Ally Bank 2012 Annual Report Download - page 57

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Loan and Lease Exposure
The following table summarizes the exposures from our loan and lease activities.
December 31, ($ in millions)2012 2011
Finance receivables and loans
Dealer Financial Services $ 86,542 $ 100,734
Mortgage operations 9,821 12,753
Corporate and Other 2,692 1,268
Total finance receivables and loans 99,055 114,755
Held-for-sale loans
Dealer Financial Services —425
Mortgage operations 2,490 8,112
Corporate and Other 86 20
Total held-for-sale loans 2,576 8,557
Total on-balance sheet loans $ 101,631 $ 123,312
Off-balance sheet securitized loans
Dealer Financial Services $ 1,495 $ —
Mortgage operations 119,384 326,975
Corporate and Other ——
Total off-balance sheet securitized loans $ 120,879 $ 326,975
Operating lease assets
Dealer Financial Services $ 13,550 $ 9,275
Mortgage operations ——
Corporate and Other ——
Total operating lease assets $ 13,550 $ 9,275
Serviced loans and leases
Dealer Financial Services $ 134,122 $ 122,881
Mortgage operations (a) 130,324 356,430
Corporate and Other 1,344 1,762
Total serviced loans and leases $ 265,790 $ 481,073
(a) Includes primary mortgage loan-servicing portfolio only.
The risks inherent in our loan and lease exposures are largely driven by changes in the overall economy, used vehicle and housing price
levels, unemployment levels, and their impact to our borrowers. The potential financial statement impact of these exposures varies depending
on the accounting classification and future expected disposition strategy. We retain the majority of our automobile loans as they complement
our core business model, but we do sell loans from time to time on an opportunistic basis. We primarily originate mortgage loans with the
intent to sell them and, as such, retain only a small percentage of the loans that we originate or purchase. Mortgage loans that we do not
intend to retain are sold to investors, primarily through securitizations guaranteed by GSEs. However, we may retain an interest or right to
service these loans. We ultimately manage the associated risks based on the underlying economics of the exposure. Given our recent strategic
actions, we intend to continue to originate a modest level of jumbo and conventional conforming residential mortgages through a select group
of correspondent lenders with the intent to retain within our held-for-investment portfolio.
• Finance receivables and loans — Loans that we have the intent and ability to hold for the foreseeable future or until maturity or
loans associated with an on-balance sheet securitization classified as secured financing. These loans are recorded at the principal
amount outstanding, net of unearned income and premiums and discounts. Probable credit-related losses inherent in our finance
receivables and loans carried at historical cost are reflected in our allowance for loan losses and recognized in current period
earnings. We manage the economic risks of these exposures, including credit risk, by adjusting underwriting standards and risk
limits, augmenting our servicing and collection activities (including loan modifications and restructurings), and optimizing our
product and geographic concentrations. Additionally, we had historically elected to carry certain mortgage loans of ResCap at fair
value. Changes in the fair value of these loans are recognized in a valuation allowance separate from the allowance for loan losses
and were reflected in current period earnings. We used market-based instruments, such as derivatives, to hedge changes in the fair
value of these loans. Refer to the Critical Accounting Estimates discussion within this MD&A and Note 1 to the Consolidated
Financial Statements for further information.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K