Ally Bank 2012 Annual Report Download - page 64

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• Payment-option adjustable-rate mortgages — Permit a variety of repayment options. The repayment options include minimum,
interest-only, fully amortizing 30-year, and fully amortizing 15-year payments. The minimum payment option generally sets the
monthly payment at the initial interest rate for the first year of the loan. The interest rate resets after the first year, but the borrower
can continue to make the minimum payment. The interest-only option sets the monthly payment at the amount of interest due on the
loan. If the interest-only option payment would be less than the minimum payment, the interest-only option is not available to the
borrower. Under the fully amortizing 30- and 15-year payment options, the borrower's monthly payment is set based on the interest
rate, loan balance, and remaining loan term. We ceased originating these loans during 2008.
• Interest-only mortgages — Allow interest-only payments for a fixed time. At the end of the interest-only period, the loan payment
includes principal payments and can increase significantly. The borrower's new payment, once the loan becomes amortizing
(i.e., includes principal payments), will be greater than if the borrower had been making principal payments since the origination of
the loan. We ceased originating these loans with the intent to retain during 2010.
• Below-market rate (teaser) mortgages — Contain contractual features that limit the initial interest rate to a below-market interest
rate for a specified time period with an increase to a market interest rate in a future period. The increase to the market interest rate
could result in a significant increase in the borrower's monthly payment amount. We ceased originating these loans with the intent to
retain during 2008.
The following table summarizes mortgage finance receivables and loans by higher-risk loan type. These finance receivables and loans
are recorded at historical cost and reported at carrying value before allowance for loan losses.
2012 2011
December 31, ($ in millions)Outstanding Nonperforming
Accruing
past due
90 days
or more Outstanding Nonperforming
Accruing
past due
90 days or
more
Interest-only mortgage loans (a) $ 2,063 $ 125 $ — $ 2,947 $ 147 $ —
Below-market rate (teaser) mortgages 192 3 — 248 6 —
Total higher-risk mortgage loans $ 2,255 $ 128 $ — $ 3,195 $ 153 $ —
(a) The majority of the interest-only mortgage loans are expected to start principal amortization in 2015 or beyond.
High original LTV mortgage finance receivables and loans and payment-option adjustable-rate mortgage finance receivables and loans
remained flat at $1 million and $3 million, respectively, at December 31, 2012 and December 31, 2011. There were no high original LTV
mortgage loans or payment-option adjustable-rate mortgage loans classified as nonperforming or 90 days past due and still accruing at
December 31, 2012 and December 31, 2011.
The allowance for loan losses was $104 million, or 4.6%, of total higher-risk held-for-investment mortgage loans recorded at historical
cost based on carrying value outstanding before allowance for loans losses at December 31, 2012.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K