##### 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, 2007, or                                           
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
| 
|  |  | For the transition period
    from           to           .                                 

Commission file number:
0-51438


RESIDENTIAL CAPITAL, LLC


(Exact name of registrant as specified in its charter)


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

8400 Normandale Lake Boulevard


Minneapolis, MN


55437


(Address of principal executive offices)


(Zip Code)


(952) 857-8700


(Registrants telephone number, including area code)


þ o


12b-2


o o þ


o þ




Reduced Disclosure Format












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##### 










RESIDENTIAL CAPITAL, LLC


INDEX


|                                                  |  |                                                                                                                  |    |      |    | 
|------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                  |  |                                                                                                                  |    | Page |   
|                                                  |  |                                                                                                                  |    |      |   
|Part I  Financial
    Information                |  |                                                                                                                  |    |     
|Item 1.                                           |  | Financial Statements (unaudited)                                                                                 |    |      |    | 
|                                                  |  | Condensed Consolidated Balance Sheet as of
    March 31, 2007 and December 31, 2006                              |    |      | 3  | 
|                                                  |  | Condensed Consolidated Statement of Income
    for the Three Months Ended March 31, 2007 and 2006                |    |      | 4  | 
|                                                  |  | Condensed Consolidated Statement of Changes
    in Equity for the Three Months Ended March 31, 2007 and
    2006 |    |      | 5  | 
|                                                  |  | Condensed Consolidated Statement of Cash
    Flows for the Three Months Ended March 31, 2007 and 2006            |    |      | 6  | 
|                                                  |  | Notes to Condensed Consolidated Financial
    Statements                                                         |    |      | 8  | 
|Item 2.                                           |  | Managements Discussion and Analysis
    of Financial Condition and Results of
    Operations                    |    |      | 26 | 
|Item 3.                                           |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                   |    |      | 46 | 
|Item 4.                                           |  | Controls and Procedures                                                                                          |    |      | 49 | 
|Part II  Other
    Information                   |  |                                                                                                                  |    |     
|Item 1.                                           |  | Legal Proceedings                                                                                                |    |      | 50 | 
|Item 1A.                                          |  | Risk Factors                                                                                                     |    |      | 51 | 
|Item 2.                                           |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                  |    |      | 51 | 
|Item 3.                                           |  | Defaults Upon Senior Securities                                                                                  |    |      | 51 | 
|Item 4.                                           |  | Submission of Matters to a Vote of Security
    Holders                                                          |    |      | 51 | 
|Item 5.                                           |  | Other Information                                                                                                |    |      | 51 | 
|Item 6.                                           |  | Exhibits                                                                                                         |    |      | 51 | 
|Signatures                                        |  |                                                                                                                  | 52 |     
|Index of Exhibits                                 |  |                                                                                                                  | 53 |     
|Computation of Ratio of Earnings to Fixed Charges
|Certification of Principal Executive Officer     
|Certification of Principal Financial Officer     
|Certification Pursuant to Section 1350           







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##### Table of Contents






PART I  FINANCIAL INFORMATION





Item 1.  Financial Statements.


RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED BALANCE SHEET


March 31, 2007 and December 31, 2006


|                                                |                                                    |                        |             |            |              |   |             |            |             | 
|----------------------------------------------- | -------------------------------------------------- | ---------------------- | ----------- | ---------- | ------------ | - | ----------- | ---------- | ----------- | 
|                                                |                                                    | March 31,              |             |            | December 31, |  
|                                                |                                                    | 2007                   |             |            | 2006         |  
|                                                |                                                    |                        |             |            |              |  
|                                                |                                                    | (Unaudited)            |            
|                                                |                                                    | (Dollars in thousands) |            
|ASSETS                                         
|Cash and cash equivalents                       |                                                    | $                      | 2,602,494   |            |              | $ | 2,018,847   |           
|Mortgage loans held for sale                    |                                                    |                        | 22,013,665  |            |              |   | 27,007,382  |           
|Trading securities                              |                                                    |                        | 5,659,922   |            |              |   | 4,562,073   |           
|Mortgage loans held for investment, net         |                                                    |                        | 63,590,182  |            |              |   | 67,927,951  |           
|Lending receivables, net                        |                                                    |                        | 12,423,337  |            |              |   | 14,530,104  |           
|Mortgage servicing rights                       |                                                    |                        | 5,107,781   |            |              |   | 4,930,061   |           
|Accounts receivable                             |                                                    |                        | 2,747,259   |            |              |   | 2,561,200   |           
|Investments in real estate and other            |                                                    |                        | 2,509,058   |            |              |   | 2,622,149   |           
|Goodwill                                        |                                                    |                        | 471,914     |            |              |   | 471,463     |           
|Other assets                                    |                                                    |                        | 8,876,974   |            |              |   | 8,955,589   |           
|                                                |                                                    |                        |             |            |              |  
|Total assets                                    |                                                    | $                      | 126,002,586 |            |              | $ | 135,586,819 |           
|                                                |                                                    |                        |             |            |              |  
|                                               
|LIABILITIES                                    
|Borrowings:                                     |                                                    |                        |             |            |              |   |             |           
|                                                | Collateralized borrowings in securitization trusts |                        | $           | 48,790,485 |              |   | $           | 53,299,518 |            
|                                                | Other borrowings                                   |                        |             | 55,322,542 |              |   |             | 59,880,378 |            
|                                                |                                                    |                        |             |            |              |  
|                                                |                                                    | Total borrowings       |             |            | 104,113,027  |   |             |            | 113,179,896 | 
|Deposit liabilities                             |                                                    |                        | 9,366,116   |            |              |   | 9,851,026   |           
|Other liabilities                               |                                                    |                        | 4,712,744   |            |              |   | 4,374,006   |           
|                                                |                                                    |                        |             |            |              |  
|Total liabilities                               |                                                    |                        | 118,191,887 |            |              |   | 127,404,928 |           
|Minority interest                               |                                                    |                        | 636,794     |            |              |   | 559,778     |           
|EQUITY                                         
|Members interest                               |                                                    |                        | 4,337,943   |            |              |   | 3,837,943   |           
|Retained earnings                               |                                                    |                        | 2,739,338   |            |              |   | 3,651,935   |           
|Accumulated other comprehensive income          |                                                    |                        | 96,624      |            |              |   | 132,235     |           
|                                                |                                                    |                        |             |            |              |  
|Total equity                                    |                                                    |                        | 7,173,905   |            |              |   | 7,622,113   |           
|                                                |                                                    |                        |             |            |              |  
|Total liabilities, minority interest and equity |                                                    | $                      | 126,002,586 |            |              | $ | 135,586,819 |           
|                                                |                                                    |                        |             |            |              |  



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RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED STATEMENT OF INCOME


|                                                              |  |                        |           |   |      |   |           |  
|------------------------------------------------------------- |  | ---------------------- | --------- | - | ---- | - | --------- | -
|                                                              |  | Three Months Ended     |          
|                                                              |  | March 31,              |          
|                                                              |  |                        |          
|                                                              |  | 2007                   |           |   | 2006 |  
|                                                              |  |                        |           |   |      |  
|                                                              |  | (Unaudited)            |          
|                                                              |  | (Dollars in thousands) |          
|Revenue                                                       |  |                        |           |   |      |   |           |  
|Interest income                                               |  | $                      | 2,134,712 |   |      | $ | 1,863,365 |  
|Interest expense                                              |  |                        | 1,745,184 |   |      |   | 1,435,369 |  
|                                                              |  |                        |           |   |      |  
|Net interest income                                           |  |                        | 389,528   |   |      |   | 427,996   |  
|Provision for loan losses                                     |  |                        | 545,009   |   |      |   | 122,733   |  
|                                                              |  |                        |           |   |      |  
|Net interest income (loss) after provision for loan losses    |  |                        | (155,481  | ) |      |   | 305,263   |  
|Gain (loss) on sale of mortgage loans, net                    |  |                        | (234,637  | ) |      |   | 267,064   |  
|Servicing fees                                                |  |                        | 447,177   |   |      |   | 374,684   |  
|Servicing asset valuation and hedge activities, net           |  |                        | (302,354  | ) |      |   | (185,513  | )
|                                                              |  |                        |           |   |      |  
|Net servicing fees                                            |  |                        | 144,823   |   |      |   | 189,171   |  
|Gain (loss) on investment securities, net                     |  |                        | 39,934    |   |      |   | (18,429   | )
|Real estate related revenues                                  |  |                        | 131,282   |   |      |   | 144,195   |  
|Other income                                                  |  |                        | 145,764   |   |      |   | 54,612    |  
|                                                              |  |                        |           |   |      |  
|Total net revenue                                             |  |                        | 71,685    |   |      |   | 941,876   |  
|                                                             
|Expenses                                                      |  |                        |           |   |      |   |           |  
|Compensation and benefits                                     |  |                        | 333,911   |   |      |   | 306,804   |  
|Professional fees                                             |  |                        | 57,986    |   |      |   | 56,800    |  
|Data processing and telecommunications                        |  |                        | 47,874    |   |      |   | 44,919    |  
|Advertising                                                   |  |                        | 30,420    |   |      |   | 41,748    |  
|Occupancy                                                     |  |                        | 34,751    |   |      |   | 32,825    |  
|Other                                                         |  |                        | 387,489   |   |      |   | 119,313   |  
|                                                              |  |                        |           |   |      |  
|Total expenses                                                |  |                        | 892,431   |   |      |   | 602,409   |  
|                                                              |  |                        |           |   |      |  
|Income (loss) before income tax expense and minority interest |  |                        | (820,746  | ) |      |   | 339,467   |  
|Income tax expense                                            |  |                        | 70,641    |   |      |   | 137,973   |  
|                                                              |  |                        |           |   |      |  
|Income (loss) before minority interest                        |  |                        | (891,387  | ) |      |   | 201,494   |  
|Minority interest                                             |  |                        | 19,089    |   |      |   |          |  
|                                                              |  |                        |           |   |      |  
|Net income (loss)                                             |  | $                      | (910,476  | ) |      | $ | 201,494   |  
|                                                              |  |                        |           |   |      |  



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RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Three Months Ended March 31, 2007 and 2006


|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |   |         |         |   |   |           |          |         |  
|------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | --------- | - | -------- | - | --------- | -------- | - | - | ------------- | -------- | ------ | ------------- | ------- | -------- | ------- | - | ------- | ------- | - | - | --------- | -------- | ------- | -
|                                                                                           |                                                                                                 | Common                                                                     |           |   |          |   |           |          |   |   | Accumulated   |          |        |              
|                                                                                           |                                                                                                 | Stock and                                                                  |           |   |          |   |           |          |   |   | Other         |          |        |              
|                                                                                           |                                                                                                 | Paid-in                                                                    |           |   | Members |   |           | Retained |   |   | Comprehensive |          |        | Comprehensive |         |          | Total   |  
|                                                                                           |                                                                                                 | Capital                                                                    |           |   | Interest |   |           | Earnings |   |   | Income        |          |        | Income        |         |          | Equity  |  
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |  
|                                                                                           |                                                                                                 | (Unaudited)                                                                |           |   |         
|                                                                                           |                                                                                                 | (Dollars in thousands)                                                     |           |   |         
|Balance at January 1, 2007                                                                 |                                                                                                 | $                                                                          |          |   |          | $ | 3,837,943 |          |   | $ | 3,651,935     |          |        |               |         |          |         | $ | 132,235 |         |   | $ | 7,622,113 |         
|                                                                                           | Net loss                                                                                        |                                                                            |           |  |          |   |           |         |   |   |               | (910,476 | )      |               | $       | (910,476 | )       |   |         |        |   |   |           | (910,476 | )      
|                                                                                           | Cumulative effect of change in accounting principle as of
    January 1, 2007, net of tax:      |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |   |         |         |   |   |           |          |        
|                                                                                           |                                                                                                 | Adoption of Financial Accounting Standards Board Interpretation
    No. 48 |           |   |         |   |           |          |  |   |               |          | (2,121 | )             |         |          |        |   |         |         |  |   |           |          | (2,121  | )
|                                                                                           | Capital contribution                                                                            |                                                                            |           |  |          |   |           | 500,000  |   |   |               |         |        |               |         |         |         |   |         |        |   |   |           | 500,000  |        
|                                                                                           | Other comprehensive income, net of tax:                                                         |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |   |         |         |   |   |           |          |        
|                                                                                           |                                                                                                 | Unrealized gain on available for sale securities                           |           |   |         |   |           |          |  |   |               |          |       |               |         |          | 686     |   |         |         |  |   |           |          | 686     |  
|                                                                                           |                                                                                                 | Foreign currency translation adjustment                                    |           |   |         |   |           |          |  |   |               |          |       |               |         |          | (659    | ) |         |         |  |   |           |          | (659    | )
|                                                                                           |                                                                                                 | Unrealized loss on cash flow hedges                                        |           |   |         |   |           |          |  |   |               |          |       |               |         |          | (35,638 | ) |         |         |  |   |           |          | (35,638 | )
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |  
|                                                                                           | Other comprehensive income                                                                      |                                                                            |           |  |          |   |           |         |   |   |               |         |        |               |         | (35,611  | )       |   |         | (35,611 | ) |   |           |         |        
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |  
|                                                                                           | Comprehensive income                                                                            |                                                                            |           |  |          |   |           |         |   |   |               |         |        |               | $       | (946,087 | )       |   |         |        |   |   |           |         |        
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |  
|Balance at March 31, 2007                                                                  |                                                                                                 | $                                                                          |          |   |          | $ | 4,337,943 |          |   | $ | 2,739,338     |          |        |               |         |          |         | $ | 96,624  |         |   | $ | 7,173,905 |         
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |  
|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 |         
|                                                                                           |                                                                                                 |                                                                            |           |   |          |   |           |          |   |   |               |          |        |               |         |          |         |  



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RESIDENTIAL CAPITAL, LLC





CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2007 and 2006


|                                                                                         |                                                     |                        |             |            |      |   |             |            |  
|---------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------- | ----------- | ---------- | ---- | - | ----------- | ---------- | -
|                                                                                         |                                                     | 2007                   |             |            | 2006 |  
|                                                                                         |                                                     |                        |             |            |      |  
|                                                                                         |                                                     | (Unaudited)            |            
|                                                                                         |                                                     | (Dollars in thousands) |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                     |                        |             |            |      |   |             |           
|Net income (loss)                                                                        |                                                     | $                      | (910,476    | )          |      | $ | 201,494     |           
|Reconciliation of net income to net cash provided by (used in)
    operating activities: |                                                     |                        |             |            |      |   |             |           
|                                                                                         | Depreciation and amortization                       |                        |             | 191,553    |      |   |             | 90,666     |  
|                                                                                         | Provision for loan losses                           |                        |             | 545,009    |      |   |             | 122,733    |  
|                                                                                         | (Gain) loss on sale of mortgage loans, net          |                        |             | 234,637    |      |   |             | (267,064   | )
|                                                                                         | Net (gain) loss on sale of other assets             |                        |             | 18,634     |      |   |             | (12,444    | )
|                                                                                         | Minority interest                                   |                        |             | 19,089     |      |   |             |           |  
|(Gain) loss on investment securities, net                                                |                                                     |                        | (39,934     | )          |      |   | 18,429      |           
|Equity in earnings of investees in excess of cash received                               |                                                     |                        | (17,226     | )          |      |   | (32,213     | )         
|(Gain) loss on valuation of mortgage servicing rights                                    |                                                     |                        | 261,982     |            |      |   | (194,536    | )         
|Originations and purchases of mortgage loans held for sale                               |                                                     |                        | (36,227,342 | )          |      |   | (35,539,837 | )         
|Proceeds from sales and repayments of mortgage loans held for
    sale                   |                                                     |                        | 40,181,401  |            |      |   | 32,344,307  |           
|Deferred income tax                                                                      |                                                     |                        | (8,323      | )          |      |   | 238,705     |           
|Net change in:                                                                           |                                                     |                        |             |            |      |   |             |           
|                                                                                         | Trading securities                                  |                        |             | (1,260,252 | )    |   |             | 608,865    |  
|                                                                                         | Accounts receivable                                 |                        |             | (206,474   | )    |   |             | (5,089     | )
|                                                                                         | Other assets                                        |                        |             | 661,966    |      |   |             | (134,835   | )
|                                                                                         | Other liabilities                                   |                        |             | 332,175    |      |   |             | (206,178   | )
|                                                                                         |                                                     |                        |             |            |      |  
|                                                                                         | Net cash provided by (used in) operating activities |                        |             | 3,776,419  |      |   |             | (2,766,997 | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                     |                        |             |            |      |   |             |           
|Net decrease in lending receivables                                                      |                                                     |                        | 1,940,742   |            |      |   | 1,021,803   |           
|Originations and purchases of mortgage loans held for
    investment                     |                                                     |                        | (1,814,457  | )          |      |   | (6,452,537  | )         
|Proceeds from sales and repayments of mortgage loans held for
    investment             |                                                     |                        | 5,491,524   |            |      |   | 5,852,269   |           
|Purchases of and advances to investments in real estate and
    other                    |                                                     |                        | (103,754    | )          |      |   | (457,688    | )         
|Proceeds from sales of and returns of investments in real estate
    and other           |                                                     |                        | 222,676     |            |      |   | 194,456     |           
|Other, net                                                                               |                                                     |                        | 142,153     |            |      |   | 53,404      |           
|                                                                                         |                                                     |                        |             |            |      |  
|                                                                                         | Net cash provided by investing activities           |                        |             | 5,878,884  |      |   |             | 211,707    |  



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RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2007 and
2006  (Continued)


|                                                                                       |                                                     |                        |            |            |      |   |            |           | 
|-------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------- | ---------- | ---------- | ---- | - | ---------- | --------- | 
|                                                                                       |                                                     | 2007                   |            |            | 2006 |  
|                                                                                       |                                                     |                        |            |            |      |  
|                                                                                       |                                                     | (Unaudited)            |           
|                                                                                       |                                                     | (Dollars in thousands) |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                  |                                                     |                        |            |            |      |   |            |          
|Net decrease in affiliate borrowings                                                   |                                                     | $                      |           |            |      | $ | (486,342   | )        
|Net decrease in other short-term borrowings                                            |                                                     |                        | (2,242,891 | )          |      |   | (3,280,545 | )        
|Proceeds from issuance of collateralized borrowings in
    securitization trusts       |                                                     |                        | 261,531    |            |      |   | 7,726,261  |          
|Repayments of collateralized borrowings in securitization trusts                       |                                                     |                        | (4,795,865 | )          |      |   | (5,131,505 | )        
|Proceeds from secured aggregation facilities, long-term                                |                                                     |                        | 4,016,419  |            |      |   | 4,513,759  |          
|Repayments of secured aggregation facilities, long-term                                |                                                     |                        | (7,024,998 | )          |      |   | (5,141,761 | )        
|Proceeds from other long-term borrowings                                               |                                                     |                        | 1,191,744  |            |      |   | 3,039,925  |          
|Repayments of other long-term borrowings                                               |                                                     |                        | (499,248   | )          |      |   | (149,668   | )        
|Payments of debt issuance costs                                                        |                                                     |                        | (6,297     | )          |      |   | (35,119    | )        
|Capital contribution                                                                   |                                                     |                        | 500,000    |            |      |   |           |          
|Increase (decrease) in deposit liabilities                                             |                                                     |                        | (484,910   | )          |      |   | 1,472,341  |          
|                                                                                       |                                                     |                        |            |            |      |  
|                                                                                       | Net cash provided by (used in) financing activities |                        |            | (9,084,515 | )    |   |            | 2,527,346 | 
|Effect of foreign exchange rates on cash and cash equivalents                          |                                                     |                        | 12,859     |            |      |   | (5,232     | )        
|                                                                                       |                                                     |                        |            |            |      |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   |                                                     |                        | 583,647    |            |      |   | (33,176    | )        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       |                                                     |                        | 2,018,847  |            |      |   | 2,266,753  |          
|                                                                                       |                                                     |                        |            |            |      |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             |                                                     | $                      | 2,602,494  |            |      | $ | 2,233,577  |          
|                                                                                       |                                                     |                        |            |            |      |  
|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 |                                                     |                        | 450,058    |            |      |   | 4,660,605  |          
|Mortgage loans held for investment transferred to mortgage loans
    held
    for sale |                                                     |                        | 320,887    |            |      |   | 468,057    |          
|Mortgage loans held for investment transferred to other assets                         |                                                     |                        | 713,644    |            |      |   | 359,894    |          
|Originations of mortgage servicing rights from sold loans                              |                                                     |                        | 441,386    |            |      |   | 310,906    |          
|Contributions of lending receivables                                                   |                                                     |                        | 10,911     |            |      |   | 25,282     |          



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RESIDENTIAL CAPITAL, LLC





NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




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





10-K




Recently Issued Accounting
Standards


Statement of Financial Accounting Standards
No. 155 Accounting for Certain
Hybrid Financial Instruments Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities,


Financial Accounting Standards Board Staff
Position  FIN 46(R)-6 Determining the
Variability to Be Considered in Applying FASB Interpretation
No. 46(R)


Staff Accounting Bulletin No. 108 Quantifying Financial Misstatements


8



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




Statement of Financial Accounting Standards
No. 157 Fair Value Measurements


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


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




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

Accounting for Uncertainty in Income Taxes Accounting for Income Taxes


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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)








|   |                   
|-- | ------------------
|3. | Trading Securities



|                                     |  |                |           |  |              |   |           |  
|------------------------------------ |  | -------------- | --------- |  | ------------ | - | --------- | -
|                                     |  | March 31,      |           |  | December 31, |  
|                                     |  | 2007           |           |  | 2006         |  
|                                     |  |                |           |  |              |  
|                                     |  | (In thousands) |          
|Mortgage and asset-backed securities |  | $              | 2,614,503 |  |              | $ | 1,748,328 |  
|U.S. Treasury securities             |  |                | 596,110   |  |              |   | 400,962   |  
|Principal-only securities            |  |                | 987,171   |  |              |   | 956,741   |  
|Residual interests                   |  |                | 1,072,354 |  |              |   | 1,018,895 |  
|Interest-only securities             |  |                | 386,425   |  |              |   | 369,484   |  
|Other                                |  |                | 3,359     |  |              |   | 67,663    |  
|                                     |  |                |           |  |              |  
|Total                                |  | $              | 5,659,922 |  |              | $ | 4,562,073 |  
|                                     |  |                |           |  |              |  
|Net unrealized gains (losses)        |  | $              | 43,821    |  |              | $ | (10,118   | )
|Pledged as collateral                |  |                | 4,772,781 |  |              |   | 3,681,269 |  



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                               |       |                |            |            |              |   |            |            | 
|------------------------------ | ----- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ---------- | 
|                               |       | March 31,      |            |            | December 31, |  
|                               |       | 2007           |            |            | 2006         |  
|                               |       |                |            |            |              |  
|                               |       | (In thousands) |           
|Prime conforming               |       | $              | 1,115,833  |            |              | $ | 988,448    |           
|Prime non-conforming           |       |                | 9,622,865  |            |              |   | 9,060,112  |           
|Nonprime                       |       |                | 47,887,778 |            |              |   | 52,340,739 |           
|Prime second-lien              |       |                | 6,622,941  |            |              |   | 7,046,301  |           
|Government                     |       |                | 535        |            |              |   | 712        |           
|                               |       |                |            |            |              |  
|                               | Total |                |            | 65,249,952 |              |   |            | 69,436,312 | 
|Less allowance for loan losses |       |                | (1,659,770 | )          |              |   | (1,508,361 | )         
|                               |       |                |            |            |              |  
|Total, net                     |       | $              | 63,590,182 |            |              | $ | 67,927,951 |           
|                               |       |                |            |            |              |  







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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                               |                       |                |            |            |              |   |            |            | 
|------------------------------ | --------------------- | -------------- | ---------- | ---------- | ------------ | - | ---------- | ---------- | 
|                               |                       | March 31,      |            |            | December 31, |  
|                               |                       | 2007           |            |            | 2006         |  
|                               |                       |                |            |            |              |  
|                               |                       | (In thousands) |           
|Construction:                  |                       |                |            |            |              |   |            |           
|                               | Residential           |                | $          | 2,760,757  |              |   | $          | 2,697,171  | 
|                               | Residential mezzanine |                |            | 367,477    |              |   |            | 380,830    | 
|                               | Resort                |                |            | 155,743    |              |   |            | 133,716    | 
|                               |                       |                |            |            |              |  
|Total construction             |                       |                | 3,283,977  |            |              |   | 3,211,717  |           
|Warehouse                      |                       |                | 6,477,758  |            |              |   | 8,804,803  |           
|Commercial business            |                       |                | 1,803,667  |            |              |   | 1,699,694  |           
|Healthcare                     |                       |                | 829,153    |            |              |   | 761,983    |           
|Commercial real estate         |                       |                | 446,506    |            |              |   | 335,938    |           
|Other                          |                       |                | 107,601    |            |              |   | 112,610    |           
|                               |                       |                |            |            |              |  
|                               | Total                 |                |            | 12,948,662 |              |   |            | 14,926,745 | 
|Less allowance for loan losses |                       |                | (525,325   | )          |              |   | (396,641   | )         
|                               |                       |                |            |            |              |  
|Total, net                     |                       | $              | 12,423,337 |            |              | $ | 14,530,104 |           
|                               |                       |                |            |            |              |  







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



|                           |  |                |           |   |             |   |         |       |  |   |        |   |  |   |           |  
|-------------------------- |  | -------------- | --------- | - | ----------- | - | ------- | ----- |  | - | ------ | - |  | - | --------- | -
|                           |  | Mortgage Loans |           |   |             |   |         |       | 
|                           |  | Held for       |           |   | Lending     |   |         |       |  |  
|                           |  | Investment     |           |   | Receivables |   |         | Other |  |   | Total  |  
|                           |  |                |           |   |             |   |         |       |  |   |        |  
|                           |  | (In thousands) |          
|Balance at January 1, 2007 |  | $              | 1,508,361 |   |             | $ | 396,641 |       |  | $ | 25,757 |   |  | $ | 1,930,759 |  
|Provision for loan losses  |  |                | 364,750   |   |             |   | 177,160 |       |  |   | 3,099  |   |  |   | 545,009   |  
|Charge-offs                |  |                | (228,432  | ) |             |   | (48,522 | )     |  |   | (2,196 | ) |  |   | (279,150  | )
|Recoveries                 |  |                | 15,091    |   |             |   | 46      |       |  |   | 932    |   |  |   | 16,069    |  
|                           |  |                |           |   |             |   |         |       |  |   |        |  
|Balance at March 31, 2007  |  | $              | 1,659,770 |   |             | $ | 525,325 |       |  | $ | 27,592 |   |  | $ | 2,212,687 |  
|                           |  |                |           |   |             |   |         |       |  |   |        |  
|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 |  
|                           |  |                |           |   |             |   |         |       |  |   |        |  

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                                                |                                                                                   |                    |           |          |                 |   |               |          |   |   |              |      |   |       |        |   |  |   |           |          |  
|----------------------------------------------- | --------------------------------------------------------------------------------- | ------------------ | --------- | -------- | --------------- | - | ------------- | -------- | - | - | ------------ | ---- | - | ----- | ------ | - |  | - | --------- | -------- | -
|                                                |                                                                                   | Mortgage Servicing |           |          |                 |   |              
|                                                |                                                                                   | Rights Managed By  |           |          |                 |   |              
|                                                |                                                                                   |                    |           |          |                 |   |              
|                                                |                                                                                   |                    |           | GMAC-RFC |                 |   | International |          |   |   |              |     
|                                                |                                                                                   | GMAC Residential   |           |          | Holding         |   |               | Business |   |   |              |      |  
|                                                |                                                                                   | Holding            |           |          | (domestic only) |   |               | Group    |   |   | Eliminations |      |   | Total |       
|                                                |                                                                                   |                    |           |          |                 |   |               |          |   |   |              |      |   |       |       
|                                                |                                                                                   | (In thousands)     |           |          |                
|Estimated fair value at January 1, 2007         |                                                                                   | $                  | 3,752,733 |          |                 | $ | 1,164,585     |          |   | $ | 12,743       |      |   | $     |       |   |  | $ | 4,930,061 |         
|Additions obtained from sales of mortgage loans |                                                                                   |                    | 293,744   |          |                 |   | 146,376       |          |   |   | 1,266        |      |   |       |       |   |  |   | 441,386   |         
|Additions from purchases of servicing assets    |                                                                                   |                    | 8,884     |          |                 |   |              |          |   |   |             |      |   |       | (8,884 | ) |  |   |          |         
|Subtractions from sales of servicing assets     |                                                                                   |                    |          |          |                 |   | (8,884        | )        |   |   |             |      |   |       | 8,884  |   |  |   |          |         
|Changes in fair value:                          |                                                                                   |                    |           |          |                 |   |               |          |   |   |              |      |   |       |        |   |  |   |           |         
|                                                | Due to changes in valuation inputs or assumptions used in the
    valuation model |                    |           | (88,393  | )               |   |               | (15,888  | ) |   |              |     |   |       |        |  |  |   |           | (104,281 | )
|                                                | Other changes in fair value                                                       |                    |           | (78,166  | )               |   |               | (79,028  | ) |   |              | (507 | ) |       |        |  |  |   |           | (157,701 | )
|Other changes that affect the balance           |                                                                                   |                    |          |          |                 |   | (1,844        | )        |   |   | 160          |      |   |       |       |   |  |   | (1,684    | )       
|                                                |                                                                                   |                    |           |          |                 |   |               |          |   |   |              |      |   |       |       
|Estimated fair value at March 31, 2007          |                                                                                   | $                  | 3,888,802 |          |                 | $ | 1,205,317     |          |   | $ | 13,662       |      |   | $     |       |   |  | $ | 5,107,781 |         
|                                                |                                                                                   |                    |           |          |                 |   |               |          |   |   |              |      |   |       |       
|                                               
|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 |         
|                                                |                                                                                   |                    |           |          |                 |   |               |          |   |   |              |      |   |       |       



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






|                                  |  |                  |           |          |                 |  |               |          |  |  |          |  
|--------------------------------- |  | ---------------- | --------- | -------- | --------------- |  | ------------- | -------- |  |  | -------- | -
|                                  |  |                  |           | GMAC-RFC |                 |  | International |         
|                                  |  | GMAC Residential |           |          | Holding         |  |               | Business | 
|March 31, 2007                    |  | Holding          |           |          | (domestic only) |  |               | Group    | 
|                                  |  |                  |           |          |                 |  |               |          | 
|Weighted average prepayment speed |  |                  | 18.0      | %        |                 |  | 28.6          | %        |  |  | 8.6      | %
|Range of prepayment speeds        |  |                  | 16.6-43.6 | %        |                 |  | 26.3-30.0     | %        |  |  | 1.0-24.7 | %
|Weighted average discount rate    |  |                  | 8.3       | %        |                 |  | 11.0          | %        |  |  | 8.0      | %
|Range of discount rates           |  |                  | 8.0-13.0  | %        |                 |  | 10.0-12.3     | %        |  |  | 8.0-8.0  | %

|                                  |  |                  |           |          |                 |  |               |          |  |  |          |  
|--------------------------------- |  | ---------------- | --------- | -------- | --------------- |  | ------------- | -------- |  |  | -------- | -
|                                  |  |                  |           | GMAC-RFC |                 |  | International |         
|                                  |  | GMAC Residential |           |          | Holding         |  |               | Business | 
|March 31, 2006                    |  | Holding          |           |          | (domestic only) |  |               | 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     | %        |  |  | 8.0-8.0  | %



|                                                      |  |                  |           |          |                 |  |               |          |  |  |          |  
|----------------------------------------------------- |  | ---------------- | --------- | -------- | --------------- |  | ------------- | -------- |  |  | -------- | -
|                                                      |  |                  |           | GMAC-RFC |                 |  | International |         
|                                                      |  | GMAC Residential |           |          | Holding         |  |               | Business | 
|Three months ended March 31, 2007                     |  | Holding          |           |          | (domestic only) |  |               | Group    | 
|                                                      |  |                  |           |          |                 |  |               |          | 
|Range of prepayment speeds (constant prepayment rate) |  |                  | 15.0-37.2 | %        |                 |  | 10.0-35.0     | %        |  |  | 1.0-15.4 | %
|Range of discount rates                               |  |                  | 7.9-13.1  | %        |                 |  | 10.2-14.1     | %        |  |  | 8.0-8.0  | %

|                                                      |  |                  |           |          |                 |  |               |          |  |  |   | 
|----------------------------------------------------- |  | ---------------- | --------- | -------- | --------------- |  | ------------- | -------- |  |  | - | 
|                                                      |  |                  |           | GMAC-RFC |                 |  | International |         
|                                                      |  | GMAC Residential |           |          | Holding         |  |               | Business | 
|Three months ended March 31, 2006                     |  | Holding          |           |          | (domestic only) |  |               | Group    | 
|                                                      |  |                  |           |          |                 |  |               |          | 
|Range of prepayment speeds (constant prepayment rate) |  |                  | 18.5-41.0 | %        |                 |  | 8.0-38.0      | %        |  |  |  | 
|Range of discount rates                               |  |                  | 8.8-13.2  | %        |                 |  | 11.0-15.0     | %        |  |  |  | 



14



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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)






|                                                                                  |  |                    |         |  |      |   |         | 
|--------------------------------------------------------------------------------- |  | ------------------ | ------- |  | ---- | - | ------- | 
|                                                                                  |  | Three Months Ended |        
|                                                                                  |  | March 31,          |        
|                                                                                  |  |                    |        
|                                                                                  |  | 2007               |         |  | 2006 |  
|                                                                                  |  |                    |         |  |      |  
|                                                                                  |  | (In thousands)     |        
|Contractual servicing fees (net of guarantee fees and including
    subservicing) |  | $                  | 380,148 |  |      | $ | 321,020 | 
|Late fees                                                                         |  |                    | 37,828  |  |      |   | 30,488  | 
|Ancillary fees                                                                    |  |                    | 29,201  |  |      |   | 23,176  | 
|                                                                                  |  |                    |         |  |      |  
|Total                                                                             |  | $                  | 447,177 |  |      | $ | 374,684 | 
|                                                                                  |  |                    |         |  |      |  





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



|                                                      |                                                   |                        |             |            |              |   |             |            |            | 
|----------------------------------------------------- | ------------------------------------------------- | ---------------------- | ----------- | ---------- | ------------ | - | ----------- | ---------- | ---------- | 
|                                                      |                                                   | March 31,              |             |            | December 31, |  
|                                                      |                                                   | 2007                   |             |            | 2006         |  
|                                                      |                                                   |                        |             |            |              |  
|                                                      |                                                   | (In thousands)         |            
|Collateralized borrowings in securitization trusts(a) |                                                   | $                      | 48,790,485  |            |              | $ | 53,299,518  |           
|Other borrowings:                                     |                                                   |                        |             |            |              |   |             |           
|                                                      | Secured aggregation facilities  short-term       |                        |             | 10,446,067 |              |   |             | 13,079,221 |           
|                                                      | Secured aggregation facilities  long-term(a)     |                        |             | 2,858,104  |              |   |             | 5,866,684  |           
|                                                      | Repurchase agreements  short-term                |                        |             | 12,261,885 |              |   |             | 10,961,850 |           
|                                                      | Repurchase agreements  long-term(a)              |                        |             | 344,662    |              |   |             | 543,675    |           
|                                                      | Senior unsecured notes(a)                         |                        |             | 12,441,621 |              |   |             | 12,408,822 |           
|                                                      | Subordinated unsecured note(a)                    |                        |             | 1,000,000  |              |   |             | 1,000,000  |           
|                                                      | FHLB advances  long-term(a)                      |                        |             | 8,313,000  |              |   |             | 7,279,000  |           
|                                                      | Third-party bank credit facilities  short-term   |                        |             | 841,000    |              |   |             | 475,000    |           
|                                                      | Third-party bank credit facilities  long-term(a) |                        |             | 1,750,000  |              |   |             | 1,750,000  |           
|                                                      | Debt collateralized by mortgage loans             |                        |             | 1,640,111  |              |   |             | 3,017,961  |           
|                                                      | Servicing advances                                |                        |             | 710,299    |              |   |             | 728,750    |           
|                                                      | Investor custodial funds                          |                        |             |           |              |   |             | 131,709    |           
|                                                      | Other  short-term                                |                        |             | 2,049,042  |              |   |             | 1,820,111  |           
|                                                      | Other  long-term(a)                              |                        |             | 666,751    |              |   |             | 817,595    |           
|                                                      |                                                   |                        |             |            |              |  
|                                                      |                                                   | Total other borrowings |             |            | 55,322,542   |   |             |            | 59,880,378 | 
|                                                      |                                                   |                        |             |            |              |  
|Total borrowings                                      |                                                   | $                      | 104,113,027 |            |              | $ | 113,179,896 |           
|                                                      |                                                   |                        |             |            |              |  

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)







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



|                                     |                                    |                |            |             |              |   |            |             | 
|------------------------------------ | ---------------------------------- | -------------- | ---------- | ----------- | ------------ | - | ---------- | ----------- | 
|                                     |                                    | March 31,      |            |             | December 31, |  
|                                     |                                    | 2007           |            |             | 2006         |  
|                                     |                                    |                |            |             |              |  
|                                     |                                    | (In thousands) |           
|Mortgage loans held for investment   |                                    | $              | 64,169,808 |             |              | $ | 68,480,110 |            
|Mortgage loans held for sale         |                                    |                | 18,386,757 |             |              |   | 22,833,819 |            
|Trading securities                   |                                    |                | 4,772,781  |             |              |   | 3,639,702  |            
|Mortgage servicing rights            |                                    |                | 2,590,142  |             |              |   | 2,447,084  |            
|Lending receivables                  |                                    |                | 9,653,572  |             |              |   | 11,804,708 |            
|Accounts receivable                  |                                    |                | 968,516    |             |              |   | 946,014    |            
|Investments in real estate and other |                                    |                | 863,342    |             |              |   | 719,116    |            
|Other assets                         |                                    |                | 921,277    |             |              |   | 1,563,691  |            
|                                     |                                    |                |            |             |              |  
|                                     | Total assets pledged as collateral |                | $          | 102,326,195 |              |   | $          | 112,434,244 | 
|                                     |                                    |                |            |             |              |  
|Related secured debt                 |                                    | $              | 86,805,364 |             |              | $ | 96,205,963 |            
|                                     |                                    |                |            |             |              |  





|                                     |       |                |           |            |              |   |           |            | 
|------------------------------------ | ----- | -------------- | --------- | ---------- | ------------ | - | --------- | ---------- | 
|                                     |       | March 31,      |           |            | December 31, |  
|                                     |       | 2007           |           |            | 2006         |  
|                                     |       |                |           |            |              |  
|                                     |       | (In thousands) |          
|Mortgage loans held for sale         |       | $              | 7,090,931 |            |              | $ | 5,513,015 |           
|Trading securities                   |       |                | 4,088,999 |            |              |   | 2,945,653 |           
|Mortgage loans held for investment   |       |                | 1,562,166 |            |              |   | 1,667,978 |           
|Investments in real estate and other |       |                | 67,679    |            |              |   | 48,193    |           
|                                     |       |                |           |            |              |  
|                                     | Total |                | $         | 12,809,775 |              |   | $         | 10,174,839 | 
|                                     |       |                |           |            |              |  

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                                       |  |                |           |  |              |   |           | 
|-------------------------------------- |  | -------------- | --------- |  | ------------ | - | --------- | 
|                                       |  | March 31,      |           |  | December 31, |  
|                                       |  | 2007           |           |  | 2006         |  
|                                       |  |                |           |  |              |  
|                                       |  | (In thousands) |          
|Non-interest bearing deposits          |  | $              | 1,653,819 |  |              | $ | 1,358,630 | 
|NOW and money market checking accounts |  |                | 1,859,158 |  |              |   | 1,806,156 | 
|Certificates of deposit                |  |                | 5,853,139 |  |              |   | 6,686,240 | 
|                                       |  |                |           |  |              |  
|Total                                  |  | $              | 9,366,116 |  |              | $ | 9,851,026 | 
|                                       |  |                |           |  |              |  





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





|                                       |                                       |               |      |      |      |   |      |                                 |   |  |                               
|-------------------------------------- | ------------------------------------- | ------------- | ---- | ---- | ---- | - | ---- | ------------------------------- | - |  | ------------------------------
|Three Months Ended March 31,           |                                       | 2007          |      |      | 2006 |   |      | Income Statement Classification
|                                       |                                       |               |      |      |      |   |      |                                
|                                       |                                       | (In millions) |      |      |     
|Fair value hedge ineffectiveness loss: |                                       |               |      |      |      |   |      |                                 |   | 
|                                       | Mortgage loans held for sale          |               | $    | (0.7 | )    |   | $    | (5.7                            | ) |  | Gain on sale of mortgage loans
|Cash flow hedge ineffectiveness gain:  |                                       |               |      |      |      |   |      |                                 |   | 
|                                       | Issuance of collateralized borrowings |               |      |     |      |   |      | 0.4                             |   |  | Interest expense              
|                                       |                                       |               |      |      |      |   |      |                                
|Total                                  |                                       | $             | (0.7 | )    |      | $ | (5.3 | )                               |   | 
|                                       |                                       |               |      |      |      |   |      |                                





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





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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)
















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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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



|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------------------- |  | -------------- | ----------- | - | -------- | - | --------- | ------------- |  | - | ---------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|                                                              |  | Residential    |             |   | Business |   |           | International |  |   |            |   |  |              |           
|                                                              |  | Finance        |             |   | Capital  |   |           | Business      |  |   | Corporate  |   |  |              |            |  
|Three Months Ended March 31,                                  |  | Group          |             |   | Group    |   |           | Group         |  |   | and Other  |   |  | Eliminations |            |   | Consolidated |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|                                                              |  | (In thousands) |            
|2007                                                          |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest income (expense)                                 |  | $              | 327,625     |   |          | $ | 34,565    |               |  | $ | 32,488     |   |  | $            | (5,150     | ) |              | $ |            |   |  | $ | 389,528     |  
|Provision for loan losses                                     |  |                | (511,433    | ) |          |   | (24,698   | )             |  |   | (5,752     | ) |  |              | (3,126     | ) |              |   |            |   |  |   | (545,009    | )
|Other revenue                                                 |  |                | (88,725     | ) |          |   | 60,733    |               |  |   | 142,481    |   |  |              | 112,677    |   |              |   |            |   |  |   | 227,166     |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Total net revenue                                             |  |                | (272,533    | ) |          |   | 70,600    |               |  |   | 169,217    |   |  |              | 104,401    |   |              |   |            |   |  |   | 71,685      |  
|Operating expenses                                            |  |                | 701,300     |   |          |   | 18,828    |               |  |   | 91,215     |   |  |              | 81,088     |   |              |   |            |   |  |   | 892,431     |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Income (loss) before income tax expense and minority interest |  |                | (973,833    | ) |          |   | 51,772    |               |  |   | 78,002     |   |  |              | 23,313     |   |              |   |            |   |  |   | (820,746    | )
|Income tax expense                                            |  |                | 25,932      |   |          |   | 259       |               |  |   | 32,982     |   |  |              | 11,468     |   |              |   |            |   |  |   | 70,641      |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Income (loss) before minority interest                        |  |                | (999,765    | ) |          |   | 51,513    |               |  |   | 45,020     |   |  |              | 11,845     |   |              |   |            |   |  |   | (891,387    | )
|Minority interest                                             |  |                |            |   |          |   |          |               |  |   |           |   |  |              | 19,089     |   |              |   |            |   |  |   | 19,089      |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Net income (loss)                                             |  | $              | (999,765    | ) |          | $ | 51,513    |               |  | $ | 45,020     |   |  | $            | (7,244     | ) |              | $ |            |   |  | $ | (910,476    | )
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Total assets                                                  |  | $              | 100,420,480 |   |          | $ | 7,470,646 |               |  | $ | 11,751,903 |   |  | $            | 27,868,961 |   |              | $ | (21,509,404 | ) |  | $ | 126,002,586 |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  
|Net interest income (expense) from other segments             |  | $              | (141,295    | ) |          | $ | (72,064   | )             |  | $ | (25,993    | ) |  | $            | 239,352    |   |              | $ |            |   |  | $ |            |  
|                                                              |  |                |             |   |          |   |           |               |  |   |            |   |  |              |            |   |              |  

|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |   |             |   |  |   |             |  
|------------------------------------------------- |  | -------------- | ----------- | - | -------- | - | --------- | ------------- |  | - | --------- | - |  | ------------ | ---------- | - | ------------ | - | ----------- | - |  | - | ----------- | -
|                                                  |  | Residential    |             |   | Business |   |           | International |  |   |           |   |  |              |           
|                                                  |  | Finance        |             |   | Capital  |   |           | Business      |  |   | Corporate |   |  |              |            |  
|Three Months Ended March 31,                      |  | Group          |             |   | Group    |   |           | Group         |  |   | and Other |   |  | Eliminations |            |   | Consolidated |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  
|                                                  |  | (In thousands) |            
|2006                                              |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |   |             |   |  |   |             |  
|Net interest income                               |  | $              | 366,086     |   |          | $ | 20,775    |               |  | $ | 41,124    |   |  | $            | 11         |   |              | $ |            |   |  | $ | 427,996     |  
|Provision for loan losses                         |  |                | (119,420    | ) |          |   | (62       | )             |  |   | (3,268    | ) |  |              | 17         |   |              |   |            |   |  |   | (122,733    | )
|Other revenue                                     |  |                | 480,205     |   |          |   | 80,953    |               |  |   | 75,545    |   |  |              | (90        | ) |              |   |            |   |  |   | 636,613     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  
|Total net revenue                                 |  |                | 726,871     |   |          |   | 101,666   |               |  |   | 113,401   |   |  |              | (62        | ) |              |   |            |   |  |   | 941,876     |  
|Operating expenses                                |  |                | 534,578     |   |          |   | 12,527    |               |  |   | 54,829    |   |  |              | 475        |   |              |   |            |   |  |   | 602,409     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  
|Income (loss) before income tax expense           |  |                | 192,293     |   |          |   | 89,139    |               |  |   | 58,572    |   |  |              | (537       | ) |              |   |            |   |  |   | 339,467     |  
|Income tax expense (benefit)                      |  |                | 86,400      |   |          |   | 35,059    |               |  |   | 17,215    |   |  |              | (701       | ) |              |   |            |   |  |   | 137,973     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  
|Net income                                        |  | $              | 105,893     |   |          | $ | 54,080    |               |  | $ | 41,357    |   |  | $            | 164        |   |              | $ |            |   |  | $ | 201,494     |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  
|Total assets                                      |  | $              | 104,356,921 |   |          | $ | 5,947,491 |               |  | $ | 9,682,805 |   |  | $            | 20,202,332 |   |              | $ | (18,251,063 | ) |  | $ | 121,938,486 |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  
|Net interest income (expense) from other segments |  | $              | (119,865    | ) |          | $ | (65,081   | )             |  | $ | 5,544     |   |  | $            | 179,402    |   |              | $ |            |   |  | $ |            |  
|                                                  |  |                |             |   |          |   |           |               |  |   |           |   |  |              |            |   |              |  

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)




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









|                                                            |  |             |         |               |                  |  |       |        |  |   |         |  |  |  |       | 
|----------------------------------------------------------- |  | ----------- | ------- | ------------- | ---------------- |  | ----- | ------ |  | - | ------- |  |  |  | ----- | 
|                                                            |  |             |         | Minimum to be |                 
|                                                            |  | Actual      |         |               | Well Capitalized | 
|                                                            |  |             |         |               |                  | 
|March 31, 2007                                              |  | Amount      |         |               | Ratio            |  |       | Amount |  |   | Ratio   | 
|                                                            |  |             |         |               |                  |  |       |        |  |   |         | 
|                                                            |  | (Dollars in |         |               | (Dollars in      | 
|                                                            |  | thousands)  |         |               | thousands)       | 
|Total capital (Tier 1 + Tier 2) to risk
    weighted assets |  | $           | 2,339.7 |               |                  |  | 15.4% |        |  | $ | 1,517.6 |  |  |  | 10.0% | 
|Tier 1 capital to risk weighted assets                      |  |             | 2,275.9 |               |                  |  | 15.0% |        |  |   | 910.6   |  |  |  | 6.0%  | 
|Tier 1 capital to average assets (leveraged ratio)          |  |             | 2,275.9 |               |                  |  | 11.3% |        |  |   | 1,615.2 |  |  |  | 8.0%  | 



|    |                                   
|--- | ----------------------------------
|14. | Supplemental Financial Information





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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING BALANCE SHEET


March 31, 2007


|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |             |             |             |   |             |            |             | 
|----------------------------------------------- | -------------------------------------------------- | ---------------------- | ---------- | ---------- | ------------ | - | ------------- | ------------ | ---------- | - | ------------ | ---------- | ---------- | ------------ | ----------- | ----------- | ----------- | - | ----------- | ---------- | ----------- | 
|                                                |                                                    |                        |            | Guarantor  |              |   | Non-Guarantor |              |            |   |              |           
|                                                |                                                    | Parent                 |            |            | Subsidiaries |   |               | Subsidiaries |            |   | Eliminations |            |            | Consolidated |            
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|                                                |                                                    | (Dollars in thousands) |           
|ASSETS                                         
|Cash and cash equivalents                       |                                                    | $                      | 1,486,471  |            |              | $ | 518,209       |              |            | $ | 628,074      |            |            | $            | (30,260     | )           |             | $ | 2,602,494   |           
|Mortgage loans held for sale                    |                                                    |                        |           |            |              |   | 8,873,556     |              |            |   | 13,140,740   |            |            |              | (631        | )           |             |   | 22,013,665  |           
|Trading securities                              |                                                    |                        |           |            |              |   | 2,531,516     |              |            |   | 3,128,406    |            |            |              |            |             |             |   | 5,659,922   |           
|Mortgage loans held for investment, net         |                                                    |                        |           |            |              |   | 2,072,598     |              |            |   | 61,584,707   |            |            |              | (67,123     | )           |             |   | 63,590,182  |           
|Lending receivables, net                        |                                                    |                        |           |            |              |   | 2,374,077     |              |            |   | 10,049,254   |            |            |              | 6           |             |             |   | 12,423,337  |           
|Mortgage servicing rights                       |                                                    |                        |           |            |              |   | 5,094,120     |              |            |   | 13,661       |            |            |              |            |             |             |   | 5,107,781   |           
|Accounts receivable                             |                                                    |                        | 4,983      |            |              |   | 1,600,731     |              |            |   | 1,639,321    |            |            |              | (497,776    | )           |             |   | 2,747,259   |           
|Investments in real estate and other            |                                                    |                        |           |            |              |   | 113,630       |              |            |   | 2,395,428    |            |            |              |            |             |             |   | 2,509,058   |           
|Goodwill                                        |                                                    |                        |           |            |              |   | 218,803       |              |            |   | 253,111      |            |            |              |            |             |             |   | 471,914     |           
|Other assets                                    |                                                    |                        | 334,189    |            |              |   | 6,080,542     |              |            |   | 7,194,593    |            |            |              | (4,732,350  | )           |             |   | 8,876,974   |           
|Investment in and loans to subsidiaries         |                                                    |                        | 21,350,612 |            |              |   | 3,998,657     |              |            |   |             |            |            |              | (25,349,269 | )           |             |   |            |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total assets                                    |                                                    | $                      | 23,176,255 |            |              | $ | 33,476,439    |              |            | $ | 100,027,295  |            |            | $            | (30,677,403 | )           |             | $ | 126,002,586 |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|                                               
|LIABILITIES                                    
|Borrowings:                                     |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |             |             |             |   |             |           
|                                                | Affiliate borrowings                               |                        | $          |           |              |   | $             | 12,605,000   |            |   | $            | 1,543,756  |            |              | $           | (14,148,756 | )           |   | $           |           |            
|                                                | Collateralized borrowings in securitization trusts |                        |            |           |              |   |               |             |            |   |              | 48,790,485 |            |              |             |            |             |   |             | 48,790,485 |            
|                                                | Other borrowings                                   |                        |            | 15,632,621 |              |   |               | 11,102,996   |            |   |              | 29,541,426 |            |              |             | (954,501    | )           |   |             | 55,322,542 |            
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|                                                |                                                    | Total borrowings       |            |            | 15,632,621   |   |               |              | 23,707,996 |   |              |            | 79,875,667 |              |             |             | (15,103,257 | ) |             |            | 104,113,027 | 
|Deposit liabilities                             |                                                    |                        |           |            |              |   |              |              |            |   | 9,411,376    |            |            |              | (45,260     | )           |             |   | 9,366,116   |           
|Other liabilities                               |                                                    |                        | 369,729    |            |              |   | 2,566,587     |              |            |   | 6,064,545    |            |            |              | (4,288,117  | )           |             |   | 4,712,744   |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total liabilities                               |                                                    |                        | 16,002,350 |            |              |   | 26,274,583    |              |            |   | 95,351,588   |            |            |              | (19,436,634 | )           |             |   | 118,191,887 |           
|Minority interest                               |                                                    |                        |           |            |              |   |              |              |            |   | 636,794      |            |            |              |            |             |             |   | 636,794     |           
|                                               
|EQUITY                                         
|Common stock and paid-in capital                |                                                    |                        |           |            |              |   |              |              |            |   | 166,601      |            |            |              | (166,601    | )           |             |   |            |           
|Members interest                               |                                                    |                        | 4,337,943  |            |              |   | 4,959,599     |              |            |   | 2,452,631    |            |            |              | (7,412,230  | )           |             |   | 4,337,943   |           
|Retained earnings                               |                                                    |                        | 2,739,338  |            |              |   | 2,143,963     |              |            |   | 1,323,110    |            |            |              | (3,467,073  | )           |             |   | 2,739,338   |           
|Accumulated other comprehensive income          |                                                    |                        | 96,624     |            |              |   | 98,294        |              |            |   | 96,571       |            |            |              | (194,865    | )           |             |   | 96,624      |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total equity                                    |                                                    |                        | 7,173,905  |            |              |   | 7,201,856     |              |            |   | 4,038,913    |            |            |              | (11,240,769 | )           |             |   | 7,173,905   |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            
|Total liabilities, minority interest and equity |                                                    | $                      | 23,176,255 |            |              | $ | 33,476,439    |              |            | $ | 100,027,295  |            |            | $            | (30,677,403 | )           |             | $ | 126,002,586 |           
|                                                |                                                    |                        |            |            |              |   |               |              |            |   |              |            |            |              |            

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RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF INCOME


Three Months Ended March 31, 2007


|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |           |   |  |   |           |  
|------------------------------------------------------------- |  | -------------- | -------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | --------- | - |  | - | --------- | -
|                                                              |  |                |          | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                              |  | Parent         |          |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |          
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|                                                              |  | (In thousands) |         
|Revenue                                                       |  |                |          |           |              |   |               |              |  |   |              |   |  |              |           |   |  |   |           |  
|Interest income                                               |  | $              | 263,553  |           |              | $ | 443,665       |              |  | $ | 1,684,817    |   |  | $            | (257,323  | ) |  | $ | 2,134,712 |  
|Interest expense                                              |  |                | 261,933  |           |              |   | 328,877       |              |  |   | 1,419,687    |   |  |              | (265,313  | ) |  |   | 1,745,184 |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Net interest income                                           |  |                | 1,620    |           |              |   | 114,788       |              |  |   | 265,130      |   |  |              | 7,990     |   |  |   | 389,528   |  
|Provision for loan losses                                     |  |                |         |           |              |   | 208,004       |              |  |   | 337,350      |   |  |              | (345      | ) |  |   | 545,009   |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Net interest income (loss) after provision for loan losses    |  |                | 1,620    |           |              |   | (93,216       | )            |  |   | (72,220      | ) |  |              | 8,335     |   |  |   | (155,481  | )
|Gain (loss) on sale of mortgage loans, net                    |  |                |         |           |              |   | (308,648      | )            |  |   | 76,959       |   |  |              | (2,948    | ) |  |   | (234,637  | )
|Servicing fees                                                |  |                |         |           |              |   | 438,739       |              |  |   | 10,257       |   |  |              | (1,819    | ) |  |   | 447,177   |  
|Servicing asset valuation and hedge activities, net           |  |                |         |           |              |   | (301,848      | )            |  |   | (506         | ) |  |              |          |   |  |   | (302,354  | )
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Net servicing fees                                            |  |                |         |           |              |   | 136,891       |              |  |   | 9,751        |   |  |              | (1,819    | ) |  |   | 144,823   |  
|Gain on investment securities, net                            |  |                |         |           |              |   | 19,863        |              |  |   | 20,071       |   |  |              |          |   |  |   | 39,934    |  
|Real estate related revenues                                  |  |                |         |           |              |   | 12,906        |              |  |   | 118,376      |   |  |              |          |   |  |   | 131,282   |  
|Other income                                                  |  |                | 828      |           |              |   | 38,772        |              |  |   | 133,674      |   |  |              | (27,510   | ) |  |   | 145,764   |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Total net revenue                                             |  |                | 2,448    |           |              |   | (193,432      | )            |  |   | 286,611      |   |  |              | (23,942   | ) |  |   | 71,685    |  
|                                                             
|Expenses                                                      |  |                |          |           |              |   |               |              |  |   |              |   |  |              |           |   |  |   |           |  
|Compensation and benefits                                     |  |                |         |           |              |   | 211,760       |              |  |   | 122,151      |   |  |              |          |   |  |   | 333,911   |  
|Professional fees                                             |  |                |         |           |              |   | 44,567        |              |  |   | 13,419       |   |  |              |          |   |  |   | 57,986    |  
|Data processing and telecommunications                        |  |                |         |           |              |   | 32,740        |              |  |   | 15,134       |   |  |              |          |   |  |   | 47,874    |  
|Advertising                                                   |  |                |         |           |              |   | 21,904        |              |  |   | 8,516        |   |  |              |          |   |  |   | 30,420    |  
|Occupancy                                                     |  |                |         |           |              |   | 21,010        |              |  |   | 13,741       |   |  |              |          |   |  |   | 34,751    |  
|Other                                                         |  |                | (1,100   | )         |              |   | 247,909       |              |  |   | 171,889      |   |  |              | (31,209   | ) |  |   | 387,489   |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Total expenses                                                |  |                | (1,100   | )         |              |   | 579,890       |              |  |   | 344,850      |   |  |              | (31,209   | ) |  |   | 892,431   |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Income (loss) before income tax expense and minority interest |  |                | 3,548    |           |              |   | (773,322      | )            |  |   | (58,239      | ) |  |              | 7,267     |   |  |   | (820,746  | )
|Income tax expense (benefit)                                  |  |                |         |           |              |   | (3,835        | )            |  |   | 75,549       |   |  |              | (1,073    | ) |  |   | 70,641    |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Income (loss) before minority interest                        |  |                | 3,548    |           |              |   | (769,487      | )            |  |   | (133,788     | ) |  |              | 8,340     |   |  |   | (891,387  | )
|Minority interest                                             |  |                |         |           |              |   |              |              |  |   | 19,089       |   |  |              |          |   |  |   | 19,089    |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Income (loss) before equity in net losses of subsidiaries     |  |                | 3,548    |           |              |   | (769,487      | )            |  |   | (152,877     | ) |  |              | 8,340     |   |  |   | (910,476  | )
|Equity in net losses of subsidiaries                          |  |                | (914,024 | )         |              |   | (144,537      | )            |  |   |             |   |  |              | 1,058,561 |   |  |   |          |  
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          
|Net loss                                                      |  | $              | (910,476 | )         |              | $ | (914,024      | )            |  | $ | (152,877     | ) |  | $            | 1,066,901 |   |  | $ | (910,476  | )
|                                                              |  |                |          |           |              |   |               |              |  |   |              |   |  |              |          

22



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##### Table of Contents



RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF INCOME


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   |  
|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 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   |  
|                                                     |  |                        |         |           |              |   |               |              |  |   |              |   |  |              |         

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##### Table of Contents



RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2007


|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |            |  
|-------------------------------------------------------------------------------- |  | -------------- | --------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | -------- | - |  | - | ---------- | -
|                                                                                 |  |                |           | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                                 |  | Parent         |           |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |         
|                                                                                 |  | (In thousands) |          
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                              |  | $              | (12,840   | )         |              | $ | (1,652,857    | )            |  | $ | 5,451,720    |   |  | $            | (9,604   | ) |  | $ | 3,776,419  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |  |                |           |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |            |  
|Net decrease in lending receivables                                              |  |                |          |           |              |   | 335,018       |              |  |   | 1,605,724    |   |  |              |         |   |  |   | 1,940,742  |  
|Originations and purchases of mortgage loans held for investment                 |  |                |          |           |              |   | (448,296      | )            |  |   | (1,357,125   | ) |  |              | (9,036   | ) |  |   | (1,814,457 | )
|Proceeds from sales and repayments of mortgage loans held for
    investment     |  |                |          |           |              |   | 751,707       |              |  |   | 4,740,456    |   |  |              | (639     | ) |  |   | 5,491,524  |  
|Purchases of and advances to investments in real estate and other                |  |                |          |           |              |   | (2,706        | )            |  |   | (101,048     | ) |  |              |         |   |  |   | (103,754   | )
|Proceeds from sales of and returns of investments in real estate
    and other   |  |                |          |           |              |   | 17,135        |              |  |   | 205,541      |   |  |              |         |   |  |   | 222,676    |  
|Payment of capital contribution                                                  |  |                |          |           |              |   | (159,246      | )            |  |   |             |   |  |              | 159,246  |   |  |   |           |  
|Net increase in affiliate lending                                                |  |                | (193,529  | )         |              |   |              |              |  |   |             |   |  |              | 193,529  |   |  |   |           |  
|Other, net                                                                       |  |                |          |           |              |   | 207,287       |              |  |   | (65,134      | ) |  |              |         |   |  |   | 142,153    |  
|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |         
|Net cash provided by (used in) investing activities                              |  |                | (193,529  | )         |              |   | 700,899       |              |  |   | 5,028,414    |   |  |              | 343,100  |   |  |   | 5,878,884  |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                            |  |                |           |           |              |   |               |              |  |   |              |   |  |              |          |   |  |   |            |  
|Net increase (decrease) in affiliate borrowings                                  |  |                |          |           |              |   | 417,000       |              |  |   | (223,471     | ) |  |              | (193,529 | ) |  |   |           |  
|Net increase (decrease) in other short-term borrowings                           |  |                | 366,000   |           |              |   | 334,741       |              |  |   | (2,943,632   | ) |  |              |         |   |  |   | (2,242,891 | )
|Proceeds from issuance of collateralized borrowings in
    securitization trusts |  |                |          |           |              |   | 261,531       |              |  |   |             |   |  |              |         |   |  |   | 261,531    |  
|Repayments of collateralized borrowings in securitization trusts                 |  |                |          |           |              |   |              |              |  |   | (4,795,865   | ) |  |              |         |   |  |   | (4,795,865 | )
|Proceeds from secured aggregation facilities, long-term                          |  |                |          |           |              |   |              |              |  |   | 4,016,419    |   |  |              |         |   |  |   | 4,016,419  |  
|Repayments of secured aggregation facilities, long-term                          |  |                |          |           |              |   |              |              |  |   | (7,024,998   | ) |  |              |         |   |  |   | (7,024,998 | )
|Proceeds from other long-term borrowings                                         |  |                | 2,500     |           |              |   |              |              |  |   | 1,189,244    |   |  |              |         |   |  |   | 1,191,744  |  
|Repayments of other long-term borrowings                                         |  |                |          |           |              |   |              |              |  |   | (499,248     | ) |  |              |         |   |  |   | (499,248   | )
|Payments of debt issuance costs                                                  |  |                | (2,553    | )         |              |   |              |              |  |   | (3,744       | ) |  |              |         |   |  |   | (6,297     | )
|Proceeds from capital contribution                                               |  |                | 500,000   |           |              |   |              |              |  |   | 159,246      |   |  |              | (159,246 | ) |  |   | 500,000    |  
|Dividends paid                                                                   |  |                |          |           |              |   |              |              |  |   | (2,474       | ) |  |              | 2,474    |   |  |   |           |  
|Decrease in deposit liabilities                                                  |  |                |          |           |              |   |              |              |  |   | (481,523     | ) |  |              | (3,387   | ) |  |   | (484,910   | )
|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |         
|Net cash provided by (used in) financing activities                              |  |                | 865,947   |           |              |   | 1,013,272     |              |  |   | (10,610,046  | ) |  |              | (353,688 | ) |  |   | (9,084,515 | )
|Effect of foreign exchange rates on cash and
    cash equivalents                |  |                | (5,707    | )         |              |   |              |              |  |   | 1,761        |   |  |              | 16,805   |   |  |   | 12,859     |  
|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |         
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |                | 653,871   |           |              |   | 61,314        |              |  |   | (128,151     | ) |  |              | (3,387   | ) |  |   | 583,647    |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 |  |                | 832,600   |           |              |   | 456,895       |              |  |   | 756,225      |   |  |              | (26,873  | ) |  |   | 2,018,847  |  
|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |         
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       |  | $              | 1,486,471 |           |              | $ | 518,209       |              |  | $ | 628,074      |   |  | $            | (30,260  | ) |  | $ | 2,602,494  |  
|                                                                                 |  |                |           |           |              |   |               |              |  |   |              |   |  |              |         









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##### Table of Contents



RESIDENTIAL CAPITAL, LLC


NOTES TO CONDENSED


CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)  (Continued)


RESIDENTIAL CAPITAL, LLC


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


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 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   | )         |              |   | (35,462       | )            |  |   | 199,146      |   |  |              |           |   |  |   | 53,404     |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           
|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 decrease 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 PERIOD                                 |  |                        | 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  |  
|                                                                                 |  |                        |            |           |              |   |               |              |  |   |              |   |  |              |           










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


Overview






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



Results of Operations




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





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|                     |                       |                                       |        |         |            |   |        |        |  |  |            |         |  |   |        |        | 
|-------------------- | --------------------- | ------------------------------------- | ------ | ------- | ---------- | - | ------ | ------ |  |  | ---------- | ------- |  | - | ------ | ------ | 
|                     |                       | U.S. Mortgage Loan Production by Type |       
|                     |                       |                                       |       
|                     |                       | Three Months Ended March 31,          |       
|                     |                       |                                       |       
|                     |                       | 2007                                  |        |         | 2006       |  
|                     |                       |                                       |        |         |            |  
|                     |                       | No. of                                |        |         | Dollar Amt |   |        | No. of |  |  | Dollar Amt |        
|                     |                       | Loans                                 |        |         | of Loans   |   |        | Loans  |  |  | of Loans   |        
|                     |                       |                                       |        |         |            |   |        |        |  |  |            |        
|                     |                       | (Dollars in millions)                 |       
|Prime conforming     |                       |                                       | 50,089 |         |            | $ | 9,569  |        |  |  | 46,053     |         |  | $ | 8,569  |       
|Prime non-conforming |                       |                                       | 38,671 |         |            |   | 12,317 |        |  |  | 39,039     |         |  |   | 11,727 |       
|Government           |                       |                                       | 4,162  |         |            |   | 584    |        |  |  | 5,998      |         |  |   | 861    |       
|Nonprime             |                       |                                       | 20,444 |         |            |   | 3,259  |        |  |  | 59,230     |         |  |   | 9,096  |       
|Prime second-lien    |                       |                                       | 97,711 |         |            |   | 5,313  |        |  |  | 101,420    |         |  |   | 5,815  |       
|                     |                       |                                       |        |         |            |   |        |        |  |  |            |        
|                     | Total U.S. production |                                       |        | 211,077 |            |   | $      | 31,042 |  |  |            | 251,740 |  |   | $      | 36,068 | 
|                     |                       |                                       |        |         |            |   |        |        |  |  |            |        



|                    |                 |                      |        |        |      |   |        |        | 
|------------------- | --------------- | -------------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                    |                 | For the Three Months |       
|                    |                 | Ended March 31,      |       
|                    |                 |                      |       
|                    |                 | 2007                 |        |        | 2006 |  
|                    |                 |                      |        |        |      |  
|                    |                 | (In millions)        |       
|Purpose:            |                 |                      |        |        |      |   |        |       
|                    | Purchase        |                      | $      | 10,032 |      |   | $      | 13,665 | 
|                    | Non-purchase    |                      |        | 21,010 |      |   |        | 22,403 | 
|                    |                 |                      |        |        |      |  
|                    |                 | $                    | 31,042 |        |      | $ | 36,068 |       
|                    |                 |                      |        |        |      |  
|                   
|Interest rate type: |                 |                      |        |        |      |   |        |       
|                    | Fixed rate      |                      | $      | 20,345 |      |   | $      | 19,300 | 
|                    | Adjustable rate |                      |        | 10,697 |      |   |        | 16,768 | 
|                    |                 |                      |        |        |      |  
|                    |                 | $                    | 31,042 |        |      | $ | 36,068 |       
|                    |                 |                      |        |        |      |  



|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |         |  |   |        |        | 
|---------------------------------------------------- | --------------------- | ---------------------------------------- | ------- | ------- | ---------- | - | ------ | ------ |  |  | ---------- | ------- |  | - | ------ | ------ | 
|                                                     |                       | U.S. Mortgage Loan Production by Channel |        
|                                                     |                       |                                          |        
|                                                     |                       | Three Months Ended March 31,             |        
|                                                     |                       |                                          |        
|                                                     |                       | 2007                                     |         |         | 2006       |  
|                                                     |                       |                                          |         |         |            |  
|                                                     |                       | No. of                                   |         |         | Dollar Amt |   |        | No. of |  |  | Dollar Amt |        
|                                                     |                       | Loans                                    |         |         | of Loans   |   |        | Loans  |  |  | of Loans   |        
|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |        
|                                                     |                       | (Dollars in millions)                    |        
|Retail branches                                      |                       |                                          | 19,623  |         |            | $ | 3,011  |        |  |  | 25,321     |         |  | $ | 3,595  |       
|Direct lending (other than retail branches)          |                       |                                          | 28,015  |         |            |   | 3,020  |        |  |  | 35,567     |         |  |   | 3,083  |       
|Mortgage brokers                                     |                       |                                          | 36,246  |         |            |   | 6,384  |        |  |  | 40,665     |         |  |   | 7,053  |       
|Correspondent lenders and secondary market purchases |                       |                                          | 127,193 |         |            |   | 18,627 |        |  |  | 150,187    |         |  |   | 22,337 |       
|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |        
|                                                     | Total U.S. production |                                          |         | 211,077 |            |   | $      | 31,042 |  |  |            | 251,740 |  |   | $      | 36,068 | 
|                                                     |                       |                                          |         |         |            |   |        |        |  |  |            |        

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|                   |                                |                                        |        |        |           |   |       |        |        |  |           |        |  |   |       |       | 
|------------------ | ------------------------------ | -------------------------------------- | ------ | ------ | --------- | - | ----- | ------ | ------ |  | --------- | ------ |  | - | ----- | ----- | 
|                   |                                | International Mortgage Loan Production |       
|                   |                                |                                        |       
|                   |                                | Three Months Ended March 31,           |       
|                   |                                |                                        |       
|                   |                                | 2007                                   |        |        | 2006      |  
|                   |                                |                                        |        |        |           |  
|                   |                                |                                        |        | Dollar |           |   |       |        | Dollar | 
|                   |                                | No. of                                 |        |        | Amount of |   |       | No. of |        |  | Amount of |       
|                   |                                | Loans                                  |        |        | Loans     |   |       | Loans  |        |  | Loans     |       
|                   |                                |                                        |        |        |           |   |       |        |        |  |           |       
|                   |                                | (Dollars in millions)                  |       
|United Kingdom     |                                |                                        | 17,789 |        |           | $ | 4,525 |        |        |  | 19,459    |        |  | $ | 4,425 |      
|Continental Europe |                                |                                        | 8,461  |        |           |   | 1,566 |        |        |  | 4,994     |        |  |   | 873   |      
|Other              |                                |                                        | 4,267  |        |           |   | 381   |        |        |  | 2,058     |        |  |   | 214   |      
|                   |                                |                                        |        |        |           |   |       |        |        |  |           |       
|                   | Total International production |                                        |        | 30,517 |           |   | $     | 6,472  |        |  |           | 26,511 |  |   | $     | 5,512 | 
|                   |                                |                                        |        |        |           |   |       |        |        |  |           |       









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|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |           |  |   |         |         | 
|----------------------------------- | ---------------------------------- | -------------------------------------- | --------- | --------- | ----------------- | - | ------- | ------- |  |  | ---------- | --------- |  | - | ------- | ------- | 
|                                    |                                    | U.S. Mortgage Loan Servicing Portfolio |          
|                                    |                                    |                                        |          
|                                    |                                    | March 31, 2007                         |           |           | December 31, 2006 |  
|                                    |                                    |                                        |           |           |                   |  
|                                    |                                    | No. of                                 |           |           | Dollar Amt        |   |         | No. of  |  |  | Dollar Amt |          
|                                    |                                    | Loans                                  |           |           | of Loans          |   |         | Loans   |  |  | of Loans   |          
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          
|                                    |                                    | (Dollars in millions)                  |          
|Prime conforming mortgage loans     |                                    |                                        | 1,469,640 |           |                   | $ | 207,038 |         |  |  | 1,456,344  |           |  | $ | 203,927 |        
|Prime non-conforming mortgage loans |                                    |                                        | 325,284   |           |                   |   | 104,786 |         |  |  | 319,255    |           |  |   | 101,138 |        
|Government mortgage loans           |                                    |                                        | 179,431   |           |                   |   | 18,692  |         |  |  | 181,563    |           |  |   | 18,843  |        
|Nonprime mortgage loans             |                                    |                                        | 394,523   |           |                   |   | 54,307  |         |  |  | 409,516    |           |  |   | 55,750  |        
|Prime second-lien mortgage loans    |                                    |                                        | 817,217   |           |                   |   | 34,421  |         |  |  | 784,170    |           |  |   | 32,726  |        
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          
|                                    | Total primary servicing portfolio* |                                        |           | 3,186,095 |                   |   | $       | 419,244 |  |  |            | 3,150,848 |  |   | $       | 412,384 | 
|                                    |                                    |                                        |           |           |                   |   |         |         |  |  |            |          






|  |                                                                                                                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excludes loans for which we acted as a subservicer. Subserviced
    loans totaled 328,425 with an unpaid principal balance of
    $66.1 billion at March 31, 2007 and 290,992 with an
    unpaid principal balance of $55.4 billion at
    December 31, 2006.















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



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



|                                                    |  |                    |        |   |      |   |        |  
|--------------------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------ | -
|                                                    |  | Three Months Ended |       
|                                                    |  | March 31,          |       
|                                                    |  |                    |       
|                                                    |  | 2007               |        |   | 2006 |  
|                                                    |  |                    |        |   |      |  
|                                                    |  | (In millions)      |       
|Net interest income                                 |  | $                  | 327.6  |   |      | $ | 366.1  |  
|Provision for loan losses                           |  |                    | (511.4 | ) |      |   | (119.4 | )
|Gain (loss) on sales of mortgage loans, net         |  |                    | (341.0 | ) |      |   | 200.3  |  
|Servicing fees                                      |  |                    | 432.2  |   |      |   | 376.8  |  
|Servicing asset valuation and hedge activities, net |  |                    | (301.9 | ) |      |   | (185.0 | )
|                                                    |  |                    |        |   |      |  
|Net servicing fees                                  |  |                    | 130.3  |   |      |   | 191.8  |  
|Other income                                        |  |                    | 122.0  |   |      |   | 88.1   |  
|Operating expenses                                  |  |                    | (701.3 | ) |      |   | (534.6 | )
|Income tax expense                                  |  |                    | (26.0  | ) |      |   | (86.4  | )
|                                                    |  |                    |        |   |      |  
|Net income (loss)                                   |  | $                  | (999.8 | ) |      | $ | 105.9  |  
|                                                    |  |                    |        |   |      |  





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3-year 10-year






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



|                          |  |                 |       |   |      |   |       |  
|------------------------- |  | --------------- | ----- | - | ---- | - | ----- | -
|                          |  | Three Months    |      
|                          |  | Ended March 31, |      
|                          |  |                 |      
|                          |  | 2007            |       |   | 2006 |  
|                          |  |                 |       |   |      |  
|                          |  | (In millions)   |      
|Net interest income       |  | $               | 34.6  |   |      | $ | 20.8  |  
|Provision for loan losses |  |                 | (24.7 | ) |      |   | (0.1  | )
|Other income              |  |                 | 60.7  |   |      |   | 81.0  |  
|Operating expenses        |  |                 | (18.8 | ) |      |   | (12.5 | )
|Income tax expense        |  |                 | (0.3  | ) |      |   | (35.1 | )
|                          |  |                 |       |   |      |  
|Net income                |  | $               | 51.5  |   |      | $ | 54.1  |  
|                          |  |                 |       |   |      |  

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



|                                              |  |                    |       |   |      |   |       |  
|--------------------------------------------- |  | ------------------ | ----- | - | ---- | - | ----- | -
|                                              |  | Three Months Ended |      
|                                              |  | March 31,          |      
|                                              |  |                    |      
|                                              |  | 2007               |       |   | 2006 |  
|                                              |  |                    |       |   |      |  
|                                              |  | (In millions)      |      
|Net interest income                           |  | $                  | 32.5  |   |      | $ | 41.1  |  
|Provision for loan losses                     |  |                    | (5.8  | ) |      |   | (3.3  | )
|Gain on sales of mortgage loans, net          |  |                    | 106.4 |   |      |   | 66.7  |  
|Servicing fees                                |  |                    | 15.0  |   |      |   | (2.3  | )
|Servicing valuation and hedge activities, net |  |                    | (0.5  | ) |      |   | (0.3  | )
|                                              |  |                    |       |   |      |  
|Net servicing fees (loss)                     |  |                    | 14.5  |   |      |   | (2.6  | )
|Other income                                  |  |                    | 21.6  |   |      |   | 11.5  |  
|Operating expenses                            |  |                    | (91.2 | ) |      |   | (54.8 | )
|Income tax expense                            |  |                    | (33.0 | ) |      |   | (17.2 | )
|                                              |  |                    |       |   |      |  
|Net income                                    |  | $                  | 45.0  |   |      | $ | 41.4  |  
|                                              |  |                    |       |   |      |  



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



|                                                    |  |                    |       |   |      |   |      |  
|--------------------------------------------------- |  | ------------------ | ----- | - | ---- | - | ---- | -
|                                                    |  | Three Months Ended |      
|                                                    |  | March 31,          |      
|                                                    |  |                    |      
|                                                    |  | 2007               |       |   | 2006 |  
|                                                    |  |                    |       |   |      |  
|                                                    |  | (In millions)      |      
|Net interest expense                                |  | $                  | (5.2  | ) |      | $ |     |  
|Provision for loan losses                           |  |                    | (3.1  | ) |      |   |     |  
|Servicing fees                                      |  |                    |      |   |      |   | 0.2  |  
|Servicing asset valuation and hedge activities, net |  |                    |      |   |      |   | (0.2 | )
|                                                    |  |                    |       |   |      |  
|Net servicing fees                                  |  |                    |      |   |      |   |     |  
|Other income (expense)                              |  |                    | 112.7 |   |      |   | (0.1 | )
|Operating expenses                                  |  |                    | (81.1 | ) |      |   | (0.5 | )
|Income tax (expense) benefit                        |  |                    | (11.4 | ) |      |   | 0.7  |  
|Minority interest                                   |  |                    | (19.1 | ) |      |   |     |  
|                                                    |  |                    |       |   |      |  
|Net income (loss)                                   |  | $                  | (7.2  | ) |      | $ | 0.1  |  
|                                                    |  |                    |       |   |      |  



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Asset Quality




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



|                                    |                   |                |         |       |             |   |       |       |  |   |       |       |  |   |         |       | 
|----------------------------------- | ----------------- | -------------- | ------- | ----- | ----------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- | 
|                                    |                   | Mortgage Loans |         |       |             |   |       |       | 
|                                    |                   | Held for       |         |       | Lending     |   |       |       |  |  
|                                    |                   | Investment     |         |       | Receivables |   |       | Other |  |   | Total |      
|                                    |                   |                |         |       |             |   |       |       |  |   |       |      
|                                    |                   | (In millions)  |        
|Balance at January 1, 2007          |                   | $              | 1,508.4 |       |             | $ | 396.6 |       |  | $ | 25.8  |       |  | $ | 1,930.8 |      
|Provision for loan losses           |                   |                | 364.8   |       |             |   | 177.2 |       |  |   | 3.0   |       |  |   | 545.0   |      
|Charge-offs                         |                   |                | (228.4  | )     |             |   | (48.5 | )     |  |   | (2.2  | )     |  |   | (279.1  | )    
|Recoveries                          |                   |                | 15.0    |       |             |   |      |       |  |   | 1.0   |       |  |   | 16.0    |      
|                                    |                   |                |         |       |             |   |       |       |  |   |       |      
|Balance at March 31, 2007           |                   | $              | 1,659.8 |       |             | $ | 525.3 |       |  | $ | 27.6  |       |  | $ | 2,212.7 |      
|                                    |                   |                |         |       |             |   |       |       |  |   |       |      
|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 |      
|                                    |                   |                |         |       |             |   |       |       |  |   |       |      
|Allowance as a percentage of total: |                   |                |         |       |             |   |       |       |  |   |       |       |  |   |         |      
|                                    | March 31, 2007    |                |         | 2.54% |             |   |       | 4.06% |  |   |       | 1.05% |  |   |         | 2.74% | 
|                                    | December 31, 2006 |                |         | 2.17% |             |   |       | 2.66% |  |   |       | 1.03% |  |   |         | 2.22% | 

34



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|                      |                      |                    |        |        |      |   |        |        |  
|--------------------- | -------------------- | ------------------ | ------ | ------ | ---- | - | ------ | ------ | -
|                      |                      | Three Months Ended |       
|                      |                      | March 31,          |       
|                      |                      |                    |       
|                      |                      | 2007               |        |        | 2006 |  
|                      |                      |                    |        |        |      |  
|                      |                      | (In millions)      |       
|Mortgage loans:       |                      |                    |        |        |      |   |        |       
|                      | Prime conforming     |                    | $      | (0.5   | )    |   | $      | (0.8   | )
|                      | Prime non-conforming |                    |        | (5.6   | )    |   |        | (6.5   | )
|                      | Prime second-lien    |                    |        | (21.7  | )    |   |        | (2.3   | )
|                      | Nonprime             |                    |        | (185.6 | )    |   |        | (105.6 | )
|Lending receivables:  |                      |                    |        |        |      |   |        |       
|                      | Warehouse            |                    |        | (48.5  | )    |   |        | (0.3   | )
|                      | Construction         |                    |        |       |      |   |        |       |  
|                      | Healthcare           |                    |        |       |      |   |        |       |  
|                      | Other                |                    |        |       |      |   |        |       |  
|Other                 |                      |                    | (1.2   | )      |      |   |       |       
|                      |                      |                    |        |        |      |  
|Total net charge-offs |                      | $                  | (263.1 | )      |      | $ | (115.5 | )     
|                      |                      |                    |        |        |      |  



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



35



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|                                                                                                               |                      |                        |          |     |              |   |         |           |         |   |         |   |         | 
|-------------------------------------------------------------------------------------------------------------- | -------------------- | ---------------------- | -------- | --- | ------------ | - | ------- | --------- | ------- | - | ------- | - | ------- | 
|                                                                                                               |                      | March 31,              |          |     | December 31, |   |         | March 31, |        
|                                                                                                               |                      | 2007                   |          |     | 2006         |   |         | 2006      |        
|                                                                                                               |                      |                        |          |     |              |   |         |           |        
|                                                                                                               |                      | (In millions)          |         
|Nonaccrual loans:                                                                                              |                      |                        |          |     |              |   |         |           |         |   |         |  
|                                                                                                               | Mortgage loans:      |                        |          |     |              |   |         |           |         |   |         |   |        
|                                                                                                               |                      | Prime conforming       |          | $   | 8.3          |   |         | $         | 11.3    |   |         | $ | 5.5     | 
|                                                                                                               |                      | Prime non-conforming   |          |     | 471.7        |   |         |           | 419.4   |   |         |   | 342.5   | 
|                                                                                                               |                      | Government             |          |     | 0.1          |   |         |           | 0.2     |   |         |   |        | 
|                                                                                                               |                      | Prime second-lien      |          |     | 155.9        |   |         |           | 142.1   |   |         |   | 189.9   | 
|                                                                                                               |                      | Nonprime*              |          |     | 7,133.3      |   |         |           | 6,736.2 |   |         |   | 5,680.0 | 
|                                                                                                               | Lending receivables: |                        |          |     |              |   |         |           |         |   |         |   |        
|                                                                                                               |                      | Warehouse**            |          |     | 1,301.3      |   |         |           | 1,317.7 |   |         |   | 25.5    | 
|                                                                                                               |                      | Construction***        |          |     | 114.7        |   |         |           | 68.8    |   |         |   | 8.6     | 
|                                                                                                               |                      | Commercial real estate |          |     |             |   |         |           |        |   |         |   | 17.0    | 
|                                                                                                               | Other                |                        |          | 0.1 |              |   |         | 0.1       |         |   |         |  |        
|                                                                                                               |                      |                        |          |     |              |   |         |           |        
|Total nonaccrual loans                                                                                         |                      |                        | 9,185.4  |     |              |   | 8,695.8 |           |         |   | 6,269.0 |  
|Restructured loans                                                                                             |                      |                        | 8.1      |     |              |   | 7.8     |           |         |   | 19.4    |  
|Foreclosed assets                                                                                              |                      |                        | 1,465.7  |     |              |   | 1,140.7 |           |         |   | 626.0   |  
|                                                                                                               |                      |                        |          |     |              |   |         |           |        
|Total nonperforming assets                                                                                     |                      | $                      | 10,659.2 |     |              | $ | 9,844.3 |           |         | $ | 6,914.4 |  
|                                                                                                               |                      |                        |          |     |              |   |         |           |        
|Total nonaccrual loans as a percentage of total mortgage loans
    held for investment and lending receivables |                      |                        | 11.7     | %   |              |   | 10.3    | %         |         |   | 7.3     | %
|                                                                                                               |                      |                        |          |     |              |   |         |           |        
|Total nonperforming assets as a percentage of total consolidated
    assets                                    |                      |                        | 8.5      | %   |              |   | 7.3     | %         |         |   | 5.7     | %
|                                                                                                               |                      |                        |          |     |              |   |         |           |        






| |   |                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Includes $480.6 million as of March 31, 2007,
    $414.7 million as of December 31, 2006 and
    $242.0 million as of March 31, 2006 of loans that were
    purchased distressed and already in nonaccrual status. In
    addition, includes $4.6 and $3.3 million as of
    March 31, 2007 and December 31, 2006, respectively, of
    nonaccrued loans that are not included in Restructured
    Loans.



| |    |                                                                                                                                                                                        
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ** | Includes $405.7 and $10.1 million of nonaccrual
    restructured loans as of March 31, 2007 and
    December 31, 2006, respectively, that are not included in
    Restructured Loans.



|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*** | Includes $18.3 million as of March 31, 2007,
    $18.8 million as of December 31, 2006 and
    $8.6 million as of March 31, 2006 that are not
    included in Restructured Loans.



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|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |   |        |       |  |  |       |     | 
|------------------------------ | --------------- | --------------------- | ------ | ---------- | ------------------ |  | ----- | --------------- | ------- | - | -------- | ----- |  | ---------- | ----- | --- | ----- | - | ------ | ----- |  |  | ----- | --- | 
|                               |                 | As of March 31,       |        |            | As of December 31, |  |       | As of March 31, |        
|                               |                 |                       |        |            |                    |  |       |                 |        
|                               |                 | 2007                  |        |            | 2006               |  |       | 2006            |        
|                               |                 |                       |        |            |                    |  |       |                 |        
|                               |                 |                       |        | Percent of |                    |  |       |                 | Percent |   |          |       |  | Percent of |      
|                               |                 | Amount                |        |            | Total              |  |       | Amount          |         |   | of Total |       |  | Amount     |       |     | Total |  
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |  
|                               |                 | (Dollars in millions) |       
|Current                        |                 | $                     | 51,802 |            |                    |  | 80.1  | %               |         | $ | 55,964   |       |  |            | 81.3  | %   |       | $ | 62,095 |       |  |  | 85.3  | %  
|Past due:                      |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |   |        |       |  |  |       |    
|                               | 30 to 59 days   |                       |        | 3,993      |                    |  |       | 6.2             |         |   |          | 4,273 |  |            |       | 6.2 |       |   |        | 4,046 |  |  |       | 5.6 | 
|                               | 60 to 89 days   |                       |        | 1,752      |                    |  |       | 2.7             |         |   |          | 1,818 |  |            |       | 2.6 |       |   |        | 1,446 |  |  |       | 2.0 | 
|                               | 90 days or more |                       |        | 2,513      |                    |  |       | 3.9             |         |   |          | 3,403 |  |            |       | 5.0 |       |   |        | 2,269 |  |  |       | 3.1 | 
|Foreclosures pending           |                 |                       | 3,206  |            |                    |  | 4.9   |                 |         |   | 2,132    |       |  |            | 3.1   |     |       |   | 1,627  |       |  |  | 2.2   |    
|Bankruptcies                   |                 |                       | 1,423  |            |                    |  | 2.2   |                 |         |   | 1,219    |       |  |            | 1.8   |     |       |   | 1,279  |       |  |  | 1.8   |    
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |  
|Total unpaid principal balance |                 |                       | 64,689 |            |                    |  | 100.0 | %               |         |   | 68,809   |       |  |            | 100.0 | %   |       |   | 72,762 |       |  |  | 100.0 | %  
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |  
|Net premiums                   |                 |                       | 561    |            |                    |  |       |                 |         |   | 627      |       |  |            |       |     |       |   | 990    |       |  |  |       |    
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |  
|Total                          |                 | $                     | 65,250 |            |                    |  |       |                 |         | $ | 69,436   |       |  |            |       |     |       | $ | 73,752 |       |  |  |       |    
|                               |                 |                       |        |            |                    |  |       |                 |         |   |          |       |  |            |       |     |       |  







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|                                                                  |                                                  |                          |   |          |                    |  |   |          | 
|----------------------------------------------------------------- | ------------------------------------------------ | ------------------------ | - | -------- | ------------------ |  | - | -------- | 
|                                                                  |                                                  | Unpaid Principal Balance |  
|                                                                  |                                                  |                          |  
|                                                                  |                                                  | As of March 31,          |   |          | As of December 31, | 
|                                                                  |                                                  | 2007                     |   |          | 2006               | 
|                                                                  |                                                  |                          |   |          |                    | 
|                                                                  |                                                  | (In millions)            |  
|Mortgage Loans Held for
    Sale  Domestic                       |                                                  |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                     |                          | $ | 3,917.9  |                    |  | $ | 4,999.8  | 
|                                                                  | Payment option adjustable rate mortgage loans    |                          |   | 2,283.0  |                    |  |   | 1,838.1  | 
|                                                                  | High loan-to-value (100% or more) mortgage loans |                          |   | 1,502.2  |                    |  |   | 770.3    | 
|                                                                  | Below market initial rate mortgage loans         |                          |   | 7.4      |                    |  |   | 24.9     | 
|                                                                 
|Mortgage Loans Held for
    Investment  Domestic                 |                                                  |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                     |                          | $ | 12,021.3 |                    |  | $ | 12,521.3 | 
|                                                                  | Payment option adjustable rate mortgage loans    |                          |   | 109.3    |                    |  |   | 117.0    | 
|                                                                  | High loan-to-value (100% or more) mortgage loans |                          |   | 10,972.9 |                    |  |   | 11,043.3 | 
|                                                                  | Below market initial rate mortgage loans         |                          |   | 150.8    |                    |  |   | 167.2    | 
|                                                                 
|Mortgage Loans  Held for Sale and
    Investment  International |                                                  |                          |   |          |                    |  |   |         
|                                                                  | Interest-only mortgage loans                     |                          | $ | 4,464.0  |                    |  | $ | 4,895.1  | 
|                                                                  | Payment option adjustable rate mortgage loans    |                          |   |         |                    |  |   |         | 
|                                                                  | High loan-to-value (100% or more) mortgage loans |                          |   | 412.5    |                    |  |   | 164.2    | 
|                                                                  | Below market initial rate mortgage loans         |                          |   |         |                    |  |   |         | 



|                                                 |  |                         |         |  |      |   |          | 
|------------------------------------------------ |  | ----------------------- | ------- |  | ---- | - | -------- | 
|                                                 |  | Loan Production for the |        
|                                                 |  | Three Months Ended      |        
|                                                 |  | March 31,               |        
|                                                 |  |                         |        
|                                                 |  | 2007                    |         |  | 2006 |  
|                                                 |  |                         |         |  |      |  
|                                                 |  | (In millions)           |        
|Interest-only mortgage loans                     |  | $                       | 9,844.6 |  |      | $ | 11,646.1 | 
|Payment option adjustable rate mortgage loans    |  |                         | 3,514.5 |  |      |   | 3,240.4  | 
|High loan-to-value (100% or more) mortgage loans |  |                         | 1,789.3 |  |      |   | 2,285.7  | 
|Below market initial rate mortgage loans         |  |                         | 212.6   |  |      |   | 28.2     | 



Liquidity and Capital Resources




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





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

38



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a.Short-term financing: We require short-term
    funding to finance our mortgage loans held for sale, lending
    receivables and various other liquid assets. We forecast our
    cash position and our potential funding needs daily, taking into
    account debt maturities and potential peak balance sheet levels
    over a medium term time horizon. We also manage the timing of
    all debt maturities to limit any concentrations. As of
    March 31, 2007, available sources of short-term liquidity
    totaled $91.3 billion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | b.Long-term financing: Our long-term financing
    needs arise primarily from our mortgage loans held for
    investment, mortgage servicing rights, real estate investments
    and assets used for over-collateralization of our funding
    conduits. We manage our long-term debt maturities and credit
    facility expirations to minimize refinancing risk and maturity
    concentrations. Further, we endeavor to obtain an appropriate
    debt funding mix to complement our equity capital. We consider
    the available capacity and relative cost given market
    constraints, as well as our commitment to our credit ratings. We
    regularly assess the term structure of our assets and
    liabilities and interest rate risk. We limit the liability
    maturities in any one period (monthly, quarterly and annually).
    Consequently, we have achieved what we believe is a
    well-laddered unsecured maturity profile. Our long-term debt
    typically consists of collateralized borrowings in
    securitization trusts, unsecured debt issued in the public debt
    capital markets and secured financing through the Federal Home
    Loan Bank (FHLB).



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



|                                           |       |               |         |           |            |   |         |           |  |   |         |         | 
|------------------------------------------ | ----- | ------------- | ------- | --------- | ---------- | - | ------- | --------- |  | - | ------- | ------- | 
|                                           |       |               |         | Unsecured |            |   | Total   |          
|                                           |       | Unsecured     |         |           | Committed- |   |         | Unsecured | 
|                                           |       | Committed-    |         |           | Unused     |   |         | Committed | 
|                                           |       | Outstanding   |         |           | Capacity   |   |         | Capacity  | 
|                                           |       |               |         |           |            |   |         |           | 
|                                           |       | (In millions) |        
|Liquidity portfolio (investment balance)   |       | $             |        |           |            | $ | 1,797.7 |           |  | $ | 1,797.7 |        
|Syndicated bank credit facilities revolver |       |               |        |           |            |   | 875.0   |           |  |   | 875.0   |        
|364-day bank credit facilities revolver    |       |               |        |           |            |   | 875.0   |           |  |   | 875.0   |        
|International bank lines                   |       |               | 169.7   |           |            |   | 192.5   |           |  |   | 362.2   |        
|Bank term loan                             |       |               | 1,750.0 |           |            |   |        |           |  |   | 1,750.0 |        
|                                           |       |               |         |           |            |   |         |           | 
|                                           | Total |               | $       | 1,919.7   |            |   | $       | 3,740.2   |  |   | $       | 5,659.9 | 
|                                           |       |               |         |           |            |   |         |           | 



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



39



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

|                                                                   |  |                   |           |  |                   |   |           | 
|------------------------------------------------------------------ |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                                                                   |  | Outstanding as of |          
|                                                                   |  |                   |          
|                                                                   |  | March 31, 2007    |           |  | December 31, 2006 |  
|                                                                   |  |                   |           |  |                   |  
|                                                                   |  | (In millions)     |          
|Collateralized borrowings in securitization trusts 
    long-term |  | $                 | 48,790.5  |  |                   | $ | 53,299.5  | 
|Senior unsecured notes  long-term                                 |  |                   | 12,441.6  |  |                   |   | 12,408.8  | 
|Subordinated unsecured note                                        |  |                   | 1,000.0   |  |                   |   | 1,000.0   | 
|Term loans and revolvers  long-term                               |  |                   | 1,750.0   |  |                   |   | 1,750.0   | 
|Bank lines  short-term                                            |  |                   | 1,251.4   |  |                   |   | 756.0     | 
|Bank lines  long-term                                             |  |                   | 23.5      |  |                   |   | 21.8      | 
|Other unsecured  short-term                                       |  |                   | 338.4     |  |                   |   | 392.7     | 
|Other unsecured  long-term                                        |  |                   | 502.7     |  |                   |   | 643.6     | 
|                                                                   |  |                   |           |  |                   |  
|Total unsecured borrowings                                         |  |                   | 17,307.6  |  |                   |   | 16,972.9  | 
|Secured  short-term                                               |  |                   | 26,358.6  |  |                   |   | 29,065.9  | 
|Secured  long-term                                                |  |                   | 3,343.3   |  |                   |   | 6,562.6   | 
|FHLB  long-term                                                   |  |                   | 8,313.0   |  |                   |   | 7,279.0   | 
|                                                                   |  |                   |           |  |                   |  
|Total secured borrowings                                           |  |                   | 38,014.9  |  |                   |   | 42,907.5  | 
|                                                                   |  |                   |           |  |                   |  
|Total borrowings                                                   |  |                   | 104,113.0 |  |                   |   | 113,179.9 | 
|Bank deposits                                                      |  |                   | 9,366.1   |  |                   |   | 9,851.0   | 
|                                                                   |  |                   |           |  |                   |  
|Total borrowings and deposits                                      |  |                   | 113,479.1 |  |                   |   | 123,030.9 | 
|Off-balance sheet financings                                       |  |                   | 130,108.3 |  |                   |   | 119,295.8 | 
|                                                                   |  |                   |           |  |                   |  
|Total                                                              |  | $                 | 243,587.4 |  |                   | $ | 242,326.7 | 
|                                                                   |  |                   |           |  |                   |  



|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |           |  |  |    |     |  
|------------- | ---------------- | ----------------- | -------- | --------------------- | ----------------- |  | -- | ------ | - | - | ---------------- | --------- |  |  | -- | --- | -
|              |                  | Outstanding as of |         
|              |                  |                   |         
|              |                  | March 31, 2007    |          |                       | December 31, 2006 | 
|              |                  |                   |          |                       |                   | 
|              |                  | Amount            |          |                       | Percent of Total  |  |    | Amount |   |   | Percent of Total |          
|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |          
|              |                  |                   |          | (Dollars in millions) |                   |  |   
|Domestic      |                  | $                 | 93,571.3 |                       |                   |  | 90 | %      |   | $ | 100,307.5        |           |  |  | 89 | %  
|International |                  |                   | 10,541.7 |                       |                   |  | 10 |        |   |   | 12,872.4         |           |  |  | 11 |    
|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |          
|              | Total borrowings |                   | $        | 104,113.0             |                   |  |    | 100    | % |   | $                | 113,179.9 |  |  |    | 100 | %
|              |                  |                   |          |                       |                   |  |    |        |   |   |                  |          



|                                |  |               |       |  |              |   |       |                 |  |   |                  |  |  |           |       |  |              |   |        |           |  |   |              |  |  |   |       |  |  |   |       | 
|------------------------------- |  | ------------- | ----- |  | ------------ | - | ----- | --------------- |  | - | ---------------- |  |  | --------- | ----- |  | ------------ | - | ------ | --------- |  | - | ------------ |  |  | - | ----- |  |  | - | ----- | 
|                                |  | Committed     |       |  | Uncommitted  |   |       | Total Liquidity |  |   | Unused Liquidity | 
|                                |  | Facilities    |       |  | Facilities   |   |       | Facilities      |  |   | Facilities       | 
|                                |  |               |       |  |              |   |       |                 |  |   |                  | 
|                                |  | March 31,     |       |  | December 31, |   |       | March 31,       |  |   | December 31,     |  |  | March 31, |       |  | December 31, |   |        | March 31, |  |   | December 31, | 
|                                |  | 2007          |       |  | 2006         |   |       | 2007            |  |   | 2006             |  |  | 2007      |       |  | 2006         |   |        | 2007      |  |   | 2006         | 
|-                               |  |               |       |  |              |   |       |                 |  |   |                  |  |  |           |       |  |              |   |        |           |  |   |              | 
|                                |  | (In billions) |      
|Unsecured funding facilities(a) |  | $             | 3.86  |  |              | $ | 3.86  |                 |  | $ | 2.04             |  |  | $         | 1.77  |  |              | $ | 5.90   |           |  | $ | 5.63         |  |  | $ | 2.53  |  |  | $ | 2.71  | 
|Secured funding facilities      |  |               | 30.34 |  |              |   | 29.37 |                 |  |   | 75.10            |  |  |           | 73.28 |  |              |   | 105.44 |           |  |   | 102.65       |  |  |   | 67.42 |  |  |   | 59.74 | 

40



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|   |                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) | We maintain $3.85 billion of unsecured syndicated bank
    facilities, consisting of a $1.75 billion bank term loan
    committed through July 2008, an $875 million syndicated
    line of credit committed through July 2008, an $875 million
    364-day revolver committed through July 2007, and a
    $354 million (U.S. dollar) Canadian syndicated bank
    line committed through December 2007.



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





|                                                                                 |  |                      |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |   |          |  |  |   |           | 
|-------------------------------------------------------------------------------- |  | -------------------- | -------- |  | ----------------------- | - | -------- | -------- |  | - | ----------- |  |  | --------------- | -------- |  | -------- | - | -------- |  |  | - | --------- | 
|                                                                                 |  | As of March 31, 2007 |          |  | As of December 31, 2006 |  
|                                                                                 |  |                      |          |  |                         |  
|                                                                                 |  | Total Secured        |          |  | Total Secured           |  
|                                                                                 |  |                      |          |  |                         |  
|                                                                                 |  | Outstanding          |          |  | Unused Capacity         |   |          | Capacity |  |   | Outstanding |  |  | Unused Capacity |          |  | Capacity |  
|                                                                                 |  |                      |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  
|                                                                                 |  | (In millions)        |         
|Mortgage Interest Networking Trust                                               |  | $                    | 1,343.5  |  |                         | $ | 23,656.5 |          |  | $ | 25,000.0    |  |  | $               | 1,402.9  |  |          | $ | 23,597.1 |  |  | $ | 25,000.0  | 
|MINT II, LLC                                                                     |  |                      | 4,301.8  |  |                         |   | 20,698.2 |          |  |   | 25,000.0    |  |  |                 | 5,831.2  |  |          |   | 19,168.8 |  |  |   | 25,000.0  | 
|Repurchase agreements                                                            |  |                      | 12,606.5 |  |                         |   | 8,454.4  |          |  |   | 21,060.9    |  |  |                 | 11,505.5 |  |          |   | 7,813.4  |  |  |   | 19,318.9  | 
|Receivables Lending Agreement                                                    |  |                      | 1,100.0  |  |                         |   | 1,670.0  |          |  |   | 2,770.0     |  |  |                 | 5,250.0  |  |          |   | 322.8    |  |  |   | 5,572.8   | 
|Mortgage Asset Lending Agreement                                                 |  |                      | 2,140.0  |  |                         |   | 3,619.0  |          |  |   | 5,759.0     |  |  |                 | 1,120.0  |  |          |   | 1,836.3  |  |  |   | 2,956.3   | 
|Bank facilities for construction and commercial business lending
    receivables |  |                      | 1,781.1  |  |                         |   | 115.2    |          |  |   | 1,896.3     |  |  |                 | 1,700.0  |  |          |   |         |  |  |   | 1,700.0   | 
|Bank facility for mortgage servicing rights                                      |  |                      | 1,300.0  |  |                         |   |         |          |  |   | 1,300.0     |  |  |                 | 1,275.0  |  |          |   | 25.0     |  |  |   | 1,300.0   | 
|Other                                                                            |  |                      | 5,129.0  |  |                         |   | 7,304.8  |          |  |   | 12,433.8    |  |  |                 | 7,543.9  |  |          |   | 4,671.6  |  |  |   | 12,215.5  | 
|                                                                                 |  |                      |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  
|Total excluding FHLB advances                                                    |  |                      | 29,701.9 |  |                         |   | 65,518.1 |          |  |   | 95,220.0    |  |  |                 | 35,628.5 |  |          |   | 57,435.0 |  |  |   | 93,063.5  | 
|FHLB advances                                                                    |  |                      | 8,313.0  |  |                         |   | 1,907.4  |          |  |   | 10,220.4    |  |  |                 | 7,279.0  |  |          |   | 2,305.3  |  |  |   | 9,584.3   | 
|                                                                                 |  |                      |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  
|Total secured borrowings                                                         |  | $                    | 38,014.9 |  |                         | $ | 67,425.5 |          |  | $ | 105,440.4   |  |  | $               | 42,907.5 |  |          | $ | 59,740.3 |  |  | $ | 102,647.8 | 
|                                                                                 |  |                      |          |  |                         |   |          |          |  |   |             |  |  |                 |          |  |          |  



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|                                      |  |                      |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |   |          |  |  |   |          | 
|------------------------------------- |  | -------------------- | -------- | ------- | ----------- | - | -------- | ----------- |  | ----- | --------- |  |  | ----------- | -------- |  | -------- | - | -------- |  |  | - | -------- | 
|                                      |  | As of March 31, 2007 |         
|                                      |  |                      |         
|                                      |  |                      |          | Secured |             |   | Secured  |             |  | Total |          
|                                      |  | Secured              |          |         | Secured     |   |          | Total       |  |       | Committed |  |  | Uncommitted |          |  | Secured  |  
|                                      |  | Committed            |          |         | Uncommitted |   |          | Secured     |  |       | Unused    |  |  | Unused      |          |  | Unused   |  
|                                      |  | Outstanding          |          |         | Outstanding |   |          | Outstanding |  |       | Capacity  |  |  | Capacity    |          |  | Capacity |  
|                                      |  |                      |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |  
|                                      |  | (In millions)        |         
|Mortgage loans & warehouse lending(a) |  | $                    | 12,738.4 |         |             | $ | 21,344.6 |             |  | $     | 34,083.0  |  |  | $           | 13,509.8 |  |          | $ | 53,610.8 |  |  | $ | 67,120.6 | 
|Other lending receivables(b)          |  |                      | 1,781.1  |         |             |   |         |             |  |       | 1,781.1   |  |  |             | 115.2    |  |          |   |         |  |  |   | 115.2    | 
|Mortgage servicing rights(c)          |  |                      | 1,300.0  |         |             |   |         |             |  |       | 1,300.0   |  |  |             |         |  |          |   |         |  |  |   |         | 
|Other                                 |  |                      | 710.3    |         |             |   | 140.5    |             |  |       | 850.8     |  |  |             | 189.7    |  |          |   |         |  |  |   | 189.7    | 
|                                      |  |                      |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |  
|                                      |  | $                    | 16,529.8 |         |             | $ | 21,485.1 |             |  | $     | 38,014.9  |  |  | $           | 13,814.7 |  |          | $ | 53,610.8 |  |  | $ | 67,425.5 | 
|                                      |  |                      |          |         |             |   |          |             |  |       |           |  |  |             |          |  |          |  

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






|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(a) | Facilities to fund mortgage loan and warehouse lending
    receivables.                     
|   
|(b) | Facilities to fund residential construction and commercial
    business lending receivables.
|   
|(c) | Facilities to fund servicing advances, servicing rights and
    residual interests.         



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Mortgage Asset Lending Agreement, or MALA, is a secured
    aggregation facility that funds residential mortgage loans,
    during the aggregation period. The facility receives funding
    from a syndicate of asset-backed commercial paper vehicles. MALA
    shares a funding commitment with Receivables Lending Agreement,
    or RLA, an asset-backed commercial paper facility that funds our
    warehouse lending receivables. The MALA and RLA facilities have
    both short-term and long-term commitments. The two facilities
    had aggregate liquidity commitments of $8.5 billion as of
    March 31, 2007, which were divided into a one-year
    commitment of $2.4 billion and a three-year commitment of
    $6.1 billion.
|
| |  | Other secured facilities include certain facilities to fund
    mortgage loans prior to their sale or securitization. As of
    March 31, 2007, in addition to MINT, MINT II, MALA and RLA,
    we had £4.7 billion of liquidity commitments to fund
    loans in the United Kingdom,
    1.3 billion
    of liquidity commitments to fund loans originated in The
    Netherlands and Germany, a 250.0 million Australian dollar
    liquidity commitment to fund loans in Australia and a
    710.9 million pesos liquidity commitment to fund loans in
    Mexico. As of March 31, 2007, we increased our committed
    capacity by a net $1.0 billion.                                                                                          

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other secured borrowings include facilities that fund
    construction and commercial business lending receivables, for
    which we had aggregate liquidity commitments of
    $1.9 billion as of March 31, 2007, which includes
    £100.0 million of liquidity commitments to fund
    lending receivables in the United Kingdom. In addition, we have
    arranged facilities to fund mortgage servicing rights and
    mortgage servicing advances either on a committed or uncommitted
    basis. These facilities provided aggregate liquidity commitments
    of $2.2 billion as of March 31, 2007.
|
| |  | GMAC Bank has entered into an advances agreement with the FHLB.
    As of March 31, 2007, we had total borrowing capacity of
    $10.2 billion under this agreement. Under the arrangement
    with the FHLB, we are able to fund mortgage loans, investments
    securities and certain lending receivables.                                                                                                                                                                                                                                                                                              



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



|                                       |                                   |                             |         |         |                   |  |         |         |         | 
|-------------------------------------- | --------------------------------- | --------------------------- | ------- | ------- | ----------------- |  | ------- | ------- | ------- | 
|                                       |                                   | Outstanding as of           |        
|                                       |                                   |                             |        
|                                       |                                   | March 31, 2007              |         |         | December 31, 2006 | 
|                                       |                                   |                             |         |         |                   | 
|                                       |                                   | (In millions)               |        
|Unsecured committed borrowings:        |                                   |                             |         |         |                   |  |         |        
|                                       | Bank term loan                    |                             | $       | 1,750.0 |                   |  | $       | 1,750.0 |        
|                                       | Canadian syndicated bank revolver |                             |         | 163.6   |                   |  |         | 213.9   |        
|                                       | Australian WestPac bank line      |                             |         | 6.0     |                   |  |         | 2.4     |        
|                                       |                                   |                             |         |         |                   | 
|Total unsecured committed borrowings   |                                   |                             | 1,919.6 |         |                   |  | 1,966.3 |        
|Unsecured uncommitted borrowings:      |                                   |                             |         |         |                   |  |         |        
|                                       | Lines of credit                   |                             |         | 705.2   |                   |  |         | 161.8   |        
|                                       | Builder notes                     |                             |         | 67.0    |                   |  |         | 74.5    |        
|                                       | International commercial paper    |                             |         | 271.5   |                   |  |         | 186.2   |        
|                                       | International medium-term notes   |                             |         | 502.7   |                   |  |         | 643.6   |        
|                                       | Investor custodial borrowings     |                             |         |        |                   |  |         | 131.7   |        
|                                       | Other                             |                             |         | 400.0   |                   |  |         | 400.0   |        
|                                       |                                   |                             |         |         |                   | 
|Total unsecured uncommitted borrowings |                                   |                             | 1,946.4 |         |                   |  | 1,597.8 |        
|                                       |                                   |                             |         |         |                   | 
|                                       |                                   | Total unsecured borrowings* |         | $       | 3,866.0           |  |         | $       | 3,564.1 | 
|                                       |                                   |                             |         |         |                   | 






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







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



43



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







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Walnut Grove Funding is a secured aggregation facility that
    funds home equity loans, home equity lines of credit, high
    loan-to-value mortgage loans and certain non-conforming fixed
    rate mortgage loans through the issuance of asset-backed
    commercial paper. Walnut Grove Funding provided
    $324.0 million of funding as of March 31, 2007 and
    $275.4 million as of December 31, 2006, and was
    permitted to finance a maximum of $1.0 billion as of
    March 31, 2007 and $900.0 million as of
    December 31, 2006.
|
| |  | Horsham Funding is a facility that funds defaulted government
    insured or guaranteed residential mortgage loans repurchased
    through the issuance of asset-backed commercial paper. Horsham
    Funding provided $107.4 million of funding as of
    March 31, 2007 and $102.4 million as of
    December 31, 2006, and was permitted to finance a maximum
    amount of $200.0 million as of March 31, 2007 and
    December 31, 2006.                                                                                                       

Credit Ratings




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





Recently Issued Accounting Standards


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


44



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##### Table of Contents



Financial Accounting Standards Board Staff
Position  FIN 46(R)-6 Determining the
Variability to Be Considered in Applying FASB Interpretation
No. 46(R)


Financial Accounting Standards Board Interpretation
No. 48 Accounting for Uncertainty in
Income Taxes


Staff Accounting Bulletin No. 108 Quantifying Financial Misstatements


Statement of Financial Accounting Standards
No. 157 Fair Value Measurements


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


45



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##### Table of Contents



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







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





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|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |      |      |     |      |       |      |      |  
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------- | ----------------------------------------------------------- | ------ | ---- | --- | ---- | ---- | --- | --- | ---- | ---- | ---- | --- | ---- | ----- | ---- | ---- | -
|                                                                                                  |                                                        | Change in Fair Value                      |                                                            
|                                                                                                  |                                                        | as of                                     |                                                            
|                                                                                                  |                                                        | March 31, 2007                            |                                                            
|                                                                                                  |                                                        |                                           |                                                            
|Change in Interest Rate (basis points)                                                            |                                                        | -100                                      |                                                             |        | -50  |     |      | +50  |     |     | +100 |     
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|                                                                                                  |                                                        | (In millions)                             |                                                            
|Mortgage serving rights and other financial instruments:                                          |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |      |      |     |      |      
|                                                                                                  | Mortgage servicing rights and other retained interests |                                           | $                                                           | (1,616 | )    |     | $    | (784 | )   |     | $    | 615  |      |     | $    | 1,059 |     
|                                                                                                  | Impact of servicing hedge:                             |                                           |                                                             |        |      |     |      |      |     |     |      |      |      |     |      |       |     
|                                                                                                  |                                                        | Swap-based                                |                                                             |        | 855  |     |      |      | 387 |     |      |      | (304 | )   |      |       | (542 | )   
|                                                                                                  |                                                        | Treasury-based                            |                                                             |        | 146  |     |      |      | 71  |     |      |      | (67  | )   |      |       | (131 | )   
|                                                                                                  |                                                        | Others                                    |                                                             |        | 576  |     |      |      | 298 |     |      |      | (306 | )   |      |       | (613 | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|                                                                                                  |                                                        |                                           | Mortgage servicing rights and other retained interests, net |        |      | (39 | )    |      |     | (28 | )    |      |      | (62 | )    |       |      | (227 | )
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|                                                                                                  | Committed pipeline                                     |                                           |                                                             | 127    |      |     |      | 75   |     |     |      | (115 | )    |     |      | (267  | )   
|                                                                                                  | Mortgage loan inventory                                |                                           |                                                             | 219    |      |     |      | 127  |     |     |      | (160 | )    |     |      | (352  | )   
|                                                                                                  | Impact of associated derivative instruments:           |                                           |                                                             |        |      |     |      |      |     |     |      |      |      |     |      |       |     
|                                                                                                  |                                                        | Mortgage-based                            |                                                             |        | (140 | )   |      |      | (84 | )   |      |      | 117  |     |      |       | 266  |     
|                                                                                                  |                                                        | Eurodollar-based                          |                                                             |        | (16  | )   |      |      | (8  | )   |      |      | 8    |     |      |       | 16   |     
|                                                                                                  |                                                        | Others                                    |                                                             |        | (144 | )   |      |      | (80 | )   |      |      | 96   |     |      |       | 198  |     
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|                                                                                                  |                                                        |                                           | Committed pipeline and mortgage loan inventory, net         |        |      | 46  |      |      |     | 30  |      |      |      | (54 | )    |       |      | (139 | )
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|Net change in fair value related to other businesses                                              |                                                        |                                           | 3                                                           |        |      |     | 2    |      |     |     | 0    |      |      |     | (2   | )    
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|GMAC Bank:                                                                                        |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |      |      |     |      |      
|                                                                                                  | Securities portfolio                                   |                                           |                                                             | 2      |      |     |      | 1    |     |     |      | (1   | )    |     |      | (2    | )   
|                                                                                                  | Mortgage loans                                         |                                           |                                                             | 165    |      |     |      | 99   |     |     |      | (122 | )    |     |      | (260  | )   
|                                                                                                  | Deposit liabilities                                    |                                           |                                                             | (10    | )    |     |      | (5   | )   |     |      | 5    |      |     |      | 10    |     
|                                                                                                  | Federal Home Loan Bank advances                        |                                           |                                                             | (182   | )    |     |      | (93  | )   |     |      | 100  |      |     |      | 208   |     
|                                                                                                  | Other liabilities                                      |                                           |                                                             | (14    | )    |     |      | (7   | )   |     |      | 7    |      |     |      | 14    |     
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|                                                                                                  |                                                        | GMAC Bank, net                            |                                                             |        | (39  | )   |      |      | (5  | )   |      |      | (11  | )   |      |       | (30  | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|Notes payable and capital securities                                                              |                                                        |                                           | (257                                                        | )      |      |     | (127 | )    |     |     | 124  |      |      |     | 245  |      
|Impact of associated derivative instruments:                                                      |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |      |      |     |      |      
|                                                                                                  |                                                        | Swap-based                                |                                                             |        | 300  |     |      |      | 148 |     |      |      | (145 | )   |      |       | (286 | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|                                                                                                  |                                                        | Notes payable and capital securities, net |                                                             |        | 43   |     |      |      | 21  |     |      |      | (21  | )   |      |       | (41  | )   
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|Insurance company investment portfolios                                                           |                                                        |                                           | 2                                                           |        |      |     | 1    |      |     |     | (1   | )    |      |     | (3   | )    
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|Net change in fair value related to mortgage servicing rights
    and other financial instruments |                                                        | $                                         | 16                                                          |        |      | $   | 21   |      |     | $   | (149 | )    |      | $   | (442 | )    
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     
|Net change in fair value related to broker-dealer trading
    securities                          |                                                        | $                                         | (1                                                          | )      |      | $   | (1   | )    |     | $   | 0    |      |      | $   | (2   | )    
|                                                                                                  |                                                        |                                           |                                                             |        |      |     |      |      |     |     |      |     

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|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |     |    |      |      |      |      |      |      |      |      |  
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------- | ----------------------------------------------------------- | ---- | ---- | --- | ---- | ---- | --- | -- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | -
|                                                                                                  |                                                        | Change in Fair Value                      |                                                            
|                                                                                                  |                                                        | as of                                     |                                                            
|                                                                                                  |                                                        | March 31, 2006                            |                                                            
|                                                                                                  |                                                        |                                           |                                                            
|Change in Interest Rate (basis points)                                                            |                                                        | -100                                      |                                                             |      | -50  |     |      | +50  |     |    | +100 |     
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |     |    |      |     
|                                                                                                  |                                                        | (In millions)                             |                                                            
|Mortgage serving rights and other financial instruments:                                          |                                                        |                                           |                                                             |      |      |     |      |      |     |    |      |      |      |      |      |     
|                                                                                                  | Mortgage servicing rights and other retained interests |                                           | $                                                           | (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   | )   
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |     |    |      |     
|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    |     
|                                                                                                  |                                                        |                                           |                                                             |      |      |     |      |      |     |    |      |     



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Item 4.  Controls and Procedures.


13a-15(e)


13a-15(f)


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PART II  OTHER INFORMATION





Item 1.  Legal Proceedings.




Kessler.


Santiago.


Murray.


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Parthiban. Murray Murray.







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






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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SIGNATURES






| |                                        
| | ---------------------------------------
| | Residential Capital, LLC               
| | (Registrant)                           
|
| | /s/ Sanjiv Khattri                     
| |                                        
| | Sanjiv Khattri                         
| | Chief Financial Officer                
|
| | /s/ James N. Young                     
| |                                        
| | James N. Young                         
| | Chief Accounting Officer and Controller

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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

53