to a number of on-balance sheet securitizations. We completed the
approved actions to cause the securitization trusts to satisfy the qualifying special purpose entity (or QSPE) requirements of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities(SFAS No. 140). These actions resulted in the deconsolidation of various securitization trusts and the removal of $5.1 billion in mortgage loans held for investment, net of the related allowance for loan loss of
$306.5 million, $5.2 billion of collateralized borrowings, capitalization of $33.3 million of mortgage servicing rights and gains on sale totaling $88.2 million in the third quarter of 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table summarizes the activity related to the allowance for loan losses for the nine months
ended September 30, 2008 and 2007:



|                                                            |  |                                  |         |      |                    |   |        |       |  |   |       |   |  |   |          |  
|----------------------------------------------------------- |  | -------------------------------- | ------- | ---- | ------------------ | - | ------ | ----- |  | - | ----- | - |  | - | -------- | -
|                                                            |  | Mortgage LoansHeld forInvestment |         |      | LendingReceivables |   |        | Other |  |   | Total |  
|                                                            |  | (In millions)                    |        
|Balance at January 1, 2008                                  |  | $                                | 832.3   |      |                    | $ | 485.2  |       |  | $ | 33.3  |   |  | $ | 1,350.8  |  
|Reduction to allowance due to fair value option election(a) |  |                                  | (489.0  | )    |                    |   |       |       |  |   |      |   |  |   | (489.0   | )
|Provision for loan losses                                   |  |                                  | 1,157.9 |      |                    |   | 257.3  |       |  |   | 15.0  |   |  |   | 1,430.2  |  
|Charge-offs                                                 |  |                                  | (556.7  | )    |                    |   | (164.9 | )     |  |   | (16.3 | ) |  |   | (737.9   | )
|Recoveries                                                  |  |                                  | 31.0    |      |                    |   | 16.3   |       |  |   | 6.8   |   |  |   | 54.1     |  
|Resort Finance sale to GMAC Commercial Finance(b)           |  |                                  |        |      |                    |   | (27.3  | )     |  |   |      |   |  |   | (27.3    | )
|                                                            |  |                                  |         |      |                    |   |        |       |  |   |       |   |  |   |          |  
|Balance at September 30, 2008                               |  | $                                | 975.5   |      |                    | $ | 566.6  |       |  | $ | 38.8  |   |  | $ | 1,580.9  |  
|                                                            |  |                                  |         |      |                    |   |        |       |  |   |       |   |  |   |          |  
|Balance at January 1, 2007                                  |  | $                                | 1,508.4 |      |                    | $ | 396.6  |       |  | $ | 25.8  |   |  | $ | 1,930.8  |  
|Provision for loan losses                                   |  |                                  | 1,436.3 |      |                    |   | 313.5  |       |  |   | 9.8   |   |  |   | 1,759.6  |  
|Charge-offs                                                 |  |                                  | (943.9  | )    |                    |   | (393.1 | )     |  |   | (8.0  | ) |  |   | (1,345.0 | )
|Recoveries                                                  |  |                                  | 39.9    |      |                    |   | 8.9    |       |  |   | 3.7   |   |  |   | 52.5     |  
|Reduction to allowance due to deconsolidation(c)            |  |                                  | (306.5  | )    |                    |   |       |       |  |   |      |   |  |   | (306.5   | )
|                                                            |  |                                  |         |      |                    |   |        |       |  |   |       |   |  |   |          |  
|Balance at September 30, 2007                               |  | $                                | 1,734.2 |      |                    | $ | 325.9  |       |  | $ | 31.3  |   |  | $ | 2,091.4  |  
|                                                            |  |                                  |         |      |                    |   |        |       |  |   |       |   |  |   |          |  
|Allowance as a percentage of total related asset class:     |  |                                  |         |      |                    |   |        |       |  |   |       |   |  |   |          |  
|September 30, 2008                                          |  |                                  | 3.53    | %(d) |                    |   | 7.97   | %     |  |   | 1.13  | % |  |   | 4.14     | %
|December 31, 2007                                           |  |                                  | 1.97    | %    |                    |   | 5.46   | %     |  |   | 1.06  | % |  |   | 2.49     | %
|September 30, 2007                                          |  |                                  | 2.85    | %    |                    |   | 3.72   | %     |  |   | 1.42  | % |  |   | 2.92     | %



|(a) | See Note 16  Fair Value  $489.0 million of allowance for loan losses was removed upon SFAS No. 159 adoption.
|--- | --------------------------------------------------------------------------------------------------------------



|(b) | In the third quarter of 2008, the Resort Finance sale was completed to GMAC Commercial Finance. Upon completion, $27.3 million of allowance for loan losses was removed from the
consolidated balance sheet.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | During the three months ended September 30, 2007, we completed the sale of residual cash flows related to a number of on-balance sheet securitizations. We completed the
approved actions to cause the securitization trusts to satisfy the qualifying special purpose entity (or QSPE) requirements of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities(SFAS No. 140). These actions resulted in the deconsolidation of various securitization trusts and the removal of $5.1 billion in mortgage loans held for investment, net of the related allowance for loan loss of
$306.5 million, $5.2 billion of collateralized borrowings, capitalization of $33.3 million of mortgage servicing rights and gains on sale totaling $88.2 million in the third quarter of 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | As of September 30, 2008, $9.2 billion of unpaid principal balance is recorded at a fair value of $2.2 billion under SFAS No. 159 with no related allowance for loan
losses. These loans have been excluded from this calculation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2008, our mortgage loans held for
investment portfolio, not held at fair value, had an unpaid principal balance, net of premium and discounts of $27.6 billion. Our nonprime product represented 17.9% of our portfolio while our prime non-conforming and prime second-lien loan products
represented 78.5% of our portfolio. As of December 31, 2007, our mortgage loans held for investment portfolio, prior to the adoption of our SFAS No. 159 election, had an unpaid principal balance, net of premium and discounts of $42.2
billion. Our nonprime product represented 40.1% of our portfolio while our prime non-conforming and prime second-lien loan products represented 56.9% of our portfolio. As a result, we have significantly mitigated our exposure to the nonprime product
throughout 2008, which resulted in increased exposure, as a percentage of our portfolio, to prime non-conforming and prime second-lien products.



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As a result of the overall increase in delinquencies throughout 2008, and most significantly in the three
months ended September 30, 2008, we increased our allowance coverage from 2.85% as of September 30, 2007 and 2.22% as of June 30, 2008 to 3.53% as of September 30, 2008. These allowance coverage percentages are based off the
allowance for loan losses related to mortgage loans held for investment, excluding those loans held at fair value, as a percentage of the unpaid principal balance, net of premium and discounts. The reduction in allowance coverage from
September 30, 2007 to June 30, 2008 resulted from the significant decrease in our exposure to nonprime mortgage loans and our fair value election under SFAS No. 159. The significant increase in allowance coverage from June 30,
2008 to September 30, 2008 was a direct result of significant increases in delinquencies and volume of foreclosures as well as a reflection of increased frequency and severity assumptions across all product categories, including our prime
conforming product.

In addition to substantial deterioration in credit quality of our lending receivables, during the three months ended
September 30, 2008, the allowance as a percentage of total lending receivables increased as a result of the completion of the Resort Finance sale to GMAC Commercial Finance. Approximately, $1.5 billion in lending receivables was sold with a
related $27.3 million of allowance for loan loss, or allowance coverage of 1.9% of the Resort Finance lending receivables.

The following
table sets forth the types of mortgage loans held for investment, excluding those loans held at fair value, that comprise the dollar balance and the percentage component of allowance for loan losses:



|                     |  |                           |       |      |   |         |  |      |      |  |      |  
|-------------------- |  | ------------------------- | ----- | ---- | - | ------- |  | ---- | ---- |  | ---- | -
|                     |  | Allowance for Loan Losses |      
|                     |  | As of September 30,       |      
|                     |  | 2008                      |       | 2007 |   | 2008    |  |      | 2007 | 
|                     |  | ($ in millions)           |      
|Prime conforming     |  | $                         | 21.9  |      | $ | 5.2     |  | 2.62 | %    |  | 0.42 | %
|Prime non-conforming |  |                           | 440.3 |      |   | 69.2    |  | 2.60 |      |  | 0.48 |  
|Prime second-lien    |  |                           | 147.4 |      |   | 149.1   |  | 3.11 |      |  | 1.93 |  
|Government           |  |                           | 2.0   |      |   | 1.0     |  | 1.40 |      |  | 0.56 |  
|Nonprime             |  |                           | 363.9 |      |   | 1,509.7 |  | 7.36 |      |  | 4.07 |  
|                     |  |                           |       |      |   |         |  |      |      |  |      |  
|Total                |  | $                         | 975.5 |      | $ | 1,734.2 |  | 3.53 | %    |  | 2.85 | %
|                     |  |                           |       |      |   |         |  |      |      |  |      |  

Increased foreclosures, home price depreciation, and other market factors have driven increases in
frequency and severity of loss. Our net charge-offs of mortgage loans held for investment totaled $195.9 million for the three months ended September 30, 2008, compared to $442.4 million for the same period of 2007, and $190.1 million for the
three months ended June 30, 2008. Annualized net charge-offs represent 2.10% of total mortgage loans held for investment unpaid principal balance as of September 30, 2008, 2.91% as of September 30, 2007, and 1.98% as of June 30,
2008. Foreclosures pending as a percentage of unpaid principal balance, net of discounts and fair value adjustment, have increased to 6.94% as of September 30, 2008 compared to 4.72% as of September 30, 2007.

The decrease in mortgage loans held for investment net charge-offs, as compared to the same period of 2007, is largely attributable to the adoption of our
SFAS No. 159 election. The loans that are carried at fair value are not charged off through the allowance for loan losses. Instead, the loss is realized through other income as a component of fair value measurement. The increase in mortgage
loans held for investment, net charge-offs, as compared to the three months ended June 30, 2008 is a component of two offsetting factors. In the second quarter of 2008, loans with an unpaid principal balance of $2.3 billion were transferred to
mortgage loans held for sale resulting in a release of the allowance through charge-offs prior to transfer, at carrying value, and the subsequent valuation adjustment as mortgage loans held for sale. For the three months ended September 30,
2008, the net charge-offs were driven by an increased number of loans being reclassified to repossessed or foreclosed real estate and the severity of the charge-offs as loans entered into repossession or foreclosure.

Our net charge-offs of lending receivables totaled $10.2 million for the three months ended September 30, 2008, compared to $41.6 million for the
three months ended September 30, 2007, and $40.2 million for the three



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months ended June 30, 2008 The significant decline of our lending receivable net charge-offs for the three months ended September 30, 2008 as
compared to the three months ended periods of September 30, 2007 and June 30, 2008 was a result of a $14.0 million recovery within warehouse lending.

The following table summarizes the net charge-off information:



|                      |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |          |  
|--------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | -------- | -
|                      |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                      |  | 2008                            |        |   | 2007                           |   |        | 2008 |  |   | 2007   |  
|                      |  | (In millions)                   |       
|Mortgage loans:       |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |          |  
|Prime conforming      |  | $                               | (4.8   | ) |                                | $ | (1.3   | )    |  | $ | (15.2  | ) |  | $ | (2.4     | )
|Prime non-conforming  |  |                                 | (65.0  | ) |                                |   | (20.9  | )    |  |   | (131.4 | ) |  |   | (33.2    | )
|Prime second-lien     |  |                                 | (50.8  | ) |                                |   | (63.8  | )    |  |   | (99.2  | ) |  |   | (123.4   | )
|Government            |  |                                 | (0.6   | ) |                                |   | (0.1   | )    |  |   | (1.0   | ) |  |   | (0.1     | )
|Nonprime              |  |                                 | (74.7  | ) |                                |   | (356.3 | )    |  |   | (278.9 | ) |  |   | (744.9   | )
|Lending receivables:  |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |          |  
|Construction          |  |                                 | (7.3   | ) |                                |   | (12.0  | )    |  |   | (128.5 | ) |  |   | (12.0    | )
|Warehouse             |  |                                 | (2.7   | ) |                                |   | (9.3   | )    |  |   | (20.1  | ) |  |   | (351.9   | )
|Other                 |  |                                 | (0.2   | ) |                                |   | (20.3  | )    |  |   |       |   |  |   | (20.3    | )
|Other                 |  |                                 | (5.1   | ) |                                |   | (1.2   | )    |  |   | (9.5   | ) |  |   | (4.3     | )
|                      |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |          |  
|Total net charge-offs |  | $                               | (211.2 | ) |                                | $ | (485.2 | )    |  | $ | (683.8 | ) |  | $ | (1,292.5 | )
|                      |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |          |  

The deteriorating domestic housing market has also impacted our investment in real estate within
the Business Capital Group. Affordability, tightening credit standards, and mortgage market illiquidity have depressed home sales. As a result, we recorded impairment charges on our business lending model home and land contract portfolios of $48.9
million for the three months ended September 30, 2008. This compares to impairment charges on these portfolios of $78.5 million for the three months ended June 30, 2008 and $98.2 million for the three months ended September 30, 2007.

Nonperforming Assets

Nonperforming assets include nonaccrual loans, restructured loans and foreclosed assets. Mortgage loans and lending receivables are generally placed on nonaccrual status when they are 60 and 90 days past due, respectively, or when the
timely collection of the principal of the loan, in whole or in part, is doubtful.

Delinquency and nonaccrual levels related to mortgage
loans held for investment and lending receivables increased when compared to the period ending June 30, 2008 and decreased when compared to the period ending September 30, 2007. Mortgage loans past due 60 days or more increased to 16.1% of
the total unpaid principal balance as of September 30, 2008, from 14.6% as of June 30, 2008. Lending receivables past due 90 days or more increased to 21.8% of total lending receivables as of September 30, 2008, from 11.6% as of
June 30, 2008. This delinquency deterioration in nonperforming assets resulted from increased mortgage loans past due 60 days or more in our prime conforming, prime non-conforming, and prime second-lien products in our mortgage loans held for
investment as well as increased lending receivables past due 90 days or more, primarily first lien construction loans, in our commercial real estate portfolio.



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Nonperforming assets unpaid principal balance consisted of the following:



|                                                                                                           |  |                   |         |   |                  |   |         |                   |  |   |          |  
|---------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | ----------------- |  | - | -------- | -
|                                                                                                           |  | September 30,2008 |         |   | December 31,2007 |   |         | September 30,2007 | 
|                                                                                                           |  | (In millions)     |        
|Nonaccrual loans:                                                                                          |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Mortgage loans:                                                                                            |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Prime conforming                                                                                           |  | $                 | 140.7   |   |                  | $ | 84.7    |                   |  | $ | 74.2     |  
|Prime non-conforming                                                                                       |  |                   | 1,935.6 |   |                  |   | 908.0   |                   |  |   | 668.9    |  
|Prime second-lien                                                                                          |  |                   | 419.6   |   |                  |   | 233.2   |                   |  |   | 197.3    |  
|Government                                                                                                 |  |                   | 74.6    |   |                  |   | 79.8    |                   |  |   | 78.2     |  
|Nonprime*                                                                                                  |  |                   | 3,355.2 |   |                  |   | 4,040.2 |                   |  |   | 7,538.3  |  
|Lending receivables:                                                                                       |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Construction**                                                                                             |  |                   | 1,414.6 |   |                  |   | 550.2   |                   |  |   | 324.0    |  
|Warehouse                                                                                                  |  |                   | 102.5   |   |                  |   | 70.8    |                   |  |   | 112.4    |  
|Commercial business                                                                                        |  |                   | 34.5    |   |                  |   | 10.0    |                   |  |   |         |  
|Other                                                                                                      |  |                   | 0.3     |   |                  |   | 0.4     |                   |  |   | 0.1      |  
|                                                                                                           |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Total nonaccrual loans                                                                                     |  |                   | 7,477.6 |   |                  |   | 5,977.3 |                   |  |   | 8,993.4  |  
|Restructured loans                                                                                         |  |                   | 124.9   |   |                  |   | 32.1    |                   |  |   | 60.2     |  
|Foreclosed assets                                                                                          |  |                   | 893.6   |   |                  |   | 1,115.5 |                   |  |   | 1,601.3  |  
|                                                                                                           |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Total nonperforming assets                                                                                 |  | $                 | 8,496.1 |   |                  | $ | 7,124.9 |                   |  | $ | 10,654.9 |  
|                                                                                                           |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Total nonaccrual loans as a percentage of total mortgage loans held for investment and lending receivables |  |                   | 16.8    | % |                  |   | 11.7    | %                 |  |   | 12.9     | %
|                                                                                                           |  |                   |         |   |                  |   |         |                   |  |   |          |  
|Total nonperforming assets as a percentage of total consolidated assets                                    |  |                   | 12.8    | % |                  |   | 8.1     | %                 |  |   | 9.3      | %
|                                                                                                           |  |                   |         |   |                  |   |         |                   |  |   |          |  



|* | Includes $303.0 million as of September 30, 2008, $1.1 billion as of December 31, 2007 and $2.1 billion as of September 30, 2007 of loans that were purchased
distressed and already in nonaccrual status. In addition, includes $126.8 million as of September 30, 2008, $15.7 million as of December 31, 2007 and $24.4 million as of September 30, 2007 of nonaccrual loans that are not included in
Restructured loans.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | Includes $82.2 million as of September 30, 2008, $47.2 million as of December 31, 2007 and $23.9 million as of September 30, 2007 of nonaccrual restructured loans,
that are not included in Restructured loans.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our classification of a loan as nonperforming does not necessarily
indicate that the principal amount of the loan is ultimately uncollectible in whole or in part. In certain cases, borrowers make payments to bring their loans contractually current and, in all cases, our mortgage loans are collateralized by
residential real estate. As a result, our experience has been that any amount of ultimate loss for mortgage loans other than second-lien loans is substantially less than the balance of a nonperforming loan.

During the period, we completed temporary and permanent loan modifications. In accordance with SFAS No. 140, the majority of these modifications
adjusted the borrower terms for loans in off-balance sheet securitization trusts, for which we retained the mortgage servicing rights. The remaining loans exist primarily in our unsecuritized mortgage loans held for investment portfolios.

If the modification was deemed temporary, our modified loans remained nonaccrual loans and retained their past due delinquency status even
if the borrower has met the modified terms. If the modification was deemed permanent, the loan is returned to current status if the borrower complies with the new loan terms. As of September 30, 2008, permanent modifications of on-balance sheet
mortgage loans held for investment and subject to allowance for loan loss per SFAS No. 5, includes approximately $189.8 million of unpaid principal balance.



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The following table summarizes the delinquency information for our mortgage loans held for investment
portfolio:



|                                   |  |                          |          |   |                         |       |   |                          |   |          |                 |  |       |        |  |   |                 |   |  |       |  
|---------------------------------- |  | ------------------------ | -------- | - | ----------------------- | ----- | - | ------------------------ | - | -------- | --------------- |  | ----- | ------ |  | - | --------------- | - |  | ----- | -
|                                   |  | As of September 30, 2008 |          |   | As of December 31, 2007 |       |   | As of September 30, 2007 |  
|                                   |  | Amount                   |          |   | Percent ofTotal         |       |   | Amount                   |   |          | Percent ofTotal |  |       | Amount |  |   | Percent ofTotal |  
|                                   |  | (Dollars in millions)    |         
|Current                            |  | $                        | 30,001.2 |   |                         | 80.5  | % |                          | $ | 35,557.7 |                 |  | 82.6  | %      |  | $ | 48,845.8        |   |  | 79.7  | %
|Past due:                          |  |                          |          |   |                         |       |   |                          |   |          |                 |  |       |        |  |   |                 |   |  |       |  
|30 to 59 days                      |  |                          | 1,287.0  |   |                         | 3.4   |   |                          |   | 1,784.3  |                 |  | 4.1   |        |  |   | 3,251.7         |   |  | 5.3   |  
|60 to 89 days                      |  |                          | 806.0    |   |                         | 2.2   |   |                          |   | 946.4    |                 |  | 2.2   |        |  |   | 1,563.0         |   |  | 2.5   |  
|90 days or more                    |  |                          | 2,442.8  |   |                         | 6.6   |   |                          |   | 2,178.5  |                 |  | 5.1   |        |  |   | 3,406.3         |   |  | 5.6   |  
|Foreclosures pending               |  |                          | 2,069.3  |   |                         | 5.5   |   |                          |   | 1,845.8  |                 |  | 4.3   |        |  |   | 2,867.8         |   |  | 4.7   |  
|Bankruptcies                       |  |                          | 664.9    |   |                         | 1.8   |   |                          |   | 735.4    |                 |  | 1.7   |        |  |   | 1,329.6         |   |  | 2.2   |  
|                                   |  |                          |          |   |                         |       |   |                          |   |          |                 |  |       |        |  |   |                 |   |  |       |  
|Total unpaid principal balance     |  |                          | 37,271.2 |   |                         | 100.0 | % |                          |   | 43,048.1 |                 |  | 100.0 | %      |  | $ | 61,264.2        |   |  | 100.0 | %
|                                   |  |                          |          |   |                         |       |   |                          |   |          |                 |  |       |        |  |   |                 |   |  |       |  
|Net (discounts) premiums           |  |                          | (525.4   | ) |                         |       |   |                          |   | (885.5   | )               |  |       |        |  |   | (492.2          | ) |  |       |  
|SFAS No. 159 fair value adjustment |  |                          | (6,928.1 | ) |                         |       |   |                          |   |         |                 |  |       |        |  |   |                |   |  |       |  
|Allowance for loan losses          |  |                          | (975.5   | ) |                         |       |   |                          |   | (832.3   | )               |  |       |        |  |   | (1,734.2        | ) |  |       |  
|                                   |  |                          |          |   |                         |       |   |                          |   |          |                 |  |       |        |  |   |                 |   |  |       |  
|Total                              |  | $                        | 28,842.2 |   |                         |       |   |                          | $ | 41,330.3 |                 |  |       |        |  | $ | 59,037.8        |   |  |       |  
|                                   |  |                          |          |   |                         |       |   |                          |   |          |                 |  |       |        |  |   |                 |   |  |       |  

As of September 30, 2008, we continue to hold mortgage loans that have features that expose us
to credit risk and thereby could result in a concentration of credit risk. We currently originate only prime conforming and government mortgages in the United States and high quality insured mortgages in Canada which reduces our overall exposure to
products which increase our credit risk. These loan products include interest-only mortgage loans (classified as prime conforming or non-conforming for domestic production and prime non-conforming or nonprime for international production), payment
option adjustable rate mortgage loans (prime non-conforming), high loan-to-value mortgage loans (nonprime) and below market initial rate mortgage loans (prime or nonprime). Our exposure related to these products recorded in mortgage loans held for
sale and mortgage loans held for investment (unpaid principal balance) was as follows:



|                                                      |  |                          |          |                        |   |         
|----------------------------------------------------- |  | ------------------------ | -------- | ---------------------- | - | --------
|                                                      |  | Unpaid Principal Balance
|                                                      |  | As of September 30,2008  |          | As of December 31,2007
|                                                      |  | (In millions)           
|Mortgage Loans Held for Sale  Domestic               |  |                          |          |                        |   |         
|High loan-to-value (greater than 100%) mortgage loans |  | $                        | 2.6      |                        | $ | 11.6    
|Payment option adjustable rate mortgage loans         |  |                          | 64.9     |                        |   | 1.1     
|Interest-only mortgage loans                          |  |                          | 221.9    |                        |   | 663.2   
|Below market initial rate mortgage loans              |  |                          |         |                        |   | 243.7   
|                                                      |  |                          |          |                        |   |         
|Total                                                 |  | $                        | 289.4    |                        | $ | 919.6   
|                                                      |  |                          |          |                        |   |         
|Mortgage Loans Held for Investment  Domestic         |  |                          |          |                        |   |         
|High loan-to-value (greater than 100%) mortgage loans |  | $                        | 2,440.6  |                        | $ | 3,701.6 
|Payment option adjustable rate mortgage loans         |  |                          | 1,362.7  |                        |   | 1,689.6 
|Interest-only mortgage loans                          |  |                          | 9,969.9  |                        |   | 11,448.7
|Below market initial rate mortgage loans              |  |                          | 820.6    |                        |   | 489.3   
|                                                      |  |                          |          |                        |   |         
|Total                                                 |  | $                        | 14,593.8 |                        | $ | 17,329.2
|                                                      |  |                          |          |                        |   |         



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|                                                              |  |                          |         |                        |   |        
|------------------------------------------------------------- |  | ------------------------ | ------- | ---------------------- | - | -------
|                                                              |  | Unpaid Principal Balance
|                                                              |  | As of September 30,2008  |         | As of December 31,2007
|                                                              |  | (In millions)           
|Mortgage Loans  Held for Sale and Investment  International |  |                          |         |                        |   |        
|High loan-to-value (greater than 100%) mortgage loans         |  | $                        | 1,545.8 |                        | $ | 2,182.6
|Payment option adjustable rate mortgage loans                 |  |                          |        |                        |   |       
|Interest-only mortgage loans                                  |  |                          | 3,036.5 |                        |   | 6,170.1
|Below market initial rate mortgage loans                      |  |                          |        |                        |   |       
|                                                              |  |                          |         |                        |   |        
|Total                                                         |  | $                        | 4,582.3 |                        | $ | 8,352.7
|                                                              |  |                          |         |                        |   |        

In circumstances when a loan has features such that it falls into multiple categories listed above
it is classified to a category only once based on the following hierarchy: 1) High loan-to-value mortgage loans, 2) Payment option adjustable rate mortgage loans, 3) Interest-only mortgage loans and 4) Below market initial rate mortgage loans. We
believe this hierarchy provides the most relevant risk assessment of our non-traditional products with the current declining home prices.

Our total production related to these products was as follows:



|                                                      |  |                                                       |         |      |   |         
|----------------------------------------------------- |  | ----------------------------------------------------- | ------- | ---- | - | --------
|                                                      |  | Loan Productionfor the Nine MonthsEnded
September 30,
|                                                      |  | 2008                                                  |         | 2007
|                                                      |  | (In millions)                                        
|High loan-to-value (greater than 100%) mortgage loans |  | $                                                     | 556.6   |      | $ | 2,319.8 
|Payment option adjustable rate mortgage loans         |  |                                                       | 0.2     |      |   | 7,576.6 
|Interest-only mortgage loans                          |  |                                                       | 3,210.3 |      |   | 26,595.4
|Below market initial rate mortgage loans              |  |                                                       | 233.4   |      |   | 1,317.9 
|                                                      |  |                                                       |         |      |   |         
|Total                                                 |  | $                                                     | 4,000.5 |      | $ | 37,809.7
|                                                      |  |                                                       |         |      |   |         

The preceding tables exclude $0.9 and $1.7 billion of mortgage loans outstanding in the United
Kingdom that have reduced introductory rates at September 30, 2008 and December 31, 2007, respectively. In addition, the preceding tables exclude United Kingdom mortgage loan production at reduced introductory rates of $0.3 and $2.0
billion for the nine months ended September 30, 2008 and September 30, 2007, respectively, and $3.5 billion for the year ended December 31, 2007. Offering a reduced introductory rate to borrowers is customary market practice in the
United Kingdom and thus the interest rate would not be considered below market.

Our underwriting guidelines for these products
take into consideration the borrowers capacity to repay the loan and credit history. We believe our underwriting procedures adequately consider the unique risks which may come from these products. We conduct a variety of quality control
procedures and periodic audits to ensure compliance with our underwriting standards.

On December 6, 2007, the American Securitization
Forum (ASF), working with various constituency groups as well as representatives of U.S. federal government agencies, issued the Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans
(the ASF Framework). The ASF Framework provides guidance for servicers to streamline borrower evaluation procedures and to facilitate the use of foreclosure and loss prevention efforts in an attempt to reduce the number of U.S. subprime
residential mortgage borrowers who might default in the coming year because the borrowers cannot afford to pay the increased loan interest rate after their U.S. subprime residential mortgage variable loan rate reset. The ASF Framework requires a
borrower and its U.S. subprime residential mortgage variable loan to meet specific conditions to qualify for a modification under which the qualifying borrowers loans interest rate would be kept at the existing rate, generally for five
years following an upcoming reset period. The ASF Framework is



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focused on U.S. subprime first-lien adjustable-rate residential mortgages that have an initial fixed interest rate period of 36 months or less, are included
in securitized pools, were originated between January 1, 2005 and July 31, 2007, and have an initial interest rate reset date between January 1, 2008 and July 31, 2010 (defined as Segment 2 Subprime ARM Loans within
the ASF Framework). At this time, we believe any loan modifications we make in accordance with the ASF Framework will not have a material affect on our accounting for U.S. subprime residential mortgage loans nor securitizations or retained interests
in securitizations of U.S. subprime residential mortgage loans.

Liquidity and Capital Resources

Liquidity and Capital Management Highlights through September 30, 2008

In a continuing effort to improve our liquidity, while maintaining our capital structure and reducing our financial risk, we completed several initiatives
in the third quarter of 2008.



| |  |  | During the second quarter of 2008, Cerberus committed to purchase certain assets at our option consisting of performing and nonperforming mortgage loans,
mortgage-backed securities and other assets for net cash proceeds of $300.0 million. During the third quarter, the following transactions were completed with Cerberus:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On July 14 and 15, 2008, GMAC Mortgage LLC (GMAC Mortgage) agreed to sell securitized excess servicing on two populations of loans to Cerberus consisting of $13.8
billion in unpaid principal balance of Freddie Mac loans and $24.8 billion in unpaid principal balance of Fannie Mae loans, capturing $591.2 and $981.9 million of notional interest-only securities, respectively. The sales closed on July 30,
2008 with net proceeds of $175.1 million to ResCap.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On September 30, 2008, our Business Capital Group completed the sale of certain of its model home assets to MHPool Holdings LLC (MHPool Holdings), an affiliate of
Cerberus, for cash consideration consisting of approximately $80.0 million, subject to certain adjustments, primarily relating to the sales of homes between June 30, 2008 and September 30, 2008, resulting in a net purchase price from
MHPool Holdings of approximately $59.0 million. The purchase price is subject to further post-closing adjustments that are not expected to be material.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These transactions entered into between ResCap and Cerberus satisfy the previously announced commitment by Cerberus to purchase assets of $300.0 million.



| |  |  | On September 30, 2008, GMAC LLC contributed ResCap notes that it had previously purchased in open market transactions with a face amount of $92.8 million and a
fair value of approximately $51.0 million. Accordingly, ResCap recorded a capital contribution to members interest for GMACs purchase price of $51.0 million and a gain of $42.2 million on extinguishment of debt representing the
difference between the carrying value and GMACs fair market value purchase price. In addition, GMAC forgave $2.5 million of accrued interest related to these notes, increasing the total capital contribution to $53.5 million.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 30, 2008, GMAC also forgave debt outstanding of $101.5 million under the loan and security agreement (the GMAC Secured MSR Facility)
with Residential Funding Corporation LLC (RFC) and GMAC Mortgage. The debt forgiveness reduces the overall GMAC Secured MSR Facility indebtedness. This facility was due to mature on October 17, 2008. Subsequent to September 30,
2008, the GMAC Secured MSR Facility matured and was renewed to May 1, 2009 with additional amendments to the original terms most notably the advance rates reduced from 85.0% to 76.6% and the reduction of the amount of GMACs lending
commitment by $84.0 million as of October 17, 2008, with a subsequent commitment reduction of $84.0 million effective as of October 22, 2008, and further commitment reductions equal to any amounts of the outstanding indebtedness forgiven
by GMAC, including the $101.5 million forgiven on September 30, 2008, as a contribution of capital to ResCap and its subsidiaries.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | On July 31, 2008, ResCap and GMAC finalized the Resort Finance Sale Agreement (Resort Sale) pursuant to which GMAC Commercial Finance LLC
(GMACCF) acquired 100% of ResCaps Resort Finance business for a cash purchase price equal to the fair market value of the business. On June 3, 2008, we received an initial deposit of $250.0 million, representing estimated net
proceeds related to this transaction. Upon final pricing and execution of the sale, we were required to repay a portion of the initial deposit to GMACCF in the amount of $153.9 million, representing the difference between the deposit we had received
and the valuation, without regard to the Deferred Purchase Price.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Under the Receivables Factoring Facility (Factoring Facility), GMACCF has purchased an additional $167.3 million face amount of receivables in the third
quarter ($753.6 million of purchases since June 17, 2008), with cash proceeds from the all sales to date totaling $640.6 million. We recorded a cumulative net loss for the nine months ended September 30, 2008 of $113.0 million related to
these transactions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On-going Liquidity and Capital Management Focus

Even with the implementation of the actions described above, we remain heavily dependent on our parent and affiliates for funding and capital support and
there can be no assurance that our parent or affiliates will continue such actions.

We are highly leveraged relative to our cash flow and
continue to recognize substantial losses resulting in a significant deterioration in capital. During the third quarter of 2008, our consolidated tangible net worth, as defined, fell below $1.0 billion, giving Fannie Mae the right to pursue certain
remedies under the master agreement and contract between GMAC Mortgage, LLC and Fannie Mae. In light of the decline in our consolidated tangible net worth, as defined, Fannie Mae has requested additional security for some of our potential
obligations under our agreements with them. We have reached an agreement in principle with Fannie Mae, under the terms of which we will provide them additional collateral valued at $200 million, and agree to sell and transfer the servicing on
mortgage loans having an unpaid principal balance of approximately $12.7 billion, or approximately 9% of the total principal balance of loans we service for them. Fannie Mae has indicated that in return for these actions, they will agree to forbear,
until January 31, 2009, from exercising contractual remedies otherwise available due to the decline in consolidated tangible net worth, as defined. Actions based on these remedies could have included, among other things, reducing our ability to
sell loans to them, reducing our capacity to service loans for them, or requiring us to transfer servicing of loans we service for them. Management believes that selling the servicing related to the loans described above will have an incremental
positive impact on our liquidity and overall cost of servicing, since we will no longer be required to advance delinquent payments on those loans. Meeting Fannie Maes collateral request will have a negative impact on our liquidity. Moreover,
if Fannie Mae deems our consolidated tangible net worth, as defined, to be inadequate following the expiration of the forbearance period referred to above, and if Fannie Mae then determines to exercise their contractual remedies as described above,
it would adversely affect our profitability and financial condition. There continues to be a risk that we will not be able to meet our debt service obligations, default on our financial debt covenants due to insufficient capital and/or be in a
negative liquidity position in 2008. As a result, there is substantial doubt about our ability to continue operating as a going concern.

We
actively manage our liquidity and capital positions and are continually working on initiatives to address our debt covenant compliance and liquidity needs, including debt maturing in the next twelve months and the identified risks and uncertainties.
Our accompanying consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Our initiatives include, but are not limited to, the following: continue to work with our key credit providers to optimize all available liquidity
options; continued reduction of assets and other restructuring activities; focused production on government and prime conforming products, explore strategic alternatives such as alliances, joint ventures and other transactions with potential
third-parties, pursuit of possible liquidity and capital benefits from the Troubled Asset Relief Program (the TARP) and continue to explore opportunities for



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funding and capital support from our parent and affiliates. Most of these initiatives are outside of our control resulting in an increased uncertainty as to
their successful execution. There are currently no substantive binding contracts, agreements or understandings with respect to any particular transaction outside the normal course of business other than those disclosed in Note 18  Subsequent
Events.

If additional financing or capital were to be obtained from our parent, affiliates and/or third-parties, the terms may contain
covenants that restrict our freedom to operate our business. Additionally, our ability to participate in any governmental investment program or the TARP, either directly or indirectly through our parent, is unknown at this time.

In light of our liquidity and capital needs, combined with volatile conditions in the marketplace, there is substantial doubt about our ability to
continue as a going concern. If the parent no longer continues to support our capital or liquidity needs or we are unable to successfully execute our other initiatives, it would have a material adverse effect on our business, results of operations
and financial position.

Liquidity Management

Our liquidity needs remain significant and we rely heavily on our ability to access capital markets and/or our parent and affiliates to provide financing.
Our primary liquidity management objective remains intact and aims to maintain adequate, reliable access to liquidity across all market cycles and in periods of financial stress. Our liquidity needs are met through our access to:



| |  |  | Unrestricted Liquidity:We maintain a portfolio of money market instruments to support cash fluctuations, which we consider our
unrestricted liquidity balance. As of September 30, 2008, our unrestricted liquidity position totaled $0.7 billion, as compared with $1.5 billion as of June 30, 2008 and $2.2 billion as of December 31, 2007. We view our unrestricted
liquidity as cash readily available to cover operating demands from across our business operations. Unrestricted liquidity differs from cash and cash equivalents of $6.9 billion in that unrestricted liquidity does not include cash balances within
GMAC Bank LLC (GMAC Bank), operating cash maintained within business segments to cover timing related outflows, and cash set aside for reinvestment into the GMAC Senior Secured Credit Facility. Subsequent to September 30, 2008, the
segregated GMAC Senior Secured Credit Facility operating cash balances, with the exception of those related to servicer advances, were transferred to GMAC as a result of an agreed upon amendment to the original loan agreement. Therefore, we paid
down $146.7 million of GMAC Senior Secured Credit Facility debt upon entering into the amended agreement and we continue to make paydowns on GMAC Senior Secured Credit Facility debt as we receive cash proceeds related to the disposition of secured
assets.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
As of September 30, 2008, the outstanding balance of short-term borrowings totaled $7.0 billion, as compared with $16.9 billion as of December 31, 2007.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | 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. Our long-term debt typically consists of collateralized borrowings in securitization trusts, unsecured debt, and junior and senior secured debt issued in the public debt
capital markets.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table summarizes the maturity profile of our total borrowings as of September 30,
2008. Amounts represent the scheduled maturity of debt, assuming no early redemptions occur. For sources of liquidity without a stated maturity date (as is the case with uncommitted agreements), the maturities are assumed to occur within 2008.



|                                                      |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|----------------------------------------------------- |  | ------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------------------ |  | ----- | ------- |  | - | ------- |  | - | ------- |  | - | --------
|                                                      |  | 2008          |         | 2009 |   | 2010    |  | 2011 |         | 2012 |   | 2013    |  | 2014 |         | 2015 |   | 2016 andThereafter |  | Total
|                                                      |  | (In millions)
|Secured borrowings:                                   |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Borrowings from parent                                |  | $             | 1,098.5 |      | $ |        |  | $    | 2,172.1 |      | $ |        |  | $    |        |      | $ |                   |  | $     |        |  | $ |        |  | $ |        |  | $ | 3,270.6 
|Borrowings from affiliates                            |  |               |        |      |   |        |  |      | 750.0   |      |   |        |  |      |        |      |   | 125.0              |  |       |        |  |   |        |  |   |        |  |   | 875.0   
|Collateralized borrowings in securitization trusts(a) |  |               |        |      |   |        |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   | 7,008.6 |  |   | 7,008.6 
|Other secured borrowings:                             |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Senior secured notes                                  |  |               |        |      |   |        |  |      | 1,690.5 |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 1,690.5 
|Junior secured notes                                  |  |               |        |      |   |        |  |      |        |      |   |        |  |      |        |      |   | 1,690.0            |  |       | 1,690.0 |  |   | 1,690.0 |  |   |        |  |   | 5,070.0 
|Secured aggregation facilities                        |  |               | 2,587.3 |      |   | 387.7   |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 2,975.0 
|Repurchasing agreements                               |  |               | 16.2    |      |   | 670.8   |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 687.0   
|FHLB advances                                         |  |               | 266.0   |      |   | 1,563.0 |  |      | 1,325.0 |      |   | 937.0   |  |      | 1,912.0 |      |   | 1,428.0            |  |       | 821.0   |  |   | 770.0   |  |   | 1,495.0 |  |   | 10,517.0
|Mortgage servicing rights facilities                  |  |               |        |      |   | 1,248.0 |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 1,248.0 
|Servicing advances                                    |  |               |        |      |   | 700.0   |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 700.0   
|Debt collateralized by mortgage loans                 |  |               | 16.9    |      |   |        |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 16.9    
|Other                                                 |  |               |        |      |   |        |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   | 335.7   |  |   | 335.7   
|                                                      |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Subtotal secured borrowings                           |  |               | 3,984.9 |      |   | 4,569.5 |  |      | 5,937.6 |      |   | 937.0   |  |      | 1,912.0 |      |   | 3,243.0            |  |       | 2,511.0 |  |   | 2,460.0 |  |   | 8,839.3 |  |   | 34,394.3
|                                                      |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Unsecured borrowings:                                 |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Senior unsecured notes  domestic                     |  |               | 274.7   |      |   | 193.9   |  |      | 1,277.4 |      |   | 225.5   |  |      | 99.5    |      |   | 931.0              |  |       |        |  |   | 156.5   |  |   |        |  |   | 3,158.5 
|Senior unsecured notes  international                |  |               |        |      |   |        |  |      | 521.1   |      |   |        |  |      | 156.9   |      |   | 71.5               |  |       | 122.8   |  |   |        |  |   |        |  |   | 872.3   
|Subordinated unsecured notes                          |  |               |        |      |   | 205.5   |  |      |        |      |   |        |  |      |        |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 205.5   
|Medium-term unsecured notes  international           |  |               |        |      |   | 204.0   |  |      |        |      |   |        |  |      | 163.1   |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 367.1   
|Other                                                 |  |               | 197.1   |      |   | 93.0    |  |      | 7.0     |      |   |        |  |      | 3.2     |      |   |                   |  |       |        |  |   |        |  |   |        |  |   | 300.3   
|                                                      |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Subtotal unsecured borrowings                         |  |               | 471.8   |      |   | 694.4   |  |      | 1,805.5 |      |   | 225.5   |  |      | 422.7   |      |   | 1,002.5            |  |       | 122.8   |  |   | 156.5   |  |   |        |  |   | 4,903.7 
|                                                      |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         
|Total Borrowings                                      |  | $             | 4,456.7 |      | $ | 5,265.9 |  | $    | 7,743.1 |      | $ | 1,162.5 |  | $    | 2,334.7 |      | $ | 4,245.5            |  | $     | 2,633.8 |  | $ | 2,616.5 |  | $ | 8,839.3 |  | $ | 39,298.0
|                                                      |  |               |         |      |   |         |  |      |         |      |   |         |  |      |         |      |   |                    |  |       |         |  |   |         |  |   |         |  |   |         



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|(a) | Collateralized borrowings in securitization trusts: The principal on the debt securities is paid using cash flows from underlying collateral (mortgage loans). Accordingly, the
timing of the principal payments on these debt securities is dependent on the payments received and as such we elected to represent the full term of the securities in the 2016 and thereafter timeframe.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sources of funding:    The funding sources utilized are primarily determined by the type of asset financed and associated with a
particular product or business. These sources of liquidity include:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Borrowings from parent and affiliates:In conjunction with June 2008s global debt refinancing initiative, we continue our reliance on GMAC and
its affiliates, General Motors Corporation (GM) and Cerberus, as sources of secured funding. There can be no assurances that our parent and affiliates will continue to undertake any such actions in the future.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

GMAC is currently in discussions with the Federal Reserve for approval to become a bank holding company under the Bank Holding Company
Act. As a bank holding company, GMAC would expect to have expanded opportunities for funding and access to capital. If GMAC submits an application and such application is approved, GMAC, and ourselves, would become subject to the consolidated
supervision and regulation of the Federal Reserve, and would also be subject to the Federal Reserves risk-based and leverage capital requirements and information reporting requirements for bank holding companies. If GMAC were to become a bank
holding company, GMAC Bank would continue to be subject to Sections 23A and 23B of the Federal Reserve Act, which currently restrict GMAC Banks ability to lend to affiliates, purchase assets from them or enter into certain other affiliate
transactions, including any entity that directly or indirectly controls or is under common control with GMAC Bank.



| | - | Unsecured and secured funding sources at the ResCap level:We have historically had access to the unsecured debt market to further diversify our
funding sources. We had been unable to access the long-term debt markets due to our weakened credit ratings and corporate performance driven by the illiquidity of the capital markets. We do not expect our access to the unsecured debt market to
return in the near future.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Third-party secured funding programs:A majority of our assets are pledged as collateral to support various funding programs provided by third-parties.
As part of these funding programs, sources of funding have been developed in the mortgage and asset-backed securities markets. Also, we have obtained liquidity and long-term funding in the term securitization market for our held for investment
mortgage loan portfolio.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | 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, to purchase federal funds and to access the Federal Reserves Discount Window and Term Auction Facility (TAF). The financing through the FHLB is
uncommitted and requests for additional advances are evaluated by the FHLB at the time they are received. In July 2008, the Federal Deposit Insurance Corporation (FDIC) granted a ten year extension of GMAC Banks current ownership.
On September 11, 2008, GMAC Bank was granted access to the Federal Reserves Discount Window and TAF. The Discount Window is the primary credit facility under which the Federal Reserve extends collateralized loans to depository
institutions at terms from overnight up to ninety days. The TAF program auctions a pre-announced quantity of collateralized credit starting with a minimum bid for term funds of 28-day or 84-day maturity. GMAC Bank has pledged $5.2 billion of
automotive loans and leasing financings to participate in the Discount Window and TAF program at varying collateral requirements. At September 30, 2008, GMAC Bank had no outstanding borrowings under these programs with unused capacity of $4.1
billion. Additionally, while no advances were outstanding as of September 30, 2008, GMAC Bank has a $3.0 billion 364-day unsecured revolver with GMAC (GMAC Bank Unsecured Facility with Parent). This source of liquidity is due to mature
on November 19, 2008, however the facility is automatically renewed on a rolling annual basis and its capacity is restricted to use
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | by GMAC Bank and unavailable to our other operations. Utilization of this liquidity source could change should certain market conditions adversely impact
liquidity at either the mortgage or automotive divisions of GMAC Bank.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2008,
GMAC Bank had total assets of $32.9 billion (including $4.9 billion of cash) distributed between its mortgage and automotive divisions. As a regulated entity, GMAC Bank is subject to significant restrictions on transactions with, or providing any
financial support to, any affiliate, including ResCap or any of its subsidiaries. Additionally, GMAC Bank is required to obtain approval from the FDIC and Utah Department of Financial Institutions for its business plan (asset plan, funding plan and
capital targets) through December 31, 2009.



| |  |  | Maintaining an active dialogue with the rating agencies:Historically, our ability to meet our funding needs has been influenced by
the ratings assigned by the rating agencies to ResCap and certain obligations issued by ResCap and its subsidiaries. These ratings could impact both our ability to access the capital markets as well as the cost of funds associated with such
transactions. We maintain an active dialogue with the rating agencies throughout the year and will continue to work closely with them regarding our performance and changes in the business environment. In addition to our ratings, the current market
conditions would inhibit our ability to access the debt capital markets.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest Rate Management:The interest rate risk profile of our liquidity can be separated from the actual debt issuances using
derivative financial products. We have issued 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. As of September 30, 2008, $0.3 billion of fixed rate long-term unsecured debt was swapped to floating rate through interest rate swaps.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital Management

We continually review our capital management process at the entity
and country level. Our capital management framework is designed to ensure that we maintain sufficient capital consistent with our risk profile as well as all applicable regulatory standards, guidelines and external rating agency considerations.
Capital is used primarily to sustain our business platforms and support strategic growth initiatives.

Additionally, we allocate capital
based on the risk associated with our businesses. Capital allocated is based on the aggregate amount required to protect against unexpected losses arising from credit, market and operational risk. This determination is made based on risks inherent
in the businesses products, portfolios, services and risk-taking activities.

We have an operating agreement with GMAC which contains
restrictions on, among other things, our ability to pay dividends or make other distributions to GMAC. The agreement includes a requirement that our members interest be at least $6.5 billion for dividends to be paid. When permitted to pay
dividends pursuant to the previous sentence, the cumulative amount of such dividends may not exceed 50% of our cumulative net income (excluding payments for income taxes from our election for federal income tax purposes to be treated as a limited
liability company), measured from July 1, 2005, at the time such dividend is paid. This restriction will cease to be effective if our members interest has been at least $12.0 billion as of the end of each of two consecutive fiscal
quarters or if GMAC ceases to be our majority owner. Currently, we are prohibited from paying dividends under the operating agreement guidelines.

Prior to June 4, 2008, certain of our credit facilities contained a financial covenant, among other covenants, requiring us to maintain a minimum consolidated tangible net worth (as defined in each respective agreement) as of the end
of each fiscal quarter. The most restrictive provision in our credit agreements required a minimum tangible net worth of $5.4 billion. After June 4, 2008 and the completion of our debt refinancing, this financial covenant was removed from all
agreements that had contained it. We complied with these provisions up to the date we renegotiated our debt obligations.



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Certain of these renegotiated credit facilities contain financial covenants, among other covenants,
requiring us to maintain consolidated tangible net worth of $250 million as of the end of each month and consolidated liquidity of $750.0 million, subject to applicable grace periods. For these purposes, consolidated tangible net worth means
consolidated equity, excluding intangible assets and any equity in GMAC Bank to the extent included in our consolidated balance sheet, and consolidated liquidity is defined as consolidated cash and cash equivalents, excluding cash and cash
equivalents of GMAC Bank to the extent included in our consolidated balance sheet. These financial covenants are also included in certain of our bilateral facilities. In addition, certain of our facilities are subject to sequential declines in
advance rates if our consolidated tangible net worth falls below $1.5, $1.0 and $0.5 billion, respectively.

As of September 30, 2008,
we had consolidated tangible net worth, as defined, of $350.0 million and remained in compliance with the most restrictive consolidated tangible net worth covenant minimum of $250.0 million. In addition, we complied with our consolidated liquidity
requirement of $750.0 million. For the three months ended September 30, 2008, GMAC contributed $92.8 million of our unsecured notes that GMAC had previously purchased in open market transactions and forgave outstanding debt of $101.5 million
related to the GMAC Secured MSR Facility. The September 30, 2008 consolidated tangible net worth of $350.0 million will result in declines in advance rates to certain facilities which will reduce the amount we can borrow and will require a
repayment of a portion of the facilities in the three months ending December 31, 2008. For the three months ended September 30, 2008, we were required to provide cash of $14.8 million to facility counterparties as a result of the advance
rate declines. On October 31, 2008, we received a waiver of this requirement from a certain lender which resulted in an extension until November 13, 2008 before advance rates are reduced.

On October 31, 2008, the GMAC Board of Directors approved forgiveness of our debt related to the Secured GMAC MSR Facility equal to the amount
required to maintain a consolidated tangible net worth, as defined, of $350.0 million as of October 31, 2008. As a result of this debt forgiveness, we will remain in compliance with our credit facility financial covenants as of October 31,
2008, among other requirements, requiring us to maintain a monthly consolidated tangible net worth of $250.0 million. For this purpose, consolidated tangible net worth is defined as our consolidated equity, excluding intangible assets and equity in
GMAC Bank to the extent included in our consolidated balance sheet.



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Borrowings



|                                                   |  |                   |           |                  |   |          
|-------------------------------------------------- |  | ----------------- | --------- | ---------------- | - | ---------
|                                                   |  | Outstanding as of
|                                                   |  | September 30,2008 |           | December 31,2007
|                                                   |  | (In millions)    
|Secured borrowings:                                |  |                   |           |                  |   |          
|Borrowings from parent                             |  | $                 | 3,270.6   |                  | $ |         
|Borrowings from affiliates                         |  |                   | 875.0     |                  |   |         
|Collateralized borrowings in securitization trusts |  |                   | 7,008.6   |                  |   | 16,145.7 
|Senior secured notes                               |  |                   | 1,690.5   |                  |   |         
|Junior secured notes                               |  |                   | 5,070.0   |                  |   |         
|Outstanding under secured facilities:              |  |                   |           |                  |   |          
|Secured aggregation facilities                     |  |                   | 2,975.0   |                  |   | 8,402.2  
|Repurchase agreements                              |  |                   | 687.0     |                  |   | 3,645.1  
|FHLB advances                                      |  |                   | 10,517.0  |                  |   | 11,349.0 
|Mortgage servicing rights facilities               |  |                   | 1,248.0   |                  |   | 1,444.0  
|Servicing advances                                 |  |                   | 700.0     |                  |   | 791.3    
|Debt collateralized by mortgage loans              |  |                   | 16.9      |                  |   | 1,782.0  
|Other                                              |  |                   | 335.7     |                  |   | 423.6    
|                                                   |  |                   |           |                  |   |          
|Total outstanding under secured facilities         |  |                   | 16,479.6  |                  |   | 27,837.2 
|                                                   |  |                   |           |                  |   |          
|Subtotal secured borrowings                        |  |                   | 34,394.3  |                  |   | 43,982.9 
|                                                   |  |                   |           |                  |   |          
|Unsecured borrowings:                              |  |                   |           |                  |   |          
|Senior unsecured notes                             |  |                   | 4,030.8   |                  |   | 14,550.4 
|Subordinated unsecured notes                       |  |                   | 205.5     |                  |   | 758.3    
|Medium-term unsecured notes                        |  |                   | 367.1     |                  |   | 624.6    
|Outstanding under unsecured facilities:            |  |                   |           |                  |   |          
|Third-party bank credit facilities                 |  |                   |          |                  |   | 1,800.0  
|Other                                              |  |                   | 300.3     |                  |   | 613.7    
|                                                   |  |                   |           |                  |   |          
|Total outstanding under unsecured facilities       |  |                   | 300.3     |                  |   | 2,413.7  
|                                                   |  |                   |           |                  |   |          
|Subtotal unsecured borrowings                      |  |                   | 4,903.7   |                  |   | 18,347.0 
|                                                   |  |                   |           |                  |   |          
|Total borrowings                                   |  |                   | 39,298.0  |                  |   | 62,329.9 
|Bank deposits                                      |  |                   | 18,234.8  |                  |   | 13,349.8 
|                                                   |  |                   |           |                  |   |          
|Total borrowings and deposits                      |  |                   | 57,532.8  |                  |   | 75,679.7 
|Off-balance sheet financings                       |  |                   | 126,641.6 |                  |   | 136,108.3
|                                                   |  |                   |           |                  |   |          
|Total                                              |  | $                 | 184,174.4 |                  | $ | 211,788.0
|                                                   |  |                   |           |                  |   |          

Funding Sources

Secured and Unsecured Funding Facilities

These facilities mature between October 2008 and
March 2040. While we were able to successfully renegotiate the renewals of most of our facilities in June 2008, we did so at less favorable terms. Such terms have included, among other things, shorter maturities upon renewal, lower overall borrowing
limits, lower ratios of funding to collateral value for secured facilities and higher borrowing costs. Continued deterioration in the market place in the third quarter further reduced the amount of available credit making it less likely to renew



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facilities in the near future. Accordingly, there are no assurances that we will be able to renew or refinance maturing facilities on acceptable terms, or at
all.

Although unused capacity exists under our secured committed facilities, the unused capacity on the committed secured facilities can be
utilized only upon pledge of eligible assets that we may not currently have available. This restriction also applies to our secured borrowings from parent and affiliates, including the GMAC Senior Secured Credit Facility and GMAC Secured MSR
facility. Additionally, the GMAC Senior Secured Credit Facility has further restrictions, including restrictions on the use of proceeds from sales of pledged collateral within this facility. The proceeds are required to be reinvested in additional
eligible collateral with a substantially equivalent value or repay existing indebtedness. We may not have such eligible collateral available at the time of the required reinvestment.

Borrowings from Parent

The
following table summarizes our borrowings from parent capacity as of September 30, 2008 and December 31, 2007:



|                                    |  |                          |         |                         |   |               |  |             |         |                |   |               |  |   |         |  |   |        
|----------------------------------- |  | ------------------------ | ------- | ----------------------- | - | ------------- |  | ----------- | ------- | -------------- | - | ------------- |  | - | ------- |  | - | -------
|                                    |  | Facilities from Parent  
|                                    |  | As of September 30, 2008 |         | As of December 31, 2007
|                                    |  | Outstanding              |         | UnusedCapacity          |   | TotalCapacity |  | Outstanding |         | UnusedCapacity |   | TotalCapacity
|                                    |  | (In millions)           
|GMAC senior secured credit facility |  | $                        | 2,172.1 |                         | $ | 577.9         |  | $           | 2,750.0 |                | $ |              |  | $ |        |  | $ |       
|GMAC secured MSR facility           |  |                          | 1,098.5 |                         |   | 101.5         |  |             | 1,200.0 |                |   |              |  |   |        |  |   |       
|GMAC unsecured Auto Bank facility   |  |                          |        |                         |   | 3,000.0       |  |             | 3,000.0 |                |   |              |  |   | 3,000.0 |  |   | 3,000.0
|                                    |  |                          |         |                         |   |               |  |             |         |                |   |               |  |   |         |  |   |        
|Total                               |  | $                        | 3,270.6 |                         | $ | 3,679.4       |  | $           | 6,950.0 |                | $ |              |  | $ | 3,000.0 |  | $ | 3,000.0
|                                    |  |                          |         |                         |   |               |  |             |         |                |   |               |  |   |         |  |   |        

We continued to rely on support from our parent in the third quarter to meet liquidity and covenant
requirements. Borrowings from our parent however decreased by $1.4 billion since June 30, 2008 to $3.3 billion as of September 30, 2008. This decrease is due to $101.5 million forgiveness of debt associated with the GMAC Secured MSR
facility and $750 million of debt reduction as a result of the sale of our Resort Finance business within the Business Capital Group to GMACCF. Further, we have reduced our borrowings against the $3.5 billion GMAC Senior Secured Credit Facility by
$577.9 million. This partial paydown is a by-product of strategic assets sales throughout the third quarter, which supported the borrowing base of the facility.

GMAC Senior Secured Credit Facility:On June 4, 2008, RFC and GMAC Mortgage entered into a Senior Secured Credit Facility with GMAC (guaranteed by ResCap and certain of its
subsidiaries) with a lending capacity of up to $3.5 billion. Proceeds from the GMAC Senior Secured Credit Facility were used to repay debt on or prior to its maturity, to acquire certain assets, and for working capital purposes. Under the GMAC
Senior Secured Credit Facility, GMAC agreed to make revolving loans to RFC and GMAC Mortgage and acquire $1.3 billion of the outstanding $1.75 billion Bank Term Loan (Term Loan) which was due to mature on July 28, 2008. We paid the
remainder of the Term Loan on July 28, 2008 with proceeds of a draw under the GMAC Senior Secured Credit Facility. This facility is scheduled to mature on May 1, 2010. The terms of the GMAC Senior Secured Credit Facility agreement result
in a permanent reduction in capacity, if proceeds from sales of pledged collateral are not reinvested in eligible collateral in a timely manner.

GMAC Secured MSR Facility:On April 18, 2008 and subsequently amended on June 1, 2008, RFC and GMAC Mortgage entered into a Secured MSR Facility with GMAC with a lending capacity of $1.2 billion. The
collateral securing the GMAC Secured MSR facility is not part of the primary collateral securing the GMAC Senior Secured Credit Facility or the new secured notes which were offered in ResCaps private exchange offers. The facility was due to
mature October 17, 2008 and subsequent to September 30, 2008 matured and was renewed to May 1, 2009. Various terms of the original agreement were amended as discussed earlier in our Liquidity and Capital Management Highlights.



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Borrowings from Affiliates

The following table summarizes our borrowings from affiliates capacity as of September 30, 2008 and December 31, 2007:



|                                              |  |                            |       |                         |   |               |  |             |       |                |   |               |  |   |   |  |   |  
|--------------------------------------------- |  | -------------------------- | ----- | ----------------------- | - | ------------- |  | ----------- | ----- | -------------- | - | ------------- |  | - | - |  | - | -
|                                              |  | Facilities from Affiliates
|                                              |  | As of September 30, 2008   |       | As of December 31, 2007
|                                              |  | Outstanding                |       | UnusedCapacity          |   | TotalCapacity |  | Outstanding |       | UnusedCapacity |   | TotalCapacity
|                                              |  | (In millions)             
|GMAC senior secured credit facility- Cerberus |  | $                          | 382.5 |                         | $ |              |  | $           | 382.5 |                | $ |              |  | $ |  |  | $ | 
|GMAC senior secured credit facility- GM       |  |                            | 367.5 |                         |   |              |  |             | 367.5 |                |   |              |  |   |  |  |   | 
|Cerberus secured model home term loan         |  |                            | 125.0 |                         |   |              |  |             | 125.0 |                |   |              |  |   |  |  |   | 
|Cerberus secured model home revolving loan    |  |                            |      |                         |   | 10.0          |  |             | 10.0  |                |   |              |  |   |  |  |   | 
|                                              |  |                            |       |                         |   |               |  |             |       |                |   |               |  |   |   |  |   |  
|Total                                         |  | $                          | 875.0 |                         | $ | 10.0          |  | $           | 885.0 |                | $ |              |  | $ |  |  | $ | 
|                                              |  |                            |       |                         |   |               |  |             |       |                |   |               |  |   |   |  |   |  

GMAC Senior Secured Credit Facility:On June 4, 2008, GMAC
entered into a participation agreement with GM and the Cerberus Fund. Pursuant to the participation agreement, GMAC sold GM and Cerberus Fund $750 million in subordinated participations in the loans made pursuant to the ResCap Facility. GM and
Cerberus Fund acquired 49% and 51% of the participations, respectively.

Cerberus Secured Model Home Term and Revolving Loans:During the second quarter of 2008, Cerberus entered into both a secured term loan and revolving loan with CHM Holdings, LLC (CMH). The term loan capacity is equal to $125.0 million and the revolving loan
amount is $10.0 million. The loans will mature on September 30, 2013 and are secured by a pledge of all of the assets of CMH. At September 30, 2008, $125.0 million was outstanding under the term loan.

Collateralized Borrowings in Securitization Trusts

As part of our ongoing funding and risk management practices, we have established secondary market trading and securitization programs that provide long-term financing primarily for our mortgage loans. Our access to
securitization markets worldwide has been severely restricted since August 2007. We do not expect these markets to improve in the near term. We have adjusted our current business production levels and distribution strategies to respond to these
market conditions.

Senior and Junior Secured Notes

On June 6, 2008, we closed our previously announced private debt tender and exchange offers for a certain amount of our outstanding unsecured notes.
As a result, we issued approximately $5.7 billion of senior and junior secured notes in exchange for approximately $8.6 billion of our outstanding unsecured notes. Of the $8.6 billion of unsecured notes that were exchanged, approximately $1.8
billion were repurchased for $1.2 billion in cash pursuant to a modified Dutch auction tender offer. In accordance with SFAS No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings, we deferred the
concession recognized in the exchange offer through an adjustment to the carrying value of the secured notes. The senior and junior secured notes interest rates are 8.5% and 9.625%, respectively. The deferred concession of $1.2 billion will be
amortized over the life of the secured notes through a reduction to interest expense using an effective yield methodology. Approximately $16.9 million of the concession was recognized as a troubled debt restructuring gain in order to write down the
carrying value of the bonds to an amount equal to the secured notes undiscounted contractual payments. During the third quarter, an additional $60.2 million was amortized as a reduction to interest expense.

Other Secured Facilities

In
the United States and in the other countries in which we operate, we use committed and uncommitted secured facilities to fund inventories of mortgage loans held for investment, mortgage loans held for sale, lending receivables, mortgage servicing
cash flows and securities. We use these facilities to provide funding for residential mortgage loans prior to their subsequent sale or securitization. We refer to the time period between the acquisition or origination of loans and their subsequent
sale or securitization as the aggregation period.



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The cost of funding related to these vehicles is priced off a short-term benchmark, such as highly-rated
commercial paper, one month LIBOR or a similar index, plus a stated percentage over such cost and/or other costs of issuance. In the past, committed liquidity sources were generally renewed annually and at our discretion and the discretion of the
third-party. Current market conditions require more unfavorable terms upon renewal. Our secured borrowings, including our aggregation facilities, are repaid as the underlying assets are sold or securitized. Between October 1, 2008 and
December 31, 2008, we have $2.9 billion, or 29.5%, of our other secured committed capacity maturing.

In conjunction with reducing risk
on our balance sheet, we are only originating conforming and government loans domestically and in Canada through our ResMor Trust Company (ResMor Trust). We continue to originate conforming agency eligible collateral, all of which has
guaranteed purchase commitments from Fannie Mae, Freddie Mac, and Ginne Mae. The significant reduction of our loan originations has therefore resulted in lower utilization of our sources of liquidity than in previous reporting periods.

The table below highlights committed, uncommitted and total capacity under our non-affiliated secured funding facilities as of September 30, 2008
and December 31, 2007:



|                                                                         |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|------------------------------------------------------------------------ |  | ------------------------ | -------- | ----------------------- | - | ------------- |  | ----------- | -------- | -------------- | - | ------------- |  | - | -------- |  | - | --------
|                                                                         |  | Secured Facilities      
|                                                                         |  | As of September 30, 2008 |          | As of December 31, 2007
|                                                                         |  | Outstanding              |          | UnusedCapacity          |   | TotalCapacity |  | Outstanding |          | UnusedCapacity |   | TotalCapacity
|                                                                         |  | (In millions)           
|Secured funding facilities  committed                                   |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|Secured aggregation facilities:                                          |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|International mortgage loan facilities                                   |  | $                        | 2,281.0  |                         | $ | 522.9         |  | $           | 2,803.9  |                | $ | 6,357.4       |  | $ | 2,106.2  |  | $ | 8,463.6 
|Bank facilities for construction lending receivables                     |  |                          | 694.0    |                         |   |              |  |             | 694.0    |                |   | 1,804.8       |  |   | 45.4     |  |   | 1,850.2 
|Receivables Lending Agreement (RLA)                                      |  |                          |         |                         |   |              |  |             |         |                |   | 170.0         |  |   | 5,292.6  |  |   | 5,462.6 
|Mortgage Asset Lending Agreement (MALA)                                  |  |                          |         |                         |   |              |  |             |         |                |   | 70.0          |  |   | 3,146.4  |  |   | 3,216.4 
|Repurchase agreements                                                    |  |                          | 670.8    |                         |   | 2,664.2       |  |             | 3,335.0  |                |   | 3,276.8       |  |   | 5,313.7  |  |   | 8,590.5 
|Mortgage servicing rights facilities                                     |  |                          | 1,248.0  |                         |   | 580.0         |  |             | 1,828.0  |                |   | 1,444.0       |  |   | 656.0    |  |   | 2,100.0 
|Servicing advances                                                       |  |                          | 700.0    |                         |   |              |  |             | 700.0    |                |   | 791.3         |  |   | 608.7    |  |   | 1,400.0 
|International debt collateralized by mortgage loans                      |  |                          | 16.9     |                         |   | 47.5          |  |             | 64.4     |                |   | 1,485.2       |  |   | 281.9    |  |   | 1,767.1 
|Other                                                                    |  |                          | 280.0    |                         |   |              |  |             | 280.0    |                |   | 328.4         |  |   |         |  |   | 328.4   
|                                                                         |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|Total  committed                                                        |  |                          | 5,890.7  |                         |   | 3,814.6       |  |             | 9,705.3  |                |   | 15,727.9      |  |   | 17,450.9 |  |   | 33,178.8
|                                                                         |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|Secured funding facilities  uncommitted Secured aggregation facilities: |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|International mortgage loan facilities                                   |  |                          |         |                         |   |              |  |             |         |                |   |              |  |   | 657.7    |  |   | 657.7   
|Repurchase agreements                                                    |  |                          | 16.2     |                         |   | 84.7          |  |             | 100.9    |                |   | 368.3         |  |   | 7,430.7  |  |   | 7,799.0 
|FHLB advances                                                            |  |                          | 10,517.0 |                         |   | 324.3         |  |             | 10,841.3 |                |   | 11,349.0      |  |   | 1,240.1  |  |   | 12,589.1
|Federal Reserve Board advances                                           |  |                          |         |                         |   | 4,143.7       |  |             | 4,143.7  |                |   |              |  |   |         |  |   |        
|International debt collateralized by mortgage loans                      |  |                          |         |                         |   |              |  |             |         |                |   | 296.8         |  |   | 145.6    |  |   | 442.4   
|Other                                                                    |  |                          | 55.7     |                         |   |              |  |             | 55.7     |                |   | 95.2          |  |   |         |  |   | 95.2    
|                                                                         |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|Total  uncommitted                                                      |  |                          | 10,588.9 |                         |   | 4,552.7       |  |             | 15,141.6 |                |   | 12,109.3      |  |   | 9,474.1  |  |   | 21,583.4
|                                                                         |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         
|Total secured facilities                                                 |  | $                        | 16,479.6 |                         | $ | 8,367.3       |  | $           | 24,846.9 |                | $ | 27,837.2      |  | $ | 26,925.0 |  | $ | 54,762.2
|                                                                         |  |                          |          |                         |   |               |  |             |          |                |   |               |  |   |          |  |   |         



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Although unused capacity exists under our secured committed facilities, use of such capacity is
conditioned upon certain collateral eligibility requirements and, as a result, our access to such capacity under these facilities may be limited.

Secured Aggregation Facilities:

International Mortgage Loan Facilities:International
facilities to fund mortgage loans prior to their sale or securitization include: $2.4 (£1.4) billion of liquidity commitments to fund loans in the United Kingdom, $0.2 (A0.1) billion of liquidity commitments to fund loans
originated in the Netherlands, Germany and Spain and $0.2 billion (0.3 billion Australian dollar) of liquidity commitments to fund loans in Australia. On September 26, 2008, the size of one of the international aggregation facilities
(Conduit No. 2) in the United Kingdom was reduced to $2.17 billion (£1.2 billion) from $4.34 billion (£2.4 billion) in recognition of reduced funding needs.

Bank Facilities for Construction Lending Receivables:As of September 30, 2008, we had facilities to fund construction
and commercial lending receivables with aggregate liquidity commitments of $0.7 billion, which in the past included liquidity commitments to fund lending receivables in the United Kingdom. The lending receivables commitment within the United Kingdom
(Grid No. 5) was terminated effective September 30, 2008, representing a decrease in funding construction and commercial lending receivables by $135.6 million. On March 31, 2008, the secured funding facility for our
Business Capital Groups construction assets went into early amortization due to Moodys decision not to reaffirm the facility rating. As a result, all forward commitments to fund receivable obligations previously eligible for financing
under this facility were funded by alternative sources.

RLA and MALA:RLA and MALA facilities were
terminated during the second quarter of 2008. Prior to the termination, the decline in borrowings under the RLA and MALA facilities reflected our decision in 2007 to restrict the amount of warehouse lending activities and non-traditional mortgages
that we make, as well as continuing disruptions in the asset-backed commercial paper market which made borrowings under these facilities less available and more expensive.

Repurchase Agreements:

Borrowings under these arrangements are provided on either a committed or an
uncommitted basis. We reached agreement to amend substantially all of our secured bilateral facilities, thus extending the maturities of these repurchase agreement facilities from various dates in 2008 to the end of May and beginning of June 2009.
Included in these negotiations was the closing of a new syndicated $2.5 billion whole loan repurchase agreement to fund domestic conforming collateral maturing on June 3, 2009. As of September 30, 2008, $400.6 million of the renewed
facilities will not accept new assets prior to maturity, or have orderly deterioration in advance rates; therefore, the facilities are amortizing to their respective maturity dates.

Mortgage Servicing Rights Facilities:

There are $1.8 billion of funding commitments through which
eligible mortgage servicing rights are funded including $1.5 billion related to a bilateral secured facility. These secured committed financing arrangements are in addition to GMACs funding of our mortgage servicing rights.

Bilateral secured facility Effective September 11, 2008, GMAC renewed a funding facility with Citi under which GMAC could have access
to funding of up to $13.8 billion for a variety of automobile and mortgage assets. The amount available for immediate funding is $10.1 billion, while the additional $3.7 billion would be made available upon successful syndication of the facility.
The availability under the facility is now allocated to specific business lines whereas the facility had previously provided more flexibility regarding the allocation of credit capacity. As of September 11, 2008, we had available to us
committed credit capacity of $1.5 billion.

Servicing Advances:

Secured facility to fund mortgage servicer advances had capacity of $0.7 billion as of September 30, 2008.



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International Debt Collateralized by Mortgage Loans:

A $64.4 million (710.9 million Mexican pesos) liquidity commitment exists to fund loans in Mexico. Committed facilities to fund loans in the United
Kingdom, as well as uncommitted facilities in Canada, have expired or closed prior to September 30, 2008.

FHLB Advances:

As previously discussed, GMAC Bank has entered into an advances agreement with the FHLB. Under the agreement, as of September 30, 2008 and
December 31, 2007, GMAC Bank had assets pledged and restricted as collateral totaling $32.9 and $28.4 billion, respectively, under the FHLBs existing blanket lien on all GMAC Bank assets. However, the FHLB will allow GMAC Bank to encumber
any assets restricted as collateral not needed to collateralize existing FHLB advances. As of September 30, 2008 and December 31, 2007, GMAC Bank had $15.0 and $12.8 billion of assets pledged, respectively, under the security interest that
were not collateralizing FHLB advances and available to be encumbered elsewhere. Subsequent to September 30, 2008, the FHLB updated their guidelines used to determine the capacity for the advances agreement. If these guidelines had been in
place on September 30, 2008, the total capacity under our advances agreement would have been $10.4 billion versus the $10.8 billion disclosed in our uncommitted total capacity which was based on the guidelines that were in place on
September 30, 2008.

Federal Reserves Discount Window and TAF:

On September 11, 2008, GMAC Bank was granted access to the Federal Reserves Discount Window and TAF. The Discount Window is the primary credit
facility under which the Federal Reserve extends collateralized loans to depository institutions at terms from overnight up to ninety days. The TAF program auctions a pre-announced quantity of collateralized credit starting with a minimum bid for
term funds of 28-day or 84-day maturity. GMAC Bank has pledged $5.2 billion of automotive loans and lease financings to participate in the Discount Window and TAF program at varying collateral requirements and had $4.1 billion of unused capacity at
September 30, 2008. These assets were available to be encumbered under the FHLBs existing blanket lien. At September 30, 2008, GMAC Bank had no outstanding borrowings under these programs.

Other Secured Borrowings:

Other secured committed
outstanding includes $280.0 million in variable funding notes due to mature on February 25, 2031. Other secured uncommitted outstanding includes a $55.7 million (£30.8 million) United Kingdom residual payable related to off-balance sheet
financing transactions.

Other Unsecured Facilities:

The table below highlights committed, uncommitted and total capacity under our non-affiliated unsecured funding facilities as of September 30, 2008
and December 31, 2007:



|                                         |  |                          |   |                         |   |               |  |             |   |                |   |               |  |   |         |  |   |        
|---------------------------------------- |  | ------------------------ | - | ----------------------- | - | ------------- |  | ----------- | - | -------------- | - | ------------- |  | - | ------- |  | - | -------
|                                         |  | Unsecured Facilities    
|                                         |  | As of September 30, 2008 |   | As of December 31, 2007
|                                         |  | Outstanding              |   | UnusedCapacity          |   | TotalCapacity |  | Outstanding |   | UnusedCapacity |   | TotalCapacity
|                                         |  |                          |   |                         |   | (In millions) |  |             |   |               
|Unsecured funding facilities  committed |  |                          |   |                         |   |               |  |             |   |                |   |               |  |   |         |  |   |        
|Third-party bank credit facilities:      |  |                          |   |                         |   |               |  |             |   |                |   |               |  |   |         |  |   |        
|Syndicated bank credit facilities        |  | $                        |  |                         | $ |              |  | $           |  |                | $ |              |  | $ | 875.0   |  | $ | 875.0  
|364-day bank credit facilities revolver  |  |                          |  |                         |   |              |  |             |  |                |   |              |  |   | 875.0   |  |   | 875.0  
|Bank term loan                           |  |                          |  |                         |   |              |  |             |  |                |   | 1,750.0       |  |   |        |  |   | 1,750.0
|International bank lines                 |  |                          |  |                         |   |              |  |             |  |                |   | 17.5          |  |   |        |  |   | 17.5   
|                                         |  |                          |   |                         |   |               |  |             |   |                |   |               |  |   |         |  |   |        
|Total  committed                        |  |                          |  |                         |   |              |  |             |  |                |   | 1,767.5       |  |   | 1,750.0 |  |   | 3,517.5
|                                         |  |                          |   |                         |   |               |  |             |   |                |   |               |  |   |         |  |   |        



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|                                           |  |                          |       |                         |   |               |  |             |       |                |   |               |  |   |         |  |   |        
|------------------------------------------ |  | ------------------------ | ----- | ----------------------- | - | ------------- |  | ----------- | ----- | -------------- | - | ------------- |  | - | ------- |  | - | -------
|                                           |  | Unsecured Facilities    
|                                           |  | As of September 30, 2008 |       | As of December 31, 2007
|                                           |  | Outstanding              |       | UnusedCapacity          |   | TotalCapacity |  | Outstanding |       | UnusedCapacity |   | TotalCapacity
|                                           |  | (In millions)           
|Unsecured funding facilities  uncommitted |  |                          |       |                         |   |               |  |             |       |                |   |               |  |   |         |  |   |        
|Third-party bank credit facilities         |  |                          |      |                         |   |              |  |             |      |                |   | 50.0          |  |   | 2.0     |  |   | 52.0   
|International lines of credit              |  |                          | 108.0 |                         |   | 125.2         |  |             | 233.2 |                |   | 243.8         |  |   | 23.2    |  |   | 267.0  
|International commercial paper             |  |                          | 178.0 |                         |   |              |  |             | 178.0 |                |   | 301.4         |  |   |        |  |   | 301.4  
|GMAC Bank Federal Funds                    |  |                          |      |                         |   | 160.0         |  |             | 160.0 |                |   | 0.1           |  |   | 219.9   |  |   | 220.0  
|Other                                      |  |                          | 14.3  |                         |   |              |  |             | 14.3  |                |   | 50.9          |  |   |        |  |   | 50.9   
|                                           |  |                          |       |                         |   |               |  |             |       |                |   |               |  |   |         |  |   |        
|Total  uncommitted                        |  |                          | 300.3 |                         |   | 285.2         |  |             | 585.5 |                |   | 646.2         |  |   | 245.1   |  |   | 891.3  
|                                           |  |                          |       |                         |   |               |  |             |       |                |   |               |  |   |         |  |   |        
|Total unsecured facilities                 |  | $                        | 300.3 |                         | $ | 285.2         |  | $           | 585.5 |                | $ | 2,413.7       |  | $ | 1,995.1 |  | $ | 4,408.8
|                                           |  |                          |       |                         |   |               |  |             |       |                |   |               |  |   |         |  |   |        

Third-Party Bank Credit Facilities:

Effectively all of our available unsecured committed funding capacity was either terminated or paid down during the second quarter of 2008. This is
directly related to the pay down of the Bank Term Loan of $1.75 billion and termination of the 364-day and 3-year syndicated bank revolvers (each $875 million). These were replaced by the $3.5 billion GMAC Senior Secured Credit Facility from our
parent and borrowings from affiliates under the GMAC Participation Agreement. As of September 30, 2008 we did not have any unsecured uncommitted agreements in place.

International Lines of Credit:

As of September 30, 2008, we had access to approximately $0.2
billion of unsecured lines of credit from financial institutions compared with $0.3 billion as of December 31, 2007. These lines are available on an uncommitted basis and borrowings under these lines mature in 30 to 365 days. We used borrowings
under these lines for general working capital purposes.

International Commercial Paper:

In Mexico, we had 2.0 billion pesos ($0.2 billion) of commercial paper as of September 30, 2008 compared with 3.3 billion pesos ($0.3 billion)
outstanding as of December 31, 2007.

GMAC Bank Federal Funds:

As of September 30, 2008, GMAC Bank had the capacity to borrow up to $160.0 million of federal funds on an overnight basis. At September 30, 2008, there was none outstanding.

Other Unsecured Borrowings:

Amount outstanding
represents Business Capital Group builder notes of $11.0 million and $3.3 million for a five year arrangement to fund software licensing in the form of uncommitted notes payable due to mature on August 12, 2012.

Bank Deposits

GMAC Bank provides us another
source of liquidity through its ability to accept deposits. As of September 30, 2008, GMAC Bank had approximately $17.7 billion of deposits, $2.3 billion of which were escrows related to our servicing of mortgage loans compared with $12.8
billion of deposits and $1.6 billion of escrows, respectively, as of December 31, 2007. These funds are generally available only for the operations of GMAC Bank, and cannot be used to fund the operations or liabilities of our other affiliates.



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At September 30, 2008 and December 31, 2007, ResMor Trust Company also had approximately
622.8 million CAD ($595.6 million) and 514.1 million CAD ($521.7 million) of deposits, respectively.

Off-Balance Sheet Financings

Our total off-balance sheet financings outstanding were $126.6 billion as of September 30, 2008 and $136.1 billion as of
December 31, 2007. A significant portion of our off-balance sheet financing relates to securitizations issued in off-balance sheet trusts.

We participate in a number of off-balance sheet revolving securitizations collateralized by home equity lines of credit with credit capacity totaling approximately $6.0 billion. These securitizations are self-contained trusts that
distribute cash between the borrowers. If at any point, the cash accessible to borrowers within the trust is not sufficient, we are obligated to fund any incremental draws on the lines by the borrower. We are actively managing the available lines of
credit within these trusts to reduce this potential risk. As of September 30, 2008, the cumulative funds drawn were $256.3 million.

As
a part of our historical capital markets activity, predominately in the International Business Group, several of our securitizations have certain servicer obligations contingent on actions by bond holders. These servicer obligations exist in our
Dutch, German and Australian securitization structures. Certain of these securitizations provide the investors of the special purpose entity (SPE) with the ability to put back these securities to the SPE at a specified date in the future at price
equal to par less losses previously allocated to the bond holder. ResCap, as the servicer of the SPE, is obligated to advance the funds required to redeem bond holders. We have the option to purchase loans from the SPE at their par value, the
proceeds of which then can be used to offset the SPEs obligation to repay the servicer. The specific dates that these options can be exercised typically range from seven to twelve years from the securitization issuance date. The earliest
exercise date for these options is the third quarter of 2009.

The total estimated amount of Dutch and German bonds subject to these
servicer obligations is approximately A5.3 billion ($7.6 billion) beginning 2009 through 2019. The estimated obligation considers contractual amortization, prepayments, and defaults among other management assumptions. The portion that is
exercisable prior to December 31, 2009 and 2010 is A59.5 million (1.1% of the total) and A343.9 million or (6.5% of the total), respectively. Approximately 70.3% of the total estimated bonds are eligible for this servicer
obligation beginning in 2013 and after.

The total estimated amount of Australian bonds subject to these servicer obligations is
approximately 110 million AUD($88 million) all exerciseable in 2011.

We currently hold the residual interest (first loss bond) on all
of these securitizations. To the extent that the potential bonds are put back to the SPE and the loans are repurchased, we have recognized the estimated future credit losses on the underlying mortgage loans in the fair market value of the retained
residuals we currently hold on our balance sheet. To the extent that losses are expected to arise from factors such as liquidity or market risk of the loans that may be purchased pursuant to our servicer obligation (i.e. losses beyond the credit
losses already reflected in the residual), we estimate and record this incremental loss when the likelihood of bond holder exercise is foreseeable and the incremental loss can be reasonably estimated. During the three months ended September 30,
2008, we recorded a $9.4 million incremental loss related to these servicer obligations. As the servicer obligation is within the underlying servicing contracts, this loss was reflected as write-down to the servicing assets held by the International
Business Group.

As of September 30, 2008, the liabilities related to these servicer obligations, after considering the valuation of
our residual interests, are immaterial.



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Credit Ratings

The following table summarizes our current credit ratings and outlook from the major credit rating agencies:



|              |  |                     |  |                    |  |                    |  |          |  |                    
|------------- |  | ------------------- |  | ------------------ |  | ------------------ |  | -------- |  | -------------------
|Rating Agency |  | SeniorUnsecuredDebt |  | SeniorSecured Debt |  | JuniorSecured Debt |  | Outlook  |  | Date of Last Action
|Fitch         |  | D                   |  | N/R                |  | N/R                |  | N/A      |  | June 4, 2008       
|Moodys       |  | Ca                  |  | Ca                 |  | Ca                 |  | Negative |  | September 10, 2008 
|S&P           |  | CC                  |  | CCC-               |  | CC                 |  | Negative |  | November 7, 2008   
|DBRS          |  | C                   |  | C                  |  | C                  |  | Negative |  | November 5, 2008   

Ratings reflect the rating agencies opinions of our financial condition, operating
performance, strategic position and ability to meet our obligations. During the third quarter of 2007, a rating downgrade occurred with respect to our senior unsecured notes resulting in an increase of 100 basis points to our cost of funds related
to the corresponding unsecured notes. Our credit ratings were further downgraded on November 1, 2007 by various credit rating agencies, resulting in an additional increase of 50 basis points to our cost of funds related to the corresponding
senior unsecured notes. A rating agency downgrade on February 22, 2008 resulted in an additional and final step-up of 50 basis points to our senior unsecured debt. There have been several additional rating downgrades that have occurred from
February 5, 2008 up until the filing date of this document, none of which resulted in a change to our cost of funds. Furthermore, any action with respect to the credit ratings of GMAC could impact our ratings because of our position as a
wholly-owned subsidiary of GMAC.

Agency ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn
at any time by the issuing organization. Each agencys rating should be evaluated independently of any other agencys rating.

Recently Issued
Accounting Standards

Refer to Notes 1 and 2 of the Notes to Condensed Consolidated Financial Statements.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

We perform various sensitivity analyses that quantify the net financial impact of changes in interest rates on our interest rate-sensitive assets, liabilities and commitments. These analyses incorporate assumed
changes in the interest rate environment, including selected hypothetical, instantaneous parallel shifts in the yield curve.

We employ
various commonly used modeling techniques to value our financial instruments in connection with these sensitivity analyses. We use option-adjusted spread models to value mortgage loans, mortgage-backed securities, mortgage-backed securities forward
contracts, collateralized mortgage obligations and mortgage servicing rights. The primary assumptions used in these models for purpose of these sensitivity analyses are the implied market volatility of interest rates and prepayment speeds. We use an
option-pricing model to value options and interest rate floors. We use zero volatility discounted cash-flow models to value other retained interests. The primary assumptions used in these models are prepayment rates, discount rates and credit
losses. All relevant cash flows associated with the financial instruments are incorporated in the various models.



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Based upon this modeling, the following tables summarize the estimated change in fair value of our
interest rate-sensitive assets, liabilities and commitments as of September 30, 2008 and 2007 given several hypothetical, instantaneous, parallel-shifts in the yield curve:



|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|--------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | --- | - | ---- | --- |  | - | ---- | - |  | - | ---- | -
|                                                                                              |  | Change in Fair Value as ofSeptember
30, 2008 |       
|Change in Interest Rate (basis points)                                                        |  | -100                                         |        |   | -50 |   |      | +50 |  |   | +100 |  
|                                                                                              |  | (In millions)                                |       
|Mortgage servicing rights and other financial instruments:                                    |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Mortgage servicing rights and other retained interests                                        |  | $                                            | (1,020 | ) |     | $ | (483 | )   |  | $ | 386  |   |  | $ | 676  |  
|Impact of servicing hedge:                                                                    |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Swap-based                                                                                    |  |                                              | 572    |   |     |   | 263  |     |  |   | (217 | ) |  |   | (391 | )
|Treasury-based                                                                                |  |                                              | 230    |   |     |   | 113  |     |  |   | (109 | ) |  |   | (219 | )
|Others                                                                                        |  |                                              | 66     |   |     |   | 33   |     |  |   | (33  | ) |  |   | (65  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Mortgage servicing rights and other retained interests, net                                   |  |                                              | (152   | ) |     |   | (74  | )   |  |   | 27   |   |  |   | 1    |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Committed pipeline                                                                            |  |                                              | 64     |   |     |   | 41   |     |  |   | (59  | ) |  |   | (132 | )
|Mortgage loan inventory                                                                       |  |                                              | 33     |   |     |   | 20   |     |  |   | (26  | ) |  |   | (57  | )
|Impact of associated derivative instruments:                                                  |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Mortgage-based                                                                                |  |                                              | (98    | ) |     |   | (58  | )   |  |   | 76   |   |  |   | 164  |  
|Eurodollar-based                                                                              |  |                                              | (3     | ) |     |   | (1   | )   |  |   | 2    |   |  |   | 3    |  
|Others                                                                                        |  |                                              | (5     | ) |     |   | (2   | )   |  |   | 2    |   |  |   | 4    |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Committed pipeline and mortgage loan inventory, net                                           |  |                                              | (9     | ) |     |   | 0    |     |  |   | (5   | ) |  |   | (18  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Net change in fair value related to other businesses                                          |  |                                              | 1      |   |     |   | 0    |     |  |   | 0    |   |  |   | (1   | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|GMAC Bank:                                                                                    |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Securities portfolio                                                                          |  |                                              | 8      |   |     |   | 4    |     |  |   | (4   | ) |  |   | (7   | )
|Mortgage loans                                                                                |  |                                              | 380    |   |     |   | 200  |     |  |   | (214 | ) |  |   | (435 | )
|Deposit liabilities                                                                           |  |                                              | (20    | ) |     |   | (10  | )   |  |   | 9    |   |  |   | 19   |  
|Federal Home Loan Bank advances                                                               |  |                                              | (241   | ) |     |   | (124 | )   |  |   | 133  |   |  |   | 273  |  
|Other liabilities                                                                             |  |                                              | (23    | ) |     |   | (11  | )   |  |   | 11   |   |  |   | 22   |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|GMAC Bank, net                                                                                |  |                                              | 104    |   |     |   | 59   |     |  |   | (65  | ) |  |   | (128 | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Notes payable and capital securities                                                          |  |                                              | (40    | ) |     |   | (20  | )   |  |   | 19   |   |  |   | 39   |  
|Impact of associated derivative instruments:                                                  |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Swap-based                                                                                    |  |                                              | 10     |   |     |   | 5    |     |  |   | (5   | ) |  |   | (9   | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Notes payable and capital securities, net                                                     |  |                                              | (30    | ) |     |   | (15  | )   |  |   | 14   |   |  |   | 30   |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Insurance company investment portfolios                                                       |  |                                              | 1      |   |     |   | 1    |     |  |   | (1   | ) |  |   | (2   | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Net change in fair value related to mortgage servicing rights and other financial instruments |  | $                                            | (85    | ) |     | $ | (29  | )   |  | $ | (30  | ) |  | $ | (118 | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Net change in fair value related to broker-dealer trading securities                          |  | $                                            |       |   |     | $ |     |     |  | $ |     |   |  | $ |     |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  
|Net change in fair value related to GMAC Auto Bank                                            |  | $                                            | 45     |   |     | $ | 22   |     |  | $ | (22  | ) |  | $ | (44  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |      |  



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|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|--------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | --- | - | ---- | --- |  | - | ---- | - |  | - | ----- | -
|                                                                                              |  | Change in Fair Value as ofSeptember 30, 2007 |       
|Change in Interest Rate (basis points)                                                        |  | -100                                         |        |   | -50 |   |      | +50 |  |   | +100 |  
|                                                                                              |  | (In millions)                                |       
|Mortgage servicing rights and other financial instruments:                                    |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Mortgage servicing rights and other retained interests                                        |  | $                                            | (1,846 | ) |     | $ | (874 | )   |  | $ | 667  |   |  | $ | 1,145 |  
|Impact of servicing hedge:                                                                    |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Swap-based                                                                                    |  |                                              | 1,297  |   |     |   | 592  |     |  |   | (480 | ) |  |   | (870  | )
|Treasury-based                                                                                |  |                                              | 3      |   |     |   | 2    |     |  |   | (2   | ) |  |   | (3    | )
|Others                                                                                        |  |                                              | 574    |   |     |   | 284  |     |  |   | (270 | ) |  |   | (522  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Mortgage servicing rights and other retained interests, net                                   |  |                                              | 28     |   |     |   | 4    |     |  |   | (85  | ) |  |   | (250  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Committed pipeline                                                                            |  |                                              | 120    |   |     |   | 77   |     |  |   | (122 | ) |  |   | (285  | )
|Mortgage loan inventory                                                                       |  |                                              | 226    |   |     |   | 122  |     |  |   | (139 | ) |  |   | (292  | )
|Impact of associated derivative instruments:                                                  |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Mortgage-based                                                                                |  |                                              | (180   | ) |     |   | (105 | )   |  |   | 137  |   |  |   | 300   |  
|Eurodollar-based                                                                              |  |                                              | (14    | ) |     |   | (7   | )   |  |   | 7    |   |  |   | 14    |  
|Others                                                                                        |  |                                              | (68    | ) |     |   | (36  | )   |  |   | 41   |   |  |   | 87    |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Committed pipeline and mortgage loan inventory, net                                           |  |                                              | 84     |   |     |   | 51   |     |  |   | (76  | ) |  |   | (176  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Net change in fair value related to other businesses                                          |  |                                              | 7      |   |     |   | 3    |     |  |   | (2   | ) |  |   | (1    | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|GMAC Bank:                                                                                    |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Securities portfolio                                                                          |  |                                              | 15     |   |     |   | 7    |     |  |   | (7   | ) |  |   | (14   | )
|Mortgage loans                                                                                |  |                                              | 294    |   |     |   | 160  |     |  |   | (177 | ) |  |   | (367  | )
|Deposit liabilities                                                                           |  |                                              | (11    | ) |     |   | (5   | )   |  |   | 5    |   |  |   | 11    |  
|Federal Home Loan Bank advances                                                               |  |                                              | (246   | ) |     |   | (124 | )   |  |   | 132  |   |  |   | 270   |  
|Other liabilities                                                                             |  |                                              | (11    | ) |     |   | (5   | )   |  |   | 5    |   |  |   | 11    |  
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|GMAC Bank, net                                                                                |  |                                              | 41     |   |     |   | 33   |     |  |   | (42  | ) |  |   | (89   | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Notes payable and capital securities                                                          |  |                                              | (288   | ) |     |   | (143 | )   |  |   | 139  |   |  |   | 276   |  
|Impact of associated derivative instruments:                                                  |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Swap-based                                                                                    |  |                                              | 294    |   |     |   | 145  |     |  |   | (141 | ) |  |   | (279  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Notes payable and capital securities, net                                                     |  |                                              | 6      |   |     |   | 2    |     |  |   | (2   | ) |  |   | (3    | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Insurance company investment portfolios                                                       |  |                                              | 2      |   |     |   | 1    |     |  |   | (1   | ) |  |   | (3    | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Net change in fair value related to mortgage servicing rights and other financial instruments |  | $                                            | 168    |   |     | $ | 94   |     |  | $ | (208 | ) |  | $ | (522  | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Net change in fair value related to broker-dealer trading securities                          |  | $                                            | 3      |   |     | $ | 2    |     |  | $ | (1   | ) |  | $ | (2    | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  
|Net change in fair value related to GMAC Auto Bank                                            |  | $                                            | 37     |   |     | $ | 19   |     |  | $ | (18  | ) |  | $ | (36   | )
|                                                                                              |  |                                              |        |   |     |   |      |     |  |   |      |   |  |   |       |  

These sensitivity analyses are limited in that they were performed at a particular point in time;
only contemplate certain movements in interest rates; do not incorporate changes in interest rate volatility or changes in the relationship of one interest rate index to another; are subject to the accuracy of various assumptions used, including
prepayment forecasts and discount rates; and do not incorporate other factors that would impact our overall financial performance in such scenarios, most significantly the impact of changes in loan related earnings that result from changes in
interest rates. In addition, not all of the changes in fair value would impact current-period earnings. For example, our debt is carried at its unpaid principal balance net of issuance discount or



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premium; therefore, absent hedge accounting and fair value elections under SFAS No. 159 changes in the market value of our debt are not recorded in
current-period earnings. For these reasons, the preceding estimates should not be viewed as an earnings forecast.



|Item 4. | Controls and Procedures.
|------- | ------------------------

We maintain
disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), designed to ensure that information required to be disclosed in reports filed under the Exchange Act is
recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this report, our Chief Executive Officer and our Chief Financial Officer evaluated, with the participation of our management, the
effectiveness of our disclosure controls and procedures. Based on managements evaluation, our Chief Executive and Chief Financial Officer each concluded that our disclosure controls and procedures were effective as of September 30, 2008.

There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred
during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our CEO and CFO, does not expect that our disclosure controls or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of
the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



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PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

We are
subject to potential liability under laws and government regulations and various claims and legal actions that are pending or may be asserted against us. In addition to the legal proceedings described below, we are a party to various legal
proceedings arising in the ordinary course of our business, some of which purport to be class actions. A final outcome in any of these legal proceedings, if unfavorable, could have a material adverse effect on our business, reputation, results of
operations or financial condition.

Kessler.This putative class action was consolidated for settlement purposes with five other
cases, all alleging that the plaintiffs obtained second-lien mortgage loans from either Community Bank of Northern Virginia or Guaranty National Bank of Tallahassee and that they were charged interest rates and fees violating the Pennsylvania
Secondary Mortgage Loan Act. Plaintiffs additionally claim that the banks were not the actual lenders, but rather that the banks rented their banking charters to affiliates for the purpose of facilitating the assessment of
illegal fees. They further allege that the affiliates either split the fees or kicked back the fees in violation of the Real Estate Settlement Procedures Act (RESPA). Plaintiffs sought to hold our subsidiary liable primarily
on the basis that the subsidiary was an assignee of the mortgage loans. In December 2003, the U.S. District Court for the Western District of Pennsylvania gave its final approval to a proposed $41.1 million settlement for all six cases, inclusive of
attorney fees. The settlement contemplated payment to approximately 44,000 borrowers nationwide. A group of seven plaintiffs class action counsel (Objectors) appealed the settlement in part on the grounds that the underlying
litigation did not address possible Truth in Lending Act (TILA) or Home Ownership and Equity Protection Act (HOEPA) claims. In August 2005, the U.S. Court of Appeals for the Third Circuit vacated the district courts
approval of the settlement and remanded the matter to the district court to determine whether such claims were viable. The parties and the Objectors then briefed the issue of the viability of the TILA and HOEPA claims within
this particular litigation. In July 2006, the parties amended the proposed settlement to address the Third Circuits concerns, and in October 2006, the trial court held that the purported TILA and HOEPA claims were not viable. In November 2006,
the parties filed a motion seeking preliminary approval of the settlement, as amended. In late March 2007, the parties and the Objectors attended a hearing before a court-appointed magistrate to present arguments pertaining to the fairness and
reasonableness of the proposed amended settlement. On July 5, 2007, the magistrate issued an advisory opinion ruling that the proposed modified settlement is fair, reasonable, and adequate. Following an October 9, 2007 hearing,
the trial court on January 25, 2008 entered an order: (1) certifying the nationwide settlement class; (2) preliminarily approving the modified settlement; and (3) ordering that the settling parties give notice of the modified
settlement to the settlement class, along with a new right of opt-out. Following the dissemination of new notice to the class, the court held a final fairness hearing on June 30, 2008 at which it heard all objections and took the question of
final approval of the settlement under advisement. The court entered its order granting final approval to the settlement on August 15, 2008. The objectors filed their notice of appeal with the Third Circuit on August 21, 2008. If the order
approving the settlement is vacated on appeal, our subsidiary intends to vigorously defend against these claims.

Murray.This
putative statewide class action was filed against our subsidiary in the United States District Court for the Northern District of Illinois in March 2005. Plaintiffs counsel alleged that our subsidiary, in sending a pre-approved
offer to the plaintiff, accessed the plaintiffs credit report without authorization from the plaintiff and without a permissible purpose under the Fair Credit Reporting Act (FCRA) since the material allegedly did
not qualify as a firm offer of credit. It also alleged that the material failed to make FCRA required notices and disclosures in a clear and conspicuous manner. Plaintiff sought statutory penalties for an allegedly willful
violation of the statute. Class certification was denied by the district court, but that decision was reversed on appeal and the matter remanded to the district court for further proceedings, including amended cross-motions for summary judgment as
well as a renewed motion for class certification. On April 10, 2007, the district court certified a narrow class limited to those residents of Will County, Illinois who received the mailer in question during the fall of 2004 and who could be
identified from any available mailing list. The district court also granted in part and denied in part each of the parties summary judgment motions, opining that the mailer in question did not constitute a firm offer of credit, entering
judgment in favor of our subsidiary on the clear and



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conspicuous disclosure issue, and finding a genuine issue of fact with respect to whether the alleged violation of FCRA could be said to be willful. On
June 5, 2007, our subsidiary filed a motion for reconsideration on the willfulness issue based upon the U.S. Supreme Court decision in Safeco Ins. Co., et al. v. Burr, et al. Upon reconsideration, on July 2, 2007, the district court
vacated its order certifying the class and granted our subsidiarys motion for summary judgment on the willfulness issue, entering judgment on behalf of our subsidiary. On April 18, 2008 the United States Court of Appeals for the Seventh
Circuit affirmed the district courts summary judgment for our subsidiary, holding in a non-published opinion that our subsidiary made a firm offer of credit and that any failure to make clear and conspicuous disclosures was not willful. On
April 23, 2008, plaintiff filed a motion to vacate the April 18, 2008 opinion, contending that our subsidiary reached an enforceable settlement agreement with the individual plaintiff prior to the date the April 18, 2008 opinion was
entered. That motion was denied. On June 18, 2008, plaintiff filed a contract action in state court seeking to enforce the alleged settlement agreement, which our subsidiary is opposing. After removing the case to federal court, our subsidiary
filed a motion to dismiss, which remains pending.

Mitchell.This putative class action lawsuit was filed against our subsidiary on
July 29, 2003 in state court in Kansas City, Missouri. Plaintiffs assert violations of the Missouri Second Mortgage Loan Act (SMLA), Mo.R.S. Section 408.233, based on the lenders charging or contracting for payment of
allegedly unlawful closing costs and fees. The relief sought includes a refund of all allegedly illegal fees, the refund of interest paid, and the discounted present value of interest to be paid in the future on active loans. The plaintiffs also
seek prejudgment interest and punitive damages.

Our subsidiary is an assignee. The plaintiffs contend that our subsidiary is strictly
liable for the lenders (Mortgage Capital Resources Corporation) alleged SMLA violations pursuant to the assignee provisions of HOEPA.

The Mitchell case involves approximately 258 Missouri second mortgage loans made by Mortgage Capital Resources Corporation and assigned to our subsidiary. The Plaintiffs and the class sought approximately $6.7 million in actual and
statutory damages plus prejudgment interest, attorneys fees and expenses. The plaintiffs counsel sought a contingent fee of approximately 40% plus litigation expenses. In addition plaintiffs will seek prejudgment interest and punitive
damages.

The parties participated in a mediation in August 2007 without success. Mortgage Capital Resources Corporation is currently in the
process of being liquidated in a Chapter 7 bankruptcy. Our subsidiary terminated its relationship with Mortgage Capital Resources Corporation in early May 2000. The case went to trial in state court in Kansas City, Missouri beginning on
December 3, 2007. On January 4, 2008, a jury verdict was returned that our subsidiary pay $4.3 million in compensatory damages and $92 million in punitive damages. On October 6, 2008, the Trial Court denied all post-trial motions
filed by defendants, including motions for new trial, judgment not withstanding the verdicts and remittitur, denied the defendants motion to set aside the judgment and to decertify the plaintiff class, and granted in part and denied in part
the plaintiffs to amend judgment and entered a judgment dated as of June 24, 2008. The trial court allocated the prejudgment interest and attorneys fees awards such that our subsidiary was assessed pre-judgment interest in the
amount of $642,066.00 and statutory attorneys fees in the amount of $2,680,001.09. In addition, on October 6, 2008, the trial court ordered the defendants to post supersedeas bonds in the total amount of $128,453,589.00, thereby denying
our subsidiarys motion insofar as it requested that the court apply the Missouri statutory appeals bond cap and further denying our subsidiarys motion insofar as it requested application of the limitation of damages set forth in HOEPA.

On October 14, 2008, our subsidiary filed its Notice of Appeal and an application with the Missouri Court of Appeals to limit the
amount of the appellate bond to fifty million dollars for all defendants, in accordance with the Missouri statutory appeals bond cap. The trial court reviewed the amount of the bond, as directed by the Court of Appeals, but refused to change the
amount. On November 3, 2008, our subsidiary posted the required appeals bond. Our subsidiary intends to continue to vigorously contest the punitive damage award through the appeals process.



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TBW.Taylor, Bean & Whitaker (TBW) filed suit in June 2005, alleging that our
subsidiary GMAC Mortgage, LLP (GMACM) failed to timely pay a holdback of $8.3 million of the purchase price for servicing rights under a 2002 purchase and sale agreement. GMACM filed a counterclaim contending that plaintiff
failed to perform the conditions precedent to payment of the holdback, including, among other things, failing to honor valid repurchase requests, entitling GMACM to set off against the holdback any and all amounts due it under the agreement or
otherwise. TBW has counterclaimed in return that, in addition to being denied the full amount of its purchase price, it was misled into making a number of erroneous repurchases, and also challenges GMACMs calculation of make-whole set offs
against the holdback as well as certain of GMACMs claims under a guarantee that further secured TBWs performance under the 2002 agreement. TBW seeks the full amount of the holdback, plus interest, attorneys fees, and consequential
damages for lost profits and/or lost business opportunities. An agreement in principle to settle for the return of a portion of the remaining holdback (after adjustment for amounts offset by GMACM and other amounts in lieu of interest and
attorneys fees) was reached on August 22, 2008. The settlement agreement and settlement consideration were exchanged on October 15, 2008.

Federal Trade Commission.The Federal Trade Commission has been conducting a review of certain business practices of one of our subsidiaries, including its servicing and lending operations. The FTC believes
there is statistical evidence that some of our subsidiarys lending practices may violate certain fair lending laws. On September 30, 2008, the FTC informed us by letter that they intend to recommend that the Commission commence an
enforcement action unless the matter is resolved through consent negotiations. We believe that we have conducted our business in compliance in all material respects with applicable fair lending laws. If the FTC is able to establish that a violation
of the fair lending laws has occurred, they may seek an injunction prohibiting future violations, require our subsidiary to change its lending practices or impose fines and other monetary penalties, which could be substantial.



|Item 1A. | Risk Factors.
|-------- | -------------

Other than with
respect to the risk factors below, there have been no material changes to the risk factors contained in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2007 and Item 1A of Part II of our quarterly
report on Form 10-Q for the quarterly period ended March 31, 2008.

Risks Related to Our Business

The occurrence of recent adverse developments in the mortgage finance and credit markets has adversely affected our business, our liquidity and our
capital position and has raised substantial doubt about our ability to continue as a going concern.

We have been negatively
impacted by the events and conditions in the broader mortgage banking industry, most severely but not limited to the nonprime and non-conforming mortgage loan markets. Fair market valuations of mortgage loans held for sale, mortgage servicing
rights, securitized interests that continue to be held by the Company and other assets and liabilities we record at fair value have significantly deteriorated due to weakening housing prices, increasing rates of delinquencies and defaults of
mortgage loans. These same deteriorating factors have also resulted in higher provision for loan losses on our mortgage loans held for investment and real estate lending portfolios. The market deterioration has resulted in rating agency downgrades
of asset-backed and mortgage-backed securities which in turn has led to fewer sources of, and significantly reduced levels of, liquidity available to finance our operations. Most recently, the widely publicized credit defaults and/or acquisitions of
large financial institutions in the marketplace has further restricted credit in the United States and international lending markets.

We
are highly leveraged relative to our cash flow and continue to recognize substantial losses resulting in a significant deterioration in capital. There continues to be a risk that we will not be able to meet our debt service obligations, default on
our financial debt covenants due to insufficient capital and/or be in a negative liquidity position in 2008. We remain heavily dependent on our parent and affiliates for funding and capital support, and there can be no assurance that our parent or
affiliates will continue such actions. If additional financing or capital



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were to be obtained from our parent, affiliates and/or third parties, the terms may contain covenants that restrict our freedom to operate our business.
Additionally, our ability to participate in any governmental investment program or the TARP, either directly or indirectly through our parent, is unknown at this time.

In light of our liquidity and capital needs, combined with volatile conditions in the marketplace, there is substantial doubt about our ability to continue as a going concern. If our parent no longer continues to
support our capital or liquidity needs, or we are unable to successfully execute our other initiatives, it would have a material adverse effect on our business, results of operations and financial position.

We remain heavily dependent on our parent and affiliates for funding and capital support, and there can be no assurance that our parent or
affiliates will continue such actions. There is a significant risk that if our parent no longer continues to support our capital or liquidity needs, it would have a material adverse effect on our business, results of operations and financial
position.

We remain heavily reliant on support from our parent and affiliates in meeting our liquidity and capital requirements.
This support has resulted in capital contributions and gains on extinguishment of debt through the forgiveness of our unsecured notes purchased by GMAC in an open market repurchase program as well as forgiveness of our secured debt with our parent.
Additionally, our parent and affiliates continue to provide multiple sources of secured funding and have completed asset sales with us that we are reliant upon to support our business. There is a significant risk that if our parent and/or affiliates
no longer continue to support our capital or liquidity needs, it would have a material adverse effect on our business, results of operations and financial position.

We have significant near-term liquidity issues. There is a significant risk that we will not be able to meet our debt service obligations and other funding obligations in the near-term.

We expect continued liquidity pressures for the remainder of 2008 and the early part of the 2009. We are highly leveraged relative to our cash flow. As of
September 30, 2008, our liquidity portfolio (cash readily available to cover operating demands from across our business operations and maturing obligations) totaled $0.7 billion. We have approximately $0.3 billion aggregate principal amount of
notes due in November 2008. Though in June we extended the maturities of most of our secured, short-term debt until April and May, 2009, we had approximately $3.7 billion of secured debt and approximately $0.3 billion of unsecured notes outstanding
as of September 30, 2008 maturing in 2008, excluding debt of GMAC Bank.

We expect that additional and continuing liquidity pressure,
which is difficult to forecast with precision, will result from the obligation of our subsidiaries to advance delinquent principal, interest, property taxes, casualty insurance premiums and certain other amounts with respect to mortgage loans we
service that become delinquent. Recent increases in delinquencies with respect to our servicing portfolio have increased the overall level of such advances, as well as extending the time over which we expect to recover such amounts under the terms
of our servicing contracts. We also must find alternate funding sources for assets that must periodically be withdrawn from some of our financing facilities as maximum funding periods for those assets expire. In addition, in connection with the
recent restructuring of our credit facilities, we became subject to requirements to maintain minimum consolidated tangible net worth and consolidated liquidity balances outside GMAC Bank in order to continue our access to those facilities. We will
attempt to meet these and other liquidity and capital demands through a combination of operating cash and additional asset sales. The sufficiency of these sources of additional liquidity cannot be assured, and any asset sales, even if they raise
sufficient cash to meet our liquidity needs, may result in losses that negatively affect our overall profitability and financial condition.

Moreover, even if we are successful in implementing all of the actions described above, our ability to satisfy our liquidity needs and comply with any covenants included in our debt agreements requiring maintenance of minimum cash balances
may be affected by additional factors and events (such as interest rate fluctuations and margin calls) that increase our cash needs making us unable to independently satisfy our near-term liquidity requirements.



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GMAC controls all fundamental matters affecting us, and its interests may differ from ours.

GMAC indirectly owns all of our outstanding membership interests and has the power to elect and remove all of our directors,
including the two independent directors who are required under an operating agreement to which we and GMAC are a party. The operating agreement may be amended by the parties thereto, except for amendments that materially and adversely affect the
rights of the holders of our outstanding notes, which require the approval of a majority of the independent directors. The operating agreement may be terminated by the parties thereto provided a majority of the independent directors approve the
termination. The operating agreement also terminates if we cease to be a direct or indirect subsidiary of GMAC.

GMACs interests may
differ from ours and, subject to the applicable provisions of the operating agreement; GMAC may cause us to take actions that are materially adverse to us.

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.

We require substantial capital to support our operations. Our primary sources of financing include our securitization activities,
whole-loan sales, secured aggregation facilities, repurchase agreements, public and private note issuances, deposits, bank credit facilities and borrowings under our recently closed credit facility with our parent. If we are unable to maintain
adequate financing or other sources of capital are not available, we could be forced to suspend, curtail or reduce our operations, which could harm our revenues, profitability, financial condition and business prospects.

Our liquidity has been significantly impaired, and may be further impaired, due to circumstances beyond our control, such as adverse changes in the
economy and general market conditions. Continued deterioration in our business performance could further limit, and recent reductions in our credit ratings have limited, our ability to access the capital markets on favorable terms. During recent
volatile times in the capital and secondary markets, especially since August 2007, access to aggregation and other forms of financing, as well as access to securitization and secondary markets for the sale of our loans, has been severely
constricted. Furthermore, our access to capital has been impacted by changes in the market value of our mortgage products and the willingness of market participants to provide liquidity for such products.

Our liquidity has also been adversely affected, and may be further adversely affected in the future, by margin calls under certain of our secured credit
facilities that are dependent in part on the lenders valuation of the collateral securing the financing. Each of these credit facilities allows the lender, to varying degrees, to revalue the collateral to values that the lender considers to
reflect market values. If a lender determines that the value of the collateral has decreased, it may initiate a margin call requiring us to post additional collateral to cover the decrease. When we are subject to such a margin call, we must provide
the lender with additional collateral or repay a portion of the outstanding borrowings with minimal notice. Any such margin call could harm our liquidity, results of operation, financial condition and business prospects. Additionally, in order to
obtain cash to satisfy a margin call, we may be required to liquidate assets at a disadvantageous time, which could cause us to incur further losses and adversely affect our results of operations and financial condition. Furthermore, continued
volatility in the capital markets has made determination of collateral values uncertain compared to our historical experience, and many of our lenders are taking a much more conservative approach to valuations. As a result, the frequency and
magnitude of margin calls has increased, and we expect both to remain high compared to historical experience for the foreseeable future.

Recent developments in the market for many types of mortgage products (including mortgage-backed securities) have resulted in reduced liquidity for these assets. Although this reduction in liquidity has been most acute with regard to
nonprime assets, there has been an overall reduction in liquidity across the credit spectrum of mortgage products. As a result, our liquidity has been and will continue to be negatively impacted by margin calls and changes to advance rates on our
secured facilities. One consequence of this funding reduction is that we may decide to retain interests in securitized mortgage pools that in other circumstances we would sell to investors, and we will have to secure additional financing for these
retained interests. If we are unable to secure sufficient financing for them, or if there is further general deterioration of liquidity for mortgage products, it will adversely impact our business.



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We have a significant amount of existing debt and may incur significant additional debt, including
secured debt, in the future, which could adversely affect our financial condition and our ability to react to changes in our business.

We have a significant amount of debt and may (subject to applicable restrictions in our debt instruments and market conditions) incur additional debt in the future.

Our significant amounts of debt could have other important consequences to you. For example, the debt will or could:



| |  |  | Require us to dedicate a significant portion of our cash flow from operating activities to payments on our and our subsidiaries debt, which will reduce our
funds available for working capital, capital expenditures and other general corporate expenses;
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| |  |  | limit our flexibility in planning for, or reacting to, changes in our business, the residential mortgage industry and the economy at large;
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| |  |  | place us at a disadvantage as compared to our competitors that have proportionately less debt or that are able to incur or refinance debt or more favorable terms;
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| |  |  | make us vulnerable to interest rate increases, because a portion of our borrowings are, and will continue to be, at variable rates of interest;
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| |  |  | expose us to increased interest expense as we refinance existing lower interest rate instruments;
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| |  |  | adversely affect our relationship with customers and suppliers; and
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| |  |  | make it more difficult for us to satisfy our obligations to the holders of our notes and for our subsidiaries to satisfy their guarantee obligations where
applicable.
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Given current conditions, we cannot assure you that we will possess sufficient cash flow and liquidity to
meet all of our long-term debt service requirements and other obligations. Our cash flow may be affected by a variety of factors, many of which are outside of our control, including regulatory issues, competition, financial markets and other general
business conditions.

Our current ratings could 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.

Each of Standard & Poors Rating
Services, Moodys Investors Service, Inc., Fitch, Inc. and Dominion Bond Rating Service rates our debt. During the third quarter of 2007, a rating downgrade occurred with respect to our senior unsecured notes resulting in an increase of 100
basis points to our cost of funds related to the corresponding unsecured notes. Our credit ratings were further downgraded on November 1, 2007 by various credit rating agencies, resulting in an additional increase of 50 basis points to our cost
of funds related the corresponding senior unsecured notes. A rating agency downgrade on February 22, 2008 resulted in an additional and final step-up of 50 basis points to our senior unsecured debt. There have been several additional rating
downgrades that have occurred from February 5, 2008 up until the filing date of this document, none of which resulted in a change to our cost of funds. All of these agencies currently maintain a negative outlook with respect to our ratings.
Ratings reflect the rating agencies opinions of our financial strength, operating performance, strategic position and ability to meet our obligations. Agency ratings are not a recommendation to buy, sell or hold any security, and may be
revised or withdrawn at any time by the issuing organization. Each agencys rating should be evaluated independently of any other agencys rating.

If our current ratings continue in effect or our ratings are further downgraded, it could increase the interest rate that we would have to pay to raise money in the capital markets, making it more expensive for us to
borrow money and adversely impacting our access to capital. As a result, our ratings could negatively impact our business, results of operations and financial condition.



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A significant portion of our operating cash from time to time may be derived from funds provided to
us as credit support by parties to various hedging arrangements. In the event interest rates change, we may be required to repay promptly all or a portion of such amounts.

We employ various economic hedging strategies to mitigate the interest rate and prepayment risk inherent in many of our assets, including our mortgage
loans held for sale portfolio, our mortgage servicing rights and our portfolio of mortgage loans held for investment and interests from securitizations At any time, a significant portion of our operating cash consists of funds delivered to us as
credit support by counterparties to these arrangements. Although we pay such parties interest on such funds and believe there are no restrictions on our ability to utilize these funds, in the event that interest rates rise, we could be required to
return promptly all or a portion of such funds and, if rates change dramatically, to deliver amounts in excess of such funds to such counterparties. If the amount we must repay or deliver is substantial, depending on our liquidity position at that
time, we may not be able to pay such amounts as required.

Current conditions in the residential mortgage market and housing markets
may continue to adversely affect our earnings and financial condition.

Recently, the residential mortgage market in the United
States, Europe and other international markets in which we conduct business has experienced a variety of difficulties and changed economic conditions that adversely affected our earnings and financial condition in full-year 2007 and in 2008 to date.
Delinquencies and losses with respect to our nonprime mortgage loans increased significantly and may continue to increase. Housing prices in many parts of the United States, the United Kingdom and other international markets have also declined or
stopped appreciating, after extended periods of significant appreciation. In addition, the liquidity provided to the mortgage sector has recently been significantly reduced. This liquidity reduction combined with our decision to reduce our exposure
to the nonprime mortgage market caused our nonprime mortgage production to decline, and such declines are expected to continue. Similar trends have emerged beyond the nonprime sector, especially at the lower end of the prime credit quality scale,
and have had a similar effect on our related liquidity needs and businesses in the United States, Europe and other international markets. These trends have resulted in significant writedowns to our mortgage loans held for sale and trading securities
portfolios and additions to our allowance for loan losses for our mortgage loans held for investment and warehouse lending receivables portfolios. A continuation of these conditions, which we anticipate in the near term, may continue to adversely
affect our financial condition and results of operations.

Moreover, the continued deterioration of the U.S. housing market and decline in
home prices in 2007 and 2008 to date in many U.S. and international markets, which we anticipate will continue for the near term, are likely to result in increased delinquencies or defaults on the mortgage assets we own and service. Further, loans
that were made based on limited credit or income documentation also increase the likelihood of future increases in delinquencies or defaults on mortgage loans. An increase in delinquencies or defaults will result in a higher level of credit losses
and credit-related expenses, as well as increased liquidity requirements to fund servicing advances, all of which in turn will reduce our revenues and profits. Higher credit losses and credit-related expenses also could adversely affect our
financial condition.

Our lending volume is generally related to the rate of growth in U.S. residential mortgage debt outstanding and the
size of the U.S. residential mortgage market. Recently, the rate of growth in total U.S. residential mortgage debt outstanding has slowed sharply in response to the reduced activity in the housing market and national declines in home prices. A
decline in the rate of growth in mortgage debt outstanding reduces the number of mortgage loans available for us to purchase or securitize, which in turn could lead to a reduction in our revenue, profits and business prospects.

Given the recent disruptions and changes in the mortgage market, we face the need to make significant changes in our business processes and activities. At
the same time, we are experiencing losses of staff resources at many levels, as a result of both attrition and our previously announced restructuring. The loss of staff beyond our control increases the difficulty we face in executing these adaptive
changes to our business, and those difficulties represent an additional risk to our business and operating results.



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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.

We are exposed to delinquencies and losses through our portfolio of interests from our securitization activities and mortgage loans held for sale and
investment. Delinquency rates have risen with the continued decline in the domestic housing market, especially with regard to the nonprime sector. As of September 30, 2008, the unpaid principal balance of nonprime mortgage loans were 34% of our
mortgage loans held for investment portfolio and 22% of our mortgage loans held for sale portfolio. As of June 30, 2008, the unpaid principal balance of nonprime mortgage loans were 36% and 20% of our respective loan portfolios.

Furthermore, the effects of ongoing adverse mortgage market conditions, combined with the ongoing correction in residential real estate market prices and
reduced home price levels, could result in further price reductions in single family home values, adversely affecting the value of collateral securing mortgage loans that we hold and potential gains on sale of mortgage loans. Declining real estate
prices and higher interest rates have caused higher delinquencies and losses on certain mortgage loans. We believe that these trends are likely to continue for the near term. These conditions have resulted in losses, write downs and impairment
charges in our mortgage, business lending and other lines of business. Continued declines in real estate values, home sales volumes and financial stress on borrowers as a result of job losses, interest rate resets on adjustable rate mortgage loans
or other factors could result in higher delinquencies and greater charge-offs in future periods, which adversely affect our revenues and profits.

Regardless of whether a mortgage loan is prime or nonprime, any delinquency interrupts the flow of projected interest income from a mortgage loan, and a default can ultimately lead to a loss if the net realizable value of the real property
securing the mortgage loan is insufficient to cover the principal and interest due on the loan. Also, our cost of financing and servicing a delinquent or defaulted loan is generally higher than for a performing loan, and delinquencies increase our
liquidity requirements because we are generally obligated to advance delinquent payments as part of our servicing activities. In addition, if we experience higher-than-expected levels of delinquencies or losses in pools of mortgage loans that we
service, we may lose our servicing rights, which would result in a loss of future servicing income and may damage our reputation as a loan servicer.

Another factor that may result in higher delinquency rates on mortgage loans we hold for sale and investment and on mortgage loans that underlie our interests from our securitizations is the scheduled increase in monthly payments on
adjustable rate mortgage loans. Borrowers with adjustable rate mortgage loans are being exposed to increased monthly payments when the related mortgage interest rate adjusts upward under the terms of the mortgage loan from the initial fixed rate or
a low introductory rate, as applicable, to the rate computed in accordance with the applicable index and margin. This increase in borrowers monthly payments, together with any increase in prevailing market interest rates, may result in
significantly increased monthly payments for borrowers with adjustable rate mortgage loans.

Borrowers seeking to avoid these increased
monthly payments by refinancing their mortgage loans may no longer be able to find available replacement loans at comparably low interest rates. A decline in housing prices may also leave borrowers with insufficient equity in their homes to permit
them to refinance. In addition, these mortgage loans may have prepayment premiums that inhibit refinancing. Furthermore, borrowers who intend to sell their homes on or before the expiration of the fixed rate periods on their mortgage loans may find
that they cannot sell their properties for an amount equal to or greater than the unpaid principal balance of their loans. These events, alone or in combination, may contribute to higher delinquency rates.

We establish an allowance for loan loss on mortgage loans held for investment based on our estimated inherent losses, and seek to manage these risks with
risk-based loan pricing and appropriate underwriting policies and loss mitigation strategies. Such policies may not be successful, however, and our profitability and financial condition could be adversely affected by a higher-than-expected level of
losses.



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Our earnings may decrease because of increases or decreases in interest rates.

Our profitability may be directly affected by changes in interest rates. The following are some of the risks we face relating to an increase 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.
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| |  |  | 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. As long as our access to the securitization market and our ability to execute whole loan sales remain constrained, the period during which we are exposed to these risks will be extended, and our earnings may decrease as a result.
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| |  |  | 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.
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| |  |  | 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.
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| |  |  | Rising interest rates could result in a significant margin call under our hedging arrangements, which would require us to provide the counterparty with additional
cash collateral.
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We are also subject to risks from decreasing interest rates. For example, a significant decrease in
interest rates could increase the rate at which loans are prepaid, which also could require us to write down the value of some of our interests. Moreover, if prepayments are greater than expected, the cash we receive over the life of our mortgage
loans held for investment and our interests would be reduced. Higher-than-expected prepayments could also reduce the value of our mortgage servicing rights and, to the extent the borrower does not refinance with us, the size of our servicing
portfolio. Therefore, any such changes in interest rates could harm our revenues, profitability, financial condition and business prospects.

We are exposed to capital markets risk related to changes in foreign exchange rates which may adversely affect our results of operations, financial condition or cash flows.

We are exposed to capital markets risk related to changes in foreign currency exchange rates. If significant strengthening or weakening of foreign
currencies against the U.S. dollar were to occur, individually or in tandem, it could have a material adverse effect on our consolidated results of operations, financial condition or cash flows.



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The functional currencies of the Companys principal subsidiaries, include the U.S. dollar, U.K.
sterling, the Euro and the Canadian dollar. Exchange rate fluctuations relative to the functional currencies may materially impact our financial position and results of operations. Many of our non-U.S. subsidiaries maintain both assets and
liabilities in currencies different to their functional currency, which exposes us to changes in currency exchange rates. In addition, locally-required capital levels are invested in local currencies in order to satisfy regulatory requirements and
to support local mortgage banking operations regardless of currency fluctuations. Foreign exchange rate risk is reviewed as part of our risk management process. While we utilize derivative instruments to, among other things, manage our foreign
currency exposure, our current credit ratings and deteriorating capital market conditions have eliminated or significantly reduced our counterparties willingness to enter into forward contracts with us, thus limiting our hedging alternatives
and increasing the cost of our risk management strategies. As such, it is possible that these instruments will not effectively mitigate all or a substantial portion of our foreign exchange rate risk.

Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates.

We employ various economic hedging strategies to mitigate the interest rate and prepayment risk inherent in many of our assets, including our mortgage
loans held for sale portfolio, our mortgage servicing rights and our portfolio of mortgage loans held for investment and interests from securitizations. We use various derivative and other financial instruments to provide a level of protection
against interest rate risks, but no hedging strategy can protect us completely. Our hedging activities may include entering into interest rate swaps, caps and floors, options to purchase these items, futures and forward contracts, and/or purchasing
or selling U.S. Treasury securities. Our hedging decisions in the future will be determined in light of the facts and circumstances existing at the time and may differ from our current hedging strategy. Any significant change in interest rates could
result in a significant margin call, which would require us to provide the counterparty with additional cash collateral. Any such margin call could harm our liquidity, profitability, financial condition and business prospects.

Recently, some counterparties have reduced or eliminated their hedging exposure to us, and in some cases are no longer willing to execute hedging
transactions with us. Moreover, our hedging strategies may not be effective in mitigating the risks related to changes in interest rates and could affect our profitability and financial condition, as could our failure to comply with hedge accounting
principles and interpretations. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Recently, we have incurred significant losses associated with our interest rate hedges, and it is likely that
there will be periods in the future, during which we incur losses after accounting for our hedging strategies. The success of our interest rate risk management strategy is largely dependent on our ability to predict the earnings sensitivity of our
loan servicing and loan production activities in various interest rate environments. Our hedging strategies also rely on assumptions and projections regarding our assets and general market factors. The significant and atypical volatility in the
current interest rate marketplace can negatively impact our hedging effectiveness. We are reliant on models and assumptions that rely on historical information and trends, such as prepayment speeds, that potentially are not as correlated with the
current marketplace. If these models, assumptions and projections prove to be incorrect or our hedges do not adequately mitigate the impact of changes in interest rates or prepayment speeds, we may incur losses that could adversely affect our
profitability and financial condition.

Recent negative developments in our mortgage markets have led us to reduce the number of
mortgage products we offer.

As a result of decreased liquidity for a number of mortgage products, including nonprime mortgage
products and many products offered through our international businesses, we no longer offer those products in the affected markets. In our domestic mortgage business, we have shifted the bulk of our loan production to prime mortgage products that
conform to the requirements of government-sponsored enterprises. In our international business, we generally restrict originations to those products and markets for which liquidity remains available, and we have suspended new loan originations in
the United Kingdom, Europe and Australia. The products that are currently relatively liquid are generally not as profitable as the broader range of products we have traditionally offered. In addition, in the U.S. and some other markets, a number of
competitors offer similar mortgage products, resulting



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in compression on interest margins and gains on sales. As a result, our operations will generally be less profitable than they would be if we were able to
offer a more diversified product line.

Our profitability and financial condition could be adversely affected if the assumptions
underlying our risk-based underwriting and pricing models prove to be incorrect.

Our loan underwriting process, including our
Assetwise Direct and other underwriting and pricing systems in each country and market in which we operate, depends heavily on risk-based pricing models. Because our risk-based pricing models are based primarily on standard industry loan loss data
supplemented by our historical loan loss data and proprietary systems, and because the models cannot predict the effect of financial market and other economic performance factors, our risk-based pricing models may not be a complete and accurate
reflection of the risks associated with our loan products. Certain of our loan products have proven to be more risky than our risk-based pricing models predicted, which contributed to write downs of our mortgage loans held for sale as well as our
retained interests from securitizations and negatively impacted our profitability and financial condition in 2007 and in 2008 to date. Unless this changes, our profitability and financial condition would continue to be adversely affected.

Changes in existing U.S. government-sponsored mortgage programs, or restrictions on our access to such 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.

Our ability to generate revenue through mortgage loan sales to institutional investors in the United States depends to a significant degree on programs administered by government-sponsored enterprises such as
Fannie Mae, Freddie Mac, Ginnie Mae and others that facilitate the issuance of mortgage-backed securities in the secondary market. These government-sponsored enterprises play a powerful role in the residential mortgage industry and we have
significant business relationships with them. Proposals have recently been enacted in Congress and are under consideration by various regulatory authorities that would affect the manner in which these government-sponsored enterprises conduct their
business, including establishing a new independent agency to regulate the government-sponsored enterprises, to require them to register their stock with the U.S. Securities and Exchange Commission to reduce or limit certain business benefits that
they receive from the U.S. government and to limit the size of the mortgage loan portfolios that they may hold. In addition, the government-sponsored enterprises themselves have been negatively affected by recent mortgage market conditions,
including conditions that have threatened their access to debt financing. Any discontinuation of, or significant reduction in, the operation of these government-sponsored enterprises could adversely affect our revenues and profitability. Also, any
significant adverse change in the level of activity in the secondary market, including declines in the institutional investors desire to invest in our mortgage products, could adversely affect our business.

We use three primary sales channels to sell our mortgage loans to the secondary market: whole-loan sales, sales to government-sponsored enterprises and
securitizations. A decrease in demand from whole-loan purchasers or the government-sponsored enterprises, or for the securities issued in our securitizations, could adversely affect our revenues and profitability.

Furthermore, in light of the decline in our consolidated tangible net worth, as defined, Fannie Mae has requested additional security for some of our
potential obligations under our agreements with them. We have reached an agreement in principle with Fannie Mae, under the terms of which we will provide them additional collateral valued at $200 million, and agree to sell and transfer the servicing
on mortgage loans having an unpaid principal balance of approximately $12.7 billion, or approximately 9% of the total principal balance of loans we service for them. Fannie Mae has indicated that in return for these actions, they will agree to
forbear, until January 31, 2009, from exercising contractual remedies otherwise available due to the decline in consolidated tangible net worth, as defined. Actions based on these remedies could have included, among other things, reducing our
ability to sell loans to them, reducing our capacity to service loans for them, or requiring us to transfer servicing of loans we service for them. Management believes that selling the servicing related to the loans described above will have an
incremental positive impact on our liquidity and overall cost of servicing, since we will no longer be required to advance delinquent payments on those loans. Meeting Fannie Maes



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collateral request will have a negative impact on our liquidity. If Fannie Mae deems our consolidated tangible net worth, as defined, to be inadequate
following the expiration of the forbearance period referred to above, and if Fannie Mae then determines to exercise their contractual remedies as described above, it would adversely affect our profitability and financial condition.

We may be required to repurchase mortgage loans or indemnify investors if we breach representations and warranties, which could harm our
profitability.

When we sell loans through whole-loan sales or securitizations, we are required to make customary representations
and warranties about the loans to the purchaser or securitization trust. Our whole-loan sale agreements generally require us to repurchase or substitute loans if we breach a representation or warranty given to the loan purchaser. In addition, we may
be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a mortgage loan shortly after its origination. Likewise, we are required to repurchase or substitute loans if we breach a representation or warranty in
connection with our securitizations. The remedies available to a purchaser of mortgage loans may be broader than those available to us against the originating broker or correspondent lender. Also, originating brokers and correspondent lenders often
lack sufficient capital to repurchase more than a limited number of such loans and numerous brokers and correspondents are no longer in business. If a purchaser enforces its remedies against us, we may not be able to enforce the remedies we have
against the seller of the mortgage loan to us or the borrower. Like others in our industry, we have experienced a material increase in repurchase requests. Significant repurchase activity could harm our profitability and financial condition.

General business and economic conditions may significantly and adversely affect our revenues, profitability and financial condition.

Our business and earnings are sensitive to general business and economic conditions in the United States and in the markets in
which we operate outside the United States. These conditions include short-term and long-term interest rates, inflation, fluctuations in the debt capital markets, and the strength of national and local economies. We have been negatively impacted due
to the significant stress in the residential real estate and related capital markets in 2007 and 2008, and, in particular, the lack of home price appreciation in many markets in which we lend. If the rate of inflation were to increase, or if the
debt capital markets or the economies of the United States or our markets outside the United States were to continue in their current condition or further weaken, or if home prices experience further declines, we could continue to be adversely
affected and it could become more expensive for us to conduct our business. For example, business and economic conditions that negatively impact household incomes or housing prices could continue in their current condition or further decrease the
demand for our mortgage loans and the value of the collateral underlying our portfolio of mortgage loans held for investment and interests that continue to be held by us , and further increase the number of consumers who become delinquent or default
on their mortgage loans. In addition, the rate of delinquencies, foreclosures and losses on our mortgage loans (especially our nonprime loans) as experienced recently could be higher during more severe economic slowdowns. Any sustained period of
increased delinquencies, foreclosures or losses could further harm our ability to sell our mortgage loans, the prices we receive for our mortgage loans or the value of our portfolio of mortgage loans held for investment or interests from our
securitizations, which could harm our revenues, profitability and financial condition. Continued adverse business and economic conditions could, and in the near term likely will, further impact demand for housing, the cost of construction and other
related factors that have harmed, and could continue to harm, the revenues and profitability of our business capital operations. For example, economic conditions that decrease demand for housing could adversely impact the success of a development
project to which we have provided capital, which could adversely affect our return on that capital.

In addition, our business and earnings
are significantly affected by the fiscal and monetary policies of the U.S. government and its agencies and similar governmental authorities outside the United States. We are particularly affected by the policies of the Federal Reserve, which
regulates the supply of money and credit in the United States. The Federal Reserves policies influence the size of the mortgage origination market, which



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significantly impacts the earnings of our U.S. residential real estate finance business, and, to the extent such policies affect the residential construction
and development market, impacts the earnings of our business capital activities. The Federal Reserves policies also influence the yield on our interest-earning assets and the cost of our interest-bearing liabilities. Changes in those policies
are beyond our control and difficult to predict, and could adversely affect our revenues, profitability and financial condition.

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.

In the United States and in several other countries in which we operate, we depend on mortgage brokers and
correspondent lenders for the origination and purchase of many of our mortgage loans. These mortgage brokers have relationships with multiple lenders and are not obligated to do business with us. We compete with these lenders for the brokers
business on pricing, service, fees, costs and other factors. Competition from other lenders and purchasers of mortgage loans could negatively affect the volume and pricing of our mortgage loans, which could harm our profitability.

In addition, significant consolidation has occurred in recent years in the U.S. residential mortgage loan origination market. Commercial banks and other
depository institutions have recently enjoyed a significant funding advantage compared to other mortgage lenders, and larger depository institutions have significantly increased their share of new mortgage loan originations. Continued consolidation
in the residential mortgage loan origination market may adversely impact our business in several respects, including increased pressure on pricing or a reduction in our sources of mortgage loan production if originators are purchased by our
competitors, any of which could adversely impact our profitability.

Our business outside the United States exposes us to additional
risks that may cause our revenues and profitability to decline.

We conduct a significant portion of our business outside the United
States. In 2008 to date, we derived approximately 61.5% of our net loss and 16.1% of our total assets from our businesses outside the United States. The risks associated with our operations outside the United States include:



| |  |  | country specific market conditions resulting in further asset valuation volatility and liquidity constraints;
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| |  |  | multiple foreign regulatory requirements that are subject to change;
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| |  |  | differing local product preferences and product requirements;
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| |  |  | fluctuations in foreign currency exchange rates and interest rates;
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| |  |  | difficulty in establishing, staffing and managing foreign operations;
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| |  |  | differing legal and regulatory requirements;
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| |  |  | potentially negative consequences from changes in tax laws; and
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| |  |  | political and economic instability.
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The effects of these risks may, individually or in the aggregate, adversely affect our revenues and profitability.

As a result of
significant restrictions on liquidity in the local mortgage markets for the United Kingdom, Spain, Germany and The Netherlands, we have recently suspended origination of new mortgage business in those markets, except for the fulfillment of existing
commitments. Though we continue to service and manage the existing loans and other assets related to these businesses, there can be no assurance that liquidity will return to these markets in the near future. Continued liquidity constraints in these
markets, which are expected to continue in the near term, are likely to affect negatively our revenues, profits and business prospects, as well as imposing additional demands on our overall liquidity and funding needs.



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Our business capital activities expose us to additional risks that may adversely affect our
revenues and profitability.

We finance residential and resort development and construction projects, provide sale-leasebacks of
model homes to homebuilders and grant lot options to homebuilders. We also make equity investments in residential development and construction projects as well as entities that conduct those projects and extend secured and unsecured working capital
loans to certain customers. Our investments in and financings of these projects and entities involve significant risks because, among other things, the projects are not complete at the time of the investment or financing. The performance of our
investment or repayment of our financing is ultimately dependent on the success of the project. In addition, we have binding legal commitments to lend to fund the construction of certain projects, even though these projects may be negatively
affected by current adverse market trends. With regard to investments in residential developers, builders and similar entities and unsecured working capital loans made to them, the success or failure of an investment or loan is dependent on the
financial performance of the entity. If any entity in which we invest or to which we have extended unsecured credit fails, we could lose all or part of our investment or loan in that entity.

We have recently disposed of certain investments resulting from our business capital activities, in many cases at then-current market values that
represented a significant loss. Furthermore, in the future we may not be able to dispose of our remaining investments on favorable terms or at all, particularly our investments in non-marketable equity securities of a private company or otherwise
illiquid assets. To complete future asset sales, we may need to complete construction of a model home or construction project, complete site preparation work and remove tax and mechanics liens in order to sell a property related to a contract in
which the related builder has defaulted or related to a lot option that has terminated. In addition, we may incur additional costs pending sale, such as property taxes, homeowners association dues, maintenance costs, insurance costs and legal
fees.

With regard to development and construction projects, the success or failure of any such project is dependent on a variety of
factors, including:



| |  |  | 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

Loans to, and investments in, these projects are considered more risky than residential mortgage loans, in part because development and construction costs
are inherently difficult to determine at the commencement of a project, the loans or investments are typically larger, the construction may not be completed timely, if at all, and the underlying collateral may be less marketable. In addition, some
of our loans are secured by a pledge of the equity interests in the related developer and are subordinate to more senior loans secured by a mortgage or the project. Our equity investments in these projects, if applicable, are subordinate to all debt
financings to the projects. If we have made both a loan and an equity investment in a construction project, there is a risk that our loan could be further subordinated by a court and deemed to be part of our equity investment. We have established an
allowance for loan losses in our financial statements intended to cover our exposure to loans on these projects. However, losses may exceed our allowance, which could adversely affect our profitability and financial condition.

The value of our investment in, or mortgage on, model homes leased to builders, and in lots under option to builders have been and may be further impaired
at any time if builders exercise their option to terminate their leases, or terminate their purchase options, or we terminate a model home base or lot option due to a builder



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default. Impairments on model leases and lots under options have been and may also be further taken even though the builder has not terminated. During the
period ended September 30, 2008, these terminations have continued to occur, and may continue to occur in the future, when the value of the related assets has fallen from the values attributed to those assets at the commencement of the
transaction with the builder or the builder has elected to terminate the related project or suffered financial distress.

A
significant portion of our business is in the States of California and Florida, and our business may be significantly harmed by a slowdown in the economy or the occurrence of a natural disaster in California or Florida.

A significant portion of the mortgage loans we originate, purchase and service are secured by properties in California and Florida. A significant portion
of our warehouse lending and business capital activities are also concentrated in California and Florida.

A continuation of current adverse
conditions or a further decline in the economy or the residential real estate market in California or Florida, or the occurrence of a natural disaster such as an earthquake, tropical storm or wildfire, could decrease the value of mortgaged
properties in California or Florida. This, in turn, would increase the risk of delinquency, default or foreclosure on our mortgage loans held for investment or with respect to which we are exposed to the credit risk. The occurrence of any of these
events could restrict our ability to originate, sell or securitize mortgage loans, impact the repayment of advances under our warehouse loans and adversely affect our business, profitability and financial condition.

A decline in the economy or the residential real estate market in California or Florida, or the occurrence of a natural disaster, could also undermine the
demand for the construction of new homes, undermine the development of residential real estate or delay the completion or sale of residential construction and development projects. The occurrence of any of these events could adversely affect our
business capital activities.

If GMAC were 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.

If GMAC were to become the
subject of a bankruptcy proceeding, the bankruptcy court could disregard the separate legal existence of ResCap and substantively consolidate us with GMAC. If this were to occur, our assets and the assets of GMAC would be subject to the
claims of creditors of all entities so consolidated.

We have executed an operating agreement that is intended to create some separation
between GMAC, on the one hand, and us, on the other. Although we believe that we would not be consolidated with GMAC in a bankruptcy of GMAC, it is a question that would be determined by the bankruptcy court in light of the circumstances existing at
the time of determination. As a result, we cannot state with certainty that we would not be substantively consolidated with GMAC in a bankruptcy proceeding.

The profitability and financial condition of our parent, and indirectly our business, are dependent upon the on-going operations of General Motors Corporation.

Our parent has substantial credit exposure to GM. In addition, a significant portion of our parents customers are those of GM, GM dealers, and
GM-related employees. As a result, various aspects of GMs business, including changes in the production or sale of GM vehicles, the quality or resale value of GM vehicles, the use of GM marketing incentives, GMs relationships with its
key suppliers, the United Auto Workers and other labor unions, and other factors impacting GM or its employees could significantly affect our parents profitability and financial condition.

Historically, GM has made all payments related to these programs and arrangements on a timely basis. However, if GM is unable to pay, fails to pay, or is
delayed in paying these amounts, our parents profitability, financial condition, and cash flow could be adversely affected. Furthermore, if GM were to discontinue or substantially downsize its operations and/or fail to continue as a going
concern entity, our parents customer base, operations and financial condition would be adversely affected.



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Legal and Regulatory Risks Related to Our Business

Our business, financial condition and results of operations could be adversely affected by new regulations to which we may become subject as a
result of our parent becoming a bank holding company, by new regulations or by changes in other regulations or the application thereof.

Our parent is currently in discussions with the Federal Reserve regarding becoming a bank holding company under the U.S. Bank Holding Company Act of 1956. Any application may not ultimately be approved. If GMAC submits a formal application
and it is approved, we expect to be able to continue to engage in most of the activities in which we currently engage. However, it is possible that certain of our existing activities will not be deemed to be permissible under applicable regulations
if GMACs application is successful. In addition, if GMAC successfully converts into a bank holding company, we will be subject to our parents comprehensive, consolidated supervision of the Federal Reserve, including risk-based and
leverage capital requirements and information reporting requirements. This regulatory oversight is established to protect depositors, federal deposit insurance funds, and the banking system as a whole, not security holders.

The financial services industry, in general, is heavily regulated. Proposals for legislation further regulating the financial services industry are
continually being introduced in the United States Congress and in state legislatures. The agencies regulating the financial services industry also periodically adopt changes to their regulations. In light of current conditions in the U.S. financial
markets and economy, regulators have increased their focus on the regulation of the financial services industry. For instance, in October 2008, Congress passed the Emergency Economic Stabilization Act of 2008, which in turn created the TARP and the
CPP. We are unable to predict how these programs will be implemented or in what form or whether any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such
action could affect us in substantial and unpredictable ways and could have an adverse effect on our business, financial condition and results of operations.

We are also affected by the policies adopted by regulatory authorities and bodies of the United States and other governments. For example, the actions of the Federal Reserve and international central banking
authorities directly impact our cost of funds for lending, capital raising, and investment activities and may impact the value of financial instruments we hold. In addition, such changes in monetary policy may affect the credit quality of our
customers. Changes in domestic and international monetary policy are beyond our control and difficult to predict.

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.

Because we are authorized to originate, purchase and service mortgage loans in all 50
states, we must comply with the laws and regulations, as well as judicial and administrative decisions, for all of these jurisdictions, in addition to an extensive body of federal law and regulations. These laws and regulations cover a wide range of
topics such as licensing; allowable fees and loan terms; permissible servicing and debt collection practices; and protection of confidential, nonpublic consumer information (privacy). We similarly face an extensive body of law and regulations in the
countries in which we operate outside the United States. The volume of new or modified laws and regulations has increased in recent years, and individual cities and counties in the United States continue to enact laws that either restrict or impose
additional obligations in connection with certain loan origination, acquisition and servicing activities in those cities and counties. The laws and regulations are complex and vary greatly among the states as well as within and outside the United
States. In some cases, these laws are in direct conflict with each other. In addition, these laws and regulations often contain vague standards or requirements, which make compliance efforts challenging. As our operations continue to grow, it may be
more difficult to comprehensively identify and accurately interpret all of these laws and regulations, properly program our technology systems and effectively train our staff. Any failure to do so will potentially increase our exposure to the risks
of noncompliance with these laws and regulations.



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Our failure to comply with these laws can lead to:



| |  |  | 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 (including consumer refunds) and litigation, including class action lawsuits;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | governmental investigations and enforcement actions; and
| | - |  | --------------------------------------------------------



| |  |  | claims that an allegedly non-compliant loan is rescindable or unenforceable.
| | - |  | ----------------------------------------------------------------------------

In addition, allegations of our failure to comply with these laws could damage our reputation. We are currently the subject of numerous class action
lawsuits relating to alleged violations of various laws and regulations as well as some governmental investigations relating to certain of our business practices. An adverse result in one or more of these legal proceedings and investigations could
harm our results of operations, financial condition, reputation and business prospects. See Legal Proceedings for more information.

New and proposed legislation and court rulings with respect to so-called predatory lending practices and other lending practices could restrict our ability to produce mortgage loans or service, which could harm our revenues and
profitability.

Several states and cities in the United States are considering or have enacted laws, regulations or ordinances aimed
at curbing so-called predatory lending practices. Congress and the federal bank regulatory agencies have also been active in this area and one agency has recently adopted expanded regulatory requirements. In many cases, these proposals involve
lowering the fee and interest rate thresholds for certain loans. If a loans rate or fees exceeds these thresholds, it is deemed a high cost loan and is subject to numerous substantive and disclosure requirements not
applicable to other loans. In addition, some of these laws and regulations impose extensive assignee liability on whole loan buyers and securitization trusts for legal violations of the originating lender. Because of the enhanced legal and
reputation risk, many investors will not purchase any loan considered high cost under any local, state or federal law or regulation. The rating agencies have also taken adverse action with respect to securitizations that include these
high-cost loans. Accordingly, these laws and rules could severely constrict the secondary market for a portion of our loan production and effectively preclude us from continuing to originate or purchase loans that fit within the newly
defined thresholds. For example, after the Georgia Fair Lending Act became effective in 2002, many lenders and secondary market buyers refused to finance or purchase Georgia mortgage loans and rating agencies refused to provide ratings for
securitizations including such loans. As a result, we substantially reduced our mortgage loan production in Georgia until the law was amended a few months later. Moreover, some of our competitors that are national banks or federally chartered
thrifts may not be subject to these laws and may, therefore, be able to capture market share from us and other lenders. We may not be able to similarly benefit from this federal preemption because our affiliate, GMAC Bank, is licensed as an
industrial bank pursuant to the laws of Utah. In addition, in response to the current high level of mortgage foreclosures existing in the United States, several states and cities are considering or have enacted laws, regulations or ordinances aimed
at further regulating and in some cases restricting the ability of mortgage lenders and servicers to foreclose upon the real estate collateral securing the mortgage loan. The U.S. government is also considering legislative and regulatory proposals
in this regard. Such new requirements may delay, restrict or increase the expense of foreclosing delinquent mortgage loans that we service. Continued enactment of such requirements could increase our compliance costs, reduce our fee income and
inhibit our ability to realize upon collateral securing loans we own, all of which could harm our revenues, profitability and financial condition.



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Other state laws either passed or under consideration impose significant new requirements on loans that
are not considered high cost loans. While these requirements typically do not impose liability on assignees of mortgage loans such as loan buyers and securitization trusts, they impose new requirements related to the underwriting of
mortgage loans. For example, several states have passed laws imposing requiring a lender to take specific steps to determine whether the borrower has the ability to repay the loan, including verification of income and employment. Other states have
imposed so-called anti-flipping provisions that prohibit some or all refinancings that do not result in a reasonable tangible net benefit to the consumer. Many of these requirements and restrictions are vague or ambiguous,
making it more difficult to comply and potentially increasing our exposure to litigation.

On February 25, 2008, a Superior Court judge
in Massachusetts issued a preliminary injunction barring Fremont Investment & Loan from foreclosing  without prior consent of the Attorney General and/or the Court  certain sub-prime loans that it originated between 2004
and 2007. These loans have characteristics that were once standard and permissible in the industry, but are now presumptively unfair under Massachusetts consumer protection statute. The Court acknowledged that the loans did not violate any
federal or state law at the time they were originated. However, the Court concluded that, even though the loans were not high cost mortgage loans governed by the Massachusetts Predatory Home Loan Practices Act (the Act), it
is reasonable for the Court to consider whether the loans at issue fall within the penumbra of the concept of unfairness reflected in the Act. The four characteristics that render the Fremont loans presumptively unfair are: (1) the
loans were adjustable rate loans with an introductory period of three years or less (generally, a 2/28 or 3/27 ARM); (2) the loans have an introductory or teaser rate for the initial period that was significantly lower than the
fully indexed rate, that is, at least 3 percent below the fully indexed rate; (3) the borrowers have a debt-to-income ratio that would have exceeded 50 percent had Fremonts underwriters measured the debt, not by
the debt due under the teaser rate, but by the debt that would be due at the fully indexed rate, and (4) the LTV is 100% or the loans carry a substantial prepayment penalty, or the prepayment penalty extends beyond the introductory
period. Subsequent to the ruling, Massachusetts Attorney General Martha Oakley announced that Fremont will not be allowed to sell the servicing rights of covered mortgage loans unless that buyer is willing to agree, in writing, to adhere to the same
preliminary injunction agreement that Fremont submitted to. On May 2, 2008, the Massachusetts Intermediate Appeals Court upheld the trial courts preliminary injunction. The appeal was heard by an individual justice of the appellate court
rather than a panel. Fremont has requested that their case be heard by a three judge panel of the Massachusetts intermediate appellate court. If the decision by the Appeals Court is not overturned by a three judge panel, it could have far reaching
effects on other lenders seeking for foreclose on sub-prime loans in Massachusetts. It may also influence how other courts, states attorneys general and other federal and state lending regulators view the fairness of similar sub-prime mortgage
loans. Attorneys General in other states may attempt to obtain a similar injunction barring foreclosure of loans that meet certain criteria.

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.

The independent third party mortgage brokers and lenders through which we obtain mortgage loans are subject to parallel and separate legal obligations.
While these laws may not explicitly hold us responsible for the legal violations of these third parties, federal and state agencies and private litigants have increasingly sought to impose such liability. Recently, for example, the Federal Trade
Commission settled an enforcement action against a mortgage lender based upon a brokers unfair and deceptive acts and practices. The agency alleged that the relationship between the lender and the broker, which placed virtually all of its loan
production with that lender, was that of principal and agent, thereby making the lender liable for the brokers actions. The U.S. Department of Justice in the past has also sought to hold a nonprime mortgage lender responsible for the pricing
practices of its mortgage brokers, alleging that the mortgage lender was directly responsible for the total fees and charges paid by the borrower under the Fair Housing Act even though the lender neither dictated what the mortgage broker could
charge nor kept the money for its own account. In addition, various regulators and plaintiffs lawyers have sought to hold assignees of mortgage loans liable for the alleged violations of the originating lender under theories of express or
implied assignee liability. Accordingly, we may be subject to fines, penalties or civil liability based upon the conduct of our independent mortgage brokers or originating lenders.



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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.

The value of a
mortgage loan depends, in part, upon the expected period of time that the mortgage loan will be outstanding. If a borrower prepays a mortgage loan, the holder of the mortgage loan does not realize the full value expected to be received from the
loan. A prepayment penalty payable by a borrower who repays a loan earlier than expected helps offset the reduction in value resulting from the early payoff. Consequently, the value of a mortgage loan is enhanced to the extent the loan includes a
prepayment penalty, and a mortgage lender can offer a lower interest rate and/or lower loan fees on a loan that has a prepayment penalty. Prepayment penalties are an important feature used to obtain value on the loans we originate.

Some state laws restrict or prohibit prepayment penalties on mortgage loans. Until July 2003, our state-regulated mortgage lending entities were able to
rely on the Alternative Mortgage Transactions Parity Act and related rules issued by the Office of Thrift Supervision (OTS), to lend without regard to most such restrictions. This ability had been enjoyed by national banks and federal savings banks,
and was extended by the Act to include loans made by state-chartered banks and mortgage lenders. However, in September 2002 the OTS released a new rule that significantly reduced the scope of the Act, eliminating our ability to rely on the
Acts preemptive effect on state prepayment penalty restrictions. This may place us at a competitive disadvantage relative to financial institutions that will continue to enjoy federal preemption of such state restrictions. Such institutions
are able to charge prepayment penalties without regard to state restrictions and, as a result, may be able to offer loans with interest rate and loan fee structures that are more attractive than the interest rate and loan fee structures that we are
able to offer. This competitive disadvantage could harm our profitability and business prospects.

GMAC and certain of our owners are
subject to regulatory agreements that may affect our control of GMAC Bank.

As previously disclosed, on February 1, 2008,
Cerberus FIM, LLC; Cerberus FIM Investors, LLC; and FIM Holdings LLC (collectively, the FIM Entities), submitted a letter to the Federal Deposit Insurance Corporation (FDIC) requesting that the FDIC waive certain of the requirements contained in a
two-year disposition agreement among each of the FIM Entities and the FDIC that was entered into in connection with the sale by General Motors Corporation of 51% of the equity interests in GMAC (the Sale Transaction). The Sale Transaction resulted
in a change of control of GMAC Bank, an industrial bank, which required the approval of the FDIC. Prior to the Sale Transaction, the FDIC had imposed a moratorium on the approval of any applications for change in bank control notices submitted to
the FDIC with respect to any industrial bank. As a condition to granting the application in connection with the change of control of GMAC Bank during the moratorium, the FDIC required each of the FIM Entities to enter into a two-year disposition
agreement. That agreement required, among other things, that by no later than November 30, 2008, the FIM Entities complete one of the following actions: (1) become registered with the appropriate federal banking agency as a depository
institution holding company pursuant to the Bank Holding Company Act or the Home Owners Loan Act, (2) divest control of GMAC Bank to one or more persons or entities other than prohibited transferees, (3) terminate GMAC Banks
status as an FDIC-insured depository institution, or (4) obtain from the FDIC a waiver of the requirements set forth in this sentence on the ground that applicable law and FDIC policy permit similarly situated companies to acquire control of
FDIC-insured industrial banks. On July 15, 2008, the FDIC determined to address the FIM Entities waiver request through execution of a 10-year extension of the existing two-year disposition requirement. Pursuant to the extension, the FIM
Entities have until November 30, 2018, to complete one of the four actions enumerated above. Certain agreements, which GMAC, GMAC Bank, and the FIM Entities entered into with the FDIC as a condition to the FDIC granting the 10-year extension,
require, among other things, both GMAC and GMAC Bank to maintain specified capital levels. In the event required levels are not maintained or other provisions of the agreements are breached, the FDIC could exercise its discretionary powers and seek
to take actions in response. Such actions could include termination or modification of the 10-year extension.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

Omitted.



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|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

Omitted.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

Omitted.



|Item 5. | Other Information.
|------- | ------------------

None.



|Item 6. | Exhibits.
|------- | ---------

Exhibits  The
exhibits listed on the accompanying Index of Exhibits are filed or incorporated by reference as a part of this report. Such Index is incorporated herein by reference.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, this 25(th) day of August, 2009.



Residential Capital, LLC(Registrant)/S/    JAMES N.
YOUNGJames N. YoungChief Financial Officer/S/    CATHERINE M.
DONDZILACatherine M. DondzilaChief Accounting Officer and Controller




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INDEX OF EXHIBITS



|        |  |                                                                                                                                                                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                              
|        | 
|10.1*   |  | Asset Purchase Agreement among Residential Funding Company, LLC, GMAC Residential of Canada Limited and GMAC Commercial Finance LLC dated July 2, 2008                   
|        | 
|10.2*   |  | Purchase Agreement among GMAC Mortgage, LLC and Cerberus International, Ltd. dated July 30, 2008 (Freddie Mac Stripped Interest Certificates, Series 256).               
|        | 
|10.3*   |  | Purchase Agreement among GMAC Mortgage, LLC and Cerberus Partners, L.P. dated July 30, 2008 (Freddie Mac Stripped Interest Certificates, Series 256).                    
|        | 
|10.4*   |  | Purchase Agreement among Residential Capital, LLC, DOA Holding Properties, LLC, DOA Properties IIIB (KB Models), LLC and MHPool Holdings LLC dated September 30, 2008    
|        | 
|10.5*   |  | Servicing Agreement between Residential Capital, LLC and MHPool Holdings LLC datedSeptember 30, 2008                                                                     
|        | 
|10.6*   |  | Limited Assignment and Assumption Agreement among KBOne, LLC, DOA Holdings NoteCo, LLC, Residential Funding Company, LLC and MHPool Holdings LLC dated September 30, 2008
|        | 
|10.7*   |  | First Amendment Agreement dated as of July 29, 2008 to Loan Agreement dated June 4, 2008                                                                                 
|        | 
|10.8*   |  | Second Amendment Agreement dated as of August 14, 2008 to Loan Agreement dated June 4, 2008                                                                              
|        | 
|10.9*   |  | Master Agreement between GMAC LLC and Residential Capital, LLC dated August 14, 2008                                                                                     
|        | 
|10.10*  |  | Schedule to the Master Agreement dated August 14, 2008                                                                                                                   
|        | 
|10.11*  |  | First Amendment to First Priority Pledge and Security Agreement and Irrevocable Proxy dated August 14, 2008                                                              
|        | 
|10.12*  |  | Hedge Pledge and Security Agreement and Irrevocable Proxy dated August 14, 2008                                                                                          
|        | 
|10.13*  |  | Amendment No. 4 dated as of July 25, 2008 to the Loan and Security Agreement dated April 18, 2008                                                                        
|        | 
|10.14*  |  | Waiver Letter dated July 29, 2008                                                                                                                                        
|        | 
|10.15*  |  | Joinder Agreement dated June 9, 2008                                                                                                                                     
|        | 
|10.16*  |  | Joinder Agreement dated August 6, 2008                                                                                                                                   
|        | 
|10.17*  |  | Joinder Agreement dated August 15, 2008                                                                                                                                  
|        | 
|10.18*  |  | Joinder Agreement dated September 16, 2008                                                                                                                               
|        | 
|10.19*  |  | Second Priority Joinder Agreement dated September 22, 2008                                                                                                               
|        | 
|10.20*  |  | Third Priority Joinder Agreement dated September 22, 2008                                                                                                                
|        | 
|12.1*   |  | Computation of ratio of earnings to fixed charges                                                                                                                        
|        | 
|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 shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

|     |  |                                                                                                                
|---- |  | ---------------------------------------------------------------------------------------------------------------
|     | 
|32** |  | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350



|* | Previously filed with the Original Filing
|- | -----------------------------------------

|** | Filed herewith
|-- | --------------



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