Ally Bank 2011 Annual Report Download - page 100

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10−K
the servicing was $10.9 billion. For the year ended December 31, 2011, the amount of losses taken on loans repurchased relating to defects where Ally Bank
was the owner of the servicing was $31 million and the amount of losses taken on loans that we have repurchased relating to defects in the other specified
categories was $15 million. These other specified categories include (i) loans subject to certain state predatory lending and similar laws; (ii) groups of 25 or
more mortgage loans purchased, originated, or serviced by one of our mortgage subsidiaries, the purchase, origination, or sale of which all involve a
common actor who committed fraud; (iii) “non−loan−level” representations and warranties which refer to representations and warranties that do not relate
to specific mortgage loans (examples of such non−loan−level representations and warranties include the requirement that our mortgage subsidiaries meet
certain standards to be eligible to sell or service loans for Freddie Mac or our mortgage subsidiaries sold or serviced loans for market participants that were
not acceptable to Freddie Mac); and (iv) mortgage loans that are ineligible for purchase by Freddie Mac under its charter and other applicable documents. If,
however, a mortgage loan was ineligible under Freddie Mac's charter solely because mortgage insurance was rescinded (rather than for example, because
the mortgage loan is secured by a commercial property), and Freddie Mac required our mortgage subsidiary to repurchase that loan because of the
ineligibility, Freddie Mac would pay our mortgage subsidiary any net loss we suffered on any later liquidation of that mortgage loan.
Certain of our Mortgage Companies received subpoenas in July 2010 from the Federal Housing Finance Agency (FHFA), which is the conservator of
Fannie Mae and Freddie Mac. The subpoenas relating to Fannie Mae investments have been withdrawn with prejudice. The FHFA indicated that documents
provided in response to the remaining subpoenas will enable the FHFA to determine whether they believe issuers of private−label MBS are potentially
liable to Freddie Mac for losses they might have incurred. Although Freddie Mac has not brought any representation and warranty claims against us with
respect to private−label securities subsequent to the settlement, they may well do so in the future. The FHFA has commenced securities and related common
law fraud litigation against Ally and certain of our Mortgage Companies with respect to certain of Freddie Mac's private−label securities investments. Refer
to the Legal Proceedings described in Note 31 to the Consolidated Financial Statements for additional information.
On December 23, 2010, certain of our mortgage subsidiaries entered into an agreement with Fannie Mae under which we made a one−time payment to
Fannie Mae for the release of repurchase obligations related to most of the mortgage loans we sold to Fannie Mae prior to June 30, 2010. The agreement
also covers potential exposure for private−label MBS in which Fannie Mae had previously invested. This agreement does not release the obligations of the
applicable Mortgage Companies with respect to loans where Ally Bank is the owner of the servicing, as well as for defects in certain other specified
categories of loans. Further, the applicable Mortgage Companies continue to be responsible for other contractual obligations they have with Fannie Mae,
including all indemnification obligations that may arise in connection with the servicing of the mortgages, and the applicable Mortgage Companies continue
to be obligated to indemnify Fannie Mae for litigation or third party claims (including by borrowers) for matters that may amount to breaches of selling
representations and warranties. The total original unpaid principal balance of loans originated prior to January 1, 2009 and where Ally Bank was the owner
of the servicing was$24.4 billion. For the year ended December 31, 2011, the amount of losses we have taken on loans that we have repurchased relating to
defects where Ally Bank was the owner of the servicing was $66 million and the amount of losses we have taken on loans that we have repurchased relating
to defects in the other specified categories of loans was $13 million. These other specified categories include, among others, (i) those that violate
anti−predatory laws or statutes or related regulations or that otherwise violate other applicable laws and regulations; (ii) those that have non−curable defects
in title to the secured property, or that have curable title defects, to the extent our mortgage subsidiaries do not cure such defects at our subsidiary's expense;
(iii) any mortgage loan in which title or ownership of the mortgage loan was defective; (iv) groups of 13 or more mortgage loans, the purchase, origination,
sale, or servicing of which all involve a common actor who committed fraud; and (v) mortgage loans not in compliance with Fannie Mae Charter Act
requirements (e.g., mortgage loans on commercial properties or mortgage loans without required mortgage insurance coverage). If a mortgage loan falls out
of compliance with Fannie Mae Charter Act requirements because mortgage insurance coverage has been rescinded and not reinstated or replaced, upon the
borrower's default our mortgage subsidiaries would have to pay to Fannie Mae the amount of insurance proceeds that would have been paid by the mortgage
insurer with respect to such mortgage loan. If the amount of the loss exceeded the amount of insurance proceeds, Fannie Mae would be responsible for such
excess.
The following table summarizes the changes in the original unpaid principal balance related to unresolved repurchase demands with respect to our
GSE exposure. The table includes demands that we have requested be rescinded but which have not been agreed to by the investor.
($ in millions) 2011 2010
Balance at January 1, $ 170 $ 296
New claims (a) 441 842
Resolved claims (b) (349) (756)
Rescinded claims/other (191) (212)
Balance at December 31, $ 71 $ 170
(a) Excludes certain populations where counterparties have requested additional documentation.
(b) Includes losses, settlements, impairments on repurchased loans, and indemnification payments.
Monoline Insurers — Historically, the applicable Mortgage Companies securitized loans where the monolines insured all or some of the related bonds
and guaranteed the timely repayment of bond principal and interest when the issuer defaults. Typically, any alleged breach requires the insurer to have both
the ability to assert a claim as well as evidence that a defect has had a material and adverse effect on the interest of the security holders or the insurer. For
the period 2004 through 2007, the Mortgage Companies sold $42.7 billion of loans into
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