Ally Bank 2011 Annual Report Download - page 98

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10−K
became delinquent within the first few years following origination. As a result of market developments over the past several years, investor repurchase
demand behavior has changed significantly. GSEs and investors are more likely to submit claims for loans at any point in their life cycle, including requests
for loans that become delinquent or loans that incur a loss. Investors are more likely to submit claims for loans that become delinquent at any time while a
loan is outstanding or when a loan incurs a loss. Representation and warranty claims are generally reviewed on a loan−by−loan basis to validate if there has
been a breach requiring a potential repurchase or indemnification payment. The applicable Mortgage Companies actively contest claims to the extent they
are not considered valid. The applicable Mortgage Companies are not required to repurchase a loan or provide an indemnification payment where claims are
not valid.
During the year ended December 31, 2011, we experienced a decrease in new claims compared to 2010, in part due to settlements with certain
counterparties. The following table presents new claims by vintage (original unpaid principal balance).
Year ended December 31, ($ in millions) 2011 2010
2004 and prior period $ 36 $ 46
2005 43 58
2006 291 235
2007 116 461
2008 147 255
Post 2008 157 60
Unspecified — 4
Total claims (a) $ 790 $ 1,119
(a) Excludes certain populations where counterparties have requested additional information.
The risk of repurchase or indemnification and the associated credit exposure is managed through underwriting and quality assurance practices and by
servicing mortgage loans to meet investor standards. We believe that, in general, the longer a loan performs prior to default the less likely it is that an
alleged breach of representation and warranty will be found to have a material and adverse impact on the loan's performance. When loans are repurchased,
the applicable Mortgage Companies bear the related credit loss on the loans. Repurchased loans are classified as held−for−sale and initially recorded at fair
value.
Refer to Note 31 to the Consolidated Financial Statements for additional information related to representation and warranties.
The following table summarizes the unpaid principal balance on mortgage loans repurchased in connection with our representation and warranty
obligations.
Year ended December 31, ($ in millions) 2011 2010
GSEs $ 143 $ 389
Private−label securitizations
Insured (monolines) 1 13
Uninsured 37 —
Whole−loan/other 9 82
Total loan repurchases $ 190 $ 484
The following table summarizes indemnification payments made in connection with our representation and warranty obligations.
Year ended December 31, ($ in millions) 2011 2010
GSEs $ 59 $ 228
Private−label securitizations
Insured (monolines) 13 27
Uninsured 167 —
Whole−loan/other 26 11
Total indemnification payments $ 265 $ 266
95