Ally Bank 2011 Annual Report Download - page 224

Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10−K
30. Guarantees and Commitments
Guarantees
Guarantees are defined as contracts or indemnification agreements that contingently require us to make payments to third parties based on changes in
the underlying agreements with the guaranteed parties. The following summarizes our outstanding guarantees made to third parties on our Consolidated
Balance Sheet, for the periods shown. 2011 2010
December 31, ($ in millions) Maximum liability Carrying value of liability Maximum liability Carrying value of liability
Default automotive repurchases $ 1,600 $ — $ 1,274 $ 151
Guarantees for repayment of third−party debt — — 1,068 989
Standby letters of credit and other guarantees 333 88 513 121
Default Automotive Repurchases
Our International Automotive Finance operations provide certain investors in our on− and off−balance sheet arrangements (securitizations) and
whole−loan transactions with repurchase commitments for loans that become contractually delinquent within a specified time from their date of origination
or purchase. The maximum obligation represents the principal balance for loans sold that are covered by these stipulations. Refer to Note 11 for further
information regarding our securitization trusts.
Guarantees for Repayment of Third−party Debt
Under certain arrangements, our International Automotive Finance operations guarantee the repayment of third−party debt obligations in the case of
default. These guarantees are collateralized by retail loans or finance leases.
Standby Letters of Credit
Our Commercial Finance Group issues standby letters of credit to customers that represent irrevocable guarantees of payment of specified financial
obligations. Third−party beneficiaries primarily utilize standby letters of credit as insurance in the event of nonperformance by our customers. Assets of the
customers (i.e., trade receivables, inventory, and cash deposits) generally collateralize letters of credit. Expiration dates on letters of credit range from
certain ongoing commitments that will expire during the upcoming year to terms of several years for certain letters of credit.
If nonperformance by a customer occurs for letters of credit, we can be liable for payment of the letter of credit to the beneficiary with our likely
recourse being a charge back to the customer or liquidation of the collateral. The majority of customers with whom we have letter of credit exposure fall
into the “acceptable” risk−rating category of our Commercial Finance Group's internal risk−rating system. This category is essentially at the midpoint of our
risk rating classifications.
Commitments
Financing Commitments
The contractual commitments were as follows.
December 31, ($ in millions) 2011 2010
Commitments to
Sell mortgages or securities (a) $ 12,632 $ 14,349
Originate/purchase mortgages or securities (a) 6,741 7,735
Provide capital to investees (b) 56 76
Provide retail automotive receivables to third−parties (c) 1,779 —
Warehouse and construction−lending commitments (d) 1,018 1,509
Home equity lines of credit (e) 2,234 2,749
Unused revolving credit line commitments (f) 1,304 1,910
(a) Amounts primarily include commitments accounted for as derivatives.
(b) We are committed to contribute capital to certain private equity funds. The fair value of these commitments is considered in the overall valuation of the underlying assets with which
they are associated.
(c) Certain of our International Automotive Finance operations are committed to provide retail automotive receivables to third−party banks in exchange for secured debt. The
transaction does not meet the definition of a sale.
(d) The fair value of these commitments is considered in the overall valuation of the related assets.
(e) We are committed to fund the remaining unused balances on home equity lines of credit for certain home equity loans sold into securitization structures (both on− and off−balance
sheet structures) if certain deal−specific triggers are met. At December 31, 2011, the commitments to fund home equity lines of credit in off−balance sheet securitizations
represented $802 million of the total unfunded commitments of $2.2 billion.
(f) The unused portion of revolving lines of credit reset at prevailing market rates and, as such, approximate market value.
221