Bank of America 2011 Annual Report Download - page 52

50 Bank of America 2011
Off-Balance Sheet Arrangements and
Contractual Obligations
We have contractual obligations to make future payments on debt
and lease agreements. Additionally, in the normal course of
business, we enter into contractual arrangements whereby we
commit to future purchases of products or services from
unaffiliated parties. Obligations that are legally binding
agreements whereby we agree to purchase products or services
with a specific minimum quantity defined at a fixed, minimum or
variable price over a specified period of time are defined as
purchase obligations. Included in purchase obligations are
commitments to purchase loans of $2.5 billion and vendor
contracts of $15.7 billion. The most significant vendor contracts
include communication services, processing services and
software contracts. Other long-term liabilities include our
contractual funding obligations related to the Qualified Pension
Plans, Non-U.S. Pension Plans, Nonqualified and Other Pension
Plans, and Postretirement Health and Life Plans (the Plans).
Obligations to the Plans are based on the current and projected
obligations of the Plans, performance of the Plans’ assets and
any participant contributions, if applicable. During 2011 and 2010,
we contributed $287 million and $395 million to the Plans, and
we expect to make at least $337 million of contributions during
2012.
Debt, lease, equity and other obligations are more fully
discussed in Note 13 – Long-term Debt and Note 14 – Commitments
and Contingencies to the Consolidated Financial Statements. The
Plans are more fully discussed in Note 19 – Employee Benefit Plans
to the Consolidated Financial Statements.
We enter into commitments to extend credit such as loan
commitments, standby letters of credit (SBLCs) and commercial
letters of credit to meet the financing needs of our customers. For
a summary of the total unfunded, or off-balance sheet, credit
extension commitment amounts by expiration date, see the table
in Note 14 – Commitments and Contingencies to the Consolidated
Financial Statements.
Table 10 presents total long-term debt and other obligations at
December 31, 2011.
Table 10
(Dollars in millions)
Long-term debt and capital leases
Operating lease obligations
Purchase obligations
Time deposits
Other long-term liabilities
Total long-term debt and other obligations
Long-term Debt and Other Obligations
December 31, 2011
Due in One
Year or Less
$ 97,415
3,008
7,130
133,907
768
$242,228
Due After
One Year Through
Three Years
$ 93,625
4,573
4,781
14,228
991
$118,198
Due After
Three Years
Through
Five Years
$ 48,539
2,903
3,742
6,094
753
$ 62,031
Due After
Five Years
$132,686
6,117
4,206
3,197
1,128
$147,334
Total
$ 372,265
16,601
19,859
157,426
3,640
$ 569,791
Representations and Warranties
We securitize first-lien residential mortgage loans generally in the
form of MBS guaranteed by the GSEs or by Government National
Mortgage Association (GNMA) in the case of the FHA-insured, U.S.
Department of Veterans Affairs (VA)-guaranteed and Rural Housing
Service-guaranteed mortgage loans. In addition, in prior years,
legacy companies and certain subsidiaries sold pools of first-lien
residential mortgage loans and home equity loans as private-label
securitizations (in certain of these securitizations, monolines or
financial guarantee providers insured all or some of the securities),
or in the form of whole loans. In connection with these transactions,
we or our subsidiaries or legacy companies make or have made
various representations and warranties. Breaches of these
representations and warranties may result in the requirement to
repurchase mortgage loans or to otherwise make whole or provide
other remedies to the GSEs, U.S. Department of Housing and
Urban Development (HUD) with respect to FHA-insured loans, VA,
whole-loan buyers, securitization trusts, monoline insurers or other
financial guarantors (collectively, repurchases). In such cases, we
would be exposed to any credit loss on the repurchased mortgage
loans after accounting for any mortgage insurance (MI) or mortgage
guaranty payments that we may receive.
Subject to the requirements and limitations of the applicable
sales and securitization agreements, these representations and
warranties can be enforced by the GSEs, HUD, VA, the whole-loan
buyer, the securitization trustee or others as governed by the
applicable agreement or, in certain first-lien and home equity
securitizations where monoline insurers or other financial
guarantee providers have insured all or some of the securities
issued, by the monoline insurer or other financial guarantor. In the
case of loans sold to parties other than the GSEs or GNMA, the
contractual liability to repurchase typically arises only if there is a
breach of the representations and warranties that materially and
adversely affects the interest of the investor, or investors, in the
loan, or of the monoline insurer or other financial guarantor (as
applicable). Contracts with the GSEs do not contain equivalent
language, while GNMA generally limits repurchases to loans that
are not insured or guaranteed as required.
For additional information about accounting for representations
and warranties and our representations and warranties claims and
exposures, see Recent Events – Private-label Securitization
Settlement with the Bank of New York Mellon, Complex Accounting
Estimates – Representations and Warranties, Note 9 –
Representations and Warranties Obligations and Corporate
Guarantees and Note 14 – Commitments and Contingencies to the
Consolidated Financial Statements and Item 1A. Risk Factors of
this Annual Report on Form 10-K.
Representations and Warranties Bulk Settlement
Actions
Beginning in the fourth quarter of 2010, we have settled, or entered
into agreements to settle, certain bulk representations and
warranties claims with a trustee for certain legacy Countrywide
private-label securitization trusts (the BNY Mellon Settlement), a
monoline insurer (the Assured Guaranty Settlement) and with each