##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549-1004


FORM 10-Q


|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
| 
|  |  | For the quarterly period ended June 30, 2007, or                                            
| 
|o |  | 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.)

8400 Normandale Lake Boulevard


Minneapolis, MN


55437


(Address of principal executive offices)


(Zip Code)


(952) 857-8700


(Registrants telephone number, including area code)


þ o


12b-2


o o þ


o þ




Reduced Disclosure Format












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##### 










RESIDENTIAL CAPITAL, LLC


INDEX


|                                                  |  |                                                                                                               |    |      |    | 
|------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                  |  |                                                                                                               |    | Page |   
|                                                  |  |                                                                                                               |    |      |   
|Part I  Financial
    Information                |  |                                                                                                               |    |     
|Item 1.                                           |  | Financial Statements (unaudited)                                                                              |    |      |    | 
|                                                  |  | Condensed Consolidated Balance Sheet as of
    June 30, 2007 and December 31, 2006                            |    |      | 3  | 
|                                                  |  | Condensed Consolidated Statement of Income
    for the Three and Six Months Ended June 30, 2007 and
    2006  |    |      | 4  | 
|                                                  |  | Condensed Consolidated Statement of Changes
    in Equity for the Six Months Ended June 30, 2007 and
    2006 |    |      | 5  | 
|                                                  |  | Condensed Consolidated Statement of Cash
    Flows for the Six Months Ended June 30, 2007 and 2006            |    |      | 6  | 
|                                                  |  | Notes to Condensed Consolidated Financial
    Statements                                                      |    |      | 8  | 
|Item 2.                                           |  | Managements Discussion and Analysis
    of Financial Condition and Results of
    Operations                 |    |      | 29 | 
|Item 3.                                           |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                |    |      | 49 | 
|Item 4.                                           |  | Controls and Procedures                                                                                       |    |      | 51 | 
|Part II  Other
    Information                   |  |                                                                                                               |    |     
|Item 1.                                           |  | Legal Proceedings                                                                                             |    |      | 53 | 
|Item 1A.                                          |  | Risk Factors                                                                                                  |    |      | 54 | 
|Item 2.                                           |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                               |    |      | 58 | 
|Item 3.                                           |  | Defaults Upon Senior Securities                                                                               |    |      | 58 | 
|Item 4.                                           |  | Submission of Matters to a Vote of Security
    Holders                                                       |    |      | 58 | 
|Item 5.                                           |  | Other Information                                                                                             |    |      | 58 | 
|Item 6.                                           |  | Exhibits                                                                                                      |    |      | 58 | 
|Signatures                                        |  |                                                                                                               | 59 |     
|Index of Exhibits                                 |  |                                                                                                               | 60 |     
|Computation of Ratio of Earnings to Fixed Charges
|Certification of Principal Executive Officer     
|Certification of Principal Financial Officer     
|Section 1350 Certifications                      







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##### Table of Contents






PART I  FINANCIAL INFORMATION





Item 1.  Financial Statements.


RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED BALANCE SHEET


June 30, 2007 and December 31, 2006


|                                                |                                                    |                        |             |            |              |   |             |            |             | 
|----------------------------------------------- | -------------------------------------------------- | ---------------------- | ----------- | ---------- | ------------ | - | ----------- | ---------- | ----------- | 
|                                                |                                                    | June 30,               |             |            | December 31, |  
|                                                |                                                    | 2007                   |             |            | 2006         |  
|                                                |                                                    |                        |             |            |              |  
|                                                |                                                    | (Unaudited)            |             |            |             
|                                                |                                                    | (Dollars in thousands) |            
|ASSETS                                         
|Cash and cash equivalents                       |                                                    | $                      | 3,714,646   |            |              | $ | 2,018,847   |           
|Mortgage loans held for sale                    |                                                    |                        | 19,333,920  |            |              |   | 27,007,382  |           
|Trading securities                              |                                                    |                        | 5,510,621   |            |              |   | 4,562,073   |           
|Mortgage loans held for investment, net         |                                                    |                        | 60,969,454  |            |              |   | 67,927,951  |           
|Lending receivables, net                        |                                                    |                        | 10,810,071  |            |              |   | 14,530,104  |           
|Mortgage servicing rights                       |                                                    |                        | 6,040,774   |            |              |   | 4,930,061   |           
|Accounts receivable                             |                                                    |                        | 2,523,666   |            |              |   | 2,561,200   |           
|Investments in real estate and other            |                                                    |                        | 2,369,639   |            |              |   | 2,622,149   |           
|Goodwill                                        |                                                    |                        | 474,128     |            |              |   | 471,463     |           
|Other assets                                    |                                                    |                        | 10,098,999  |            |              |   | 8,955,589   |           
|                                                |                                                    |                        |             |            |              |  
|Total assets                                    |                                                    | $                      | 121,845,918 |            |              | $ | 135,586,819 |           
|                                                |                                                    |                        |             |            |              |  
|                                               
|LIABILITIES                                    
|Borrowings:                                     |                                                    |                        |             |            |              |   |             |           
|                                                | Collateralized borrowings in securitization trusts |                        | $           | 45,122,216 |              |   | $           | 53,299,518 |            
|                                                | Other borrowings                                   |                        |             | 52,987,276 |              |   |             | 59,880,378 |            
|                                                |                                                    |                        |             |            |              |  
|                                                |                                                    | Total borrowings       |             |            | 98,109,492   |   |             |            | 113,179,896 | 
|Deposit liabilities                             |                                                    |                        | 10,652,603  |            |              |   | 9,851,026   |           
|Other liabilities                               |                                                    |                        | 4,806,427   |            |              |   | 4,374,006   |           
|                                                |                                                    |                        |             |            |              |  
|Total liabilities                               |                                                    |                        | 113,568,522 |            |              |   | 127,404,928 |           
|Minority interest                               |                                                    |                        | 769,991     |            |              |   | 559,778     |           
|EQUITY                                         
|Members interest                               |                                                    |                        | 4,837,943   |            |              |   | 3,837,943   |           
|Retained earnings                               |                                                    |                        | 2,487,110   |            |              |   | 3,651,935   |           
|Accumulated other comprehensive income          |                                                    |                        | 182,352     |            |              |   | 132,235     |           
|                                                |                                                    |                        |             |            |              |  
|Total equity                                    |                                                    |                        | 7,507,405   |            |              |   | 7,622,113   |           
|                                                |                                                    |                        |             |            |              |  
|Total liabilities, minority interest and equity |                                                    | $                      | 121,845,918 |            |              | $ | 135,586,819 |           
|                                                |                                                    |                        |             |            |              |  



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##### Table of Contents



RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED STATEMENT OF INCOME


|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |   |  |   |           |  
|------------------------------------------------------------- |  | ---------------------- | --------- | - | ---------------- | - | --------- | ---- |  | - | ---------- | - |  | - | --------- | -
|                                                              |  | Three Months Ended     |           |   | Six Months Ended |  
|                                                              |  | June 30,               |           |   | June 30,         |  
|                                                              |  |                        |           |   |                  |  
|                                                              |  | 2007                   |           |   | 2006             |   |           | 2007 |  |   | 2006       |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|                                                              |  | (Unaudited)            |          
|                                                              |  | (Dollars in thousands) |          
|Revenue                                                       |  |                        |           |   |                  |   |           |      |  |   |            |   |  |   |           |  
|Interest income                                               |  | $                      | 1,968,730 |   |                  | $ | 2,009,922 |      |  | $ | 4,103,442  |   |  | $ | 3,873,287 |  
|Interest expense                                              |  |                        | 1,656,377 |   |                  |   | 1,557,894 |      |  |   | 3,401,561  |   |  |   | 2,993,263 |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Net interest income                                           |  |                        | 312,353   |   |                  |   | 452,028   |      |  |   | 701,881    |   |  |   | 880,024   |  
|Provision for loan losses                                     |  |                        | 330,418   |   |                  |   | 122,604   |      |  |   | 875,427    |   |  |   | 245,337   |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Net interest income (loss) after provision for loan losses    |  |                        | (18,065   | ) |                  |   | 329,424   |      |  |   | (173,546   | ) |  |   | 634,687   |  
|Gain (loss) on sale of mortgage loans, net                    |  |                        | 173,514   |   |                  |   | 374,969   |      |  |   | (61,123    | ) |  |   | 642,033   |  
|Servicing fees                                                |  |                        | 452,144   |   |                  |   | 386,484   |      |  |   | 899,321    |   |  |   | 761,168   |  
|Servicing asset valuation and hedge activities, net           |  |                        | (151,533  | ) |                  |   | (170,760  | )    |  |   | (453,887   | ) |  |   | (356,273  | )
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Net servicing fees                                            |  |                        | 300,611   |   |                  |   | 215,724   |      |  |   | 445,434    |   |  |   | 404,895   |  
|Gain (loss) on investment securities, net                     |  |                        | (56,474   | ) |                  |   | 1,468     |      |  |   | (16,540    | ) |  |   | (16,961   | )
|Real estate related revenues                                  |  |                        | 137,606   |   |                  |   | 187,035   |      |  |   | 268,888    |   |  |   | 331,230   |  
|Gain (loss) on sale of equity investments                     |  |                        | (542      | ) |                  |   | 414,508   |      |  |   | (542       | ) |  |   | 414,508   |  
|Other income                                                  |  |                        | 109,461   |   |                  |   | 50,704    |      |  |   | 255,225    |   |  |   | 105,316   |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Total net revenue                                             |  |                        | 646,111   |   |                  |   | 1,573,832 |      |  |   | 717,796    |   |  |   | 2,515,708 |  
|                                                             
|Expenses                                                      |  |                        |           |   |                  |   |           |      |  |   |            |   |  |   |           |  
|Compensation and benefits                                     |  |                        | 350,880   |   |                  |   | 375,657   |      |  |   | 684,791    |   |  |   | 682,461   |  
|Professional fees                                             |  |                        | 57,516    |   |                  |   | 62,011    |      |  |   | 115,502    |   |  |   | 118,811   |  
|Data processing and telecommunications                        |  |                        | 45,492    |   |                  |   | 47,571    |      |  |   | 93,366     |   |  |   | 92,490    |  
|Advertising                                                   |  |                        | 35,097    |   |                  |   | 43,404    |      |  |   | 65,517     |   |  |   | 85,152    |  
|Occupancy                                                     |  |                        | 39,224    |   |                  |   | 33,854    |      |  |   | 73,975     |   |  |   | 66,679    |  
|Other                                                         |  |                        | 282,509   |   |                  |   | 132,569   |      |  |   | 669,998    |   |  |   | 251,882   |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Total expenses                                                |  |                        | 810,718   |   |                  |   | 695,066   |      |  |   | 1,703,149  |   |  |   | 1,297,475 |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Income (loss) before income tax expense and minority interest |  |                        | (164,607  | ) |                  |   | 878,766   |      |  |   | (985,353   | ) |  |   | 1,218,233 |  
|Income tax expense                                            |  |                        | 64,988    |   |                  |   | 330,618   |      |  |   | 135,629    |   |  |   | 468,591   |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Income (loss) before minority interest                        |  |                        | (229,595  | ) |                  |   | 548,148   |      |  |   | (1,120,982 | ) |  |   | 749,642   |  
|Minority interest                                             |  |                        | 24,401    |   |                  |   |          |      |  |   | 43,490     |   |  |   |          |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  
|Net income (loss)                                             |  | $                      | (253,996  | ) |                  | $ | 548,148   |      |  | $ | (1,164,472 | ) |  | $ | 749,642   |  
|                                                              |  |                        |           |   |                  |   |           |      |  |   |            |  



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RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Six Months Ended June 30, 2007 and 2006


|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |   |         |        |   |   |           |            |        |  
|------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | --------- | - | -------- | - | --------- | --------- | - | - | ------------- | ---------- | ---- | ------------- | ------- | ---------- | ------ | - | ------- | ------ | - | - | --------- | ---------- | ------ | -
|                                                                                           |                                                                                                 | Common                                                                     |           |   |          |   |           |           |   |   | Accumulated   |            |      |              
|                                                                                           |                                                                                                 | Stock and                                                                  |           |   |          |   |           |           |   |   | Other         |            |      |              
|                                                                                           |                                                                                                 | Paid-in                                                                    |           |   | Members |   |           | Retained  |   |   | Comprehensive |            |      | Comprehensive |         |            | Total  |  
|                                                                                           |                                                                                                 | Capital                                                                    |           |   | Interest |   |           | Earnings  |   |   | Income        |            |      | Income        |         |            | Equity |  
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|                                                                                           |                                                                                                 | (Unaudited)                                                                |           |   |         
|                                                                                           |                                                                                                 | (Dollars in thousands)                                                     |           |   |         
|Balance at January 1, 2007                                                                 |                                                                                                 | $                                                                          |          |   |          | $ | 3,837,943 |           |   | $ | 3,651,935     |            |      |               |         |            |        | $ | 132,235 |        |   | $ | 7,622,113 |           
|                                                                                           | Net loss                                                                                        |                                                                            |           |  |          |   |           |          |   |   |               | (1,164,472 | )    |               | $       | (1,164,472 | )      |   |         |       |   |   |           | (1,164,472 | )     
|                                                                                           | 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   | )
|                                                                                           | Capital contribution                                                                            |                                                                            |           |  |          |   |           | 1,000,000 |   |   |               |           |      |               |         |           |        |   |         |       |   |   |           | 1,000,000  |       
|                                                                                           | Other comprehensive income, net of tax:                                                         |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |   |         |        |   |   |           |            |       
|                                                                                           |                                                                                                 | Unrealized gain on available for sale securities                           |           |   |         |   |           |           |  |   |               |            |     |               |         |            | 269    |   |         |        |  |   |           |            | 269    |  
|                                                                                           |                                                                                                 | Foreign currency translation adjustment                                    |           |   |         |   |           |           |  |   |               |            |     |               |         |            | 18,681 |   |         |        |  |   |           |            | 18,681 |  
|                                                                                           |                                                                                                 | Unrealized gain on cash flow hedges                                        |           |   |         |   |           |           |  |   |               |            |     |               |         |            | 31,167 |   |         |        |  |   |           |            | 31,167 |  
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|                                                                                           | Other comprehensive income                                                                      |                                                                            |           |  |          |   |           |          |   |   |               |           |      |               |         | 50,117     |        |   |         | 50,117 |   |   |           |           |       
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|                                                                                           | Comprehensive income                                                                            |                                                                            |           |  |          |   |           |          |   |   |               |           |      |               | $       | (1,114,355 | )      |   |         |       |   |   |           |           |       
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|Balance at June 30, 2007                                                                   |                                                                                                 | $                                                                          |          |   |          | $ | 4,837,943 |           |   | $ | 2,487,110     |            |      |               |         |            |        | $ | 182,352 |        |   | $ | 7,507,405 |           
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|                                                                                          
|Balance at January 1, 2006                                                                 |                                                                                                 | $                                                                          | 3,367,677 |   |          | $ |          |           |   | $ | 3,980,587     |            |      |               |         |            |        | $ | 115,706 |        |   | $ | 7,463,970 |           
|Cumulative effect of change in accounting principle as of
    January 1, 2006, net of tax: |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |   |         |        |   |   |           |           
|                                                                                           | Transfer of unrealized loss for certain available for sale
    securities to trading securities |                                                                            |           |  |          |   |           |          |   |   |               | (16,717    | )    |               | $       |           |        |   |         | 16,717 |   |   |           |           |       
|                                                                                           | Recognize mortgage servicing rights at fair value                                               |                                                                            |           |  |          |   |           |          |   |   |               | 3,850      |      |               |         | 3,850      |        |   |         |       |   |   |           | 3,850      |       
|Net income                                                                                 |                                                                                                 |                                                                            |          |   |          |   |          |           |   |   | 749,642       |            |      |               | 749,642 |            |        |   |         |        |   |   | 749,642   |           
|Capital contributions                                                                      |                                                                                                 |                                                                            | 44,543    |   |          |   |          |           |   |   |              |            |      |               |        |            |        |   |        |        |   |   | 44,543    |           
|Other comprehensive income, net of tax:                                                    |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |   |         |        |   |   |           |           
|                                                                                           | Unrealized loss on available for sale securities                                                |                                                                            |           |  |          |   |           |          |   |   |               |           |      |               |         | (365       | )      |   |         |       |   |   |           | (365       | )     
|                                                                                           | Foreign currency translation adjustment                                                         |                                                                            |           |  |          |   |           |          |   |   |               |           |      |               |         | 11,497     |        |   |         |       |   |   |           | 11,497     |       
|                                                                                           | Unrealized gain on cash flow hedges                                                             |                                                                            |           |  |          |   |           |          |   |   |               |           |      |               |         | 131,124    |        |   |         |       |   |   |           | 131,124    |       
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|Other comprehensive income                                                                 |                                                                                                 |                                                                            |          |   |          |   |          |           |   |   |              |            |      |               | 142,256 |            |        |   | 142,256 |        |   |   |          |           
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|Comprehensive income                                                                       |                                                                                                 |                                                                            |          |   |          |   |          |           |   |   |              |            |      | $             | 895,748 |            |        |   |        |        |   |   |          |           
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  
|Balance at June 30, 2006                                                                   |                                                                                                 | $                                                                          | 3,412,220 |   |          | $ |          |           |   | $ | 4,717,362     |            |      |               |         |            |        | $ | 274,679 |        |   | $ | 8,404,261 |           
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |           |   |   |               |            |      |               |         |            |        |  



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##### Table of Contents



RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Six Months Ended June 30, 2007 and 2006


|                                                                                         |                                                     |                        |             |            |      |   |             |            |  
|---------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------- | ----------- | ---------- | ---- | - | ----------- | ---------- | -
|                                                                                         |                                                     | 2007                   |             |            | 2006 |  
|                                                                                         |                                                     |                        |             |            |      |  
|                                                                                         |                                                     | (Unaudited)            |            
|                                                                                         |                                                     | (Dollars in thousands) |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                     |                        |             |            |      |   |             |           
|Net income (loss)                                                                        |                                                     | $                      | (1,164,472  | )          |      | $ | 749,642     |           
|Reconciliation of net income to net cash provided by (used in)
    operating activities: |                                                     |                        |             |            |      |   |             |           
|                                                                                         | Depreciation and amortization                       |                        |             | 199,932    |      |   |             | 156,789    |  
|                                                                                         | Provision for loan losses                           |                        |             | 875,427    |      |   |             | 245,337    |  
|                                                                                         | (Gain) loss on sale of mortgage loans, net          |                        |             | 61,123     |      |   |             | (642,033   | )
|                                                                                         | (Gain) loss on sale of equity investments           |                        |             | 542        |      |   |             | (414,508   | )
|                                                                                         | Net (gain) loss on sale of other assets             |                        |             | 75,190     |      |   |             | (24,040    | )
|                                                                                         | Minority interest                                   |                        |             | 43,490     |      |   |             |           |  
|Loss on investment securities, net                                                       |                                                     |                        | 16,540      |            |      |   | 16,961      |           
|Equity in earnings of investees in excess of cash received                               |                                                     |                        | (23,180     | )          |      |   | (65,340     | )         
|Gain on valuation of mortgage servicing rights                                           |                                                     |                        | (183,476    | )          |      |   | (299,269    | )         
|Originations and purchases of mortgage loans held for sale                               |                                                     |                        | (69,471,441 | )          |      |   | (80,126,904 | )         
|Proceeds from sales and repayments of mortgage loans held for
    sale                   |                                                     |                        | 74,826,714  |            |      |   | 71,994,595  |           
|Deferred income tax                                                                      |                                                     |                        | (11,659     | )          |      |   | 358,699     |           
|Net change in:                                                                           |                                                     |                        |             |            |      |   |             |           
|                                                                                         | Trading securities                                  |                        |             | (1,314,475 | )    |   |             | 670,871    |  
|                                                                                         | Accounts receivable                                 |                        |             | (6,212     | )    |   |             | (128,641   | )
|                                                                                         | Other assets                                        |                        |             | (179,933   | )    |   |             | 285,570    |  
|                                                                                         | Other liabilities                                   |                        |             | 322,912    |      |   |             | 1,744      |  
|                                                                                         |                                                     |                        |             |            |      |  
|                                                                                         | Net cash provided by (used in) operating activities |                        |             | 4,067,022  |      |   |             | (7,220,527 | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                     |                        |             |            |      |   |             |           
|Net decrease (increase) in lending receivables                                           |                                                     |                        | 3,659,282   |            |      |   | (667,631    | )         
|Originations and purchases of mortgage loans held for
    investment                     |                                                     |                        | (4,002,380  | )          |      |   | (9,687,376  | )         
|Proceeds from sales and repayments of mortgage loans held for
    investment             |                                                     |                        | 10,486,282  |            |      |   | 12,618,987  |           
|Purchase of and advances to investments in real estate and
    other                     |                                                     |                        | (175,182    | )          |      |   | (768,548    | )         
|Proceeds from sales of and returns of investments in real estate
    and other           |                                                     |                        | 419,093     |            |      |   | 962,618     |           
|Other, net                                                                               |                                                     |                        | 481,640     |            |      |   | 294,183     |           
|                                                                                         |                                                     |                        |             |            |      |  
|                                                                                         | Net cash provided by investing activities           |                        |             | 10,868,735 |      |   |             | 2,752,233  |  



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RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Six Months Ended June 30, 2007 and
2006  (Continued)


|                                                                                       |                                                     |                        |             |             |      |   |             |           | 
|-------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------- | ----------- | ----------- | ---- | - | ----------- | --------- | 
|                                                                                       |                                                     | 2007                   |             |             | 2006 |  
|                                                                                       |                                                     |                        |             |             |      |  
|                                                                                       |                                                     | (Unaudited)            |            
|                                                                                       |                                                     | (Dollars in thousands) |            
|CASH FLOWS FROM FINANCING ACTIVITIES                                                   |                                                     |                        |             |             |      |   |             |          
|Net decrease in affiliate borrowings                                                   |                                                     | $                      |            |             |      | $ | (5,177,462  | )        
|Net decrease in other short-term borrowings                                            |                                                     |                        | (6,986,139  | )           |      |   | (4,080,309  | )        
|Proceeds from issuance of collateralized borrowings in
    securitization trusts       |                                                     |                        | 1,223,104   |             |      |   | 12,173,129  |          
|Repayments of collateralized borrowings in securitization trusts                       |                                                     |                        | (9,416,405  | )           |      |   | (10,989,930 | )        
|Proceeds from secured aggregation facilities, long-term                                |                                                     |                        | 7,320,797   |             |      |   | 10,930,165  |          
|Repayments of secured aggregation facilities, long-term                                |                                                     |                        | (11,879,874 | )           |      |   | (10,761,175 | )        
|Proceeds from other long-term borrowings                                               |                                                     |                        | 6,561,730   |             |      |   | 10,147,212  |          
|Repayments of other long-term borrowings                                               |                                                     |                        | (1,788,281  | )           |      |   | (273,695    | )        
|Payment of debt issuance costs                                                         |                                                     |                        | (26,956     | )           |      |   | (82,392     | )        
|Capital contributions                                                                  |                                                     |                        | 1,000,000   |             |      |   |            |          
|Increase in deposit liabilities                                                        |                                                     |                        | 801,577     |             |      |   | 2,185,270   |          
|                                                                                       |                                                     |                        |             |             |      |  
|                                                                                       | Net cash provided by (used in) financing activities |                        |             | (13,190,447 | )    |   |             | 4,070,813 | 
|Effect of foreign exchange rates on cash and cash equivalents                          |                                                     |                        | (49,511     | )           |      |   | 16,232      |          
|                                                                                       |                                                     |                        |             |             |      |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   |                                                     |                        | 1,695,799   |             |      |   | (381,249    | )        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       |                                                     |                        | 2,018,847   |             |      |   | 2,266,753   |          
|                                                                                       |                                                     |                        |             |             |      |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             |                                                     | $                      | 3,714,646   |             |      | $ | 1,885,504   |          
|                                                                                       |                                                     |                        |             |             |      |  
|SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:                                    |                                                     |                        |             |             |      |   |             |          
|Available for sale securities transferred to trading securities                        |                                                     | $                      |            |             |      | $ | 927,141     |          
|Mortgage loans held for sale transferred to mortgage loans held
    for
    investment |                                                     |                        | 1,582,079   |             |      |   | 8,174,047   |          
|Mortgage loans held for investment transferred to mortgage loans
    held
    for sale |                                                     |                        | 374,668     |             |      |   | 2,038,365   |          
|Mortgage loans held for investment transferred to other assets                         |                                                     |                        | 1,371,325   |             |      |   | 738,597     |          
|Originations of mortgage servicing rights from sold loans                              |                                                     |                        | 928,377     |             |      |   | 770,175     |          
|Contributions of lending receivables                                                   |                                                     |                        | 157,223     |             |      |   | 44,544      |          



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RESIDENTIAL CAPITAL, LLC





NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




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





10-K




Recently Issued Accounting
Standards


Statement of Financial Accounting Standards
No. 157 Fair Value Measurements


Statement of Financial Accounting Standards
No. 158 Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans


8



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




Statement of Financial Accounting Standards
No. 159 The
Fair Value Option for Financial Assets and Financial Liabilities


FASB Staff Position
(FSP) FIN No. 39-1 39-1, Amendment of FASB Interpretation No. 39. 39-1 39-1


FSP
FIN No. 48-1 48-1, Definition of Settlement in FASB Interpretation
No. 48. 48-1 48-1 48-1




|   |                               
|-- | ------------------------------
|2. | Change in Accounting Principle

Accounting for Uncertainty in Income Taxes Accounting for Income Taxes




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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)








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



|                     |  |                |            |  |              |   |            | 
|-------------------- |  | -------------- | ---------- |  | ------------ | - | ---------- | 
|                     |  | June 30,       |            |  | December 31, |  
|                     |  | 2007           |            |  | 2006         |  
|                     |  |                |            |  |              |  
|                     |  | (In thousands) |           
|Prime conforming     |  | $              | 3,456,647  |  |              | $ | 2,171,782  | 
|Prime non-conforming |  |                | 9,907,472  |  |              |   | 12,606,382 | 
|Nonprime             |  |                | 4,011,464  |  |              |   | 8,548,213  | 
|Prime second-lien    |  |                | 1,188,732  |  |              |   | 2,991,471  | 
|Government           |  |                | 769,605    |  |              |   | 689,534    | 
|                     |  |                |            |  |              |  
|Total                |  | $              | 19,333,920 |  |              | $ | 27,007,382 | 
|                     |  |                |            |  |              |  





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



|                                     |  |                |           |  |              |   |           |  
|------------------------------------ |  | -------------- | --------- |  | ------------ | - | --------- | -
|                                     |  | June 30,       |           |  | December 31, |  
|                                     |  | 2007           |           |  | 2006         |  
|                                     |  |                |           |  |              |  
|                                     |  | (In thousands) |          
|Mortgage and asset-backed securities |  | $              | 2,527,766 |  |              | $ | 1,748,328 |  
|U.S. Treasury securities             |  |                | 350,496   |  |              |   | 400,962   |  
|Principal-only securities            |  |                | 971,316   |  |              |   | 956,741   |  
|Residual interests                   |  |                | 1,158,764 |  |              |   | 1,018,895 |  
|Interest-only securities             |  |                | 481,300   |  |              |   | 369,484   |  
|Other                                |  |                | 20,979    |  |              |   | 67,663    |  
|                                     |  |                |           |  |              |  
|Total                                |  | $              | 5,510,621 |  |              | $ | 4,562,073 |  
|                                     |  |                |           |  |              |  
|Net unrealized gains (losses)        |  | $              | 37,725    |  |              | $ | (10,118   | )
|Pledged as collateral                |  |                | 4,320,657 |  |              |   | 3,681,269 |  



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                               |       |                |            |            |              |   |            |            | 
|------------------------------ | ----- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ---------- | 
|                               |       | June 30,       |            |            | December 31, |  
|                               |       | 2007           |            |            | 2006         |  
|                               |       |                |            |            |              |  
|                               |       | (In thousands) |           
|Prime conforming               |       | $              | 1,040,706  |            |              | $ | 988,448    |           
|Prime non-conforming           |       |                | 10,641,798 |            |              |   | 9,060,112  |           
|Nonprime                       |       |                | 44,624,795 |            |              |   | 52,340,739 |           
|Prime second-lien              |       |                | 6,357,299  |            |              |   | 7,046,301  |           
|Government                     |       |                | 500        |            |              |   | 712        |           
|                               |       |                |            |            |              |  
|                               | Total |                |            | 62,665,098 |              |   |            | 69,436,312 | 
|Less allowance for loan losses |       |                | (1,695,644 | )          |              |   | (1,508,361 | )         
|                               |       |                |            |            |              |  
|Total, net                     |       | $              | 60,969,454 |            |              | $ | 67,927,951 |           
|                               |       |                |            |            |              |  







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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                               |                       |                |            |            |              |   |            |            | 
|------------------------------ | --------------------- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ---------- | 
|                               |                       | June 30,       |            |            | December 31, |  
|                               |                       | 2007           |            |            | 2006         |  
|                               |                       |                |            |            |              |  
|                               |                       | (In thousands) |           
|Construction:                  |                       |                |            |            |              |   |            |           
|                               | Residential           |                | $          | 3,044,555  |              |   | $          | 2,697,171  | 
|                               | Residential mezzanine |                |            | 362,850    |              |   |            | 380,830    | 
|                               | Resort                |                |            | 169,185    |              |   |            | 133,716    | 
|                               |                       |                |            |            |              |  
|Total construction             |                       |                | 3,576,590  |            |              |   | 3,211,717  |           
|Warehouse                      |                       |                | 3,926,452  |            |              |   | 8,804,803  |           
|Commercial business            |                       |                | 2,015,490  |            |              |   | 1,699,694  |           
|Healthcare                     |                       |                | 878,448    |            |              |   | 761,983    |           
|Commercial real estate         |                       |                | 581,162    |            |              |   | 335,938    |           
|Other                          |                       |                | 106,041    |            |              |   | 112,610    |           
|                               |                       |                |            |            |              |  
|                               | Total                 |                |            | 11,084,183 |              |   |            | 14,926,745 | 
|Less allowance for loan losses |                       |                | (274,112   | )          |              |   | (396,641   | )         
|                               |                       |                |            |            |              |  
|Total, net                     |                       | $              | 10,810,071 |            |              | $ | 14,530,104 |           
|                               |                       |                |            |            |              |  







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



|                           |  |                |           |   |             |   |          |       |  |   |        |   |  |   |           |  
|-------------------------- |  | -------------- | --------- | - | ----------- | - | -------- | ----- |  | - | ------ | - |  | - | --------- | -
|                           |  | Mortgage Loans |           |   |             |   |          |       | 
|                           |  | Held for       |           |   | Lending     |   |          |       |  |  
|                           |  | Investment     |           |   | Receivables |   |          | Other |  |   | Total  |  
|                           |  |                |           |   |             |   |          |       |  |   |        |  
|                           |  | (In thousands) |          
|Balance at January 1, 2007 |  | $              | 1,508,361 |   |             | $ | 396,641  |       |  | $ | 25,757 |   |  | $ | 1,930,759 |  
|Provision for loan losses  |  |                | 648,753   |   |             |   | 220,125  |       |  |   | 6,549  |   |  |   | 875,427   |  
|Charge-offs                |  |                | (491,084  | ) |             |   | (343,055 | )     |  |   | (5,339 | ) |  |   | (839,478  | )
|Recoveries                 |  |                | 29,614    |   |             |   | 401      |       |  |   | 2,195  |   |  |   | 32,210    |  
|                           |  |                |           |   |             |   |          |       |  |   |        |  
|Balance at June 30, 2007   |  | $              | 1,695,644 |   |             | $ | 274,112  |       |  | $ | 29,162 |   |  | $ | 1,998,918 |  
|                           |  |                |           |   |             |   |          |       |  |   |        |  
|Balance at January 1, 2006 |  | $              | 1,065,906 |   |             | $ | 187,407  |       |  | $ |       |   |  | $ | 1,253,313 |  
|Provision for loan losses  |  |                | 238,835   |   |             |   | 6,502    |       |  |   |       |   |  |   | 245,337   |  
|Charge-offs                |  |                | (288,445  | ) |             |   | (5,601   | )     |  |   |       |   |  |   | (294,046  | )
|Recoveries                 |  |                | 25,201    |   |             |   | 354      |       |  |   |       |   |  |   | 25,555    |  
|                           |  |                |           |   |             |   |          |       |  |   |        |  
|Balance at June 30, 2006   |  | $              | 1,041,497 |   |             | $ | 188,662  |       |  | $ |       |   |  | $ | 1,230,159 |  
|                           |  |                |           |   |             |   |          |       |  |   |        |  

12



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                                                |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |        |   |  |   |           |          |  
|----------------------------------------------- | --------------------------------------------------------------------------------- | ------------------ | --------- | -------- | ---------- | - | --------- | ------------- | - | - | ------------ | ------ | - | ----- | ------ | - |  | - | --------- | -------- | -
|                                                |                                                                                   | Mortgage Servicing |           |          |            |   |          
|                                                |                                                                                   | Rights Managed By  |           |          |            |   |          
|                                                |                                                                                   |                    |           |          |            |   |          
|                                                |                                                                                   | GMAC               |           |          | GMAC RFC   |   |           | International |   |   |              |        |  
|                                                |                                                                                   | Residential        |           |          | Holding    |   |           | Business      |   |   |              |        |  
|                                                |                                                                                   | Holding            |           |          | (Domestic) |   |           | Group         |   |   | Eliminations |        |   | Total |       
|                                                |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |       
|                                                |                                                                                   | (In thousands)     |          
|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 |                                                                                   |                    | 658,345   |          |            |   | 266,823   |               |   |   | 3,209        |        |   |       |       |   |  |   | 928,377   |         
|Additions from purchases of servicing assets    |                                                                                   |                    | 9,291     |          |            |   |          |               |   |   |             |        |   |       | (9,291 | ) |  |   |          |         
|Changes in fair value:                          |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |        |   |  |   |           |         
|                                                | Due to changes in valuation inputs or assumptions used in the
    valuation model |                    |           | 341,789  |            |   |           | 164,435       |   |   |              |       |   |       |        |  |  |   |           | 506,224  |  
|                                                | Other changes in fair value                                                       |                    |           | (155,538 | )          |   |           | (165,994      | ) |   |              | (1,216 | ) |       |        |  |  |   |           | (322,748 | )
|Other changes that affect the balance           |                                                                                   |                    |          |          |            |   | (10,724   | )             |   |   | 293          |        |   |       | 9,291  |   |  |   | (1,140    | )       
|                                                |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |       
|Estimated fair value at June 30, 2007           |                                                                                   | $                  | 4,606,620 |          |            | $ | 1,419,125 |               |   | $ | 15,029       |        |   | $     |       |   |  | $ | 6,040,774 |         
|                                                |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |       
|                                               
|Estimated fair value at January 1, 2006         |                                                                                   | $                  | 3,056,446 |          |            | $ | 959,708   |               |   | $ | 4,850        |        |   | $     |       |   |  | $ | 4,021,004 |         
|Additions obtained from sales of mortgage loans |                                                                                   |                    | 522,285   |          |            |   | 247,890   |               |   |   |             |        |   |       |       |   |  |   | 770,175   |         
|Additions from purchases of servicing assets    |                                                                                   |                    | 5,520     |          |            |   |          |               |   |   |             |        |   |       |       |   |  |   | 5,520     |         
|Changes in fair value:                          |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |        |   |  |   |           |         
|                                                | Due to changes in valuation inputs or assumptions used in the
    valuation model |                    |           | 563,957  |            |   |           | 90,313        |   |   |              |       |   |       |        |  |  |   |           | 654,270  |  
|                                                | Other changes in fair value                                                       |                    |           | (210,045 | )          |   |           | (145,030      | ) |   |              | 74     |   |       |        |  |  |   |           | (355,001 | )
|Other changes that affect the balance           |                                                                                   |                    |          |          |            |   | (2,670    | )             |   |   | 305          |        |   |       |       |   |  |   | (2,365    | )       
|                                                |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |       
|Estimated fair value at June 30, 2006           |                                                                                   | $                  | 3,938,163 |          |            | $ | 1,150,211 |               |   | $ | 5,229        |        |   | $     |       |   |  | $ | 5,093,603 |         
|                                                |                                                                                   |                    |           |          |            |   |           |               |   |   |              |        |   |       |       





13



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






|                                  |  |                  |           |          |            |  |               |          |  |  |          |  
|--------------------------------- |  | ---------------- | --------- | -------- | ---------- |  | ------------- | -------- |  |  | -------- | -
|                                  |  |                  |           | GMAC-RFC |            |  | International |         
|                                  |  | GMAC Residential |           |          | Holding    |  |               | Business | 
|June 30, 2007                     |  | Holding          |           |          | (Domestic) |  |               | Group    | 
|                                  |  |                  |           |          |            |  |               |          | 
|Weighted average prepayment speed |  |                  | 14.8      | %        |            |  | 22.9          | %        |  |  | 8.3      | %
|Range of prepayment speeds        |  |                  | 13.5-39.7 | %        |            |  | 20.9- 23.9    | %        |  |  | 0.0-23.6 | %
|Weighted average discount rate    |  |                  | 8.5       | %        |            |  | 10.5          | %        |  |  | 8.0      | %
|Range of discount rates           |  |                  | 8.3-13.0  | %        |            |  | 10.4- 10.5    | %        |  |  | 8.0-8.0  | %

|                                  |  |                  |           |          |            |  |               |          |  |  |          |  
|--------------------------------- |  | ---------------- | --------- | -------- | ---------- |  | ------------- | -------- |  |  | -------- | -
|                                  |  |                  |           | GMAC-RFC |            |  | International |         
|                                  |  | GMAC Residential |           |          | Holding    |  |               | Business | 
|June 30, 2006                     |  | Holding          |           |          | (Domestic) |  |               | Group    | 
|                                  |  |                  |           |          |            |  |               |          | 
|Weighted average prepayment speed |  |                  | 16.1      | %        |            |  | 27.2          | %        |  |  | 8.0      | %
|Range of prepayment speeds        |  |                  | 15.1-38.2 | %        |            |  | 27.2- 27.2    | %        |  |  | 7.0-15.0 | %
|Weighted average discount rate    |  |                  | 9.2       | %        |            |  | 12.6          | %        |  |  | 8.0      | %
|Range of discount rates           |  |                  | 9.0-13.5  | %        |            |  | 12.0- 12.9    | %        |  |  | 8.0-8.0  | %



|                                                      |  |                  |            |          |            |  |               |          |  |  |          |  
|----------------------------------------------------- |  | ---------------- | ---------- | -------- | ---------- |  | ------------- | -------- |  |  | -------- | -
|                                                      |  |                  |            | GMAC-RFC |            |  | International |         
|                                                      |  | GMAC Residential |            |          | Holding    |  |               | Business | 
|Six months ended June 30, 2007                        |  | Holding          |            |          | (Domestic) |  |               | Group    | 
|                                                      |  |                  |            |          |            |  |               |          | 
|Range of prepayment speeds (constant prepayment rate) |  |                  | 12.6-37.2% |          |            |  | 10.3- 35.0    | %        |  |  | 0.8-15.4 | %
|Range of discount rates                               |  |                  | 7.7-13.9%  |          |            |  | 10.2- 17.7    | %        |  |  | 8.0-8.0  | %

|                                                      |  |                  |            |          |            |  |               |          |  |  |   | 
|----------------------------------------------------- |  | ---------------- | ---------- | -------- | ---------- |  | ------------- | -------- |  |  | - | 
|                                                      |  |                  |            | GMAC-RFC |            |  | International |         
|                                                      |  | GMAC Residential |            |          | Holding    |  |               | Business | 
|Six months ended June 30, 2006                        |  | Holding          |            |          | (Domestic) |  |               | Group    | 
|                                                      |  |                  |            |          |            |  |               |          | 
|Range of prepayment speeds (constant prepayment rate) |  |                  | 14.1-41.0% |          |            |  | 8.5-37.8      | %        |  |  |  | 
|Range of discount rates                               |  |                  | 8.7-13.5%  |          |            |  | 11.0- 15.0    | %        |  |  |  | 



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






|                                                                                  |  |                  |         |  |      |   |         | 
|--------------------------------------------------------------------------------- |  | ---------------- | ------- |  | ---- | - | ------- | 
|                                                                                  |  | Six Months Ended |        
|                                                                                  |  | June 30,         |        
|                                                                                  |  |                  |        
|                                                                                  |  | 2007             |         |  | 2006 |  
|                                                                                  |  |                  |         |  |      |  
|                                                                                  |  | (In thousands)   |        
|Contractual servicing fees (net of guarantee fees and including
    subservicing) |  | $                | 763,849 |  |      | $ | 640,093 | 
|Late fees                                                                         |  |                  | 74,522  |  |      |   | 61,845  | 
|Ancillary fees                                                                    |  |                  | 60,950  |  |      |   | 59,230  | 
|                                                                                  |  |                  |         |  |      |  
|Total                                                                             |  | $                | 899,321 |  |      | $ | 761,168 | 
|                                                                                  |  |                  |         |  |      |  



|   |           
|-- | ----------
|9. | Borrowings



|                                                      |                                                   |                        |            |            |              |   |             |            |            | 
|----------------------------------------------------- | ------------------------------------------------- | ---------------------- | ---------- | ---------- | ------------ | - | ----------- | ---------- | ---------- | 
|                                                      |                                                   | June 30,               |            |            | December 31, |  
|                                                      |                                                   | 2007                   |            |            | 2006         |  
|                                                      |                                                   |                        |            |            |              |  
|                                                      |                                                   | (In thousands)         |           
|Collateralized borrowings in securitization trusts(a) |                                                   | $                      | 45,122,216 |            |              | $ | 53,299,518  |           
|Other borrowings:                                     |                                                   |                        |            |            |              |   |             |           
|                                                      | Secured aggregation facilities  short-term       |                        |            | 9,823,759  |              |   |             | 13,079,221 |           
|                                                      | Secured aggregation facilities  long-term(a)     |                        |            | 1,307,607  |              |   |             | 5,866,684  |           
|                                                      | Repurchase agreements  short-term                |                        |            | 8,765,362  |              |   |             | 10,961,850 |           
|                                                      | Repurchase agreements  long-term(a)              |                        |            | 326,248    |              |   |             | 543,675    |           
|                                                      | Senior unsecured notes(a)                         |                        |            | 15,139,995 |              |   |             | 12,408,822 |           
|                                                      | Subordinated unsecured note(a)                    |                        |            | 1,000,000  |              |   |             | 1,000,000  |           
|                                                      | FHLB advances  long-term(a)                      |                        |            | 9,414,000  |              |   |             | 7,279,000  |           
|                                                      | Third-party bank credit facilities  short-term   |                        |            | 341,000    |              |   |             | 475,000    |           
|                                                      | Third-party bank credit facilities  long-term(a) |                        |            | 1,750,000  |              |   |             | 1,750,000  |           
|                                                      | Debt collateralized by mortgage loans             |                        |            | 1,496,942  |              |   |             | 3,017,961  |           
|                                                      | Servicing advances                                |                        |            | 679,344    |              |   |             | 728,750    |           
|                                                      | Investor custodial funds                          |                        |            |           |              |   |             | 131,709    |           
|                                                      | Other  short-term                                |                        |            | 2,096,581  |              |   |             | 1,820,111  |           
|                                                      | Other  long-term(a)                              |                        |            | 846,438    |              |   |             | 817,595    |           
|                                                      |                                                   |                        |            |            |              |  
|                                                      |                                                   | Total other borrowings |            |            | 52,987,276   |   |             |            | 59,880,378 | 
|                                                      |                                                   |                        |            |            |              |  
|Total borrowings                                      |                                                   | $                      | 98,109,492 |            |              | $ | 113,179,896 |           
|                                                      |                                                   |                        |            |            |              |  






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

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




|                                     |                                    |                |            |            |              |   |            |             | 
|------------------------------------ | ---------------------------------- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ----------- | 
|                                     |                                    | June 30,       |            |            | December 31, |  
|                                     |                                    | 2007           |            |            | 2006         |  
|                                     |                                    |                |            |            |              |  
|                                     |                                    | (In thousands) |           
|Mortgage loans held for investment   |                                    | $              | 61,430,979 |            |              | $ | 68,480,110 |            
|Mortgage loans held for sale         |                                    |                | 14,902,723 |            |              |   | 22,833,819 |            
|Trading securities                   |                                    |                | 4,245,487  |            |              |   | 3,639,702  |            
|Mortgage servicing rights            |                                    |                | 3,191,003  |            |              |   | 2,447,084  |            
|Lending receivables                  |                                    |                | 8,028,778  |            |              |   | 11,804,708 |            
|Accounts receivable                  |                                    |                | 964,532    |            |              |   | 946,014    |            
|Investments in real estate and other |                                    |                | 1,067,256  |            |              |   | 719,116    |            
|Other assets                         |                                    |                | 2,032,006  |            |              |   | 1,563,691  |            
|                                     |                                    |                |            |            |              |  
|                                     | Total assets pledged as collateral |                | $          | 95,862,764 |              |   | $          | 112,434,244 | 
|                                     |                                    |                |            |            |              |  
|Related secured debt                 |                                    | $              | 78,360,253 |            |              | $ | 96,206,963 |            
|                                     |                                    |                |            |            |              |  





|                                     |       |                |           |           |              |   |           |            | 
|------------------------------------ | ----- | -------------- | --------- | --------- | ------------ | - | --------- | ---------- | 
|                                     |       | June 30,       |           |           | December 31, |  
|                                     |       | 2007           |           |           | 2006         |  
|                                     |       |                |           |           |              |  
|                                     |       | (In thousands) |          
|Mortgage loans held for sale         |       | $              | 4,399,061 |           |              | $ | 5,513,015 |           
|Trading securities                   |       |                | 3,603,698 |           |              |   | 2,945,653 |           
|Mortgage loans held for investment   |       |                | 1,543,735 |           |              |   | 1,667,978 |           
|Investments in real estate and other |       |                | 243,638   |           |              |   | 48,193    |           
|                                     |       |                |           |           |              |  
|                                     | Total |                | $         | 9,790,132 |              |   | $         | 10,174,839 | 
|                                     |       |                |           |           |              |  



|    |                    
|--- | -------------------
|10. | Deposit Liabilities



|                                       |  |                |            |  |              |   |           | 
|-------------------------------------- |  | -------------- | ---------- |  | ------------ | - | --------- | 
|                                       |  | June 30,       |            |  | December 31, |  
|                                       |  | 2007           |            |  | 2006         |  
|                                       |  |                |            |  |              |  
|                                       |  | (In thousands) |           
|Non-interest bearing deposits          |  | $              | 2,383,415  |  |              | $ | 1,358,630 | 
|NOW and money market checking accounts |  |                | 2,285,800  |  |              |   | 1,806,156 | 
|Certificates of deposit                |  |                | 5,983,388  |  |              |   | 6,686,240 | 
|                                       |  |                |            |  |              |  
|Total                                  |  | $              | 10,652,603 |  |              | $ | 9,851,026 | 
|                                       |  |                |            |  |              |  

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






|    |                       
|--- | ----------------------
|11. | Derivative Instruments





|                                              |                                       |               |      |      |      |   |      |                                 |   |  |                               
|--------------------------------------------- | ------------------------------------- | ------------- | ---- | ---- | ---- | - | ---- | ------------------------------- | - |  | ------------------------------
|Six Months Ended June 30,                     |                                       | 2007          |      |      | 2006 |   |      | Income Statement Classification
|                                              |                                       |               |      |      |      |   |      |                                
|                                              |                                       | (In millions) |      |      |     
|Fair value hedge ineffectiveness gain (loss): |                                       |               |      |      |      |   |      |                                 |   | 
|                                              | Mortgage loans held for sale          |               | $    | (0.7 | )    |   | $    | (4.5                            | ) |  | Gain on sale of mortgage loans
|                                              | Senior unsecured notes                |               |      | (0.8 | )    |   |      | 0.3                             |   |  | Gain on investment securities 
|Cash flow hedge ineffectiveness gain:         |                                       |               |      |      |      |   |      |                                 |   | 
|                                              | Issuance of collateralized borrowings |               |      |     |      |   |      | 0.4                             |   |  | Interest expense              
|                                              |                                       |               |      |      |      |   |      |                                
|Total                                         |                                       | $             | (1.5 | )    |      | $ | (3.8 | )                               |   | 
|                                              |                                       |               |      |      |      |   |      |                                





|    |                           
|--- | --------------------------
|12. | Related Party Transactions









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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)












18



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




|    |                    
|--- | -------------------
|13. | Segment Information



|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------------------- |  | -------------- | ---------- | -------- | ------- | - | ------------- | -------- |  | - | ---------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|                                                              |  |                |            | Business |         |   | International |          |  |   |            |   |  |             
|                                                              |  | Residential    |            |          | Capital |   |               | Business |  |   | Corporate  |   |  |              |            |  
|Three Months Ended June 30,                                   |  | Finance Group  |            |          | Group   |   |               | Group    |  |   | and Other  |   |  | Eliminations |            |   | Consolidated |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|                                                              |  | (In thousands) |           
|2007                                                          |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest income (expense)                                 |  | $              | 257,845    |          |         | $ | 31,416        |          |  | $ | 27,188     |   |  | $            | (4,096     | ) |              | $ |            |   |  | $ | 312,353     |  
|Provision for loan losses                                     |  |                | (277,193   | )        |         |   | (32,744       | )        |  |   | (16,809    | ) |  |              | (3,672     | ) |              |   |            |   |  |   | (330,418    | )
|Other revenue                                                 |  |                | 413,392    |          |         |   | 26,545        |          |  |   | 99,971     |   |  |              | 124,268    |   |              |   |            |   |  |   | 664,176     |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|Total net revenue                                             |  |                | 394,044    |          |         |   | 25,217        |          |  |   | 110,350    |   |  |              | 116,500    |   |              |   |            |   |  |   | 646,111     |  
|Operating expenses                                            |  |                | 606,826    |          |         |   | 18,778        |          |  |   | 98,271     |   |  |              | 86,843     |   |              |   |            |   |  |   | 810,718     |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|Income (loss) before income tax expense and minority interest |  |                | (212,782   | )        |         |   | 6,439         |          |  |   | 12,079     |   |  |              | 29,657     |   |              |   |            |   |  |   | (164,607    | )
|Income tax expense (benefit)                                  |  |                | 47,132     |          |         |   | 59            |          |  |   | (2,686     | ) |  |              | 20,483     |   |              |   |            |   |  |   | 64,988      |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|Income (loss) before minority interest                        |  |                | (259,914   | )        |         |   | 6,380         |          |  |   | 14,765     |   |  |              | 9,174      |   |              |   |            |   |  |   | (229,595    | )
|Minority interest                                             |  |                |           |          |         |   |              |          |  |   |           |   |  |              | 24,401     |   |              |   |            |   |  |   | 24,401      |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|Net income (loss)                                             |  | $              | (259,914   | )        |         | $ | 6,380         |          |  | $ | 14,765     |   |  | $            | (15,227    | ) |              | $ |            |   |  | $ | (253,996    | )
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|Total assets                                                  |  | $              | 93,615,062 |          |         | $ | 7,608,534     |          |  | $ | 12,650,047 |   |  | $            | 31,040,648 |   |              | $ | (23,068,373 | ) |  | $ | 121,845,918 |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  
|Net interest income (expense) from other segments             |  | $              | (150,878   | )        |         | $ | (74,692       | )        |  | $ | (79,917    | ) |  | $            | 305,487    |   |              | $ |            |   |  | $ |            |  
|                                                              |  |                |            |          |         |   |               |          |  |   |            |   |  |              |            |   |              |  

|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------- |  | -------------- | ----------- | - | -------- | - | --------- | ------------- |  | - | ---------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|                                                  |  | Residential    |             |   | Business |   |           | International |  |   |            |   |  |              |           
|                                                  |  | Finance        |             |   | Capital  |   |           | Business      |  |   | Corporate  |   |  |              |            |  
|Three Months Ended June 30,                       |  | Group          |             |   | Group    |   |           | Group         |  |   | and Other  |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|                                                  |  | (In thousands) |            
|2006                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest income                               |  | $              | 371,134     |   |          | $ | 22,438    |               |  | $ | 42,730     |   |  | $            | 15,726     |   |              | $ |            |   |  | $ | 452,028     |  
|Provision for loan losses                         |  |                | (114,534    | ) |          |   | (4,734    | )             |  |   | (3,358     | ) |  |              | 22         |   |              |   |            |   |  |   | (122,604    | )
|Other revenue                                     |  |                | 685,248     |   |          |   | 491,254   |               |  |   | 69,591     |   |  |              | (1,685     | ) |              |   |            |   |  |   | 1,244,408   |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Total net revenue                                 |  |                | 941,848     |   |          |   | 508,958   |               |  |   | 108,963    |   |  |              | 14,063     |   |              |   |            |   |  |   | 1,573,832   |  
|Operating expenses                                |  |                | 605,770     |   |          |   | 23,569    |               |  |   | 63,375     |   |  |              | 2,352      |   |              |   |            |   |  |   | 695,066     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Income before income tax expense                  |  |                | 336,078     |   |          |   | 485,389   |               |  |   | 45,588     |   |  |              | 11,711     |   |              |   |            |   |  |   | 878,766     |  
|Income tax expense (benefit)                      |  |                | 139,374     |   |          |   | 186,249   |               |  |   | 5,421      |   |  |              | (426       | ) |              |   |            |   |  |   | 330,618     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Net income                                        |  | $              | 196,704     |   |          | $ | 299,140   |               |  | $ | 40,167     |   |  | $            | 12,137     |   |              | $ |            |   |  | $ | 548,148     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Total assets                                      |  | $              | 106,915,749 |   |          | $ | 6,250,365 |               |  | $ | 10,195,342 |   |  | $            | 22,147,023 |   |              | $ | (20,955,995 | ) |  | $ | 124,552,484 |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Net interest income (expense) from other segments |  | $              | (141,758    | ) |          | $ | (62,864   | )             |  | $ | (13,484    | ) |  | $            | 218,106    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------------------- |  | -------------- | ---------- | - | -------- | - | --------- | ------------- |  | - | ---------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|                                                              |  | Residential    |            |   | Business |   |           | International |  |   |            |   |  |              |           
|                                                              |  | Finance        |            |   | Capital  |   |           | Business      |  |   | Corporate  |   |  |              |            |  
|Six Months Ended June 30,                                     |  | Group          |            |   | Group    |   |           | Group         |  |   | and Other  |   |  | Eliminations |            |   | Consolidated |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|                                                              |  | (In thousands) |           
|2007                                                          |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest income (expense)                                 |  | $              | 585,470    |   |          | $ | 65,981    |               |  | $ | 59,676     |   |  | $            | (9,246     | ) |              | $ |            |   |  | $ | 701,881     |  
|Provision for loan losses                                     |  |                | (788,626   | ) |          |   | (57,442   | )             |  |   | (22,561    | ) |  |              | (6,798     | ) |              |   |            |   |  |   | (875,427    | )
|Other revenue                                                 |  |                | 324,667    |   |          |   | 87,278    |               |  |   | 242,452    |   |  |              | 236,945    |   |              |   |             |   |  |   | 891,342     |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Total net revenue                                             |  |                | 121,511    |   |          |   | 95,817    |               |  |   | 279,567    |   |  |              | 220,901    |   |              |   |            |   |  |   | 717,796     |  
|Operating expenses                                            |  |                | 1,308,126  |   |          |   | 37,606    |               |  |   | 189,486    |   |  |              | 167,931    |   |              |   |            |   |  |   | 1,703,149   |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Income (loss) before income tax expense and minority interest |  |                | (1,186,615 | ) |          |   | 58,211    |               |  |   | 90,081     |   |  |              | 52,970     |   |              |   |            |   |  |   | (985,353    | )
|Income tax expense                                            |  |                | 73,064     |   |          |   | 318       |               |  |   | 30,296     |   |  |              | 31,951     |   |              |   |            |   |  |   | 135,629     |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Income (loss) before minority interest                        |  |                | (1,259,679 | ) |          |   | 57,893    |               |  |   | 59,785     |   |  |              | 21,019     |   |              |   |            |   |  |   | (1,120,982  | )
|Minority interest                                             |  |                |           |   |          |   |          |               |  |   |           |   |  |              | 43,490     |   |              |   |            |   |  |   | 43,490      |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Net income (loss)                                             |  | $              | (1,259,679 | ) |          | $ | 57,893    |               |  | $ | 59,785     |   |  | $            | (22,471    | ) |              | $ |            |   |  | $ | (1,164,472  | )
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Total assets                                                  |  | $              | 93,615,062 |   |          | $ | 7,608,534 |               |  | $ | 12,650,047 |   |  | $            | 31,040,648 |   |              | $ | (23,068,373 | ) |  | $ | 121,845,918 |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Net interest income (expense) from other segments             |  | $              | (292,173   | ) |          | $ | (146,756  | )             |  | $ | (105,910   | ) |  | $            | 544,839    |   |              | $ |            |   |  | $ |            |  
|                                                              |  |                |            |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  

|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------- |  | -------------- | ----------- | -------- | ------- | - | ------------- | -------- |  | - | ------------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|                                                  |  |                |             | Business |         |   | International |          |  |   |               |   |  |             
|                                                  |  | Residential    |             |          | Capital |   |               | Business |  |   | Corporate and |   |  |              |            |  
|Six Months Ended June 30,                         |  | Finance Group  |             |          | Group   |   |               | Group    |  |   | Other         |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  
|                                                  |  | (In thousands) |            
|2006                                              |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest income                               |  | $              | 737,220     |          |         | $ | 43,213        |          |  | $ | 83,854        |   |  | $            | 15,737     |   |              | $ |            |   |  | $ | 880,024     |  
|Provision for loan losses                         |  |                | (233,954    | )        |         |   | (4,796        | )        |  |   | (6,626        | ) |  |              | 39         |   |              |   |            |   |  |   | (245,337    | )
|Other revenue                                     |  |                | 1,165,453   |          |         |   | 572,207       |          |  |   | 145,136       |   |  |              | (1,775     | ) |              |   |            |   |  |   | 1,881,021   |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  
|Total net revenue                                 |  |                | 1,668,719   |          |         |   | 610,624       |          |  |   | 222,364       |   |  |              | 14,001     |   |              |   |            |   |  |   | 2,515,708   |  
|Operating expenses                                |  |                | 1,140,348   |          |         |   | 36,096        |          |  |   | 118,204       |   |  |              | 2,827      |   |              |   |            |   |  |   | 1,297,475   |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  
|Income before income tax expense                  |  |                | 528,371     |          |         |   | 574,528       |          |  |   | 104,160       |   |  |              | 11,174     |   |              |   |            |   |  |   | 1,218,233   |  
|Income tax expense (benefit)                      |  |                | 225,774     |          |         |   | 221,308       |          |  |   | 22,636        |   |  |              | (1,127     | ) |              |   |            |   |  |   | 468,591     |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  
|Net income                                        |  | $              | 302,597     |          |         | $ | 353,220       |          |  | $ | 81,524        |   |  | $            | 12,301     |   |              | $ |            |   |  | $ | 749,642     |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  
|Total assets                                      |  | $              | 106,915,749 |          |         | $ | 6,250,365     |          |  | $ | 10,195,342    |   |  | $            | 22,147,023 |   |              | $ | (20,955,995 | ) |  | $ | 124,552,484 |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  
|Net interest income (expense) from other segments |  | $              | (261,623    | )        |         | $ | (127,945      | )        |  | $ | (7,940        | ) |  | $            | 397,508    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                |             |          |         |   |               |          |  |   |               |   |  |              |            |   |              |  



|    |                   
|--- | ------------------
|14. | Regulatory Matters



20



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)










|                                                            |  |             |         |               |                  |  |       |        |  |   |         |  |  |  |       | 
|----------------------------------------------------------- |  | ----------- | ------- | ------------- | ---------------- |  | ----- | ------ |  | - | ------- |  |  |  | ----- | 
|                                                            |  |             |         | Minimum to be |                 
|                                                            |  | Actual      |         |               | Well Capitalized | 
|                                                            |  |             |         |               |                  | 
|June 30, 2007                                               |  | Amount      |         |               | Ratio            |  |       | Amount |  |   | Ratio   | 
|                                                            |  |             |         |               |                  |  |       |        |  |   |         | 
|                                                            |  | (Dollars in |         |               | (Dollars in      | 
|                                                            |  | thousands)  |         |               | thousands)       | 
|Total capital (Tier 1 + Tier 2) to risk
    weighted assets |  | $           | 2,725.3 |               |                  |  | 15.9% |        |  | $ | 1,712.8 |  |  |  | 10.0% | 
|Tier 1 capital to risk weighted assets                      |  |             | 2,648.7 |               |                  |  | 15.5% |        |  |   | 1,027.7 |  |  |  | 6.0%  | 
|Tier 1 capital to average assets (leveraged ratio)          |  |             | 2,648,7 |               |                  |  | 12.2% |        |  |   | 1,732.2 |  |  |  | 8.0%  | 



|    |                                   
|--- | ----------------------------------
|15. | Supplemental Financial Information





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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING BALANCE SHEET


June 30, 2007


|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |             |             |             |   |             |            |            | 
|----------------------------------------------- | -------------------------------------------------- | ---------------------- | ---------- | ---------- | ------------ | - | ------------- | ------------ | ---------- | - | ------------ | ---------- | ---------- | ------------ | ----------- | ----------- | ----------- | - | ----------- | ---------- | ---------- | 
|                                                |                                                    |                        |            | Guarantor  |              |   | Non-Guarantor |              |            |   |              |           
|                                                |                                                    | Parent                 |            |            | Subsidiaries |   |               | Subsidiaries |            |   | Eliminations |            |            | Consolidated |            
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|                                                |                                                    | (Dollars in thousands) |           
|ASSETS                                         
|Cash and cash equivalents                       |                                                    | $                      | 2,750,970  |            |              | $ | 239,252       |              |            | $ | 757,847      |            |            | $            | (33,423     | )           |             | $ | 3,714,646   |           
|Mortgage loans held for sale                    |                                                    |                        |           |            |              |   | 4,872,414     |              |            |   | 14,461,805   |            |            |              | (299        | )           |             |   | 19,333,920  |           
|Trading securities                              |                                                    |                        |           |            |              |   | 2,328,318     |              |            |   | 3,182,303    |            |            |              |            |             |             |   | 5,510,621   |           
|Mortgage loans held for investment, net         |                                                    |                        |           |            |              |   | 2,313,432     |              |            |   | 58,714,236   |            |            |              | (58,214     | )           |             |   | 60,969,454  |           
|Lending receivables, net                        |                                                    |                        |           |            |              |   | 1,640,561     |              |            |   | 9,168,836    |            |            |              | 674         |             |             |   | 10,810,071  |           
|Mortgage servicing rights                       |                                                    |                        |           |            |              |   | 6,025,745     |              |            |   | 15,029       |            |            |              |            |             |             |   | 6,040,774   |           
|Accounts receivable                             |                                                    |                        | 12,607     |            |              |   | 1,459,683     |              |            |   | 1,503,999    |            |            |              | (452,623    | )           |             |   | 2,523,666   |           
|Investments in real estate and other            |                                                    |                        |           |            |              |   | 112,361       |              |            |   | 2,257,278    |            |            |              |            |             |             |   | 2,369,639   |           
|Goodwill                                        |                                                    |                        |           |            |              |   | 218,803       |              |            |   | 255,325      |            |            |              |            |             |             |   | 474,128     |           
|Other assets                                    |                                                    |                        | 391,323    |            |              |   | 7,728,086     |              |            |   | 8,235,173    |            |            |              | (6,255,583  | )           |             |   | 10,098,999  |           
|Investment in and loans to subsidiaries         |                                                    |                        | 22,981,915 |            |              |   | 2,350,981     |              |            |   |             |            |            |              | (25,332,896 | )           |             |   |            |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total assets                                    |                                                    | $                      | 26,136,815 |            |              | $ | 29,289,636    |              |            | $ | 98,551,831   |            |            | $            | (32,132,364 | )           |             | $ | 121,845,918 |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|                                               
|LIABILITIES                                    
|Borrowings:                                     |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |             |             |             |   |             |           
|                                                | Affiliate borrowings                               |                        | $          |           |              |   | $             | 13,400,000   |            |   | $            | 1,873,916  |            |              | $           | (15,273,916 | )           |   | $           |           |           
|                                                | Collateralized borrowings in securitization trusts |                        |            |           |              |   |               |             |            |   |              | 45,122,216 |            |              |             |            |             |   |             | 45,122,216 |           
|                                                | Other borrowings                                   |                        |            | 18,130,995 |              |   |               | 7,486,489    |            |   |              | 28,235,398 |            |              |             | (865,606    | )           |   |             | 52,987,276 |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|                                                |                                                    | Total borrowings       |            |            | 18,130,995   |   |               |              | 20,886,489 |   |              |            | 75,231,530 |              |             |             | (16,139,522 | ) |             |            | 98,109,492 | 
|Deposit liabilities                             |                                                    |                        |           |            |              |   |              |              |            |   | 10,723,026   |            |            |              | (70,423     | )           |             |   | 10,652,603  |           
|Other liabilities                               |                                                    |                        | 498,415    |            |              |   | 2,565,774     |              |            |   | 7,572,308    |            |            |              | (5,830,070  | )           |             |   | 4,806,427   |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total liabilities                               |                                                    |                        | 18,629,410 |            |              |   | 23,452,263    |              |            |   | 93,526,864   |            |            |              | (22,040,015 | )           |             |   | 113,568,522 |           
|Minority interest                               |                                                    |                        |           |            |              |   |              |              |            |   | 769,991      |            |            |              |            |             |             |   | 769,991     |           
|                                               
|EQUITY                                         
|Common stock and paid-in capital                |                                                    |                        |           |            |              |   |              |              |            |   | 169,785      |            |            |              | (169,785    | )           |             |   |            |           
|Members interest                               |                                                    |                        | 4,837,943  |            |              |   | 3,899,444     |              |            |   | 2,576,355    |            |            |              | (6,475,799  | )           |             |   | 4,837,943   |           
|Retained earnings                               |                                                    |                        | 2,487,110  |            |              |   | 1,755,155     |              |            |   | 1,328,792    |            |            |              | (3,083,947  | )           |             |   | 2,487,110   |           
|Accumulated other comprehensive income          |                                                    |                        | 182,352    |            |              |   | 182,774       |              |            |   | 180,044      |            |            |              | (362,818    | )           |             |   | 182,352     |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total equity                                    |                                                    |                        | 7,507,405  |            |              |   | 5,837,373     |              |            |   | 4,254,976    |            |            |              | (10,092,349 | )           |             |   | 7,507,405   |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total liabilities, minority interest and equity |                                                    | $                      | 26,136,815 |            |              | $ | 29,289,636    |              |            | $ | 98,551,831   |            |            | $            | (32,132,364 | )           |             | $ | 121,845,918 |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF INCOME


Three Months Ended June 30, 2007


|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|------------------------------------------------------------------------ |  | -------------- | -------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | -------- | - |  | - | --------- | -
|                                                                         |  |                |          | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                         |  | Parent         |          |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|                                                                         |  | (In thousands) |         
|Revenue                                                                  |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|Interest income                                                          |  | $              | 284,458  |           |              | $ | 366,360       |              |  | $ | 1,585,427    |   |  | $            | (267,515 | ) |  | $ | 1,968,730 |  
|Interest expense                                                         |  |                | 283,052  |           |              |   | 303,275       |              |  |   | 1,343,777    |   |  |              | (273,727 | ) |  |   | 1,656,377 |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Net interest income                                                      |  |                | 1,406    |           |              |   | 63,085        |              |  |   | 241,650      |   |  |              | 6,212    |   |  |   | 312,353   |  
|Provision for loan losses                                                |  |                |         |           |              |   | 88,263        |              |  |   | 243,972      |   |  |              | (1,817   | ) |  |   | 330,418   |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Net interest income (loss) after provision for loan losses               |  |                | 1,406    |           |              |   | (25,178       | )            |  |   | (2,322       | ) |  |              | 8,029    |   |  |   | (18,065   | )
|Gain on sale of mortgage loans, net                                      |  |                |         |           |              |   | 17,236        |              |  |   | 156,056      |   |  |              | 222      |   |  |   | 173,514   |  
|Servicing fees                                                           |  |                |         |           |              |   | 441,932       |              |  |   | 12,028       |   |  |              | (1,816   | ) |  |   | 452,144   |  
|Servicing asset valuation and hedge activities, net                      |  |                |         |           |              |   | (150,827      | )            |  |   | (706         | ) |  |              |         |   |  |   | (151,533  | )
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Net servicing fees                                                       |  |                |         |           |              |   | 291,105       |              |  |   | 11,322       |   |  |              | (1,816   | ) |  |   | 300,611   |  
|Gain (loss) on investment securities, net                                |  |                | (771     | )         |              |   | (111,146      | )            |  |   | 55,443       |   |  |              |         |   |  |   | (56,474   | )
|Real estate related revenues                                             |  |                |         |           |              |   | 228           |              |  |   | 137,378      |   |  |              |         |   |  |   | 137,606   |  
|Loss on sale of equity investments                                       |  |                |         |           |              |   |              |              |  |   | (542         | ) |  |              |         |   |  |   | (542      | )
|Other income                                                             |  |                | 994      |           |              |   | 28,005        |              |  |   | 114,960      |   |  |              | (34,498  | ) |  |   | 109,461   |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Total net revenue                                                        |  |                | 1,629    |           |              |   | 200,250       |              |  |   | 472,295      |   |  |              | (28,063  | ) |  |   | 646,111   |  
|                                                                        
|Expenses                                                                 |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|Compensation and benefits                                                |  |                |         |           |              |   | 202,339       |              |  |   | 148,541      |   |  |              |         |   |  |   | 350,880   |  
|Professional fees                                                        |  |                |         |           |              |   | 42,813        |              |  |   | 14,703       |   |  |              |         |   |  |   | 57,516    |  
|Data processing and telecommunications                                   |  |                |         |           |              |   | 30,119        |              |  |   | 15,373       |   |  |              |         |   |  |   | 45,492    |  
|Advertising                                                              |  |                |         |           |              |   | 23,074        |              |  |   | 12,023       |   |  |              |         |   |  |   | 35,097    |  
|Occupancy                                                                |  |                |         |           |              |   | 25,547        |              |  |   | 13,677       |   |  |              |         |   |  |   | 39,224    |  
|Other                                                                    |  |                | 941      |           |              |   | 143,402       |              |  |   | 174,291      |   |  |              | (36,125  | ) |  |   | 282,509   |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Total expenses                                                           |  |                | 941      |           |              |   | 467,294       |              |  |   | 378,608      |   |  |              | (36,125  | ) |  |   | 810,718   |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Income (loss) before income tax expense and minority interest            |  |                | 688      |           |              |   | (267,044      | )            |  |   | 93,687       |   |  |              | 8,062    |   |  |   | (164,607  | )
|Income tax expense (benefit)                                             |  |                |         |           |              |   | (960          | )            |  |   | 64,772       |   |  |              | 1,176    |   |  |   | 64,988    |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Income (loss) before minority interest                                   |  |                | 688      |           |              |   | (266,084      | )            |  |   | 28,915       |   |  |              | 6,886    |   |  |   | (229,595  | )
|Minority interest                                                        |  |                |         |           |              |   |              |              |  |   | 24,401       |   |  |              |         |   |  |   | 24,401    |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Income (loss) before equity in net earnings (losses) of
    subsidiaries |  |                | 688      |           |              |   | (266,084      | )            |  |   | 4,514        |   |  |              | 6,886    |   |  |   | (253,996  | )
|Equity in net losses of subsidiaries                                     |  |                | (254,684 | )         |              |   | (105,372      | )            |  |   |             |   |  |              | 360,056  |   |  |   |          |  
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         
|Net income (loss)                                                        |  | $              | (253,996 | )         |              | $ | (371,456      | )            |  | $ | 4,514        |   |  | $            | 366,942  |   |  | $ | (253,996  | )
|                                                                         |  |                |          |           |              |   |               |              |  |   |              |   |  |              |         

23



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATED STATEMENT OF INCOME


Three Months Ended June 30, 2006


|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|---------------------------------------------------- |  | ---------------------- | ------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | -------- | - |  | - | --------- | -
|                                                     |  |                        |         | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                     |  | Parent                 |         |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|                                                     |  | (Dollars in thousands) |        
|Revenue                                              |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|Interest income                                      |  | $                      | 222,403 |           |              | $ | 320,157       |              |  | $ | 1,668,869    |   |  | $            | (201,507 | ) |  | $ | 2,009,922 |  
|Interest expense                                     |  |                        | 221,791 |           |              |   | 279,965       |              |  |   | 1,271,048    |   |  |              | (214,910 | ) |  |   | 1,557,894 |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net interest income                                  |  |                        | 612     |           |              |   | 40,192        |              |  |   | 397,821      |   |  |              | 13,403   |   |  |   | 452,028   |  
|Provision for loan losses                            |  |                        |        |           |              |   | 17,910        |              |  |   | 104,922      |   |  |              | (228     | ) |  |   | 122,604   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net interest income after provision for loan losses  |  |                        | 612     |           |              |   | 22,282        |              |  |   | 292,899      |   |  |              | 13,631   |   |  |   | 329,424   |  
|Gain on sale of mortgage loans, net                  |  |                        |        |           |              |   | 289,359       |              |  |   | 80,858       |   |  |              | 4,752    |   |  |   | 374,969   |  
|Servicing fees                                       |  |                        |        |           |              |   | 391,032       |              |  |   | (3,413       | ) |  |              | (1,135   | ) |  |   | 386,484   |  
|Servicing asset valuation and hedge activities, net  |  |                        |        |           |              |   | (171,137      | )            |  |   | 377          |   |  |              |         |   |  |   | (170,760  | )
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net servicing fees                                   |  |                        |        |           |              |   | 219,895       |              |  |   | (3,036       | ) |  |              | (1,135   | ) |  |   | 215,724   |  
|Gain (loss) on investment securities, net            |  |                        | 376     |           |              |   | (47,170       | )            |  |   | 48,262       |   |  |              |         |   |  |   | 1,468     |  
|Real estate related revenues                         |  |                        |        |           |              |   | 22,587        |              |  |   | 164,448      |   |  |              |         |   |  |   | 187,035   |  
|Gain on sale of equity investments                   |  |                        |        |           |              |   | 414,508       |              |  |   |             |   |  |              |         |   |  |   | 414,508   |  
|Other income                                         |  |                        | 595     |           |              |   | 34,860        |              |  |   | 39,210       |   |  |              | (23,961  | ) |  |   | 50,704    |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Total net revenue                                    |  |                        | 1,583   |           |              |   | 956,321       |              |  |   | 622,641      |   |  |              | (6,713   | ) |  |   | 1,573,832 |  
|Expenses                                             |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|Compensation and benefits                            |  |                        |        |           |              |   | 239,103       |              |  |   | 136,554      |   |  |              |         |   |  |   | 375,657   |  
|Professional fees                                    |  |                        |        |           |              |   | 51,566        |              |  |   | 10,356       |   |  |              | 89       |   |  |   | 62,011    |  
|Data processing and telecommunications               |  |                        |        |           |              |   | 34,557        |              |  |   | 13,014       |   |  |              |         |   |  |   | 47,571    |  
|Advertising                                          |  |                        |        |           |              |   | 32,174        |              |  |   | 11,230       |   |  |              |         |   |  |   | 43,404    |  
|Occupancy                                            |  |                        |        |           |              |   | 21,199        |              |  |   | 12,655       |   |  |              |         |   |  |   | 33,854    |  
|Other                                                |  |                        | 1,019   |           |              |   | 86,921        |              |  |   | 68,191       |   |  |              | (23,562  | ) |  |   | 132,569   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Total expenses                                       |  |                        | 1,019   |           |              |   | 465,520       |              |  |   | 252,000      |   |  |              | (23,473  | ) |  |   | 695,066   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Income before income tax expense                     |  |                        | 564     |           |              |   | 490,801       |              |  |   | 370,641      |   |  |              | 16,760   |   |  |   | 878,766   |  
|Income tax expense                                   |  |                        | 216     |           |              |   | 206,089       |              |  |   | 120,552      |   |  |              | 3,761    |   |  |   | 330,618   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Income before equity in net earnings of subsidiaries |  |                        | 348     |           |              |   | 284,712       |              |  |   | 250,089      |   |  |              | 12,999   |   |  |   | 548,148   |  
|Equity in net earnings of subsidiaries               |  |                        | 547,800 |           |              |   | 263,088       |              |  |   |             |   |  |              | (810,888 | ) |  |   |          |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net income                                           |  | $                      | 548,148 |           |              | $ | 547,800       |              |  | $ | 250,089      |   |  | $            | (797,889 | ) |  | $ | 548,148   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         

24



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##### Table of Contents



RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF INCOME


Six Months Ended June 30, 2007


|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           |   |  |   |            |  
|------------------------------------------------------------------------ |  | -------------- | ---------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | --------- | - |  | - | ---------- | -
|                                                                         |  |                |            | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                         |  | Parent         |            |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |          
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|                                                                         |  | (In thousands) |           
|Revenue                                                                  |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           |   |  |   |            |  
|Interest income                                                          |  | $              | 548,011    |           |              | $ | 810,025       |              |  | $ | 3,270,244    |   |  | $            | (524,838  | ) |  | $ | 4,103,442  |  
|Interest expense                                                         |  |                | 544,985    |           |              |   | 632,152       |              |  |   | 2,763,464    |   |  |              | (539,040  | ) |  |   | 3,401,561  |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Net interest income                                                      |  |                | 3,026      |           |              |   | 177,873       |              |  |   | 506,780      |   |  |              | 14,202    |   |  |   | 701,881    |  
|Provision for loan losses                                                |  |                |           |           |              |   | 296,267       |              |  |   | 581,322      |   |  |              | (2,162    | ) |  |   | 875,427    |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Net interest income (loss) after provision for loan losses               |  |                | 3,026      |           |              |   | (118,394      | )            |  |   | (74,542      | ) |  |              | 16,364    |   |  |   | (173,546   | )
|Gain (loss) on sale of mortgage loans, net                               |  |                |           |           |              |   | (291,412      | )            |  |   | 233,015      |   |  |              | (2,726    | ) |  |   | (61,123    | )
|Servicing fees                                                           |  |                |           |           |              |   | 880,671       |              |  |   | 22,285       |   |  |              | (3,635    | ) |  |   | 899,321    |  
|Servicing asset valuation and hedge activities, net                      |  |                |           |           |              |   | (452,675      | )            |  |   | (1,212       | ) |  |              |          |   |  |   | (453,887   | )
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Net servicing fees                                                       |  |                |           |           |              |   | 427,996       |              |  |   | 21,073       |   |  |              | (3,635    | ) |  |   | 445,434    |  
|Gain (loss) on investment securities, net                                |  |                | (771       | )         |              |   | (91,283       | )            |  |   | 75,514       |   |  |              |          |   |  |   | (16,540    | )
|Real estate related revenues                                             |  |                |           |           |              |   | 13,134        |              |  |   | 255,754      |   |  |              |          |   |  |   | 268,888    |  
|Loss on sale of equity investments                                       |  |                |           |           |              |   |              |              |  |   | (542         | ) |  |              |          |   |  |   | (542       | )
|Other income                                                             |  |                | 1,822      |           |              |   | 66,777        |              |  |   | 248,634      |   |  |              | (62,008   | ) |  |   | 255,225    |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Total net revenue                                                        |  |                | 4,077      |           |              |   | 6,818         |              |  |   | 758,906      |   |  |              | (52,005   | ) |  |   | 717,796    |  
|                                                                        
|Expenses                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           |   |  |   |            |  
|Compensation and benefits                                                |  |                |           |           |              |   | 414,099       |              |  |   | 270,692      |   |  |              |          |   |  |   | 684,791    |  
|Professional fees                                                        |  |                |           |           |              |   | 87,380        |              |  |   | 28,122       |   |  |              |          |   |  |   | 115,502    |  
|Data processing and telecommunications                                   |  |                |           |           |              |   | 62,859        |              |  |   | 30,507       |   |  |              |          |   |  |   | 93,366     |  
|Advertising                                                              |  |                |           |           |              |   | 44,978        |              |  |   | 20,539       |   |  |              |          |   |  |   | 65,517     |  
|Occupancy                                                                |  |                |           |           |              |   | 46,557        |              |  |   | 27,418       |   |  |              |          |   |  |   | 73,975     |  
|Other                                                                    |  |                | (159       | )         |              |   | 391,311       |              |  |   | 346,180      |   |  |              | (67,334   | ) |  |   | 669,998    |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Total expenses                                                           |  |                | (159       | )         |              |   | 1,047,184     |              |  |   | 723,458      |   |  |              | (67,334   | ) |  |   | 1,703,149  |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Income (loss) before income tax expense and minority interest            |  |                | 4,236      |           |              |   | (1,040,366    | )            |  |   | 35,448       |   |  |              | 15,329    |   |  |   | (985,353   | )
|Income tax expense (benefit)                                             |  |                |           |           |              |   | (4,795        | )            |  |   | 140,321      |   |  |              | 103       |   |  |   | 135,629    |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Income (loss) before minority interest                                   |  |                | 4,236      |           |              |   | (1,035,571    | )            |  |   | (104,873     | ) |  |              | 15,226    |   |  |   | (1,120,982 | )
|Minority interest                                                        |  |                |           |           |              |   |              |              |  |   | 43,490       |   |  |              |          |   |  |   | 43,490     |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Income (loss) before equity in net earnings (losses) of
    subsidiaries |  |                | 4,236      |           |              |   | (1,035,571    | )            |  |   | (148,363     | ) |  |              | 15,226    |   |  |   | (1,164,472 | )
|Equity in net losses of subsidiaries                                     |  |                | (1,168,708 | )         |              |   | (249,909      | )            |  |   |             |   |  |              | 1,418,617 |   |  |   |           |  
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          
|Net loss                                                                 |  | $              | (1,164,472 | )         |              | $ | (1,285,480    | )            |  | $ | (148,363     | ) |  | $            | 1,433,843 |   |  | $ | (1,164,472 | )
|                                                                         |  |                |            |           |              |   |               |              |  |   |              |   |  |              |          

25



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##### Table of Contents



RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATED STATEMENT OF INCOME


Six Months Ended June 30, 2006


|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |           |  
|---------------------------------------------------- |  | ---------------------- | ------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                     |  |                        |         | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                     |  | Parent                 |         |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |           
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|                                                     |  | (Dollars in thousands) |        
|Revenue                                              |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |           |  
|Interest income                                      |  | $                      | 424,839 |           |              | $ | 740,494       |              |  | $ | 3,096,473    |   |  | $            | (388,519   | ) |  | $ | 3,873,287 |  
|Interest expense                                     |  |                        | 422,916 |           |              |   | 528,317       |              |  |   | 2,454,980    |   |  |              | (412,950   | ) |  |   | 2,993,263 |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Net interest income                                  |  |                        | 1,923   |           |              |   | 212,177       |              |  |   | 641,493      |   |  |              | 24,431     |   |  |   | 880,024   |  
|Provision for loan losses                            |  |                        |        |           |              |   | 28,247        |              |  |   | 217,958      |   |  |              | (868       | ) |  |   | 245,337   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Net interest income after provision for loan losses  |  |                        | 1,923   |           |              |   | 183,930       |              |  |   | 423,535      |   |  |              | 25,299     |   |  |   | 634,687   |  
|Gain on sale of mortgage loans, net                  |  |                        |        |           |              |   | 463,252       |              |  |   | 194,917      |   |  |              | (16,136    | ) |  |   | 642,033   |  
|Servicing fees                                       |  |                        |        |           |              |   | 768,366       |              |  |   | (4,632       | ) |  |              | (2,566     | ) |  |   | 761,168   |  
|Servicing asset valuation and hedge activities, net  |  |                        |        |           |              |   | (356,363      | )            |  |   | 90           |   |  |              |           |   |  |   | (356,273  | )
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Net servicing fees                                   |  |                        |        |           |              |   | 412,003       |              |  |   | (4,542       | ) |  |              | (2,566     | ) |  |   | 404,895   |  
|Gain (loss) on investment securities, net            |  |                        | 286     |           |              |   | (93,239       | )            |  |   | 75,992       |   |  |              |           |   |  |   | (16,961   | )
|Real estate related revenues                         |  |                        |        |           |              |   | 48,808        |              |  |   | 282,422      |   |  |              |           |   |  |   | 331,230   |  
|Gain on sale of equity investments                   |  |                        |        |           |              |   | 414,508       |              |  |   |             |   |  |              |           |   |  |   | 414,508   |  
|Other income                                         |  |                        | 595     |           |              |   | 68,660        |              |  |   | 80,687       |   |  |              | (44,626    | ) |  |   | 105,316   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Total net revenue                                    |  |                        | 2,804   |           |              |   | 1,497,922     |              |  |   | 1,053,011    |   |  |              | (38,029    | ) |  |   | 2,515,708 |  
|Expenses                                             |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |           |  
|Compensation and benefits                            |  |                        |        |           |              |   | 434,229       |              |  |   | 248,232      |   |  |              |           |   |  |   | 682,461   |  
|Professional fees                                    |  |                        |        |           |              |   | 96,248        |              |  |   | 22,474       |   |  |              | 89         |   |  |   | 118,811   |  
|Data processing and telecommunications               |  |                        |        |           |              |   | 67,278        |              |  |   | 25,212       |   |  |              |           |   |  |   | 92,490    |  
|Advertising                                          |  |                        |        |           |              |   | 66,395        |              |  |   | 18,757       |   |  |              |           |   |  |   | 85,152    |  
|Occupancy                                            |  |                        |        |           |              |   | 41,735        |              |  |   | 24,944       |   |  |              |           |   |  |   | 66,679    |  
|Other                                                |  |                        | 2,091   |           |              |   | 165,024       |              |  |   | 129,504      |   |  |              | (44,737    | ) |  |   | 251,882   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Total expenses                                       |  |                        | 2,091   |           |              |   | 870,909       |              |  |   | 469,123      |   |  |              | (44,648    | ) |  |   | 1,297,475 |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Income before income tax expense                     |  |                        | 713     |           |              |   | 627,013       |              |  |   | 583,888      |   |  |              | 6,619      |   |  |   | 1,218,233 |  
|Income tax expense                                   |  |                        | 273     |           |              |   | 275,775       |              |  |   | 192,011      |   |  |              | 532        |   |  |   | 468,591   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Income before equity in net earnings of subsidiaries |  |                        | 440     |           |              |   | 351,238       |              |  |   | 391,877      |   |  |              | 6,087      |   |  |   | 749,642   |  
|Equity in net earnings of subsidiaries               |  |                        | 749,202 |           |              |   | 397,964       |              |  |   |             |   |  |              | (1,147,166 | ) |  |   |          |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           
|Net income                                           |  | $                      | 749,642 |           |              | $ | 749,202       |              |  | $ | 391,877      |   |  | $            | (1,141,079 | ) |  | $ | 749,642   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |           

26



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##### Table of Contents



RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


Six Months Ended June 30, 2007


|                                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |             |  
|-------------------------------------------------------------------------------- |  | -------------- | ---------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                                                 |  |                |            | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                                 |  | Parent         |            |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |           
|                                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           
|                                                                                 |  | (In thousands) |           
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                              |  | $              | (139,194   | )         |              | $ | (948,528      | )            |  | $ | 5,121,558    |   |  | $            | 33,186     |   |  | $ | 4,067,022   |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |  |                |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |             |  
|Net decrease in lending receivables                                              |  |                |           |           |              |   | 1,031,073     |              |  |   | 2,628,209    |   |  |              |           |   |  |   | 3,659,282   |  
|Originations and purchases of mortgage loans held for investment                 |  |                |           |           |              |   | (925,994      | )            |  |   | (3,074,652   | ) |  |              | (1,734     | ) |  |   | (4,002,380  | )
|Proceeds from sales and repayments of mortgage loans held for
    investment     |  |                |           |           |              |   | 901,013       |              |  |   | 9,585,908    |   |  |              | (639       | ) |  |   | 10,486,282  |  
|Purchases of and advances to investments in real estate and other                |  |                |           |           |              |   | (3,817        | )            |  |   | (171,365     | ) |  |              |           |   |  |   | (175,182    | )
|Proceeds from sales of and returns of investments in real estate
    and other   |  |                |           |           |              |   | 19,234        |              |  |   | 399,859      |   |  |              |           |   |  |   | 419,093     |  
|Payment of capital contribution                                                  |  |                | (175,000   | )         |              |   | (214,806      | )            |  |   |             |   |  |              | 389,806    |   |  |   |            |  
|Net increase in affiliate lending                                                |  |                | (1,818,073 | )         |              |   |              |              |  |   |             |   |  |              | 1,818,073  |   |  |   |            |  
|Other, net                                                                       |  |                |           |           |              |   | 434,879       |              |  |   | 47,444       |   |  |              | (683       | ) |  |   | 481,640     |  
|                                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           
|Net cash provided by (used in) investing activities                              |  |                | (1,993,073 | )         |              |   | 1,241,582     |              |  |   | 9,415,403    |   |  |              | 2,204,823  |   |  |   | 10,868,735  |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                            |  |                |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |             |  
|Net increase in affiliate borrowings                                             |  |                |           |           |              |   | 1,712,000     |              |  |   | 106,073      |   |  |              | (1,818,073 | ) |  |   |            |  
|Net increase (decrease) in other short-term borrowings                           |  |                | 166,000    |           |              |   | (3,409,053    | )            |  |   | (3,743,086   | ) |  |              |           |   |  |   | (6,986,139  | )
|Proceeds from issuance of collateralized borrowings in
    securitization trusts |  |                |           |           |              |   | 1,186,356     |              |  |   | 36,748       |   |  |              |           |   |  |   | 1,223,104   |  
|Repayments of collateralized borrowings in securitization trusts                 |  |                |           |           |              |   |              |              |  |   | (9,416,405   | ) |  |              |           |   |  |   | (9,416,405  | )
|Proceeds from secured aggregation facilities, long-term                          |  |                |           |           |              |   |              |              |  |   | 7,320,797    |   |  |              |           |   |  |   | 7,320,797   |  
|Repayments of secured aggregation facilities, long-term                          |  |                |           |           |              |   |              |              |  |   | (11,879,874  | ) |  |              |           |   |  |   | (11,879,874 | )
|Proceeds from other long-term borrowings                                         |  |                | 3,853,195  |           |              |   |              |              |  |   | 2,708,535    |   |  |              |           |   |  |   | 6,561,730   |  
|Repayments of other long-term borrowings                                         |  |                | (1,000,000 | )         |              |   |              |              |  |   | (788,281     | ) |  |              |           |   |  |   | (1,788,281  | )
|Payments of debt issuance costs                                                  |  |                | (18,448    | )         |              |   |              |              |  |   | (8,508       | ) |  |              |           |   |  |   | (26,956     | )
|Capital contribution                                                             |  |                | 1,000,000  |           |              |   |              |              |  |   | 389,806      |   |  |              | (389,806   | ) |  |   | 1,000,000   |  
|Dividends paid                                                                   |  |                |           |           |              |   |              |              |  |   | (2,474       | ) |  |              | 2,474      |   |  |   |            |  
|Decrease in deposit liabilities                                                  |  |                |           |           |              |   |              |              |  |   | 830,127      |   |  |              | (28,550    | ) |  |   | 801,577     |  
|                                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           
|Net cash provided by (used in) financing activities                              |  |                | 4,000,747  |           |              |   | (510,697      | )            |  |   | (14,446,542  | ) |  |              | (2,233,955 | ) |  |   | (13,190,447 | )
|Effect of foreign exchange rates on cash and
    cash equivalents                |  |                | 49,890     |           |              |   |              |              |  |   | (88,797      | ) |  |              | (10,604    | ) |  |   | (49,511     | )
|                                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                | 1,918,370  |           |              |   | (217,643      | )            |  |   | 1,622        |   |  |              | (6,550     | ) |  |   | 1,695,799   |  
|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                                       |  | $              | 2,750,970  |           |              | $ | 239,252       |              |  | $ | 757,847      |   |  | $            | (33,423    | ) |  | $ | 3,714,646   |  
|                                                                                 |  |                |            |           |              |   |               |              |  |   |              |   |  |              |           









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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Six Months Ended June 30, 2006


|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |             |  
|-------------------------------------------------------------------------------- |  | ---------------------- | ---------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                                                 |  |                        |            | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                                 |  | Parent                 |            |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |           
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|                                                                                 |  | (Dollars in thousands) |           
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                              |  | $                      | 81,751     |           |              | $ | (9,876,755    | )            |  | $ | 2,573,213    |   |  | $            | 1,264      |   |  | $ | (7,220,527  | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |             |  
|Net (increase) decrease in lending receivables                                   |  |                        |           |           |              |   | 383,247       |              |  |   | (1,050,878   | ) |  |              |           |   |  |   | (667,631    | )
|Originations and purchases of mortgage loans held for investment                 |  |                        |           |           |              |   | (6,958,470    | )            |  |   | (4,079,283   | ) |  |              | 1,350,377  |   |  |   | (9,687,376  | )
|Proceeds from sales and repayments of mortgage loans held for
    investment     |  |                        |           |           |              |   | 2,910,564     |              |  |   | 11,054,679   |   |  |              | (1,346,256 | ) |  |   | 12,618,987  |  
|Purchase of and advances to investments in real estate and other                 |  |                        |           |           |              |   | (18,765       | )            |  |   | (749,783     | ) |  |              |           |   |  |   | (768,548    | )
|Proceeds from sales of and returns of investments in real estate
    and other   |  |                        |           |           |              |   | 630,685       |              |  |   | 331,933      |   |  |              |           |   |  |   | 962,618     |  
|Payment of capital contribution                                                  |  |                        | (100,000   | )         |              |   | (112,939      | )            |  |   |             |   |  |              | 212,939    |   |  |   |            |  
|Net increase in affiliate lending                                                |  |                        | (3,011,922 | )         |              |   |              |              |  |   | 52,703       |   |  |              | 2,959,219  |   |  |   |            |  
|Other, net                                                                       |  |                        | (192,040   | )         |              |   | 90,245        |              |  |   | 398,637      |   |  |              | (2,659     | ) |  |   | 294,183     |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|Net cash provided by (used in) investing activities                              |  |                        | (3,303,962 | )         |              |   | (3,075,433    | )            |  |   | 5,958,008    |   |  |              | 3,173,620  |   |  |   | 2,752,233   |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                             |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |             |  
|Net increase (decrease) in affiliate borrowings                                  |  |                        | (4,130,000 | )         |              |   | 1,364,981     |              |  |   | 546,776      |   |  |              | (2,959,219 | ) |  |   | (5,177,462  | )
|Net increase in other short-term borrowings                                      |  |                        |           |           |              |   | (591,205      | )            |  |   | (3,491,719   | ) |  |              | 2,615      |   |  |   | (4,080,309  | )
|Proceeds from issuance of collateralized borrowings in
    securitization trusts |  |                        |           |           |              |   | 12,102,987    |              |  |   | 70,142       |   |  |              |           |   |  |   | 12,173,129  |  
|Repayments of collateralized borrowings in securitization trusts                 |  |                        |           |           |              |   |              |              |  |   | (10,989,930  | ) |  |              |           |   |  |   | (10,989,930 | )
|Proceeds from secured aggregation facilities, long-term                          |  |                        |           |           |              |   |              |              |  |   | 10,930,165   |   |  |              |           |   |  |   | 10,930,165  |  
|Repayments of secured aggregation facilities, long-term                          |  |                        |           |           |              |   |              |              |  |   | (10,761,175  | ) |  |              |           |   |  |   | (10,761,175 | )
|Proceeds from other long-term borrowings                                         |  |                        | 6,956,965  |           |              |   |              |              |  |   | 3,190,247    |   |  |              |           |   |  |   | 10,147,212  |  
|Repayments of other long-term borrowings                                         |  |                        |           |           |              |   |              |              |  |   | (273,695     | ) |  |              |           |   |  |   | (273,695    | )
|Payments of debt issuance costs                                                  |  |                        | (46,161    | )         |              |   |              |              |  |   | (36,231      | ) |  |              |           |   |  |   | (82,392     | )
|Proceeds from capital contribution                                               |  |                        |           |           |              |   | 100,000       |              |  |   | 112,939      |   |  |              | (212,939   | ) |  |   |            |  
|Dividends paid                                                                   |  |                        |           |           |              |   |              |              |  |   | (2,659       | ) |  |              | 2,659      |   |  |   |            |  
|Increase in deposit liabilities                                                  |  |                        |           |           |              |   |              |              |  |   | 2,165,190    |   |  |              | 20,080     |   |  |   | 2,185,270   |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|Net cash provided by (used in) financing activities                              |  |                        | 2,780,804  |           |              |   | 12,976,763    |              |  |   | (8,539,950   | ) |  |              | (3,146,804 | ) |  |   | 4,070,813   |  
|Effect of foreign exchange rates on cash and cash equivalents                    |  |                        | (2,158     | )         |              |   |              |              |  |   | 18,390       |   |  |              |           |   |  |   | 16,232      |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                        | (443,565   | )         |              |   | 24,575        |              |  |   | 9,661        |   |  |              | 28,080     |   |  |   | (381,249    | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 |  |                        | 1,626,814  |           |              |   | 158,167       |              |  |   | 556,252      |   |  |              | (74,480    | ) |  |   | 2,266,753   |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       |  | $                      | 1,183,249  |           |              | $ | 182,742       |              |  | $ | 565,913      |   |  | $            | (46,400    | ) |  | $ | 1,885,504   |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           










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


Overview






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Residential Finance Group. Our Residential Finance Group
    originates, purchases, sells, securitizes and services
    residential mortgage loans in the United States. The segment
    originates mortgage loans through a retail branch network,
    direct lending centers and mortgage brokers. In addition, the
    segment purchases residential mortgage loans from correspondent
    lenders and other third-parties and provides warehouse lending.
    The loans produced or purchased by this segment cover a broad
    credit spectrum. Prime credit quality loans that are produced in
    conformity with the underwriting guidelines of Fannie Mae and
    Freddie Mac are generally sold to one of these
    government-sponsored enterprises in the form of agency
    guaranteed securitizations. This segment also produces a variety
    of loans that do not conform to the underwriting guidelines of
    Fannie Mae and Freddie Mac. These loans include prime
    nonconforming, nonprime and prime second-lien loans, which are
    generally securitized though the issuance of non-agency
    mortgage-backed and mortgage related asset-backed securities.
    This segment also provides collateralized lines of credit to
    other originators of residential mortgage loans, which the
    Company refers to as warehouse lending. Our limited banking
    activities through the mortgage division of GMAC Bank and our
    real estate brokerage and relocation business are also included
    in this segment.
|
| |  | Business Capital Group. Our Business Capital Group
    provides financing and equity capital to residential land
    developers and homebuilders and financing to resort developers
    and healthcare-related enterprises.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | International Business Group. Our International Business
    Group includes substantially all of our operations outside of
    the United States, and has businesses in the United Kingdom
    (which currently generates a significant portion of the
    segments net income), Canada, Continental Europe, Latin
    America and Australia. We originate, purchase, sell and
    securitize residential mortgage loans. We also extend credit to
    companies involved in residential real estate development and
    provide commercial lending facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



Results of Operations




| |                     
| | --------------------
| | Consolidated Results



prime-nonconforming second-lien Non-prime


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|                     |                       |                                       |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |        |  |  |         |         |  |   |        |        | 
|-------------------- | --------------------- | ------------------------------------- | ------ | ------- | ------------------------- | - | ------ | ------ |  |  | ---------- | ------- |  | ------ | ------ | ------ | ---------- |  | ------- | ------- |  | - | ---------- | ------ |  |  | ------- | ------- |  | - | ------ | ------ | 
|                     |                       | U.S. Mortgage Loan Production by Type |       
|                     |                       |                                       |       
|                     |                       | Three Months Ended June 30,           |        |         | Six Months Ended June 30, |  
|                     |                       |                                       |        |         |                           |  
|                     |                       | 2007                                  |        |         | 2006                      |   |        | 2007   |  |  | 2006       |        
|                     |                       |                                       |        |         |                           |   |        |        |  |  |            |        
|                     |                       | No. of                                |        |         | Dollar Amt                |   |        | No. of |  |  | Dollar Amt |         |  | No. of |        |        | Dollar Amt |  |         | No. of  |  |   | Dollar Amt |       
|                     |                       | Loans                                 |        |         | of Loans                  |   |        | Loans  |  |  | of Loans   |         |  | Loans  |        |        | of Loans   |  |         | Loans   |  |   | of Loans   |       
|                     |                       |                                       |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |       
|                     |                       | (Dollars in millions)                 |       
|Prime conforming     |                       |                                       | 66,677 |         |                           | $ | 12,682 |        |  |  | 64,690     |         |  | $      | 11,965 |        |            |  | 116,766 |         |  | $ | 22,251     |        |  |  | 110,743 |         |  | $ | 20,534 |       
|Prime non-conforming |                       |                                       | 27,064 |         |                           |   | 9,849  |        |  |  | 46,312     |         |  |        | 14,638 |        |            |  | 65,735  |         |  |   | 22,166     |        |  |  | 85,351  |         |  |   | 26,365 |       
|Government           |                       |                                       | 5,520  |         |                           |   | 828    |        |  |  | 7,513      |         |  |        | 1,081  |        |            |  | 9,682   |         |  |   | 1,412      |        |  |  | 13,511  |         |  |   | 1,942  |       
|Nonprime             |                       |                                       | 5,396  |         |                           |   | 685    |        |  |  | 42,983     |         |  |        | 6,060  |        |            |  | 25,840  |         |  |   | 3,944      |        |  |  | 102,213 |         |  |   | 15,156 |       
|Prime second-lien    |                       |                                       | 48,907 |         |                           |   | 3,107  |        |  |  | 112,260    |         |  |        | 6,585  |        |            |  | 146,618 |         |  |   | 8,420      |        |  |  | 213,680 |         |  |   | 12,400 |       
|                     |                       |                                       |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |       
|                     | Total U.S. production |                                       |        | 153,564 |                           |   | $      | 27,151 |  |  |            | 273,758 |  |        | $      | 40,329 |            |  |         | 364,641 |  |   | $          | 58,193 |  |  |         | 525,498 |  |   | $      | 76,397 | 
|                     |                       |                                       |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |       



|                    |                 |                      |        |        |                    |   |        |        |  |   |        |        |  |   |        |        | 
|------------------- | --------------- | -------------------- | ------ | ------ | ------------------ | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                    |                 | For the Three Months |        |        | For the Six Months |  
|                    |                 | Ended June 30,       |        |        | Ended June 30,     |  
|                    |                 |                      |        |        |                    |  
|                    |                 | 2007                 |        |        | 2006               |   |        | 2007   |  |   | 2006   |       
|                    |                 |                      |        |        |                    |   |        |        |  |   |        |       
|                    |                 | (In millions)        |       
|Purpose:            |                 |                      |        |        |                    |   |        |        |  |   |        |        |  |   |        |       
|                    | Purchase        |                      | $      | 9,369  |                    |   | $      | 16,903 |  |   | $      | 19,401 |  |   | $      | 30,568 | 
|                    | Non-purchase    |                      |        | 17,782 |                    |   |        | 23,426 |  |   |        | 38,792 |  |   |        | 45,829 | 
|                    |                 |                      |        |        |                    |   |        |        |  |   |        |       
|                    |                 | $                    | 27,151 |        |                    | $ | 40,329 |        |  | $ | 58,193 |        |  | $ | 76,397 |       
|                    |                 |                      |        |        |                    |   |        |        |  |   |        |       
|                   
|Interest rate type: |                 |                      |        |        |                    |   |        |        |  |   |        |        |  |   |        |       
|                    | Fixed rate      |                      | $      | 19,865 |                    |   | $      | 22,816 |  |   | $      | 40,211 |  |   | $      | 42,116 | 
|                    | Adjustable rate |                      |        | 7,286  |                    |   |        | 17,513 |  |   |        | 17,982 |  |   |        | 34,281 | 
|                    |                 |                      |        |        |                    |   |        |        |  |   |        |       
|                    |                 | $                    | 27,151 |        |                    | $ | 40,329 |        |  | $ | 58,193 |        |  | $ | 76,397 |       
|                    |                 |                      |        |        |                    |   |        |        |  |   |        |       



|                                                     |                       |                                          |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |        |  |  |         |         |  |   |        |        | 
|---------------------------------------------------- | --------------------- | ---------------------------------------- | ------ | ------- | ------------------------- | - | ------ | ------ |  |  | ---------- | ------- |  | ------ | ------ | ------ | ---------- |  | ------- | ------- |  | - | ---------- | ------ |  |  | ------- | ------- |  | - | ------ | ------ | 
|                                                     |                       | U.S. Mortgage Loan Production by Channel |       
|                                                     |                       |                                          |       
|                                                     |                       | Three Months Ended June 30,              |        |         | Six Months Ended June 30, |  
|                                                     |                       |                                          |        |         |                           |  
|                                                     |                       | 2007                                     |        |         | 2006                      |   |        | 2007   |  |  | 2006       |        
|                                                     |                       |                                          |        |         |                           |   |        |        |  |  |            |        
|                                                     |                       | No. of                                   |        |         | Dollar Amt                |   |        | No. of |  |  | Dollar Amt |         |  | No. of |        |        | Dollar Amt |  |         | No. of  |  |   | Dollar Amt |       
|                                                     |                       | Loans                                    |        |         | of Loans                  |   |        | Loans  |  |  | of Loans   |         |  | Loans  |        |        | of Loans   |  |         | Loans   |  |   | of Loans   |       
|                                                     |                       |                                          |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |       
|                                                     |                       | (Dollars in millions)                    |       
|Retail branches                                      |                       |                                          | 22,304 |         |                           | $ | 3,501  |        |  |  | 29,289     |         |  | $      | 4,237  |        |            |  | 41,927  |         |  | $ | 6,512      |        |  |  | 54,610  |         |  | $ | 7,832  |       
|Direct lending (other than retail branches)          |                       |                                          | 31,749 |         |                           |   | 3,506  |        |  |  | 35,722     |         |  |        | 3,187  |        |            |  | 59,764  |         |  |   | 6,526      |        |  |  | 71,289  |         |  |   | 6,270  |       
|Mortgage brokers                                     |                       |                                          | 32,947 |         |                           |   | 6,441  |        |  |  | 45,386     |         |  |        | 7,898  |        |            |  | 69,193  |         |  |   | 12,825     |        |  |  | 86,051  |         |  |   | 14,951 |       
|Correspondent lenders and secondary market purchases |                       |                                          | 66,564 |         |                           |   | 13,703 |        |  |  | 163,361    |         |  |        | 25,007 |        |            |  | 193,757 |         |  |   | 32,330     |        |  |  | 313,548 |         |  |   | 47,344 |       
|                                                     |                       |                                          |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |       
|                                                     | Total U.S. production |                                          |        | 153,564 |                           |   | $      | 27,151 |  |  |            | 273,758 |  |        | $      | 40,329 |            |  |         | 364,641 |  |   | $          | 58,193 |  |  |         | 525,498 |  |   | $      | 76,397 | 
|                                                     |                       |                                          |        |         |                           |   |        |        |  |  |            |         |  |        |        |        |            |  |         |         |  |   |            |       

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|                   |                                |                                        |        |        |                           |   |       |        |        |  |           |        |  |        |       |       |           |  |        |        |  |   |           |        |  |  |        |        |  |   |       |        | 
|------------------ | ------------------------------ | -------------------------------------- | ------ | ------ | ------------------------- | - | ----- | ------ | ------ |  | --------- | ------ |  | ------ | ----- | ----- | --------- |  | ------ | ------ |  | - | --------- | ------ |  |  | ------ | ------ |  | - | ----- | ------ | 
|                   |                                | International Mortgage Loan Production |       
|                   |                                |                                        |       
|                   |                                | Three Months Ended June 30,            |        |        | Six Months Ended June 30, |  
|                   |                                |                                        |        |        |                           |  
|                   |                                | 2007                                   |        |        | 2006                      |   |       | 2007   |        |  | 2006      |       
|                   |                                |                                        |        |        |                           |   |       |        |        |  |           |       
|                   |                                |                                        |        | Dollar |                           |   |       |        | Dollar |  |           |        |  | Dollar |       |       |           |  | Dollar |       
|                   |                                | No. of                                 |        |        | Amount of                 |   |       | No. of |        |  | Amount of |        |  | No. of |       |       | Amount of |  |        | No. of |  |   | Amount of |       
|                   |                                | Loans                                  |        |        | Loans                     |   |       | Loans  |        |  | Loans     |        |  | Loans  |       |       | Loans     |  |        | Loans  |  |   | Loans     |       
|                   |                                |                                        |        |        |                           |   |       |        |        |  |           |        |  |        |       |       |           |  |        |        |  |   |           |       
|                   |                                | (Dollars in millions)                  |       
|United Kingdom     |                                |                                        | 18,648 |        |                           | $ | 5,100 |        |        |  | 22,776    |        |  | $      | 5,374 |       |           |  | 36,437 |        |  | $ | 9,625     |        |  |  | 42,235 |        |  | $ | 9,799 |       
|Continental Europe |                                |                                        | 10,199 |        |                           |   | 1,919 |        |        |  | 5,215     |        |  |        | 935   |       |           |  | 18,660 |        |  |   | 3,485     |        |  |  | 10,209 |        |  |   | 1,808 |       
|Other              |                                |                                        | 5,246  |        |                           |   | 699   |        |        |  | 2,721     |        |  |        | 384   |       |           |  | 9,513  |        |  |   | 1,080     |        |  |  | 4,779  |        |  |   | 598   |       
|                   |                                |                                        |        |        |                           |   |       |        |        |  |           |        |  |        |       |       |           |  |        |        |  |   |           |       
|                   | Total International production |                                        |        | 34,093 |                           |   | $     | 7,718  |        |  |           | 30,712 |  |        | $     | 6,693 |           |  |        | 64,610 |  |   | $         | 14,190 |  |  |        | 57,223 |  |   | $     | 12,205 | 
|                   |                                |                                        |        |        |                           |   |       |        |        |  |           |        |  |        |       |       |           |  |        |        |  |   |           |       









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|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |           |  |   |         |         | 
|----------------------------------- | ---------------------------------- | -------------------------------------- | --------- | --------- | ----------------- | - | ------- | ------- |  |  | ---------- | --------- |  | - | ------- | ------- | 
|                                    |                                    | U.S. Mortgage Loan Servicing Portfolio |          
|                                    |                                    |                                        |          
|                                    |                                    | June 30, 2007                          |           |           | December 31, 2006 |  
|                                    |                                    |                                        |           |           |                   |  
|                                    |                                    | No. of                                 |           |           | Dollar Amt        |   |         | No. of  |  |  | Dollar Amt |          
|                                    |                                    | Loans                                  |           |           | of Loans          |   |         | Loans   |  |  | of Loans   |          
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          
|                                    |                                    | (Dollars in millions)                  |          
|Prime conforming mortgage loans     |                                    |                                        | 1,485,416 |           |                   | $ | 211,463 |         |  |  | 1,456,344  |           |  | $ | 203,927 |        
|Prime non-conforming mortgage loans |                                    |                                        | 348,653   |           |                   |   | 112,562 |         |  |  | 319,255    |           |  |   | 101,138 |        
|Government mortgage loans           |                                    |                                        | 175,588   |           |                   |   | 18,166  |         |  |  | 181,563    |           |  |   | 18,843  |        
|Nonprime mortgage loans             |                                    |                                        | 352,752   |           |                   |   | 48,040  |         |  |  | 409,516    |           |  |   | 55,750  |        
|Prime second-lien mortgage loans    |                                    |                                        | 806,617   |           |                   |   | 34,377  |         |  |  | 784,170    |           |  |   | 32,726  |        
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          
|                                    | Total primary servicing portfolio* |                                        |           | 3,169,026 |                   |   | $       | 424,608 |  |  |            | 3,150,848 |  |   | $       | 412,384 | 
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          






|  |                                                                                                                                                                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excludes loans for which we acted as a subservicer. Subserviced
    loans totaled 291,917 with an unpaid principal balance of
    $62.0 billion at June 30, 2007 and 290,992 with an
    unpaid principal balance of $55.4 billion at
    December 31, 2006.













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| |                
| | ---------------
| | Segment Results



| |                          
| | -------------------------
| | Residential Finance Group



|                                                    |  |                    |        |   |                  |   |        |      |  |   |          |   |  |   |          |  
|--------------------------------------------------- |  | ------------------ | ------ | - | ---------------- | - | ------ | ---- |  | - | -------- | - |  | - | -------- | -
|                                                    |  | Three Months Ended |        |   | Six Months Ended |  
|                                                    |  | June 30,           |        |   | June 30,         |  
|                                                    |  |                    |        |   |                  |  
|                                                    |  | 2007               |        |   | 2006             |   |        | 2007 |  |   | 2006     |  
|                                                    |  |                    |        |   |                  |   |        |      |  |   |          |  
|                                                    |  | (In millions)      |       
|Net interest income                                 |  | $                  | 257.8  |   |                  | $ | 371.1  |      |  | $ | 585.5    |   |  | $ | 737.2    |  
|Provision for loan losses                           |  |                    | (277.2 | ) |                  |   | (114.5 | )    |  |   | (788.6   | ) |  |   | (233.9   | )
|Gain (loss) on sales of mortgage loans, net         |  |                    | 97.6   |   |                  |   | 337.1  |      |  |   | (243.5   | ) |  |   | 537.4    |  
|Servicing fees                                      |  |                    | 436.2  |   |                  |   | 384.9  |      |  |   | 868.3    |   |  |   | 761.7    |  
|Servicing asset valuation and hedge activities, net |  |                    | (150.8 | ) |                  |   | (171.4 | )    |  |   | (452.7   | ) |  |   | (356.4   | )
|                                                    |  |                    |        |   |                  |   |        |      |  |   |          |  
|Net servicing fees                                  |  |                    | 285.4  |   |                  |   | 213.5  |      |  |   | 415.6    |   |  |   | 405.3    |  
|Other income                                        |  |                    | 30.4   |   |                  |   | 134.7  |      |  |   | 152.6    |   |  |   | 222.8    |  
|Operating expenses                                  |  |                    | (606.8 | ) |                  |   | (605.8 | )    |  |   | (1,308.1 | ) |  |   | (1,140.4 | )
|Income tax expense                                  |  |                    | (47.1  | ) |                  |   | (139.4 | )    |  |   | (73.1    | ) |  |   | (225.8   | )
|                                                    |  |                    |        |   |                  |   |        |      |  |   |          |  
|Net income (loss)                                   |  | $                  | (259.9 | ) |                  | $ | 196.7  |      |  | $ | (1,259.6 | ) |  | $ | 302.6    |  
|                                                    |  |                    |        |   |                  |   |        |      |  |   |          |  



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3-year 10-year


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| |                       
| | ----------------------
| | Business Capital Group



|                          |  |                |       |   |                |   |        |      |  |   |       |   |  |   |        |  
|------------------------- |  | -------------- | ----- | - | -------------- | - | ------ | ---- |  | - | ----- | - |  | - | ------ | -
|                          |  | Three Months   |       |   | Six Months     |  
|                          |  | Ended June 30, |       |   | Ended June 30, |  
|                          |  |                |       |   |                |  
|                          |  | 2007           |       |   | 2006           |   |        | 2007 |  |   | 2006  |  
|                          |  |                |       |   |                |   |        |      |  |   |       |  
|                          |  | (In millions)  |      
|Net interest income       |  | $              | 31.4  |   |                | $ | 22.4   |      |  | $ | 66.0  |   |  | $ | 43.2   |  
|Provision for loan losses |  |                | (32.7 | ) |                |   | (4.7   | )    |  |   | (57.5 | ) |  |   | (4.8   | )
|Other income              |  |                | 26.6  |   |                |   | 491.2  |      |  |   | 87.3  |   |  |   | 572.2  |  
|Operating expenses        |  |                | (18.8 | ) |                |   | (23.6  | )    |  |   | (37.6 | ) |  |   | (36.1  | )
|Income tax expense        |  |                | (0.1  | ) |                |   | (186.2 | )    |  |   | (0.3  | ) |  |   | (221.3 | )
|                          |  |                |       |   |                |   |        |      |  |   |       |  
|Net income                |  | $              | 6.4   |   |                | $ | 299.1  |      |  | $ | 57.9  |   |  | $ | 353.2  |  
|                          |  |                |       |   |                |   |        |      |  |   |       |  











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| |                             
| | ----------------------------
| | International Business Group



|                                              |  |                    |       |   |                  |   |       |      |  |   |        |   |  |   |        |  
|--------------------------------------------- |  | ------------------ | ----- | - | ---------------- | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                              |  | Three Months Ended |       |   | Six Months Ended |  
|                                              |  | June 30,           |       |   | June 30,         |  
|                                              |  |                    |       |   |                  |  
|                                              |  | 2007               |       |   | 2006             |   |       | 2007 |  |   | 2006   |  
|                                              |  |                    |       |   |                  |   |       |      |  |   |        |  
|                                              |  | (In millions)      |      
|Net interest income                           |  | $                  | 27.2  |   |                  | $ | 42.8  |      |  | $ | 59.7   |   |  | $ | 83.9   |  
|Provision for loan losses                     |  |                    | (16.8 | ) |                  |   | (3.3  | )    |  |   | (22.6  | ) |  |   | (6.6   | )
|Gain on sales of mortgage loans, net          |  |                    | 76.0  |   |                  |   | 39.7  |      |  |   | 182.4  |   |  |   | 106.4  |  
|Servicing fees                                |  |                    | 15.9  |   |                  |   | 1.8   |      |  |   | 31.0   |   |  |   | (0.5   | )
|Servicing valuation and hedge activities, net |  |                    | (0.7  | ) |                  |   | 0.4   |      |  |   | (1.2   | ) |  |   | 0.1    |  
|                                              |  |                    |       |   |                  |   |       |      |  |   |        |  
|Net servicing fees (loss)                     |  |                    | 15.2  |   |                  |   | 2.2   |      |  |   | 29.8   |   |  |   | (0.4   | )
|Other income                                  |  |                    | 8.8   |   |                  |   | 27.5  |      |  |   | 30.3   |   |  |   | 39.0   |  
|Operating expenses                            |  |                    | (98.3 | ) |                  |   | (63.4 | )    |  |   | (189.5 | ) |  |   | (118.2 | )
|Income tax (expense) benefit                  |  |                    | 2.7   |   |                  |   | (5.4  | )    |  |   | (30.3  | ) |  |   | (22.6  | )
|                                              |  |                    |       |   |                  |   |       |      |  |   |        |  
|Net income                                    |  | $                  | 14.8  |   |                  | $ | 40.1  |      |  | $ | 59.8   |   |  | $ | 81.5   |  
|                                              |  |                    |       |   |                  |   |       |      |  |   |        |  















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| |                    
| | -------------------
| | Corporate and Other





Asset Quality




| |                          
| | -------------------------
| | Allowance for Loan Losses



|                                    |                   |                |         |       |             |   |        |       |  |   |       |       |  |   |         |       | 
|----------------------------------- | ----------------- | -------------- | ------- | ----- | ----------- | - | ------ | ----- |  | - | ----- | ----- |  | - | ------- | ----- | 
|                                    |                   | Mortgage Loans |         |       |             |   |        |       | 
|                                    |                   | Held for       |         |       | Lending     |   |        |       |  |  
|                                    |                   | Investment     |         |       | Receivables |   |        | Other |  |   | Total |      
|                                    |                   |                |         |       |             |   |        |       |  |   |       |      
|                                    |                   | (In millions)  |        
|Balance at January 1, 2007          |                   | $              | 1,508.4 |       |             | $ | 396.6  |       |  | $ | 25.8  |       |  | $ | 1,930.8 |      
|Provision for loan losses           |                   |                | 648.8   |       |             |   | 220.1  |       |  |   | 6.5   |       |  |   | 875.4   |      
|Charge-offs                         |                   |                | (491.1  | )     |             |   | (343.1 | )     |  |   | (5.3  | )     |  |   | (839.5  | )    
|Recoveries                          |                   |                | 29.5    |       |             |   | 0.5    |       |  |   | 2.2   |       |  |   | 32.2    |      
|                                    |                   |                |         |       |             |   |        |       |  |   |       |      
|Balance at June 30, 2007            |                   | $              | 1,695.6 |       |             | $ | 274.1  |       |  | $ | 29.2  |       |  | $ | 1,998.9 |      
|                                    |                   |                |         |       |             |   |        |       |  |   |       |      
|Balance at January 1, 2006          |                   | $              | 1,065.9 |       |             | $ | 187.4  |       |  | $ |      |       |  | $ | 1,253.3 |      
|Provision for loan losses           |                   |                | 238.8   |       |             |   | 6.5    |       |  |   |      |       |  |   | 245.3   |      
|Charge-offs                         |                   |                | (288.4  | )     |             |   | (5.6   | )     |  |   |      |       |  |   | (294.0  | )    
|Recoveries                          |                   |                | 25.2    |       |             |   | 0.4    |       |  |   |      |       |  |   | 25.6    |      
|                                    |                   |                |         |       |             |   |        |       |  |   |       |      
|Balance at June 30, 2006            |                   | $              | 1,041.5 |       |             | $ | 188.7  |       |  | $ |      |       |  | $ | 1,230.2 |      
|                                    |                   |                |         |       |             |   |        |       |  |   |       |      
|Allowance as a percentage of total: |                   |                |         |       |             |   |        |       |  |   |       |       |  |   |         |      
|                                    | June 30, 2007     |                |         | 2.71% |             |   |        | 2.47% |  |   |       | 1.11% |  |   |         | 2.62% | 
|                                    | December 31, 2006 |                |         | 2.17% |             |   |        | 2.66% |  |   |       | 1.03% |  |   |         | 2.22% | 

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|                      |                      |                    |        |        |                  |   |        |        |   |   |        |        |   |   |        |        |  
|--------------------- | -------------------- | ------------------ | ------ | ------ | ---------------- | - | ------ | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                      |                      | Three Months Ended |        |        | Six Months Ended |  
|                      |                      | June 30,           |        |        | June 30,         |  
|                      |                      |                    |        |        |                  |  
|                      |                      | 2007               |        |        | 2006             |   |        | 2007   |   |   | 2006   |       
|                      |                      |                    |        |        |                  |   |        |        |   |   |        |       
|                      |                      | (In millions)      |       
|Mortgage loans:       |                      |                    |        |        |                  |   |        |        |   |   |        |        |   |   |        |       
|                      | Prime conforming     |                    | $      | (0.6   | )                |   | $      |       |   |   | $      | (1.1   | ) |   | $      | (0.8   | )
|                      | Prime non-conforming |                    |        | (6.7   | )                |   |        | (10.4  | ) |   |        | (12.3  | ) |   |        | (16.9  | )
|                      | Prime second-lien    |                    |        | (37.9  | )                |   |        | (0.3   | ) |   |        | (59.6  | ) |   |        | (2.6   | )
|                      | Nonprime             |                    |        | (203.0 | )                |   |        | (137.5 | ) |   |        | (388.6 | ) |   |        | (242.9 | )
|Lending receivables:  |                      |                    |        |        |                  |   |        |        |   |   |        |        |   |   |        |       
|                      | Warehouse            |                    |        | (294.1 | )                |   |        | 0.1    |   |   |        | (342.6 | ) |   |        | (0.2   | )
|                      | Construction         |                    |        |       |                  |   |        |       |   |   |        |       |   |   |        |       |  
|                      | Healthcare           |                    |        |       |                  |   |        |       |   |   |        |       |   |   |        |       |  
|                      | Other                |                    |        |       |                  |   |        | (5.0   | ) |   |        |       |   |   |        | (5.0   | )
|Other                 |                      |                    | (1.9   | )      |                  |   |       |        |   |   | (3.1   | )      |   |   |       |       
|                      |                      |                    |        |        |                  |   |        |        |   |   |        |       
|Total net charge-offs |                      | $                  | (544.2 | )      |                  | $ | (153.1 | )      |   | $ | (807.3 | )      |   | $ | (268.4 | )     
|                      |                      |                    |        |        |                  |   |        |        |   |   |        |       



| |                     
| | --------------------
| | Nonperforming Assets



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|                                                                                                               |                      |                      |          |   |              |   |         |          |         |   |         |   |         | 
|-------------------------------------------------------------------------------------------------------------- | -------------------- | -------------------- | -------- | - | ------------ | - | ------- | -------- | ------- | - | ------- | - | ------- | 
|                                                                                                               |                      | June 30,             |          |   | December 31, |   |         | June 30, |        
|                                                                                                               |                      | 2007                 |          |   | 2006         |   |         | 2006     |        
|                                                                                                               |                      |                      |          |   |              |   |         |          |        
|                                                                                                               |                      | (In millions)        |         
|Nonaccrual loans:                                                                                              |                      |                      |          |   |              |   |         |          |         |   |         |  
|                                                                                                               | Mortgage loans:      |                      |          |   |              |   |         |          |         |   |         |   |        
|                                                                                                               |                      | Prime conforming     |          | $ | 14.4         |   |         | $        | 11.3    |   |         | $ | 8.5     | 
|                                                                                                               |                      | Prime non-conforming |          |   | 558.0        |   |         |          | 419.4   |   |         |   | 327.6   | 
|                                                                                                               |                      | Government           |          |   | 0.1          |   |         |          | 0.2     |   |         |   | 0.1     | 
|                                                                                                               |                      | Prime second-lien    |          |   | 161.0        |   |         |          | 142.1   |   |         |   | 69.6    | 
|                                                                                                               |                      | Nonprime*            |          |   | 8,066.2      |   |         |          | 6,736.2 |   |         |   | 5,587.3 | 
|                                                                                                               | Lending receivables: |                      |          |   |              |   |         |          |         |   |         |   |        
|                                                                                                               |                      | Warehouse**          |          |   | 189.0        |   |         |          | 1,317.7 |   |         |   | 21.5    | 
|                                                                                                               |                      | Construction***      |          |   | 130.1        |   |         |          | 68.8    |   |         |   | 13.3    | 
|                                                                                                               | Other                |                      |          |  |              |   |         | 0.1      |         |   |         |  |        
|                                                                                                               |                      |                      |          |   |              |   |         |          |        
|Total nonaccrual loans                                                                                         |                      |                      | 9,118.8  |   |              |   | 8,695.8 |          |         |   | 6,027.9 |  
|Restructured loans                                                                                             |                      |                      | 34.7     |   |              |   | 7.8     |          |         |   | 17.3    |  
|Foreclosed assets                                                                                              |                      |                      | 1,591.5  |   |              |   | 1,140.7 |          |         |   | 727.8   |  
|                                                                                                               |                      |                      |          |   |              |   |         |          |        
|Total nonperforming assets                                                                                     |                      | $                    | 10,745.0 |   |              | $ | 9,844.3 |          |         | $ | 6,773.0 |  
|                                                                                                               |                      |                      |          |   |              |   |         |          |        
|Total nonaccrual loans as a percentage of total mortgage loans
    held for investment and lending receivables |                      |                      | 12.4     | % |              |   | 10.3    | %        |         |   | 7.0     | %
|                                                                                                               |                      |                      |          |   |              |   |         |          |        
|Total nonperforming assets as a percentage of total consolidated
    assets                                    |                      |                      | 8.8      | % |              |   | 7.3     | %        |         |   | 5.4     | %
|                                                                                                               |                      |                      |          |   |              |   |         |          |        






| |   |                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Includes $871.1 million as of June 30, 2007,
    $414.7 million as of December 31, 2006 and
    $179.9 million as of June 30, 2006 of loans that were
    purchased distressed and already in nonaccrual status. In
    addition, includes $8.7 and $3.3 million as of
    June 30, 2007 and December 31, 2006, respectively, of
    nonaccrual loans that are not included in Restructured
    Loans.



| |    |                                                                                                                                                                                     
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ** | Includes $0.0 and $10.1 million of nonaccrual restructured
    loans as of June 30, 2007 and December 31, 2006,
    respectively, that are not included in Restructured
    Loans.



|    |                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|*** | Includes $18.8 and $8.6 million as of December 31,
    2006 and June 30, 2006, respectively, that are not included
    in Restructured Loans.



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|                               |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |   |        |       |  |  |       |     | 
|------------------------------ | --------------- | --------------------- | ------ | ---------- | ------------------ |  | ----- | -------------- | ------- | - | -------- | ----- |  | ---------- | ----- | --- | ----- | - | ------ | ----- |  |  | ----- | --- | 
|                               |                 | As of June 30,        |        |            | As of December 31, |  |       | As of June 30, |        
|                               |                 |                       |        |            |                    |  |       |                |        
|                               |                 | 2007                  |        |            | 2006               |  |       | 2006           |        
|                               |                 |                       |        |            |                    |  |       |                |        
|                               |                 |                       |        | Percent of |                    |  |       |                | Percent |   |          |       |  | Percent of |      
|                               |                 | Amount                |        |            | Total              |  |       | Amount         |         |   | of Total |       |  | Amount     |       |     | Total |  
|                               |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |  
|                               |                 | (Dollars in millions) |       
|Current                        |                 | $                     | 48,744 |            |                    |  | 78.2  | %              |         | $ | 55,964   |       |  |            | 81.3  | %   |       | $ | 60,834 |       |  |  | 85.0  | %  
|Past due:                      |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |   |        |       |  |  |       |    
|                               | 30 to 59 days   |                       |        | 3,939      |                    |  |       | 6.3            |         |   |          | 4,273 |  |            |       | 6.2 |       |   |        | 3,906 |  |  |       | 5.5 | 
|                               | 60 to 89 days   |                       |        | 1,705      |                    |  |       | 2.7            |         |   |          | 1,818 |  |            |       | 2.6 |       |   |        | 1,587 |  |  |       | 2.2 | 
|                               | 90 days or more |                       |        | 3,049      |                    |  |       | 4.9            |         |   |          | 3,403 |  |            |       | 5.0 |       |   |        | 2,337 |  |  |       | 3.2 | 
|Foreclosures pending           |                 |                       | 3,529  |            |                    |  | 5.7   |                |         |   | 2,132    |       |  |            | 3.1   |     |       |   | 1,697  |       |  |  | 2.4   |    
|Bankruptcies                   |                 |                       | 1,388  |            |                    |  | 2.2   |                |         |   | 1,219    |       |  |            | 1.8   |     |       |   | 1,206  |       |  |  | 1.7   |    
|                               |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |  
|Total unpaid principal balance |                 |                       | 62,354 |            |                    |  | 100.0 | %              |         |   | 68,809   |       |  |            | 100.0 | %   |       |   | 71,567 |       |  |  | 100.0 | %  
|                               |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |  
|Net premiums                   |                 |                       | 311    |            |                    |  |       |                |         |   | 627      |       |  |            |       |     |       |   | 866    |       |  |  |       |    
|                               |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |  
|Total                          |                 | $                     | 62,665 |            |                    |  |       |                |         | $ | 69,436   |       |  |            |       |     |       | $ | 72,433 |       |  |  |       |    
|                               |                 |                       |        |            |                    |  |       |                |         |   |          |       |  |            |       |     |       |  







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|                                                                  |                                                  |                          |   |          |                    |  |   |          | 
|----------------------------------------------------------------- | ------------------------------------------------ | ------------------------ | - | -------- | ------------------ |  | - | -------- | 
|                                                                  |                                                  | Unpaid Principal Balance |  
|                                                                  |                                                  |                          |  
|                                                                  |                                                  | As of June 30,           |   |          | As of December 31, | 
|                                                                  |                                                  | 2007                     |   |          | 2006               | 
|                                                                  |                                                  |                          |   |          |                    | 
|                                                                  |                                                  | (In millions)            |  
|Mortgage Loans Held for
    Sale  Domestic                       |                                                  |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                     |                          | $ | 3,061.5  |                    |  | $ | 4,999.8  | 
|                                                                  | Payment option adjustable rate mortgage loans    |                          |   | 1,177.2  |                    |  |   | 1,838.1  | 
|                                                                  | High loan-to-value (100% or more) mortgage loans |                          |   | 433.9    |                    |  |   | 770.3    | 
|                                                                  | Below market initial rate mortgage loans         |                          |   | 4.3      |                    |  |   | 24.9     | 
|                                                                 
|Mortgage Loans Held for
    Investment  Domestic                 |                                                  |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                     |                          | $ | 11,619.4 |                    |  | $ | 12,521.3 | 
|                                                                  | Payment option adjustable rate mortgage loans    |                          |   | 138.8    |                    |  |   | 117.0    | 
|                                                                  | High loan-to-value (100% or more) mortgage loans |                          |   | 9,536.0  |                    |  |   | 11,043.3 | 
|                                                                  | Below market initial rate mortgage loans         |                          |   | 133.5    |                    |  |   | 167.2    | 
|                                                                 
|Mortgage Loans  Held for Sale and
    Investment  International |                                                  |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                     |                          | $ | 4,676.3  |                    |  | $ | 4,895.1  | 
|                                                                  | Payment option adjustable rate mortgage loans    |                          |   |         |                    |  |   |         | 
|                                                                  | High loan-to-value (100% or more) mortgage loans |                          |   | 785.8    |                    |  |   | 164.2    | 
|                                                                  | Below market initial rate mortgage loans         |                          |   |         |                    |  |   |         | 



|                                                 |  |                         |          |  |      |   |          | 
|------------------------------------------------ |  | ----------------------- | -------- |  | ---- | - | -------- | 
|                                                 |  | Loan Production for the |         
|                                                 |  | Six Months Ended        |         
|                                                 |  | June 30,                |         
|                                                 |  |                         |         
|                                                 |  | 2007                    |          |  | 2006 |  
|                                                 |  |                         |          |  |      |  
|                                                 |  | (In millions)           |         
|Interest-only mortgage loans                     |  | $                       | 18,282.7 |  |      | $ | 22,387.0 | 
|Payment option adjustable rate mortgage loans    |  |                         | 6,219.8  |  |      |   | 8,423.1  | 
|High loan-to-value (100% or more) mortgage loans |  |                         | 3,440.5  |  |      |   | 3,754.2  | 
|Below market initial rate mortgage loans         |  |                         | 31.2     |  |      |   | 114.2    | 





Liquidity and Capital Resources




| |                     
| | --------------------
| | Liquidity Management



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| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Maintaining sufficient short- and long-term financing: We
    have significant short- and long-term financing needs. We manage
    our liquidity by financing our assets in a manner consistent
    with their liquidity profile.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a.Short-term financing: We require short-term
    funding to finance our mortgage loans held for sale, lending
    receivables and various other liquid assets. We forecast our
    cash position and our potential funding needs daily, taking into
    account debt maturities and potential peak balance sheet levels
    over a medium-term time horizon. We also manage the timing of
    all debt maturities to limit any concentrations. As of
    June 30, 2007, available sources of short-term liquidity
    totaled $117.4 billion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | b.Long-term financing: Our long-term financing
    needs arise primarily from our mortgage loans held for
    investment, mortgage servicing rights, real estate investments
    and assets used for over-collateralization of our funding
    conduits. We manage our long-term debt maturities and credit
    facility expirations to minimize refinancing risk and maturity
    concentrations. Further, we endeavor to obtain an appropriate
    debt funding mix to complement our equity capital. We consider
    the available capacity and relative cost given market
    constraints, as well as our commitment to our credit ratings. We
    regularly assess the term structure of our assets and
    liabilities and interest rate risk. We limit the liability
    maturities in any one period (monthly, quarterly and annually).
    Consequently, we have achieved what we believe is a
    well-laddered unsecured maturity profile. Our long-term debt
    typically consists of collateralized borrowings in
    securitization trusts, unsecured debt issued in the public debt
    capital markets and secured financing through the Federal Home
    Loan Bank (FHLB).
|
| | During the quarter ended June 30, 2007, we issued the
    following senior long-term unsecured notes: a May 2007 issuance
    of $2.25 billion dual-tranche transaction ($1 billion
    2-year floating rate debt and $1.25 billion 5-year fixed
    rate debt), and a June 2007 issuance of
    600 million
    3.25-year floating rate note and £400 million 7-year
    fixed rate note ($1.6 billion U.S. dollars). In
    addition, in June 2007 we issued $1.8 billion MXN pesos of
    medium-term notes ($0.2 billion U.S. dollars). We do not
    have any additional long-term senior unsecured debt maturing
    throughout the remainder of 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Maintaining diversified sources of funding: The funding
    sources utilized are primarily determined by the type of asset
    financed and associated with a particular product or business.
    We diversify our financing programs, credit providers, debt
    investors and dealers to reduce reliance upon any one source of
    liquidity and distribution. We continue to diversify our funding
    strategy in order to promote improved pricing and drive access
    to new sources of liquidity. We increased our committed capacity
    by net, $2.1 and $3.1 billion for the three-and six-months
    ended June 30, 2007, respectively.
|
| |  | Maintaining sufficient reserve liquidity: We maintain a
    portfolio of money market instruments to support cash
    fluctuations, which we consider our liquidity portfolio. In
    addition, we maintain domestic unsecured revolving bank credit
    facilities that are available to cover contingent funding needs.
    In June 2007, we renewed facilities comprised of a 364-day
    revolver which now matures in June 2008 and a 3-year syndicated
    revolver which now matures in June 2010. Our Canadian operations
    maintain an unsecured Canadian syndicated bank line.                                                          





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|                                           |       |               |         |           |            |   |         |           |  |   |         |         | 
|------------------------------------------ | ----- | ------------- | ------- | --------- | ---------- | - | ------- | --------- |  | - | ------- | ------- | 
|                                           |       |               |         | Unsecured |            |   | Total   |          
|                                           |       | Unsecured     |         |           | Committed- |   |         | Unsecured | 
|                                           |       | Committed-    |         |           | Unused     |   |         | Committed | 
|                                           |       | Outstanding   |         |           | Capacity   |   |         | Capacity  | 
|                                           |       |               |         |           |            |   |         |           | 
|                                           |       | (In millions) |        
|Liquidity portfolio (investment balance)   |       | $             |        |           |            | $ | 2,912.5 |           |  | $ | 2,912.5 |        
|Syndicated bank credit facilities revolver |       |               |        |           |            |   | 875.0   |           |  |   | 875.0   |        
|364-day bank credit facilities revolver    |       |               |        |           |            |   | 875.0   |           |  |   | 875.0   |        
|International bank lines                   |       |               | 301.8   |           |            |   | 101.3   |           |  |   | 403.1   |        
|Bank term loan                             |       |               | 1,750.0 |           |            |   |        |           |  |   | 1,750.0 |        
|                                           |       |               |         |           |            |   |         |           | 
|                                           | Total |               | $       | 2,051.8   |            |   | $       | 4,763.8   |  |   | $       | 6,815.6 | 
|                                           |       |               |         |           |            |   |         |           | 



| |                   
| | ------------------
| | Capital Management





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| |                
| | ---------------
| | Funding Sources

|                                                                   |                                      |                               |           |          |                   |   |           |          |           | 
|------------------------------------------------------------------ | ------------------------------------ | ----------------------------- | --------- | -------- | ----------------- | - | --------- | -------- | --------- | 
|                                                                   |                                      | Outstanding as of             |          
|                                                                   |                                      |                               |          
|                                                                   |                                      | June 30, 2007                 |           |          | December 31, 2006 |  
|                                                                   |                                      |                               |           |          |                   |  
|                                                                   |                                      | (In millions)                 |          
|Collateralized borrowings in securitization trusts 
    long-term |                                      | $                             | 45,122.2  |          |                   | $ | 53,299.5  |         
|                                                                   | Senior unsecured notes  long-term   |                               |           | 15,140.0 |                   |   |           | 12,408.8 |          
|                                                                   | Subordinated unsecured note          |                               |           | 1,000.0  |                   |   |           | 1,000.0  |          
|                                                                   | Term loans and revolvers  long-term |                               |           | 1,750.0  |                   |   |           | 1,750.0  |          
|                                                                   | Bank lines  short-term              |                               |           | 822.2    |                   |   |           | 756.0    |          
|                                                                   | Bank lines  long-term               |                               |           | 25.8     |                   |   |           | 21.8     |          
|                                                                   | Other unsecured  short-term         |                               |           | 315.4    |                   |   |           | 392.7    |          
|                                                                   | Other unsecured  long-term          |                               |           | 695.9    |                   |   |           | 643.6    |          
|                                                                   |                                      |                               |           |          |                   |  
|Subtotal unsecured borrowings                                      |                                      |                               | 19,749.3  |          |                   |   | 16,972.9  |         
|                                                                   | Secured  short-term                 |                               |           | 22,065.4 |                   |   |           | 29,065.9 |          
|                                                                   | Secured  long-term                  |                               |           | 1,758.6  |                   |   |           | 6,562.6  |          
|                                                                   | FHLB  long-term                     |                               |           | 9,414.0  |                   |   |           | 7,279.0  |          
|                                                                   |                                      |                               |           |          |                   |  
|Subtotal secured borrowings                                        |                                      |                               | 33,238.0  |          |                   |   | 42,907.5  |         
|                                                                   |                                      |                               |           |          |                   |  
|                                                                   |                                      | Total borrowings              |           |          | 98,109.5          |   |           |          | 113,179.9 | 
|Bank deposits                                                      |                                      |                               | 10,652.6  |          |                   |   | 9,851.0   |         
|                                                                   |                                      |                               |           |          |                   |  
|                                                                   |                                      | Total borrowings and deposits |           |          | 108,762.1         |   |           |          | 123,030.9 | 
|Off-balance sheet financings                                       |                                      |                               | 138,203.2 |          |                   |   | 119,295.8 |         
|                                                                   |                                      |                               |           |          |                   |  
|                                                                   |                                      | Total                         |           | $        | 246,965.3         |   |           | $        | 242,326.7 | 
|                                                                   |                                      |                               |           |          |                   |  






|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |           |  |  |    |     |  
|------------- | ---------------- | ----------------- | -------- | --------------------- | ----------------- |  | -- | ------ | - | - | ---------------- | --------- |  |  | -- | --- | -
|              |                  | Outstanding as of |         
|              |                  |                   |         
|              |                  | June 30, 2007     |          |                       | December 31, 2006 | 
|              |                  |                   |          |                       |                   | 
|              |                  | Amount            |          |                       | Percent of Total  |  |    | Amount |   |   | Percent of Total |          
|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |          
|              |                  |                   |          | (Dollars in millions) |                   |  |   
|Domestic      |                  | $                 | 85,525.7 |                       |                   |  | 87 | %      |   | $ | 100,307.5        |           |  |  | 89 | %  
|International |                  |                   | 12,583.8 |                       |                   |  | 13 |        |   |   | 12,872.4         |           |  |  | 11 |    
|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |          
|              | Total borrowings |                   | $        | 98,109.5              |                   |  |    | 100    | % |   | $                | 113,179.9 |  |  |    | 100 | %
|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |          



|                                |  |               |       |  |              |   |       |                 |  |   |                  |  |  |          |       |  |              |   |        |          |  |   |              |  |  |   |       |  |  |   |       | 
|------------------------------- |  | ------------- | ----- |  | ------------ | - | ----- | --------------- |  | - | ---------------- |  |  | -------- | ----- |  | ------------ | - | ------ | -------- |  | - | ------------ |  |  | - | ----- |  |  | - | ----- | 
|                                |  | Committed     |       |  | Uncommitted  |   |       | Total Liquidity |  |   | Unused Liquidity | 
|                                |  | Facilities    |       |  | Facilities   |   |       | Facilities      |  |   | Facilities       | 
|                                |  |               |       |  |              |   |       |                 |  |   |                  | 
|                                |  | June 30,      |       |  | December 31, |   |       | June 30,        |  |   | December 31,     |  |  | June 30, |       |  | December 31, |   |        | June 30, |  |   | December 31, | 
|                                |  | 2007          |       |  | 2006         |   |       | 2007            |  |   | 2006             |  |  | 2007     |       |  | 2006         |   |        | 2007     |  |   | 2006         | 
|-                               |  |               |       |  |              |   |       |                 |  |   |                  |  |  |          |       |  |              |   |        |          |  |   |              | 
|                                |  | (In billions) |      
|Unsecured funding facilities(a) |  | $             | 3.90  |  |              | $ | 3.86  |                 |  | $ | 1.98             |  |  | $        | 1.77  |  |              | $ | 5.88   |          |  | $ | 5.63         |  |  | $ | 2.96  |  |  | $ | 2.71  | 
|Secured funding facilities      |  |               | 32.42 |  |              |   | 29.37 |                 |  |   | 100.50           |  |  |          | 73.28 |  |              |   | 132.92 |          |  |   | 102.65       |  |  |   | 99.69 |  |  |   | 59.74 | 






|   |                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) | We maintain $3.89 billion of unsecured syndicated bank
    facilities, consisting of a $1.75 billion bank term loan
    committed through July 2008, an $875 million syndicated
    line of credit committed through July 2010,

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| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | an $875 million 364-day revolver committed through June
    2008, and a $386 million (U.S. dollar) Canadian
    syndicated bank line committed through December 2007.



| |                   
| | ------------------
| | Secured Borrowings





|                                                                                 |  |                     |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |   |          |  |  |   |           | 
|-------------------------------------------------------------------------------- |  | ------------------- | -------- |  | ----------------------- | - | -------- | -------- |  | - | ----------- |  |  | --------------- | -------- |  | -------- | - | -------- |  |  | - | --------- | 
|                                                                                 |  | As of June 30, 2007 |          |  | As of December 31, 2006 |  
|                                                                                 |  |                     |          |  |                         |  
|                                                                                 |  | Total Secured       |          |  | Total Secured           |  
|                                                                                 |  |                     |          |  |                         |  
|                                                                                 |  | Outstanding         |          |  | Unused Capacity         |   |          | Capacity |  |   | Outstanding |  |  | Unused Capacity |          |  | Capacity |  
|                                                                                 |  |                     |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  
|                                                                                 |  | (In millions)       |         
|Mortgage Interest Networking Trust (MINT)                                        |  | $                   | 2,256.2  |  |                         | $ | 22,743.8 |          |  | $ | 25,000.0    |  |  | $               | 1,402.9  |  |          | $ | 23,597.1 |  |  | $ | 25,000.0  | 
|MINT I, LLC                                                                      |  |                     | 106.0    |  |                         |   | 24,894.0 |          |  |   | 25,000.0    |  |  |                 |         |  |          |   |         |  |  |   |          | 
|MINT II, LLC                                                                     |  |                     | 3,182.0  |  |                         |   | 21,818.0 |          |  |   | 25,000.0    |  |  |                 | 5,831.2  |  |          |   | 19,168.8 |  |  |   | 25,000.0  | 
|Repurchase agreements                                                            |  |                     | 9,091.6  |  |                         |   | 12,447.4 |          |  |   | 21,539.0    |  |  |                 | 11,505.5 |  |          |   | 7,813.4  |  |  |   | 19,318.9  | 
|Receivables Lending Agreement                                                    |  |                     | 130.0    |  |                         |   | 1,080.5  |          |  |   | 1,210.5     |  |  |                 | 5,250.0  |  |          |   | 322.8    |  |  |   | 5,572.8   | 
|Mortgage Asset Lending Agreement                                                 |  |                     | 830.0    |  |                         |   | 6,638.5  |          |  |   | 7,468.5     |  |  |                 | 1,120.0  |  |          |   | 1,836.3  |  |  |   | 2,956.3   | 
|Bank facilities for construction and commercial business lending
    receivables |  |                     | 1,830.0  |  |                         |   | 70.2     |          |  |   | 1,900.2     |  |  |                 | 1,700.0  |  |          |   |         |  |  |   | 1,700.0   | 
|Bank facility for mortgage servicing rights                                      |  |                     | 1,300.0  |  |                         |   |         |          |  |   | 1,300.0     |  |  |                 | 1,275.0  |  |          |   | 25.0     |  |  |   | 1,300.0   | 
|Other                                                                            |  |                     | 5,098.2  |  |                         |   | 8,343.5  |          |  |   | 13,441.7    |  |  |                 | 7,543.9  |  |          |   | 4,671.6  |  |  |   | 12,215.5  | 
|                                                                                 |  |                     |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  
|Total excluding FHLB advances                                                    |  |                     | 23,824.0 |  |                         |   | 98,035.9 |          |  |   | 121,859.9   |  |  |                 | 35,628.5 |  |          |   | 57,435.0 |  |  |   | 93,063.5  | 
|FHLB advances                                                                    |  |                     | 9,414.0  |  |                         |   | 1,651.2  |          |  |   | 11,065.2    |  |  |                 | 7,279.0  |  |          |   | 2,305.3  |  |  |   | 9,584.3   | 
|                                                                                 |  |                     |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  
|Total secured borrowings                                                         |  | $                   | 33,238.0 |  |                         | $ | 99,687.1 |          |  | $ | 132,925.1   |  |  | $               | 42,907.5 |  |          | $ | 59,740.3 |  |  | $ | 102,647.8 | 
|                                                                                 |  |                     |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  



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|                                      |  |                     |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |   |          |  |  |   |          | 
|------------------------------------- |  | ------------------- | -------- | ------- | ----------- | - | -------- | ----------- |  | ----- | --------- |  |  | ----------- | -------- |  | -------- | - | -------- |  |  | - | -------- | 
|                                      |  | As of June 30, 2007 |         
|                                      |  |                     |         
|                                      |  |                     |          | Secured |             |   | Secured  |             |  | Total |          
|                                      |  | Secured             |          |         | Secured     |   |          | Total       |  |       | Committed |  |  | Uncommitted |          |  | Secured  |  
|                                      |  | Committed           |          |         | Uncommitted |   |          | Secured     |  |       | Unused    |  |  | Unused      |          |  | Unused   |  
|                                      |  | Outstanding         |          |         | Outstanding |   |          | Outstanding |  |       | Capacity  |  |  | Capacity    |          |  | Capacity |  
|                                      |  |                     |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |  
|                                      |  | (In millions)       |         
|Mortgage loans & warehouse lending(a) |  | $                   | 10,074.8 |         |             | $ | 19,229.1 |             |  | $     | 29,303.9  |  |  | $           | 18,247.3 |  |          | $ | 81,148.9 |  |  | $ | 99,396.2 | 
|Other lending receivables(b)          |  |                     | 1,830.0  |         |             |   |         |             |  |       | 1,830.0   |  |  |             | 70.2     |  |          |   |         |  |  |   | 70.2     | 
|Mortgage servicing rights(c)          |  |                     | 1,300.0  |         |             |   |         |             |  |       | 1,300.0   |  |  |             |         |  |          |   |         |  |  |   |         | 
|Other                                 |  |                     | 679.3    |         |             |   | 124.8    |             |  |       | 804.1     |  |  |             | 220.7    |  |          |   |         |  |  |   | 220.7    | 
|                                      |  |                     |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |  
|                                      |  | $                   | 13,884.1 |         |             | $ | 19,353.9 |             |  | $     | 33,238.0  |  |  | $           | 18,538.2 |  |          | $ | 81,148.9 |  |  | $ | 99,687.1 | 
|                                      |  |                     |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |  

|                                      |  |                         |          |         |             |   |          |             |  |       |           |  |  |             |         |  |          |   |          |  |  |   |          | 
|------------------------------------- |  | ----------------------- | -------- | ------- | ----------- | - | -------- | ----------- |  | ----- | --------- |  |  | ----------- | ------- |  | -------- | - | -------- |  |  | - | -------- | 
|                                      |  | As of December 31, 2006 |         
|                                      |  |                         |         
|                                      |  |                         |          | Secured |             |   | Secured  |             |  | Total |          
|                                      |  | Secured                 |          |         | Secured     |   |          | Total       |  |       | Committed |  |  | Uncommitted |         |  | Secured  |  
|                                      |  | Committed               |          |         | Uncommitted |   |          | Secured     |  |       | Unused    |  |  | Unused      |         |  | Unused   |  
|                                      |  | Outstanding             |          |         | Outstanding |   |          | Outstanding |  |       | Capacity  |  |  | Capacity    |         |  | Capacity |  
|                                      |  |                         |          |         |             |   |          |             |  |       |           |  |  |             |         |  |          |  
|                                      |  | (In millions)           |         
|Mortgage loans & warehouse lending(a) |  | $                       | 17,815.3 |         |             | $ | 21,388.4 |             |  | $     | 39,203.7  |  |  | $           | 7,655.7 |  |          | $ | 51,888.3 |  |  | $ | 59,544.0 | 
|Other lending receivables(b)          |  |                         | 1,700.0  |         |             |   |         |             |  |       | 1,700.0   |  |  |             |        |  |          |   |         |  |  |   |         | 
|Mortgage servicing rights(c)          |  |                         | 1,275.0  |         |             |   |         |             |  |       | 1,275.0   |  |  |             | 25.0    |  |          |   |         |  |  |   | 25.0     | 
|Other                                 |  |                         | 728.8    |         |             |   |         |             |  |       | 728.8     |  |  |             | 171.3   |  |          |   |         |  |  |   | 171.3    | 
|                                      |  |                         |          |         |             |   |          |             |  |       |           |  |  |             |         |  |          |  
|                                      |  | $                       | 21,519.1 |         |             | $ | 21,388.4 |             |  | $     | 42,907.5  |  |  | $           | 7,852.0 |  |          | $ | 51,888.3 |  |  | $ | 59,740.3 | 
|                                      |  |                         |          |         |             |   |          |             |  |       |           |  |  |             |         |  |          |  






|    |                                                                        
|--- | -----------------------------------------------------------------------
|(a) | Facilities to fund mortgage loan and warehouse lending
    receivables.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Mortgage Asset Lending Agreement, or MALA, is a secured
    aggregation facility that funds residential mortgage loans,
    during the aggregation period. The facility receives funding
    from a syndicate of asset-backed commercial paper vehicles. MALA
    shares a funding commitment with Receivables Lending Agreement,
    or RLA, an asset-backed commercial paper facility that funds our
    warehouse lending receivables. The MALA and RLA facilities have
    both short-term and long-term commitments. The two facilities
    had aggregate liquidity commitments of $8.7 billion as of
    June 30, 2007, which comprises a one-year commitment of
    $2.2 billion and a three-year commitment of
    $6.5 billion.                                                                                                                                                                             
|
| |  | MINT I, LLC, or MINT I, was created during the second
    quarter of 2007, increasing outstanding liquidity by
    $25 billion. MINT I is an on balance sheet secured
    aggregation vehicle that provides us with financing for mortgage
    loans during the aggregation period and for warehouse lending
    receivables. MINT I obtains financing through the issuance
    of extendable notes, which are secured by the mortgage loans and
    warehouse lending receivables. As of June 30, 2007,
    MINT I had uncommitted liquidity of approximately
    $25 billion with approximately $106 million of
    extendable notes outstanding. During the third quarter of 2007,
    our intent is to replace the amounts financed by MINT with
    extendable notes issued by MINT I and to terminate the MINT
    program as soon as practicable thereafter, causing a reduction
    of liquidity to prior levels.

46



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other secured facilities include certain facilities to fund
    mortgage loans prior to their sale or securitization. As of
    June 30, 2007, in addition to MINT, MINT I, MINT II,
    MALA and RLA, we had £4.7 billion of liquidity
    commitments to fund loans in the United Kingdom,
    1.9 billion
    of liquidity commitments to fund loans originated in The
    Netherlands and Germany, a 250.0 million Australian dollar
    liquidity commitment to fund loans in Australia and a
    710.9 million MXN pesos liquidity commitment to fund loans
    in Mexico.
|
| |  | GMAC Bank has entered into an advances agreement with the FHLB.
    As of June 30, 2007, we had total borrowing capacity of
    $11.1 billion under this agreement. Under the arrangement
    with the FHLB, we are able to fund mortgage loans, investments
    securities and certain lending receivables.                                                                                                                                                                                                                                                                     



|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(b) | Facilities to fund residential construction and commercial
    business lending receivables.



| |   |                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other secured borrowings include facilities that fund
    construction and commercial business lending receivables, for
    which we had aggregate liquidity commitments of
    $1.9 billion as of June 30, 2007, which includes
    £100.0 million of liquidity commitments to fund
    lending receivables in the United Kingdom.



|    |                                                                                    
|--- | -----------------------------------------------------------------------------------
|(c) | Facilities to fund servicing advances, servicing rights and
    residual interests.



| |   |                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In addition, we have arranged facilities to fund mortgage
    servicing rights and mortgage servicing advances either on a
    committed or uncommitted basis. These facilities provided
    aggregate liquidity commitments of $2.3 billion as of
    June 30, 2007.



| |                     
| | --------------------
| | Unsecured Borrowings



|                                       |                                   |                             |         |         |                   |  |         |         |         | 
|-------------------------------------- | --------------------------------- | --------------------------- | ------- | ------- | ----------------- |  | ------- | ------- | ------- | 
|                                       |                                   | Outstanding as of           |        
|                                       |                                   |                             |        
|                                       |                                   | June 30, 2007               |         |         | December 31, 2006 | 
|                                       |                                   |                             |         |         |                   | 
|                                       |                                   | (In millions)               |        
|Unsecured committed borrowings:        |                                   |                             |         |         |                   |  |         |        
|                                       | Bank term loan                    |                             | $       | 1,750.0 |                   |  | $       | 1,750.0 |        
|                                       | Canadian syndicated bank revolver |                             |         | 290.6   |                   |  |         | 213.9   |        
|                                       | Australian bank line              |                             |         | 11.2    |                   |  |         | 2.4     |        
|                                       |                                   |                             |         |         |                   | 
|Total unsecured committed borrowings   |                                   |                             | 2,051.8 |         |                   |  | 1,966.3 |        
|Unsecured uncommitted borrowings:      |                                   |                             |         |         |                   |  |         |        
|                                       | Lines of credit                   |                             |         | 448.7   |                   |  |         | 161.8   |        
|                                       | Builder notes                     |                             |         | 62.1    |                   |  |         | 74.5    |        
|                                       | International commercial paper    |                             |         | 250.7   |                   |  |         | 186.2   |        
|                                       | International medium-term notes   |                             |         | 695.9   |                   |  |         | 643.6   |        
|                                       | Investor custodial borrowings     |                             |         |        |                   |  |         | 131.7   |        
|                                       | Other                             |                             |         | 100.0   |                   |  |         | 400.0   |        
|                                       |                                   |                             |         |         |                   | 
|Total unsecured uncommitted borrowings |                                   |                             | 1,557.4 |         |                   |  | 1,597.8 |        
|                                       |                                   |                             |         |         |                   | 
|                                       |                                   | Total unsecured borrowings* |         | $       | 3,609.2           |  |         | $       | 3,564.1 | 
|                                       |                                   |                             |         |         |                   | 






|  |                                                                                                                                                                                                                                         
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excludes senior unsecured long-term debt of $15.1 and
    $12.4 billion as of June 30, 2007 and
    December 31, 2006, respectively and a subordinated
    unsecured note of $1.0 billion as of June 30, 2007 and
    December 31, 2006.



47



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| |              
| | -------------
| | Bank Deposits





| |                             
| | ----------------------------
| | Off-Balance Sheet Financings







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Walnut Grove Funding is a secured aggregation facility that
    funds home equity loans, home equity lines of credit, high
    loan-to-value mortgage loans and certain non-conforming fixed
    rate mortgage loans through the issuance of asset-backed
    commercial paper. Walnut Grove Funding provided
    $368.4 million of funding as of June 30, 2007 and
    $275.4 million as of December 31, 2006, and was
    permitted to finance a maximum of $1.0 billion as of
    June 30, 2007 and $900.0 million as of
    December 31, 2006.
|
| |  | Horsham Funding is a facility that funds defaulted government
    insured or guaranteed residential mortgage loans repurchased
    through the issuance of asset-backed commercial paper. Horsham
    Funding provided $108.3 million of funding as of
    June 30, 2007 and $102.4 million as of
    December 31, 2006, and was permitted to finance a maximum
    amount of $200.0 million as of June 30, 2007 and
    December 31, 2006.                                                                                                       

Credit Ratings




|              |  |            |  |             |  |         
|------------- |  | ---------- |  | ----------- |  | --------
|              |  | Commercial |  |             |  |         
|Rating Agency |  | Paper      |  | Senior Debt |  | Outlook 
|              |  |            |  |             |  |         
|Fitch         |  | F2         |  | BBB         |  | Negative
|Moodys       |  | P-3        |  | Baa3        |  | Negative
|S&P           |  | A-3        |  | BBB-        |  | Stable  
|DBRS          |  | R-3        |  | BBB Low     |  | Stable  





48



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Recently Issued Accounting Standards









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





49



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|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |      |      |     |      |      |      |      |  
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------- | ----------------------------------------------------------- | ------ | ---- | --- | ---- | ---- | ---- | -- | ---- | ---- | ---- | --- | ---- | ---- | ---- | ---- | -
|                                                                                                  |                                                        | Change in Fair Value                      |                                                            
|                                                                                                  |                                                        | as of                                     |                                                            
|                                                                                                  |                                                        | June 30, 2007                             |                                                            
|                                                                                                  |                                                        |                                           |                                                            
|Change in Interest Rate (basis points)                                                            |                                                        | -100                                      |                                                             |        | -50  |     |      | +50  |      |    | +100 |     
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        | (In millions)                             |                                                            
|Mortgage serving rights and other financial instruments:                                          |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |      |      |     |      |     
|                                                                                                  | Mortgage servicing rights and other retained interests |                                           | $                                                           | (1,549 | )    |     | $    | (675 | )    |    | $    | 497  |      |     | $    | 831  |     
|                                                                                                  | Impact of servicing hedge:                             |                                           |                                                             |        |      |     |      |      |      |    |      |      |      |     |      |      |     
|                                                                                                  |                                                        | Swap-based                                |                                                             |        | 755  |     |      |      | 319  |    |      |      | (226 | )   |      |      | (388 | )   
|                                                                                                  |                                                        | Treasury-based                            |                                                             |        | 141  |     |      |      | 68   |    |      |      | (65  | )   |      |      | (128 | )   
|                                                                                                  |                                                        | Others                                    |                                                             |        | 588  |     |      |      | 288  |    |      |      | (270 | )   |      |      | (519 | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        |                                           | Mortgage servicing rights and other retained interests, net |        |      | (65 | )    |      |      | 0  |      |      |      | (64 | )    |      |      | (204 | )
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|                                                                                                  | Committed pipeline                                     |                                           |                                                             | 171    |      |     |      | 98   |      |    |      | (139 | )    |     |      | (320 | )   
|                                                                                                  | Mortgage loan inventory                                |                                           |                                                             | 287    |      |     |      | 160  |      |    |      | (195 | )    |     |      | (420 | )   
|                                                                                                  | Impact of associated derivative instruments:           |                                           |                                                             |        |      |     |      |      |      |    |      |      |      |     |      |      |     
|                                                                                                  |                                                        | Mortgage-based                            |                                                             |        | (199 | )   |      |      | (117 | )  |      |      | 160  |     |      |      | 364  |     
|                                                                                                  |                                                        | Eurodollar-based                          |                                                             |        | (20  | )   |      |      | (10  | )  |      |      | 10   |     |      |      | 20   |     
|                                                                                                  |                                                        | Others                                    |                                                             |        | (131 | )   |      |      | (71  | )  |      |      | 75   |     |      |      | 157  |     
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        |                                           | Committed pipeline and mortgage loan inventory, net         |        |      | 108 |      |      |      | 60 |      |      |      | (89 | )    |      |      | (199 | )
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|Net change in fair value related to other businesses                                              |                                                        |                                           | 5                                                           |        |      |     | 3    |      |      |    | (4   | )    |      |     | (6   | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|GMAC Bank:                                                                                        |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |      |      |     |      |     
|                                                                                                  | Securities portfolio                                   |                                           |                                                             | 14     |      |     |      | 7    |      |    |      | (7   | )    |     |      | (13  | )   
|                                                                                                  | Mortgage loans                                         |                                           |                                                             | 257    |      |     |      | 140  |      |    |      | (153 | )    |     |      | (316 | )   
|                                                                                                  | Deposit liabilities                                    |                                           |                                                             | (17    | )    |     |      | (8   | )    |    |      | 8    |      |     |      | 16   |     
|                                                                                                  | Federal Home Loan Bank advances                        |                                           |                                                             | (212   | )    |     |      | (109 | )    |    |      | 118  |      |     |      | 243  |     
|                                                                                                  | Other liabilities                                      |                                           |                                                             | (13    | )    |     |      | (6   | )    |    |      | 6    |      |     |      | 13   |     
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        | GMAC Bank, net                            |                                                             |        | 29   |     |      |      | 24   |    |      |      | (28  | )   |      |      | (57  | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|Notes payable and capital securities                                                              |                                                        |                                           | (364                                                        | )      |      |     | (179 | )    |      |    | 175  |      |      |     | 346  |     
|Impact of associated derivative instruments:                                                      |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |      |      |     |      |     
|                                                                                                  |                                                        | Swap-based                                |                                                             |        | 375  |     |      |      | 185  |    |      |      | (179 | )   |      |      | (353 | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        | Notes payable and capital securities, net |                                                             |        | 11   |     |      |      | 6    |    |      |      | (4   | )   |      |      | (7   | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|Insurance company investment portfolios                                                           |                                                        |                                           | 2                                                           |        |      |     | 1    |      |      |    | (1   | )    |      |     | (3   | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|Net change in fair value related to mortgage servicing rights
    and other financial instruments |                                                        | $                                         | 90                                                          |        |      | $   | 94   |      |      | $  | (190 | )    |      | $   | (476 | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     
|Net change in fair value related to broker-dealer trading
    securities                          |                                                        | $                                         | 1                                                           |        |      | $   | 1    |      |      | $  | (2   | )    |      | $   | (4   | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |      |    |      |     

50



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|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |      |      |     |      |      |      |      |  
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------- | ----------------------------------------------------------- | ---- | ---- | --- | ---- | ---- | ---- | -- | ---- | ---- | ---- | --- | ---- | ---- | ---- | ---- | -
|                                                                                                  |                                                        | Change in Fair Value                      |                                                            
|                                                                                                  |                                                        | as of                                     |                                                            
|                                                                                                  |                                                        | June 30, 2006                             |                                                            
|                                                                                                  |                                                        |                                           |                                                            
|Change in Interest Rate (basis points)                                                            |                                                        | -100                                      |                                                             |      | -50  |     |      | +50  |      |    | +100 |     
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        | (In millions)                             |                                                            
|Mortgage serving rights and other financial instruments:                                          |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |      |      |     |      |     
|                                                                                                  | Mortgage servicing rights and other retained interests |                                           | $                                                           | (737 | )    |     | $    | (288 | )    |    | $    | 153  |      |     | $    | 196  |     
|                                                                                                  | Impact of servicing hedge:                             |                                           |                                                             |      |      |     |      |      |      |    |      |      |      |     |      |      |     
|                                                                                                  |                                                        | Swap-based                                |                                                             |      | 42   |     |      |      | (15  | )  |      |      | 69   |     |      |      | 175  |     
|                                                                                                  |                                                        | Treasury-based                            |                                                             |      | 95   |     |      |      | 47   |    |      |      | (45  | )   |      |      | (88  | )   
|                                                                                                  |                                                        | Others                                    |                                                             |      | 518  |     |      |      | 255  |    |      |      | (259 | )   |      |      | (524 | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        |                                           | Mortgage servicing rights and other retained interests, net |      |      | (82 | )    |      |      | (1 | )    |      |      | (82 | )    |      |      | (241 | )
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|                                                                                                  | Committed pipeline                                     |                                           |                                                             | 70   |      |     |      | 48   |      |    |      | (88  | )    |     |      | (214 | )   
|                                                                                                  | Mortgage loan inventory                                |                                           |                                                             | 256  |      |     |      | 143  |      |    |      | (170 | )    |     |      | (364 | )   
|                                                                                                  | Impact of associated derivative instruments:           |                                           |                                                             |      |      |     |      |      |      |    |      |      |      |     |      |      |     
|                                                                                                  |                                                        | Mortgage-based                            |                                                             |      | (167 | )   |      |      | (104 | )  |      |      | 152  |     |      |      | 346  |     
|                                                                                                  |                                                        | Eurodollar-based                          |                                                             |      | (17  | )   |      |      | (9   | )  |      |      | 9    |     |      |      | 17   |     
|                                                                                                  |                                                        | Others                                    |                                                             |      | (129 | )   |      |      | (66  | )  |      |      | 68   |     |      |      | 138  |     
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        |                                           | Committed pipeline and mortgage loan inventory, net         |      |      | 13  |      |      |      | 12 |      |      |      | (29 | )    |      |      | (77  | )
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|Net change in fair value related to other businesses                                              |                                                        |                                           | 3                                                           |      |      |     | 2    |      |      |    | (3   | )    |      |     | (5   | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|GMAC Bank:                                                                                        |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |      |      |     |      |     
|                                                                                                  | Securities portfolio                                   |                                           |                                                             | 1    |      |     |      | 1    |      |    |      | (1   | )    |     |      | (1   | )   
|                                                                                                  | Mortgage loans                                         |                                           |                                                             | 179  |      |     |      | 97   |      |    |      | (108 | )    |     |      | (224 | )   
|                                                                                                  | Deposit liabilities                                    |                                           |                                                             | (10  | )    |     |      | (5   | )    |    |      | 5    |      |     |      | 10   |     
|                                                                                                  | Federal Home Loan Bank advances                        |                                           |                                                             | (140 | )    |     |      | (71  | )    |    |      | 73   |      |     |      | 146  |     
|                                                                                                  | Other liabilities                                      |                                           |                                                             | (26  | )    |     |      | (13  | )    |    |      | 13   |      |     |      | 25   |     
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        | GMAC Bank, net                            |                                                             |      | 4    |     |      |      | 9    |    |      |      | (18  | )   |      |      | (44  | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|Notes payable and capital securities                                                              |                                                        |                                           | (291                                                        | )    |      |     | (143 | )    |      |    | 139  |      |      |     | 275  |     
|Impact of associated derivative instruments:                                                      |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |      |      |     |      |     
|                                                                                                  |                                                        | Swap-based                                |                                                             |      | 334  |     |      |      | 165  |    |      |      | (161 | )   |      |      | (318 | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|                                                                                                  |                                                        | Notes payable and capital securities, net |                                                             |      | 43   |     |      |      | 22   |    |      |      | (22  | )   |      |      | (43  | )   
|Insurance company investment portfolios                                                           |                                                        |                                           | 3                                                           |      |      |     | 2    |      |      |    | (2   | )    |      |     | (4   | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|Net change in fair value related to mortgage servicing rights
    and other financial instruments |                                                        | $                                         | (16                                                         | )    |      | $   | 46   |      |      | $  | (156 | )    |      | $   | (414 | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     
|Net change in fair value related to broker-dealer trading
    securities                          |                                                        | $                                         |                                                            |      |      | $   | 1    |      |      | $  | (1   | )    |      | $   | (3   | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |      |    |      |     






Item 4.  Controls and Procedures.


13a-15(e)


51



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13a-15(f)




52



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PART II  OTHER INFORMATION





Item 1.  Legal Proceedings.




Kessler.


Santiago.


Murray.


53



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Safeco Ins. Co., et al. v. Burr, et al


Parthiban. Murray Murray.







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



| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

10-K 10-K




| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





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| |                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Rating agencies may downgrade their ratings for us in the
    future, which would adversely affect our ability to raise
    capital in the debt markets at attractive rates and increase the
    interest that we pay on our outstanding publicly traded notes,
    which could have a material adverse effect on our results of
    operations and financial condition.







| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Recent developments in the residential mortgage market may
    continue to adversely affect our earnings and financial
    condition.



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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 use estimates and various assumptions in determining
    the fair value of certain of our assets, and in determining our
    allowance for loan losses. If our estimates or assumptions prove
    to be incorrect, we may be required to write down the value of
    these assets or increase our allowance for loan losses, either
    of which could adversely affect our earnings and financial
    condition.



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| |                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We remain exposed to credit risk associated with our
    business lending activities, including our warehouse lending
    activities, and declines in the value of the collateral securing
    these loans or negative developments affecting the borrower
    could adversely affect our profitability and financial
    condition.





| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Recent negative developments in the secondary mortgage
    markets have led credit rating agencies to make requirements for
    rating mortgage securities more stringent, and market
    participants are still evaluating the impact.





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



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| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have concluded that a material weakness exists in the
    design and operation of our internal controls as of
    June 30, 2007 which, if our remediation efforts fail, could
    result in material misstatements in our financial statements in
    future periods.








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







Item 3.  Defaults Upon Senior Securities.







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







Item 5.  Other Information.







Item 6.  Exhibits.




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##### Table of Contents






SIGNATURES






| |                                        
| | ---------------------------------------
| | Residential Capital, LLC               
| | (Registrant)                           
|
| | /s/ Sanjiv Khattri                     
| |                                        
| | Sanjiv Khattri                         
| | Chief Financial Officer                
|
| | /s/ Linda K. Zukauckas                 
| |                                        
| | Linda K. Zukauckas                     
| | Chief Accounting Officer and Controller

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##### Table of Contents






INDEX OF EXHIBITS


|        |      |  |             |                                                                                      
|------- | ---- |  | ----------- | -------------------------------------------------------------------------------------
|Exhibit |      |  | Description
|        |      |  |            
|        | 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)



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

60