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UNITED STATES

FORM 10-K

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002, or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from              to             .

Commission file number: 1-3754

GENERAL MOTORS ACCEPTANCE CORPORATION

200 Renaissance Center

(313) 556-5000

Securities registered pursuant to Section 12(b) of the Act:

Each class of security listed above is registered on the New York Stock Exchange.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

As of December 31, 2002, there were outstanding 10 shares of the issuer’s $.10 par value common stock.

Documents incorporated by reference. None.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format.

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* Item is omitted pursuant to the Reduced Disclosure Format, as set forth on the cover page of this filing.

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GMAC’s global activities include Financing, Mortgage and Insurance operations:

•	Financing — GMAC and its affiliated companies offer a wide variety of automotive financial services to and through General Motors and other automobile dealerships and to the customers of those dealerships. The Company also provides commercial financing and factoring services to businesses in other industries (e.g., manufacturing and apparel).
•	Mortgage — The Company’s Mortgage operations originate, purchase, service and securitize residential and commercial mortgage loans and mortgage related products.
•	Insurance — GMAC’s Insurance operations insure and reinsure automobile service contracts, personal automobile insurance coverages (ranging from preferred to non-standard risk) and selected commercial insurance coverages.

Various subsidiaries of the Company are subject to regulatory, financial and other requirements of the jurisdictions in which they conduct business operations. These regulatory restrictions primarily dictate that these subsidiaries meet certain minimum capital requirements, restrict dividend distributions and may restrict certain assets. To date, compliance with these various regulations has not had a material effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company had 31,936 and 29,390 employees worldwide as of December 31, 2002 and 2001, respectively. A description of the Company’s business segments, along with the products and services offered and the market competition, is contained in the Business Segment Results of Operations sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which begins on page 9.

Item 2. Properties

Item 3. Legal Proceedings

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

GMAC’s Annual Report of Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K are available on the Company’s Internet website, free of charge, as soon as reasonably practicable after the reports are electronically filed with or furnished to the United States Securities and Exchange Commission. These reports are available at www.gmacfs.com, under Investment, Financial Statements and SEC Filings.

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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 14. Controls and Procedures

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The Company filed the following Current Reports on Form 8-K during the quarter ended December 31, 2002:

•	On October 15, 2002, under Item 5, Other Events, summarizing financial results for the quarter ended September 30, 2002.
•	On October 17, 2002, under Item 5, Other Events, containing the news releases of Moody’s Investors Service and Standard & Poor’s Ratings Services describing the confirmation of GMAC’s short- and long-term credit ratings by Moody’s, and the lowering of GMAC’s long-term corporate credit rating by S&P.
•	On November 4, 2002, under Item 5, Other Events, containing the news release of General Motors Corporation announcing the appointment of Eric A. Feldstein as GMAC President.

No other reports on Form 8-K were filed during the quarter ended December 31, 2002; however,

•	On January 16, 2003, under Item 5, Other Events, the Company filed a Current Report on Form 8-K summarizing financial results for the quarter ended December 31, 2002.
•	On March 7, 2003, under Item 5, Other Events, the Company filed a Current Report on Form 8-K summarizing the potential sale of GMAC’s commercial mortgage business.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 13th day of March, 2003.

	General Motors Acceptance Corporation
	(Registrant)
	/s/ ERIC A. FELDSTEIN
	________________________________________ Eric A. Feldstein
	Principal Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, this 13th day of March, 2003.

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1.	I have reviewed this annual report on Form 10-K of GMAC;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.	The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 13, 2003

/s/ ERIC A. FELDSTEIN

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1.	I have reviewed this annual report on Form 10-K of GMAC;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.	The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 13, 2003

/s/ WILLIAM F. MUIR

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GMAC is a leading global financial services firm with over $200 billion of assets and operations in 41 countries. Founded in 1919 as a wholly-owned subsidiary of General Motors Corporation, GMAC was established to provide GM dealers with the automotive financing necessary for the dealers to acquire and maintain vehicle inventories and to provide retail customers means by which to finance vehicle purchases through GM dealers. GMAC products and services have expanded beyond automotive financing and GMAC currently operates in three primary business segments — Financing, Mortgage and Insurance operations. Net income for these segments is summarized as follows:

GMAC earned net income of $1,870 million in 2002, a 7% increase from the $1,752 million earned in 2001, exclusive of the cumulative effect of accounting change due to the January 1, 2001 adoption of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. All annual comparisons within this MD&A exclude the cumulative effect of this accounting change. Despite operating in challenging economic and capital market environments, 2002 earnings are an annual record for GMAC, with 2002 net income representing the eighth consecutive year of increase.

Net income from Financing operations totaled $1,239 million in 2002, an increase of $28 million from the $1,211 million earned in 2001. Increased earnings from higher asset levels more than offset higher credit loss provisions and wider borrowing spreads (in relation to United States Treasury securities) that have occurred primarily as a result of rating agency downgrades occurring in October 2001 and October 2002.

GMAC’s Mortgage operations earned a record $544 million in 2002, a 64% increase from the $332 million earned in 2001. The higher earnings reflect increased production volumes and higher servicing levels across each of GMAC’s three Mortgage companies. The results also reflect improved hedging results, which partially offset a decrease in the value of mortgage servicing rights.

Insurance operations generated net income of $87 million in 2002, a decrease of 58% from the $209 million earned in 2001. The overall reduction reflects a write-down of certain investment securities primarily due to the prolonged decline in equity markets, partially offset by improved underwriting results and a favorable income impact related to settlement with the IRS of closed tax years.

As summarized in the Supplementary Financial Data appearing on page 70, GMAC’s fourth quarter 2002 consolidated results totaled $524 million, representing a 20% increase from the $435 million earned in the fourth quarter of 2001 and a quarterly record. For the quarter, net income from Financing operations totaled $334 million, up from $251 million earned in the fourth quarter of 2001. Mortgage operations earned a quarterly record of $185 million in the fourth quarter, up from the $108 million earned in the fourth quarter of 2001. Insurance operations earned net income of $5 million in the fourth quarter of 2002, down from the $76 million earned in the same period of 2001.

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GMAC offers financing, mortgage and insurance products and services to customers throughout the world.

GMAC’s Financing operations offer a wide range of financial services and products (directly and indirectly) to retail automotive consumers, automotive dealerships, and other commercial businesses. These products and services include the purchase of installment sales contracts and leases, extension of term loans, floorplan financing and other lines of credit, and factoring of receivables.

Consumer Automotive Financing

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The following table summarizes GMAC’s new vehicle consumer financing volume and the Company’s share of GM retail sales.

General Motors may elect to sponsor incentive programs (on both retail contracts and leases) by supporting financing rates below standard rates at which GMAC purchases retail contracts. Such purchase incentives are also referred to as rate support or subvention. General Motors pays the present value difference between the customer rate and GMAC’s standard rates either directly or indirectly to GM dealers. GMAC purchases these contracts at a discount and recognizes the discount into income over the life of the contract. GM may also provide incentives on leases by supporting residual values (established at lease inception) in excess of GMAC’s standard residual values and reimbursing the Company to the extent proceeds at termination are less than contract residual. Such lease incentives are also referred to as residual support, as further discussed in the Residual Risk Management portion of the Financing Operations section of this MD&A. The following table summarizes the percentage of the Company’s annual retail contract and lease volume that included GM sponsored incentives.

GM’s decisions to use rate and residual incentives for marketing purposes on consumer retail contracts and leases can have a significant effect on the business of the Company. For example, in the mid-1990s, GM’s marketing efforts consisted primarily of rate and residual incentives on consumer leases. As a result, the Company’s lease portfolio increased from $11 billion in 1993 to $30 billion at the end of 1999. More recently, GM has used rate subvention on retail contracts to market vehicles in the United States, which has increased the Company’s consumer automotive retail contract portfolio by 64% over the past two years.

Consumer Credit Approval

•	The consumer’s credit history, including any prior experience with GMAC
•	The asset value of the vehicle and the amount of equity (downpayment) in the vehicle
•	The term of the retail contract or lease

GMAC uses a proprietary credit scoring system to support this credit approval process and to manage the credit quality of the portfolio. Credit scoring is used to differentiate credit applicants in terms of expected default rates. This enables the Company to properly evaluate credit applications for approval and to tailor the pricing and financing structure based on this assessment of credit risk. The credit scoring model is periodically reviewed and updated based on historical information and current trends. However, these actions by management do not eliminate credit risk. Improper evaluations of contracts for purchase could negatively affect the credit quality of the Company’s receivables portfolio, resulting in credit losses.

Prior to contract purchase, the Company verifies that:

•	Physical damage insurance is placed on the vehicle
•	A security interest is established in the vehicle (for retail contracts)
•	All required license fees, registration fees and initial taxes are paid

Servicing

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Consumer Credit Risk

The following table summarizes pertinent delinquency and loss experience in the consumer automotive retail contract portfolio. Consistent with the presentation in the Consolidated Balance Sheet, retail contracts presented in the table represent the principal balance of the finance receivable discounted for the unearned rate support received from General Motors. GM’s increased use of rate support in 2001 and 2002 has increased the effect that this discount has on losses when expressed as a percent of the net finance receivable balance.

The Company’s allowance for credit losses is intended to cover management’s estimate of probable incurred losses in the portfolio (refer to the Critical Accounting Estimates section of this MD&A and Note 1 to the Consolidated Financial Statements for further discussion). The following table summarizes the applicable allowance for credit losses as a percentage of total on-balance sheet consumer automotive retail contracts.

The Company’s consumer automotive leases are operating leases and exhibit different loss performance as compared to consumer automotive retail contracts. Credit losses on the operating lease portfolio are not as significant as losses on retail contracts because lease losses are limited to past due payments, late charges, and fees for excess mileage and excessive wear and tear. Since some of these fees are not assessed until the vehicle is returned, credit losses on the lease portfolio are correlated with lease termination volume. As further described in the Critical Accounting Estimates section of this MD&A, credit risk is accounted for within the overall depreciation and valuation of the operating lease asset. North American operating lease accounts past due over 30 days were 1.95% and 2.01% of the total portfolio at December 31, 2002 and 2001, respectively.

GMAC’s losses on consumer automotive retail contracts and leases have increased over the past few years despite relatively stable delinquencies and loss frequencies during the same period. The increased losses arise from an increase in loss severity attributable to weaknesses in used vehicle prices (which is further described in the following Lease Residual Risk section). Weaker used vehicle prices increase the loss per occurrence as the Company realizes less upon repossession and disposal of the underlying vehicle. This increase in severity is illustrated by an increase in the average loss incurred per contract in the United States, from $5,820 in 2000 to $7,703 in 2002, as calculated on only those new vehicle retail contracts with a loss. Despite a more adverse economic environment, the overall credit quality of the consumer automotive portfolios has remained strong, primarily due to the higher quality of contracts purchased over the past few years because of management’s decision to tighten the contract purchase policy in the late 1990s. In addition, the increased volume of GM rate supported contracts has further enhanced the portfolio credit quality. Typically, rate subvented contracts have stronger credit characteristics than non-incentivized contracts, as the former involve buyers who are more likely to have paid cash for the vehicles in the absence of the attractive financing rates.

Lease Residual Risk

With consumer leasing, GMAC purchases leases (and the associated vehicles) from dealerships. The purchase prices of the consumer leases are based on the negotiated price for the vehicle,

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In a consumer lease, the Company assumes ownership of the vehicle from the dealers. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease maturity. Typically, the vehicle is returned to GMAC for remarketing. The following summarizes GMAC’s methods of vehicle sale in the United States at lease termination, stated as a percentage of total lease vehicle disposals.

The Company primarily utilizes physical auctions and Internet auctions in disposing of vehicles.

•	Physical auctions — GMAC disposes of the majority of its off-lease vehicles, not purchased at termination, through official General Motors sponsored auctions. The Company is responsible for handling decisions at the auction, including arranging for inspections, authorizing repairs and refurbishment and determining whether bids received at auction should be accepted.
•	Internet auctions — In 2000, the Company began offering off-lease vehicles to GM dealers and affiliates through a proprietary Internet site. The Internet sales program was established to increase the net sales proceeds on off-lease vehicles by reducing the time between vehicle return and ultimate disposition (reducing holding costs) and broadening the number of prospective buyers (maximizing proceeds). GMAC maintains the Internet auction site, sets the pricing floors on vehicles, and administers the auction process. The Company earns a service fee for every sale. The Internet sales program has increased significantly since inception and was the remarketing channel for approximately 40% of 2002 off-lease vehicles disposed through auction in the United States.

GMAC bears the risk of loss to the extent that the value of the vehicle upon remarketing is below the residual value estimated at contract inception. GMAC primarily uses published residual guidebook values (primarily Automotive Lease Guide or ALG, in the United States) in establishing residual values at contract inception. These projected values may be upwardly adjusted as a marketing incentive if General Motors considers an above-market residual appropriate to encourage consumers to lease vehicles. Such residual support by GM results in a lower monthly lease payment by the consumer. General Motors reimburses GMAC for its portion of these increased residual values to the extent remarketing sales proceeds are less than contract residual at termination.

Residual Risk Management

•	Used vehicle market — The Company is at risk due to changes in used vehicle prices. General economic conditions, off-lease vehicle supply, and new vehicle market prices (of both GM and other manufacturers) most heavily influence used vehicle prices.
•	Initial residual value projections — As previously discussed, the Company establishes residual values at lease inception by consulting independently published guides. These values are projections of expected values in the future (typically between two to four years) based on current assumptions for the respective make and model. Actual realized values will likely differ.
•	GMAC’s remarketing abilities — GMAC’s ability to efficiently process and effectively market off-lease vehicles impacts the disposal costs and the proceeds realized from vehicle sales.
•	General Motors vehicle and marketing programs — GM influences lease residual results in the following ways:

	>	GM reimburses GMAC for certain residual deficiencies on residual supported vehicles.
	>	The brand image and consumer preference of GM products impact residual risk, as the Company’s lease portfolio consists primarily of GM vehicles.
	>	GM marketing programs that may influence the used vehicle market for GM vehicles, through programs such as incentives on new vehicles, programs designed to encourage lessees to terminate their leases early (in conjunction with the acquisition of a new GM vehicle), and special rate used vehicle programs.

The following table summarizes the volume of lease terminations and resulting income impact in the United States (which represents approximately 70% of the Company’s operating lease portfolio) for the years indicated.

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GMAC’s off-lease vehicle results have deteriorated as a result of lower than expected vehicle values at lease termination. As previously discussed, this is largely attributable to weak used vehicle prices due to deteriorating economic conditions, excess supply of off-lease vehicles, and intense price pressure in the new vehicle market. These factors have adversely affected GMAC’s off-lease vehicle disposal results. These deteriorating results have been mitigated by GMAC’s aggressive use of the Internet in remarketing off-lease vehicles. This initiative has improved efficiency, reduced costs, and ultimately increased the net proceeds on the sale of off-lease vehicles.

Commercial Financing

Automotive Wholesale Dealer Financing

The following table summarizes GMAC’s wholesale financing of new vehicles and the Company’s share of GM sales to dealers.

Credit Approval

•	Reviews credit reports, financial statements, and may obtain bank references,
•	Evaluates the dealer’s marketing capabilities,
•	Evaluates the dealer’s financial condition, and
•	Assesses the dealer’s operations and management.

Based on this analysis, the Company may approve the issuance of a credit line and determine the appropriate size. The credit lines represent guidelines, not limits, which dealers may exceed on occasion, an example being a dealer exceeding sales targets contemplated in the credit approval process. Generally, the size of the credit line is intended to be an amount sufficient to finance a 60-90 day supply of new vehicles and a 30-60 day supply of used vehicles.

Servicing and Monitoring

A statement setting forth billing and account information is prepared by GMAC and distributed on a monthly basis to each dealer. Interest and other non-principal charges are billed in arrears and are required to be paid immediately upon receipt of the monthly billing statement. Dealers remit payments directly to a GMAC office, typically within geographic proximity to the dealer.

Dealers are assigned a credit category based on various factors, including capital sufficiency, financial outlook, and credit history. The credit category impacts the amount of the line of credit, the determination of further advances, and the management of the account. GMAC monitors the level of borrowing under each dealer’s account daily. When a dealer’s balance exceeds the credit

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GMAC personnel periodically inspect and verify the existence of dealer vehicle inventories. The timing of the verifications varies and no advance notice is given to the dealer. Among other things, verifications are intended to determine dealer compliance with the financing agreement and confirm the status of GMAC’s collateral.

Other Commercial Financing

•	Automotive dealer term loans — The Company makes loans to dealers to finance other aspects of the dealership business. These loans are typically secured by real estate, other dealership assets and occasionally the personal guarantees of the individual owner of the dealership.
•	Automotive fleet financing — Dealers, their affiliates and other companies may obtain financing to buy vehicles, which they lease or rent to others. These transactions represent GMAC’s fleet financing activities. GMAC generally has a security interest in these vehicles and in the rental payments. However, competitive factors may occasionally limit the security interest in this collateral. As of January 1, 2002, General Motors terminated programs in which GM provided a limited payment guarantee to GMAC and other lenders as consideration for providing fleet financing. Volume acquired prior to 2002 continues to be covered under the payment guarantee. At December 31, 2002, approximately 61 percent of GMAC’s fleet financing receivables were covered by the General Motors payment guarantee program.
•	Full service leasing — GMAC offers full service individual and fleet leasing products in Europe, Mexico and Australia. In addition to financing the vehicles, the Company offers maintenance, fleet, and accident management services, as well as fuel programs, short-term vehicle rental, title and licensing services.
•	Specialty lending — Through its Commercial Finance Group, the Company provides asset-based lending, equipment finance, structured finance and factoring services in the United States, United Kingdom and Canada to companies in the apparel, textile, automotive supplier and other industries.

Commercial Credit Risk

Credit risk is managed and guided by policies and procedures that are designed to ensure that risks are accurately assessed, properly approved and continuously monitored. Individual business units approve significant transactions and are responsible for credit risk assessments (including the evaluation of the adequacy of the collateral). Individual business units also monitor the credit risk profile of individual borrowers and the aggregate portfolio of borrowers – either within a designated geographic region or a particular product or industry segment. Corporate approval is required for transactions exceeding business unit approval limits. Credit risk monitoring is supplemented at the corporate portfolio level through a periodic review performed by the Company’s Chief Credit Officer.

The table below summarizes pertinent credit quality information for the commercial portfolio.

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The Company’s allowance for credit losses is intended to cover management’s estimate of probable incurred losses in the portfolio (refer to the Critical Accounting Estimates section of this MD&A and Note 1 to the Consolidated Financial Statements for further discussion). The following table summarizes the applicable allowance for credit losses as a percentage of on-balance sheet commercial loans.

Consistent with the overall deterioration in the United States economy, credit losses in the commercial portfolio and impaired loans have increased since 2000. The majority of the losses were concentrated in the Company’s Commercial Finance Group, which was established and has grown through acquisitions. Despite the continued “soft” economic environment in the United States, the Company does not expect that commercial portfolio losses will continue at the levels experienced in 2002 and 2001. However, future charge-offs and credit quality in the commercial portfolio are subject to uncertainties that may cause actual results to differ from management’s expectations.

Securitization Activities

Results of Operations

Despite challenging economic and capital market environments, GMAC’s Financing operations experienced income growth in 2002. The continued use of GM sponsored special rate financing programs in the United States fueled asset growth in the consumer retail contract portfolio. The favorable income generated from this asset growth was partially offset by increased credit loss provisions in both the consumer retail contract and commercial loan portfolios. In addition, results were negatively impacted by wider borrowing spreads primarily caused by rating agency downgrades in October 2001 and October 2002, along with overall market pressure on corporate credit spreads.

Total financing revenue decreased 1% as compared to 2001. Consumer revenue increased 17% due to an increase in the consumer retail contract portfolio as a result of GM sponsored retail incentive programs. Revenue from the commercial portfolio (which is primarily floating rate) decreased consistent with the general decrease in market interest rates during the period. Net operating lease revenue declined as the Company’s operating lease portfolio decreased. The continued decline in the operating lease portfolio coincides with GM’s marketing emphasis on rate incentives on retail contracts, as opposed to leasing incentives.

The decrease in interest and discount expense was consistent with the general market decrease in interest rates. However, the favorable impact from this decrease in interest rates was offset by an overall increase in debt used to fund asset growth. Additionally, interest expense was negatively impacted by the widening of the Company’s corporate credit spreads during 2002. As further discussed in the Funding and Liquidity section of this MD&A, the wider spreads resulted from a combination of rating agency downgrades and a weak corporate bond market.

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In 2002, the provision for credit losses increased by 33%, reflecting growth in the consumer retail contract portfolio and a difficult economic environment. As previously discussed in the Consumer Credit Risk section, the consumer portfolio was adversely affected by an increase in loss severity due to the weak used vehicle market in the United States. The increase in the loss provision on the commercial portfolio related to the non-automotive dealer portion of the portfolio, as discussed in the Commercial Credit Risk section.

Other income decreased 10% during the year. A portion of the decrease relates to a reduction in interest income on loans to GMAC subsidiaries, and to GM and affiliates, primarily caused by a reduction in interest rates. Additionally, decreases were caused by unfavorable market adjustments on the Company’s derivative financial instruments that do not qualify for hedge accounting (i.e., primarily interest rate swaps used to facilitate securitization transactions). These negative impacts were offset by higher full service leasing revenues, as the Company’s International Financing operations continued to expand this line of business, and higher income related to increased securitization activity and outstandings. In addition, during 2002 the Company adjusted tax-related accruals, resulting in a favorable income impact as open tax years were closed and settled with the IRS.

Total noninterest expense increased by 7% year over year. Increased pension and postretirement allocations from GM resulted in an increase in compensation expense. Vehicle maintenance costs in the growing international full service leasing business also contributed to the increase in noninterest expense.

Factors Affecting Future Results

As the financing of GM manufactured vehicles comprises a substantial portion of the Company’s Financing operations, any protracted reduction or suspension of GM’s production or sales resulting from a decline in demand, work stoppage, governmental action, adverse publicity or other event could have a substantial unfavorable effect on the Company’s results of operations. Conversely, an increase in production or a significant marketing program could positively impact the Company’s results. Information about GM’s production and sales is disclosed in GM’s Annual Report on Form 10-K for the year ended December 31, 2002, filed separately with the United States Securities and Exchange Commission.

The Company’s Financing operations operate in a highly competitive environment. The Company’s principal competitors for consumer automotive financing are a large number of banks, commercial finance companies, savings and loan associations and credit unions. Commercial financing competitors are primarily comprised of other manufacturers’ affiliated finance companies, independent commercial finance companies and banks.

GMAC Mortgage Group, Inc. (the Mortgage Group) is comprised of three wholly-owned subsidiaries: GMAC Residential Holding Corp (GMAC Residential), GMAC Commercial Holding Corp (GMAC Commercial Mortgage) and GMAC-RFC Holding Corp (RFC). The principal activities of the Mortgage Group involve the origination, purchase, servicing and securitization of consumer (i.e., residential) and commercial mortgage loans and mortgage related products. Typically, mortgage loans are originated and sold to investors in the secondary market.

Overview, Products and Services

Consumer

Retail origination of consumer mortgage products occurs primarily through GMAC Residential, which provides residential real estate services nationwide. These services primarily involve the origination, sale and servicing of first and second lien residential mortgage loans and high loan-to-value mortgage loans. GMAC Residential’s products are offered to customers through retail and direct origination channels, which involve direct interaction with consumers through a retail branch network and direct lending centers. Mortgage loans are also originated through relationships

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Loans originated by GMAC Residential through the retail, direct and broker channels are processed and underwritten using an automated mortgage origination platform. As part of the underwriting process, GMAC Residential ensures that the loan meets certain qualifications for sale in the secondary markets. For loans that are originated through a correspondent mortgage banker, loan origination activities are performed by that correspondent and the loan is acquired by GMAC Residential, subject to secondary market criteria acceptance procedures.

GMAC Residential also provides bundled real estate services to consumers, including real estate brokerage services, full service relocation services, mortgage services and settlement services. Through GMAC Bank, which commenced operations in the United States in August 2001, GMAC Residential offers a variety of personal investment products to its customers, including consumer deposits, consumer loans and other investment services.

The origination of consumer mortgage products through broker or correspondent mortgage banker channels occurs primarily at RFC. RFC is engaged in several interrelated business lines, including mortgage origination and acquisition, investing, securitization and lending operations. RFC originates and acquires residential mortgage loans from correspondent sellers and brokers in the United States and Europe, and sells loans to public and private investors in the secondary market via whole loan sales and securitizations. In 2002, RFC issued its highest annual volume of asset- and mortgage-backed securities, totaling $35 billion. Residential mortgage loans originated and purchased include both prime and subprime first mortgages, as well as mortgages with second liens on residential property, including closed-end second mortgage loans and home equity lines of credit. At December 31, 2002, RFC had relationships with approximately 3,200 third-party brokers and correspondent mortgage bankers, maintained 50 offices in the United States, and had operations in Europe, Canada and Latin America.

Commercial

RFC also offers a number of commercial products and services. RFC’s warehouse lending activities provide interim financing, secured principally by mortgage collateral, to mortgage companies for the purchase or origination of mortgage loans pending sale to third-party investors. RFC also acquires seasoned or distressed mortgage loans and other real estate for resolution or resale, and manages portfolios of asset- and mortgage-backed securities acquired from unrelated bond issuers. In addition, RFC provides direct financing to homebuilders, both for construction purposes and through model home acquisition and leaseback arrangements. Finally, RFC operates a registered broker-dealer that trades asset- and mortgage-backed securities and other fixed income securities with dealers, brokers and other institutional investors.

Mortgage Loan Production, Sales and Servicing

Typically, the Mortgage Group originates or purchases consumer and commercial mortgage loans with the intent to sell the loans in

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In connection with the sale or securitization of certain consumer and commercial mortgage loans, the Company generally retains an investment in the assets sold through the purchase of interest-only, principal-only, investment grade, non-investment grade, unrated (subordinate) or other classes of asset- or mortgage-backed securities. Certain loans sold by the Company in the secondary market are subject to recourse in the event of borrower default on these mortgage loans.

When the Company sells mortgage loans to investors in the secondary market, it generally retains the right to service the loans sold in exchange for a servicing fee. The servicing fee is normally expressed as an annual percentage of the unpaid principal balance of the loan and is collected over the life of the loan as payments are received from the borrower. Typically, a servicing agreement sets forth the loan servicing functions to be provided by the servicer, including billing and collecting borrowers’ monthly payments; remitting amounts due to investors, insurers and taxing authorities; maintaining custodial bank accounts; default management and foreclosure procedures; and other related activities. The present value of the anticipated cash flows received for servicing the loan, net of the estimated costs of servicing the loan, is capitalized on the Company’s Consolidated Balance Sheet as a mortgage servicing right asset. Refer to the Critical Accounting Estimates section of this MD&A for further discussion.

The Company’s mortgage servicing activities include primary servicing, master servicing and special servicing. Primary servicing involves the servicing of individual loans, which principally includes collecting payments from borrowers and passing these payments through to agents of the final investors in these loans. Master servicing involves the servicing of asset- and mortgage-backed securities, including the collection of loan payments in the aggregate from various primary servicers for distribution to the investors in the issued securities. Special servicing entails default management activities associated with sub- and non-performing residential loans or default management activities associated with collateral securities from commercial mortgage-backed securities transactions.

The following summarizes the Mortgage Group servicing portfolio for the periods indicated.