Other Financial Guaranty VIE Debt and Other Assets CPS VIE Debt VIEs 154 We are the primary beneficiary for two other  VIEs for which we have provided financial guarantees.  These VIEs  primarily consist of manufactured housing loans and  VIE debt to note holders in the trust. The fair value of the  VIE debt related  to these other financial guaranty  VIEs is estimated based on prices of comparable securities and spreads observed in the market.  The overall net fair value for these transactions is determined using a discounted cash flow analysis.  We do not currently  estimate any projected claims based on our internal credit analysis, which is based on the current performance of the underlying  collateral and the remaining subordination available to support the transaction.  The present value of the insured cash flows is  determined by using a discount rate that is equal to our CDS rate plus a risk-free rate.  We utilize this model to determine the fair  value of our exposure to these VIEs and to derive the fair value of the assets in these  VIEs, which are reported within other  assets on our consolidated balance sheets.  The assets and VIE debt related to these transactions are categorized in Level III of the fair value hierarchy . Our  maximum principal exposure to loss from these transactions is$120.9 million; however, we do not currently expect to pay any  claims related to these two VIEs. At December 31, 2012, we recorded $99.2 million of other assets, $99.0 million of VIE debt  and $0.2 million of accounts payable and accrued expenses associated with these two  VIEs. The fair value of our CPS  VIE debt, in the absence of observable market data, is estimated based on the present value of  the spread differential between the current market rate of issuing a perpetual preferred security and the maximum contractual  rate of our perpetual preferred security . In determining the current market rate, consideration is given to any relevant market  observations that are available. We purchased substantially all of the securities issued by the three trusts, and we consolidated  the assets and liabilities of those trusts during 2010.As of December 31, 2012 and 2011, there is no consolidated CPS VIE debt  because we had purchased all of the CPS in the three trusts.   As a provider of credit enhancement, we have entered into insurance contracts with  VIEs and derivative contracts with  counterparties where we have provided credit protection directly on variable interests and, in some cases, obtained the  contractual rights of our counterparties with respect to the  VIEs. VIEs include corporations, trusts or partnerships in which  equity investors do not have a controlling financial interest or do not have suf ficient equity at risk to finance activities without  additional subordinated financial support.  An entity is considered the primary beneficiary and is required to consolidate a  VIE if its variable interest: (i) gives it the  power to most significantly impact the economic performance of the  VIE; and (ii) has the obligation to absorb losses or the  right to receive residual benefits that could potentially be significant to the  VIE. For all VIEs in which we have a variable  interest, we determine whether we are the primary beneficiary . In determining whether we are the primary beneficiary , a  number of factors are considered, including the structure of the entity , provisions in our contracts that grant us additional rights  to influence or control the economic performance of the  VIE upon the occurrence of an event of default or a servicer  termination event or the breach of a performance trigger , and our obligation to absorb significant losses. Due to the continued  deterioration of the performance of many of our financial guaranty transactions, the breach of these performance tests or other  events giving rise to our right to influence or control the economic performance of the  VIE could occur. When we obtain  control rights, we perform an analysis to reassess our involvement with these  VIEs to determine whether we have become the  primary beneficiary.  When evaluating whether we are the primary beneficiary of a  VIE, we determine which activities most significantly  impact the economic performance of the  VIE. As part of our qualitative analysis, we consider whether we have any contractual  rights that would allow us to direct those activities. Prior to the second quarter of 2012, we consolidated the assets and liabilities  associated with one CDO of ABS transaction. This transaction was commuted in the second quarter of 2012 and as a result, the  assets and liabilities were unconsolidated. During the second quarter of 2012, in connection with the commutation of certain of  our insured TruPs CDO transactions, a new VIE was formed, which we consolidated as a result of our ongoing involvement  with the entity, including our ability to impact the activities of the  VIE in certain limited ways that could impact its economic  performance. As of December 31, 2012, we have determined that we are the primary beneficiary of our NIMS transactions and  certain financial guaranty structured transactions. Our control rights in these  VIEs, which we obtained due to an event of default  or breach of a performance trigger as defined in the transaction, generally provide us with either a right to replace the  VIE  servicer or, in some cases, the right to direct the sale of the  VIE assets. In those instances where we have determined that we are  the primary beneficiary, we consolidate the assets and liabilities of the  VIE. We have elected to carry the financial assets and  financial liabilities of these  VIEs at fair value. 