2.4.0.8100200 - Disclosure - Assets and Liabilities of Businesses Held For Sale and Discontnued Operationstruefalsefalse1false falsefalseFROM_Jan01_2013_TO_Jun30_2013http://www.sec.gov/CIK0000040554duration2013-01-01T00:00:002013-06-30T00:00:001true 1gecc_AssetsAndLiabilitiesOfBusinessesHeldForSaleAndDiscontinuedOperationsAbstractgecc_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:9pt;font-weight:bold;margin-left:0px;">2.</font><font style="font-family:Arial;font-size:9pt;font-weight:bold;"> </font><font style="font-family:Arial;font-size:9pt;font-weight:bold;">ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS</font></p><p style='margin-top:0pt; 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border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td></tr><tr style="height: 11px"><td style="width: 336px; text-align:left;border-color:#000000;min-width:336px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">Disposal</font></td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; text-align:left;border-color:#000000;min-width:57px;">&#160;</td></tr><tr style="height: 11px"><td style="width: 336px; text-align:left;border-color:#000000;min-width:336px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">Gain (loss) on disposal before income taxes</font></td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">$</font></td><td style="width: 57px; 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border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:57px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">14</font></td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:57px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">68</font></td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; 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text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:8px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">$</font></td><td style="width: 57px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:57px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">(294)</font></td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:8px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">$</font></td><td style="width: 57px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:57px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">(214)</font></td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:left;border-color:#000000;min-width:8px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">$</font></td><td style="width: 57px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:57px;"><font style="FONT-FAMILY: Arial;FONT-SIZE: 8pt;COLOR: #000000;">(459)</font></td></tr><tr style="height: 11px"><td style="width: 336px; text-align:left;border-color:#000000;min-width:336px;">&#160;</td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td></tr><tr style="height: 11px"><td style="width: 336px; 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text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; border-top-style:double;border-top-width:3px;text-align:left;border-color:#000000;min-width:57px;">&#160;</td></tr></table></div><p style='margin-top: 0pt; margin-bottom: 0pt;'></p><div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 11px"><td style="width: 336px; text-align:left;border-color:#000000;min-width:336px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 19px; text-align:left;border-color:#000000;min-width:19px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 57px; text-align:left;border-color:#000000;min-width:57px;">&#160;</td><td style="width: 29px; text-align:left;border-color:#000000;min-width:29px;">&#160;</td><td colspan="2" style="width: 65px; text-align:right;border-color:#000000;min-width:65px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Arial Narrow;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: right;">June 30,</font></td><td style="width: 19px; text-align:center;border-color:#000000;min-width:19px;">&#160;</td><td colspan="2" style="width: 65px; text-align:right;border-color:#000000;min-width:65px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Arial Narrow;FONT-SIZE: 8pt;COLOR: #000000;TEXT-ALIGN: right;">December 31,</font></td></tr><tr style="height: 11px"><td style="width: 336px; 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The underlying portfolio to which this obligation relates is in runoff and interest rates were capped for all designated accounts by mid-2009. 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Our reserves declined from </font><font style="font-family:Arial;font-size:9pt;">$</font><font style="font-family:Arial;font-size:9pt;">700</font><font style="font-family:Arial;font-size:9pt;"> million</font><font style="font-family:Arial;font-size:9pt;"> at </font><font style="font-family:Arial;font-size:9pt;">December 31, 2012</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">to $</font><font style="font-family:Arial;font-size:9pt;">557</font><font style="font-family:Arial;font-size:9pt;"> million at June 30, 2013</font><font style="font-family:Arial;font-size:9pt;">, as</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">claim payments </font><font style="font-family:Arial;font-size:9pt;">and the effects of a strengthening U.S. dollar against the Japanese yen </font><font style="font-family:Arial;font-size:9pt;">were partially offset by a</font><font style="font-family:Arial;font-size:9pt;">n i</font><font style="font-family:Arial;font-size:9pt;">ncrease to reserves</font><font style="font-family:Arial;font-size:9pt;"> of</font><font style="font-family:Arial;font-size:9pt;"> $</font><font style="font-family:Arial;font-size:9pt;">126</font><font style="font-family:Arial;font-size:9pt;"> million</font><font style="font-family:Arial;font-size:9pt;">.</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">In determining reserve levels, we consider analyses of recent and historical claims experience, as well as pending and estimated future refund requests, adjusted for the estimated percentage of customers who present valid requests and associated estimated payments. We determined our reserve assuming the pace of incoming claims will decelerate, that average exposure per claim remains consistent with recent experience, and that we continue to see the impact of loss mitigation efforts. Since our disposition of the business, incoming claims have continued to decline, however, it is highly variable and difficult to predict the pace and pattern of that decline and such assumptions have a significant effect on the total amount of our liability. Holding all other assumptions constant, an adverse change of</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">20</font><font style="font-family:Arial;font-size:9pt;">% and </font><font style="font-family:Arial;font-size:9pt;">50</font><font style="font-family:Arial;font-size:9pt;">% in assumed incoming daily claim rate reduction (resulting in an extension of the claim period and higher incoming claims), would result in an increase to our reserve of approximately $</font><font style="font-family:Arial;font-size:9pt;">75</font><font style="font-family:Arial;font-size:9pt;"> million and $</font><font style="font-family:Arial;font-size:9pt;">400</font><font style="font-family:Arial;font-size:9pt;"> million, respectively. We continue to closely monitor and evaluate claims activity.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Arial;font-size:9pt;margin-left:0px;">Based on the uncertainties discussed above, and considering other environmental factors in Japan, including the runoff status of the underlying book of business, challenging economic conditions, the impact of laws and regulations (including consideration of proposed legislation that could impose a </font><font style="font-family:Arial;font-size:9pt;">framework for collective legal action proceedings)</font><font style="font-family:Arial;font-size:9pt;">, and the financial status of other local personal lending companies, it is difficult to develop a meaningful estimate of the aggregate possible claims exposure. These uncertainties and factors could have an adverse effect on claims development.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Arial;font-size:9pt;margin-left:0px;">GE Money Japan earnings (loss) from discontinued operations, net of taxes</font><font style="font-family:Arial;font-size:9pt;">, were</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">$</font><font style="font-family:Arial;font-size:9pt;">(65)</font><font style="font-family:Arial;font-size:9pt;"> million and $</font><font style="font-family:Arial;font-size:9pt;">(</font><font style="font-family:Arial;font-size:9pt;">3</font><font style="font-family:Arial;font-size:9pt;">27)</font><font style="font-family:Arial;font-size:9pt;"> million in the </font><font style="font-family:Arial;font-size:9pt;">three</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">months ended </font><font style="font-family:Arial;font-size:9pt;">June 30, 2013</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">and </font><font style="font-family:Arial;font-size:9pt;">2012</font><font style="font-family:Arial;font-size:9pt;">, respectively, and $</font><font style="font-family:Arial;font-size:9pt;">(1</font><font style="font-family:Arial;font-size:9pt;">1</font><font style="font-family:Arial;font-size:9pt;">6)</font><font style="font-family:Arial;font-size:9pt;"> million and $</font><font style="font-family:Arial;font-size:9pt;">(3</font><font style="font-family:Arial;font-size:9pt;">5</font><font style="font-family:Arial;font-size:9pt;">4)</font><font style="font-family:Arial;font-size:9pt;"> million in the </font><font style="font-family:Arial;font-size:9pt;">six</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">months </font><font style="font-family:Arial;font-size:9pt;">ended June 30, 2013</font><font style="font-family:Arial;font-size:9pt;"> and 2012, respectively</font><font style="font-family:Arial;font-size:9pt;">.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Arial;font-size:9pt;font-weight:bold;margin-left:0px;">WMC</font></p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Arial;font-size:9pt;margin-left:0px;">During the fourth quarter of 2007, we completed the </font><font style="font-family:Arial;font-size:9pt;">sale of WMC, our U.S. mortgage business</font><font style="font-family:Arial;font-size:9pt;">. WMC substantially discontinued all new loan originations by the second quarter of 200</font><font style="font-family:Arial;font-size:9pt;">7, and is not a loan servicer. </font><font style="font-family:Arial;font-size:9pt;">In connection with the sale</font><font style="font-family:Arial;font-size:9pt;">, WMC retained certain representation and warranty obligations related to loans sold to third parties prior to the disposal of the business and contractual obligations to repurchase previously sold loans as to which there was an early payment default. All claims received</font><font style="font-family:Arial;font-size:9pt;"> by WMC</font><font style="font-family:Arial;font-size:9pt;"> for early payment default have either been resolved or are no longer being pursued. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Arial;font-size:9pt;margin-left:0px;">Pending repurchase claims based upon representations and warranties made in connection with loan sales were</font><font style="font-family:Arial;font-size:9pt;"> $</font><font style="font-family:Arial;font-size:9pt;">6</font><font style="font-family:Arial;font-size:9pt;">,</font><font style="font-family:Arial;font-size:9pt;">335</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">million at June 30, 2013</font><font style="font-family:Arial;font-size:9pt;">, $</font><font style="font-family:Arial;font-size:9pt;">5,357</font><font style="font-family:Arial;font-size:9pt;"> million at </font><font style="font-family:Arial;font-size:9pt;">December 31, 2012</font><font style="font-family:Arial;font-size:9pt;"> and $</font><font style="font-family:Arial;font-size:9pt;">705</font><font style="font-family:Arial;font-size:9pt;"> million at December 31, </font><font style="font-family:Arial;font-size:9pt;">2011</font><font style="font-family:Arial;font-size:9pt;">. Pending claims represent those active repurchase claims that identify the specific loans tendered for repurchase and, for each loan, the alleged breach of a representation or warranty. </font><font style="font-family:Arial;font-size:9pt;">As such, they do not include unspecified repurchase claim</font><font style="font-family:Arial;font-size:9pt;">s, such as</font><font style="font-family:Arial;font-size:9pt;"> the Litigation Claims discussed below</font><font style="font-family:Arial;font-size:9pt;">, or claims </font><font style="font-family:Arial;font-size:9pt;">relating to breaches of representations that were made more than six years before WMC was notified of </font><font style="font-family:Arial;font-size:9pt;">the </font><font style="font-family:Arial;font-size:9pt;">claim</font><font style="font-family:Arial;font-size:9pt;">.</font><font style="font-family:Arial;font-size:9pt;"> WMC believes</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">that these repurchase claims do </font><font style="font-family:Arial;font-size:9pt;">not meet the substantive and procedural requirements for tender under the governing agreements</font><font style="font-family:Arial;font-size:9pt;">, would be barred from being enforced in legal proceedings under applicable statutes of limitations</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">or are otherwise invalid</font><font style="font-family:Arial;font-size:9pt;">.</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">The amounts reported </font><font style="font-family:Arial;font-size:9pt;">in pending claims </font><font style="font-family:Arial;font-size:9pt;">reflect the </font><font style="font-family:Arial;font-size:9pt;">purchase price or unpaid</font><font style="font-family:Arial;font-size:9pt;"> principal balances of the loans</font><font style="font-family:Arial;font-size:9pt;"> at the time of purchase and do not give effect to pay </font><font style="font-family:Arial;font-size:9pt;">downs, accrued interest or fees, or potential recoveries based upon the underlying collateral. 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The </font><font style="font-family:Arial;font-size:9pt;">adverse parties </font><font style="font-family:Arial;font-size:9pt;">in these cases </font><font style="font-family:Arial;font-size:9pt;">are securitization trustees or parties claiming to act on their behalf</font><font style="font-family:Arial;font-size:9pt;">. 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These Litigation Claims consist of sampling-based claims in </font><font style="font-family:Arial;font-size:9pt;">two</font><font style="font-family:Arial;font-size:9pt;"> cases on approximately $</font><font style="font-family:Arial;font-size:9pt;">900</font><font style="font-family:Arial;font-size:9pt;"> million of mortgage loans and, in the other </font><font style="font-family:Arial;font-size:9pt;">nin</font><font style="font-family:Arial;font-size:9pt;">e</font><font style="font-family:Arial;font-size:9pt;"> cases, claims for repurchase or damages based on the alleged failure to provide notice of defective loans, breach of a corporate representation and warranty, and/or non-specific claims for </font><font style="font-family:Arial;font-size:9pt;">resciss</font><font style="font-family:Arial;font-size:9pt;">iona</font><font style="font-family:Arial;font-size:9pt;">ry</font><font style="font-family:Arial;font-size:9pt;"> damages on approximately $</font><font style="font-family:Arial;font-size:9pt;">5</font><font style="font-family:Arial;font-size:9pt;">,</font><font style="font-family:Arial;font-size:9pt;">7</font><font style="font-family:Arial;font-size:9pt;">00 </font><font style="font-family:Arial;font-size:9pt;">million of mortgage loans. These claims reflect the purchase price or unpaid principal balances of the loans at the time of purchase and do not give effect to pay downs, accrued interest or fees, or potential recoveries based upon the underlying collateral. As noted above, WMC believes that the Litigation Claims are disallowed by the governing agreements and applicable law. As a result, WMC has not included the Litigation Claims in its pending claims or in its estimates of future loan repurchase requests and holds n</font><font style="font-family:Arial;font-size:9pt;">o related reserve as of </font><font style="font-family:Arial;font-size:9pt;">June 30,</font><font style="font-family:Arial;font-size:9pt;"> 201</font><font style="font-family:Arial;font-size:9pt;">3</font><font style="font-family:Arial;font-size:9pt;">. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Arial;font-size:9pt;margin-left:0px;">At this point, WMC is unable to develop a meaningful estimate of reasonably possible loss in connection with the Litigation Claims </font><font style="font-family:Arial;font-size:9pt;">d</font><font style="font-family:Arial;font-size:9pt;">escribed above due to a number of factors, including the extent to which courts will agree with the theories supporting the Litigation Claims. Specifically, while several courts in cases not involving WMC have supported some of those theories, other courts have rejected them. In addition, WMC lacks experience resolving such claims, and there are few public industry settlements that may serve as benchmarks to estimate a reasonably possible loss. An adverse court decision </font><font style="font-family:Arial;font-size:9pt;">on any of t</font><font style="font-family:Arial;font-size:9pt;">he theories supporting the Liti</font><font style="font-family:Arial;font-size:9pt;">gation </font><font style="font-family:Arial;font-size:9pt;">C</font><font style="font-family:Arial;font-size:9pt;">laims </font><font style="font-family:Arial;font-size:9pt;">could increase WMC</font><font style="font-family:Arial;font-size:9pt;">'</font><font style="font-family:Arial;font-size:9pt;">s exposure in</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">some or all of the 1</font><font style="font-family:Arial;font-size:9pt;">5</font><font style="font-family:Arial;font-size:9pt;"> lawsuits and result in additional claims and lawsuits. However, WMC believes that it has defenses to all the claims asserted in litigation, including</font><font style="font-family:Arial;font-size:9pt;"> for example,</font><font style="font-family:Arial;font-size:9pt;"> causation and materiality requirements</font><font style="font-family:Arial;font-size:9pt;">, </font><font style="font-family:Arial;font-size:9pt;">limitations on remedies for breach of representations and warranties</font><font style="font-family:Arial;font-size:9pt;">, and the applicable statutes of limitations</font><font style="font-family:Arial;font-size:9pt;">. To the extent WMC is required to repurchase loans, WMC</font><font style="font-family:Arial;font-size:9pt;">'</font><font style="font-family:Arial;font-size:9pt;">s loss also would be affected by several factors, including pay downs, accrued interest and fees, and the value of the underlying collateral. It is not possible to predict the outcome or impact of these defenses and other factors, any one of which could materially affect the amount of any loss ultimately incurred by WMC on these claims.</font><font style="font-family:Arial;font-size:9pt;"> </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Arial;font-size:9pt;margin-left:0px;">WMC has received claims on approximately </font><font style="font-family:Arial;font-size:9pt;">$</font><font style="font-family:Arial;font-size:9pt;">900</font><font style="font-family:Arial;font-size:9pt;"> million of mortgage loans after the expiration of the statute of limitations</font><font style="font-family:Arial;font-size:9pt;"> as of </font><font style="font-family:Arial;font-size:9pt;">June 30,</font><font style="font-family:Arial;font-size:9pt;"> 2013</font><font style="font-family:Arial;font-size:9pt;">, $</font><font style="font-family:Arial;font-size:9pt;">700</font><font style="font-family:Arial;font-size:9pt;"> million of which are also included as Litigation Claims</font><font style="font-family:Arial;font-size:9pt;">. </font><font style="font-family:Arial;font-size:9pt;">WMC has also received unspecified indemnification demands from depositors/underwriters/sponsors of </font><font style="font-family:Arial;font-size:9pt;">residential mortgage-</font><font style="font-family:Arial;font-size:9pt;">backed securities (</font><font style="font-family:Arial;font-size:9pt;">RMBS</font><font style="font-family:Arial;font-size:9pt;">)</font><font style="font-family:Arial;font-size:9pt;"> in connection with lawsuits brought by RMBS investors</font><font style="font-family:Arial;font-size:9pt;"> </font><font style="font-family:Arial;font-size:9pt;">concerning alleged misrepresentations in the securitization offering documents</font><font style="font-family:Arial;font-size:9pt;"> to which WMC is not a pa</font><font style="font-family:Arial;font-size:9pt;">rty. 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