Sallie Mae 2010 Annual Report Download - page 122

2. Significant Accounting Policies (Continued)
Subsequent to the adoption of the new accounting guidance regarding consolidations and the transfers of
financial instruments on January 1, 2010, all of our securitizations trusts that had previously been accounted
for off-balance sheet were consolidated. In addition, regardless of our ability to qualify for sales treatment
related to our 2010 securitization trusts, we consolidated all of our 2010 securitization trusts pursuant to the
new consolidation accounting guidance. See “Consolidations,” for additional information regarding the
accounting rules for consolidation and the effect of the application of the new guidance as we are the primary
beneficiary of these trusts.
Irrespective of whether a securitization receives sales or on-balance sheet treatment, our continuing
involvement with our securitization trusts is generally limited to:
• Owning the equity certificates of certain trusts.
• The servicing of the student loan assets within the securitization trusts, on both a pre- and post-default
basis.
• Our acting as administrator for the securitization transactions we sponsored, which includes remarketing
certain bonds at future dates.
• Our responsibilities relative to representation and warranty violations and the reimbursement of
borrower benefits.
• The reimbursement to the trust of borrower benefits afforded the borrowers of student loans that have
been securitized.
• Certain back-to-back derivatives entered into by us contemporaneously with the execution of derivatives
by certain Private Education Loan securitization trusts.
• The option held by us to buy certain delinquent loans from certain Private Education Loan securitiza-
tion trusts.
• The option to exercise the clean-up call and purchase the student loans from the trust when the asset
balance is 10 percent or less of the original loan balance.
• The option (in certain trusts) to call rate reset notes in instances where the remarketing process has failed.
• The option (in certain trusts that were TALF eligible in 2009) to call the outstanding bonds at a
discount to par at a future date
The investors of the securitization trusts have no recourse to our other assets should there be a failure of
the trusts to pay when due. Generally, the only arrangements under which we have to provide financial
support to the trusts are:
• representation and warranty violations requiring the buyback of loans;
• funding specific cash accounts within certain trusts related to the remarketing of certain bonds.
Under the terms of the transaction documents of certain trusts, we have, from time to time, exercised our
options to purchase delinquent loans from Private Education Loan trusts, to purchase the remaining loans from
trusts once the loan balance falls below 10 percent of the original amount, or to call rate reset notes. We have
not provided any financial support to the securitization trusts that we were not contractually required to
provide in the past. Certain trusts maintain financial arrangements with third parties also typical of
securitization transactions, such as derivative contracts (swaps) and bond insurance policies that, in the case of
a counterparty failure, could adversely impact the value of any Residual Interest.
F-19
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)