Ally Bank 2012 Annual Report Download - page 145

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Other Variable Interest Entities
Servicer Advance Funding Entity
We previously assisted in the financing of our servicer advance receivables; we formed a VIE that issued variable funding notes to third-
party investors that were collateralized by servicer advance receivables. These servicer advance receivables were transferred to the VIE and
consisted of delinquent principal and interest advances we made as servicer to various investors; property taxes and insurance premiums
advanced to taxing authorities and insurance companies on behalf of borrowers; and amounts advanced for mortgages in foreclosure. The
VIE funded the purchase of the receivables through financing obtained from the third-party investors and subordinated loans or an equity
contribution from our mortgage activities. This VIE was not consolidated on our balance sheet at December 31, 2012 as a result of the
deconsolidation of ResCap, but was consolidated on our balance sheet at December 31, 2011. The beneficial interest holder of this VIE does
not have legal recourse to our general credit. We do not have a contractual obligation to provide any type of financial support in the future,
nor have we provided noncontractual financial support to the entity during 2012 or 2011.
Other
We had involvements with various other on-balance sheet, immaterial VIEs. Most of these VIEs were used for additional liquidity
whereby we sold certain financial assets into the VIE and issued beneficial interests to third parties for cash.
We also provide long-term guarantee contracts to investors in certain nonconsolidated affordable housing entities and have extended a
line of credit to provide liquidity and minimize our exposure under these contracts. Since we do not have control over the entities or the
power to make decisions, we do not consolidate the entities and our involvement is limited to the guarantee and the line of credit.
Involvement with Variable Interest Entities
The determination of whether financial assets transferred by us to these VIEs (and related liabilities) are consolidated on our balance
sheet (also referred to as on-balance sheet) or not consolidated on our balance sheet (also referred to as off-balance sheet) depends on the
terms of the related transaction and our continuing involvement (if any) with the VIE. We are deemed the primary beneficiary and therefore
consolidate VIEs for which we have both (a) the power, through voting rights or similar rights, to direct the activities that most significantly
impact the VIE's economic performance, and (b) a variable interest (or variable interests) that (i) obligates us to absorb losses that could
potentially be significant to the VIE and/or (ii) provides us the right to receive residual returns of the VIE that could potentially be significant
to the VIE. We determine whether we hold a significant variable interest in a VIE based on a consideration of both qualitative and quantitative
factors regarding the nature, size, and form of our involvement with the VIE. We assess whether we are the primary beneficiary of a VIE on
an ongoing basis.
Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K