##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549-1004
  FORM 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2008, oro

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

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

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

Accelerated
    filer o

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

Smaller reporting
    company o    o þ
      Reduced
    Disclosure Format




---



##### 





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

Financial Statements (unaudited)


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


3Condensed Consolidated Statements of Income for
    the Three Months Ended March 31, 2008 and 2007


4Condensed Consolidated Statements of Changes in
    Equity for the Three Months Ended March 31, 2008 and
    2007


5Condensed Consolidated Statements of Cash Flows
    for the Three Months Ended
    March 31, 2008 and 2007


6Notes to Condensed Consolidated Financial
    Statements


8Item 2.

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


42Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


72Item 4.

Controls and Procedures


75PART II  OTHER
    INFORMATIONItem 1.

Legal Proceedings


76Item 1A.

Risk Factors


78Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


95Item 3.

Defaults Upon Senior Securities


95Item 4.

Submission of Matters to a Vote of Security
    Holders


95Item 5.

Other Information


95Item 6.

Exhibits


95Signatures


96Index of Exhibits


97Computation of Ratio of Earnings to Fixed ChargesCertification of Principal Executive OfficerCertification of Principal Financial OfficerSection 1350 Certification   2




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##### Table of Contents



PART
    I  FINANCIAL INFORMATION Item
    1.  Financial Statements.  RESIDENTIAL
    CAPITAL, LLC
  CONDENSED CONSOLIDATED BALANCE SHEETS
 (Dollars
    in thousands)
  March 31,


December 31,2008


2007(unaudited)ASSETSCash and cash equivalents

$
4,154,724


$
4,415,913Mortgage loans held for sale


11,798,322



11,998,236Trading securities


1,144,917



2,090,690Mortgage loans held for investment, net ($3,915,336 at fair
    value
    at March 31, 2008)


34,000,965



41,330,322Lending receivables, net


8,809,368



8,406,495Mortgage servicing rights


4,277,979



4,702,862Accounts receivable, net


3,511,615



3,187,913Investments in real estate and other


1,226,513



1,629,717Other assets


12,417,243



11,657,769Total assets

$
81,341,646


$
89,419,917LIABILITIESBorrowings:Borrowings from parent

$
655,000


$
Collateralized borrowings in securitization trusts ($4,298,973
    at fair value
    at March 31, 2008)


9,368,625



16,145,741Other borrowings


41,729,093



46,184,150Total borrowings


51,752,718



62,329,891Deposit liabilities


15,949,764



13,349,844Other liabilities


6,492,546



6,370,305Total liabilities


74,195,028



82,050,040Minority interest


1,413,736



1,339,760EQUITYMembers interest


6,767,003



6,624,344Preferred membership interests


607,192



Accumulated deficit


(1,709,132
)


(694,756
)Accumulated other comprehensive income


67,819



100,529Total equity


5,732,882



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

$
81,341,646


$
89,419,917    3




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC



CONDENSED
    CONSOLIDATED STATEMENTS OF INCOME  Three Months EndedMarch 31,2008


2007(Unaudited)(Dollars in thousands)RevenueInterest income

$
1,216,024


$
2,134,712Automotive operating lease income


147,274



111,230Total financing revenue


1,363,298



2,245,942Interest expense


1,170,396



1,745,184Depreciation expense on automotive operating lease income


87,287



65,876Net financing revenue


105,615



434,882Other revenueLoss on mortgage loans, net


(747,996
)


(234,637
)Servicing fees


392,072



447,177Servicing asset valuation and hedge activities, net


409,503



(302,354
)Net servicing fees


801,575



144,823(Loss) gain on investment securities, net


(443,820
)


39,934Real estate related revenues, net


(27,944
)


131,282Gain on extinguishment of debt


479,544



Loss on foreclosed real estate


(85,369
)


(22,440
)Other (loss) income


(20,285
)


56,974Total other revenue


(44,295
)


115,936Total net revenue


61,320



550,818Provision for loan losses


302,021



545,009Non-interest expenseCompensation and benefits


261,456



333,911Professional fees


60,833



57,986Data processing and telecommunications


40,496



47,874Advertising


18,188



30,420Occupancy


28,193



34,751Restructuring


20,214



Other


178,910



321,613Total non-interest expense


608,290



826,555Loss before income tax expense and minority interest


(848,991
)


(820,746
)Income tax (benefit) expense


(28,182
)


70,641Loss before minority interest


(820,809
)


(891,387
)Minority interest


38,281



19,089Net loss

$
(859,090
)

$
(910,476
)    4




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
    EQUITY
 Three Months Ended March 31, 2008 and 2007
  (Accumulated





AccumulatedPreferred


Deficit)





OtherMembers


Membership


Retained


Comprehensive


Comprehensive


TotalInterest


Interests


Earnings


Income (Loss)


Income


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

$
6,624,344


$



$
(694,756
)





$
100,529


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










23,218











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










(178,504
)










(178,504
)Net loss










(859,090
)

$
(859,090
)






(859,090
)Capital contribution


142,659



607,192















749,851Other comprehensive income, net of tax:Unrealized loss on available for sale securities














(244
)






(244
)Foreign currency translation adjustment














(29,644
)






(29,644
)Unrealized loss on cash flow hedges














(2,822
)






(2,822
)Other comprehensive loss














(32,710
)


(32,710
)


Comprehensive loss













$
(891,800
)






Balance at March 31, 2008

$
6,767,003


$
607,192


$
(1,709,132
)





$
67,819


$
5,732,882Balance at January 1, 2007

$
3,837,943






$
3,651,935






$
132,235


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










(2,121
)










(2,121
)Net loss










(910,476
)

$
(910,476
)






(910,476
)Capital contribution


500,000



















500,000Other comprehensive income, net of tax:Unrealized gain on available for sale securities














686







686Foreign currency translation adjustment














(659
)






(659
)Unrealized loss on cash flow hedges














(35,638
)






(35,638
)Other comprehensive loss














(35,611
)


(35,611
)


Comprehensive loss













$
(946,087
)






Balance at March 31, 2007

$
4,337,943


$



$
2,739,338






$
96,624


$
7,173,905    5




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Three Months Ended March 31,2008


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

$
(859,090
)

$
(910,476
)Reconciliation of net loss to net cash (used in) provided by
    operating activities:Depreciation and amortization


340,808



191,553Provision for loan losses


302,021



545,009Loss on mortgage loans, net


747,996



234,637Net (gain) loss on sale of other assets


(45,416
)


18,634Minority interest


38,281



19,089Gain on extinguishment of debt


(479,544
)


Loss (gain) on investment securities, net


443,820



(39,934
)Equity in earnings of investees in excess of cash received


(1,548
)


(17,226
)Loss on valuation of mortgage servicing rights


629,584



261,982Originations and purchases of mortgage loans held for sale


(19,598,307
)


(36,227,342
)Proceeds from sales and repayments of mortgage loans held for
    sale


19,357,813



40,181,401Deferred income tax


(67,591
)


(8,323
)Net change in:Trading securities


551,770



(1,260,252
)Accounts receivable


(283,799
)


(206,474
)Other assets


(35,489
)


661,966Other liabilities


84,555



332,175Net cash provided by operating activities


1,125,864



3,776,419CASH FLOWS FROM INVESTING ACTIVITIES:Net (increase) decrease in lending receivables


(416,304
)


1,940,742Originations and purchases of mortgage loans held for investment


(1,642,308
)


(1,814,457
)Proceeds from sales and repayments of mortgage loans held for
    investment


1,737,721



5,491,524Sales of mortgage servicing rights


174,112



Purchases of and advances to investments in real estate and other


(12,320
)


(103,754
)Proceeds from sales of and returns of investments in real estate
    and other


112,883



222,676Other, net


156,682



142,153Net cash provided by investing activities


110,466



5,878,884    6




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  CONDENSED CONSOLIDATED STATEMENTS OF CASH
    FLOWS  (Continued)
  Three Months Ended March 31,2008


2007(Unaudited)(Dollars in thousands)CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in borrowings from parent

$
655,000


$
Net decrease in other short-term borrowings


(3,275,241
)


(2,242,891
)Proceeds from issuance of collateralized borrowings in
    securitization trusts






261,531Repayments of collateralized borrowings in securitization trusts


(994,499
)


(4,795,865
)Proceeds from secured aggregation facilities, long-term


160,000



4,016,419Repayments of secured aggregation facilities, long-term


(465,114
)


(7,024,998
)Proceeds from other long-term borrowings


1,325,000



1,191,744Repayments of other long-term borrowings


(1,342,106
)


(499,248
)Payments of debt issuance costs


(9,620
)


(6,297
)Capital contribution






500,000Increase (decrease) in deposit liabilities


2,604,119



(484,910
)Net cash used in financing activities


(1,342,461
)


(9,084,515
)Effect of foreign exchange rates on cash and cash equivalents


(155,058
)


12,859NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(261,189
)


583,647CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


4,415,913



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

$
4,154,724


$
2,602,494SUPPLEMENTAL DISCLOSURES FOR NON-CASH TRANSACTIONS:Mortgage loans held for sale transferred to mortgage loans held
    for
    investment

$
459,967


$
450,058Mortgage loans held for investment transferred to mortgage loans
    held
    for sale


1,486,664



320,887Mortgage loans held for investment transferred to other assets


401,746



713,644Originations of mortgage servicing rights from sold loans


370,315



441,386Contributions of lending receivables


34,947



10,911Capital contribution through forgiveness of unsecured borrowings
    in exchange for preferred membership interests


607,192



Capital contributions through forgiveness of unsecured borrowings


142,659



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


3,846,775



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


3,667,522



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


587,136



1,599,539    7




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##### Table of Contents



RESIDENTIAL
    CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
  1.
    Basis of
    Presentation    No. 39-1, Amendment of FASB Interpretation No. 39 No. 39-1),
  Form 10-K
  The Fair Value Option for Financial Assets and
    Financial Liabilities.
    2-year
 8




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    and/or
  Recently
    Issued Accounting Standards
  Statement of Financial Accounting Standards
    No. 141(R) Business Combinations Business Combinations. case-by-case
  Statement of Financial Accounting Standards
    No. 160 Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51
  FSP
    FAS No. 140-3 FAS No. 140-3, Accounting for Transfers of Financial Assets and Repurchase
    Financing Transactions, FAS No. 140-3
  Statement of Financial Accounting Standards
    No. 161  Disclosures about Derivative Instruments and
    Hedging Activities
 9




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    2.
    Change in
    Accounting Principle  Statement of Financial Accounting Standards
    No. 157 Fair Value Measurements No. 02-3, Issues Involved in Accounting for Derivative Contracts Held
    for Trading Purposes and Contracts Involved in Energy Trading
    and Risk Management Activities (EITF No. 02-3) EITF No. 02-3
  Statement of Financial Accounting Standards
    No. 159 The Fair Value Option
    for Financial Assets and Financial Liabilities
  SEC Staff Accounting
    Bulletin No. 109 Written Loan Commitments Recorded at Fair Value Through
    Earnings Application of Accounting Principles to Loan Commitments
  FASB Staff Position (FSP)
    FIN No. 39-1 FIN No. 39-1, Amendment of FASB Interpretation No. 39 FIN No. 39-1
 10




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
  FIN No. 39-1,
  3.
    Mortgage
    Loans Held for Sale    March 31,


December 31,2008


2007(In thousands)Prime conforming

$
2,916,816


$
3,054,747Prime non-conforming


4,852,569



5,376,538Nonprime


2,604,937



2,026,078Prime second-lien


449,253



723,369Government


974,747



817,504Total

$
11,798,322


$
11,998,236         4.
    Trading
    Securities    March 31,


December 31,2008


2007(In thousands)Mortgage and asset-backed securities

$
552,119


$
905,292U.S. Treasury securities






257,320Principal-only securities


18,580



46,390Residual interests


443,075



684,701Interest-only securities


115,594



181,138Other


15,549



15,849Total

$
1,144,917


$
2,090,690Net unrealized losses

$
(398,045
)

$
(635,140
)Pledged as collateral

$
341,015


$
751,575  11




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    5.
    Mortgage
    Loans Held for Investment    March 31,


December 31,2008


2007(In thousands)Prime conforming

$
1,026,482


$
1,070,890Prime non-conforming


16,859,475



16,709,924Nonprime


9,731,552



16,904,428Prime second-lien


6,698,559



7,292,788Government


169,893



184,566Total


34,485,961
(a)


42,162,596Less allowance for loan losses


(484,996
)


(832,274
)Total, net

$
34,000,965


$
41,330,322     (a)
    
    See Note 16  Fair Value  $3.9 billion of
    total mortgage loans held for investment are recorded at fair
    value under SFAS No. 159 as of March 31, 2008.       12




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
  6.
    Lending
    Receivables    March 31,


December 31,2008


2007(In thousands)Construction:Residential

$
2,623,702


$
2,844,647Residential mezzanine


315,899



357,512Resort


293,909



277,052Total construction


3,233,510



3,479,211Warehouse


1,780,235



1,669,583Commercial business


3,007,248



2,614,692Commercial real estate


1,108,511



1,031,937Other


84,975



96,298Total


9,214,479



8,891,721Less allowance for loan losses


(405,111
)


(485,226
)Total, net

$
8,809,368


$
8,406,495       7.
    Allowance
    for Loan Losses    Mortgage LoansHeld forInvestment


Lending Receivables


Other


Total(In thousands)Balance at January 1, 2008

$
832,274


$
485,226


$
33,296


$
1,350,796Provision for loan losses


281,459



18,053



2,509



302,021Charge-offs


(147,931
)


(98,728
)


(4,229
)


(250,888
)Reduction to allowance due to fair value option election(a)


(488,982
)










(488,982
)Recoveries


8,176



560



2,818



11,554Balance at March 31, 2008

$
484,996


$
405,111


$
34,394


$
924,501Balance at January 1, 2007

$
1,508,361


$
396,641


$
25,757


$
1,930,759Provision for loan losses


364,750



177,160



3,099



545,009Charge-offs


(228,432
)


(48,522
)


(2,196
)


(279,150
)Recoveries


15,091



46



932



16,069Balance at March 31, 2007

$
1,659,770


$
525,325


$
27,592


$
2,212,687   
 13




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##### Table of Contents



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


InternationalGMAC Residential


Holding


BusinessHolding


(domestic only)


Group


Eliminations


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

$
3,514,671


$
1,170,665


$
17,526


$



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


365,717



4,302



296







370,315Subtractions from sales of servicing assets


(4,138
)


(169,974
)










(174,112
)Changes in fair value:Due to changes in valuation inputs or assumptions used in the
    valuation model


(308,482
)


(140,237
)


(5,348
)






(454,067
)Recognized day one gains on previously purchased MSRs upon
    adoption of SFAS No. 157


10,552















10,552Other changes in fair value


(121,253
)


(54,264
)










(175,517
)Other changes that affect the balance






(3,194
)


1,140







(2,054
)Estimated fair value at March 31, 2008

$
3,457,067


$
807,298


$
13,614


$



$
4,277,979Estimated fair value at January 1, 2007

$
3,752,733


$
1,164,585


$
12,743


$



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


293,744



146,376



1,266







441,386Additions 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  14




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##### Table of Contents



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


InternationalGMAC Residential


Holding


BusinessMarch 31, 2008

Holding


(domestic only)


GroupWeighted average prepayment speed


19.0
%


28.9
%


8.5
%Range of prepayment speeds


10.0-49.6
%


16.4-47.0
%


0.7-24.6
%Weighted average discount rate


7.5
%


7.9
%


24.3
%Range of discount rates


4.1-23.5
%


4.9-27.7
%


8.0-30.5
%   GMAC-RFC


InternationalGMAC Residential


Holding


BusinessMarch 31, 2007

Holding


(domestic only)


GroupWeighted 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

InternationalGMAC Residential

Holding

BusinessThree Months Ended March 31, 2008

Holding

(domestic only)

GroupRange of prepayment speeds (constant prepayment rate)


8.7-48.5
%


20.5-42.8
%


1.2-15.7
%Range of discount rates


4.4-23.6
%


13.5-16.6
%


24.0-24.0
%   GMAC-RFC

InternationalGMAC Residential

Holding

BusinessThree Months Ended March 31, 2007

Holding

(domestic only)

GroupRange 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
%   and/or
 15




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
      Three Months EndedMarch 31,2008


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

$
329,460


$
380,148Late fees


34,747



37,828Ancillary fees


27,865



29,201Total

$
392,072


$
447,177     9.
    Investments
    In Real Estate and Other    March 31,


December 31,2008


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

$
471,693


$
636,228Construction in progress


104,397



114,064Real estate held for development


168,213



376,116744,303



1,126,408Accumulated depreciation


(9,377
)


(16,008
)Total residential real estate


734,926



1,110,400Other investments:Investments in partnerships


268



4,724Investments in real estate projects


392,524



418,554Other equity investments


98,795



96,039Total

$
1,226,513


$
1,629,717    16




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
  10.
    Other
    Assets    March 31,


December 31,2008


2007(In thousands)Property and equipment at cost

$
722,867


$
761,038Accumulated depreciation and amortization


(519,260
)


(539,586
)Net property and equipment


203,607



221,452Automotive loans and lease financing, net


3,192,708



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


2,548,180



2,522,027Available for sale securities


270,022



275,671Repossessed, foreclosed and owned real estate


1,340,947



1,165,293Derivative assets


2,357,485



1,733,486Other assets


2,504,294



2,636,812Total other assets

$
12,417,243


$
11,657,769     11.
    Borrowings    March 31,


December 31,2008


2007(In thousands)Borrowings from parent

$
655,000


$
Collateralized borrowings in securitization trusts(a)(c)


9,368,625



16,145,741Other borrowings:Secured aggregation facilities  short-term


7,103,596



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


508,824



813,938Repurchase agreements  short-term


3,031,285



3,954,909Repurchase agreements  long-term(a)


122



18,569Senior unsecured notes(a)(b)(d)


13,874,057



14,550,385Subordinated unsecured notes(a)


576,961



758,321FHLB advances  short-term


450,000



1,050,000FHLB advances  long-term(a)


10,315,000



10,299,000Third-party bank credit facilities  short-term






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


1,750,000



1,750,000Debt collateralized by mortgage loans


716,197



1,782,039Servicing advances


700,000



791,300Other  short-term


1,958,665



2,019,264Other  long-term(a)


744,386



758,172Total other borrowings


41,729,093



46,184,150Total borrowings

$
51,752,718


$
62,329,891     (a)
    
    Represents borrowings with an original contractual maturity in
    excess of one year. 17




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
   (b)
    
    March 31, 2008 and December 31, 2007 totals include
    $341.9 and $200.0 million, respectively, purchased and held by
    GMAC.(c)
    
    See Note 16  Fair Value  $4.3 billion
    of collateralized borrowings are recorded at fair value under
    SFAS No. 159 as of March 31, 2008.(d)
    
    During the quarter, the credit rating on the senior unsecured
    notes was downgraded by certain rating agencies resulting in an
    increase of 50 basis points to the Companys borrowing
    rates related to these notes.      March 31,


December 31,2008


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

$
2,193,813


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


9,185,163



10,436,521Trading securities(a)


341,015



751,575Mortgage loans held for investment(b)


38,599,879



39,081,151Lending receivables(b)


7,910,717



6,372,760Mortgage servicing rights(a)


2,699,530



2,673,771Accounts receivable(a)


1,074,684



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


409,845



231,561Other assets(a)


6,376,883



7,493,311Total assets restricted as collateral

$
68,791,529


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

$
40,193,960


$
43,982,894     (a)
    
    Disclosed at carrying value or fair value of the underlying
    collateral.(b)
    
    Disclosed at unpaid principal balance of the underlying
    collateral.(c)
    
    Disclosed at cost, net of premium or discount and issuance costs.   18




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    March 31,


December 31,2008


2007(In thousands)Mortgage loans held for sale

$
1,599,050


$
2,365,646Trading securities


75,495



426,194Mortgage loans held for investment


4,062,560



3,958,384Investments in real estate and other


80,610



8,597Total

$
5,817,715


$
6,758,821   12.
    Deposit
    Liabilities    March 31,


December 31,2008


2007(In thousands)Non-interest bearing deposits

$
1,738,102


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


4,007,704



3,664,168Certificates of deposit


10,203,958



8,116,159Total

$
15,949,764


$
13,349,844       13.
    Income
    Taxes  and/or
    Accounting for
    Uncertainty in Income Taxes
 19




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
      14.
    Derivative
    Instruments        Income StatementThree Months Ended March 31,

2008


2007


Classification(In millions)Fair value hedge ineffectiveness gain (loss):Mortgage loans held for sale

$



$
(0.7
)

Gain (loss) on mortgage loans, netDebt obligations


16.6






Gain (loss) on investment securitiesTotal

$
16.6


$
(0.7
)     15.
    Restructuring
    Charges   20




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##### Table of Contents



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


Restructuring


or Otherwise


LiabilityBalance at


Charges Through


Settled Through


Balance atJanuary 1, 2008


March 31, 2008


March 31, 2008


March 31, 2008(In thousands)Restructuring charges:Employee severance

$
23,648


$
20,228


$
(14,719
)

$
29,157Lease terminations and fixed asset write-offs


45,734



(14
)


(6,824
)


38,896Total

$
69,382


$
20,214


$
(21,543
)

$
68,053   16.
    Fair
    Value  Fair
    Value Measurements (SFAS No. 157)
    No. 02-3. No. 02-3 No. 02-3, No. 02-3
      Level 1
    Inputs are quoted prices in active markets for identical assets
    or liabilities as of the measurement date. Additionally, the
    entity must have the ability to access the active market and the
    quoted prices cannot be adjusted by the entity.Level 2
    Inputs include quoted prices in active markets for similar
    assets or liabilities; quoted prices in inactive markets for
    identical or similar assets or liabilities; or inputs that are
    observable or can be corroborated by observable market data by
    correlation or other means for substantially the full term of
    the assets or liabilities. 21




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
   Level 3
    Unobservable inputs are supported by little or no market
    activity. The unobservable inputs represent managements
    best assumptions of how market participants would price the
    assets and liabilities. Generally, Level 3 assets and
    liabilities are valued using pricing models, discounted cash
    flow methodologies, or similar techniques that require
    significant judgment or estimation.    Mortgage loans held for sale
    Loans valued using observable market prices for identical or
    similar assets
  Loans valued using internal models 
    Trading securities
 22




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    Mortgage loans held for investment
       Mortgage servicing rights (MSRs)
  Derivative instruments
   23




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    Repossessed, foreclosed and owned assets (other real estate
    owned)
    On-balance sheet securitization
    debt On-balance sheet securitizations
   24




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
    Collateralized Debt Obligations
    (CDOs) Collateralized Debt Obligations
    Recurring Fair Value MeasurementsAt March 31, 2008Level 1


Level 2


Level 3


Total(In thousands)AssetsTrading securities

$
2,469


$
123,711


$
1,018,737


$
1,144,917Mortgage loans held for
    investment(1)










3,915,336



3,915,336Mortgage servicing rights










4,277,979



4,277,979Other assets:Derivative assets


240,874



2,035,460



81,151



2,357,485Other


120,996



145,625



3,401



270,022Total assets

$
364,339


$
2,304,796


$
9,296,604


$
11,965,739LiabilitiesCollateralized borrowings:On-balance sheet securitization
    debt(1)

$



$



$
(3,995,850
)

$
(3,995,850
)Collateralized debt
    obligations(1)










(303,123
)


(303,123
)Other liabilities:Derivative liabilities


(582,673
)


(89,904
)


(125,712
)


(798,289
)Other


(10,901
)










(10,901
)Total liabilities

$
(593,574
)

$
(89,904
)

$
(4,424,685
)

$
(5,108,163
)     (1)
    
    These items are carried at fair
    value due to fair value option election under
    SFAS No. 159. 25




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
     Level 3 Recurring Fair Value MeasurementsThree Months Ended March 31, 2008Change in NetUnrealizedGains(Losses)Includedin NetPurchases,








Income onTotal Gains/Losses Included in


Sales,








PortfolioFair Value -





Other


Issuances


Transfers


Fair Value-


Still Held atJanuary 1,


Net


Comprehensive


and


In/Out of


March 31,


March 31,2008


Income(b)


Income


Settlements


Level 3


2008


2008(In thousands)AssetsTrading securities

$
1,642,169


$
(396,753
)(c)

$



$
(226,679
)

$



$
1,018,737


$
(494,182
)Mortgage loans held for
    investment(a)


6,683,649



(2,003,331
)(d)






(764,982
)






3,915,336



(2,274,130
)Mortgage servicing rights


4,713,414



(645,703
)(e)






210,268







4,277,979



(629,653
)Other assets:Other


3,558







(399
)(f)


242







3,401



Total assets

$
13,042,790


$
(3,045,787
)

$
(399
)

$
(781,151
)

$



$
9,215,453


$
(3,397,965
)LiabilitiesCollateralized borrowings:On-balance sheet securitization
    debt(a)

$
(6,734,448
)

$
2,033,280
(d)

$



$
705,318


$



$
(3,995,850
)

$
2,149,277Collateralized debt
    obligations(a)


(351,226
)


21,238
(c)






26,865







(303,123
)


(58,745
)Other liabilities:Derivative liabilities, net


(39,064
)


(41,323
)(c)






35,826







(44,561
)


17,698Total liabilities

$
(7,124,738
)

$
2,013,195


$



$
768,009


$



$
(4,343,534
)

$
2,108,230     (a)
    
    Carried at fair value due to fair
    value option election under SFAS No. 159.(b)
    
    Net income is inclusive of both
    realized and change in unrealized gains and losses as well as
    interest related to the underlying asset or liability.(c)
    
    Fair value adjustment reported in
    (loss) gain on investment securities, net. Accretion income
    reported in interest income.(d)
    
    Fair value adjustment reported in
    other (loss) income and related interest on loans and debt
    reported in interest income and interest expense, respectively.(e)
    
    Reported in servicing asset
    valuation and hedge activities, net.(f)
    
    Change in unrealized gains (losses)
    in available-for-sale securities recorded in equity. 26




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
      Non Recurring Fair Value Measures


LOCOM orAs of March 31, 2008


Credit


YTDLevel 1


Level 2


Level 3


Total


Allowance


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

$



$
7,784,338


$
1,031,971


$
8,816,309


$
(1,347,511
)Lending
    receivables(2)






238,134



31,070



269,204



(240,798
)Other assets:Other real estate
    owned(3)






382,080



624,343



1,006,423



(166,986
)Model home
    portfolio(4)






280,385







280,385






$
(2,721
)Total assets

$



$
8,684,937


$
1,687,384


$
10,372,321


$
(1,755,295
)

$
(2,721
)     (1)
    
    Mortgage loans held for sale are
    required to be measured at LOCOM in accordance with
    SFAS No. 65 Accounting for Certain Mortgage Banking
    Activities. Only mortgage loans with fair values below cost
    are included in the table above. The related valuation allowance
    represents the cumulative adjustment to fair value of those
    specific mortgage loans.(2)
    
    The carrying value for lending
    receivables includes only those lending receivables that have a
    specific reserve established using the fair value of the
    underlying collateral. The related credit allowance represents
    the cumulative adjustment to fair value of those specific
    lending receivables.(3)
    
    The allowance provided for other
    real estate owned represents any cumulative valuation
    adjustments recognized to adjust those respective repossessed,
    foreclosed and owned properties to fair value less costs to sell.(4)
    
    The model home portfolio held by
    the Business Capital Group is accounted for as required by
    SFAS No. 144 Accounting for the Impairment or
    Disposal of Long-Lived Assets. The YTD loss represents
    adjustments to fair value of that portfolio based on actual
    sales over the last three months.  Fair
    Value Option for Financial Assets and Financial Liabilities
    (SFAS No. 159)
     27




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##### Table of Contents



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


Retained


January 1, 2008Carrying Value


Earnings


Fair Value AfterPrior to Adoption


Gain (Loss)


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

$
10,530,424


$
(3,846,775
)

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


(10,367,144
)


3,632,696



(6,734,448
)Collateralized debt obligations


(386,052
)


34,826



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





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





$
(178,504
)     (1)
    
    Includes the removal from the
    balance sheet of the $489.0 million of allowance for loan
    losses.  On-balance
    sheet securitizations
  Accounting for Transfers and Servicing
    of Financial Assets and Extinguishments of
    Liabilities  a replacement of FASB Statement
    No. 125 (SFAS No. 140)
   28




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
            Collateralized
    Debt Obligations
  Consolidation of Variable Interest
    Entities Accounting for
    Certain Investments in Debt and Equity Securities
 29




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
          Changes in Fair Value Included in the Condensed Consolidated
    Income StatementThree Months Ended March 31, 2008Change inTotal


Fair ValueGain on


Included


Due toInterest


Interest


Other


Investment


in Net


CreditIncome


Expense


(Loss) Income


Securities, Net


Income


Risk(In thousands)Loans held for investment

$
198,480


$



$
(2,201,811
)

$



$
(2,003,331
)

$
(17,901
)(1)Collateralized borrowings:On-balance sheet securitization debt






(114,416
)


2,147,696







2,033,280



(21,651
)(2)Collateralized debt obligations














21,292



21,292




(3)Total

















$
51,241     (1)
    
    The credit impact for mortgage
    loans held for investment was quantified by applying internal
    credit loss assumptions to cash flow models.(2)
    
    The credit impact for on-balance
    sheet securitization debt is assumed to be zero until the
    Companys economic interests in a particular securitization
    is reduced to zero, at which point the losses on the underlying
    collateral will be expected to be passed through to third-party
    bondholders. Losses allocated to third-party bondholders,
    including changes in the amount of losses allocated, will result
    in fair value change due to credit. The Company also monitors
    credit ratings and will make credit adjustments to the extent
    any bond classes are downgraded by rating agencies.(3)
    
    The credit impact for
    collateralized debt obligations is assumed to be zero until the
    Companys economic interests in the securitization is
    reduced to zero, at which point the losses projected on the
    underlying collateral will be expected to be passed through to
    the securitizations bonds. The Company also monitors
    credit ratings and will make credit adjustments to the extent
    any bond classes are downgraded by rating agencies. 30




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
       As of March 31, 2008Difference betweenFair Value and UnpaidFair Value


Unpaid Principal Balance


Principal Balance(In thousands)Mortgage loans held for investment:Total loans

$
3,915,336


$
10,379,033


$
(6,463,697
)Loans 90+ days past due






1,399,361Nonaccrual loans






1,852,263Collateralized borrowings:On-balance sheet securitizations


(3,995,850
)


(9,791,300
)


5,795,450Collateralized debt obligations


(303,123
)


(361,868
)


58,745     17.
    Related
    Party Transactions     31




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
                   32




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##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
        18.
    Subsequent
    Events        364-day 3-year
 33




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##### Table of Contents



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


Business


International


CorporateFinance


Capital


Business


andThree Months Ended March 31,

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)2008Net financing revenue

$
64,304


$
(12,718
)

$
(14,927
)

$
68,956


$



$
105,615Other revenue


402,666



(87,600
)


(810,519
)


451,158







(44,295
)Total net revenue


466,970



(100,318
)


(825,446
)


520,114







61,320Provision for loan losses


(256,737
)


(2,949
)


(39,630
)


(2,705
)






(302,021
)Total non-interest expense


(420,090
)


(20,763
)


(131,643
)


(35,794
)






(608,290
)(Loss) gain before income tax expense and minority interest


(209,857
)


(124,030
)


(996,719
)


481,615







(848,991
)Income tax expense (benefit)


16,972



(151
)


(61,090
)


16,087







(28,182
)(Loss) gain before minority interest


(226,829
)


(123,879
)


(935,629
)


465,528







(820,809
)Minority interest














38,281







38,281Net (loss) gain

$
(226,829
)

$
(123,879
)

$
(935,629
)

$
427,247


$



$
(859,090
)Total assets

$
49,011,882


$
5,214,349


$
18,464,916


$
29,775,454


$
(21,124,955
)

$
81,341,646Net interest income (expense) from other segments

$
(158,725
)

$
(56,058
)

$
(90,987
)

$
305,770


$



$
   34




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##### Table of Contents



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


Business


International


CorporateFinance


Capital


Business


andThree Months Ended March 31,

Group


Group


Group


Other


Eliminations


Consolidated(In thousands)2007Net financing revenue

$
327,625


$
34,565


$
32,488


$
40,204


$



$
434,882Other revenue


(88,725
)


60,733



142,481



1,447







115,936Total net revenue


238,900



95,298



174,969



41,651







550,818Provision for loan losses


(511,433
)


(24,698
)


(5,752
)


(3,126
)






(545,009
)Total non-interest expense


(701,300
)


(18,828
)


(91,215
)


(15,212
)






(826,555
)(Loss) income 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(Loss) income before minority interest


(999,765
)


51,513



45,020



11,845







(891,387
)Minority interest














19,089







19,089Net (Loss) income

$
(999,765
)

$
51,513


$
45,020


$
(7,244
)

$



$
(910,476
)Total assets

$
104,657,977


$
7,470,646


$
12,086,795


$
27,912,514


$
(21,509,404
)

$
130,618,528Net interest income (expense) from other segments

$
(141,295
)

$
(72,064
)

$
(25,993
)

$
239,352


$



$
   20.
    Regulatory
    Matters       35




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##### Table of Contents



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


Well CapitalizedMarch 31, 2008

Amount


Ratio


Amount


Ratio(Dollars in millions)


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

$
3,536.1



15.8
%

$
2,242.3



10.0
%Tier 1 capital to risk weighted assets


3,414.9



15.2
%


1,345.3



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


3,414.9



11.5
%


1,480.9



5.0
%       21.
    Supplemental
    Financial Information     36




---



##### Table of Contents



RESIDENTIAL CAPITAL, LLC
  NOTES TO CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)  (Continued)
  RESIDENTIAL
    CAPITAL, LLC
  CONDENSED CONSOLIDATING BALANCE SHEET
 March 31, 2008
  Guarantor

Non-GuarantorParent

Subsidiaries

Subsidiaries

Eliminations

Consolidated(Dollars in thousands)ASSETSCash and cash equivalents

$
993,114

$
205,978

$
2,989,730

$
(34,098)

$
4,154,724Mortgage loans held for sale





3,406,550


8,646,036


(254,264)


11,798,322Trading securities





172,104


972,979


(166)


1,144,917Mortgage loans held for investment, net fair value





3,906,877


29,881,044


213,044


34,000,965Lending receivables, net





551,687


8,257,681





8,809,368Mortgage servicing rights





3,966,917


311,062





4,277,979Accounts receivable, net


8,281


2,493,003


1,583,401


(573,070)


3,511,615Investments in real estate and other





73,992


1,152,521





1,226,513Other assets


390,429


6,925,273


9,388,434


(4,286,893)


12,417,243Investment in, and loans to, subsidiaries


20,993,069


(351,258)





(20,641,811)


Total assets

$
22,384,893

$
21,351,123

$
63,182,888

$
(25,577,258)

$
81,341,646LIABILITIESBorrowings:Affiliate borrowings

$


$
8,073,000

$
5,886,366

$
(13,304,366)

$
655,000Collateralized borrowings in securitization trusts fair value








9,368,625





9,368,625Other borrowings


16,201,019


3,450,740


22,649,987


(572,653)


41,729,093Total borrowings


16,201,019


11,523,740


37,904,978


(13,877,019)


51,752,718Deposit liabilities








16,083,862


(134,098)


15,949,764Other liabilities


450,992


4,140,056


6,141,980


(4,240,482)


6,492,546Total liabilities


16,652,011


15,663,796


60,130,820


(18,251,599)


74,195,028Minority interest








1,413,736





1,413,736EQUITYCommon stock and
    paid-in
    capital








456,496


(456,496)


Members interest


6,767,003


9,170,757


3,326,882


(12,497,639)


6,767,003Preferred membership interests


607,192











607,192Accumulated deficit


(1,709,132)


(3,531,179)


(2,192,369)


5,723,548


(1,709,132)Accumulated other comprehensive income


67,819


47,749


47,323


(95,072)


67,819Total equity


5,732,882


5,687,327


1,638,332


(7,325,659)


5,732,882Total liabilities, minority interest and equity

$
22,384,893

$
21,351,123

$
63,182,888

$
(25,577,258)

$
81,341,646  37




---



##### 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, 2008
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)RevenueInterest income

$
322,263


$
180,392


$
1,027,334


$
(313,965
)

$
1,216,024Automotive operating lease income










147,274







147,274Total financing revenue


322,263



180,392



1,174,608



(313,965
)


1,363,298Interest expense


329,076



237,434



917,216



(313,330
)


1,170,396Depreciation expense on automotive operating lease income










87,287







87,287Net financing revenue


(6,813
)


(57,042
)


170,105



(635
)


105,615Other revenueLoss on mortgage loans, net






(99,234
)


(669,347
)


20,585



(747,996
)Servicing fees






362,114



32,235



(2,277
)


392,072Servicing asset valuation and hedge activities, net






426,789



(17,286
)






409,503Net servicing fees






788,903



14,949



(2,277
)


801,575Loss on investment securities, net


(29,749
)


(120,042
)


(294,029
)






(443,820
)Real estate related revenues, net






(11,403
)


(16,541
)






(27,944
)Gain on extinguishment of debt


479,544















479,544Loss on foreclosed real estate






(58,982
)


(26,387
)






(85,369
)Other (loss) income


(981
)


9,094



(20,696
)


(7,702
)


(20,285
)Total other revenue


448,814



508,336



(1,012,051
)


10,606



(44,295
)Total net revenue


442,001



451,294



(841,946
)


9,971



61,320Provision for loan losses






181,225



120,796







302,021Non-interest expenseCompensation and benefits






138,170



123,286







261,456Professional fees






49,951



10,882







60,833Data processing and telecommunications






25,036



15,460







40,496Advertising






12,402



5,786







18,188Occupancy






13,097



15,096







28,193Restructuring






16,181



4,033







20,214Other


(7,068
)


93,335



101,932



(9,289
)


178,910Total non-interest expense


(7,068
)


348,172



276,475



(9,289
)


608,290Income (loss) before income tax expense and minority interest


449,069



(78,103
)


(1,239,217
)


19,260



(848,991
)Income tax benefit


(2,000
)


(3,710
)


(22,472
)






(28,182
)Income (loss) before minority interest


451,069



(74,393
)


(1,216,745
)


19,260



(820,809
)Minority interest










38,281







38,281Income (loss) before equity in net losses of subsidiaries


451,069



(74,393
)


(1,255,026
)


19,260



(859,090
)Equity in net losses of subsidiaries


(1,310,159
)


(1,263,801
)






2,573,960



Net loss

$
(859,090
)

$
(1,338,194
)

$
(1,255,026
)

$
2,593,220


$
(859,090
)  38




---



##### 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, 2007
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)RevenueInterest income

$
263,553


$
443,665


$
1,684,817


$
(257,323
)

$
2,134,712Automotive operating lease income










111,230







111,230Total financing revenue


263,553



443,665



1,796,047



(257,323
)


2,245,942Interest expense


261,933



328,877



1,419,687



(265,313
)


1,745,184Depreciation expense on automotive operating lease income










65,876







65,876Net financing revenue


1,620



114,788



310,484



7,990



434,882Other revenue(Loss) gain on of mortgage loans, net






(308,648
)


76,959



(2,948
)


(234,637
)Servicing fees






438,739



10,257



(1,819
)


447,177Servicing asset valuation and hedge activities, net






(301,848
)


(506
)






(302,354
)Net servicing fees






136,891



9,751



(1,819
)


144,823Gain on investment securities, net






19,863



20,071







39,934Real estate related revenues






12,906



118,376







131,282Loss on foreclosed real estate






(3,321
)


(19,119
)






(22,440
)Other income


828



42,093



41,563



(27,510
)


56,974Total other revenue


828



(100,216
)


247,601



(32,277
)


115,936Total net revenue


2,448



14,572



558,085



(24,287
)


550,818Provision for loan losses






208,004



337,350



(345
)


545,009Non-interest expenseCompensation and benefits






211,760



122,151







333,911Professional fees






44,567



13,419







57,986Data processing and telecommunications






32,740



15,134







47,874Advertising






21,904



8,516







30,420Occupancy






21,010



13,741







34,751Other


(1,100
)


247,909



106,013



(31,209
)


321,613Total non-interest expense


(1,100
)


579,890



278,974



(31,209
)


826,555Income (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
)


70,641Income (loss) before minority interest


3,548



(769,487
)


(133,788
)


8,340



(891,387
)Minority interest










19,089







19,089Income (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
)  39




---



##### 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, 2008
  Guarantor


Non-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

$
264,166


$
1,483,248


$
(644,992
)

$
23,442


$
1,125,864CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in lending receivables






(64,541
)


(351,581
)


(182
)


(416,304
)Originations and purchases of mortgage loans held for investment






(537,193
)


(1,549,955
)


444,840



(1,642,308
)Proceeds from sales and repayments of mortgage loans held for
    investment






434,846



1,749,471



(446,596
)


1,737,721Sales of mortgage servicing rights






4,138



169,974







174,112Purchases of and advances to investments in real estate and other






(6,484
)


(5,836
)






(12,320
)Proceeds from sales of and returns of investments in real estate
    and other






445



112,438







112,883Payment of capital contribution






(3,799
)






3,799



Net increase in affiliate lending


(1,271,557
)










1,271,557



Other, net


8,890



194,827



(47,035
)






156,682Net cash (used in) provided by investing activities


(1,262,667
)


22,239



77,476



1,273,418



110,466CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in borrowings from GMAC






172,986



1,753,571



(1,271,557
)


655,000Net decrease in other short-term borrowings






(1,683,119
)


(1,592,275
)


153



(3,275,241
)Repayments of collateralized borrowings in securitization trusts










(994,499
)






(994,499
)Proceeds from secured aggregation facilities, long-term










160,000







160,000Repayments of secured aggregation facilities, long-term










(465,114
)






(465,114
)Proceeds from other long-term borrowings










1,325,000







1,325,000Repayments of other long-term borrowings










(1,342,106
)






(1,342,106
)Payments of debt issuance costs


(415
)






(9,205
)






(9,620
)Proceeds from capital contribution










3,799



(3,799
)


Increase in deposit liabilities










2,602,506



1,613



2,604,119Net cash (used in) provided by financing activities


(415
)


(1,510,133
)


1,441,677



(1,273,590
)


(1,342,461
)Effect of foreign exchange rates on cash and
    cash equivalents


97,109







(227,284
)


(24,883
)


(155,058
)NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(901,807
)


(4,646
)


646,877



(1,613
)


(261,189
)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


1,894,921



210,624



2,342,853



(32,485
)


4,415,913CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
993,114


$
205,978


$
2,989,730


$
(34,098
)

$
4,154,724      40




---



##### 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-GuarantorParent


Subsidiaries


Subsidiaries


Eliminations


Consolidated(In thousands)NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

$
(12,840
)

$
(1,652,857
)

$
5,451,720


$
(9,604
)

$
3,776,419CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in lending receivables






335,018



1,605,724







1,940,742Originations 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
)


5,491,524Purchases 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







222,676Payment of capital contribution






(159,246
)






159,246



Net increase in affiliate lending


(193,529
)










193,529



Other, net






207,287



(65,134
)






142,153Net cash provided by (used in) investing activities


(193,529
)


700,899



5,028,414



343,100



5,878,884CASH 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











261,531Repayments of collateralized borrowings in securitization trusts










(4,795,865
)






(4,795,865
)Proceeds from secured aggregation facilities, long-term










4,016,419







4,016,419Repayments of secured aggregation facilities, long-term










(7,024,998
)






(7,024,998
)Proceeds from other long-term borrowings


2,500







1,189,244







1,191,744Repayments 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
)


500,000Dividends 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



12,859NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


653,871



61,314



(128,151
)


(3,387
)


583,647CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


832,600



456,895



756,225



(26,873
)


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

$
1,486,471


$
518,209


$
628,074


$
(30,260
)

$
2,602,494          41




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  General
      Three Months Ended March 31,

2008


2007(In thousands)Net revenueResidential Finance Group

$
466,970


$
238,900Business Capital Group


(100,318
)


95,298International Business Group


(825,446
)


174,969Net (loss) gainResidential Finance Group

$
(226,829
)

$
(999,765
)Business Capital Group


(123,879
)


51,513International Business Group


(935,629
)


45,020   
    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 non-conforming, nonprime and prime second-lien loans,
    which are generally securitized though the issuance of
    non-agency mortgage-backed and mortgage related asset-backed
    securities. These activities, however, have been significantly
    reduced in response to market conditions. This segment also
    provides collateralized lines of credit to other originators of
    residential mortgage loans, which we refer to as warehouse
    lending. This activity has also been reduced. Our limited
    banking activities through the mortgage division of GMAC Bank
    and our real estate brokerage and relocation business are
    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.
    Due to current market conditions, the origination activities of
    this business are limited.
    International Business Group.  Our
    International Business Group includes substantially all of our
    operations outside of the United States.   42




---



##### Table of Contents



Significant
    Accounting Estimates
  Fair Value Measurements The Fair Value
    Option for Financial Assets and Financial Liabilities
    Level 1
    
    Inputs are quoted prices in active markets for identical asset
    or liabilities as of the measurement date. Additionally, the
    entity must have the ability to access the active market and the
    quoted prices cannot be adjusted by the entity.Level 2
    
    Inputs include quoted prices in active markets for similar
    assets or liabilities; quoted prices in inactive markets for
    identical or similar assets or liabilities; or inputs that are
    observable or can be corroborated by observable market data by
    correlation or other means for substantially the full term of
    the assets or liabilities.Level 3
    
    Unobservable inputs that are supported by little or no market
    activity. The unobservable inputs represent managements
    best assumptions of how market participants would price the
    assets and liabilities. Generally, Level 3 assets and
    liabilities are valued using pricing models, discounted cash
    flow methodologies, or similar techniques that require
    significant judgment or estimation.      
    We enter into interest rate lock commitments with borrowers or
    mortgage purchase commitments with correspondent lenders and
    other sellers. These commitments typically are considered
    derivative instruments under GAAP and are accounted for at fair
    value. Due to the underlying attributes of these mortgage loan
    commitments and the fact that they do not trade in any market,
    these derivatives typically are Level 3 items. 43




---



##### Table of Contents




    We fund or purchase mortgage loans. We have not elected fair
    value for our mortgage loans held for sale portfolio. Rather,
    the loans are accounted for at lower of cost or market under
    GAAP. The loans are valued differently depending upon the
    underlying characteristics of the loan. Generally speaking,
    loans that will be sold to the agencies and the majority of
    international loans where recently negotiated market prices for
    the pool exist with a counterparty are Level 2, while
    domestic loans that cannot be sold to agencies and delinquent
    loans are Level 3 due to lack of observable market prices.
    We ultimately sell our mortgage loans included in our held for
    sale portfolio, either to the agencies, to whole loan
    purchasers, or via off balance sheet securitization structures.
    When we sell loans into any of the three channels above, we
    typically will retain servicing rights. We have opted to carry
    our servicing rights at fair value under SFAS No. 156
    Accounting for Servicing of Financial Assets  an
    amendment of FASB Statement No. 140. Further, when the
    loans are sold into off balance sheet securitizations, we will
    often retain residuals
    and/or
    certain classes of bonds. These retained bonds may include
    interest only strips, principal only securities, or principal
    and interest paying bonds (typically the subordinated bonds),
    all of which are carried at fair value within trading securities
    on our balance sheet. Due to the lack of observable market
    prices or data, our servicing rights and retained interests
    typically are Level 3.
    We have previously executed certain securitizations that have
    not qualified for sale treatment under SFAS No. 140
    Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities  a replacement of
    FASB Statement No. 125. The collateral in these
    securitizations are classified as loans held for investment and
    the related debt is recorded on our balance sheet. We have
    elected fair value for both the collateral and debt in certain
    of these securitizations. Due to the characteristics of the
    underlying loan collateral (nonprime and home equities), the
    collateral and debt are both classified as Level 3.      and/or
   44




---



##### Table of Contents



Results
    of Operations
  Consolidated
    Results
          U.S. Mortgage Loan Production by TypeThree Months Ended March 31,2008


2007No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans(Dollars in millions)Prime conforming


70,219


$
15,437



50,089


$
9,569Prime non-conforming


727



490



38,671



12,317Government


12,317



1,977



4,162



584Nonprime


13



3



20,444



3,259Prime second-lien


6,985



801



97,711



5,313Total U.S. production


90,261


$
18,708



211,077


$
31,042  45




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##### Table of Contents



For the Three MonthsEnded March 31,2008


2007(In millions)Purpose:Purchase

$
4,549


$
10,032Non-purchase


14,159



21,010$
18,708


$
31,042Interest rate type:Fixed rate

$
16,797


$
20,345Adjustable rate


1,911



10,697$
18,708


$
31,042     U.S. Mortgage Loan Production by ChannelThree Months Ended March 31,2008


2007No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans(Dollars in millions)Retail branches


15,588


$
2,907



19,623


$
3,011Direct lending (other than retail branches)


12,359



2,192



28,015



3,020Mortgage brokers


13,331



2,776



36,246



6,384Correspondent lenders and secondary market purchases


48,983



10,833



127,193



18,627Total U.S. production


90,261


$
18,708



211,077


$
31,042     International Mortgage Loan ProductionThree Months Ended March 31,2008


2007Dollar





DollarNo. of


Amount of


No. of


Amount ofLoans


Loans


Loans


Loans(Dollars in millions)United Kingdom


2,648


$
707



17,789


$
4,525Continental Europe


2,600



679



8,461



1,566Canada


2,965



611



1,646



286Other


930



194



2,621



95Total international production


9,143


$
2,191



30,517


$
6,472  46




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##### Table of Contents



Three Months EndedMarch 31,2008


2007(In millions)Net financing revenue

$
105.6


$
434.9Loss on mortgage loans, net


(748.0
)


(234.6
)Servicing fees


392.1



447.2Servicing asset valuation and hedge activities, net


409.5



(302.4
)Net servicing fees


801.6



144.8Other (loss) income


(97.9
)


205.7Provision for loan losses


(302.0
)


(545.0
)Non-interest expense


(608.3
)


(826.6
)Loss before income tax expense and minority interest


(849.0
)


(820.8
)Income tax benefit (expense)


28.2



(70.6
)Loss before minority interest


(820.8
)


(891.4
)Minority interest


(38.3
)


(19.1
)Net loss

$
(859.1
)

$
(910.5
)   step-up
     47




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##### Table of Contents



U.S. Mortgage Loan Servicing PortfolioMarch 31,


December 31,2008


2007No. of


Dollar Amt


No. of


Dollar AmtLoans


of Loans


Loans


of Loans(Dollars in millions)Prime conforming mortgage loans


1,687,280


$
276,212



1,652,933


$
267,511Prime non-conforming mortgage loans


182,569



55,816



184,154



54,993Government mortgage loans


184,896



20,453



179,475



19,382Nonprime mortgage loans


253,438



32,840



282,250



36,809Prime second-lien mortgage loans


711,880



30,881



730,866



31,523Total primary servicing portfolio*


3,020,063


$
416,202



3,029,678


$
410,218     *
    
    Excludes loans for which we acted as a subservicer. Subserviced
    loans totaled 167,848 with an unpaid principal balance of
    $32.8 billion at March 31, 2008 and 205,019 with an
    unpaid principal balance of $44.3 billion at
    December 31, 2007.               48




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##### Table of Contents



49




---



##### Table of Contents



Segment
    Results
  Residential
    Finance Group
    Three Months EndedMarch 31,2008


2007(In millions)Net financing revenue

$
64.3


$
327.6Loss on mortgage loans, net


(66.3
)


(341.0
)Servicing fees


377.7



432.2Servicing asset valuation and hedge activities, net


414.9



(301.9
)Net servicing fees


792.6



130.3Other revenue


(323.6
)


122.0Provision for loan losses


(256.7
)


(511.4
)Non-interest expense


(420.1
)


(701.3
)Income tax expense


(17.0
)


(26.0
)Net loss

$
(226.8
)

$
(999.8
)          50




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##### Table of Contents



Business
    Capital Group
    Three Months EndedMarch 31,2008


2007(In millions)Net financing revenue

$
(12.7
)

$
34.6Other revenue


(87.6
)


60.7Provision for loan losses


(3.0
)


(24.7
)Non-interest expense


(20.8
)


(18.8
)Income tax benefit (expense)


0.2



(0.3
)Net (loss) income

$
(123.9
)

$
51.5      51




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##### Table of Contents



International
    Business Group
    Three Months EndedMarch 31,2008


2007(In millions)Net financing revenue

$
(14.9
)

$
32.5(Loss) gain on mortgage loans, net


(682.5
)


106.4Servicing fees


14.3



15.0Servicing asset valuation and hedge activities, net


(5.4
)


(0.5
)Net servicing fees


8.9



14.5Other revenue


(137.0
)


21.6Provision for loan losses


(39.6
)


(5.8
)Non-interest expense


(131.6
)


(91.2
)Income tax benefit (expense)


61.1



(33.0
)Net (loss) income

$
(935.6
)

$
45.0      52




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##### Table of Contents



Corporate
    and Other
       53




---



##### Table of Contents



Asset
    Quality
  Allowance
    for Loan Losses
    Mortgage LoansHeld for


LendingInvestment


Receivables


Other


Total(In millions)Balance at January 1, 2008

$
832.3


$
485.2


$
33.3


$
1,350.8Provision for loan losses


281.4



18.1



2.5



302.0Charge-offs


(147.9
)


(98.8
)


(4.2
)


(250.9
)Reduction to allowance due to fair value option election(a)


(489.0
)










(489.0
)Recoveries


8.2



0.6



2.8



11.6Balance at March 31, 2008

$
485.0


$
405.1


$
34.4


$
924.5Balance at January 1, 2007

$
1,508.4


$
396.6


$
25.8


$
1,930.8Provision for loan losses


364.8



177.2



3.0



545.0Charge-offs


(228.4
)


(48.5
)


(2.2
)


(279.1
)Recoveries


15.0







1.0



16.0Balance at March 31, 2007

$
1,659.8


$
525.3


$
27.6


$
2,212.7Allowance as a percentage of total:March 31, 2008


1.59
%(b)


4.40
%


1.07
%


2.15
%December 31, 2007


1.97
%


5.46
%


1.06
%


2.49
%    (a)
    
    See Note 16  Fair
    Value  $489.0 million of allowance for loan
    losses was removed upon SFAS No. 159 adoption.(b)
    
    As of March 31, 2008, $3.9 billion of loans are held
    at fair value with no related allowance for loss. These loans
    have been excluded from this calculation.    Allowance for Loan LossesAs of March 31,2008


2007


2008


2007($ In thousands)Nonprime mortgage loans

$
222,864


$
1,524,821



3.39
%


3.18
%Prime second-lien mortgage loans


87,553



72,608



1.43



1.10Prime non-conforming mortgage loans


163,727



60,878



0.98



0.63Prime conforming mortgage loans


8,779



1,442



0.86



0.13Government mortgage loans


2,073



21



1.22



3.93Total

$
484,996


$
1,659,770



1.59
%


2.54
%  54




---



##### Table of Contents



Three Months EndedMarch 31,2008


2007(In millions)Mortgage loans:Prime conforming

$
(4.3
)

$
(0.5
)Prime non-conforming


(1.2
)


(5.6
)Prime second-lien


(15.4
)


(21.7
)Nonprime


(118.6
)


(185.6
)Government


(0.2
)


Lending receivables:Warehouse


(15.2
)


(48.5
)Construction


(83.2
)


Other


0.2



Other


(1.4
)


(1.2
)Total net charge-offs

$
(239.3
)

$
(263.1
)          55




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##### Table of Contents



Nonperforming
    Assets
      March 31,


December 31,


March 31,2008


2007


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

$
41.6


$
84.7


$
8.3Prime non-conforming


1,239.6



908.0



471.7Government


25.0



79.8



0.1Prime second-lien


163.4



233.2



155.9Nonprime*


4,125.9



4,040.2



7,133.3Lending receivables:Warehouse


37.2



70.8



1,301.3Construction**


618.0



550.2



114.7Commercial real estate


9.5







Other


0.2



10.4



0.1Total nonaccrual loans


6,260.4



5,977.3



9,185.4Restructured loans


42.9



32.1



8.1Foreclosed assets


1,104.3



1,115.5



1,465.7Total nonperforming assets

$
7,407.6


$
7,124.9


$
10,659.2Total nonaccrual loans as a percentage of total mortgage loans
    held for investment and lending receivables


12.3
%


11.7
%


11.7
%Total nonperforming assets as a percentage of total consolidated
    assets


9.1
%


8.0
%


8.2
%     *
    
    Includes $171.0 million as of March 31, 2008,
    $1.1 billion as of December 31, 2007 and
    $480.6 million as of March 31, 2007 of loans that were
    purchased distressed and already in nonaccrual status. In
    addition, includes $23.7 million as of March 31, 2008,
    $15.7 million as of December 31, 2007 and
    $4.6 million as of March 31, 2007 of nonaccrued loans
    that are not included in Restructured Loans. 56




---



##### Table of Contents



**
    
    Includes $101.7 million as of March 31, 2008,
    $47.2 million as of December 31, 2007 and
    $18.3 million as of March 31, 2007 of nonaccrual
    restructured loans, that are not included in Restructured
    Loans.          As of March 31, 2008


As of December 31, 2007


As of March 31, 2007Percent of





Percent of





Percent ofAmount


Total


Amount


Total


Amount


Total(Dollars in millions)Current

$
34,080



82.0
%

$
35,558



82.6
%

$
51,802



80.1
%Past due:30 to 59 days


1,587



3.8



1,784



4.1



3,993



6.260 to 89 days


798



1.9



946



2.2



1,752



2.790 days or more


2,097



5.0



2,179



5.1



2,513



3.9Foreclosures pending


2,278



5.5



1,846



4.3



3,206



4.9Bankruptcies


742



1.8



735



1.7



1,423



2.2Total unpaid principal balance


41,582



100.0
%


43,048



100.0
%


64,689



100.0
%Net (discounts) premiums


(687
)






(885
)






561SFAS No. 159 fair value adjustment


(6,409
)














Total

$
34,486






$
42,163






$
65,250  57




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##### Table of Contents



As of March 31, 2008


As of December 31, 2007


As of March 31, 2007Percent of





Percent of





Percent ofAmount


Total


Amount


Total


Amount


Total(Dollars in millions)Current

$
10,202



66.0
%

$
12,014



67.7
%

$
35,481



74.7
%Past due:30 to 59 days


990



6.4



1,263



7.1



3,751



7.960 to 89 days


548



3.5



693



3.9



1,668



3.590 days or more


1,269



8.2



1,445



8.1



2,183



4.6Foreclosures pending


1,806



11.7



1,642



9.3



3,073



6.5Bankruptcies


647



4.2



690



3.9



1,357



2.8Total unpaid principal balance


15,462



100.0
%


17,747



100
%


47,513



100.0
%Net (discounts) premiums


(563
)






(843
)






375SFAS No. 159 fair value adjustment


(5,167
)














Total

$
9,732






$
16,904






$
47,888        58




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##### Table of Contents



Unpaid Principal BalanceAs of March 31,


As of December 31,2008


2007(In millions)Mortgage Loans Held for Sale  DomesticInterest-only mortgage loans

$
907.7


$
493.2Payment option adjustable rate mortgage loans


166.7



1.1High loan-to-value (100% or more) mortgage loans


105.7



71.5Below market initial rate mortgage loans






Mortgage Loans Held for Investment 
    DomesticInterest-only mortgage loans

$
11,021.1


$
11,555.0Payment option adjustable rate mortgage loans


1,516.3



1,694.0High loan-to-value (100% or more) mortgage loans


3,393.4



3,569.2Below market initial rate mortgage loans






0.6Mortgage Loans  Held for Sale and
    Investment  InternationalInterest-only mortgage loans

$
6,618.6


$
6,170.1Payment option adjustable rate mortgage loans






High loan-to-value (100% or more) mortgage loans


2,379.9



2,182.6Below market initial rate mortgage loans






     Loan Production For theThree Months EndedMarch 31,2008


2007(In millions)Interest-only mortgage loans

$
1,783.6


$
9,844.6Payment option adjustable rate mortgage loans


0.2



3,514.5High loan-to-value (100% or more) mortgage loans


384.6



1,789.3Below market initial rate mortgage loans






212.6        59




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##### Table of Contents



Liquidity
    and Capital Resources
  Liquidity
    Management
    
    Liquidity portfolio:  We maintain a portfolio
    of money market instruments to support cash fluctuations, which
    we consider our liquidity portfolio. As of March 31, 2008, our
    liquidity portfolio totaled $1.3 billion, as compared with $2.2
    billion as of December 31, 2007. We view our liquidity portfolio
    as cash readily available to cover operating demands from across
    our business operations. In our view, liquidity differs from
    cash and cash equivalents of $4.2 billion in that liquidity does
    not include cash balances within GMAC Bank and operating cash
    maintained within business segments to cover timing related
    outflows. In addition to our liquidity portfolio, we maintain
    domestic unsecured revolving bank credit facilities that are
    available to cover contingent funding needs. We have an $875.0
    million 364-day revolving bank credit facility that matures in
    June 2008 and an $875.0 million 3-year revolving bank credit
    facility that matures in June 2010. Under the terms of the
    364-day revolver, we have the ability to draw funds and the
    ability to convert the revolver into a term loan for one
    additional year with a minimum notice of one business day prior
    to the termination of the initial 364-day commitment. These
    facilities would be replaced in the event that we enter into the
    proposed senior secured credit facility.
    Short- and long-term financing:  We have
    significant short- and long-term financing needs. We manage our
    liquidity by financing our assets in a manner consistent with
    their liquidity profile.  -
    Short-term financing:  We require short-term
    funding to finance our mortgage loans held for sale, lending
    receivables and various other liquid assets. As of March 31,
    2008, the outstanding balance of short-term borrowings totaled
    $14.0 billion, as compared with $17.2 billion as of December 31,
    2007.-
    Long-term financing:  Our long-term financing
    needs arise primarily from our mortgage loans held for
    investment, mortgage servicing rights, real estate investments
    and assets used for over-collateralization of our funding
    conduits. Our long-term debt typically consists of
    collateralized borrowings in securitization trusts and unsecured
    debt issued in the public debt capital markets. 60




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##### Table of Contents



2016and2008


2009


2010


2011


2012


2013


2014


2015


Thereafter


Total(In millions)Domestic senior unsecured notes

$
2,287.7


$
1,663.0


$
2,210.1


$
1,315.0


$
1,006.6


$
1,722.6


$



$
500.3


$



$
10,705.3Domestic subordinated unsecured notes






577.0































577.0Domestic third-party bank credit facility


1,750.0



































1,750.0International unsecured notes










856.0







857.2



692.6



763.0











3,168.8Other unsecured long-term debt


247.7



238.4



5.7







168.2



















660.0Total

$
4,285.4


$
2,478.4


$
3,071.8


$
1,315.0


$
2,032.0


$
2,415.2


$
763.0


$
500.3


$



$
16,861.1   
    Sources of funding:The funding sources
    utilized are primarily determined by the type of asset financed
    and associated with a particular product or business. These
    sources of liquidity include:  -
    Secured funding programs:A majority of our
    assets are pledged as collateral to support various funding
    programs. As a result, sources of funding have been developed in
    the mortgage and asset-backed securities markets. Also, we have
    obtained liquidity and long-term funding in the term
    securitization market for our held for investment mortgage loan
    portfolio.-
    Unsecured funding sources at the ResCap parent
    level: ResCap has historically had access to the
    unsecured debt market to further diversify its funding sources.
    Since the June 2007 issuances of 600 million
    3.25-year floating rate note and £400 million
    7-year fixed
    rate note (total of $1.6 billion U.S. dollars), we have
    been unable to access the long-term unsecured markets due to our
    weakened ratings and corporate performance driven by the
    illiquidity of the capital markets. Where legal entity,
    regulatory, country differences or other business segment
    considerations make reliance on parent funding impractical, some
    business segments enter into their own financing arrangements.
    We regularly assess the reliability and concentrations of our
    funding sources.-
    Our ability to access the funding capacity of GMAC
    Bank: GMAC Bank provides us with another source
    of liquidity through its ability to accept deposits, to obtain
    Federal Home Loan Bank (FHLB) advances and federal
    funds. The financing through the FHLB is uncommitted and
    requests for additional advances are evaluated at the time they
    are received. We may be required to sell GMAC Bank, or
    conditions may be placed on our retention of GMAC Bank. See
    Legal and Regulatory Risks Related to Our
    Business  Certain of our owners are subject to a
    regulatory agreement that may affect our interest in GMAC
    Bank.    2016and2008


2009


2010


2011


2012


2013


2014


2015


Thereafter


Total(In millions)FHLB advances

$
1,497


$
1,401


$
1,446


$
687


$
2,813


$
267


$
1,081


$
500


$
1,073


$
10,765     
    Maintaining an active dialogue with the rating
    agencies:  Historically, our ability to meet our
    funding needs is influenced by the rating agencies
    requirements. These requirements impact our capital structure 61




---



##### Table of Contents



and growth rate. We have obtained ratings from four agencies and
    maintain an active dialogue with each throughout the year.
    Changes in the business environment and our performance may
    further negatively impact ratings. On February 5th,
    February 22nd, March 3rd, April 23rd,
    April 24th, April 29th, May 2nd and May 5th,
    additional rating downgrades were enacted by all four rating
    agencies. Currently all four agencies have placed ResCap on
    negative watch, reflecting the credit agencies concern
    that, among other things, continued stresses in the mortgage
    markets will continue to present financial challenges for ResCap
    in the near term. If our current ratings continue in effect or
    our ratings are further downgraded, it could increase the
    interest rate that we would have to pay to raise money in the
    capital markets, making it more expensive for us to borrow money
    and adversely impacting our access to capital.  
    Interest Rate Management:  The interest rate
    risk profile of our liquidity can be separated from the actual
    debt issuances using derivative financial products. We issue
    both fixed and variable rate debt in a range of currencies. We
    use derivative contracts, primarily interest rate swaps, to
    effectively convert a portion of our fixed rate debt to variable
    rate debt and variable rate debt to fixed rate debt. The
    maturity structure of the derivatives generally corresponds to
    the maturity structure of the debt being hedged. In addition, we
    use other derivative contracts to manage the foreign exchange
    impact of certain debt issuances. Recently, we have been
    required to make significant cash payments under certain
    derivative contracts.  Capital
    Management
        Liquidity
    and Capital Management Highlights through March 31,
    2008
     62




---



##### Table of Contents



unit-for-unit
    On-going
    Liquidity and Capital Management Focus
      
    We are conducting debt tender and exchange offers, as previously
    announced, for our outstanding unsecured notes to improve our
    financial flexibility by extending the maturities of such
    indebtedness and reducing our overall indebtedness. We are
    offering eligible holders of ResCap notes that mature in 2008
    and 2009, as well as holders of ResCap notes that mature in 2010
    through 2015, the ability to exchange such notes for one of two
    newly-issued series of notes of ResCap. Holders of ResCaps
    floating rate notes maturing on June 9, 2008 have the
    ability to tender such notes for cash. In addition, eligible
    holders participating in the exchange offers may elect to
    receive cash in lieu of new notes that they would otherwise
    receive pursuant to a Modified Dutch Auction
    process. Newly issued notes would be secured by a second or
    third priority lien on the assets that would secure the proposed
    senior secured credit facility with GMAC. 63




---



##### Table of Contents




    We are in negotiations with our parent, GMAC LLC
    (GMAC), to provide us with a new $3.5 billion
    senior secured credit facility, which would be used to fund the
    cash required for the previously announced offers, to repay the
    term loan maturing in July 2008 and to replace our
    $875.0 million
    364-day
    revolving bank credit facility and our $875.0 million
    3-year
    revolving bank credit facility. Such facility would be secured
    by a first priority lien in substantially all of our existing
    and after-acquired unencumbered assets remaining available to be
    pledged as collateral.
    We are seeking amendments to substantially all of our secured
    bilateral facilities that would extend the maturities of such
    facilities from various dates in 2008 to May 2009 and eliminate
    or modify the tangible net worth covenant contained in such
    facilities. Although some of our secured facilities have been
    extended during 2008, the extensions have generally been for
    periods shorter than such facilities previous terms.
    Between March 31, 2008 and December 31, 2008, we have
    $28.8 billion, or 98%, of our secured committed capacity
    maturing.
    We are in negotiations with GMAC for them to contribute to us by
    May 31, 2008 approximately $350.0 million principal
    amount of our outstanding notes held by GMAC in exchange for
    additional ResCap preferred units, which are exchangeable at
    GMACs option at any time after January 1, 2009,
    subject to certain conditions, into preferred units of IB
    Finance, the owner of GMAC Bank.
    We are seeking approximately $150.0 million in additional
    borrowings under one of our existing secured facilities with
    GMAC, the availability of which is subject to us meeting certain
    conditions.    and/or
 64




---



##### Table of Contents



Borrowings
  Outstanding as ofMarch 31,


December 31,2008


2007(In millions)Borrowings from parent

$
655.0


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


9,368.6



16,145.7Senior unsecured notes  long-term(a)(c)


13,874.1



14,550.4Subordinated unsecured note  long-term(a)


577.0



758.3Term loans and revolvers  long-term(a)


1,750.0



1,750.0Bank lines  short-term


233.3



278.3Bank lines  long-term(a)


33.7



33.2Other unsecured  short-term


432.3



347.0Other unsecured  long-term(a)


626.3



629.8Subtotal unsecured borrowings


17,526.7



18,347.0Secured  short-term


12,844.1



15,560.5Secured  long-term(a)


593.3



927.7FHLB  short-term


450.0



1,050.0FHLB  long-term(a)


10,315.0



10,299.0Subtotal secured borrowings


24,202.4



27,837.2Total borrowings


51,752.7



62,329.9Bank deposits


15,949.8



13,349.8Total borrowings and deposits


67,702.5



75,679.7Off-balance sheet financings


156,920.8



136,108.3Total

$
224,623.3


$
211,788.0     (a)
    
    Represents borrowings with an original contractual maturity in
    excess of one year.(b)
    
    See Note 16  Fair Value 
    $4.3 billion of collateralized borrowings are recorded at
    fair value under SFAS No. 159 as of March 31, 2008.(c)
    
    March 31, 2008 and December 31, 2007 totals include
    $341.9 and $200.0 million, respectively, purchased and held
    by GMAC.  Funding
    Sources
  Borrowings
    from Parent
   65




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##### Table of Contents



Collateralized
    Borrowings in Securitization Trusts
      Unsecured
    and Secured Funding Facilities
      As of March 31, 2008

As of December 31, 2007Committed

Uncommitted

Total

Committed

Uncommitted

Total(In millions)Unsecured funding facilities

$
3,518.4


$
928.5


$
4,446.9


$
3,517.5


$
891.3


$
4,408.8Secured funding facilities


29,464.2



21,788.8



51,253.0



33,178.8



21,583.4



54,762.2        66




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##### Table of Contents



Unsecured
    Funding Facilities
    Unsecured Committed FacilitiesAs of March 31, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Syndicated bank credit facilities

$



$
875.0


$
875.0


$



$
875.0


$
875.0364-day bank
    credit facilities revolver






875.0



875.0







875.0



875.0International bank lines


18.4







18.4



17.5







17.5Bank term loan


1,750.0







1,750.0



1,750.0







1,750.0Total

$
1,768.4


$
1,750.0


$
3,518.4


$
1,767.5


$
1,750.0


$
3,517.5   364-day
    Unsecured Uncommitted FacilitiesAs of March 31, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Lines of credit

$
248.6


$
23.5


$
272.1


$
243.8


$
23.2


$
267.0International commercial paper


388.8







388.8



301.4







301.4GMAC Bank Fed Funds


0.1



219.9



220.0



0.1



219.9



220.0Other


45.6



2.0



47.6



100.9



2.0



102.9Total

$
683.1


$
245.4


$
928.5


$
646.2


$
245.1


$
891.3       Secured
    Funding Facilities
   67




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##### Table of Contents



and/or
    Secured Committed FacilitiesAs of March 31, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Repurchase agreements

$
2,961.7


$
5,671.5


$
8,633.2


$
3,605.2


$
5,313.7


$
8,918.9Receivables Lending Agreement (RLA)






5,462.6



5,462.6



170.0



5,292.6



5,462.6Mortgage Asset Lending Agreement (MALA)






3,216.4



3,216.4



70.0



3,146.4



3,216.4Bank facilities for construction lending receivables


1,602.7



31.1



1,633.8



1,804.8



45.4



1,850.2Bank facility for mortgage servicing rights


1,292.0



308.0



1,600.0



1,444.0



656.0



2,100.0Other


7,224.0



1,694.2



8,918.2



8,633.9



2,996.8



11,630.7Total

$
13,080.4


$
16,383.8


$
29,464.2


$
15,727.9


$
17,450.9


$
33,178.8     Repurchase Agreements:
  RLA and MALA:
   68




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##### Table of Contents



Bank facilities:
  Other:
  Bilateral secured facility: rd th
    Secured Uncommitted FacilitiesAs of March 31, 2008


As of December 31, 2007Unused


Total





Unused


TotalOutstanding


Capacity


Capacity


Outstanding


Capacity


Capacity(In millions)Repurchase agreements

$
69.7


$
7,134.0


$
7,203.7


$
368.3


$
7,430.7


$
7,799.0Bank facility for mortgage servicing rights


1.0



499.0



500.0











Other


286.3



880.9



1,167.2



392.0



803.3



1,195.3Total excluding FHLB advances


357.0



8,513.9



8,870.9



760.3



8,234.0



8,994.3FHLB advances


10,765.0



2,152.9



12,917.9



11,349.0



1,240.1



12,589.1Total

$
11,122.0


$
10,666.8


$
21,788.8


$
12,109.3


$
9,474.1


$
21,583.4    69




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##### Table of Contents



FHLB Advances:
    As of March 31, 2008Secured


Secured


TotalSecured


Secured


Total


Committed


Uncommitted


SecuredCommitted


Uncommitted


Secured


Unused


Unused


UnusedOutstanding


Outstanding


Outstanding


Capacity


Capacity


Capacity(In millions)Mortgage loans and warehouse lending(a)

$
9,485.7


$
11,036.6


$
20,522.3


$
16,044.7


$
10.167.8


$
26,212.5Other lending receivables(b)


1,602.7







1,602.7



31.1







31.1Mortgage servicing rights(c)


1,292.0



1.0



1,293.0



308.0



499.0



807.0Other


700.0



84.4



784.4











Total

$
13,080.4


$
11,122.0


$
24,202.4


$
16,383.8


$
10,666.8


$
27,050.6As of December 31, 2007Secured


Secured


TotalSecured


Secured


Total


Committed


Uncommitted


SecuredCommitted


Uncommitted


Secured


Unused


Unused


UnusedOutstanding


Outstanding


Outstanding


Capacity


Capacity


Capacity(In millions)Mortgage loans and warehouse lending(a)

$
11,687.7


$
12,014.1


$
23,701.8


$
16,140.8


$
9,474.1


$
25,614.9Other lending receivables(b)


1,804.8







1,804.8



45.4







45.4Mortgage servicing rights(c)


1,444.0







1,444.0



656.0







656.0Other


791.4



95.2



886.6



608.7







608.7Total

$
15,727.9


$
12,109.3


$
27,837.2


$
17,450.9


$
9,474.1


$
26,925.0     (a)
    
    Mortgage loans and warehouse lending is comprised of MALA, RLA,
    repurchase agreements, the Facilities, and FHLB advances.(b)
    
    Facilities that fund construction and commercial business
    lending receivables.(c)
    
    Facilities to fund mortgage servicing rights.  International
    Funding Facilities
   70




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##### Table of Contents



International FacilitiesAs of March 31, 2008

As of December 31, 2007Unused

Total



Unused

TotalOutstanding

Capacity

Capacity

Outstanding

Capacity

Capacity(In millions)Committed international facilities

$
7,185.6


$
1,723.7


$
8,909.3


$
8,460.1


$
2,428.8


$
10,888.9Uncommitted international facilities


923.6



904.4



1,828.0



937.2



826.6



1,763.8   Bank
    Deposits
      Off-Balance
    Sheet Financings
      Credit
    Ratings
    Commercial





Date ofRating Agency

Paper

Senior Debt

Outlook

Last ActionFitch

C

C

Watch ratings-negative

May 2, 2008Moodys

NP

Ca

Watch ratings-negative

May 2, 2008S&P

C

CC

Watch ratings-negative

May 2, 2008DBRS

R-5

CCC

Watch ratings-negative

May 5, 2008   step-up
 71




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##### Table of Contents



Recently
    Issued Accounting Standards
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.     72




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##### Table of Contents



Change in Fair Value as of March 31, 2008Change in Interest Rate (basis points)

−100


−50


+50


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

$
(1,607
)

$
(889
)

$
848


$
1,469Impact of servicing hedge:Swap-based


1,308



621



(554
)


(1,043
)Treasury-based


3



1



(1
)


(3
)Others


516



287



(327
)


(682
)Mortgage servicing rights and other retained interests, net


220



20



(34
)


(259
)Committed pipeline


70



60



(130
)


(324
)Mortgage loan inventory


139



85



(97
)


(217
)Impact of associated derivative instruments:Mortgage-based


(218
)


(129
)


169



368Eurodollar-based


(16
)


(8
)


8



16Others


(14
)


(7
)


7



14Committed pipeline and mortgage loan inventory, net


(39
)


1



(43
)


(143
)Net change in fair value related to other businesses


3



2



(2
)


(3
)GMAC Bank:Securities portfolio


11



6



(6
)


(11
)Mortgage loans


285



161



(191
)


(402
)Deposit liabilities


(11
)


(6
)


5



11Federal Home Loan Bank advances


(261
)


(131
)


137



283Other liabilities


(13
)


(6
)


6



13GMAC Bank, net


11



24



(49
)


(106
)Notes payable and capital securities


(118
)


(59
)


57



112Impact of associated derivative instruments:Swap-based


60



30



(29
)


(57
)Notes payable and capital securities, net


(58
)


(29
)


28



55Insurance company investment portfolios


1



1



(1
)


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

$
138


$
19


$
(101
)

$
(458
)Net change in fair value related to broker-dealer trading
    securities

$
1


$



$



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

$
39


$
20


$
(20
)

$
(41
)   73




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##### Table of Contents



Change in Fair Value as of March 31, 2007Change in Interest Rate (basis points)

−100


−50


+50


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

$
(1,616
)

$
(784
)

$
615


$
1,059Impact 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



266Eurodollar-based


(16
)


(8
)


8



16Others


(144
)


(80
)


96



198Committed 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



10Federal Home Loan Bank advances


(182
)


(93
)


100



208Other liabilities


(14
)


(7
)


7



14GMAC Bank, net


(39
)


(5
)


(11
)


(30
)Notes payable and capital securities


(257
)


(127
)


124



245Impact 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
)    74




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##### Table of Contents



Item 4.
    Controls
    and Procedures.  Rule 13a-15(e)
  Rule 13a-15(f)
   75




---



##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings.    Kessler.
  Murray.
 76




---



##### Table of Contents



Safeco Ins. Co., et al. v. Burr, et
    al
  Parthiban. Murray Murray.
  Mitchell.
        Federal Trade Commission.
 77




---



##### Table of Contents



Item 1A.
    Risk
    Factors.  Form 10-K
  Risks
    Related to Our Business
  We
    have significant near-term liquidity issues and short-term debt
    maturities. There is a significant risk that we will not be able
    to meet our debt service obligations in the
    near-term.
         78




---



##### Table of Contents



Our
    business requires substantial capital, and if we are unable to
    maintain adequate financing sources our profitability and
    financial condition will suffer and jeopardize our ability to
    continue operations.
         79




---



##### Table of Contents



We
    have a significant amount of existing debt and may incur
    significant additional debt, including secured debt, in the
    future, which could adversely affect our financial condition and
    our ability to react to changes in our business.
      
    Require us to dedicate a significant portion of our cash flow
    from operating activities to payments on our and our
    subsidiaries debt, which will reduce our funds available
    for working capital, capital expenditures and other general
    corporate expenses;
    limit our flexibility in planning for, or reacting to, changes
    in our business, the residential mortgage industry and the
    economy at large;
    place us at a disadvantage as compared to our competitors that
    have proportionately less debt or that are able to incur or
    refinance debt or more favorable terms;
    make us vulnerable to interest rate increases, because a portion
    of our borrowings are, and will continue to be, at variable
    rates of interest;
    expose us to increased interest expense as we refinance existing
    lower interest rate instruments;
    adversely affect our relationship with customers and suppliers;
    and
    make it more difficult for us to satisfy our obligations to the
    holders of our notes and for our subsidiaries to satisfy their
    guarantee obligations where applicable.    Our
    current ratings could adversely affect our ability to raise
    capital in the debt markets at attractive rates which could
    negatively impact our results of operations and financial
    condition.
  step-up
    A
    substantial portion of our operating cash from time to time may
    be derived from funds provided to us as credit support by
    parties to various hedging arrangements. In the event interest
    rates change, we may be required to repay promptly all or a
    portion of such amounts.
   80




---



##### Table of Contents



Current
    conditions in the residential mortgage market and housing
    markets may continue to adversely affect our earnings and
    financial condition.
          We use
    estimates and various assumptions in determining the fair value
    of certain of our assets, and in determining our allowance for
    loan losses. If our estimates or assumptions prove to be
    incorrect, we may be required to write down the value of these
    assets or increase our allowance for loan losses, either of
    which could adversely affect our earnings and financial
    condition.
   81




---



##### Table of Contents



We
    remain exposed to credit risk associated with the assets held in
    our portfolio of mortgage loans held for sale and investment and
    interests from our securitization activities, and higher rates
    of delinquency and default rates could adversely affect our
    profitability and financial condition.
      higher-than-expected
       82




---



##### Table of Contents



higher-than-expected
  Our
    earnings may decrease because of increases or decreases in
    interest rates.
    
    Rising interest rates generally reduce our residential mortgage
    loan production as borrowers become less likely to refinance and
    acquiring a new home becomes more expensive. Rising interest
    rates may also reduce demand for our other lending activities,
    including our warehouse lending and business capital activities.
    If demand for our loans decreases, our earnings may decrease.
    During periods of rising interest rates, the value and
    profitability of our mortgage loans may be harmed from the date
    of origination (or interest rate lock) or purchase commitment
    until the date we sell or securitize the mortgage loans. In
    addition, the spread between the interest we receive on our
    mortgage loans during this aggregation period and our funding
    costs may be reduced by increases in market interest rates. As
    long as our access to the securitization market and our ability
    to execute whole loan sales remain constrained, the period
    during which we are exposed to these risks will be extended, and
    our earnings may decrease as a result.
    Rising interest rates will generally reduce the value of
    mortgage loans and our interests that we continue to hold from
    our securitizations in our investment portfolio. For example,
    some of the interests we retain in connection with our
    securitizations are entitled to cash-flows that primarily
    represent the difference between the amount of interest
    collected on the underlying mortgage loans and the amount of
    interest payable to the holders of senior securities in the
    related securitization. In certain of these securitizations, the
    underlying mortgage loans generally have fixed interest rates
    for the first two or three years while the interest rate payable
    to holders of the senior securities is generally based on an
    adjustable London Inter-Bank Offered Rate, or LIBOR. In other
    securitizations, the underlying mortgage loans have variable
    interest rates that are based on indices other than LIBOR while
    the interest rate payable to holders of securities is generally
    based on LIBOR. If LIBOR increases during the time that the
    mortgage loans are fixed, or increases at a faster rate than the
    rate at which the underlying loans adjust, the income and value
    of our interests from these securitizations will be reduced.
    This would reduce the amount of cash we receive over the life of
    the loans in securitizations structured as financings and from
    our interests, and could require us to reduce the carrying value
    of these interests.
    Rising interest rates will generally reduce the demand for
    residential real estate related services, including our
    brokerage and relocation services, which may reduce the income
    we receive from these services.
    Rising interest rates could result in a significant margin call
    under our hedging arrangements, which would require us to
    provide the counterparty with additional cash collateral.  Higher-than-expected
  Our
    hedging strategies may not be successful in mitigating our risks
    associated with changes in interest rates.
   83




---



##### Table of Contents



Recent
    negative developments in the secondary mortgage markets have led
    credit rating agencies to make requirements for rating mortgage
    securities more stringent, and market participants are still
    evaluating the impact.
    Recent
    negative developments in our mortgage markets have led us to
    reduce the number of mortgage products we offer.
    We
    remain exposed to credit risk associated with our business
    lending activities, including our warehouse lending activities,
    and declines in the value of the collateral securing these loans
    or negative developments affecting the borrower could adversely
    affect our profitability and financial condition.
   84




---



##### Table of Contents



Our
    profitability and financial condition could be adversely
    affected if the assumptions underlying our risk-based
    underwriting and pricing models prove to be
    incorrect.
  ®
  Changes
    in existing U.S. government-sponsored mortgage programs, or
    disruptions in the secondary markets in the United States or in
    other countries in which we operate, could adversely affect our
    profitability and financial condition.
      We
    depend on the accuracy and completeness of information about our
    customers and counterparties, and inaccuracies in such
    information could adversely affect our
    profitability.
   85




---



##### Table of Contents



We may
    be required to repurchase mortgage loans or indemnify investors
    if we breach representations and warranties, which could harm
    our profitability.
    General business and economic conditions may significantly
    and adversely affect our revenues, profitability and financial
    condition.
     86




---



##### Table of Contents



We
    face intense competition that could harm our market share,
    revenues and profitability.
      Increasing
    competition in the acquisition of mortgage loans from
    correspondent lenders in the secondary market and the
    origination of loans through mortgage brokers, and recent
    consolidation in the mortgage loan industry, may harm our
    profitability.
      Our
    financial results could be materially adversely affected if a
    large number of homeowners to whom we have lent money were to
    suffer uninsured catastrophic damage to their property due to a
    terrorist attack or natural disaster.
   87




---



##### Table of Contents



Changes
    in accounting standards issued by the Financial Accounting
    Standards Board or other standard-setting bodies may adversely
    affect our reported revenues, profitability and financial
    condition.
    An
    interruption in or breach of our information systems may result
    in lost business, regulatory actions or litigation or otherwise
    harm our reputation.
    The
    success and growth of our business may be adversely affected if
    we do not adapt to and implement technological
    changes.
    
    becomes non-compliant with existing industry standards or is no
    longer supported by vendors;
    fails to meet or exceed the capabilities of our
    competitors corresponding technologies or technological
    solutions;
    becomes increasingly expensive to service, retain and update; or
    becomes subject to third-party claims of copyright or patent
    infringement.   88




---



##### Table of Contents



Our
    business outside the United States exposes us to additional
    risks that may cause our revenues and profitability to
    decline.
    
    country specific market conditions resulting in further asset
    valuation volatility and liquidity constraints;
    multiple foreign regulatory requirements that are subject to
    change;
    differing local product preferences and product requirements;
    fluctuations in foreign currency exchange rates and interest
    rates;
    difficulty in establishing, staffing and managing foreign
    operations;
    differing legal and regulatory requirements;
    potentially negative consequences from changes in tax laws; and
    political and economic instability.      Our
    business capital activities expose us to additional risks that
    may adversely affect our revenues and
    profitability.
     89




---



##### Table of Contents




    the performance and financial strength of the developer;
    development, construction and other costs of the project not
    exceeding original estimates;
    the ability of the project to attract creditworthy buyers;
    the project being completed on schedule, which is subject to
    many factors, several of which are beyond the control of the
    developer, such as required governmental approvals, weather,
    labor conditions and material shortages;
    the continued involvement of key personnel; and
    local housing demand and competition, including the strength of
    the local and national economy and fluctuations in interest
    rates.      A
    significant portion of our business is in the States of
    California and Florida, and our business may be significantly
    harmed by a slowdown in the economy or the occurrence of a
    natural disaster in California or Florida.
       90




---



##### Table of Contents



If
    GMAC were to become the subject of a bankruptcy proceeding and
    we were substantively consolidated with GMAC, our assets would
    become subject to the claims of our creditors and the creditors
    of GMAC.
      GMAC
    controls all fundamental matters affecting us, and its interests
    may differ from ours.
      Legal and
    Regulatory Risks Related to Our Business
  The
    scope of our residential mortgage loan production and servicing
    operations exposes us to risks of noncompliance with an
    increasing and inconsistent body of complex laws and regulations
    at the federal, state and local levels in the United States and
    in the international markets in which we operate.
      
    civil and criminal liability;
    loss of licenses and approvals;
    damage to our reputation in the industry;
    inability to sell or securitize our loans, or otherwise raise
    capital;
    demands for indemnification or loan repurchases from purchasers
    of our loans;
    fines and penalties and litigation, including class action
    lawsuits; 91




---



##### Table of Contents




    governmental investigations and enforcement actions; and
    claims that an allegedly non-compliant loan is rescindable or
    unenforceable.    New
    and proposed legislation and court rulings with respect to
    so-called predatory lending practices and other lending
    practices could restrict our ability to produce mortgage loans
    or service, which could harm our revenues and
    profitability.
      sub-prime
 92




---



##### Table of Contents



debt-to-income sub-prime sub-prime
  We may
    be subject to fines or other penalties based upon the conduct of
    independent mortgage brokers through which we originate mortgage
    loans and lenders from which we acquire mortgage
    loans.
    If
    warehouse lenders and securitization underwriters face exposure
    stemming from legal violations committed by the companies to
    which they provide financing or underwriting services, this
    could increase our borrowing costs and harm the market for our
    whole loans and mortgage-backed securities.
    Enhanced
    reporting required by the Home Mortgage Disclosure Act may lead
    to increased litigation, investigations, media coverage and
    challenges to our reputation.
   93




---



##### Table of Contents



debt-to-income
  We are
    no longer able to rely on the Alternative Mortgage Transactions
    Parity Act of 1982 to preempt certain state law restrictions on
    prepayment penalties, which could harm our revenues and
    profitability.
      Certain
    of our owners are subject to a regulatory agreement that may
    affect our interest in GMAC Bank.
   94




---



##### Table of Contents



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.   95




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##### Table of Contents



SIGNATURES  th
     
   Chief Financial Officer
  
   Chief Accounting Officer and Controller
 96




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##### Table of Contents



INDEX OF
    EXHIBITS  Exhibit

Description10.1

Credit Agreement among Residential Funding company, LLC, the
    several lenders from time to time parties thereto, and GMAC LLC,
    as agent, dated February 21, 2008 (incorporated by reference to
    Exhibit 10.10 to the Registrants Annual Report on Form
    10-K for the year ended December 31, 2007).10.2

Pledge Agreement, dated as of February 21, 2008, among
    Residential Funding Company, LLC and GMAC LLC, as Agent
    (incorporated by reference to Exhibit 10.11 to the
    Registrants Annual Report on Form 10-K for the year ended
    December 31, 2007).10.3

Promissory Note, dated February 21, 2008 (incorporated by
    reference to Exhibit 10.12 to the Registrants Annual
    Report on Form 10-K for the year ended December 31, 2007).10.4

Performance Guarantee, dated February 21, 2008, of Residential
    Capital, LLC in favor of GMAC LLC, as Agent for the Lenders
    (incorporated by reference to Exhibit 10.13 to the
    Registrants Annual Report on Form 10-K for the year ended
    December 31, 2007).12.1

Computation of ratio of earnings to fixed charges31.1

Certification of Principal Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a)31.2

Certification of Principal Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a)     32

Certification of Principal Executive Officer and Principal
    Financial Officer pursuant to 18 U.S.C. Section 1350  97