##### 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 1934For the quarterly period ended September 30, 2008, oro

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

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

(I.R.S. Employer
    Identification No.)    One
    Meridian Crossings
    Minneapolis, MN
    55423 (Address
    of principal executive offices)
    (Zip Code)
   (952) 857-8700
 (Registrants telephone
    number, including area code)
   þ o
  12b-2
  Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ
    
    (Do not check if a smaller reporting company)

Smaller reporting company o   Rule 12b-2 o þ
     Reduced
    Disclosure Format
  Form 10-Q




---



##### 





RESIDENTIAL
    CAPITAL, LLC
  INDEX
  PagePART I  FINANCIAL
    INFORMATIONItem 1.

Financial Statements (unaudited)


3Condensed Consolidated Balance Sheets as of
    September 30, 2008 and December 31, 2007


3Condensed Consolidated Statements of Income for
    the Three and Nine Months Ended September 30, 2008 and
    2007


4Condensed Consolidated Statements of Changes in
    Equity for the Nine Months Ended September 30, 2008 and
    2007


5Condensed Consolidated Statements of Cash Flows
    for the Nine Months Ended September 30, 2008 and 2007


6Notes to Condensed Consolidated Financial
    Statements


8Item 2.

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


48Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


85Item 4.

Controls and Procedures


88PART II  OTHER
    INFORMATIONItem 1.

Legal Proceedings


89Item 1A.

Risk Factors


91Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


107Item 3.

Defaults Upon Senior Securities


107Item 4.

Submission of Matters to a Vote of Security
    Holders


107Item 5.

Other Information


108Item 6.

Exhibits


108Signatures


109Index of Exhibits


110EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-10.6EX-10.7EX-10.8EX-10.9EX-10.10EX-10.11EX-10.12EX-10.13EX-10.14EX-10.15EX-10.16EX-10.17EX-10.18EX-10.19EX-10.20EX-12.1EX-31.1EX-31.2EX-32   2




---



##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements.  RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
 (Dollars
    in thousands)
  September 30,


December 31,2008


2007(Unaudited)ASSETSCash and cash equivalents

$
6,884,843


$
4,415,913Mortgage loans held for sale


4,153,005



11,998,236Trading securities


867,590



2,090,690Mortgage loans held for investment, net ($2,209,831 at fair
    value at September 30, 2008)


28,842,249



41,330,322Lending receivables, net


6,541,539



8,406,495Mortgage servicing rights


4,724,561



4,702,862Accounts receivable, net


3,445,542



3,187,913Investments in real estate and other


681,487



1,629,717Other assets


10,374,471



11,657,769Total assets

$
66,515,287


$
89,419,917LIABILITIESBorrowings:Borrowings from parent

$
3,270,583


$
Borrowings from affiliates


874,979



Collateralized borrowings in securitization trusts ($2,466,006
    at fair value at September 30, 2008)


7,008,655



16,145,741Other borrowings


28,143,826



46,184,150Total borrowings


39,298,043



62,329,891Deposit liabilities


18,234,788



13,349,844Other liabilities


4,712,526



6,370,305Total liabilities


62,245,357



82,050,040Minority interest


1,954,495



1,339,760EQUITYMembers interest


6,962,487



6,624,344Preferred membership interests


806,344



Accumulated deficit


(5,480,822
)


(694,756
)Accumulated other comprehensive income


27,426



100,529Total equity


2,315,435



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

$
66,515,287


$
89,419,917    3




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATED STATEMENTS OF INCOME
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(Unaudited)(Dollars in thousands)RevenueInterest income

$
954,091


$
1,886,006


$
3,315,798


$
5,989,448Automotive operating lease income


144,949



135,373



440,745



369,988Total financing revenue


1,099,040



2,021,379



3,756,543



6,359,436Interest expense


894,505



1,680,746



3,041,928



5,082,307Depreciation expense on automotive operating lease income


86,485



81,616



259,146



219,373Impairment of investment in automotive operating leases










92,035



Net financing revenue


118,050



259,017



363,434



1,057,756Other revenueLoss on mortgage loans, net


(138,177
)


(569,589
)


(1,947,678
)


(630,712
)Servicing fees


369,444



451,420



1,153,571



1,350,741Servicing asset valuation and hedge activities, net


(260,822
)


(123,439
)


(36,169
)


(577,326
)Net servicing fees


108,622



327,981



1,117,402



773,415Loss on investment securities, net


(41,898
)


(332,511
)


(575,782
)


(349,051
)Real estate related revenues, net


(24,970
)


23,505



(34,258
)


292,393Gain on extinguishment of debt


42,199







1,168,818



Loss on foreclosed real estate


(49,381
)


(137,644
)


(209,700
)


(229,822
)Other (loss) income


(64,655
)


48,938



(425,429
)


161,184Total other revenue


(168,260
)


(639,320
)


(906,627
)


17,407Total net revenue


(50,210
)


(380,303
)


(543,193
)


1,075,163Provision for loan losses


660,882



884,213



1,430,203



1,759,640Non-interest expenseCompensation and benefits


228,510



306,034



740,102



990,825Professional fees


84,709



57,119



310,277



172,621Data processing and telecommunications


36,598



64,126



117,776



157,492Advertising


19,992



29,700



56,990



95,217Occupancy


28,204



34,345



85,414



108,320Restructuring


72,729







110,624



Goodwill impairment






454,828







454,828Other


688,270



145,140



1,100,815



677,381Total non-interest expense


1,159,012



1,091,292



2,521,998



2,656,684Loss before income tax expense and minority interest


(1,870,104
)


(2,355,808
)


(4,495,394
)


(3,341,161
)Income tax expense (benefit)


4,932



(119,442
)


88,089



16,187Loss before minority interest


(1,875,036
)


(2,236,366
)


(4,583,483
)


(3,357,348
)Minority interest


37,135



24,561



47,297



68,051Net loss

$
(1,912,171
)

$
(2,260,927
)

$
(4,630,780
)

$
(3,425,399
)    4




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Nine
    Months Ended September 30, 2008 and 2007
  (Accumulated





AccumulatedPreferred


Deficit)





OtherMembers


Membership


Retained


Comprehensive


Comprehensive


TotalInterest


Interests


Earnings


Income (Loss)


Income


Equity(Unaudited)(Dollars in thousands)Balance at January 1, 2008

$
6,624,344


$



$
(694,756
)





$
100,529


$
6,030,117Cumulative effect of change in accounting principles as of
    January 1, 2008, net of tax:Adoption of Financial Accounting Standards Board No. 157










23,218











23,218Adoption of Financial Accounting Standards Board No. 159










(178,504
)










(178,504
)Net loss










(4,630,780
)

$
(4,630,780
)






(4,630,780
)Capital contributions


338,143



806,344















1,144,487Other comprehensive income, net of tax:Unrealized loss on available for sale securities














(2,221
)






(2,221
)Foreign currency translation adjustment














(53,671
)






(53,671
)Unrealized loss on cash flow hedges














(4,171
)






(4,171
)Pension adjustment Financial Accounting Standards Board
    No. 158














(13,040
)






(13,040
)Other comprehensive loss














(73,103
)


(73,103
)


Comprehensive loss













$
(4,703,883
)






Balance at September 30, 2008

$
6,962,487


$
806,344


$
(5,480,822
)





$
27,426


$
2,315,435Balance at January 1, 2007

$
3,837,943


$



$
3,651,935






$
132,235


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










(353
)










(353
)Net loss










(3,425,399
)

$
(3,425,399
)






(3,425,399
)Capital contribution


2,023,741



















2,023,741Other comprehensive income, net of tax:Unrealized gain on available for sale securities














1,639







1,639Foreign currency translation adjustment














4,533







4,533Unrealized loss on cash flow hedges














(54,719
)






(54,719
)Other comprehensive loss














(48,547
)


(48,547
)


Comprehensive loss













$
(3,473,946
)






Balance at September 30, 2007

$
5,861,684


$



$
226,183






$
83,688


$
6,171,555    5




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
 Nine
    Months Ended September 30, 2008 and 2007
  2008


2007(Unaudited)(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(4,630,780
)

$
(3,425,399
)Reconciliation of net loss to net cash provided by operating
    activities:Depreciation and amortization


382,130



704,151Provision for loan losses


1,430,203



1,759,640Loss on sale of mortgage loans, net


1,947,678



630,712Net loss on sale of other assets


526,429



224,109Goodwill impairment






454,828Minority interest


47,297



68,051Gain on extinguishment of debt


(1,168,818
)


Loss on investment securities, net


575,782



349,051Equity in earnings of investees in excess of cash received


(4,329
)


(9,825
)Loss on mortgage servicing rights, net


529,373



521,783Originations and purchases of mortgage loans held for sale


(48,781,077
)


(96,722,925
)Proceeds from sales and repayments of mortgage loans held for
    sale


54,942,096



99,257,968Deferred income tax


180,390



(80,990
)Net change in:Trading securities


846,650



301,914Accounts receivable


(238,209
)


(96,478
)Other assets


1,701,594



559,850Other liabilities


(1,683,783
)


(2,595,531
)Net cash provided by operating activities


6,602,626



1,900,909CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in lending receivables


443,862



5,183,237Originations and purchases of mortgage loans held for investment


(3,635,743
)


(6,733,288
)Proceeds from sales and repayments of mortgage loans held for
    investment


4,780,487



14,136,594Sales of mortgage servicing rights


484,291



165,557Purchase of and advances to investments in real estate and other


(16,852
)


(197,769
)Proceeds from sales of and returns of investments in real estate
    and other


359,903



619,105Other, net


907,389



1,847,370Net cash provided by investing activities


3,323,337



15,020,806    6




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
 Nine
    Months Ended September 30, 2008 and 2007 
    (Continued)
  2008


2007(Unaudited)(Dollars in thousands)CASH FLOWS FROM FINANCING ACTIVITIESNet increase in borrowings from parent

$
4,122,124


$
Net increase in affiliate borrowings


874,979



Net decrease in other short-term borrowings


(10,918,506
)


(11,663,051
)Proceeds from issuance of collateralized borrowings in
    securitization trusts






3,937,055Repayments of collateralized borrowings in securitization trusts


(2,407,607
)


(13,467,761
)Proceeds from secured aggregation facilities, long-term


160,000



12,158,635Repayments of secured aggregation facilities, long-term


(465,114
)


(16,210,746
)Proceeds from other long-term borrowings


2,975,000



7,860,770Repayments of other long-term borrowings


(4,964,210
)


(2,654,264
)Payment of debt issuance costs


(46,252
)


(21,308
)Extinguishment of long-term borrowings


(2,060,829
)


Proceeds from capital contributions


14,254



2,256,000Disposal of subsidiary, net


163,310



898,794Increase in deposit liabilities


4,884,944



4,637,235Net cash used in financing activities


(7,667,907
)


(12,268,641
)Effect of foreign exchange rates on cash and cash equivalents


210,874



(152,433
)NET INCREASE IN CASH AND CASH EQUIVALENTS


2,468,930



4,500,641CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


4,415,913



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

$
6,884,843


$
6,519,488SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:Mortgage loans held for sale transferred to mortgage loans held
    for investment

$
842,141


$
8,376,506Mortgage loans held for investment transferred to mortgage loans
    held for sale


3,768,346



645,877Mortgage loans held for investment transferred to other assets


1,095,209



2,295,243Deconsolidation of loans






5,358,653Deconsolidation of collateralized borrowings






5,440,595Originations of mortgage servicing rights from sold loans


1,024,503



1,303,752Capital contributions of lending receivables to the minority
    interest entity


387,809



264,749Capital contributions through forgiveness of unsecured
    borrowings in exchange for preferred membership interests


806,344



Capital contributions through forgiveness of unsecured borrowings


217,537



Capital contribution through forgiveness of borrowings from
    parent


101,541



Decrease in mortgage loans held for investment upon initial
    adoption of SFAS No. 159


3,846,775



Decrease in collateralized borrowings upon initial adoption of
    SFAS No. 159


3,667,522



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


1,510,946



5,487,750Proceeds from capital contribution to the minority interest
    entity


14,254



256,000    7




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLCNOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
  1.
    Basis of
    Presentation    FIN No. 39-1, Amendment of FASB Interpretation No. 39 (FIN No. 39-1),
  Disclosures about Segments of an Enterprise and
    Related Information
  Form 10-K
  The Fair Value Option for Financial
    Assets and Financial Liabilities.
   8




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
            Recently
    Issued Accounting Standards
  Statement of Financial Accounting Standards
    No. 141(R) Business Combinations Business Combinations. case-by-case
  Statement of Financial Accounting Standards
    No. 160 Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51
 9




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    FASB Staff Position (FSP)
    FAS No. 140-3 FAS No. 140-3, Accounting for Transfers of Financial Assets and Repurchase
    Financing Transactions FAS No. 140-3
  Statement of Financial Accounting Standards
    No. 161  Disclosures about Derivative
    Instruments and Hedging Activities
  Statement of Financial Accounting Standards
    No. 162 The Hierarchy of Generally Accepted
    Accounting Principles The Meaning of Present Fairly in Conformity With
    Generally Accepted Accounting Principles The Meaning of Present
    Fairly in Conformity With Generally Accepted Accounting
    Principles
  FASB Staff Position (FSP)
    FAS No. 142-3  FAS No. 142-3, Determination of the Useful Life of Intangible Assets FAS No. 142-3 Goodwill and Other
    Intangible Assets FAS No. 142-3 FAS No. 142-3 FAS No. 142-3
  FSP
    FAS No. 133-1
    and
    FIN No. 45-4  FAS No. 133-1 FIN No. 45-4, Disclosures about Credit Derivatives and Certain Guarantees:
    An Amendment of FASB Statement No. 133 and FASB
    Interpretation No. 45; and Clarification of the Effective
    Date of FASB Statement No. 161. FAS No. 133-1 FIN No. 45-4 Accounting for Derivative
    Instruments and Hedging Activities
 10




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others Disclosures about Derivative
    Instruments and Hedging FAS No. 133-1 FIN No. 45-4
  EITF Issue
    No. 08-5  No. 08-5, Issuers Accounting for Liabilities at Fair Value with a
    Third-Party Credit Enhancement 08-5). No. 08-5 states No. 08-5
  2.
    Recently
    Adopted Accounting Standards  Statement of Financial Accounting Standards
    No. 157 Fair Value
    Measurements No. 02-3, Issues Involved in Accounting for Derivative Contracts Held
    for Trading Purposes and Contracts Involved in Energy Trading
    and Risk Management Activities (EITF 02-3) EITF 02-3
  Statement of Financial Accounting Standards
    No. 159 The Fair Value Option
    for Financial Assets and Financial Liabilities
  SEC Staff Accounting
    Bulletin No. 109 Written Loan Commitments Recorded
    at Fair Value Through Earnings Application of Accounting Principles to Loan Commitments
 11




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Accounting for Servicing of Financial
    Assets,
  FASB Staff Position (FSP)
    FIN No. 39-1 FIN No. 39-1, Amendment of FASB Interpretation No. 39 FIN No. 39-1 FIN No. 39-1,
  FSP
    FAS 157-3  FAS No. 157-3, Determining Fair Value of a Financial Asset in a Market that
    is Not Active. Accounting Changes and
    Error Corrections, FAS No. 157-3
 12




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  3.
    Mortgage
    Loans Held for Sale    September 30,


December 31,2008


2007(In thousands)Prime conforming

$
508,230


$
3,072,593Prime non-conforming


2,648,273



5,537,946Prime second-lien


7,056



729,323Government


997,077



816,285Nonprime


1,204,347



2,090,433Total unpaid principal balance


5,364,983



12,246,580Net (discounts) premiums


(16,720
)


(20,064
)Lower of cost or fair value adjustment


(1,195,258
)


(228,280
)Total, net

$
4,153,005


$
11,998,236     September 30,


December 31,2008


2007(In thousands)Prime conforming

$
501,813


$
3,054,747Prime non-conforming


1,891,481



5,376,538Prime second-lien


6,380



723,369Government


1,008,284



817,504Nonprime


745,047



2,026,078Total, net

$
4,153,005


$
11,998,236        13




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  4.
    Trading
    Securities    September 30,


December 31,2008(a)


2007(In thousands)Mortgage and asset-backed securities(a)

$
385,989


$
905,292U.S. Treasury securities






257,320Principal-only securities


16,821



46,390Residual interests


346,217



684,701Interest-only securities


117,735



181,138Other


828



15,849Total

$
867,590


$
2,090,690Net unrealized losses on securities held at end of period

$
(1,136,615
)

$
(635,140
)Pledged as collateral

$
346,687


$
751,575     (a)
    
    See Note 16  Fair Value  includes
    $172.3 million of securities held by collateralized debt
    obligations for which the related debt is recorded at fair value
    under SFAS No. 159 as of September 30, 2008.    5.
    Mortgage
    Loans Held for Investment    September 30,


December 31,2008(a)


2007(In thousands)Prime conforming

$
880,308


$
1,099,221Prime non-conforming


17,294,949



18,057,688Prime second-lien


6,182,516



5,928,662Government


166,919



215,507Nonprime


12,746,506



17,747,020Total unpaid principal balance


37,271,198



43,048,098Net (discounts) premiums


(525,440
)


(885,502
)SFAS No. 159 fair value adjustment


(6,928,038
)


Allowance for loan losses


(975,471
)


(832,274
)Total, net

$
28,842,249


$
41,330,322  14




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    September 30,


December 31,2008(a)


2007(In thousands)Prime conforming

$
812,329


$
1,064,777Prime non-conforming


16,601,000



17,943,448Prime second-lien


4,955,327



5,824,123Government


142,273



182,634Nonprime


6,331,320



16,315,340Total, net

$
28,842,249


$
41,330,322     (a)
    
    See Note 16  Fair Value 
    $9.2 billion of total unpaid principal balance is recorded
    at a fair value of $2.2 billion under SFAS No. 159 as
    of September 30, 2008.        6.
    Lending
    Receivables    September 30,


December 31,2008


2007(In thousands)Construction:Residential

$
2,282,770


$
2,844,647Residential mezzanine


263,427



357,512Resort






277,052Total construction


2,546,197



3,479,211Warehouse


1,309,090



1,669,583Commercial business


1,644,737



2,614,692Commercial real estate


1,582,708



1,031,937Other


25,388



96,298Total


7,108,120



8,891,721Less allowance for loan losses


(566,581
)


(485,226
)Total, net

$
6,541,539


$
8,406,495    15




---



##### Table of Contents



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


LendingInvestment


Receivables


Other


Total(In thousands)Balance at January 1, 2008

$
832,274


$
485,226


$
33,296


$
1,350,796Reduction to allowance due to fair value option election(a)


(488,982
)










(488,982
)Provision for loan losses


1,157,878



257,295



15,030



1,430,203Charge-offs


(556,750
)


(164,924
)


(16,272
)


(737,946
)Recoveries


31,051



16,269



6,772



54,092Resort Finance sale to GMAC Commercial Finance(b)






(27,285
)






(27,285
)Balance at September 30, 2008

$
975,471


$
566,581


$
38,826


$
1,580,878Balance at January 1, 2007

$
1,508,361


$
396,641


$
25,757


$
1,930,759Provision for loan losses


1,436,316



313,465



9,859



1,759,640Charge-offs


(943,880
)


(393,088
)


(8,069
)


(1,345,037
)Recoveries


39,894



8,917



3,674



52,485Reduction of allowance due to deconsolidation(c)


(306,474
)










(306,474
)Balance at September 30, 2007

$
1,734,217


$
325,935


$
31,221


$
2,091,373     (a)
    
    See Note 16  Fair Value 
    $489.0 million of allowance for loan losses was removed
    upon SFAS No. 159 election.(b)
    
    In the third quarter of 2008, the Resort Finance sale was
    completed to GMAC Commercial Finance. Upon completion,
    $27.3 million of allowance for loan loss was removed from
    the consolidated balance sheet.(c)
    
    During the three months ended September 30, 2007, the
    Company completed the sale of residual cash flows related to a
    number of on-balance sheet securitizations. The Company
    completed the approved actions to cause the securitization
    trusts to satisfy the qualifying special purpose entity (or
    QSPE) requirements of SFAS No. 140,
    Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities(SFAS
    No. 140). These actions resulted in the
    deconsolidation of various securitization trusts and the removal
    of $5.1 billion in mortgage loans held for investment, net
    of the related allowance for loan loss of $306.5 million,
    $5.2 billion of collateralized borrowings, capitalization
    of $33.3 million of mortgage servicing rights and gains on
    sale totaling $88.2 million in the third quarter of 2007. 16




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   8.
    Mortgage
    Servicing Rights    Mortgage ServicingRights Managed ByGMAC-RFC


InternationalGMAC Residential


Holding


BusinessHolding


(domestic only)


Group


Eliminations


Total(In thousands)Estimated fair value at January 1, 2008

$
3,514,671


$
1,170,665


$
17,526


$



$
4,702,862Additions obtained from sales of mortgage loans


1,019,854



4,302



347







1,024,503Additions from purchases of servicing assets






421











421Subtractions from sales of servicing assets


(311,193
)


(173,098
)










(484,291
)Changes in fair value:Recognized day one gains on previously purchased MSRs upon
    adoption of SFAS No. 157


10,552















10,552Due to changes in valuation inputs or assumptions used in the
    valuation model


278,599



(148,534
)


(5,348
)






124,717Other changes in fair value


(538,960
)


(104,160
)


(11,075
)






(654,195
)Other changes that affect the balance










(8
)






(8
)Estimated fair value at September 30, 2008

$
3,973,523


$
749,596


$
1,442


$



$
4,724,561Estimated fair value at January 1, 2007

$
3,752,733


$
1,164,585


$
12,743


$



$
4,930,061Additions obtained from sales of mortgage loans


975,479



323,282



4,991







1,303,752Additions from purchases of servicing assets


12,483











(9,291
)


3,192Subtractions from sales of servicing assets


(165,557
)














(165,557
)Changes in fair value:Due to changes in valuation inputs or assumptions used in the
    valuation model


(112,396
)


58,060



(1,352
)






(55,688
)Other changes in fair value


(216,086
)


(246,928
)


(3,081
)






(466,095
)Other changes that affect the balance






(12,959
)


1,037



9,291



(2,631
)Estimated fair value at September 30, 2007

$
4,246,656


$
1,286,040


$
14,338


$



$
5,547,034    17




---



##### Table of Contents



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


InternationalGMAC Residential


Holding


BusinessSeptember 30, 2008

Holding


(domestic only)


GroupWeighted average prepayment speed


15.8
%


24.2
%


8.5
%Range of prepayment speeds


5.2-46.5
%


7.0-39.1
%


0.7-27.8
%Weighted average discount rate


9.1
%


9.8
%


24.7
%Range of discount rates


5.1-31.3
%


4.8-31.6
%


8.0-30.5
%   GMAC-RFC


InternationalGMAC Residential


Holding


BusinessSeptember 30, 2007

Holding


(domestic only)


GroupWeighted average prepayment speed


16.6
%


26.7
%


8.5
%Range of prepayment speeds


15.4-40.4
%


15.3-53.6
%


0.4-28.4
%Weighted average discount rate


8.0
%


10.7
%


11.7
%Range of discount rates


7.7-12.9
%


9.5-11.2
%


8.0-13.0
%     GMAC-RFC

InternationalGMAC Residential

Holding

BusinessNine Months Ended September 30, 2008

Holding

(domestic only)

GroupRange of prepayment speeds (constant prepayment rate)


7.5-48.5
%


0.5-42.8
%


1.2-15.7
%Range of discount rates


4.4-23.6
%


13.5-16.6
%


12.5-24.0
%   GMAC-RFC

InternationalGMAC Residential

Holding

BusinessNine Months Ended September 30, 2007

Holding

(domestic only)

GroupRange of prepayment speeds (constant prepayment rate)


12.6-41.6
%


13.6-47.5
%


0.4-11.1
%Range of discount rates


7.5-13.9
%


9.6-16.8
%


8.0-12.5
%   and/or
 18




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In thousands)Contractual servicing fees (net of guarantee fees and including
    subservicing)

$
307,081


$
390,935


$
958,631


$
1,154,784Late fees


26,872



35,187



93,948



109,709Ancillary fees


35,491



25,298



100,992



86,248Total

$
369,444


$
451,420


$
1,153,571


$
1,350,741      19




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  9.
    Investments
    In Real Estate and Other    September 30,


December 31,2008


2007(In thousands)Residential real estate:Acquired through sale and leaseback agreements

$
129,745


$
636,228Construction in progress


63,232



114,064Real estate held for development


67,481



376,116260,458



1,126,408Accumulated depreciation


(2,907
)


(16,008
)Total residential real estate


257,551



1,110,400Other investments:Investments in partnerships


193



4,724Investments in real estate projects


414,529



418,554Other equity investments


9,214



96,039Total

$
681,487


$
1,629,717       10.
    Other
    Assets    September 30,


December 31,2008


2007(In thousands)Property and equipment at cost

$
648,123


$
761,038Accumulated depreciation and amortization


(491,068
)


(539,586
)Net property and equipment


157,055



221,452Automotive loans and lease financing, net


3,411,692



3,103,028Investments in automotive operating leases, net


2,214,606



2,522,027Available for sale securities


414,263



275,671Repossessed, foreclosed and owned real estate


1,051,136



1,165,293Derivative assets


1,244,885



1,733,486Restricted cash


510,459



484,445Non-marketable equity securities


644,459



615,166Other assets


725,916



1,537,201Total other assets

$
10,374,471


$
11,657,769    20




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  11.
    Borrowings    September 30,


December 31,2008


2007(In thousands)Secured borrowings:Borrowings from parent  short-term

$
1,098,459


$
Borrowings from parent  long-term(a)


2,172,124



Borrowings from affiliates  long-term(a)


874,979



Collateralized borrowings in securitization trusts 
    long-term(a)(b)


7,008,655



16,145,741Other secured borrowings:Senior secured notes  long-term(a)


1,690,491



Junior secured notes  long-term(a)


5,069,986



Secured aggregation facilities  short-term


2,975,001



7,588,253Secured aggregation facilities  long-term(a)






813,938Repurchase agreements  short-term


687,013



3,626,502Repurchase agreements  long-term(a)






18,569FHLB advances  short-term






1,050,000FHLB advances  long-term(a)


10,517,000



10,299,000Mortgage servicing rights facilities  short-term


1,248,000



1,444,000Servicing advances  short-term


700,000



791,300Debt collateralized by mortgage loans  short-term


16,919



1,782,039Other  long-term(a)


335,734



423,552Subtotal secured borrowings


34,394,361



43,982,894Unsecured borrowings:Senior unsecured notes  long-term(a)(c)


4,030,841



14,550,385Subordinated unsecured notes  long-term(a)


205,448



758,321Medium-term unsecured notes  long-term(a)


367,112



624,567Third-party bank credit facilities  short-term






50,000Third-party bank credit facilities  long-term(a)






1,750,000Other  short-term


272,302



575,264Other  long-term(a)


27,979



38,460Subtotal unsecured borrowings


4,903,682



18,346,997Total borrowings

$
39,298,043


$
62,329,891     (a)
    
    Represents borrowings with an original contractual maturity in
    excess of one year.(b)
    
    At September 30, 2008, collateralized borrowings with an
    outstanding balance of $9.1 billion are recorded at a fair
    value of $2.5 billion under
    SFAS No. 159  see Note 16 
    Fair Value.(c)
    
    The December 31, 2007 total includes approximately
    $200.0 million of senior unsecured notes purchased and held
    by GMAC. 21




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
     September 30,


December 31,2008


2007Maturities of Borrowings

(In thousands)Short-term borrowings

$
6,997,694


$
16,907,358Long-term borrowings:2008


540,717



5,188,6312009


2,184,223



4,314,0912010


7,743,136



5,381,3072011


1,162,498



2,276,2322012


2,334,668



4,714,9112013 and thereafter


11,326,452



7,401,620Collateralized borrowings in securitization trusts(a)


7,008,655



16,145,741Total long-term borrowings


32,300,349



45,422,533Total borrowings

$
39,298,043


$
62,329,891     (a)
    
    Collateralized borrowings in securitization trusts: The
    principal on the debt securities is paid using cash flows from
    underlying collateral (mortgage loans). Accordingly, the timing
    of the principal payments on these debt securities is dependent
    on the payments received.     22




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Accounting by
    Debtors and Creditors for Troubled Debt Restructurings
    September 30,


December 31,2008


2007(In thousands)Cash and cash equivalents(a)

$
5,011,854


$
1,411,317Mortgage loans held for sale(b)


4,243,794



10,436,521Trading securities(a)


346,687



751,575Mortgage loans held for investment(b)


35,293,418



39,081,151Lending receivables(b)


6,370,975



6,372,760Mortgage servicing rights(a)


4,297,968



2,673,771Accounts receivable(a)


1,876,655



1,297,891Investments in real estate and other(a)


161,632



231,561Other assets(a)


7,633,064



7,493,311Total assets restricted as collateral

$
65,236,047


$
69,749,858Related secured debt(c)

$
41,035,851


$
43,982,894     (a)
    
    Disclosed at carrying value or fair value of the underlying
    collateral.(b)
    
    Disclosed at unpaid principal balance of the underlying
    collateral.(c)
    
    Disclosed at carrying value, excluding the SFAS No. 159
    fair value adjustment.       23




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  28-day 84-day
    September 30,


December 31,2008


2007(In thousands)Mortgage loans held for sale

$
414,408


$
2,365,646Trading securities


15,905



426,194Mortgage loans held for investment


479,278



3,958,384Accounts receivable


5,204



Other assets






8,597Total

$
914,795


$
6,758,821   12.
    Deposit
    Liabilities    September 30,


December 31,2008


2007(In thousands)Non-interest bearing deposits

$
2,246,485


$
1,569,517NOW and money-market checking accounts


4,098,509



3,664,168Certificates of deposit


11,889,794



8,116,159Total

$
18,234,788


$
13,349,844       13.
    Income
    Taxes  and/or
   24




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Accounting for
    Uncertainty in Income Taxes,
    14.
    Derivative
    Instruments     25




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Income StatementNine Months Ended September 30,

2008


2007


Classification(In millions)Fair value hedge ineffectiveness loss:Debt obligations

$
(6.3
)

$
(0.8
)

Gain (loss) on investment securitiesMortgage loans held for sale






(0.7
)

Gain (loss) on mortgage loans, netTotal

$
(6.3
)

$
(1.5
)     15.
    Restructuring
    Charges       26




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
     Cost PaidLiability


Restructuring


or Otherwise


LiabilityBalance at


Charges Through


Settled Through


Balance atJanuary 1, 2008


September 30, 2008


September 30, 2008


September 30, 2008(In thousands)Restructuring charges from the:Fourth quarter 2007 plan:Employee severance

$
23,648


$
34,390


$
(40,049
)

$
17,989Lease terminations and fixed asset write-offs


45,734



(5
)


(21,909
)


23,820Sub-total


69,382



34,385



(61,958
)


41,809Third quarter 2008 plan:Employee severance






48,558



(10,508
)


38,050Lease terminations and fixed asset write-offs






27,681



(12,276
)


15,405Sub-total






76,239



(22,784
)


53,455Total restructuring charges:Employee severance


23,648



82,948



(50,557
)


56,039Lease terminations and fixed asset write-offs


45,734



27,676



(34,185
)


39,225Total

$
69,382


$
110,624


$
(84,742
)

$
95,264   16.
    Fair
    Value  Fair
    Value Measurements (SFAS No. 157)
    EITF 02-3. EITF 02-3 EITF 02-3, EITF 02-3
   27




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Level 1
    Inputs are quoted prices in active markets for identical assets
    or liabilities as of the measurement date. Additionally, the
    entity must have the ability to access the active market and the
    quoted prices cannot be adjusted by the entity.Level 2
    Inputs include quoted prices in active markets for similar
    assets or liabilities; quoted prices in inactive markets for
    identical or similar assets or liabilities; or inputs that are
    observable or can be corroborated by observable market data by
    correlation or other means for substantially the full-term of
    the assets or liabilities.Level 3
    Unobservable inputs are supported by little or no market
    activity. The unobservable inputs represent managements
    best assumptions of how market participants would price the
    assets and liabilities. Generally, Level 3 assets and
    liabilities are valued using pricing models, discounted cash
    flow methodologies, or similar techniques that require
    significant judgment or estimation.    Mortgage loans held for sale
    Loans valued using observable market prices for identical or
    similar assets 
  Loans valued using internal models 
 28




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Trading securities
  Mortgage loans held for investment
      Mortgage servicing rights (MSRs)
 29




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Derivative instruments
        and/or
  Repossessed, foreclosed and owned assets (other real estate
    owned)
 30




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      On-balance sheet securitization debt On-balance sheet
    securitizations
    Collateralized Debt Obligations (CDOs) Collateralized
    Debt Obligations
 31




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Recurring
    Fair Value
    Recurring Fair Value MeasurementsAt September 30, 2008Level 1


Level 2


Level 3


Total(In thousands)AssetsTrading securities

$
858


$
90,259


$
776,473


$
867,590Mortgage loans held for
    investment(1)










2,209,831



2,209,831Mortgage servicing rights










4,724,561



4,724,561Other assets:Derivative assets


33,373



1,176,222



35,290



1,244,885Other


291,242



120,031



2,990



414,263Total assets

$
325,473


$
1,386,512


$
7,749,145


$
9,461,130LiabilitiesCollateralized borrowings:On-balance sheet securitization
    debt(1)

$



$



$
(2,284,724
)

$
(2,284,724
)Collateralized debt
    obligations(1)










(181,282
)


(181,282
)Other liabilities:Derivative liabilities


(63,425
)


(154,303
)


(30,804
)


(248,532
)Other


(6,360
)










(6,360
)Total liabilities

$
(69,785
)

$
(154,303
)

$
(2,496,810
)

$
(2,720,898
)     (1)
    
    These items are carried at fair
    value due to fair value option election under
    SFAS No. 159. 32




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
     Level 3 Recurring Fair Value MeasurementsNine Months Ended September 30, 2008Purchases,Sales,





End ofJanuary 1,


Total Net Gains/(Losses) Included in Net Income:





Issuances


Net


Period2008


Realized


Unrealized


Other


and


Transfers


Level 3Level 3 Fair


Gains


Gains


Comprehensive


Settlements,


In/(Out) of


FairValue


(Losses)(b)


(Losses)(b)


Income


Net


Level 3


Value(In thousands)AssetsTrading securities

$
1,642,169


$
(52,673
)(c)

$
(462,930
)(c)

$



$
(350,093
)

$



$
776,473Mortgage loans held for investment(a)


6,683,649



897,943
(d)


(3,392,421
)(d)






(1,979,340
)






2,209,831Mortgage servicing rights


4,713,414



(19,464
)(e)


(529,478
)(e)






560,089







4,724,561Other assets:Other


3,558











(808
)(f)


240







2,990Total

$
13,042,790


$
825,806


$
(4,384,829
)

$
(808
)

$
(1,769,104
)

$



$
7,713,855LiabilitiesCollateralized borrowings:On-balance sheet securitization debt(a)

$
(6,734,448
)

$
(329,116
)(d)

$
2,872,724
(d)

$



$
1,906,116


$



$
(2,284,724
)Collateralized debt obligations(a)


(351,226
)


(10,501
)(c)


93,352
(c)






87,093







(181,282
)Other liabilities:Derivative liabilities, net


(39,064
)


15,049
(c)


60,118
(c)






(33,361
)


1,744



4,486Total

$
(7,124,738
)

$
(324,568
)

$
3,026,194


$



$
1,959,848


$
1,744


$
(2,461,520
)     (a)
    
    Carried at fair value due to fair
    value option election under SFAS No. 159.(b)
    
    Net income is inclusive of both
    realized and change in unrealized gains and losses as well as
    interest related to the underlying asset or liability.(c)
    
    Fair value adjustment reported in
    (loss) gain on investment securities, net and related interest
    on loans and debt reported interest income and interest expense,
    respectively.(d)
    
    Fair value adjustment reported in
    other (loss) income and related interest on loans and debt
    reported in interest income and interest expense, respectively.(e)
    
    Reported in servicing asset
    valuation and hedge activities, net.(f)
    
    Change in unrealized gains (losses)
    in available-for-sale securities recorded in equity.  Nonrecurring
    Fair Value
   33




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Nonrecurring Fair Value MeasurementsAs of September 30, 2008


Total Gains (Losses)Lower of


Included in EarningsCost or


for the Periods EndedTotal


Fair Value or


September 30, 2008Nonrecurring Fair Value Measures


Estimated


Credit


Three


NineLevel 1


Level 2


Level 3


Fair Value


Allowance


Months


Months(In thousands)Mortgage loans held for
    sale(1)

$



$
3,037,400


$
522,913


$
3,560,313


$
(1,195,258
)Lending
    receivables(2)






479,937



94,026



573,963



(466,364
)Other assets:Other real estate
    owned(3)






304,953



400,336



705,289



(171,346
)Model home
    portfolio(4)






140,522







140,522






$
(29,810
)

$
(51,160
)Investments in automotive operating leases,
    net(5)


























(92,035
)GMAC Home Services assets held for
    sale(6)










182,440



182,440



(13,865
)Total

$



$
3,962,812


$
1,199,715


$
5,162,527


$
(1,846,833
)

$
(29,810
)

$
(143,195
)     (1)
    
    Represents assets held for sale
    that are required to be measured at lower of cost or fair value
    in accordance with SFAS No. 65, Accounting for
    Certain Mortgage Banking Activitiesor
    (SOP 01-6,
    Accounting by Certain Entities (Including Entities With Trade
    Receivables) That Lend to or Finance the Activities of
    Others. Only assets with fair values below cost are included
    in the table above. The related valuation allowance represents
    the cumulative adjustment to fair value of those specific loans.(2)
    
    The carrying value for lending
    receivables includes only those lending receivables that have a
    specific reserve established using the fair value of the
    underlying collateral. The related credit allowance represents
    the cumulative adjustment to fair value of those specific
    lending receivables.(3)
    
    The allowance provided for other
    real estate owned represents any cumulative valuation
    adjustments recognized to adjust those respective repossessed,
    foreclosed and owned properties to fair value less costs to sell.(4)
    
    The model home portfolio held by
    the Business Capital Group is accounted for as required by
    SFAS No. 144. The losses represent adjustments to fair
    value of that portfolio based on actual sales over the last
    three and nine months.(5)
    
    Represents assets impaired as of
    September 30, 2008, under SFAS No. 144, Accounting
    for the Impairment or Disposal of Long Lived Assets. The
    total loss included in earnings for the three and nine months
    ended September 30, 2008, represents the fair market value
    adjustments on the portfolio.(6)
    
    GMAC Home Services is a business
    unit of the Company that is under contract for sale and impaired
    under SFAS No. 144 held for sale treatment. The allowance
    amount represents the difference between the carrying value and
    the estimated sale price.  Fair
    Value Option for Financial Assets and Financial Liabilities
    (SFAS No. 159)
   34




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
        CumulativeEffectAdjustment toJanuary 1, 2008January 1, 2008


Retained


January 1, 2008Carrying Value


Earnings


Fair Value AfterPrior to Adoption


Gain (Loss)


Adoption(In thousands)AssetsMortgage loans held for
    investment(1)

$
10,530,424


$
(3,846,775
)

$
6,683,649LiabilitiesCollateralized borrowings:On-balance sheet securitization debt


(10,367,144
)


3,632,696



(6,734,448
)Collateralized debt obligations


(386,052
)


34,826



(351,226
)Pretax cumulative effect of adopting SFAS No. 159





$
(179,253
)After-tax cumulative effect of adopting SFAS No. 159





$
(178,504
)     (1)
    
    Includes the removal from the
    balance sheet of the $489.0 million of allowance for loan
    losses.  On-balance
    sheet securitizations
  Accounting for Transfers and Servicing
    of Financial Assets and Extinguishments of
    Liabilities  a replacement of FASB Statement
    No. 125
   35




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
            Collateralized
    Debt Obligations
   36




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Consolidation of
    Variable Interest Entities Accounting for Certain Investments in
    Debt and Equity Securities
       37




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Changes in Fair Value Included in the Condensed Consolidated
    Income StatementChange inTotal


Fair ValueGain on


Included


Due toInterest


Interest


Other


Investment


in Net


CreditThree Months Ended September 30, 2008

Income


Expense


(Loss) Income


Securities, Net


Income


Risk(1)(In thousands)Mortgage loans held for investment

$
168,093


$



$
(74,679
)

$



$
93,414


$
(258,139
)(2)Collateralized borrowings:On-balance sheet securitizations






(90,245
)


2,891







(87,354
)


119,264
(3)Collateralized debt obligations






(2,758
)






50,313



47,555




(4)Total

















$
53,615Changes in Fair Value Included in the Condensed Consolidated
    Income StatementChange inTotal


Fair ValueGain on


Included


Due toInterest


Interest


Other


Investment


in Net


CreditNine Months Ended September 30, 2008

Income


Expense


(Loss) Income


Securities, Net


Income


Risk(1)(In thousands)Mortgage loans held for investment

$
548,551


$



$
(3,043,029
)

$



$
(2,494,478
)

$
(510,814
)(2)Collateralized borrowings:On-balance sheet securitization debt






(299,695
)


2,843,303







2,543,608



218,103
(3)Collateralized debt obligations






(10,501
)






93,352



82,851




(4)Total

















$
131,981     (1)
    
    Factors other than credit quality
    which impact the fair value include changes in market interest
    rates and the liquidity or marketability in the current
    marketplace. Lower levels of observable data points in illiquid
    markets generally result in wide bid/offer spreads.(2)
    
    The credit impact for mortgage
    loans held for investment was quantified by applying internal
    credit loss assumptions to cash flow models.(3)
    
    The credit impact for on-balance
    sheet securitization debt is assumed to be zero until the
    Companys economic interests in a particular securitization
    is reduced to zero, at which point the losses on the underlying
    collateral will be expected to be passed through to third-party
    bondholders. Losses allocated to third-party bondholders,
    including changes in the amount of losses allocated, will result
    in fair value change due to credit. The Company also monitors
    credit ratings and will make credit adjustments to the extent
    any bond classes are downgraded by rating agencies.(4)
    
    The credit impact for
    collateralized debt obligations is assumed to be zero until the
    Companys economic interests in the securitization is
    reduced to zero, at which point the losses projected on the
    underlying collateral will be expected to be passed through to
    the securitizations bonds. The Company also monitors
    credit ratings and will make credit adjustments to the extent
    any bond classes are downgraded by rating agencies.   38




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    As of September 30, 2008Unpaid


LoanPrincipal


Advances/


Accrued


Fair ValueBalance


Other


Interest


Allowance


Fair Value(In thousands)Mortgage Loans Held for Investment:Total loans

$
9,184,051


$
(142,465
)

$
96,283


$
(6,928,038
)

$
2,209,831Nonaccrual loans


1,730,025Loans 90+ days past due


1,325,444Collateralized Borrowings:On-balance sheet securitizations


(8,773,458
)


(1,560
)


(20,335
)


6,510,629



(2,284,724
)Collateralized debt obligations


(310,922
)






(1,221
)


130,861



(181,282
)Total for collateralized borrowings

$
(9,084,380
)

$
(1,560
)

$
(21,556
)

$
6,641,490


$
(2,466,006
)     17.
    Related
    Party Transactions    Principal


Interest for the NineOutstanding as of


Months EndedSeptember 30,


December 31,


September 30,


September 30,2008


2007


2008


2007(In millions)Borrowings:GMAC senior secured credit facility

$
2,172.1


$



$
33.5


$
GMAC term loan










9.2



GMAC senior secured credit facility  Cerberus


382.5







6.5



GMAC senior secured credit facility  GM


367.5







6.3



GMAC secured MSR facility


1,098.5







21.0



GMAC Resort Finance facility










17.8



Cerberus model home term loan


125.0







25.3



Deposit liabilities at GMAC Bank


455.8



418.8



15.6



11.1Receivables:Warehousing lending receivable

$



$
115.9


$
5.6


$
4.0Mortgage loans/others receivable (purchased at market price)


43.0



131.6







  39




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Fees and OtherIncome/(Expense)for the Nine MonthsEnded September 30,Fees Paid and Revenue Earned:

2008


2007(In millions)Management fees paid to GMAC(a)

$
49.7


$
31.6Auto Bank loans, administration and other service fees(b)


52.5



38.0Total fees paid

$
102.2


$
69.6Global relocation services provided to GM/GMAC

$
9.0


$
7.6Mortgage related services provided to GM/GMAC employees


2.6



3.2Risk management services provided to GMAC






15.0Total revenue earned

$
11.6


$
25.8     (a)
    
    Includes finance, information technology, communication,
    corporate marketing, procurement, and services related to
    facilities.(b)
    
    Includes primarily the services related to automotive loans,
    commercial lending, banking and finance.       40




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
           41




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
        
    On July 14 and 15, 2008, GMAC Mortgage LLC (GMAC
    Mortgage) agreed to sell securitized excess servicing on
    two populations of loans to Cerberus consisting of
    $13.8 billion in unpaid principal balance of Freddie Mac
    loans and $24.8 billion in unpaid principal balance of
    Fannie Mae loans, capturing $591.2 million and
    $981.9 million of notional interest-only securities,
    respectively. The sales closed on July 30, 2008 with net
    proceeds of $175.1 million to the Company and a loss on
    sale of $23.5 million.
    On September 30, 2008, the Companys Business Capital
    Group completed the sale of certain of its model home assets to
    MHPool Holdings LLC (MHPool Holdings), an affiliate
    of Cerberus, for cash consideration consisting of approximately
    $80.0 million, subject to certain adjustments, primarily
    relating to the sales of homes between June 30, 2008 and
    September 30, 2008, resulting in a net purchase price from
    MHPool Holdings of approximately $59.0 million. The loss on
    sale was $27.3 million. The purchase price is subject to
    further post-closing adjustments that are not expected to be
    material.        18.
    Subsequent
    Events  Renewal
    and amendment to GMAC MSR Facility
   42




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    
    Reduce the advance rate from 85% to 76.6%;
    Renew the MSR facility to May 1, 2009, unless ResCap
    obtains replacement financing from a third-party lender at an
    earlier date;
    Reduce the amount of GMACs lending commitment by
    $84 million as of October 17, 2008, with a subsequent
    commitment reduction of $84 million effective as of
    October 22, 2008, and further commitment reductions equal
    to any amounts of the outstanding indebtedness forgiven by GMAC,
    including the $101.5 million forgiven on September 30,
    2008, as a contribution of capital to ResCap and its
    subsidiaries;
    Add a covenant by the borrowers to use their best efforts to
    provide GMAC, by November 30, 2008, with $250 million
    in additional collateral for the indebtedness outstanding under
    the MSR facility, with a zero advance rate applicable to such
    collateral;
    At GMACs request, require the borrowers to resign as
    servicers under the underlying servicing agreements, during the
    existence of an event of default under the MSR Facility; and
    Add an option permitting GMAC to require on two business
    days notice (or on one business days notice
    following an event of default) that servicing collections be
    placed in a segregated account.      GMAC
    forgiveness of debt
   43




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  19.
    Segment
    Information    Residential


Business


International


CorporateThree Months Ended

Finance


Capital


Business


andSeptember 30, 2008

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)Net financing revenue

$
45,493


$
(20,558
)

$
(29,074
)

$
122,189


$



$
118,050Other revenue


112,016



(92,806
)


(189,260
)


1,790







(168,260
)Total net revenue


157,509



(113,364
)


(218,334
)


123,979







(50,210
)Provision for loan losses


(208,344
)


(116,773
)


(257,886
)


(77,879
)






(660,882
)Total non-interest expense


(474,501
)


(23,480
)


(155,405
)


(505,626
)






(1,159,012
)Loss before income taxes and minority interest


(525,336
)


(253,617
)


(631,625
)


(459,526
)






(1,870,104
)Income tax (benefit) expense


(25,368
)


(635
)


6,207



24,728







4,932Loss before minority interest


(499,968
)


(252,982
)


(637,832
)


(484,254
)






(1,875,036
)Minority interest














37,135







37,135Net loss

$
(499,968
)

$
(252,982
)

$
(637,832
)

$
(521,389
)

$



$
(1,912,171
)Total assets

$
40,645,716


$
2,811,176


$
10,684,456


$
28,427,992


$
(16,054,053
)

$
66,515,287Net interest (expense) income from other segments

$
(94,967
)

$
(11,758
)

$
(56,472
)

$
163,197


$



$
   Residential


Business


International


CorporateThree Months Ended

Finance


Capital


Business


andSeptember 30, 2007

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)Net financing revenue

$
137,650


$
22,702


$
21,503


$
77,162


$



$
259,017Other revenue


161,333



(78,185
)


(500,437
)


(222,031
)






(639,320
)Total net revenue


298,983



(55,483
)


(478,934
)


(144,869
)






(380,303
)Provision for loan losses


(586,833
)


(92,368
)


(22,445
)


(182,567
)






(884,213
)Total non-interest expense


(881,733
)


(24,888
)


(158,363
)


(26,308
)






(1,091,292
)Loss before income taxes and minority interest


(1,169,583
)


(172,739
)


(659,742
)


(353,744
)






(2,355,808
)Income tax expense (benefit)


23,125



(849
)


(161,731
)


20,013







(119,442
)Loss before minority interest


(1,192,708
)


(171,890
)


(498,011
)


(373,757
)






(2,236,366
)Minority interest














24,561







24,561Net loss

$
(1,192,708
)

$
(171,890
)

$
(498,011
)

$
(398,318
)

$



$
(2,260,927
)Total assets

$
76,059,559


$
6,490,298


$
16,478,824


$
38,799,143


$
(21,702,956
)

$
116,124,868Net interest (expense) income from other segments

$
(153,229
)

$
(75,969
)

$
11,667


$
217,531


$



$
   44




---



##### Table of Contents



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


Business


International


CorporateNine Months Ended

Finance


Capital


Business


andSeptember 30, 2008

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)Net financing revenue

$
176,667


$
(45,547
)

$
7,781


$
224,533


$



$
363,434Other revenue


1,115,669



(521,679
)


(1,906,964
)


406,347







(906,627
)Total net revenue


1,292,336



(567,226
)


(1,899,183
)


630,880







(543,193
)Provision for loan losses


(493,176
)


(211,730
)


(442,258
)


(283,039
)






(1,430,203
)Total non-interest expense


(1,374,444
)


(63,102
)


(404,166
)


(680,286
)






(2,521,998
)Loss before income taxes and minority interest


(575,284
)


(842,058
)


(2,745,607
)


(332,445
)






(4,495,394
)Income tax expense (benefit)


(22,401
)


(1,050
)


100,245



11,295







88,089Loss before minority interest


(552,883
)


(841,008
)


(2,845,852
)


(343,740
)






(4,583,483
)Minority interest














47,297







47,297Net loss

$
(552,883
)

$
(841,008
)

$
(2,845,852
)

$
(391,037
)

$



$
(4,630,780
)Total assets

$
40,645,716


$
2,811,176


$
10,684,456


$
28,427,992


$
(16,054,053
)

$
66,515,287Net interest (expense) income from other segments

$
(319,204
)

$
(108,622
)

$
(240,398
)

$
668,224


$



$
   Residential


Business


International


CorporateNine Months Ended

Finance


Capital


Business


andSeptember 30, 2007

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)Net financing revenue

$
647,294


$
88,683


$
81,179


$
240,600


$



$
1,057,756Other revenue


563,274



9,093



(257,985
)


(296,975
)






17,407Total net revenue


1,210,568



97,776



(176,806
)


(56,375
)






1,075,163Provision for loan losses


(1,313,110
)


(149,810
)


(45,006
)


(251,714
)






(1,759,640
)Total non-interest expense


(2,159,491
)


(62,494
)


(347,849
)


(86,850
)






(2,656,684
)Loss before income taxes and minority interest


(2,262,033
)


(114,528
)


(569,661
)


(394,939
)






(3,341,161
)Income tax expense (benefit)


96,659



(531
)


(131,435
)


51,494







16,187Loss before minority interest


(2,358,692
)


(113,997
)


(438,226
)


(446,433
)






(3,357,348
)Minority interest














68,051







68,051Net loss

$
(2,358,692
)

$
(113,997
)

$
(438,226
)

$
(514,484
)

$



$
(3,425,399
)Total assets

$
76,059,559


$
6,490,298


$
16,478,824


$
38,799,143


$
(21,702,956
)

$
116,124,868Net interest (expense) income from other segments

$
(410,149
)

$
(222,725
)

$
(94,243
)

$
727,117


$



$
   20.
    Regulatory
    Matters   45




---



##### Table of Contents



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


Well CapitalizedSeptember 30, 2008

Amount


Ratio


Amount


Ratio(Dollars in millions)


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

$
3,932.0



16.4
%

$
2,395.3



10.0
%Tier 1 capital to risk weighted assets


3,685.6



15.4
%


1,437.2



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


3,685.6



11.3
%


3,580.0



11.0
%   10-year
    
    Each of GMAC, the FIM Entities, IB Finance Holding Company, LLC
    (Holdings), the Bank and the FDIC (collectively, the
    Contracting Parties) entered into a Parent Company
    Agreement (the PA). The PA requires GMAC to maintain
    its capital at a level such that the ratio of its total equity
    to total assets is at least 5%. The PA further requires GMAC,
    beginning December 31, 2008, to maintain its capital at a
    level such that the ratio of its tangible equity to tangible
    assets is at least 5%. Further, the PA requires the Bank to
    obtain FDIC approval prior to engaging in certain affiliate
    transactions, and for any major deviation or material change
    from its business plan for a seven-year period. The PA also
    requires GMAC and Holdings to submit certain periodic reports to
    the FDIC and to consent to examinations by the FDIC to monitor
    compliance with the PA, any other agreements executed in
    conjunction with the
    10-year
    extension of the existing two-year disposition requirement, and
    applicable law. As of September 30, 2008, the
    Banks tangible equity to tangible assets ratio was 11.5%.
    The Contracting Parties entered into a Capital and Liquidity
    Maintenance Agreement (the CLMA). The CLMA requires
    capital at the Bank to be maintained at a level such that GMAC
    Banks leverage ratio is at least 11% for a three-year
    period. Following the initial three-year period, GMAC Bank must
    continue to be well capitalized. As of September
    30, 2008, the Banks leverage ratio was 11.3%. The
    CLMA further requires GMAC (and such additional Contracting
    Parties acceptable to the FDIC) to extend a $3 billion
    unsecured revolving line of credit to the Bank. 46




---



##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
    NOTES TO CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      47




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  General
  and/or
      Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007(In millions)Net revenueResidential Finance Group

$
157.5


$
299.0


$
1,292.3


$
1,210.6Business Capital Group


(113.4
)


(55.5
)


(567.2
)


97.8International Business Group


(218.3
)


(478.9
)


(1,899.2
)


(176.8
)Corporate and Other


124.0



(144.9
)


630.9



(56.4
)Total

$
(50.2
)

$
(380.3
)

$
(543.2
)

$
1,075.2Net lossResidential Finance Group

$
(500.0
)

$
(1,192.7
)

$
(552.9
)

$
(2,358.7
)Business Capital Group


(253.0
)


(171.9
)


(841.0
)


(114.0
)International Business Group


(637.8
)


(498.0
)


(2,845.9
)


(438.2
)Corporate and Other


(521.4
)


(398.3
)


(391.0
)


(514.5
)Total

$
(1,912.2
)

$
(2,260.9
)

$
(4,630.8
)

$
(3,425.4
)   
    Residential Finance Group.  Our Residential
    Finance Group originates, purchases, sells, securitizes and
    services residential mortgage loans in the United States. As
    part of the restructuring plan announced in the third quarter,
    we closed our retail and wholesale channels in September 2008.
    The segment continues to originate mortgage loans through our
    direct lending centers and GMAC Bank correspondents. In
    addition, the segment purchases residential mortgage loans from
    correspondent lenders and other third-parties and provides
    warehouse lending. Loans are primarily agency-eligible or
    government loans. Prime credit quality loans that are produced
    in conformity with the underwriting guidelines of Fannie Mae,
    Freddie Mac and Ginnie Mae are generally sold to one of these
    government-sponsored enterprises in the form of agency
    guaranteed securitizations. This segment also provides
    collateralized lines of credit to other originators of
    residential mortgage loans, which we refer to as warehouse
    lending. This activity has also been reduced 48




---



##### Table of Contents



although we continue to originate prime conforming warehouse
    lending through GMAC Bank. Our limited banking activities
    through the mortgage division of GMAC Bank and our real estate
    brokerage and relocation business are included in this segment.
    We have entered into an agreement to sell GMAC Home Services
    real estate brokerage and relocation businesses in the fourth
    quarter of 2008.  
    Business Capital Group.  Our Business Capital
    Group provides financing and equity capital to residential land
    developers and homebuilders. Due to current market conditions,
    the origination activities of this business are substantially
    contracting the scope of its operations.
    International Business Group.  Our
    International Business Group includes substantially all of our
    operations outside of the United States. The mortgage loan
    production in the countries in which we operate have been
    suspended, except for insured mortgages in Canada, due to
    current market conditions.
    Corporate and Other.  Our Corporate and Other
    Group primarily consists of the Principal Investment Activity
    (PIA) business and Corporate holding company
    activities, including our debt issuances. The PIA business was
    previously reported as part of the Residential Finance Group
    segment. The PIA business operations primarily represent the
    loan portfolio management of our purchased distressed asset
    portfolio as well as certain other nonperforming assets. This
    business terminated its strategy to purchase distressed assets
    and its existing portfolio is being managed into run-off. Also
    included in Corporate and Other are costs associated with the
    restructuring initiative announced in the third quarter of 2008.
    Our chief operating decision maker elected to evaluate the
    performance of our three primary operating segments without the
    costs of the new restructuring initiative. In addition, our
    other business operations include the automotive division of
    GMAC Bank, which are not significant to our results of
    operations. The revenues and expenses of the automotive division
    of GMAC Bank are eliminated from our net results through
    minority interest.      Significant
    Accounting Estimates
  Fair Value Measurements The Fair Value
    Option for Financial Assets and Financial Liabilities
 49




---



##### Table of Contents



Level 1
    
    Inputs are quoted prices in active markets for identical assets
    or liabilities as of the measurement date. Additionally, the
    entity must have the ability to access the active market and the
    quoted prices cannot be adjusted by the entity.Level 2
    
    Inputs include quoted prices in active markets for similar
    assets or liabilities; quoted prices in inactive markets for
    identical or similar assets or liabilities; or inputs that are
    observable or can be corroborated by observable market data by
    correlation or other means for substantially the full term of
    the assets or liabilities.Level 3
    
    Unobservable inputs that are supported by little or no market
    activity. The unobservable inputs represent managements
    best assumptions of how market participants would price the
    assets or liabilities. Generally, Level 3 assets and
    liabilities are valued using pricing models, discounted cash
    flow methodologies, or similar techniques that require
    significant judgment or estimation.      
    We enter into interest rate lock commitments with borrowers or
    mortgage purchase commitments with correspondent lenders and
    other sellers. These commitments typically are considered
    derivative instruments under GAAP and are accounted for at fair
    value. Due to the underlying attributes of these mortgage loan
    commitments and the fact that they do not trade in any market,
    these derivatives typically are Level 3 items.
    We fund or purchase mortgage loans. We have not elected fair
    value for our mortgage loans held for sale portfolio. Rather,
    the loans are accounted for at lower of cost or market under
    GAAP. The loans are valued differently depending upon the
    underlying characteristics of the loan. Generally speaking,
    loans that will be sold to the agencies and international loans
    where recently negotiated market prices for the pool exist with
    a counterparty are Level 2, while domestic loans that
    cannot be sold to agencies and delinquent loans are Level 3
    due to lack of observable market prices.
    We ultimately sell our mortgage loans included in our held for
    sale portfolio, either to the agencies, to whole loan
    purchasers, or securitization structures. When we sell loans, we
    typically will retain servicing rights. We have opted to carry
    our servicing rights at fair value under SFAS No. 156
    Accounting for Servicing of Financial Assets  an
    amendment of FASB Statement No. 140. Further, when the
    loans are sold into off-balance sheet securitizations, we will
    often retain residuals
    and/or
    certain classes of bonds. These retained bonds may include
    interest only strips, principal only securities, or principal
    and interest paying bonds (typically the subordinated bonds),
    all of which are carried at fair value within trading securities
    on our 50




---



##### Table of Contents



balance sheet. Due to the lack of observable market prices or
    data, our servicing rights and retained interests typically are
    Level 3.  
    We have previously executed certain securitizations that have
    not qualified for sale treatment under SFAS No. 140
    Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities  a replacement of
    FASB Statement No. 125. The collateral in these
    securitizations are classified as mortgage loans held for
    investment and the related debt is recorded on our balance
    sheet. We have elected fair value for both the collateral and
    debt in certain of these securitizations. Due to the
    characteristics of the underlying loan collateral (nonprime and
    home equities), the collateral and debt are both classified as
    Level 3.           51




---



##### Table of Contents



and/or
    Results
    of Operations
  Consolidated
    Results
     52




---



##### Table of Contents



U.S. Mortgage Loan Production by TypeThree Months Ended September 30,


Nine Months Ended September 30,2008


2007


2008


2007No. of


Dollar Amt


No. of


Dollar Amt


No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans


Loans


of Loans


Loans


of Loans(Dollars in millions)Prime conforming


32,233


$
6,766



64,116


$
12,174



158,712


$
34,390



180,882


$
34,425Prime non-conforming


537



250



13,985



4,993



4,079



1,838



83,712



27,798Prime second-lien


1,199



86



23,546



1,440



11,147



872



116,710



6,472Government


22,939



4,137



13,241



1,378



56,360



9,873



70,833



5,458Nonprime










3,007



221



13



3



30,399



4,246Total U.S. production


56,908


$
11,239



117,895


$
20,206



230,311


$
46,976



482,536


$
78,399     Three Months


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007(In millions)Purpose:Purchase

$
6,291


$
9,409


$
16,983


$
29,544Non-purchase


4,948



10,797



29,993



48,855$
11,239


$
20,206


$
46,976


$
78,399Interest rate type:Fixed rate

$
10,107


$
16,191


$
42,180


$
56,231Adjustable rate


1,132



4,015



4,796



22,168$
11,239


$
20,206


$
46,976


$
78,399     U.S. Mortgage Loan Production by ChannelThree Months Ended September 30,


Nine Months Ended September 30,2008


2007


2008


2007No. of


Dollar Amt


No. of


Dollar Amt


No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans


Loans


of Loans


Loans


of Loans(Dollars in millions)Retail branches


8,419


$
1,536



18,618


$
2,878



37,971


$
6,988



60,545


$
9,391Direct lending (other than retail branches)


6,266



1,060



20,402



2,227



30,308



5,400



80,166



8,753Mortgage brokers


4,996



994



23,423



4,372



27,989



5,867



92,616



17,196Correspondent lenders and secondary market purchases


37,227



7,649



55,452



10,729



134,043



28,721



249,209



43,059Total U.S. production


56,908


$
11,239



117,895


$
20,206



230,311


$
46,976



482,536


$
78,399  53




---



##### Table of Contents



International Mortgage Loan ProductionThree Months Ended September 30,


Nine Months Ended September 30,2008


2007


2008


2007No. of


Dollar Amt


No. of


Dollar Amt


No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans


Loans


of Loans


Loans


of Loans(Dollars in millions)United Kingdom


144


$
32



22,192


$
6,538



3,360


$
882



58,629


$
16,163Continental Europe


158



41



10,230



1,941



3,408



893



28,890



5,427Canada


2,621



484



2,035



414



8,723



1,705



6,636



1,281Other


982



70



2,983



175



2,698



387



7,895



387Total international production


3,905


$
627



37,440


$
9,068



18,189


$
3,867



102,050


$
23,258     Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net financing revenue

$
118.1


$
259.0


$
363.4


$
1,057.8Loss on mortgage loans, net


(138.2
)


(569.6
)


(1,947.7
)


(630.7
)Servicing fees


369.4



451.4



1,153.6



1,350.7Servicing asset valuation and hedge activities, net


(260.8
)


(123.4
)


(36.2
)


(577.3
)Net servicing fees


108.6



328.0



1,117.4



773.4Other revenue


(138.8
)


(397.7
)


(76.3
)


(125.3
)Provision for loan losses


(660.9
)


(884.2
)


(1,430.2
)


(1,759.6
)Non-interest expense


(1,159.0
)


(1,091.3
)


(2,522.0
)


(2,656.7
)Loss before income tax expense and minority interest


(1,870.2
)


(2,355.8
)


(4,495.4
)


(3,341.1
)Income tax (expense) benefit


(4.9
)


119.5



(88.1
)


(16.2
)Loss before minority interest


(1,875.1
)


(2,236.3
)


(4,583.5
)


(3,357.3
)Minority interest


(37.1
)


(24.6
)


(47.3
)


(68.1
)Net loss

$
(1,912.2
)

$
(2,260.9
)

$
(4,630.8
)

$
(3,425.4
)   step-up
   54




---



##### Table of Contents



U.S. Mortgage Loan Servicing PortfolioSeptember 30,


December 31,2008


2007No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans(Dollars in millions)Prime conforming


1,568,986


$
236,400



1,554,594


$
227,460Prime non-conforming


243,943



73,904



336,319



103,285Prime second-lien


587,525



25,698



651,260



28,297Government


217,681



26,865



180,453



19,454Nonprime


261,061



29,078



349,696



40,105Total primary servicing portfolio*


2,879,196


$
391,945



3,072,322


$
418,601     *
    
    Excludes loans for which we acted as a subservicer. Subserviced
    loans totaled 155,848 with an unpaid principal balance of
    $33.9 billion at September 30, 2008 and 205,019 with
    an unpaid principal balance of $44.3 billion at
    December 31, 2007.         55




---



##### Table of Contents



56




---



##### Table of Contents



Segment
    Results
  Residential
    Finance Group
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net financing revenue

$
45.5


$
137.7


$
176.7


$
647.3Gain (loss) on mortgage loans, net


44.1



(104.5
)


316.9



(339.0
)Servicing fees


360.0



435.3



1,116.8



1,304.3Servicing asset valuation and hedge activities, net


(250.4
)


(122.0
)


(19.8
)


(574.7
)Net servicing fees


109.6



313.3



1,097.0



729.6Other revenue


(41.8
)


(47.6
)


(298.3
)


172.7Provision for loan losses


(208.3
)


(586.8
)


(493.2
)


(1,313.1
)Non-interest expense


(474.5
)


(881.7
)


(1,374.4
)


(2,159.5
)Income tax benefit (expense)


25.4



(23.1
)


22.4



(96.7
)Net loss

$
(500.0
)

$
(1,192.7
)

$
(552.9
)

$
(2,358.7
)      57




---



##### Table of Contents



58




---



##### Table of Contents



Business
    Capital Group
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net financing revenue

$
(20.6
)

$
22.7


$
(45.5
)

$
88.7Other revenue


(92.7
)


(78.2
)


(521.7
)


9.1Provision for loan losses


(116.8
)


(92.4
)


(211.7
)


(149.8
)Non-interest expense


(23.5
)


(24.9
)


(63.1
)


(62.5
)Income tax benefit


0.6



0.9



1.0



0.5Net loss

$
(253.0
)

$
(171.9
)

$
(841.0
)

$
(114.0
)        59




---



##### Table of Contents



International
    Business Group
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net financing revenue

$
(29.1
)

$
21.5


$
7.8


$
81.2Loss on mortgage loans, net


(170.5
)


(462.5
)


(1,734.6
)


(280.2
)Servicing fees


9.4



16.7



37.2



47.7Servicing asset valuation and hedge activities, net


(10.4
)


(1.4
)


(16.4
)


(2.6
)Net servicing fees


(1.0
)


15.3



20.8



45.1Other revenue


(17.7
)


(53.2
)


(193.2
)


(22.9
)Provision for loan losses


(257.9
)


(22.4
)


(442.3
)


(45.0
)Non-interest expense


(155.4
)


(158.4
)


(404.2
)


(347.8
)Income tax (expense) benefit


(6.2
)


161.7



(100.2
)


131.4Net loss

$
(637.8
)

$
(498.0
)

$
(2,845.9
)

$
(438.2
)        60




---



##### Table of Contents



Corporate
    and Other
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net financing revenue

$
122.2


$
77.2


$
224.5


$
240.6Loss on mortgage loans, net


(11.8
)


(2.6
)


(530.0
)


(11.6
)Other revenue


13.5



(219.4
)


936.4



(285.3
)Provision for loan losses


(77.9
)


(182.6
)


(283.0
)


(251.7
)Non-interest expense


(505.6
)


(26.3
)


(680.3
)


(86.9
)Income tax expense


(24.7
)


(20.0
)


(11.3
)


(51.5
)Loss before minority interest


(484.3
)


(373.7
)


(343.7
)


(446.4
)Minority interest


(37.1
)


(24.6
)


(47.3
)


(68.1
)Net loss

$
(521.4
)

$
(398.3
)

$
(391.0
)

$
(514.5
)  61




---



##### Table of Contents



62




---



##### Table of Contents



Asset
    Quality
  Allowance
    for Loan Losses
         63




---



##### Table of Contents



Mortgage LoansHeld for


LendingInvestment


Receivables


Other


Total(In thousands)Balance at June 30, 2008

$
637.9


$
485.1


$
35.5


$
1,158.5Provision for loan losses


533.5



119.0



8.4



660.9Charge-offs


(206.0
)


(24.8
)


(7.1
)


(237.9
)Recoveries


10.1



14.6



2.0



26.7Resort Finance sale to GMAC Commercial Finance(a)






(27.3
)






(27.3
)Balance at September 30, 2008

$
975.5


$
566.6


$
38.8


$
1,580.9Balance at June 30, 2007

$
1,695.6


$
274.1


$
29.2


$
1,998.9Provision for loan losses


787.5



93.4



3.3



884.2Charge-offs


(452.8
)


(50.0
)


(2.7
)


(505.5
)Recoveries


10.4



8.4



1.5



20.3Reduction of Allowance due to deconsolidation(b)


(306.5
)










(306.5
)Balance at September 30, 2007

$
1,734.2


$
325.9


$
31.3


$
2,091.4     (a)
    
    In the third quarter of 2008, the Resort Finance sale was
    completed to GMAC Commercial Finance. Upon completion,
    $27.3 million of allowance for loan losses was removed from
    the consolidated balance sheet.(b)
    
    During the three months ended September 30, 2007, we
    completed the sale of residual cash flows related to a number of
    on-balance sheet securitizations. We completed the approved
    actions to cause the securitization trusts to satisfy the
    qualifying special purpose entity (or QSPE)
    requirements of SFAS No. 140, Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities(SFAS No. 140). These
    actions resulted in the deconsolidation of various
    securitization trusts and the removal of $5.1 billion in
    mortgage loans held for investment, net of the related allowance
    for loan loss of $306.5 million, $5.2 billion of
    collateralized borrowings, capitalization of $33.3 million
    of mortgage servicing rights and gains on sale totaling
    $88.2 million in the third quarter of 2007. 64




---



##### Table of Contents



Mortgage LoansHeld for


LendingInvestment


Receivables


Other


Total(In millions)Balance at January 1, 2008

$
832.3


$
485.2


$
33.3


$
1,350.8Reduction to allowance due to fair value option election(a)


(489.0
)










(489.0
)Provision for loan losses


1,157.9



257.3



15.0



1,430.2Charge-offs


(556.7
)


(164.9
)


(16.3
)


(737.9
)Recoveries


31.0



16.3



6.8



54.1Resort Finance sale to GMAC Commercial Finance(b)






(27.3
)






(27.3
)Balance at September 30, 2008

$
975.5


$
566.6


$
38.8


$
1,580.9Balance at January 1, 2007

$
1,508.4


$
396.6


$
25.8


$
1,930.8Provision for loan losses


1,436.3



313.5



9.8



1,759.6Charge-offs


(943.9
)


(393.1
)


(8.0
)


(1,345.0
)Recoveries


39.9



8.9



3.7



52.5Reduction to allowance due to deconsolidation(c)


(306.5
)










(306.5
)Balance at September 30, 2007

$
1,734.2


$
325.9


$
31.3


$
2,091.4Allowance as a percentage of total related asset class:September 30, 2008


3.53
%(d)


7.97
%


1.13
%


4.14
%December 31, 2007


1.97
%


5.46
%


1.06
%


2.49
%September 30, 2007


2.85
%


3.72
%


1.42
%


2.92
%     (a)
    
    See Note 16  Fair Value 
    $489.0 million of allowance for loan losses was removed
    upon SFAS No. 159 adoption.(b)
    
    In the third quarter of 2008, the Resort Finance sale was
    completed to GMAC Commercial Finance. Upon completion,
    $27.3 million of allowance for loan losses was removed from
    the consolidated balance sheet.(c)
    
    During the three months ended September 30, 2007, we
    completed the sale of residual cash flows related to a number of
    on-balance sheet securitizations. We completed the approved
    actions to cause the securitization trusts to satisfy the
    qualifying special purpose entity (or QSPE)
    requirements of SFAS No. 140, Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities(SFAS No. 140). These
    actions resulted in the deconsolidation of various
    securitization trusts and the removal of $5.1 billion in
    mortgage loans held for investment, net of the related allowance
    for loan loss of $306.5 million, $5.2 billion of
    collateralized borrowings, capitalization of $33.3 million
    of mortgage servicing rights and gains on sale totaling
    $88.2 million in the third quarter of 2007.(d)
    
    As of September 30, 2008, $9.2 billion of unpaid
    principal balance is recorded at a fair value of
    $2.2 billion under SFAS No. 159 with no related
    allowance for loan losses. These loans have been excluded from
    this calculation.   65




---



##### Table of Contents



Allowance for Loan LossesAs of September 30,2008


2007


2008


2007($ in millions)Prime conforming

$
21.9


$
5.2



2.62
%


0.42
%Prime non-conforming


440.3



69.2



2.60



0.48Prime second-lien


147.4



149.1



3.11



1.93Government


2.0



1.0



1.40



0.56Nonprime


363.9



1,509.7



7.36



4.07Total

$
975.5


$
1,734.2



3.53
%


2.85
%        66




---



##### Table of Contents



Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Mortgage loans:Prime conforming

$
(4.8
)

$
(1.3
)

$
(15.2
)

$
(2.4
)Prime non-conforming


(65.0
)


(20.9
)


(131.4
)


(33.2
)Prime second-lien


(50.8
)


(63.8
)


(99.2
)


(123.4
)Government


(0.6
)


(0.1
)


(1.0
)


(0.1
)Nonprime


(74.7
)


(356.3
)


(278.9
)


(744.9
)Lending receivables:Construction


(7.3
)


(12.0
)


(128.5
)


(12.0
)Warehouse


(2.7
)


(9.3
)


(20.1
)


(351.9
)Other


(0.2
)


(20.3
)






(20.3
)Other


(5.1
)


(1.2
)


(9.5
)


(4.3
)Total net charge-offs

$
(211.2
)

$
(485.2
)

$
(683.8
)

$
(1,292.5
)     Nonperforming
    Assets
     67




---



##### Table of Contents



September 30,


December 31,


September 30,2008


2007


2007(In millions)Nonaccrual loans:Mortgage loans:Prime conforming

$
140.7


$
84.7


$
74.2Prime non-conforming


1,935.6



908.0



668.9Prime second-lien


419.6



233.2



197.3Government


74.6



79.8



78.2Nonprime*


3,355.2



4,040.2



7,538.3Lending receivables:Construction**


1,414.6



550.2



324.0Warehouse


102.5



70.8



112.4Commercial business


34.5



10.0



Other


0.3



0.4



0.1Total nonaccrual loans


7,477.6



5,977.3



8,993.4Restructured loans


124.9



32.1



60.2Foreclosed assets


893.6



1,115.5



1,601.3Total nonperforming assets

$
8,496.1


$
7,124.9


$
10,654.9Total nonaccrual loans as a percentage of total mortgage loans
    held for investment and lending receivables


16.8
%


11.7
%


12.9
%Total nonperforming assets as a percentage of total consolidated
    assets


12.8
%


8.1
%


9.3
%     *
    
    Includes $303.0 million as of September 30, 2008,
    $1.1 billion as of December 31, 2007 and
    $2.1 billion as of September 30, 2007 of loans that
    were purchased distressed and already in nonaccrual status. In
    addition, includes $126.8 million as of September 30,
    2008, $15.7 million as of December 31, 2007 and
    $24.4 million as of September 30, 2007 of nonaccrual
    loans that are not included in Restructured loans.**
    
    Includes $82.2 million as of September 30, 2008,
    $47.2 million as of December 31, 2007 and
    $23.9 million as of September 30, 2007 of nonaccrual
    restructured loans, that are not included in Restructured
    loans.       68




---



##### Table of Contents



As of September 30, 2008


As of December 31, 2007


As of September 30, 2007Percent of





Percent of





Percent ofAmount


Total


Amount


Total


Amount


Total(Dollars in millions)Current

$
30,001.2



80.5
%

$
35,557.7



82.6
%

$
48,845.8



79.7
%Past due:30 to 59 days


1,287.0



3.4



1,784.3



4.1



3,251.7



5.360 to 89 days


806.0



2.2



946.4



2.2



1,563.0



2.590 days or more


2,442.8



6.6



2,178.5



5.1



3,406.3



5.6Foreclosures pending


2,069.3



5.5



1,845.8



4.3



2,867.8



4.7Bankruptcies


664.9



1.8



735.4



1.7



1,329.6



2.2Total unpaid principal balance


37,271.2



100.0
%


43,048.1



100.0
%

$
61,264.2



100.0
%Net (discounts) premiums


(525.4
)






(885.5
)






(492.2
)SFAS No. 159 fair value adjustment


(6,928.1
)














Allowance for loan losses


(975.5
)






(832.3
)






(1,734.2
)Total

$
28,842.2






$
41,330.3






$
59,037.8     Unpaid Principal BalanceAs of September 30,


As of December 31,2008


2007(In millions)Mortgage Loans Held for Sale  DomesticHigh loan-to-value (greater than 100%) mortgage loans

$
2.6


$
11.6Payment option adjustable rate mortgage loans


64.9



1.1Interest-only mortgage loans


221.9



663.2Below market initial rate mortgage loans






243.7Total

$
289.4


$
919.6Mortgage Loans Held for Investment 
    DomesticHigh loan-to-value (greater than 100%) mortgage loans

$
2,440.6


$
3,701.6Payment option adjustable rate mortgage loans


1,362.7



1,689.6Interest-only mortgage loans


9,969.9



11,448.7Below market initial rate mortgage loans


820.6



489.3Total

$
14,593.8


$
17,329.2Mortgage Loans  Held for Sale and
    Investment  InternationalHigh loan-to-value (greater than 100%) mortgage loans

$
1,545.8


$
2,182.6Payment option adjustable rate mortgage loans






Interest-only mortgage loans


3,036.5



6,170.1Below market initial rate mortgage loans






Total

$
4,582.3


$
8,352.7  69




---



##### Table of Contents



Loan Production for theNine Months EndedSeptember 30,2008


2007(In millions)High loan-to-value (greater than 100%) mortgage loans

$
556.6


$
2,319.8Payment option adjustable rate mortgage loans


0.2



7,576.6Interest-only mortgage loans


3,210.3



26,595.4Below market initial rate mortgage loans


233.4



1,317.9Total

$
4,000.5


$
37,809.7         Liquidity
    and Capital Resources
  Liquidity
    and Capital Management Highlights through September 30,
    2008
   70




---



##### Table of Contents




    During the second quarter of 2008, Cerberus committed to
    purchase certain assets at our option consisting of performing
    and nonperforming mortgage loans, mortgage-backed securities and
    other assets for net cash proceeds of $300.0 million.
    During the third quarter, the following transactions were
    completed with Cerberus:  -
    On July 14 and 15, 2008, GMAC Mortgage LLC (GMAC
    Mortgage) agreed to sell securitized excess servicing on
    two populations of loans to Cerberus consisting of
    $13.8 billion in unpaid principal balance of Freddie Mac
    loans and $24.8 billion in unpaid principal balance of
    Fannie Mae loans, capturing $591.2 and $981.9 million
    of notional interest-only securities, respectively. The sales
    closed on July 30, 2008 with net proceeds of
    $175.1 million to ResCap.-
    On September 30, 2008, our Business Capital Group completed
    the sale of certain of its model home assets to MHPool Holdings
    LLC (MHPool Holdings), an affiliate of Cerberus, for
    cash consideration consisting of approximately
    $80.0 million, subject to certain adjustments, primarily
    relating to the sales of homes between June 30, 2008 and
    September 30, 2008, resulting in a net purchase price from
    MHPool Holdings of approximately $59.0 million. The
    purchase price is subject to further post-closing adjustments
    that are not expected to be material.    
    On September 30, 2008, GMAC LLC contributed ResCap notes
    that it had previously purchased in open market transactions
    with a face amount of $92.8 million and a fair value of
    approximately $51.0 million. Accordingly, ResCap recorded a
    capital contribution to members interest for GMACs
    purchase price of $51.0 million and a gain of
    $42.2 million on extinguishment of debt representing the
    difference between the carrying value and GMACs fair
    market value purchase price. In addition, GMAC forgave
    $2.5 million of accrued interest related to these notes,
    increasing the total capital contribution to $53.5 million.
    On September 30, 2008, GMAC also forgave debt outstanding
    of $101.5 million under the loan and security agreement
    (the GMAC Secured MSR Facility) with Residential
    Funding Corporation LLC (RFC) and GMAC Mortgage. The
    debt forgiveness reduces the overall GMAC Secured MSR Facility
    indebtedness. This facility was due to mature on
    October 17, 2008. Subsequent to September 30, 2008,
    the GMAC Secured MSR Facility matured and was renewed to
    May 1, 2009 with additional amendments to the original
    terms most notably the advance rates reduced from 85.0% to 76.6%
    and the reduction of the amount of GMACs lending
    commitment by $84.0 million as of October 17, 2008,
    with a subsequent commitment reduction of $84.0 million
    effective as of October 22, 2008, and further commitment
    reductions equal to any amounts of the outstanding indebtedness
    forgiven by GMAC, including the $101.5 million forgiven on
    September 30, 2008, as a contribution of capital to ResCap
    and its subsidiaries.
    On July 31, 2008, ResCap and GMAC finalized the Resort
    Finance Sale Agreement (Resort Sale) pursuant to
    which GMAC Commercial Finance LLC (GMACCF) acquired
    100% of ResCaps Resort Finance business for a cash
    purchase price equal to the fair market value of the business.
    On June 3, 2008, we received an initial deposit of
    $250.0 million, representing estimated net proceeds related
    to this transaction. Upon final pricing and execution of the
    sale, we were required to repay a portion of the initial deposit
    to GMACCF in the amount of $153.9 million, representing the
    difference between the deposit we had received and the
    valuation, without regard to the Deferred Purchase Price.
    Under the Receivables Factoring Facility (Factoring
    Facility), GMACCF has purchased an additional
    $167.3 million face amount of receivables in the third
    quarter ($753.6 million of purchases since June 17,
    2008), with cash proceeds from the all sales to date totaling
    $640.6 million. We recorded a cumulative net loss for the
    nine months ended September 30, 2008 of $113.0 million
    related to these transactions.  On-going
    Liquidity and Capital Management Focus
   71




---



##### Table of Contents



and/or
      and/or
    Liquidity
    Management
    
    Unrestricted Liquidity:  We maintain a
    portfolio of money market instruments to support cash
    fluctuations, which we consider our unrestricted liquidity
    balance. As of September 30, 2008, our unrestricted
    liquidity position totaled $0.7 billion, as compared with
    $1.5 billion as of June 30, 2008 and $2.2 billion
    as of 72




---



##### Table of Contents



December 31, 2007. We view our unrestricted liquidity as
    cash readily available to cover operating demands from across
    our business operations. Unrestricted liquidity differs from
    cash and cash equivalents of $6.9 billion in that
    unrestricted liquidity does not include cash balances within
    GMAC Bank LLC (GMAC Bank), operating cash maintained
    within business segments to cover timing related outflows, and
    cash set aside for reinvestment into the GMAC Senior Secured
    Credit Facility. Subsequent to September 30, 2008, the
    segregated GMAC Senior Secured Credit Facility operating cash
    balances, with the exception of those related to servicer
    advances, were transferred to GMAC as a result of an agreed upon
    amendment to the original loan agreement. Therefore, we paid
    down $146.7 million of GMAC Senior Secured Credit Facility
    debt upon entering into the amended agreement and we continue to
    make paydowns on GMAC Senior Secured Credit Facility debt as we
    receive cash proceeds related to the disposition of secured
    assets.  
    Short- and long-term financing:  We have
    significant short- and long-term financing needs. We manage our
    liquidity by financing our assets in a manner consistent with
    their liquidity profile.  -
    Short-term financing:  We require short-term
    funding to finance our mortgage loans held for sale, lending
    receivables and various other liquid assets. As of
    September 30, 2008, the outstanding balance of short-term
    borrowings totaled $7.0 billion, as compared with
    $16.9 billion as of December 31, 2007.-
    Long-term financing:  Our long-term financing
    needs arise primarily from our mortgage loans held for
    investment, mortgage servicing rights, real estate investments
    and assets used for over-collateralization of our funding
    conduits. Our long-term debt typically consists of
    collateralized borrowings in securitization trusts, unsecured
    debt, and junior and senior secured debt issued in the public
    debt capital markets. 73




---



##### Table of Contents



2016and2008


2009


2010


2011


2012


2013


2014


2015


Thereafter


Total(In millions)Secured borrowings:Borrowings from parent

$
1,098.5


$



$
2,172.1


$



$



$



$



$



$



$
3,270.6Borrowings from affiliates










750.0











125.0















875.0Collateralized borrowings in securitization trusts(a)


































7,008.6



7,008.6Other secured borrowings:Senior secured notes










1,690.5



























1,690.5Junior secured notes






















1,690.0



1,690.0



1,690.0







5,070.0Secured aggregation facilities


2,587.3



387.7































2,975.0Repurchasing agreements


16.2



670.8































687.0FHLB advances


266.0



1,563.0



1,325.0



937.0



1,912.0



1,428.0



821.0



770.0



1,495.0



10,517.0Mortgage servicing rights facilities






1,248.0































1,248.0Servicing advances






700.0































700.0Debt collateralized by mortgage loans


16.9



































16.9Other


































335.7



335.7Subtotal secured borrowings


3,984.9



4,569.5



5,937.6



937.0



1,912.0



3,243.0



2,511.0



2,460.0



8,839.3



34,394.3Unsecured borrowings:Senior unsecured notes  domestic


274.7



193.9



1,277.4



225.5



99.5



931.0







156.5







3,158.5Senior unsecured notes  international










521.1







156.9



71.5



122.8











872.3Subordinated unsecured notes






205.5































205.5Medium-term unsecured notes  international






204.0











163.1



















367.1Other


197.1



93.0



7.0







3.2



















300.3Subtotal unsecured borrowings


471.8



694.4



1,805.5



225.5



422.7



1,002.5



122.8



156.5







4,903.7Total Borrowings

$
4,456.7


$
5,265.9


$
7,743.1


$
1,162.5


$
2,334.7


$
4,245.5


$
2,633.8


$
2,616.5


$
8,839.3


$
39,298.0     (a)
    
    Collateralized borrowings in
    securitization trusts: The principal on the debt securities is
    paid using cash flows from underlying collateral (mortgage
    loans). Accordingly, the timing of the principal payments on
    these debt securities is dependent on the payments received and
    as such we elected to represent the full term of the securities
    in the 2016 and thereafter timeframe.  
    Sources of funding:  The funding sources
    utilized are primarily determined by the type of asset financed
    and associated with a particular product or business. These
    sources of liquidity include:  -
    Borrowings from parent and affiliates:  In
    conjunction with June 2008s global debt refinancing
    initiative, we continue our reliance on GMAC and its affiliates,
    General Motors Corporation (GM) and Cerberus, as
    sources of secured funding. There can be no assurances that our
    parent and affiliates will continue to undertake any such
    actions in the future.   74




---



##### Table of Contents



-
    Unsecured and secured funding sources at the ResCap
    level:  We have historically had access to the
    unsecured debt market to further diversify our funding sources.
    We had been unable to access the long-term debt markets due to
    our weakened credit ratings and corporate performance driven by
    the illiquidity of the capital markets. We do not expect our
    access to the unsecured debt market to return in the near future.-
    Third-party secured funding programs:  A
    majority of our assets are pledged as collateral to support
    various funding programs provided by third-parties. As part of
    these funding programs, sources of funding have been developed
    in the mortgage and asset-backed securities markets. Also, we
    have obtained liquidity and long-term funding in the term
    securitization market for our held for investment mortgage loan
    portfolio.-
    Our ability to access the funding capacity of GMAC
    Bank:  GMAC Bank provides us with another source
    of liquidity through its ability to accept deposits, to obtain
    Federal Home Loan Bank (FHLB) advances, to purchase
    federal funds and to access the Federal Reserves Discount
    Window and Term Auction Facility (TAF). The
    financing through the FHLB is uncommitted and requests for
    additional advances are evaluated by the FHLB at the time they
    are received. In July 2008, the Federal Deposit Insurance
    Corporation (FDIC) granted a ten year extension of
    GMAC Banks current ownership. On September 11, 2008,
    GMAC Bank was granted access to the Federal Reserves
    Discount Window and TAF. The Discount Window is the primary
    credit facility under which the Federal Reserve extends
    collateralized loans to depository institutions at terms from
    overnight up to ninety days. The TAF program auctions a
    pre-announced quantity of collateralized credit starting with a
    minimum bid for term funds of
    28-day or
    84-day
    maturity. GMAC Bank has pledged $5.2 billion of automotive
    loans and leasing financings to participate in the Discount
    Window and TAF program at varying collateral requirements. At
    September 30, 2008, GMAC Bank had no outstanding borrowings
    under these programs with unused capacity of $4.1 billion.
    Additionally, while no advances were outstanding as of
    September 30, 2008, GMAC Bank has a $3.0 billion
    364-day
    unsecured revolver with GMAC (GMAC Bank Unsecured Facility
    with Parent). This source of liquidity is due to mature on
    November 19, 2008, however the facility is automatically
    renewed on a rolling annual basis and its capacity is restricted
    to use by GMAC Bank and unavailable to our other operations.
    Utilization of this liquidity source could change should certain
    market conditions adversely impact liquidity at either the
    mortgage or automotive divisions of GMAC Bank.    
    Maintaining an active dialogue with the rating
    agencies:  Historically, our ability to meet our
    funding needs has been influenced by the ratings assigned by the
    rating agencies to ResCap and certain obligations issued by
    ResCap and its subsidiaries. These ratings could impact both our
    ability to access the capital markets as well as the cost of
    funds associated with such transactions. We maintain an active
    dialogue with the rating agencies throughout the year and will
    continue to work closely with them regarding our performance and
    changes in the business environment. In addition to our ratings,
    the current market conditions would inhibit our ability to
    access the debt capital markets.
    Interest Rate Management:  The interest rate
    risk profile of our liquidity can be separated from the actual
    debt issuances using derivative financial products. We have
    issued both fixed and variable rate debt in a range of
    currencies. We use derivative contracts, primarily interest rate
    swaps, to effectively convert a portion of our fixed rate debt
    to variable rate debt and variable rate debt to fixed rate debt.
    The maturity 75




---



##### Table of Contents



structure of the derivatives generally corresponds to the
    maturity structure of the debt being hedged. In addition, we use
    other derivative contracts to manage the foreign exchange impact
    of certain debt issuances. As of September 30, 2008,
    $0.3 billion of fixed rate long-term unsecured debt was
    swapped to floating rate through interest rate swaps.  Capital
    Management
               76




---



##### Table of Contents



Borrowings
  Outstanding as ofSeptember 30,


December 31,2008


2007(In millions)Secured borrowings:Borrowings from parent

$
3,270.6


$
Borrowings from affiliates


875.0



Collateralized borrowings in securitization trusts


7,008.6



16,145.7Senior secured notes


1,690.5



Junior secured notes


5,070.0



Outstanding under secured facilities:Secured aggregation facilities


2,975.0



8,402.2Repurchase agreements


687.0



3,645.1FHLB advances


10,517.0



11,349.0Mortgage servicing rights facilities


1,248.0



1,444.0Servicing advances


700.0



791.3Debt collateralized by mortgage loans


16.9



1,782.0Other


335.7



423.6Total outstanding under secured facilities


16,479.6



27,837.2Subtotal secured borrowings


34,394.3



43,982.9Unsecured borrowings:Senior unsecured notes


4,030.8



14,550.4Subordinated unsecured notes


205.5



758.3Medium-term unsecured notes


367.1



624.6Outstanding under unsecured facilities:Third-party bank credit facilities






1,800.0Other


300.3



613.7Total outstanding under unsecured facilities


300.3



2,413.7Subtotal unsecured borrowings


4,903.7



18,347.0Total borrowings


39,298.0



62,329.9Bank deposits


18,234.8



13,349.8Total borrowings and deposits


57,532.8



75,679.7Off-balance sheet financings


126,641.6



136,108.3Total

$
184,174.4


$
211,788.0   Funding
    Sources
  Secured
    and Unsecured Funding Facilities
   77




---



##### Table of Contents



Borrowings
    from Parent
    Facilities from ParentAs of September 30, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)GMAC senior secured credit facility

$
2,172.1


$
577.9


$
2,750.0


$



$



$
GMAC secured MSR facility


1,098.5



101.5



1,200.0











GMAC unsecured Auto Bank facility






3,000.0



3,000.0







3,000.0



3,000.0Total

$
3,270.6


$
3,679.4


$
6,950.0


$



$
3,000.0


$
3,000.0     GMAC Senior Secured Credit Facility:
  GMAC Secured MSR Facility:
 78




---



##### Table of Contents



Borrowings
    from Affiliates
    Facilities from AffiliatesAs of September 30, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)GMAC senior secured credit facility-Cerberus

$
382.5


$



$
382.5


$



$



$
GMAC senior secured credit facility- GM


367.5







367.5











Cerberus secured model home term loan


125.0







125.0











Cerberus secured model home revolving loan






10.0



10.0











Total

$
875.0


$
10.0


$
885.0


$



$



$
   GMAC Senior Secured Credit Facility:
  Cerberus Secured Model Home Term and Revolving
    Loans:
  Collateralized
    Borrowings in Securitization Trusts
    Senior
    and Junior Secured Notes
  , Accounting by
    Debtors and Creditors for Troubled Debt Restructurings
  Other
    Secured Facilities
   79




---



##### Table of Contents



and/or
      Secured FacilitiesAs of September 30, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Secured funding facilities  committedSecured aggregation facilities:International mortgage loan facilities

$
2,281.0


$
522.9


$
2,803.9


$
6,357.4


$
2,106.2


$
8,463.6Bank facilities for construction lending receivables


694.0







694.0



1,804.8



45.4



1,850.2Receivables Lending Agreement (RLA)














170.0



5,292.6



5,462.6Mortgage Asset Lending Agreement (MALA)














70.0



3,146.4



3,216.4Repurchase agreements


670.8



2,664.2



3,335.0



3,276.8



5,313.7



8,590.5Mortgage servicing rights facilities


1,248.0



580.0



1,828.0



1,444.0



656.0



2,100.0Servicing advances


700.0







700.0



791.3



608.7



1,400.0International debt collateralized by mortgage loans


16.9



47.5



64.4



1,485.2



281.9



1,767.1Other


280.0







280.0



328.4







328.4Total  committed


5,890.7



3,814.6



9,705.3



15,727.9



17,450.9



33,178.8Secured funding facilities  uncommittedSecured aggregation facilities:International mortgage loan facilities


















657.7



657.7Repurchase agreements


16.2



84.7



100.9



368.3



7,430.7



7,799.0FHLB advances


10,517.0



324.3



10,841.3



11,349.0



1,240.1



12,589.1Federal Reserve Board advances






4,143.7



4,143.7











International debt collateralized by mortgage loans














296.8



145.6



442.4Other


55.7







55.7



95.2







95.2Total  uncommitted


10,588.9



4,552.7



15,141.6



12,109.3



9,474.1



21,583.4Total secured facilities

$
16,479.6


$
8,367.3


$
24,846.9


$
27,837.2


$
26,925.0


$
54,762.2    80




---



##### Table of Contents



Secured
    Aggregation Facilities:
  International Mortgage Loan
    Facilities:
  Bank Facilities for Construction Lending
    Receivables:
  RLA and MALA:
  Repurchase
    Agreements:
    Mortgage
    Servicing Rights Facilities:
    Bilateral secured facility
  Servicing
    Advances:
    International
    Debt Collateralized by Mortgage Loans:
   81




---



##### Table of Contents



FHLB
    Advances:
    Federal
    Reserves Discount Window and TAF:
  28-day 84-day
  Other
    Secured Borrowings:
    Other
    Unsecured Facilities:
    Unsecured FacilitiesAs of September 30, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Unsecured funding facilities  committedThird-party bank credit facilities:Syndicated bank credit facilities

$



$



$



$



$
875.0


$
875.0364-day bank
    credit facilities revolver


















875.0



875.0Bank term loan














1,750.0







1,750.0International bank lines














17.5







17.5Total  committed














1,767.5



1,750.0



3,517.5 82




---



##### Table of Contents



Unsecured FacilitiesAs of September 30, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Unsecured funding facilities  uncommittedThird-party bank credit facilities














50.0



2.0



52.0International lines of credit


108.0



125.2



233.2



243.8



23.2



267.0International commercial paper


178.0







178.0



301.4







301.4GMAC Bank Federal Funds






160.0



160.0



0.1



219.9



220.0Other


14.3







14.3



50.9







50.9Total  uncommitted


300.3



285.2



585.5



646.2



245.1



891.3Total unsecured facilities

$
300.3


$
285.2


$
585.5


$
2,413.7


$
1,995.1


$
4,408.8   Third-Party
    Bank Credit Facilities:
  364-day 3-year
  International
    Lines of Credit:
    International
    Commercial Paper:
    GMAC Bank
    Federal Funds:
    Other
    Unsecured Borrowings:
    Bank
    Deposits
   83




---



##### Table of Contents



Off-Balance
    Sheet Financings
               84




---



##### Table of Contents



Credit
    Ratings
    SeniorUnsecured

Senior

Junior



Date ofRating Agency

Debt

Secured Debt

Secured Debt

Outlook

Last ActionFitch

D

N/R

N/R

N/A

June 4, 2008Moodys

Ca

Ca

Ca

Negative

September 10, 2008S&P

CC

CCC-

CC

Negative

November 7, 2008DBRS

C

C

C

Negative

November 5, 2008   step-up
    Recently
    Issued Accounting Standards
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.     85




---



##### Table of Contents



Change in Fair Value as of September 30, 2008Change in Interest Rate (basis points)

− 100


− 50


+50


+100(In millions)Mortgage servicing rights and other financial instruments:Mortgage servicing rights and other retained interests

$
(1,020
)

$
(483
)

$
386


$
676Impact of servicing hedge:Swap-based


572



263



(217
)


(391
)Treasury-based


230



113



(109
)


(219
)Others


66



33



(33
)


(65
)Mortgage servicing rights and other retained interests, net


(152
)


(74
)


27



1Committed pipeline


64



41



(59
)


(132
)Mortgage loan inventory


33



20



(26
)


(57
)Impact of associated derivative instruments:Mortgage-based


(98
)


(58
)


76



164Eurodollar-based


(3
)


(1
)


2



3Others


(5
)


(2
)


2



4Committed pipeline and mortgage loan inventory, net


(9
)


0



(5
)


(18
)Net change in fair value related to other businesses


1



0



0



(1
)GMAC Bank:Securities portfolio


8



4



(4
)


(7
)Mortgage loans


380



200



(214
)


(435
)Deposit liabilities


(20
)


(10
)


9



19Federal Home Loan Bank advances


(241
)


(124
)


133



273Other liabilities


(23
)


(11
)


11



22GMAC Bank, net


104



59



(65
)


(128
)Notes payable and capital securities


(40
)


(20
)


19



39Impact of associated derivative instruments:Swap-based


10



5



(5
)


(9
)Notes payable and capital securities, net


(30
)


(15
)


14



30Insurance company investment portfolios


1



1



(1
)


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

$
(85
)

$
(29
)

$
(30
)

$
(118
)Net change in fair value related to broker-dealer trading
    securities

$



$



$



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

$
45


$
22


$
(22
)

$
(44
)   86




---



##### Table of Contents



Change in Fair Value as of September 30, 2007Change in Interest Rate (basis points)

− 100


− 50


+50


+100(In millions)Mortgage servicing rights and other financial instruments:Mortgage servicing rights and other retained interests

$
(1,846
)

$
(874
)

$
667


$
1,145Impact of servicing hedge:Swap-based


1,297



592



(480
)


(870
)Treasury-based


3



2



(2
)


(3
)Others


574



284



(270
)


(522
)Mortgage servicing rights and other retained interests, net


28



4



(85
)


(250
)Committed pipeline


120



77



(122
)


(285
)Mortgage loan inventory


226



122



(139
)


(292
)Impact of associated derivative instruments:Mortgage-based


(180
)


(105
)


137



300Eurodollar-based


(14
)


(7
)


7



14Others


(68
)


(36
)


41



87Committed pipeline and mortgage loan inventory, net


84



51



(76
)


(176
)Net change in fair value related to other businesses


7



3



(2
)


(1
)GMAC Bank:Securities portfolio


15



7



(7
)


(14
)Mortgage loans


294



160



(177
)


(367
)Deposit liabilities


(11
)


(5
)


5



11Federal Home Loan Bank advances


(246
)


(124
)


132



270Other liabilities


(11
)


(5
)


5



11GMAC Bank, net


41



33



(42
)


(89
)Notes payable and capital securities


(288
)


(143
)


139



276Impact of associated derivative instruments:Swap-based


294



145



(141
)


(279
)Notes payable and capital securities, net


6



2



(2
)


(3
)Insurance company investment portfolios


2



1



(1
)


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

$
168


$
94


$
(208
)

$
(522
)Net change in fair value related to broker-dealer trading
    securities

$
3


$
2


$
(1
)

$
(2
)Net change in fair value related to GMAC Auto Bank

$
37


$
19


$
(18
)

$
(36
)    87




---



##### Table of Contents



Item 4.
    Controls
    and Procedures.  Rule 13a-15(e)
  Rule 13a-15(f)
   88




---



##### Table of Contents



PART II 
    OTHER INFORMATION Item 1.Legal
    Proceedings.    Kessler.
  Murray.
 89




---



##### Table of Contents



Mitchell.
          TBW.
 90




---



##### Table of Contents



and/or
  Federal Trade Commission.
  Item 1A.
    Risk
    Factors.  Form 10-K Form 10-Q
  Risks
    Related to Our Business
  The
    occurrence of recent adverse developments in the mortgage
    finance and credit markets has adversely affected our business,
    our liquidity and our capital position and has raised
    substantial doubt about our ability to continue as a going
    concern.
  and/or
  and/or and/or
   91




---



##### Table of Contents



We
    remain heavily dependent on our parent and affiliates for
    funding and capital support, and there can be no assurance that
    our parent or affiliates will continue such actions. There is a
    significant risk that if our parent no longer continues to
    support our capital or liquidity needs, it would have a material
    adverse effect on our business, results of operations and
    financial position.
  and/or
  We
    have significant near-term liquidity issues. There is a
    significant risk that we will not be able to meet our debt
    service obligations and other funding obligations in the
    near-term.
        GMAC
    controls all fundamental matters affecting us, and its interests
    may differ from ours.
     92




---



##### Table of Contents



Our
    business requires substantial capital, and if we are unable to
    maintain adequate financing sources our profitability and
    financial condition will suffer and jeopardize our ability to
    continue operations.
          We
    have a significant amount of existing debt and may incur
    significant additional debt, including secured debt, in the
    future, which could adversely affect our financial condition and
    our ability to react to changes in our business.
      
    Require us to dedicate a significant portion of our cash flow
    from operating activities to payments on our and our
    subsidiaries debt, which will reduce our funds available
    for working capital, capital expenditures and other general
    corporate expenses; 93




---



##### Table of Contents




    limit our flexibility in planning for, or reacting to, changes
    in our business, the residential mortgage industry and the
    economy at large;
    place us at a disadvantage as compared to our competitors that
    have proportionately less debt or that are able to incur or
    refinance debt or more favorable terms;
    make us vulnerable to interest rate increases, because a portion
    of our borrowings are, and will continue to be, at variable
    rates of interest;
    expose us to increased interest expense as we refinance existing
    lower interest rate instruments;
    adversely affect our relationship with customers and
    suppliers; and
    make it more difficult for us to satisfy our obligations to the
    holders of our notes and for our subsidiaries to satisfy their
    guarantee obligations where applicable.    Our
    current ratings could adversely affect our ability to raise
    capital in the debt markets at attractive rates which could
    negatively impact our results of operations and financial
    condition.
  step-up
    A
    significant portion of our operating cash from time to time may
    be derived from funds provided to us as credit support by
    parties to various hedging arrangements. In the event interest
    rates change, we may be required to repay promptly all or a
    portion of such amounts.
   94




---



##### Table of Contents



Current
    conditions in the residential mortgage market and housing
    markets may continue to adversely affect our earnings and
    financial condition.
          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.
     95




---



##### Table of Contents



Our
    earnings may decrease because of increases or decreases in
    interest rates.
    
    Rising interest rates generally reduce our residential mortgage
    loan production as borrowers become less likely to refinance and
    acquiring a new home becomes more expensive. Rising interest
    rates may also reduce demand for our other lending activities,
    including our warehouse lending and business capital activities.
    If demand for our loans decreases, our earnings may decrease.
    During periods of rising interest rates, the value and
    profitability of our mortgage loans may be harmed from the date
    of origination (or interest rate lock) or purchase commitment
    until the date we sell or securitize the mortgage loans. In
    addition, the spread between the interest we receive on our
    mortgage loans during this aggregation period and our funding
    costs may be reduced by increases in market interest rates. As
    long as our access to the securitization market and our ability
    to execute whole loan sales remain constrained, the period
    during which we are exposed to these risks will be extended, and
    our earnings may decrease as a result.
    Rising interest rates will generally reduce the value of
    mortgage loans and our interests that we continue to hold from
    our securitizations in our investment portfolio. For example,
    some of the interests we retain in 96




---



##### Table of Contents



connection with our securitizations are entitled to cash-flows
    that primarily represent the difference between the amount of
    interest collected on the underlying mortgage loans and the
    amount of interest payable to the holders of senior securities
    in the related securitization. In certain of these
    securitizations, the underlying mortgage loans generally have
    fixed interest rates for the first two or three years while the
    interest rate payable to holders of the senior securities is
    generally based on an adjustable London Inter-Bank Offered Rate,
    or LIBOR. In other securitizations, the underlying mortgage
    loans have variable interest rates that are based on indices
    other than LIBOR while the interest rate payable to holders of
    securities is generally based on LIBOR. If LIBOR increases
    during the time that the mortgage loans are fixed, or increases
    at a faster rate than the rate at which the underlying loans
    adjust, the income and value of our interests from these
    securitizations will be reduced. This would reduce the amount of
    cash we receive over the life of the loans in securitizations
    structured as financings and from our interests, and could
    require us to reduce the carrying value of these interests.  
    Rising interest rates will generally reduce the demand for
    residential real estate related services, including our
    brokerage and relocation services, which may reduce the income
    we receive from these services.
    Rising interest rates could result in a significant margin call
    under our hedging arrangements, which would require us to
    provide the counterparty with additional cash collateral.    We are
    exposed to capital markets risk related to changes in foreign
    exchange rates which may adversely affect our results of
    operations, financial condition or cash flows.
    non-U.S. subsidiaries
  Our
    hedging strategies may not be successful in mitigating our risks
    associated with changes in interest rates.
  and/or
 97




---



##### Table of Contents



Recent
    negative developments in our mortgage markets have led us to
    reduce the number of mortgage products we offer.
    Our
    profitability and financial condition could be adversely
    affected if the assumptions underlying our risk-based
    underwriting and pricing models prove to be
    incorrect.
    Changes
    in existing U.S. government-sponsored mortgage programs, or
    restrictions on our access to such programs or disruptions in
    the secondary markets in the United States or in other countries
    in which we operate, could adversely affect our profitability
    and financial condition.
   98




---



##### Table of Contents



We may
    be required to repurchase mortgage loans or indemnify investors
    if we breach representations and warranties, which could harm
    our profitability.
   99




---



##### Table of Contents



General
    business and economic conditions may significantly and adversely
    affect our revenues, profitability and financial
    condition.
      Increasing
    competition in the acquisition of mortgage loans from
    correspondent lenders in the secondary market and the
    origination of loans through mortgage brokers, and recent
    consolidation in the mortgage loan industry, may harm our
    profitability.
     100




---



##### Table of Contents



Our
    business outside the United States exposes us to additional
    risks that may cause our revenues and profitability to
    decline.
    
    country specific market conditions resulting in further asset
    valuation volatility and liquidity constraints;
    multiple foreign regulatory requirements that are subject to
    change;
    differing local product preferences and product requirements;
    fluctuations in foreign currency exchange rates and interest
    rates;
    difficulty in establishing, staffing and managing foreign
    operations;
    differing legal and regulatory requirements;
    potentially negative consequences from changes in tax
    laws; and
    political and economic instability.      Our
    business capital activities expose us to additional risks that
    may adversely affect our revenues and
    profitability.
     101




---



##### Table of Contents




    the performance and financial strength of the developer;
    development, construction and other costs of the project not
    exceeding original estimates;
    the ability of the project to attract creditworthy buyers;
    the project being completed on schedule, which is subject to
    many factors, several of which are beyond the control of the
    developer, such as required governmental approvals, weather,
    labor conditions and material shortages;
    the continued involvement of key personnel; and
    local housing demand and competition, including the strength of
    the local and national economy and fluctuations in interest
    rates.      A
    significant portion of our business is in the States of
    California and Florida, and our business may be significantly
    harmed by a slowdown in the economy or the occurrence of a
    natural disaster in California or Florida.
       102




---



##### Table of Contents



If
    GMAC were to become the subject of a bankruptcy proceeding and
    we were substantively consolidated with GMAC, our assets would
    become subject to the claims of our creditors and the creditors
    of GMAC.
      The
    profitability and financial condition of our parent, and
    indirectly our business, are dependent upon the on-going
    operations of General Motors Corporation.
    and/or
 103




---



##### Table of Contents



Legal and
    Regulatory Risks Related to Our Business
  Our
    business, financial condition and results of operations could be
    adversely affected by new regulations to which we may become
    subject as a result of our parent becoming a bank holding
    company, by new regulations or by changes in other regulations
    or the application thereof.
        The
    scope of our residential mortgage loan production and servicing
    operations exposes us to risks of noncompliance with an
    increasing and inconsistent body of complex laws and regulations
    at the federal, state and local levels in the United States and
    in the international markets in which we operate.
      
    civil and criminal liability; 104




---



##### Table of Contents




    loss of licenses and approvals;
    damage to our reputation in the industry;
    inability to sell or securitize our loans, or otherwise raise
    capital;
    demands for indemnification or loan repurchases from purchasers
    of our loans;
    fines and penalties (including consumer refunds) and litigation,
    including class action lawsuits;
    governmental investigations and enforcement actions; and
    claims that an allegedly non-compliant loan is rescindable or
    unenforceable.    New
    and proposed legislation and court rulings with respect to
    so-called predatory lending practices and other lending
    practices could restrict our ability to produce mortgage loans
    or service, which could harm our revenues and
    profitability.
     105




---



##### Table of Contents



and/or 2 28 3 27
  We may
    be subject to fines or other penalties based upon the conduct of
    independent mortgage brokers through which we originate mortgage
    loans and lenders from which we acquire mortgage
    loans.
    We are
    no longer able to rely on the Alternative Mortgage Transactions
    Parity Act of 1982 to preempt certain state law restrictions on
    prepayment penalties, which could harm our revenues and
    profitability.
   106




---



##### Table of Contents



and/or
    GMAC
    and certain of our owners are subject to regulatory agreements
    that may affect our control of GMAC Bank.
  10-year 10-year 10-year
  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.   107




---



##### Table of Contents



Item 5.
    Other
    Information.    Item 6.
    Exhibits.   108




---



##### Table of Contents



SIGNATURES       /s/  James
    N. Young    Chief Financial Officer
  
   Chief Accounting Officer and Controller
 109




---



##### Table of Contents



INDEX OF
    EXHIBITS  Exhibit

Description10
.1

Asset Purchase Agreement among Residential Funding Company, LLC,
    GMAC Residential of Canada Limited and GMAC Commercial Finance
    LLC dated July 2, 200810
.2

Purchase Agreement among GMAC Mortgage, LLC and Cerberus
    International, Ltd. dated July 30, 2008 (Freddie Mac Stripped
    Interest Certificates, Series 256).10
.3

Purchase Agreement among GMAC Mortgage, LLC and Cerberus
    Partners, L.P. dated July 30, 2008 (Freddie Mac Stripped
    Interest Certificates, Series 256).10
.4

Purchase Agreement among Residential Capital, LLC, DOA Holding
    Properties, LLC, DOA Properties IIIB (KB Models), LLC and MHPool
    Holdings LLC dated September 30, 200810
.5

Servicing Agreement between Residential Capital, LLC and MHPool
    Holdings LLC dated September 30, 200810
.6

Limited Assignment and Assumption Agreement among KBOne, LLC,
    DOA Holdings NoteCo, LLC, Residential Funding Company, LLC and
    MHPool Holdings LLC dated September 30, 200810
.7

First Amendment Agreement dated as of July 29, 2008 to Loan
    Agreement dated June 4, 200810
.8

Second Amendment Agreement dated as of August 14, 2008 to Loan
    Agreement dated June 4, 200810
.9

Master Agreement between GMAC LLC and Residential Capital, LLC
    dated August 14, 200810
.10

Schedule to the Master Agreement dated August 14, 200810
.11

First Amendment to First Priority Pledge and Security Agreement
    and Irrevocable Proxy dated August 14, 200810
.12

Hedge Pledge and Security Agreement and Irrevocable Proxy dated
    August 14, 200810
.13

Amendment No. 4 dated as of July 25, 2008 to the Loan and
    Security Agreement dated April 18, 200810
.14

Waiver Letter dated July 29, 200810
.15

Joinder Agreement dated June 9, 200810
.16

Joinder Agreement dated August 6, 200810
.17

Joinder Agreement dated August 15, 200810
.18

Joinder Agreement dated September 16, 200810
.19

Second Priority Joinder Agreement dated September 22, 200810
.20

Third Priority Joinder Agreement dated September 22, 200812
.1

Computation of ratio of earnings to fixed charges31
.1

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

Certification of Principal Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a)The following exhibit shall not be deemed filed for
    purposes of Section 18 of the Securities Exchange Act of
    1934 or otherwise subject to the liability of that Section. In
    addition Exhibit No. 32 shall not be deemed
    incorporated into any filing under the Securities Act of 1933 or
    the Securities Exchange Act of 1934.32


Certification of Principal Executive Officer and Principal
    Financial Officer pursuant to 18 U.S.C. Section 1350  110