SunTrust 2007 Annual Report Download - page 35

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Securitization and Trading Loans
As part of our securitization and trading activities, we often warehouse assets prior to sale or securitization, retain interests
in securitizations, and maintain a portfolio of loans that we trade in the secondary market. At January 1, 2007, we
transferred to trading assets approximately $600 million of loans, substantially all of which were purchased from the
market for the purpose of sales into securitizations, which were previously classified as loans held for sale. Pursuant to the
provisions of SFAS No. 159, we elected to carry warehoused and trading loans at fair value in order to reflect the active
management of these positions and, in certain cases, to align the economics of these instruments with the hedges that we
typically execute on certain of these loans. We also elected to reclassify our residual interests to trading assets, consistent
with other residual positions we own. As of December 31, 2007, approximately $107 million of the $600 million of trading
loans transferred into trading assets as of January 1, 2007 remained outstanding, and additional loans were purchased and
recorded at fair value as part of our normal loan securitization and trading activities.
The assets securing these residual interests are primarily residential loans, commercial loans, corporate loans, and
government sponsored student loans. The total value of our securitization warehouses that we have elected to carry at
fair value, excluding certain mortgage loan warehouses, was approximately $44.8 million as of December 31, 2007. The
assets held in the warehouses at December 31, 2007 include commercial loans. These warehouses were mark to market
as of December 31, 2007 and reflect our best estimate of fair value taking into consideration the markets into which
these assets will be securitized and/or sold and the credit quality of the assets held in the warehouse. The size of our
securitization warehouse has decreased significantly during 2007 as a result of valuation write-downs, as well as our
decision in the fourth quarter to exit certain aspects of the securitization business.
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