##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549-1004


FORM 10-Q


|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
| 
|  |  | For the quarterly period ended March 31, 2006, or                                           
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  |  | For the transition period
    from           to           .                                 

Commission file number:
0-51438


RESIDENTIAL CAPITAL CORPORATION


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 20-1770738                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

8400 Normandale Lake Boulevard


Minneapolis, MN


55437


(Address of principal executive offices)


(Zip Code)


(952) 857-8700


(Registrants telephone number, including area code)


þ o


12b-2


o o þ


o þ




Reduced Disclosure Format












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##### 










RESIDENTIAL CAPITAL CORPORATION


INDEX


|                                                  |  |                                                                                                                                |    |      |    | 
|------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------ | -- | ---- | -- | 
|                                                  |  |                                                                                                                                |    | Page |   
|                                                  |  |                                                                                                                                |    |      |   
|Part I  Financial
    Information                |  |                                                                                                                                |    |     
|Item 1.                                           |  | Financial Statements (unaudited)                                                                                               |    |      |    | 
|                                                  |  | Condensed Consolidated Balance Sheet as of
    March 31, 2006 and December 31, 2005                                            |    |      | 3  | 
|                                                  |  | Condensed Consolidated Statement of Income
    for the Three Months Ended March 31, 2006 and 2005                              |    |      | 4  | 
|                                                  |  | Condensed Consolidated Statement of Changes
    in Stockholders Equity for the Three Months Ended
    March 31, 2006 and 2005 |    |      | 5  | 
|                                                  |  | Condensed Consolidated Statement of Cash
    Flows for the Three Months Ended March 31, 2006 and 2005                          |    |      | 6  | 
|                                                  |  | Notes to Condensed Consolidated Financial
    Statements                                                                       |    |      | 8  | 
|Item 2.                                           |  | Managements Discussion and Analysis of Financial Condition
    and Results of
    Operations                                  |    |      | 26 | 
|Item 3.                                           |  | Quantitative and Qualitative Disclosures About Market Risk                                                                     |    |      | 41 | 
|Item 4.                                           |  | Controls and Procedures                                                                                                        |    |      | 42 | 
|Part II  Other
    Information                   |  |                                                                                                                                |    |     
|Item 1.                                           |  | Legal Proceedings                                                                                                              |    |      | 43 | 
|Item 1A.                                          |  | Risk Factors                                                                                                                   |    |      | 43 | 
|Item 2.                                           |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                    |    |      | 43 | 
|Item 3.                                           |  | Defaults Upon Senior Securities                                                                                                |    |      | 43 | 
|Item 4.                                           |  | Submission of Matters to a Vote of Security Holders                                                                            |    |      | 43 | 
|Item 5.                                           |  | Other Information                                                                                                              |    |      | 43 | 
|Item 6.                                           |  | Exhibits                                                                                                                       |    |      | 43 | 
|Signatures                                        |  |                                                                                                                                | 44 |     
|Index of Exhibits                                 |  |                                                                                                                                | 45 |     
|Computation of Ratio of Earnings to Fixed Charges
|Certification of Principal Executive Officer     
|Certification of Principal Financial Officer     
|Section 1350 Certifications                      







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##### Table of Contents






PART I  FINANCIAL INFORMATION





Item 1.  Financial Statements.


RESIDENTIAL CAPITAL CORPORATION





CONDENSED CONSOLIDATED BALANCE SHEET


March 31, 2006 and December 31, 2005


|                                                                                                        |                                                    |                        |             |            |              |   |             |            |             | 
|------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------- | ----------- | ---------- | ------------ | - | ----------- | ---------- | ----------- | 
|                                                                                                        |                                                    | March 31,              |             |            | December 31, |  
|                                                                                                        |                                                    | 2006                   |             |            | 2005         |  
|                                                                                                        |                                                    |                        |             |            |              |  
|                                                                                                        |                                                    | (Unaudited)            |            
|                                                                                                        |                                                    | (Dollars in thousands) |            
|ASSETS                                                                                                 
|Cash and cash equivalents                                                                               |                                                    | $                      | 2,233,577   |            |              | $ | 2,266,753   |           
|Mortgage loans held for sale                                                                            |                                                    |                        | 18,124,746  |            |              |   | 19,521,566  |           
|Trading securities                                                                                      |                                                    |                        | 4,261,711   |            |              |   | 3,896,008   |           
|Available for sale securities                                                                           |                                                    |                        | 143,166     |            |              |   | 1,068,937   |           
|Mortgage loans held for investment, net                                                                 |                                                    |                        | 72,673,116  |            |              |   | 67,892,660  |           
|Lending receivables, net                                                                                |                                                    |                        | 12,410,206  |            |              |   | 13,401,047  |           
|Mortgage servicing rights                                                                               |                                                    |                        | 4,526,471   |            |              |   | 4,015,015   |           
|Accounts receivable                                                                                     |                                                    |                        | 1,928,680   |            |              |   | 1,951,210   |           
|Investments in real estate and other                                                                    |                                                    |                        | 2,155,077   |            |              |   | 1,855,298   |           
|Goodwill                                                                                                |                                                    |                        | 459,172     |            |              |   | 459,768     |           
|Other assets                                                                                            |                                                    |                        | 3,022,564   |            |              |   | 2,556,830   |           
|                                                                                                        |                                                    |                        |             |            |              |  
|Total assets                                                                                            |                                                    | $                      | 121,938,486 |            |              | $ | 118,885,092 |           
|                                                                                                        |                                                    |                        |             |            |              |  
|                                                                                                       
|LIABILITIES                                                                                            
|Borrowings:                                                                                             |                                                    |                        |             |            |              |   |             |           
|                                                                                                        | Affiliate borrowings                               |                        | $           | 4,715,364  |              |   | $           | 5,177,462  |            
|                                                                                                        | Collateralized borrowings in securitization trusts |                        |             | 58,801,030 |              |   |             | 56,097,801 |            
|                                                                                                        | Other borrowings                                   |                        |             | 41,269,836 |              |   |             | 42,300,507 |            
|                                                                                                        |                                                    |                        |             |            |              |  
|                                                                                                        |                                                    | Total borrowings       |             |            | 104,786,230  |   |             |            | 103,575,770 | 
|Deposit liabilities                                                                                     |                                                    |                        | 5,595,645   |            |              |   | 4,123,304   |           
|Other liabilities                                                                                       |                                                    |                        | 3,793,132   |            |              |   | 3,722,048   |           
|                                                                                                        |                                                    |                        |             |            |              |  
|Total liabilities                                                                                       |                                                    |                        | 114,175,007 |            |              |   | 111,421,122 |           
|STOCKHOLDERS EQUITY                                                                                   
|Common stock, $0.01 par value (1,000 shares
    authorized, issued and outstanding) and paid-in capital |                                                    |                        | 3,392,958   |            |              |   | 3,367,677   |           
|Retained earnings                                                                                       |                                                    |                        | 4,169,214   |            |              |   | 3,980,587   |           
|Accumulated other comprehensive income                                                                  |                                                    |                        | 201,307     |            |              |   | 115,706     |           
|                                                                                                        |                                                    |                        |             |            |              |  
|Total stockholders equity                                                                              |                                                    |                        | 7,763,479   |            |              |   | 7,463,970   |           
|                                                                                                        |                                                    |                        |             |            |              |  
|Total liabilities and stockholders equity                                                              |                                                    | $                      | 121,938,486 |            |              | $ | 118,885,092 |           
|                                                                                                        |                                                    |                        |             |            |              |  



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION





CONDENSED CONSOLIDATED STATEMENT OF INCOME


|                                                    |  |                        |           |   |      |   |           |  
|--------------------------------------------------- |  | ---------------------- | --------- | - | ---- | - | --------- | -
|                                                    |  | Three Months Ended     |          
|                                                    |  | March 31,              |          
|                                                    |  |                        |          
|                                                    |  | 2006                   |           |   | 2005 |  
|                                                    |  |                        |           |   |      |  
|                                                    |  | (Unaudited)            |          
|                                                    |  | (Dollars in thousands) |          
|Revenue                                             |  |                        |           |   |      |   |           |  
|Interest income                                     |  | $                      | 1,863,365 |   |      | $ | 1,309,980 |  
|Interest expense                                    |  |                        | 1,435,369 |   |      |   | 765,910   |  
|                                                    |  |                        |           |   |      |  
|Net interest income                                 |  |                        | 427,996   |   |      |   | 544,070   |  
|Provision for loan losses                           |  |                        | 122,733   |   |      |   | 155,832   |  
|                                                    |  |                        |           |   |      |  
|Net interest income after provision for loan losses |  |                        | 305,263   |   |      |   | 388,238   |  
|Gain on sale of mortgage loans, net                 |  |                        | 267,064   |   |      |   | 329,643   |  
|Servicing fees                                      |  |                        | 374,684   |   |      |   | 347,394   |  
|Amortization and impairment of servicing rights     |  |                        |          |   |      |   | (139,780  | )
|Servicing asset valuation and hedge activities, net |  |                        | (185,513  | ) |      |   | (67,861   | )
|                                                    |  |                        |           |   |      |  
|Net servicing fees                                  |  |                        | 189,171   |   |      |   | 139,753   |  
|Gain (loss) on investment securities, net           |  |                        | (18,429   | ) |      |   | 72,115    |  
|Real estate related revenues                        |  |                        | 144,195   |   |      |   | 131,374   |  
|Other income                                        |  |                        | 54,612    |   |      |   | 66,454    |  
|                                                    |  |                        |           |   |      |  
|Total net revenue                                   |  |                        | 941,876   |   |      |   | 1,127,577 |  
|                                                   
|Expenses                                            |  |                        |           |   |      |   |           |  
|Compensation and benefits                           |  |                        | 306,804   |   |      |   | 319,931   |  
|Professional fees                                   |  |                        | 56,800    |   |      |   | 50,298    |  
|Data processing and telecommunications              |  |                        | 44,919    |   |      |   | 49,445    |  
|Advertising                                         |  |                        | 41,748    |   |      |   | 39,305    |  
|Occupancy                                           |  |                        | 32,825    |   |      |   | 29,567    |  
|Other                                               |  |                        | 119,313   |   |      |   | 110,181   |  
|                                                    |  |                        |           |   |      |  
|Total expenses                                      |  |                        | 602,409   |   |      |   | 598,727   |  
|                                                    |  |                        |           |   |      |  
|Income before income tax expense                    |  |                        | 339,467   |   |      |   | 528,850   |  
|Income tax expense                                  |  |                        | 137,973   |   |      |   | 207,055   |  
|                                                    |  |                        |           |   |      |  
|Net Income                                          |  | $                      | 201,494   |   |      | $ | 321,795   |  
|                                                    |  |                        |           |   |      |  



4



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION





CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS EQUITY


Three Months Ended March 31, 2006 and 2005


|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |         |        |   |   |           |         |         |  
|------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ------------------------------------------------ | --------- | ------ | -------- | - | --------- | ------------- | ----------- | - | ------------- | ------- | ------- | ------------- | ------- | ------ | - | - | --------- | ------- | ------- | -
|                                                                                           |                                                                                                 | Common                                           |           |        |          |   |           |               | Accumulated |   |               |        
|                                                                                           |                                                                                                 | Stock and                                        |           |        |          |   |           |               | Other       |   |               | Total   |        
|                                                                                           |                                                                                                 | Paid-in                                          |           |        | Retained |   |           | Comprehensive |             |   | Comprehensive |         |         | Stockholders |        
|                                                                                           |                                                                                                 | Capital                                          |           |        | Earnings |   |           | Income        |             |   | Income        |         |         | Equity        |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|                                                                                           |                                                                                                 | (Unaudited)                                      |          
|                                                                                           |                                                                                                 | (Dollars in thousands)                           |          
|Balance at January 1, 2006                                                                 |                                                                                                 | $                                                | 3,367,677 |        |          | $ | 3,980,587 |               |             |   |               |         |         | $             | 115,706 |        |   | $ | 7,463,970 |        
|Cumulative effect of change in accounting principle as of
    January 1, 2006, net of tax: |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |         |        |   |   |           |        
|                                                                                           | Transfer of unrealized loss for certain available for sale
    securities to trading securities |                                                  |           |       |          |   |           | (16,717       | )           |   | $             |        |         |               |         | 16,717 |   |   |           |        |        
|                                                                                           | Recognize mortgage servicing rights at fair value                                               |                                                  |           |       |          |   |           | 3,850         |             |   |               | 3,850   |         |               |         |       |   |   |           | 3,850   |        
|Net income                                                                                 |                                                                                                 |                                                  |          |        |          |   | 201,494   |               |             |   | 201,494       |         |         |               |         |        |   |   | 201,494   |        
|Capital contributions                                                                      |                                                                                                 |                                                  | 25,281    |        |          |   |          |               |             |   |              |         |         |               |        |        |   |   | 25,281    |        
|Other comprehensive income, net of tax:                                                    |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |         |        |   |   |           |        
|                                                                                           | Unrealized loss on available for sale securities                                                |                                                  |           |       |          |   |           |              |             |   |               | (175    | )       |               |         |       |   |   |           | (175    | )      
|                                                                                           | Foreign currency translation adjustment                                                         |                                                  |           |       |          |   |           |              |             |   |               | 2,708   |         |               |         |       |   |   |           | 2,708   |        
|                                                                                           | Unrealized gain on cash flow hedges                                                             |                                                  |           |       |          |   |           |              |             |   |               | 66,351  |         |               |         |       |   |   |           | 66,351  |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|Other comprehensive income                                                                 |                                                                                                 |                                                  |          |        |          |   |          |               |             |   | 68,884        |         |         |               | 68,884  |        |   |   |          |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|Comprehensive income                                                                       |                                                                                                 |                                                  |          |        |          |   |          |               |             | $ | 274,228       |         |         |               |        |        |   |   |          |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|Balance at March 31, 2006                                                                  |                                                                                                 | $                                                | 3,392,958 |        |          | $ | 4,169,214 |               |             |   |               |         |         | $             | 201,307 |        |   | $ | 7,763,479 |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|Balance at January 1, 2005                                                                 |                                                                                                 | $                                                | 1,246,778 |        |          | $ | 2,959,961 |               |             |   |               |         |         | $             | 159,006 |        |   | $ | 4,365,745 |        
|                                                                                           | Net income                                                                                      |                                                  |           |       |          |   |           | 321,795       |             |   | $             | 321,795 |         |               |         |       |   |   |           | 321,795 |        
|                                                                                           | Capital contributions                                                                           |                                                  |           | 45,708 |          |   |           |              |             |   |               |        |         |               |         |       |   |   |           | 45,708  |        
|                                                                                           | Other comprehensive income, net of tax:                                                         |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |         |        |   |   |           |         |        
|                                                                                           |                                                                                                 | Unrealized loss on available for sale securities |           |        |         |   |           |               |            |   |               |         | (25,823 | )             |         |        |  |   |           |         | (25,823 | )
|                                                                                           |                                                                                                 | Foreign currency translation adjustment          |           |        |         |   |           |               |            |   |               |         | (8,972  | )             |         |        |  |   |           |         | (8,972  | )
|                                                                                           |                                                                                                 | Unrealized gain on cash flow hedges              |           |        |         |   |           |               |            |   |               |         | 59,311  |               |         |        |  |   |           |         | 59,311  |  
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|                                                                                           | Other comprehensive income                                                                      |                                                  |           |       |          |   |           |              |             |   |               | 24,516  |         |               |         | 24,516 |   |   |           |        |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|                                                                                           | Comprehensive income                                                                            |                                                  |           |       |          |   |           |              |             |   | $             | 346,311 |         |               |         |       |   |   |           |        |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        
|Balance at March 31, 2005                                                                  |                                                                                                 | $                                                | 1,292,486 |        |          | $ | 3,281,756 |               |             |   |               |         |         | $             | 183,522 |        |   | $ | 4,757,764 |        
|                                                                                           |                                                                                                 |                                                  |           |        |          |   |           |               |             |   |               |         |         |               |        



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION





CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2006 and 2005


|                                                                                         |                                                          |                        |             |            |      |   |             |            |  
|---------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------- | ----------- | ---------- | ---- | - | ----------- | ---------- | -
|                                                                                         |                                                          | 2006                   |             |            | 2005 |  
|                                                                                         |                                                          |                        |             |            |      |  
|                                                                                         |                                                          | (Unaudited)            |            
|                                                                                         |                                                          | (Dollars in thousands) |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                          |                        |             |            |      |   |             |           
|Net income                                                                               |                                                          | $                      | 201,494     |            |      | $ | 321,795     |           
|Reconciliation of net income to net cash provided by (used in)
    operating activities: |                                                          |                        |             |            |      |   |             |           
|                                                                                         | Amortization and impairment of mortgage servicing rights |                        |             |           |      |   |             | 139,780    |  
|                                                                                         | Depreciation and amortization                            |                        |             | 90,666     |      |   |             | 179,507    |  
|                                                                                         | Provision for loan losses                                |                        |             | 122,733    |      |   |             | 155,832    |  
|                                                                                         | Gain on sale of mortgage loans, net                      |                        |             | (267,064   | )    |   |             | (329,643   | )
|                                                                                         | Net gain on sale of other assets                         |                        |             | (12,444    | )    |   |             | (9,602     | )
|(Gain) loss on valuation of derivatives                                                  |                                                          |                        | 464,733     |            |      |   | 394,552     |           
|(Gain) loss on investment securities, net                                                |                                                          |                        | 18,429      |            |      |   | (72,115     | )         
|Equity in earnings of investees in excess of cash received                               |                                                          |                        | (32,213     | )          |      |   | (22,496     | )         
|Loss (gain) on valuation of mortgage servicing rights                                    |                                                          |                        | (194,536    | )          |      |   | (124,943    | )         
|Originations and purchases of mortgage loans held for sale                               |                                                          |                        | (35,539,837 | )          |      |   | (32,919,480 | )         
|Proceeds from sales and repayments of mortgage loans held for
    sale                   |                                                          |                        | 32,344,307  |            |      |   | 28,801,896  |           
|Deferred income tax                                                                      |                                                          |                        | 238,705     |            |      |   | 109,699     |           
|Net change in:                                                                           |                                                          |                        |             |            |      |   |             |           
|                                                                                         | Trading securities                                       |                        |             | 608,865    |      |   |             | (3,024,352 | )
|                                                                                         | Accounts receivable                                      |                        |             | (5,089     | )    |   |             | (620,639   | )
|                                                                                         | Other assets                                             |                        |             | (159,919   | )    |   |             | (15,063    | )
|                                                                                         | Other liabilities                                        |                        |             | (645,827   | )    |   |             | (682,951   | )
|                                                                                         |                                                          |                        |             |            |      |  
|                                                                                         | Net cash used in operating activities                    |                        |             | (2,766,997 | )    |   |             | (7,718,223 | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                          |                        |             |            |      |   |             |           
|Net decrease in lending receivables                                                      |                                                          |                        | 1,021,803   |            |      |   | 322,318     |           
|Originations and purchases of mortgage loans held for
    investment                     |                                                          |                        | (6,452,537  | )          |      |   | (4,774,089  | )         
|Proceeds from sales and repayments of mortgage loans held for
    investment             |                                                          |                        | 5,852,269   |            |      |   | 8,023,712   |           
|Purchases of available for sale securities                                               |                                                          |                        | (6,575      | )          |      |   | (297,803    | )         
|Proceeds from sales and repayments of available for sale
    securities                  |                                                          |                        | 4,937       |            |      |   | 160,457     |           
|Additions to mortgage servicing rights                                                   |                                                          |                        |            |            |      |   | (28,044     | )         
|Purchase of and advances to investments in real estate and
    other                     |                                                          |                        | (457,688    | )          |      |   | (205,451    | )         
|Proceeds from sales of and returns of investments in real estate
    and other           |                                                          |                        | 194,456     |            |      |   | 171,805     |           
|Other, net                                                                               |                                                          |                        | 55,042      |            |      |   | 22,776      |           
|                                                                                         |                                                          |                        |             |            |      |  
|                                                                                         | Net cash provided by investing activities                |                        |             | 211,707    |      |   |             | 3,395,681  |  



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2006 and
2005  (Continued)


|                                                                                       |                                           |                        |            |           |      |   |            |           | 
|-------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------- | ---------- | --------- | ---- | - | ---------- | --------- | 
|                                                                                       |                                           | 2006                   |            |           | 2005 |  
|                                                                                       |                                           |                        |            |           |      |  
|                                                                                       |                                           | (Unaudited)            |           
|                                                                                       |                                           | (Dollars in thousands) |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                                   |                                           |                        |            |           |      |   |            |          
|Net increase (decrease) in affiliate borrowings                                        |                                           | $                      | (486,342   | )         |      | $ | 263,587    |          
|Net increase (decrease) in other short-term borrowings                                 |                                           |                        | (3,280,545 | )         |      |   | 4,499,315  |          
|Proceeds from issuance of collateralized borrowings in
    securitization trusts       |                                           |                        | 7,726,261  |           |      |   | 3,751,145  |          
|Repayments of collateralized borrowings in securitization trusts                       |                                           |                        | (5,131,505 | )         |      |   | (5,086,291 | )        
|Proceeds from secured aggregation facilities, long-term                                |                                           |                        | 4,513,759  |           |      |   |           |          
|Repayments of secured aggregation facilities, long-term                                |                                           |                        | (5,141,761 | )         |      |   |           |          
|Proceeds from other long-term borrowings                                               |                                           |                        | 3,039,925  |           |      |   | 453,854    |          
|Repayments of other long-term borrowings                                               |                                           |                        | (149,668   | )         |      |   | (250,925   | )        
|Payment of debt issuance costs                                                         |                                           |                        | (35,119    | )         |      |   | (3,123     | )        
|Increase in deposit liabilities                                                        |                                           |                        | 1,472,341  |           |      |   | 345,911    |          
|                                                                                       |                                           |                        |            |           |      |  
|                                                                                       | Net cash provided by financing activities |                        |            | 2,527,346 |      |   |            | 3,973,473 | 
|Effect of foreign exchange rates on cash and cash equivalents                          |                                           |                        | (5,232     | )         |      |   | (6,242     | )        
|                                                                                       |                                           |                        |            |           |      |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                              |                                           |                        | (33,176    | )         |      |   | (355,311   | )        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       |                                           |                        | 2,266,753  |           |      |   | 899,083    |          
|                                                                                       |                                           |                        |            |           |      |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             |                                           | $                      | 2,233,577  |           |      | $ | 543,772    |          
|                                                                                       |                                           |                        |            |           |      |  
|SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:                                    |                                           |                        |            |           |      |   |            |          
|Available for sale securities transferred to trading securities                        |                                           | $                      | 927,141    |           |      | $ |           |          
|Mortgage loans held for sale transferred to mortgage loans held
    for
    investment |                                           |                        | 4,660,605  |           |      |   | 860,705    |          
|Mortgage loans held for investment transferred to mortgage loans
    held
    for sale |                                           |                        | 468,057    |           |      |   | 1,712,530  |          
|Mortgage loans held for investment transferred to other assets                         |                                           |                        | 359,894    |           |      |   | 119,838    |          
|Originations of mortgage servicing rights from sold loans                              |                                           |                        | 310,906    |           |      |   | 293,124    |          
|Capital contributions of lending receivables                                           |                                           |                        | 25,282     |           |      |   | 45,708     |          



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION





NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




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







10-K


Change in Accounting Principle


Accounting for
Servicing of Financial Assets




8



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






Recently Issued Accounting Standards


Statement of Financial Accounting Standards
No. 154 Accounting Changes and
Error Corrections


Financial Accounting Standards Board Staff Position
Nos. 115-1 and
124-1 115-1 124-1, The Meaning
of Other-Than-Temporary Impairment and Its Application to
Certain Investments The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments 03-1). 115-1 124-1 115-1 124-1


Statement of Financial Accounting Standards
No. 155 Accounting for Certain Hybrid Financial Instruments


9



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






|   |                   
|-- | ------------------
|2. | Trading Securities



|                                     |  |                |           |   |              |   |           | 
|------------------------------------ |  | -------------- | --------- | - | ------------ | - | --------- | 
|                                     |  | March 31,      |           |   | December 31, |  
|                                     |  | 2006           |           |   | 2005         |  
|                                     |  |                |           |   |              |  
|                                     |  | (In thousands) |          
|Mortgage and asset-backed securities |  | $              | 1,119,219 |   |              | $ | 1,042,548 | 
|U.S. Treasury securities             |  |                | 1,068,156 |   |              |   | 1,173,792 | 
|Principal-only securities            |  |                | 888,803   |   |              |   | 651,309   | 
|Residual interests                   |  |                | 866,865   |   |              |   | 763,713   | 
|Interest-only securities             |  |                | 318,454   |   |              |   | 264,646   | 
|Other                                |  |                | 214       |   |              |   |          | 
|                                     |  |                |           |   |              |  
|Total                                |  | $              | 4,261,711 |   |              | $ | 3,896,008 | 
|                                     |  |                |           |   |              |  
|Net unrealized gains (losses)        |  | $              | (4,121    | ) |              | $ | 131,019   | 
|Pledged as collateral                |  |                | 3,043,517 |   |              |   | 2,721,189 | 





|   |                              
|-- | -----------------------------
|3. | Available for Sale Securities



|                      |                                 |                |         |                  |       |   |       |        |  |   |            |        |   |   |         |        | 
|--------------------- | ------------------------------- | -------------- | ------- | ---------------- | ----- | - | ----- | ------ |  | - | ---------- | ------ | - | - | ------- | ------ | 
|                      |                                 | March 31, 2006 |        
|                      |                                 |                |        
|                      |                                 |                |         | Gross Unrealized |       |   |      
|                      |                                 |                |         |                  |       |   |      
|                      |                                 | Cost           |         |                  | Gains |   |       | Losses |  |   | Fair Value |       
|                      |                                 |                |         |                  |       |   |       |        |  |   |            |       
|                      |                                 | (In thousands) |        
|Debt securities:      |                                 |                |         |                  |       |   |       |        |  |   |            |        |   |   |         |       
|                      | Mortgage-backed securities      |                | $       | 98,346           |       |   | $     | 3      |  |   | $          | (2,407 | ) |   | $       | 95,942 | 
|                      | Interest-only securities(a)     |                |         | 2,560            |       |   |       | 2,972  |  |   |            |       |   |   |         | 5,532  | 
|                      | Principal-only securities       |                |         | 204              |       |   |       | 132    |  |   |            |       |   |   |         | 336    | 
|                      | States & political subdivisions |                |         | 4,775            |       |   |       |       |  |   |            | (77    | ) |   |         | 4,698  | 
|                      | Other                           |                |         | 36,599           |       |   |       |       |  |   |            | (636   | ) |   |         | 35,963 | 
|                      |                                 |                |         |                  |       |   |       |        |  |   |            |       
|Total debt securities |                                 |                | 142,484 |                  |       |   | 3,107 |        |  |   | (3,120     | )      |   |   | 142,471 |       
|Equity securities     |                                 |                | 900     |                  |       |   |      |        |  |   | (205       | )      |   |   | 695     |       
|                      |                                 |                |         |                  |       |   |       |        |  |   |            |       
|Total                 |                                 | $              | 143,384 |                  |       | $ | 3,107 |        |  | $ | (3,325     | )      |   | $ | 143,166 |       
|                      |                                 |                |         |                  |       |   |       |        |  |   |            |       

10



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)


|                      |                                 |                   |           |                  |       |   |       |        |  |   |            |         |   |   |           |         | 
|--------------------- | ------------------------------- | ----------------- | --------- | ---------------- | ----- | - | ----- | ------ |  | - | ---------- | ------- | - | - | --------- | ------- | 
|                      |                                 | December 31, 2005 |          
|                      |                                 |                   |          
|                      |                                 |                   |           | Gross Unrealized |       |   |      
|                      |                                 |                   |           |                  |       |   |      
|                      |                                 | Cost              |           |                  | Gains |   |       | Losses |  |   | Fair Value |        
|                      |                                 |                   |           |                  |       |   |       |        |  |   |            |        
|                      |                                 | (In thousands)    |          
|Debt securities:      |                                 |                   |           |                  |       |   |       |        |  |   |            |         |   |   |           |        
|                      | U.S. Treasury securities        |                   | $         | 952,860          |       |   | $     |       |  |   | $          | (25,719 | ) |   | $         | 927,141 | 
|                      | Mortgage-backed securities      |                   |           | 99,113           |       |   |       | 20     |  |   |            | (1,907  | ) |   |           | 97,226  | 
|                      | Interest-only securities(a)     |                   |           | 3,031            |       |   |       | 2,240  |  |   |            |        |   |   |           | 5,271   | 
|                      | Principal-only securities       |                   |           | 212              |       |   |       | 159    |  |   |            |        |   |   |           | 371     | 
|                      | States & political subdivisions |                   |           | 4,882            |       |   |       |       |  |   |            | (33     | ) |   |           | 4,849   | 
|                      | Other                           |                   |           | 33,607           |       |   |       | 36     |  |   |            | (284    | ) |   |           | 33,359  | 
|                      |                                 |                   |           |                  |       |   |       |        |  |   |            |        
|Total debt securities |                                 |                   | 1,093,705 |                  |       |   | 2,455 |        |  |   | (27,943    | )       |   |   | 1,068,217 |        
|Equity securities     |                                 |                   | 900       |                  |       |   |      |        |  |   | (180       | )       |   |   | 720       |        
|                      |                                 |                   |           |                  |       |   |       |        |  |   |            |        
|Total                 |                                 | $                 | 1,094,605 |                  |       | $ | 2,455 |        |  | $ | (28,123    | )       |   | $ | 1,068,937 |        
|                      |                                 |                   |           |                  |       |   |       |        |  |   |            |        






|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | These interest-only securities are interests that continue to be
    held by the Company from the Companys off-balance sheet
    securitizations.



|                             |  |                |   |      |  |   |        | 
|---------------------------- |  | -------------- | - | ---- |  | - | ------ | 
|Three Months Ended March 31, |  | 2006           |   | 2005 | 
|                             |  |                |   |      | 
|                             |  | (In thousands) |  
|Gross realized gains         |  | $              |  |      |  | $ | 15,884 | 
|Gross realized losses        |  |                |  |      |  |   |       | 
|                             |  |                |   |      |  |  
|Net realized gains           |  | $              |  |      |  | $ | 15,884 | 
|                             |  |                |   |      |  |  







|   |                                   
|-- | ----------------------------------
|4. | Mortgage Loans Held for Investment



|                               |       |                |            |            |              |   |            |            | 
|------------------------------ | ----- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ---------- | 
|                               |       | March 31,      |            |            | December 31, |  
|                               |       | 2006           |            |            | 2005         |  
|                               |       |                |            |            |              |  
|                               |       | (In thousands) |           
|Prime conforming               |       | $              | 1,470,898  |            |              | $ | 1,517,456  |           
|Prime non-conforming           |       |                | 6,758,000  |            |              |   | 6,186,374  |           
|Nonprime                       |       |                | 58,908,027 |            |              |   | 56,923,366 |           
|Prime second-lien              |       |                | 6,614,707  |            |              |   | 4,330,537  |           
|Government                     |       |                | 812        |            |              |   | 833        |           
|                               |       |                |            |            |              |  
|                               | Total |                |            | 73,752,444 |              |   |            | 68,958,566 | 
|Less allowance for loan losses |       |                | (1,079,328 | )          |              |   | (1,065,906 | )         
|                               |       |                |            |            |              |  
|Total, net                     |       | $              | 72,673,116 |            |              | $ | 67,892,660 |           
|                               |       |                |            |            |              |  

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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)










|   |                    
|-- | -------------------
|5. | Lending Receivables



|                               |       |                |            |            |              |   |            |            | 
|------------------------------ | ----- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ---------- | 
|                               |       | March 31,      |            |            | December 31, |  
|                               |       | 2006           |            |            | 2005         |  
|                               |       |                |            |            |              |  
|                               |       | (In thousands) |           
|Warehouse                      |       | $              | 7,872,033  |            |              | $ | 9,003,196  |           
|Construction                   |       |                | 2,852,671  |            |              |   | 2,677,301  |           
|Commercial business            |       |                | 1,028,381  |            |              |   | 1,026,572  |           
|Healthcare                     |       |                | 492,027    |            |              |   | 593,230    |           
|Commercial real estate         |       |                | 249,907    |            |              |   | 212,272    |           
|Other                          |       |                | 96,539     |            |              |   | 75,883     |           
|                               |       |                |            |            |              |  
|                               | Total |                |            | 12,591,558 |              |   |            | 13,588,454 | 
|Less allowance for loan losses |       |                | (181,352   | )          |              |   | (187,407   | )         
|                               |       |                |            |            |              |  
|Total, net                     |       | $              | 12,410,206 |            |              | $ | 13,401,047 |           
|                               |       |                |            |            |              |  



12



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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)




|   |                          
|-- | -------------------------
|6. | Allowance for Loan Losses



|                           |  |                |           |   |             |   |         |       |  |   |           |  
|-------------------------- |  | -------------- | --------- | - | ----------- | - | ------- | ----- |  | - | --------- | -
|                           |  | Mortgage Loans |           |   |             |   |        
|                           |  | Held for       |           |   | Lending     |   |         |      
|                           |  | Investment     |           |   | Receivables |   |         | Total | 
|                           |  |                |           |   |             |   |         |       | 
|                           |  | (In thousands) |          
|Balance at January 1, 2006 |  | $              | 1,065,906 |   |             | $ | 187,407 |       |  | $ | 1,253,313 |  
|Provision for loan losses  |  |                | 128,391   |   |             |   | (5,658  | )     |  |   | 122,733   |  
|Charge-offs                |  |                | (129,893  | ) |             |   | (420    | )     |  |   | (130,313  | )
|Recoveries                 |  |                | 14,924    |   |             |   | 23      |       |  |   | 14,947    |  
|                           |  |                |           |   |             |   |         |       | 
|Balance at March 31, 2006  |  | $              | 1,079,328 |   |             | $ | 181,352 |       |  | $ | 1,260,680 |  
|                           |  |                |           |   |             |   |         |       | 
|Balance at January 1, 2005 |  | $              | 872,954   |   |             | $ | 141,723 |       |  | $ | 1,014,677 |  
|Provision for loan losses  |  |                | 152,405   |   |             |   | 3,427   |       |  |   | 155,832   |  
|Charge-offs                |  |                | (108,743  | ) |             |   | (429    | )     |  |   | (109,172  | )
|Recoveries                 |  |                | 13,954    |   |             |   | 18      |       |  |   | 13,972    |  
|                           |  |                |           |   |             |   |         |       | 
|Balance at March 31, 2005  |  | $              | 930,570   |   |             | $ | 144,739 |       |  | $ | 1,075,309 |  
|                           |  |                |           |   |             |   |         |       | 



|   |                          
|-- | -------------------------
|7. | Mortgage Servicing Rights



|                                                |                                                                                   |                                      |           |             |         |   |               |          |   |   |       |      |   |   |           |          |  
|----------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------ | --------- | ----------- | ------- | - | ------------- | -------- | - | - | ----- | ---- | - | - | --------- | -------- | -
|                                                |                                                                                   | Mortgage Servicing Rights Managed By |           |             |        
|                                                |                                                                                   |                                      |           |             |        
|                                                |                                                                                   |                                      |           | Residential |         |   | International |          |   |  
|                                                |                                                                                   | GMAC                                 |           |             | Capital |   |               | Business |   |   |      
|                                                |                                                                                   | Residential                          |           |             | Group   |   |               | Group    |   |   | Total |     
|                                                |                                                                                   |                                      |           |             |         |   |               |          |   |   |       |     
|                                                |                                                                                   | (In thousands)                       |          
|Estimated fair value at January 1, 2006         |                                                                                   | $                                    | 3,056,446 |             |         | $ | 959,708       |          |   | $ | 4,850 |      |   | $ | 4,021,004 |         
|Additions obtained from sales of mortgage loans |                                                                                   |                                      | 206,283   |             |         |   | 104,648       |          |   |   |      |      |   |   | 310,931   |         
|Changes in fair value:                          |                                                                                   |                                      |           |             |         |   |               |          |   |   |       |      |   |   |           |         
|                                                | Due to changes in valuation inputs or assumptions used in the
    valuation model |                                      |           | 317,425     |         |   |               | 41,591   |   |   |       |     |   |   |           | 359,016  |  
|                                                | Other changes in fair value                                                       |                                      |           | (95,685     | )       |   |               | (68,096  | ) |   |       | (285 | ) |   |           | (164,066 | )
|Other changes that affect the balance           |                                                                                   |                                      |          |             |         |   | (552          | )        |   |   | 138   |      |   |   | (414      | )       
|                                                |                                                                                   |                                      |           |             |         |   |               |          |   |   |       |     
|Estimated fair value at March 31, 2006          |                                                                                   | $                                    | 3,484,469 |             |         | $ | 1,037,299     |          |   | $ | 4,703 |      |   | $ | 4,526,471 |         
|                                                |                                                                                   |                                      |           |             |         |   |               |          |   |   |       |     



13



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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)




|                                  |  |             |           |             |         |  |               |          |  |  |          |  
|--------------------------------- |  | ----------- | --------- | ----------- | ------- |  | ------------- | -------- |  |  | -------- | -
|                                  |  |             |           | Residential |         |  | International |         
|                                  |  | GMAC        |           |             | Capital |  |               | Business | 
|March 31, 2006                    |  | Residential |           |             | Group   |  |               | Group    | 
|                                  |  |             |           |             |         |  |               |          | 
|Weighted average prepayment speed |  |             | 17.5      | %           |         |  | 28.1          | %        |  |  | 8.7      | %
|Range of prepayment speeds        |  |             | 16.6-36.7 | %           |         |  | 14.0- 38.4    | %        |  |  | 7.0-15.0 | %
|Weighted average discount rate    |  |             | 9.3       | %           |         |  | 12.4          | %        |  |  | 8.0      | %
|Range of discount rates           |  |             | 9.1-13.2  | %           |         |  | 12.0- 14.0    | %        |  |  | 8.0      | %





|                                                                                  |  |                |         | 
|--------------------------------------------------------------------------------- |  | -------------- | ------- | 
|                                                                                  |  | (In thousands) |        
|Contractual servicing fees (net of guarantee fees and including
    subservicing) |  | $              | 321,020 | 
|Late fees                                                                         |  |                | 30,488  | 
|Ancillary fees                                                                    |  |                | 23,176  | 
|                                                                                  |  |                |        
|Total                                                                             |  | $              | 374,684 | 
|                                                                                  |  |                |        





|                                           |  |                |           |  
|------------------------------------------ |  | -------------- | --------- | -
|                                           |  | (In thousands) |          
|Balance at January 1, 2005                 |  | $              | 4,294,846 |  
|Originations and purchases, net of sales   |  |                | 321,168   |  
|Amortization                               |  |                | (243,274  | )
|Valuation adjustments for hedge accounting |  |                | 124,942   |  
|Other than temporary impairment            |  |                | (14,272   | )
|                                           |  |                |          
|Balance at March 31, 2005                  |  |                | 4,483,410 |  
|Valuation allowance                        |  |                | (811,088  | )
|                                           |  |                |          
|Carrying value at March 31, 2005           |  | $              | 3,672,322 |  
|                                           |  |                |          
|Estimated fair value at March 31, 2005     |  | $              | 3,678,418 |  
|                                           |  |                |          

14



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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)




|                                |  |                |          |  
|------------------------------- |  | -------------- | -------- | -
|                                |  | (In thousands) |         
|Balance at January 1, 2005      |  | $              | 928,854  |  
|Impairment                      |  |                | (103,494 | )
|Other than temporary impairment |  |                | (14,272  | )
|                                |  |                |         
|Balance at March 31, 2005       |  | $              | 811,088  |  
|                                |  |                |         





|   |           
|-- | ----------
|8. | Borrowings



|                                                      |                                                   |                        |             |           |              |   |             |            |            | 
|----------------------------------------------------- | ------------------------------------------------- | ---------------------- | ----------- | --------- | ------------ | - | ----------- | ---------- | ---------- | 
|                                                      |                                                   | March 31,              |             |           | December 31, |  
|                                                      |                                                   | 2006                   |             |           | 2005         |  
|                                                      |                                                   |                        |             |           |              |  
|                                                      |                                                   | (In thousands)         |            
|Affiliate borrowings(a)                               |                                                   | $                      | 4,715,364   |           |              | $ | 5,177,462   |           
|Collateralized borrowings in securitization trusts(b) |                                                   |                        | 58,801,030  |           |              |   | 56,097,801  |           
|Other borrowings:                                     |                                                   |                        |             |           |              |   |             |           
|                                                      | Secured aggregation facilities  short-term       |                        |             | 9,560,483 |              |   |             | 10,959,581 |           
|                                                      | Secured aggregation facilities  long-term(b)     |                        |             | 4,110,604 |              |   |             | 4,738,606  |           
|                                                      | Repurchase agreements                             |                        |             | 9,972,236 |              |   |             | 9,896,658  |           
|                                                      | Senior unsecured notes(b)                         |                        |             | 6,826,915 |              |   |             | 5,150,519  |           
|                                                      | FHLB advances  short-term                        |                        |             | 396,000   |              |   |             | 1,506,000  |           
|                                                      | FHLB advances  long-term(b)                      |                        |             | 3,972,000 |              |   |             | 2,922,000  |           
|                                                      | Third-party bank credit facilities  short-term   |                        |             | 350,000   |              |   |             | 450,000    |           
|                                                      | Third-party bank credit facilities  long-term(b) |                        |             | 1,750,000 |              |   |             | 1,750,000  |           
|                                                      | Debt collateralized by mortgage loans             |                        |             | 1,430,314 |              |   |             | 2,150,529  |           
|                                                      | Servicing advances                                |                        |             | 559,254   |              |   |             | 571,532    |           
|                                                      | Investor custodial funds                          |                        |             | 146,208   |              |   |             | 120,985    |           
|                                                      | Securities purchased under forward contracts      |                        |             | 163,383   |              |   |             |           |           
|                                                      | Other  short-term                                |                        |             | 1,676,400 |              |   |             | 1,802,789  |           
|                                                      | Other  long-term(b)                              |                        |             | 356,039   |              |   |             | 281,308    |           
|                                                      |                                                   |                        |             |           |              |  
|                                                      |                                                   | Total other borrowings |             |           | 41,269,836   |   |             |            | 42,300,507 | 
|                                                      |                                                   |                        |             |           |              |  
|Total borrowings                                      |                                                   | $                      | 104,786,230 |           |              | $ | 103,575,770 |           
|                                                      |                                                   |                        |             |           |              |  






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(a) | Affiliate borrowings had $3.6 billion of borrowings with an
    original maturity in excess of one year at March 31, 2006.
|   
|(b) | Represents borrowings with an original contractual maturity in
    excess of one year.                                    

15



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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)




|                                     |                                       |                |            |             |              |   |            |             | 
|------------------------------------ | ------------------------------------- | -------------- | ---------- | ----------- | ------------ | - | ---------- | ----------- | 
|                                     |                                       | March 31,      |            |             | December 31, |  
|                                     |                                       | 2006           |            |             | 2005         |  
|                                     |                                       |                |            |             |              |  
|                                     |                                       | (In thousands) |           
|Mortgage loans held for investment   |                                       | $              | 71,151,503 |             |              | $ | 67,798,758 |            
|Mortgage loans held for sale         |                                       |                | 14,821,245 |             |              |   | 16,147,391 |            
|Trading securities                   |                                       |                | 3,043,517  |             |              |   | 2,696,896  |            
|Available for sale securities        |                                       |                | 10,604     |             |              |   | 929,112    |            
|Mortgage servicing rights            |                                       |                | 2,550,061  |             |              |   | 2,220,657  |            
|Lending receivables                  |                                       |                | 10,094,525 |             |              |   | 11,020,766 |            
|Accounts receivable                  |                                       |                | 850,944    |             |              |   | 795,149    |            
|Investments in real estate and other |                                       |                | 436,778    |             |              |   | 357,644    |            
|Other assets                         |                                       |                | 511,198    |             |              |   | 238,758    |            
|                                     |                                       |                |            |             |              |  
|                                     | Total assets restricted as collateral |                | $          | 103,470,375 |              |   | $          | 102,205,131 | 
|                                     |                                       |                |            |             |              |  
|Related secured debt                 |                                       | $              | 90,120,914 |             |              | $ | 89,939,405 |            
|                                     |                                       |                |            |             |              |  



|                                     |       |                |           |           |              |   |           |           | 
|------------------------------------ | ----- | -------------- | --------- | --------- | ------------ | - | --------- | --------- | 
|                                     |       | March 31,      |           |           | December 31, |  
|                                     |       | 2006           |           |           | 2005         |  
|                                     |       |                |           |           |              |  
|                                     |       | (In thousands) |          
|Mortgage loans held for sale         |       | $              | 4,432,762 |           |              | $ | 3,880,448 |          
|Trading securities                   |       |                | 2,314,670 |           |              |   | 2,126,393 |          
|Mortgage loans held for investment   |       |                | 2,314,054 |           |              |   | 2,429,880 |          
|Available for sale securities        |       |                |          |           |              |   | 927,140   |          
|Investments in real estate and other |       |                | 14,219    |           |              |   | 6,276     |          
|                                     |       |                |           |           |              |  
|                                     | Total |                | $         | 9,075,705 |              |   | $         | 9,370,137 | 
|                                     |       |                |           |           |              |  



|   |                    
|-- | -------------------
|9. | Deposit Liabilities



|                                       |  |                |           |  |              |   |           | 
|-------------------------------------- |  | -------------- | --------- |  | ------------ | - | --------- | 
|                                       |  | March 31,      |           |  | December 31, |  
|                                       |  | 2006           |           |  | 2005         |  
|                                       |  |                |           |  |              |  
|                                       |  | (In thousands) |          
|Non-interest bearing deposits          |  | $              | 1,605,603 |  |              | $ | 1,368,345 | 
|NOW and money market checking accounts |  |                | 861,879   |  |              |   | 508,830   | 
|Certificates of deposit                |  |                | 3,128,163 |  |              |   | 2,246,129 | 
|                                       |  |                |           |  |              |  
|Total                                  |  | $              | 5,595,645 |  |              | $ | 4,123,304 | 
|                                       |  |                |           |  |              |  





|    |                       
|--- | ----------------------
|10. | Derivative Instruments



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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)






|                                       |                               |               |      |      |      |   |       |                                 |   |  |                                               
|-------------------------------------- | ----------------------------- | ------------- | ---- | ---- | ---- | - | ----- | ------------------------------- | - |  | ----------------------------------------------
|Three Months Ended March 31,           |                               | 2006          |      |      | 2005 |   |       | Income Statement Classification
|                                       |                               |               |      |      |      |   |       |                                
|                                       |                               | (In millions) |      |      |     
|Fair value hedge ineffectiveness loss: |                               |               |      |      |      |   |       |                                 |   | 
|                                       | Mortgage servicing rights     |               | $    |     |      |   | $     | (26.5                           | ) |  | Servicing asset valuation and hedge activities
|                                       | Mortgage loans held for sale  |               |      | (5.7 | )    |   |       | (5.8                            | ) |  | Gain on sale of mortgage loans                
|Cash flow hedge ineffectiveness gain:  |                               |               |      |      |      |   |       |                                 |   | 
|                                       | Debt and future debt issuance |               |      | 0.4  |      |   |       | 5.1                             |   |  | Interest expense                              
|                                       |                               |               |      |      |      |   |       |                                
|Total                                  |                               | $             | (5.3 | )    |      | $ | (27.2 | )                               |   | 
|                                       |                               |               |      |      |      |   |       |                                





|    |                           
|--- | --------------------------
|11. | Related Party Transactions













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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)








|    |                    
|--- | -------------------
|12. | Segment Information



|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              |  |   |             |   |  |   |             |  
|--------------------------------------- |  | -------------- | ---------- | - | ------------- | -------- | ---------- | ------- | ------------- | - | --------- | - |  | ------------- | --------- | - | ------------ | - | ---------- | ------------ |  | - | ----------- | - |  | - | ----------- | -
|                                        |  |                |            |   |               | Business |            |         | International |   |           |   |  |               |           |  
|                                        |  | GMAC           |            |   | Residential   |          |            | Capital |               |   | Business  |   |  | Corporate and |           |   |              |   |           
|Three Months Ended March 31,            |  | Residential    |            |   | Capital Group |          |            | Group   |               |   | Group     |   |  | Other         |           |   | Eliminations |   |            | Consolidated | 
|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              | 
|                                        |  | (In thousands) |           
|2006                                    |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              |  |   |             |   |  |   |             |  
|Net interest income (expense)           |  | $              | 58,739     |   |               | $        | 310,611    |         |               | $ | 20,775    |   |  | $             | 41,124    |   |              | $ | (3,253     | )            |  | $ |            |   |  | $ | 427,996     |  
|Provision for loan losses               |  |                | (2,610     | ) |               |          | (116,810   | )       |               |   | (62       | ) |  |               | (3,268    | ) |              |   | 17         |              |  |   |            |   |  |   | (122,733    | )
|Other revenue                           |  |                | 208,112    |   |               |          | 192,000    |         |               |   | 80,953    |   |  |               | 75,545    |   |              |   | 79,302     |              |  |   | 701         |   |  |   | 636,613     |  
|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              | 
|Total net revenue                       |  |                | 264,241    |   |               |          | 385,801    |         |               |   | 101,666   |   |  |               | 113,401   |   |              |   | 76,066     |              |  |   | 701         |   |  |   | 941,876     |  
|Operating expenses                      |  |                | 233,519    |   |               |          | 210,905    |         |               |   | 12,527    |   |  |               | 54,829    |   |              |   | 90,629     |              |  |   |            |   |  |   | 602,409     |  
|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              | 
|Income (loss) before income tax expense |  |                | 30,722     |   |               |          | 174,896    |         |               |   | 89,139    |   |  |               | 58,572    |   |              |   | (14,563    | )            |  |   | 701         |   |  |   | 339,467     |  
|Income tax expense (benefit)            |  |                | 22,014     |   |               |          | 68,787     |         |               |   | 35,059    |   |  |               | 17,215    |   |              |   | (5,369     | )            |  |   | 267         |   |  |   | 137,973     |  
|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              | 
|Net income (loss)                       |  | $              | 8,708      |   |               | $        | 106,109    |         |               | $ | 54,080    |   |  | $             | 41,357    |   |              | $ | (9,194     | )            |  | $ | 434         |   |  | $ | 201,494     |  
|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              | 
|Total assets                            |  | $              | 23,605,383 |   |               | $        | 80,586,582 |         |               | $ | 5,947,491 |   |  | $             | 9,682,805 |   |              | $ | 20,505,722 |              |  | $ | (18,389,497 | ) |  | $ | 121,938,486 |  
|                                        |  |                |            |   |               |          |            |         |               |   |           |   |  |               |           |   |              |   |            |              | 

|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              |  |   |        |   |  |   |            |  
|-------------------------------- |  | -------------- | ---------- | - | ------------- | -------- | ---------- | ------- | ------------- | - | --------- | - |  | --------- | --------- |  | ------------ | - | -------- | ------------ |  | - | ------ | - |  | - | ---------- | -
|                                 |  |                |            |   |               | Business |            |         | International |   |           |   |  |           |           | 
|                                 |  | GMAC           |            |   | Residential   |          |            | Capital |               |   | Business  |   |  | Corporate |           |  |              |   |         
|Three Months Ended March 31,     |  | Residential    |            |   | Capital Group |          |            | Group   |               |   | Group     |   |  | and Other |           |  | Eliminations |   |          | Consolidated | 
|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              | 
|                                 |  | (In thousands) |           
|2005                             |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              |  |   |        |   |  |   |            |  
|Net interest income (expense)    |  | $              | 73,215     |   |               | $        | 416,049    |         |               | $ | 37,214    |   |  | $         | 23,491    |  |              | $ | (5,899   | )            |  | $ |       |   |  | $ | 544,070    |  
|Provision for loan losses        |  |                | (1,103     | ) |               |          | (148,346   | )       |               |   | (7,472    | ) |  |           | 1,330     |  |              |   | (241     | )            |  |   |       |   |  |   | (155,832   | )
|Other revenue                    |  |                | 278,071    |   |               |          | 192,773    |         |               |   | 50,038    |   |  |           | 66,100    |  |              |   | 152,357  |              |  |   |       |   |  |   | 739,339    |  
|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              | 
|Total net revenue                |  |                | 350,183    |   |               |          | 460,476    |         |               |   | 79,780    |   |  |           | 90,921    |  |              |   | 146,217  |              |  |   |       |   |  |   | 1,127,577  |  
|Operating expenses               |  |                | 204,432    |   |               |          | 214,751    |         |               |   | 17,210    |   |  |           | 58,412    |  |              |   | 103,922  |              |  |   |       |   |  |   | 598,727    |  
|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              | 
|Income before income tax expense |  |                | 145,751    |   |               |          | 245,725    |         |               |   | 62,570    |   |  |           | 32,509    |  |              |   | 42,295   |              |  |   |       |   |  |   | 528,850    |  
|Income tax expense               |  |                | 66,559     |   |               |          | 94,190     |         |               |   | 23,983    |   |  |           | 9,863     |  |              |   | 12,460   |              |  |   |       |   |  |   | 207,055    |  
|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              | 
|Net income                       |  | $              | 79,192     |   |               | $        | 151,535    |         |               | $ | 38,587    |   |  | $         | 22,646    |  |              | $ | 29,835   |              |  | $ |       |   |  | $ | 321,795    |  
|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              | 
|Total assets                     |  | $              | 20,693,730 |   |               | $        | 65,721,382 |         |               | $ | 4,679,369 |   |  | $         | 7,953,299 |  |              | $ | (398,252 | )            |  | $ | (3,339 | ) |  | $ | 98,646,189 |  
|                                 |  |                |            |   |               |          |            |         |               |   |           |   |  |           |           |  |              |   |          |              | 

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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)




|    |                   
|--- | ------------------
|13. | Regulatory Matters





|                          |  |          |   |   |                  |  |    |           |  |  |      |  
|------------------------- |  | -------- | - | - | ---------------- |  | -- | --------- |  |  | ---- | -
|                          |  | Minimum  |   |   | Minimum to be    |  |    | March 31, | 
|                          |  | Required |   |   | Well-Capitalized |  |    | 2006      | 
|                          |  |          |   |   |                  |  |    |           | 
|Tier 1 leverage           |  |          | 4 | % |                  |  | 5  | %         |  |  | 7.1  | %
|Tier 1 risk-based capital |  |          | 4 |   |                  |  | 6  |           |  |  | 10.3 |  
|Total risk-based capital  |  |          | 8 |   |                  |  | 10 |           |  |  | 10.4 |  



|    |                 
|--- | ----------------
|14. | Subsequent Event





| |   |                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GMAC and most of its U.S. direct and indirect subsidiaries
    (other than GMAC Insurance Holdings Inc. and its subsidiaries),
    including the Company and most of its U.S. direct and
    indirect subsidiaries, will convert into limited liability
    companies (whether by statutory conversion or merger);
|
| |  | The Company will dispose of its interests in GMAC Bank and is
    exploring options to preserve some of the benefits the Company
    obtains from GMAC Bank, which may include the creation or
    acquisition (in whole or in part) of, or the development of a
    relationship with, an industrial bank; and   
|
| |  | GM will sell to FIM Holdings common limited liability company
    interests of GMAC representing 51% of the common limited
    liability company interests of GMAC.                                                                                                                                               



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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)




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





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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)


RESIDENTIAL CAPITAL CORPORATION


CONDENSED CONSOLIDATED BALANCE SHEET


March 31, 2006


|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |             |             |             |   |             |            |             | 
|------------------------------------------ | -------------------------------------------------- | ---------------------- | ---------- | --------- | ------------ | - | ------------- | ------------ | ---------- | - | ------------ | ---------- | ---------- | ------------ | ----------- | ----------- | ----------- | - | ----------- | ---------- | ----------- | 
|                                           |                                                    |                        |            | Guarantor |              |   | Non-Guarantor |              |            |   |              |           
|                                           |                                                    | Parent                 |            |           | Subsidiaries |   |               | Subsidiaries |            |   | Eliminations |            |            | Consolidated |            
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|                                           |                                                    | (Dollars in thousands) |           
|ASSETS                                    
|Cash and cash equivalents                  |                                                    | $                      | 1,780,400  |           |              | $ | 179,352       |              |            | $ | 503,661      |            |            | $            | (229,836    | )           |             | $ | 2,233,577   |           
|Mortgage loans held for sale               |                                                    |                        |           |           |              |   | 6,335,543     |              |            |   | 11,787,456   |            |            |              | 1,747       |             |             |   | 18,124,746  |           
|Trading securities                         |                                                    |                        |           |           |              |   | 2,638,703     |              |            |   | 1,623,008    |            |            |              |            |             |             |   | 4,261,711   |           
|Available for sale securities              |                                                    |                        |           |           |              |   | 724,849       |              |            |   | 136,604      |            |            |              | (718,287    | )           |             |   | 143,166     |           
|Mortgage loans held for investment, net    |                                                    |                        |           |           |              |   | 3,335,231     |              |            |   | 69,434,756   |            |            |              | (96,871     | )           |             |   | 72,673,116  |           
|Lending receivables, net                   |                                                    |                        |           |           |              |   | 1,797,276     |              |            |   | 10,616,505   |            |            |              | (3,575      | )           |             |   | 12,410,206  |           
|Mortgage servicing rights, net             |                                                    |                        |           |           |              |   | 4,521,768     |              |            |   | 4,703        |            |            |              |            |             |             |   | 4,526,471   |           
|Accounts receivable                        |                                                    |                        | 6,479      |           |              |   | 1,316,488     |              |            |   | 1,064,656    |            |            |              | (458,943    | )           |             |   | 1,928,680   |           
|Investments in real estate and other       |                                                    |                        |           |           |              |   | 279,139       |              |            |   | 1,875,938    |            |            |              |            |             |             |   | 2,155,077   |           
|Goodwill                                   |                                                    |                        |           |           |              |   | 218,803       |              |            |   | 240,369      |            |            |              |            |             |             |   | 459,172     |           
|Other assets                               |                                                    |                        | 266,853    |           |              |   | 5,982,088     |              |            |   | 1,930,868    |            |            |              | (5,157,245  | )           |             |   | 3,022,564   |           
|Investment in and loans to subsidiaries    |                                                    |                        | 18,187,188 |           |              |   | 3,901,815     |              |            |   |             |            |            |              | (22,089,003 | )           |             |   |            |           
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|Total assets                               |                                                    | $                      | 20,240,920 |           |              | $ | 31,231,055    |              |            | $ | 99,218,524   |            |            | $            | (28,752,013 | )           |             | $ | 121,938,486 |           
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|                                          
|LIABILITIES                               
|Borrowings:                                |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |             |             |             |   |             |           
|                                           | Affiliate borrowings                               |                        | $          | 3,630,000 |              |   | $             | 11,395,000   |            |   | $            | 1,085,364  |            |              | $           | (11,395,000 | )           |   | $           | 4,715,364  |            
|                                           | Collateralized borrowings in securitization trusts |                        |            |          |              |   |               |             |            |   |              | 58,801,030 |            |              |             |            |             |   |             | 58,801,030 |            
|                                           | Other borrowings                                   |                        |            | 8,576,915 |              |   |               | 9,956,777    |            |   |              | 23,916,948 |            |              |             | (1,180,804  | )           |   |             | 41,269,836 |            
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|                                           |                                                    | Total borrowings       |            |           | 12,206,915   |   |               |              | 21,351,777 |   |              |            | 83,803,342 |              |             |             | (12,575,804 | ) |             |            | 104,786,230 | 
|Deposit liabilities                        |                                                    |                        |           |           |              |   |              |              |            |   | 5,847,481    |            |            |              | (251,836    | )           |             |   | 5,595,645   |           
|Other liabilities                          |                                                    |                        | 270,526    |           |              |   | 3,087,090     |              |            |   | 5,663,740    |            |            |              | (5,228,224  | )           |             |   | 3,793,132   |           
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|Total liabilities                          |                                                    |                        | 12,477,441 |           |              |   | 24,438,867    |              |            |   | 95,314,563   |            |            |              | (18,055,864 | )           |             |   | 114,175,007 |           
|                                          
|STOCKHOLDERS EQUITY                      
|Common stock and paid-in capital           |                                                    |                        | 3,392,958  |           |              |   | 2,427,958     |              |            |   | 1,397,035    |            |            |              | (3,824,993  | )           |             |   | 3,392,958   |           
|Retained earnings                          |                                                    |                        | 4,169,214  |           |              |   | 4,162,923     |              |            |   | 2,309,784    |            |            |              | (6,472,707  | )           |             |   | 4,169,214   |           
|Accumulated other comprehensive income     |                                                    |                        | 201,307    |           |              |   | 201,307       |              |            |   | 197,142      |            |            |              | (398,449    | )           |             |   | 201,307     |           
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|Total stockholders equity                 |                                                    |                        | 7,763,479  |           |              |   | 6,792,188     |              |            |   | 3,903,961    |            |            |              | (10,696,149 | )           |             |   | 7,763,479   |           
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            
|Total liabilities and stockholders equity |                                                    | $                      | 20,240,920 |           |              | $ | 31,231,055    |              |            | $ | 99,218,524   |            |            | $            | (28,752,013 | )           |             | $ | 121,938,486 |           
|                                           |                                                    |                        |            |           |              |   |               |              |            |   |              |            |            |              |            

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RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)


RESIDENTIAL CAPITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENT OF INCOME


Three Months Ended March 31, 2006


|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|----------------------------------------------------------- |  | ---------------------- | ------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | -------- | - |  | - | --------- | -
|                                                            |  |                        |         | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                            |  | Parent                 |         |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|                                                            |  | (Dollars in thousands) |        
|Revenue                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|Interest income                                             |  | $                      | 202,436 |           |              | $ | 420,337       |              |  | $ | 1,427,604    |   |  | $            | (187,012 | ) |  | $ | 1,863,365 |  
|Interest expense                                            |  |                        | 201,125 |           |              |   | 248,352       |              |  |   | 1,183,932    |   |  |              | (198,040 | ) |  |   | 1,435,369 |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net interest income                                         |  |                        | 1,311   |           |              |   | 171,985       |              |  |   | 243,672      |   |  |              | 11,028   |   |  |   | 427,996   |  
|Provision for loan losses                                   |  |                        |        |           |              |   | 10,337        |              |  |   | 113,036      |   |  |              | (640     | ) |  |   | 122,733   |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net interest income after provision for loan losses         |  |                        | 1,311   |           |              |   | 161,648       |              |  |   | 130,636      |   |  |              | 11,668   |   |  |   | 305,263   |  
|Gain on sale of mortgage loans, net                         |  |                        |        |           |              |   | 173,893       |              |  |   | 114,059      |   |  |              | (20,888  | ) |  |   | 267,064   |  
|Servicing fees                                              |  |                        |        |           |              |   | 377,334       |              |  |   | (1,219       | ) |  |              | (1,431   | ) |  |   | 374,684   |  
|Amortization and impairment of servicing rights             |  |                        |        |           |              |   |              |              |  |   |             |   |  |              |         |   |  |   |          |  
|Servicing asset valuation and hedge activities, net         |  |                        |        |           |              |   | (185,226      | )            |  |   | (287         | ) |  |              |         |   |  |   | (185,513  | )
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net servicing fees                                          |  |                        |        |           |              |   | 192,108       |              |  |   | (1,506       | ) |  |              | (1,431   | ) |  |   | 189,171   |  
|Gain (loss) on investment securities, net                   |  |                        | (90     | )         |              |   | (46,069       | )            |  |   | 27,730       |   |  |              |         |   |  |   | (18,429   | )
|Real estate related revenues                                |  |                        |        |           |              |   | 26,221        |              |  |   | 117,974      |   |  |              |         |   |  |   | 144,195   |  
|Other income                                                |  |                        |        |           |              |   | 33,800        |              |  |   | 41,477       |   |  |              | (20,665  | ) |  |   | 54,612    |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Total net revenue                                           |  |                        | 1,221   |           |              |   | 541,601       |              |  |   | 430,370      |   |  |              | (31,316  | ) |  |   | 941,876   |  
|Expenses                                                    |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |           |  
|Compensation and benefits                                   |  |                        |        |           |              |   | 195,126       |              |  |   | 111,678      |   |  |              |         |   |  |   | 306,804   |  
|Professional fees                                           |  |                        |        |           |              |   | 44,682        |              |  |   | 12,118       |   |  |              |         |   |  |   | 56,800    |  
|Data processing and telecommunications                      |  |                        |        |           |              |   | 32,721        |              |  |   | 12,198       |   |  |              |         |   |  |   | 44,919    |  
|Advertising                                                 |  |                        |        |           |              |   | 34,221        |              |  |   | 7,527        |   |  |              |         |   |  |   | 41,748    |  
|Occupancy                                                   |  |                        |        |           |              |   | 20,536        |              |  |   | 12,289       |   |  |              |         |   |  |   | 32,825    |  
|Other                                                       |  |                        | 1,072   |           |              |   | 78,103        |              |  |   | 61,313       |   |  |              | (21,175  | ) |  |   | 119,313   |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Total expenses                                              |  |                        | 1,072   |           |              |   | 405,389       |              |  |   | 217,123      |   |  |              | (21,175  | ) |  |   | 602,409   |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Income before income tax expense                            |  |                        | 149     |           |              |   | 136,212       |              |  |   | 213,247      |   |  |              | (10,141  | ) |  |   | 339,467   |  
|Income tax expense                                          |  |                        | 57      |           |              |   | 69,686        |              |  |   | 71,459       |   |  |              | (3,229   | ) |  |   | 137,973   |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Income (loss) before equity in net earnings of subsidiaries |  |                        | 92      |           |              |   | 66,526        |              |  |   | 141,788      |   |  |              | (6,912   | ) |  |   | 201,494   |  
|Equity in net earnings of subsidiaries                      |  |                        | 201,402 |           |              |   | 134,876       |              |  |   |             |   |  |              | (336,278 | ) |  |   |          |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         
|Net income                                                  |  | $                      | 201,494 |           |              | $ | 201,402       |              |  | $ | 141,788      |   |  | $            | (343,190 | ) |  | $ | 201,494   |  
|                                                            |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         

22



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)


RESIDENTIAL CAPITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENT OF INCOME


Three Months Ended March 31, 2005


|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |          |   |  |   |           |  
|---------------------------------------------------- |  | ---------------------- | ------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ |  |  | ------------ | -------- | - |  | - | --------- | -
|                                                     |  |                        |         | Guarantor |              |   | Non-Guarantor |              |  |   |              | 
|                                                     |  | Parent                 |         |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |  |  | Consolidated |         
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|                                                     |  | (Dollars in thousands) |        
|Revenue                                              |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |          |   |  |   |           |  
|Interest income                                      |  | $                      |        |           |              | $ | 211,656       |              |  | $ | 1,108,123    |  |  | $            | (9,799   | ) |  | $ | 1,309,980 |  
|Interest expense                                     |  |                        |        |           |              |   | 119,313       |              |  |   | 658,512      |  |  |              | (11,915  | ) |  |   | 765,910   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Net interest income                                  |  |                        |        |           |              |   | 92,343        |              |  |   | 449,611      |  |  |              | 2,116    |   |  |   | 544,070   |  
|Provision for loan losses                            |  |                        |        |           |              |   | 54,813        |              |  |   | 101,019      |  |  |              |         |   |  |   | 155,832   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Net interest income after provision for loan losses  |  |                        |        |           |              |   | 37,530        |              |  |   | 348,592      |  |  |              | 2,116    |   |  |   | 388,238   |  
|Gain on sale of mortgage loans, net                  |  |                        |        |           |              |   | 171,426       |              |  |   | 157,365      |  |  |              | 852      |   |  |   | 329,643   |  
|Servicing fees                                       |  |                        |        |           |              |   | 346,037       |              |  |   | 1,864        |  |  |              | (507     | ) |  |   | 347,394   |  
|Amortization and impairment of servicing rights      |  |                        |        |           |              |   | (140,105      | )            |  |   | 325          |  |  |              |         |   |  |   | (139,780  | )
|Servicing asset valuation and hedge activities, net  |  |                        |        |           |              |   | (67,861       | )            |  |   |             |  |  |              |         |   |  |   | (67,861   | )
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Net servicing fees                                   |  |                        |        |           |              |   | 138,071       |              |  |   | 2,189        |  |  |              | (507     | ) |  |   | 139,753   |  
|Gain on investment securities, net                   |  |                        |        |           |              |   | 54,233        |              |  |   | 17,882       |  |  |              |         |   |  |   | 72,115    |  
|Real estate related revenues                         |  |                        |        |           |              |   | 46,714        |              |  |   | 84,660       |  |  |              |         |   |  |   | 131,374   |  
|Other income                                         |  |                        |        |           |              |   | 18,322        |              |  |   | 75,519       |  |  |              | (27,387  | ) |  |   | 66,454    |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Total net revenue                                    |  |                        |        |           |              |   | 466,296       |              |  |   | 686,207      |  |  |              | (24,926  | ) |  |   | 1,127,577 |  
|Expenses                                             |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |          |   |  |   |           |  
|Compensation and benefits                            |  |                        |        |           |              |   | 208,623       |              |  |   | 111,308      |  |  |              |         |   |  |   | 319,931   |  
|Professional fees                                    |  |                        |        |           |              |   | 40,759        |              |  |   | 9,539        |  |  |              |         |   |  |   | 50,298    |  
|Data processing and telecommunications               |  |                        |        |           |              |   | 33,148        |              |  |   | 16,297       |  |  |              |         |   |  |   | 49,445    |  
|Advertising                                          |  |                        |        |           |              |   | 32,623        |              |  |   | 6,682        |  |  |              |         |   |  |   | 39,305    |  
|Occupancy                                            |  |                        |        |           |              |   | 18,654        |              |  |   | 10,913       |  |  |              |         |   |  |   | 29,567    |  
|Other                                                |  |                        |        |           |              |   | 68,647        |              |  |   | 67,974       |  |  |              | (26,440  | ) |  |   | 110,181   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Total expenses                                       |  |                        |        |           |              |   | 402,454       |              |  |   | 222,713      |  |  |              | (26,440  | ) |  |   | 598,727   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Income before income tax expense                     |  |                        |        |           |              |   | 63,842        |              |  |   | 463,494      |  |  |              | 1,514    |   |  |   | 528,850   |  
|Income tax expense                                   |  |                        |        |           |              |   | 51,055        |              |  |   | 155,450      |  |  |              | 550      |   |  |   | 207,055   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Income before equity in net earnings of subsidiaries |  |                        |        |           |              |   | 12,787        |              |  |   | 308,044      |  |  |              | 964      |   |  |   | 321,795   |  
|Equity in net earnings of subsidiaries               |  |                        | 321,795 |           |              |   | 309,008       |              |  |   |             |  |  |              | (630,803 | ) |  |   |          |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         
|Net income                                           |  | $                      | 321,795 |           |              | $ | 321,795       |              |  | $ | 308,044      |  |  | $            | (629,839 | ) |  | $ | 321,795   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |  |  |              |         

23



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)


RESIDENTIAL CAPITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2006


|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |            |  
|-------------------------------------------------------------------------------- |  | ---------------------- | ---------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | ---------- | -
|                                                                                 |  |                        |            | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                                 |  | Parent                 |            |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |           
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|                                                                                 |  | (Dollars in thousands) |           
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                              |  | $                      | 19,698     |           |              | $ | (5,264,043    | )            |  | $ | 2,445,694    |   |  | $            | 31,654     |   |  | $ | (2,766,997 | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |            |  
|Net (increase) decrease in lending receivables                                   |  |                        |           |           |              |   | (76,217       | )            |  |   | 1,098,020    |   |  |              |           |   |  |   | 1,021,803  |  
|Originations and purchases of mortgage loans held for investment                 |  |                        |           |           |              |   | (4,815,096    | )            |  |   | (2,735,673   | ) |  |              | 1,098,232  |   |  |   | (6,452,537 | )
|Proceeds from sales and repayments of mortgage loans held for
    investment     |  |                        |           |           |              |   | 1,703,945     |              |  |   | 5,235,084    |   |  |              | (1,086,760 | ) |  |   | 5,852,269  |  
|Purchases of available for sale securities                                       |  |                        |           |           |              |   | (6            | )            |  |   | (6,569       | ) |  |              |           |   |  |   | (6,575     | )
|Proceeds from sales and repayments of available for sale
    securities          |  |                        |           |           |              |   | 485           |              |  |   | 4,452        |   |  |              |           |   |  |   | 4,937      |  
|Purchase of and advances to investments in real estate and other                 |  |                        |           |           |              |   | (17,549       | )            |  |   | (440,139     | ) |  |              |           |   |  |   | (457,688   | )
|Proceeds from sales of and returns of investments in real estate
    and other   |  |                        |           |           |              |   | 24,872        |              |  |   | 169,584      |   |  |              |           |   |  |   | 194,456    |  
|Payment of capital contribution                                                  |  |                        | (35,000    | )         |              |   | (41,826       | )            |  |   |             |   |  |              | 76,826     |   |  |   |           |  
|Net increase in affiliate lending                                                |  |                        | (967,028   | )         |              |   |              |              |  |   |             |   |  |              | 967,028    |   |  |   |           |  
|Other, net                                                                       |  |                        | (110,280   | )         |              |   | (35,941       | )            |  |   | 201,263      |   |  |              |           |   |  |   | 55,042     |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|Net cash provided by (used in) investing activities                              |  |                        | (1,112,308 | )         |              |   | (3,257,333    | )            |  |   | 3,526,022    |   |  |              | 1,055,326  |   |  |   | 211,707    |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                             |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |            |   |  |   |            |  
|Net increase (decrease) in affiliate borrowings                                  |  |                        | (500,000   | )         |              |   | 967,028       |              |  |   | 13,658       |   |  |              | (967,028   | ) |  |   | (486,342   | )
|Net increase in other short-term borrowings                                      |  |                        |           |           |              |   | (185,728      | )            |  |   | (3,096,123   | ) |  |              | 1,306      |   |  |   | (3,280,545 | )
|Proceeds from issuance of collateralized borrowings in
    securitization trusts |  |                        |           |           |              |   | 7,726,261     |              |  |   |             |   |  |              |           |   |  |   | 7,726,261  |  
|Repayments of collateralized borrowings in securitization trusts                 |  |                        |           |           |              |   |              |              |  |   | (5,131,505   | ) |  |              |           |   |  |   | (5,131,505 | )
|Proceeds from secured aggregation facilities, long-term                          |  |                        |           |           |              |   |              |              |  |   | 4,513,759    |   |  |              |           |   |  |   | 4,513,759  |  
|Repayments of secured aggregation facilities, long-term                          |  |                        |           |           |              |   |              |              |  |   | (5,141,761   | ) |  |              |           |   |  |   | (5,141,761 | )
|Proceeds from other long-term borrowings                                         |  |                        | 1,758,458  |           |              |   |              |              |  |   | 1,281,467    |   |  |              |           |   |  |   | 3,039,925  |  
|Repayments of other long-term borrowings                                         |  |                        |           |           |              |   |              |              |  |   | (149,668     | ) |  |              |           |   |  |   | (149,668   | )
|Payments of debt issuance costs                                                  |  |                        | (12,262    | )         |              |   |              |              |  |   | (22,857      | ) |  |              |           |   |  |   | (35,119    | )
|Proceeds from capital contribution                                               |  |                        |           |           |              |   | 35,000        |              |  |   | 41,826       |   |  |              | (76,826    | ) |  |   |           |  
|Dividends paid                                                                   |  |                        |           |           |              |   |              |              |  |   | (970         | ) |  |              | 970        |   |  |   |           |  
|Increase in deposit liabilities                                                  |  |                        |           |           |              |   |              |              |  |   | 1,673,091    |   |  |              | (200,750   | ) |  |   | 1,472,341  |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|Net cash provided by (used in) financing activities                              |  |                        | 1,246,196  |           |              |   | 8,542,561     |              |  |   | (6,019,083   | ) |  |              | (1,242,328 | ) |  |   | 2,527,346  |  
|Effect of foreign exchange rates on cash and cash equivalents                    |  |                        |           |           |              |   |              |              |  |   | (5,224       | ) |  |              | (8         | ) |  |   | (5,232     | )
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                        | 153,586    |           |              |   | 21,185        |              |  |   | (52,591      | ) |  |              | (155,356   | ) |  |   | (33,176    | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                   |  |                        | 1,626,814  |           |              |   | 158,167       |              |  |   | 556,252      |   |  |              | (74,480    | ) |  |   | 2,266,753  |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       |  | $                      | 1,780,400  |           |              | $ | 179,352       |              |  | $ | 503,661      |   |  | $            | (229,836   | ) |  | $ | 2,233,577  |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           










24



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##### Table of Contents



RESIDENTIAL CAPITAL CORPORATION


NOTES TO CONDENSED CONSOLIDATED


FINANCIAL STATEMENTS (Unaudited) 
(Continued)


RESIDENTIAL CAPITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2005


|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |         |   |  |   |            |  
|-------------------------------------------------------------------------------- |  | ---------------------- | - | ------------ |  | - | ------------- | - |  | ------------ | ---------- | - | ------------ | - | ------- | - |  | - | ---------- | -
|                                                                                 |  |                        |   | Guarantor    |  |   | Non-Guarantor |   |  |              |            |  
|                                                                                 |  | Parent                 |   | Subsidiaries |  |   | Subsidiaries  |   |  | Eliminations |            |   | Consolidated |  
|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |  
|                                                                                 |  | (Dollars in thousands) |  
|NET CASH USED IN OPERATING ACTIVITIES                                            |  | $                      |  |              |  | $ | (7,377,119    | ) |  | $            | (333,386   | ) |              | $ | (7,718  | ) |  | $ | (7,718,223 | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |         |   |  |   |            |  
|Net (increase) decrease in lending receivables                                   |  |                        |  |              |  |   | (155,917      | ) |  |              | 478,235    |   |              |   |         |   |  |   | 322,318    |  
|Originations and purchases of mortgage loans held for investment                 |  |                        |  |              |  |   | (3,889,244    | ) |  |              | (884,845   | ) |              |   |        |   |  |   | (4,774,089 | )
|Proceeds from sales and repayments of mortgage loans held for
    investment     |  |                        |  |              |  |   | 2,882,811     |   |  |              | 5,140,901  |   |              |   |        |   |  |   | 8,023,712  |  
|Purchases of available for sale securities                                       |  |                        |  |              |  |   | (297,803      | ) |  |              |           |   |              |   |        |   |  |   | (297,803   | )
|Proceeds from sales and repayments of available for sale
    securities          |  |                        |  |              |  |   | 160,457       |   |  |              |           |   |              |   |        |   |  |   | 160,457    |  
|Additions to mortgage servicing rights, net                                      |  |                        |  |              |  |   | (27,471       | ) |  |              | (573       | ) |              |   |        |   |  |   | (28,044    | )
|Purchase of and advances to investments in real estate and other                 |  |                        |  |              |  |   | (1,682        | ) |  |              | (203,769   | ) |              |   |        |   |  |   | (205,451   | )
|Proceeds from sales of and returns of investments in real estate
    and other   |  |                        |  |              |  |   | 37,523        |   |  |              | 134,282    |   |              |   |        |   |  |   | 171,805    |  
|Payment of capital contribution                                                  |  |                        |  |              |  |   | (32,965       | ) |  |              |           |   |              |   | 32,965  |   |  |   |           |  
|Other, net                                                                       |  |                        |  |              |  |   | (3,720        | ) |  |              | 26,496     |   |              |   |        |   |  |   | 22,776     |  
|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |        
|Net cash provided by (used in) investing activities                              |  |                        |  |              |  |   | (1,328,011    | ) |  |              | 4,690,727  |   |              |   | 32,965  |   |  |   | 3,395,681  |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                             |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |         |   |  |   |            |  
|Net increase (decrease) in affiliate borrowings                                  |  |                        |  |              |  |   | 440,400       |   |  |              | (176,813   | ) |              |   |        |   |  |   | 263,587    |  
|Net increase in other short-term borrowings                                      |  |                        |  |              |  |   | 4,263,803     |   |  |              | 235,512    |   |              |   |        |   |  |   | 4,499,315  |  
|Proceeds from issuance of collateralized borrowings in
    securitization trusts |  |                        |  |              |  |   | 3,507,011     |   |  |              | 244,134    |   |              |   |        |   |  |   | 3,751,145  |  
|Repayments of collateralized borrowings in securitization trusts                 |  |                        |  |              |  |   |              |   |  |              | (5,086,291 | ) |              |   |        |   |  |   | (5,086,291 | )
|Proceeds from other long-term borrowings                                         |  |                        |  |              |  |   |              |   |  |              | 453,854    |   |              |   |        |   |  |   | 453,854    |  
|Repayments of other long-term borrowings                                         |  |                        |  |              |  |   |              |   |  |              | (250,925   | ) |              |   |        |   |  |   | (250,925   | )
|Payments of debt issuance costs                                                  |  |                        |  |              |  |   |              |   |  |              | (3,123     | ) |              |   |        |   |  |   | (3,123     | )
|Proceeds from capital contribution                                               |  |                        |  |              |  |   |              |   |  |              | 32,965     |   |              |   | (32,965 | ) |  |   |           |  
|Increase in deposit liabilities                                                  |  |                        |  |              |  |   |              |   |  |              | 345,911    |   |              |   |        |   |  |   | 345,911    |  
|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |        
|Net cash provided by (used in) financing activities                              |  |                        |  |              |  |   | 8,211,214     |   |  |              | (4,204,776 | ) |              |   | (32,965 | ) |  |   | 3,973,473  |  
|Effect of foreign exchange rates on cash and cash equivalents                    |  |                        |  |              |  |   |              |   |  |              | (6,242     | ) |              |   |        |   |  |   | (6,242     | )
|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                        |  |              |  |   | (493,916      | ) |  |              | 146,323    |   |              |   | (7,718  | ) |  |   | (355,311   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 |  |                        |  |              |  |   | 648,511       |   |  |              | 293,712    |   |              |   | (43,140 | ) |  |   | 899,083    |  
|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       |  | $                      |  |              |  | $ | 154,595       |   |  | $            | 440,035    |   |              | $ | (50,858 | ) |  | $ | 543,772    |  
|                                                                                 |  |                        |   |              |  |   |               |   |  |              |            |   |              |   |        









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


Overview






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GMAC Residential. Our GMAC Residential segment primarily
    originates, purchases, sells, securitizes and services
    residential mortgage loans. This segment originates residential
    mortgage loans through a retail branch network, direct lending
    centers and mortgage brokers, and also purchases residential
    mortgage loans from correspondent lenders. The majority of the
    loans originated or purchased by this segment are prime credit
    quality loans that meet the underwriting standards of Fannie Mae
    or Freddie Mac. This segment also provides collateralized lines
    of credit to other originators of residential mortgage loans,
    which we refer to as warehouse lending. Our limited banking
    activities through GMAC Bank are included in this segment.
|
| |  | Residential Capital Group. Our Residential Capital Group
    originates, purchases, sells, securitizes and services
    residential mortgage loans. This segment originates residential
    mortgage loans primarily through mortgage brokers, purchases
    loans from correspondent lenders and other third parties and
    provides warehouse lending. The residential mortgage loans
    produced by this segment cover a broad credit spectrum and
    generally do not conform to the underwriting requirements of
    Fannie Mae or Freddie Mac. These loans are primarily securitized
    through the issuance of non-agency mortgage-backed and mortgage
    related asset-backed securities.                                                                                                     
|
| |  | Business Capital Group. Our Business Capital Group
    provides financing and equity capital to residential land
    developers and homebuilders and financing to resort developers
    and healthcare-related enterprises.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | International Business Group. Our International Business
    Group includes substantially all of our operations outside of
    the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



Results of Operations




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





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|                     |                       |                                       |         |         |            |   |        |        |  |  |            |         |  |   |        |        | 
|-------------------- | --------------------- | ------------------------------------- | ------- | ------- | ---------- | - | ------ | ------ |  |  | ---------- | ------- |  | - | ------ | ------ | 
|                     |                       | U.S. Mortgage Loan Production by Type |        
|                     |                       |                                       |        
|                     |                       | Three Months Ended March 31,          |        
|                     |                       |                                       |        
|                     |                       | 2006                                  |         |         | 2005       |  
|                     |                       |                                       |         |         |            |  
|                     |                       | No. of                                |         |         | Dollar Amt |   |        | No. of |  |  | Dollar Amt |        
|                     |                       | Loans                                 |         |         | of Loans   |   |        | Loans  |  |  | of Loans   |        
|                     |                       |                                       |         |         |            |   |        |        |  |  |            |        
|                     |                       | (Dollars in millions)                 |        
|Prime conforming     |                       |                                       | 46,053  |         |            | $ | 8,569  |        |  |  | 77,480     |         |  | $ | 14,188 |       
|Prime non-conforming |                       |                                       | 39,039  |         |            |   | 11,727 |        |  |  | 42,096     |         |  |   | 10,068 |       
|Government           |                       |                                       | 5,998   |         |            |   | 861    |        |  |  | 9,404      |         |  |   | 1,197  |       
|Nonprime             |                       |                                       | 59,230  |         |            |   | 9,096  |        |  |  | 40,011     |         |  |   | 5,616  |       
|Prime second-lien    |                       |                                       | 101,420 |         |            |   | 5,815  |        |  |  | 50,659     |         |  |   | 2,488  |       
|                     |                       |                                       |         |         |            |   |        |        |  |  |            |        
|                     | Total U.S. production |                                       |         | 251,740 |            |   | $      | 36,068 |  |  |            | 219,650 |  |   | $      | 33,557 | 
|                     |                       |                                       |         |         |            |   |        |        |  |  |            |        



|                    |                 |                      |        |        |      |   |        |        | 
|------------------- | --------------- | -------------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                    |                 | For the Three Months |       
|                    |                 | Ended March 31,      |       
|                    |                 |                      |       
|                    |                 | 2006                 |        |        | 2005 |  
|                    |                 |                      |        |        |      |  
|                    |                 | (In millions)        |       
|Purpose:            |                 |                      |        |        |      |   |        |       
|                    | Purchase        |                      | $      | 13,665 |      |   | $      | 11,844 | 
|                    | Non-purchase    |                      |        | 22,403 |      |   |        | 21,713 | 
|                    |                 |                      |        |        |      |  
|                    |                 | $                    | 36,068 |        |      | $ | 33,557 |       
|                    |                 |                      |        |        |      |  
|                   
|Interest rate type: |                 |                      |        |        |      |   |        |       
|                    | Fixed rate      |                      | $      | 19,300 |      |   | $      | 17,381 | 
|                    | Adjustable rate |                      |        | 16,768 |      |   |        | 16,176 | 
|                    |                 |                      |        |        |      |  
|                    |                 | $                    | 36,068 |        |      | $ | 33,557 |       
|                    |                 |                      |        |        |      |  



|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |         |  |   |        |        | 
|---------------------------------------------------- | --------------------- | ---------------------------------------- | ------- | ------- | ---------- | - | ------ | ------ |  |  | ---------- | ------- |  | - | ------ | ------ | 
|                                                     |                       | U.S. Mortgage Loan Production by Channel |        
|                                                     |                       |                                          |        
|                                                     |                       | Three Months Ended March 31,             |        
|                                                     |                       |                                          |        
|                                                     |                       | 2006                                     |         |         | 2005       |  
|                                                     |                       |                                          |         |         |            |  
|                                                     |                       | No. of                                   |         |         | Dollar Amt |   |        | No. of |  |  | Dollar Amt |        
|                                                     |                       | Loans                                    |         |         | of Loans   |   |        | Loans  |  |  | of Loans   |        
|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |        
|                                                     |                       | (Dollars in millions)                    |        
|Retail branches                                      |                       |                                          | 25,321  |         |            | $ | 3,595  |        |  |  | 27,847     |         |  | $ | 4,197  |       
|Direct lending (other than retail branches)          |                       |                                          | 35,567  |         |            |   | 3,083  |        |  |  | 38,554     |         |  |   | 4,284  |       
|Mortgage brokers                                     |                       |                                          | 40,665  |         |            |   | 7,053  |        |  |  | 29,173     |         |  |   | 4,764  |       
|Correspondent lenders and secondary market purchases |                       |                                          | 150,187 |         |            |   | 22,337 |        |  |  | 124,076    |         |  |   | 20,312 |       
|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |        
|                                                     | Total U.S. production |                                          |         | 251,740 |            |   | $      | 36,068 |  |  |            | 219,650 |  |   | $      | 33,557 | 
|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |        



|                               |  |                                        |        |        |           |   |       |        |        |  |           |  |  |   |       | 
|------------------------------ |  | -------------------------------------- | ------ | ------ | --------- | - | ----- | ------ | ------ |  | --------- |  |  | - | ----- | 
|                               |  | International Mortgage Loan Production |       
|                               |  |                                        |       
|                               |  | Three Months Ended March 31,           |       
|                               |  |                                        |       
|                               |  | 2006                                   |        |        | 2005      |  
|                               |  |                                        |        |        |           |  
|                               |  |                                        |        | Dollar |           |   |       |        | Dollar | 
|                               |  | No. of                                 |        |        | Amount of |   |       | No. of |        |  | Amount of | 
|                               |  | Loans                                  |        |        | Loans     |   |       | Loans  |        |  | Loans     | 
|                               |  |                                        |        |        |           |   |       |        |        |  |           | 
|                               |  | (Dollars in millions)                  |       
|Total International Production |  |                                        | 26,511 |        |           | $ | 5,512 |        |        |  | 14,621    |  |  | $ | 2,904 | 
|                               |  |                                        |        |        |           |   |       |        |        |  |           | 

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|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |           |  |   |         |         | 
|----------------------------------- | ---------------------------------- | -------------------------------------- | --------- | --------- | ----------------- | - | ------- | ------- |  |  | ---------- | --------- |  | - | ------- | ------- | 
|                                    |                                    | U.S. Mortgage Loan Servicing Portfolio |          
|                                    |                                    |                                        |          
|                                    |                                    | March 31, 2006                         |           |           | December 31, 2005 |  
|                                    |                                    |                                        |           |           |                   |  
|                                    |                                    | No. of                                 |           |           | Dollar Amt        |   |         | No. of  |  |  | Dollar Amt |          
|                                    |                                    | Loans                                  |           |           | of Loans          |   |         | Loans   |  |  | of Loans   |          
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          
|                                    |                                    | (Dollars in millions)                  |          
|Prime conforming mortgage loans     |                                    |                                        | 1,401,134 |           |                   | $ | 189,307 |         |  |  | 1,393,379  |           |  | $ | 186,405 |        
|Prime non-conforming mortgage loans |                                    |                                        | 274,954   |           |                   |   | 83,103  |         |  |  | 257,550    |           |  |   | 76,980  |        
|Government mortgage loans           |                                    |                                        | 180,357   |           |                   |   | 18,160  |         |  |  | 181,679    |           |  |   | 18,098  |        
|Nonprime mortgage loans             |                                    |                                        | 482,452   |           |                   |   | 57,108  |         |  |  | 493,486    |           |  |   | 56,373  |        
|Prime second-lien mortgage loans    |                                    |                                        | 564,962   |           |                   |   | 20,573  |         |  |  | 500,534    |           |  |   | 17,073  |        
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          
|                                    | Total Primary Servicing Portfolio* |                                        |           | 2,903,859 |                   |   | $       | 368,251 |  |  |            | 2,826,628 |  |   | $       | 354,929 | 
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          






|  |                                                                                                                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excludes loans for which we acted as a subservicer. Subserviced
    loans totaled 294,606 with an unpaid principal balance of
    $41.8 billion at March 31, 2006 and 271,489 with an
    unpaid principal balance of $38.9 billion at
    December 31, 2005.









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



| |                 
| | ----------------
| | GMAC Residential



|                                                    |  |                    |        |   |      |   |        |  
|--------------------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------ | -
|                                                    |  | Three Months Ended |       
|                                                    |  | March 31,          |       
|                                                    |  |                    |       
|                                                    |  | 2006               |        |   | 2005 |  
|                                                    |  |                    |        |   |      |  
|                                                    |  | (In millions)      |       
|Net interest income                                 |  | $                  | 58.7   |   |      | $ | 73.2   |  
|Provision for loan losses                           |  |                    | (2.6   | ) |      |   | (1.1   | )
|Gain on sales of mortgage loans, net                |  |                    | 89.6   |   |      |   | 132.5  |  
|Servicing fees                                      |  |                    | 248.8  |   |      |   | 234.4  |  
|Amortization and impairment of servicing rights     |  |                    |       |   |      |   | (137.7 | )
|Servicing asset valuation and hedge activities, net |  |                    | (121.3 | ) |      |   | (13.9  | )
|                                                    |  |                    |        |   |      |  
|Net servicing fees                                  |  |                    | 127.5  |   |      |   | 82.8   |  
|Other income                                        |  |                    | (9.0   | ) |      |   | 62.8   |  
|Operating expenses                                  |  |                    | (233.5 | ) |      |   | (204.4 | )
|Income tax expense                                  |  |                    | (22.0  | ) |      |   | (66.6  | )
|                                                    |  |                    |        |   |      |  
|Net income                                          |  | $                  | 8.7    |   |      | $ | 79.2   |  
|                                                    |  |                    |        |   |      |  











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| |                          
| | -------------------------
| | Residential Capital Group



|                                                    |  |                    |        |   |      |   |        |  
|--------------------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------ | -
|                                                    |  | Three Months Ended |       
|                                                    |  | March 31,          |       
|                                                    |  |                    |       
|                                                    |  | 2006               |        |   | 2005 |  
|                                                    |  |                    |        |   |      |  
|                                                    |  | (In millions)      |       
|Net interest income                                 |  | $                  | 310.6  |   |      | $ | 416.1  |  
|Provision for loan losses                           |  |                    | (116.8 | ) |      |   | (148.4 | )
|Gain on sales of mortgage loans, net                |  |                    | 109.6  |   |      |   | 65.6   |  
|Servicing fees                                      |  |                    | 124.1  |   |      |   | 109.5  |  
|Amortization and impairment of servicing rights     |  |                    |       |   |      |   | (5.3   | )
|Servicing asset valuation and hedge activities, net |  |                    | (63.7  | ) |      |   | (54.0  | )
|                                                    |  |                    |        |   |      |  
|Net servicing fees (loss)                           |  |                    | 60.4   |   |      |   | 50.2   |  
|Other income                                        |  |                    | 22.0   |   |      |   | 76.9   |  
|Operating expenses                                  |  |                    | (210.9 | ) |      |   | (214.7 | )
|Income tax expense                                  |  |                    | (68.8  | ) |      |   | (94.2  | )
|                                                    |  |                    |        |   |      |  
|Net income                                          |  | $                  | 106.1  |   |      | $ | 151.5  |  
|                                                    |  |                    |        |   |      |  











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



|                          |  |                    |       |   |      |   |       |  
|------------------------- |  | ------------------ | ----- | - | ---- | - | ----- | -
|                          |  | Three Months Ended |      
|                          |  | March 31,          |      
|                          |  |                    |      
|                          |  | 2006               |       |   | 2005 |  
|                          |  |                    |       |   |      |  
|                          |  | (In millions)      |      
|Net interest income       |  | $                  | 20.8  |   |      | $ | 37.2  |  
|Provision for loan losses |  |                    | (0.1  | ) |      |   | (7.5  | )
|Other income              |  |                    | 81.0  |   |      |   | 50.1  |  
|Operating expenses        |  |                    | (12.5 | ) |      |   | (17.2 | )
|Income tax expense        |  |                    | (35.1 | ) |      |   | (24.0 | )
|                          |  |                    |       |   |      |  
|Net income                |  | $                  | 54.1  |   |      | $ | 38.6  |  
|                          |  |                    |       |   |      |  











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



|                                                |  |                    |       |   |      |   |       |  
|----------------------------------------------- |  | ------------------ | ----- | - | ---- | - | ----- | -
|                                                |  | Three Months Ended |      
|                                                |  | March 31,          |      
|                                                |  |                    |      
|                                                |  | 2006               |       |   | 2005 |  
|                                                |  |                    |       |   |      |  
|                                                |  | (In millions)      |      
|Net interest income                             |  | $                  | 41.1  |   |      | $ | 23.5  |  
|Provision for loan losses                       |  |                    | (3.3  | ) |      |   | 1.3   |  
|Gain on sales of mortgage loans, net            |  |                    | 66.7  |   |      |   | 67.1  |  
|Servicing fees                                  |  |                    | (2.3  | ) |      |   | 2.8   |  
|Amortization and impairment of servicing rights |  |                    |      |   |      |   | 0.3   |  
|Servicing valuation and hedge activities, net   |  |                    | (0.3  | ) |      |   |      |  
|                                                |  |                    |       |   |      |  
|Net servicing fees (loss)                       |  |                    | (2.6  | ) |      |   | 3.1   |  
|Other income                                    |  |                    | 11.5  |   |      |   | (4.1  | )
|Operating expenses                              |  |                    | (54.8 | ) |      |   | (58.4 | )
|Income tax expense                              |  |                    | (17.2 | ) |      |   | (9.9  | )
|                                                |  |                    |       |   |      |  
|Net income                                      |  | $                  | 41.4  |   |      | $ | 22.6  |  
|                                                |  |                    |       |   |      |  













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



|                                                         |  |                    |       |   |      |   |        |  
|-------------------------------------------------------- |  | ------------------ | ----- | - | ---- | - | ------ | -
|                                                         |  | Three Months Ended |      
|                                                         |  | March 31,          |      
|                                                         |  |                    |      
|                                                         |  | 2006               |       |   | 2005 |  
|                                                         |  |                    |       |   |      |  
|                                                         |  | (In millions)      |      
|Net interest expense                                     |  | $                  | (3.3  | ) |      | $ | (5.9   | )
|Provision for loan losses                                |  |                    |      |   |      |   | (0.2   | )
|Gain on sales of loans                                   |  |                    |      |   |      |   | 64.0   |  
|Servicing fees                                           |  |                    | 4.6   |   |      |   | 1.2    |  
|Amortization and impairment of mortgage servicing rights |  |                    |      |   |      |   | 2.9    |  
|Servicing asset valuation and hedge activities, net      |  |                    | (0.2  | ) |      |   |       |  
|                                                         |  |                    |       |   |      |  
|Net servicing fees                                       |  |                    | 4.4   |   |      |   | 4.1    |  
|Other income                                             |  |                    | 74.9  |   |      |   | 84.2   |  
|Operating expenses                                       |  |                    | (90.6 | ) |      |   | (103.9 | )
|Income tax expense (benefit)                             |  |                    | 5.4   |   |      |   | (12.5  | )
|                                                         |  |                    |       |   |      |  
|Net income (loss)                                        |  | $                  | (9.2  | ) |      | $ | 29.8   |  
|                                                         |  |                    |       |   |      |  









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Asset Quality




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



|                                    |                   |                |         |       |             |   |       |       |  |   |         |       | 
|----------------------------------- | ----------------- | -------------- | ------- | ----- | ----------- | - | ----- | ----- |  | - | ------- | ----- | 
|                                    |                   | Mortgage Loans |         |       |             |   |      
|                                    |                   | Held for       |         |       | Lending     |   |       |      
|                                    |                   | Investment     |         |       | Receivables |   |       | Total | 
|                                    |                   |                |         |       |             |   |       |       | 
|                                    |                   | (In millions)  |        
|Balance at January 1, 2006          |                   | $              | 1,065.9 |       |             | $ | 187.4 |       |  | $ | 1,253.3 |      
|Provision for loan losses           |                   |                | 128.4   |       |             |   | (5.7  | )     |  |   | 122.7   |      
|Charge-offs                         |                   |                | (129.9  | )     |             |   | (0.4  | )     |  |   | (130.3  | )    
|Recoveries                          |                   |                | 14.9    |       |             |   | 0.1   |       |  |   | 15.0    |      
|                                    |                   |                |         |       |             |   |       |       | 
|Balance at March 31, 2006           |                   | $              | 1,079.3 |       |             | $ | 181.4 |       |  | $ | 1,260.7 |      
|                                    |                   |                |         |       |             |   |       |       | 
|Balance at January 1, 2005          |                   | $              | 873.0   |       |             | $ | 141.7 |       |  | $ | 1,014.7 |      
|Provision for loan losses           |                   |                | 152.4   |       |             |   | 3.4   |       |  |   | 155.8   |      
|Charge-offs                         |                   |                | (108.8  | )     |             |   | (0.4  | )     |  |   | (109.2  | )    
|Recoveries                          |                   |                | 14.0    |       |             |   |      |       |  |   | 14.0    |      
|                                    |                   |                |         |       |             |   |       |       | 
|Balance at March 31, 2005           |                   | $              | 930.6   |       |             | $ | 144.7 |       |  | $ | 1,075.3 |      
|                                    |                   |                |         |       |             |   |       |       | 
|Allowance as a percentage of total: |                   |                |         |       |             |   |       |       |  |   |         |      
|                                    | March 31, 2006    |                |         | 1.46% |             |   |       | 1.44% |  |   |         | 1.46% | 
|                                    | December 31, 2005 |                |         | 1.55% |             |   |       | 1.38% |  |   |         | 1.52% | 



|                      |                      |                    |        |        |      |   |       |       |  
|--------------------- | -------------------- | ------------------ | ------ | ------ | ---- | - | ----- | ----- | -
|                      |                      | Three Months Ended |       
|                      |                      | March 31,          |       
|                      |                      |                    |       
|                      |                      | 2006               |        |        | 2005 |  
|                      |                      |                    |        |        |      |  
|                      |                      | (In millions)      |       
|Mortgage loans:       |                      |                    |        |        |      |   |       |      
|                      | Prime conforming     |                    | $      | (0.8   | )    |   | $     |      |  
|                      | Prime non-conforming |                    |        | (6.5   | )    |   |       | (14.5 | )
|                      | Prime second-lien    |                    |        | (2.3   | )    |   |       | (2.0  | )
|                      | Nonprime             |                    |        | (105.6 | )    |   |       | (78.3 | )
|Lending receivables:  |                      |                    |        |        |      |   |       |      
|                      | Warehouse            |                    |        | (0.3   | )    |   |       | (0.4  | )
|                      |                      |                    |        |        |      |  
|Total net charge-offs |                      | $                  | (115.5 | )      |      | $ | (95.2 | )    
|                      |                      |                    |        |        |      |  



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



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|                                                                                                               |                      |                        |         |   |              |   |         |           |         |   |         |   |         | 
|-------------------------------------------------------------------------------------------------------------- | -------------------- | ---------------------- | ------- | - | ------------ | - | ------- | --------- | ------- | - | ------- | - | ------- | 
|                                                                                                               |                      | March 31,              |         |   | December 31, |   |         | March 31, |        
|                                                                                                               |                      | 2006                   |         |   | 2005         |   |         | 2005      |        
|                                                                                                               |                      |                        |         |   |              |   |         |           |        
|                                                                                                               |                      | (In millions)          |        
|Nonaccrual loans:                                                                                              |                      |                        |         |   |              |   |         |           |         |   |         |  
|                                                                                                               | Mortgage loans:      |                        |         |   |              |   |         |           |         |   |         |   |        
|                                                                                                               |                      | Prime conforming       |         | $ | 5.5          |   |         | $         | 9.8     |   |         | $ | 12.7    | 
|                                                                                                               |                      | Prime non-conforming   |         |   | 342.5        |   |         |           | 361.7   |   |         |   | 249.3   | 
|                                                                                                               |                      | Government             |         |   |             |   |         |           | 0.1     |   |         |   | 13.8    | 
|                                                                                                               |                      | Prime second-lien      |         |   | 189.9        |   |         |           | 84.8    |   |         |   | 58.0    | 
|                                                                                                               |                      | Nonprime*              |         |   | 5,680.0      |   |         |           | 5,730.7 |   |         |   | 4,804.4 | 
|                                                                                                               | Lending receivables: |                        |         |   |              |   |         |           |         |   |         |   |        
|                                                                                                               |                      | Warehouse              |         |   | 25.5         |   |         |           | 41.8    |   |         |   | 4.7     | 
|                                                                                                               |                      | Construction**         |         |   | 8.6          |   |         |           | 8.6     |   |         |   | 10.6    | 
|                                                                                                               |                      | Commercial real estate |         |   | 17.0         |   |         |           | 17.0    |   |         |   | 3.7     | 
|                                                                                                               |                      |                        |         |   |              |   |         |           |        
|Total nonaccrual loans                                                                                         |                      |                        | 6,269.0 |   |              |   | 6,254.5 |           |         |   | 5,157.2 |  
|Restructured loans                                                                                             |                      |                        | 19.4    |   |              |   | 22.8    |           |         |   |        |  
|Foreclosed assets                                                                                              |                      |                        | 626.0   |   |              |   | 506.5   |           |         |   | 561.9   |  
|                                                                                                               |                      |                        |         |   |              |   |         |           |        
|Total nonperforming assets                                                                                     |                      | $                      | 6,914.4 |   |              | $ | 6,783.8 |           |         | $ | 5,719.1 |  
|                                                                                                               |                      |                        |         |   |              |   |         |           |        
|Total nonaccrual loans as a percentage of total mortgage loans
    held for investment and lending receivables |                      |                        | 7.3     | % |              |   | 7.6     | %         |         |   | 7.9     | %
|                                                                                                               |                      |                        |         |   |              |   |         |           |        
|Total nonperforming assets as a percentage of total consolidated
    assets                                    |                      |                        | 5.7     | % |              |   | 5.7     | %         |         |   | 5.8     | %
|                                                                                                               |                      |                        |         |   |              |   |         |           |        






| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Includes $242.0 million as of March 31, 2006,
    $374.1 million as of December 31, 2005 and
    $894.7 million as of March 31, 2005 of loans that were
    purchased distressed and already in nonaccrual status.



|   |                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------
|** | The $8.6 million loan on nonaccrual status was also a
    restructured loan and not included in the restructured loans
    line below.



36



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|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |   |        |       |  |  |       |     | 
|------------------------------ | --------------- | --------------------- | ------ | ---------- | ------------------ |  | ----- | --------------- | ------- | - | -------- | ----- |  | ---------- | ------ | --- | ----- | - | ------ | ----- |  |  | ----- | --- | 
|                               |                 | As of March 31,       |        |            | As of December 31, |  |       | As of March 31, |        
|                               |                 |                       |        |            |                    |  |       |                 |        
|                               |                 | 2006                  |        |            | 2005               |  |       | 2005            |        
|                               |                 |                       |        |            |                    |  |       |                 |        
|                               |                 |                       |        | Percent of |                    |  |       |                 | Percent |   |          |       |  | Percent of |       
|                               |                 | Amount                |        |            | Total              |  |       | Amount          |         |   | of Total |       |  | Amount     |        |     | Total |  
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |  
|                               |                 | (Dollars in millions) |        |            |                    |  |      
|Current                        |                 | $                     | 62,095 |            |                    |  | 85.3  | %               |         | $ | 56,576   |       |  |            | 83.3%  |     |       | $ | 47,026 |       |  |  | 85.6  | %  
|Past due:                      |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |   |        |       |  |  |       |    
|                               | 30 to 59 days   |                       |        | 4,046      |                    |  |       | 5.6             |         |   |          | 4,773 |  |            |        | 7.0 |       |   |        | 3,278 |  |  |       | 6.0 | 
|                               | 60 to 89 days   |                       |        | 1,446      |                    |  |       | 2.0             |         |   |          | 1,528 |  |            |        | 2.2 |       |   |        | 1,047 |  |  |       | 1.9 | 
|                               | 90 days or more |                       |        | 2,269      |                    |  |       | 3.1             |         |   |          | 2,258 |  |            |        | 3.3 |       |   |        | 1,125 |  |  |       | 2.0 | 
|Foreclosures pending           |                 |                       | 1,627  |            |                    |  | 2.2   |                 |         |   | 1,356    |       |  |            | 2.0    |     |       |   | 1,411  |       |  |  | 2.6   |    
|Bankruptcies                   |                 |                       | 1,279  |            |                    |  | 1.8   |                 |         |   | 1,520    |       |  |            | 2.2    |     |       |   | 1,078  |       |  |  | 1.9   |    
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |  
|Total unpaid principal balance |                 |                       | 72,762 |            |                    |  | 100.0 | %               |         |   | 68,011   |       |  |            | 100.0% |     |       |   | 54,965 |       |  |  | 100.0 | %  
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |  
|Net premiums                   |                 |                       | 990    |            |                    |  |       |                 |         |   | 948      |       |  |            |        |     |       |   | 1,022  |       |  |  |       |    
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |  
|Total                          |                 | $                     | 73,752 |            |                    |  |       |                 |         | $ | 68,959   |       |  |            |        |     |       | $ | 55,987 |       |  |  |       |    
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |        |     |       |  









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|                                                                  |                                                     |                          |   |          |                    |  |   |          | 
|----------------------------------------------------------------- | --------------------------------------------------- | ------------------------ | - | -------- | ------------------ |  | - | -------- | 
|                                                                  |                                                     | Unpaid Principal Balance |  
|                                                                  |                                                     |                          |  
|                                                                  |                                                     | As of March 31,          |   |          | As of December 31, | 
|                                                                  |                                                     | 2006                     |   |          | 2005               | 
|                                                                  |                                                     |                          |   |          |                    | 
|                                                                  |                                                     | (In millions)            |  
|Mortgage Loans Held for
    Sale  Domestic                       |                                                     |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                        |                          | $ | 3,388.0  |                    |  | $ | 3,316.3  | 
|                                                                  | Option adjustable rate mortgage loans               |                          |   | 1,727.2  |                    |  |   | 1,097.6  | 
|                                                                  | High loan-to-value (100% or more) mortgage loans    |                          |   | 715.1    |                    |  |   | 391.7    | 
|                                                                  | Below market initial rate (teaser) mortgage loans |                          |   | 33.8     |                    |  |   | 16.6     | 
|                                                                 
|Mortgage Loans Held for
    Investment  Domestic                 |                                                     |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                        |                          | $ | 12,831.8 |                    |  | $ | 11,118.9 | 
|                                                                  | Option adjustable rate mortgage loans               |                          |   | 28.8     |                    |  |   | 16.3     | 
|                                                                  | High loan-to-value (100% or more) mortgage loans    |                          |   | 12,824.9 |                    |  |   | 12,904.7 | 
|                                                                  | Below market initial rate (teaser) mortgage loans |                          |   | 358.1    |                    |  |   | 394.8    | 
|                                                                 
|Mortgage Loans  Held for Sale and
    Investment  International |                                                     |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                        |                          | $ | 4,148.3  |                    |  | $ | 4,925.9  | 
|                                                                  | Option adjustable rate mortgage loans               |                          |   |         |                    |  |   |         | 
|                                                                  | High loan-to-value (100% or more) mortgage loans    |                          |   | 5.9      |                    |  |   | 21.8     | 
|                                                                  | Below market initial rate (teaser) mortgage loans |                          |   |         |                    |  |   |         | 



|                                                    |  |                    |          |  |      |   |         | 
|--------------------------------------------------- |  | ------------------ | -------- |  | ---- | - | ------- | 
|                                                    |  | Loan Production    |         
|                                                    |  | for the            |         
|                                                    |  | Three Months Ended |         
|                                                    |  | March 31,          |         
|                                                    |  |                    |         
|                                                    |  | 2006               |          |  | 2005 |  
|                                                    |  |                    |          |  |      |  
|                                                    |  | (In millions)      |         
|Interest-only mortgage loans                        |  | $                  | 11,646.1 |  |      | $ | 7,551.8 | 
|Option adjustable rate mortgage loans               |  |                    | 3,240.4  |  |      |   | 13.5    | 
|High loan-to-value (100% or more) mortgage loans    |  |                    | 2,285.7  |  |      |   | 1,854.7 | 
|Below market initial rate (teaser) mortgage loans |  |                    | 28.2     |  |      |   | 18.5    | 



Liquidity and Capital Resources




| |                                 
| | --------------------------------
| | Liquidity and Capital Management



38



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##### Table of Contents









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



|                                                   |                               |                   |          |           |              |   |          |           | 
|-------------------------------------------------- | ----------------------------- | ----------------- | -------- | --------- | ------------ | - | -------- | --------- | 
|                                                   |                               | Outstanding as of |         
|                                                   |                               |                   |         
|                                                   |                               | March 31,         |          |           | December 31, |  
|                                                   |                               | 2006              |          |           | 2005         |  
|                                                   |                               |                   |          |           |              |  
|                                                   |                               | (In millions)     |         
|Collateralized borrowings in securitization trusts |                               | $                 | 58,801.0 |           |              | $ | 56,097.8 |          
|Short-term secured borrowings                      |                               |                   | 22,759.8 |           |              |   | 24,675.0 |          
|Short-term unsecured non-affiliate borrowings      |                               |                   | 1,098.6  |           |              |   | 1,277.1  |          
|Long-term secured borrowings                       |                               |                   | 4,192.1  |           |              |   | 4,738.6  |          
|Long-term unsecured non-affiliate borrowings       |                               |                   | 8,851.4  |           |              |   | 7,181.8  |          
|FHLB advances  short-term                         |                               |                   | 396.0    |           |              |   | 1,506.0  |          
|FHLB advances  long-term                          |                               |                   | 3,972.0  |           |              |   | 2,922.0  |          
|Affiliate borrowings  short-term                  |                               |                   | 1,085.4  |           |              |   | 1,047.5  |          
|Affiliate subordinated borrowings  long-term      |                               |                   | 3,630.0  |           |              |   | 4,130.0  |          
|                                                   |                               |                   |          |           |              |  
|                                                   | Total borrowings              |                   |          | 104,786.3 |              |   |          | 103,575.8 | 
|Bank deposits                                      |                               |                   | 5,595.6  |           |              |   | 4,123.3  |          
|                                                   |                               |                   |          |           |              |  
|                                                   | Total borrowings and deposits |                   |          | 110,381.9 |              |   |          | 107,699.1 | 
|Off-balance sheet financings                       |                               |                   | 87,576.5 |           |              |   | 78,290.7 |          
|                                                   |                               |                   |          |           |              |  
|                                                   | Total                         |                   | $        | 197,958.4 |              |   | $        | 185,989.8 | 
|                                                   |                               |                   |          |           |              |  



|                                                |       |                            |          |          |                            |   |          |           |  |   |              |          |  |   |         |         | 
|----------------------------------------------- | ----- | -------------------------- | -------- | -------- | -------------------------- | - | -------- | --------- |  | - | ------------ | -------- |  | - | ------- | ------- | 
|                                                |       | Secured Committed          |          |          | Unused Secured Committed   |  
|                                                |       | Liquidity Facilities as of |          |          | Liquidity Facilities as of |  
|                                                |       |                            |          |          |                            |  
|                                                |       | March 31,                  |          |          | December 31,               |   |          | March 31, |  |   | December 31, |         
|                                                |       | 2006                       |          |          | 2005                       |   |          | 2006      |  |   | 2005         |         
|                                                |       |                            |          |          |                            |   |          |           |  |   |              |         
|                                                |       | (In millions)              |         
|Mortgage loans and warehouse lending(a)         |       | $                          | 22,898.8 |          |                            | $ | 23,739.8 |           |  | $ | 12,340.4     |          |  | $ | 9,456.0 |        
|Residential construction lending receivables(b) |       |                            | 1,575.0  |          |                            |   | 1,275.0  |           |  |   | 292.0        |          |  |   | 220.0   |        
|Other(c)                                        |       |                            | 2,625.0  |          |                            |   | 2,625.0  |           |  |   | 258.9        |          |  |   | 246.9   |        
|                                                |       |                            |          |          |                            |   |          |           |  |   |              |         
|                                                | Total |                            | $        | 27,098.8 |                            |   | $        | 27,639.8  |  |   | $            | 12,891.3 |  |   | $       | 9,922.9 | 
|                                                |       |                            |          |          |                            |   |          |           |  |   |              |         






|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Facilities to fund mortgage loan and warehouse lending
    receivables.                                                                           
|   
|(b) | Facilities to fund residential construction and resort finance.                                                                                   
|   
|(c) | Facilities to fund servicing advances, servicing rights and
    interests that continue to be held from our off-balance sheet
    securitizations.

39



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Off-Balance
Sheet Financings






Credit Ratings




|              |  |              |  |        |  |                   
|------------- |  | ------------ |  | ------ |  | ------------------
|              |  | Commercial   |  | Senior |  |                   
|Rating Agency |  | Paper        |  | Debt   |  | Outlook           
|              |  |              |  |        |  |                   
|Fitch         |  | F3           |  | BBB-   |  | Positive          
|Moodys       |  | P3           |  | Baa3   |  | Possible Downgrade
|S&P           |  | A-3          |  | BBB-   |  | Developing        
|DBRS          |  | R-2 (middle) |  | BBB    |  | Developing        





Recently Issued Accounting Standards


Statement of Financial Accounting Standards
No. 154 Accounting Changes and Error
Corrections


Financial Accounting Standards Board Staff Position
Nos. 115-1 and
124-1 115-1 124-1, The Meaning
of Other-Than-Temporary Impairment and Its Application to
Certain Investments The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments 03-1). 115-1 124-1


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##### Table of Contents



115-1 124-1


Statement of Financial Accounting Standards
No. 155 Accounting
for Certain Hybrid Financial Instruments (SFAS 155),







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







|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |      |      |      |    |      |      |      |  
|-------------------------------------------------------- | ------------------------------------------------------ | -------------------- | ----------------------------------------------------------- | ---- | ---- | --- | - | ---- | --- | -- | ---- | ---- | ---- | ---- | -- | ---- | ---- | ---- | -
|                                                         |                                                        | Change in Fair Value |                                                            
|                                                         |                                                        |                      |                                                            
|Change in Interest Rate (basis points)                   |                                                        | -100                 |                                                             |      | -50  |     |   | +50  |     |    | +100 |     
|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |     
|                                                         |                                                        | (In millions)        |                                                            
|Mortgage serving rights and other financial instruments: |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |      |      |      |    |     
|                                                         | Mortgage servicing rights and other retained interests |                      | $                                                           | (782 | )    |     | $ | (303 | )   |    | $    | 184  |      |      | $  | 382  |     
|                                                         | Impact of servicing hedge:                             |                      |                                                             |      |      |     |   |      |     |    |      |      |      |      |    |      |     
|                                                         |                                                        | Swap-based           |                                                             |      | 154  |     |   |      | 45  |    |      |      | 14   |      |    |      | 73   |     
|                                                         |                                                        | Treasury-based       |                                                             |      | 103  |     |   |      | 50  |    |      |      | (48  | )    |    |      | (93  | )   
|                                                         |                                                        | Others               |                                                             |      | 515  |     |   |      | 256 |    |      |      | (252 | )    |    |      | (503 | )   
|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |     
|                                                         |                                                        |                      | Mortgage servicing rights and other retained interests, net |      |      | (10 | ) |      |     | 48 |      |      |      | (102 | )  |      |      | (141 | )
|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |     
|                                                         | Committed pipeline                                     |                      |                                                             | 69   |      |     |   | 47   |     |    |      | (88  | )    |      |    | (215 | )   
|                                                         | Mortgage loan inventory                                |                      |                                                             | 259  |      |     |   | 151  |     |    |      | (174 | )    |      |    | (369 | )   
|                                                         | Impact of associated derivative instruments:           |                      |                                                             |      |      |     |   |      |     |    |      |      |      |      |    |      |     
|                                                         |                                                        | Mortgage-based       |                                                             |      | (132 | )   |   |      | (83 | )  |      |      | 128  |      |    |      | 297  |     
|                                                         |                                                        | Eurodollar-based     |                                                             |      | (17  | )   |   |      | (9  | )  |      |      | 9    |      |    |      | 17   |     
|                                                         |                                                        | Others               |                                                             |      | (168 | )   |   |      | (88 | )  |      |      | 94   |      |    |      | 190  |     
|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |     
|                                                         |                                                        |                      | Committed pipeline and mortgage loan inventory, net         |      |      | 11  |   |      |     | 18 |      |      |      | (31  | )  |      |      | (80  | )
|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |     
|Net change in fair value related to other businesses     |                                                        |                      | 5                                                           |      |      |     | 3 |      |     |    | (3   | )    |      |      | (6 | )   
|                                                         |                                                        |                      |                                                             |      |      |     |   |      |     |    |      |     

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|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |     |      |   |      |      |      |  
|------------------------------------------------------------------------------------------------- | ------------------------------- | ----------------------------------------- | ---- | ---- | --- | - | ---- | --- | --- | - | ---- | --- | ---- | - | ---- | ---- | ---- | -
|                                                                                                  |                                 | Change in Fair Value                      |     
|                                                                                                  |                                 |                                           |     
|Change in Interest Rate (basis points)                                                            |                                 | -100                                      |      |      | -50 |   |      | +50 |     |   | +100 |    
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    
|                                                                                                  |                                 | (In millions)                             |     
|GMAC Bank:                                                                                        |                                 |                                           |      |      |     |   |      |     |     |   |      |     |      |   |      |     
|                                                                                                  | Securities portfolio            |                                           | $    | 1    |     |   | $    | 1   |     |   | $    | (1  | )    |   | $    | (1   | )   
|                                                                                                  | Mortgage loans                  |                                           |      | 140  |     |   |      | 79  |     |   |      | (91 | )    |   |      | (190 | )   
|                                                                                                  | Deposit liabilities             |                                           |      | (7   | )   |   |      | (3  | )   |   |      | 3   |      |   |      | 7    |     
|                                                                                                  | Federal Home Loan Bank advances |                                           |      | (112 | )   |   |      | (57 | )   |   |      | 59  |      |   |      | 120  |     
|                                                                                                  | Other liabilities               |                                           |      | (28  | )   |   |      | (14 | )   |   |      | 14  |      |   |      | 28   |     
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    
|                                                                                                  |                                 | GMAC Bank, net                            |      |      | (6  | ) |      |     | 6   |   |      |     | (16  | ) |      |      | (36  | )
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    
|Notes payable and capital securities                                                              |                                 |                                           | (218 | )    |     |   | (108 | )   |     |   | 105  |     |      |   | 207  |     
|Impact of associated derivative instruments:                                                      |                                 |                                           |      |      |     |   |      |     |     |   |      |     |      |   |      |     
|                                                                                                  |                                 | Swap-based                                |      |      | 243 |   |      |     | 120 |   |      |     | (117 | ) |      |      | (231 | )
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    
|                                                                                                  |                                 | Notes payable and capital securities, net |      |      | 25  |   |      |     | 12  |   |      |     | (12  | ) |      |      | (24  | )
|Insurance company investment portfolios                                                           |                                 |                                           | 3    |      |     |   | 1    |     |     |   | (2   | )   |      |   | (3   | )   
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    
|Net change in fair value related to mortgage servicing rights
    and other financial instruments |                                 | $                                         | 28   |      |     | $ | 88   |     |     | $ | (166 | )   |      | $ | (290 | )   
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    
|Net change in fair value related to broker-dealer trading
    securities                          |                                 | $                                         | (2   | )    |     | $ | (1   | )   |     | $ |     |     |      | $ | 1    |     
|                                                                                                  |                                 |                                           |      |      |     |   |      |     |     |   |      |    






Item 4.  Controls and Procedures.


13a-15(e) 10-K




13a-15(f)


42



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##### Table of Contents






PART II  OTHER INFORMATION





Item 1.  Legal Proceedings.









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

Risks Related to Our Stockholder




| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | GM has agreed to sell a controlling interest in GMAC. There
    is a risk that the sale may not occur or, if it does occur, it
    may not restore GMACs investment grade rating or maintain
    our investment grade rating.






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







Item 3.  Defaults Upon Senior Securities.







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







Item 5.  Other Information.







Item 6.  Exhibits.




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##### Table of Contents






SIGNATURES






| |                                        
| | ---------------------------------------
| | Residential Capital Corporation        
| | (Registrant)                           
|
| | /s/ Davee L. Olson                     
| |                                        
| | Davee L. Olson                         
| | Chief Financial Officer                
|
| | /s/ James N. Young                     
| |                                        
| | James N. Young                         
| | Chief Accounting Officer and Controller

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##### Table of Contents






INDEX OF EXHIBITS


|        |      |  |             |                                                                                                                                                                                                                                                                                                                                    
|------- | ---- |  | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  | Description
|        |      |  |            
|        | 4.1  |  |             | Subordinated Indenture among Residential Capital Corporation,
    the guarantors party thereto and Deutsche Bank Trust Company
    Americas, dated April 17, 2006. (Incorporated by reference
    to Exhibit 99.4 to the Registrants Current Report on
    Form 8-K (File No. 0-51438), filed on April 17,
    2006.)             
|        | 4.2  |  |             | Supplemental Subordinated Indenture among Residential Capital
    Corporation, the guarantors party thereto and Deutsche Bank
    Trust Company Americas, dated April 17, 2006. (Incorporated
    by reference to Exhibit 99.5 to the Registrants
    Current Report on Form 8-K (File No. 0-51438), filed
    on April 17, 2006.)
|        | 12.1 |  |             | Computation of ratio of earnings to fixed charges                                                                                                                                                                                                                                                                                  
|        | 31.1 |  |             | Certification of Principal Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a)                                                                                                                                                                                                                                              
|        | 31.2 |  |             | Certification of Principal Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a)                                                                                                                                                                                                                                              



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

45