Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) For each of the non-corporate CDOs and other derivative transactions discussed above, with the exception of CDOs of  ABS and TruPs transactions that are valued using a discounted cash flow analysis, we make an adjustment to the fair premium  amounts, as described above under  “Non-Performance Risk Adjustment on Corporate CDOs,” to incorporate our own non- performance risk. The non-performance risk adjustment associated with our CDOs of  ABS and our TruPs transactions is  incorporated in the fair value as described above; therefore, no separate adjustment is required.  These credit derivatives are  categorized in Level III of the fair value hierarchy . In making our determination of fair value for these credit derivatives, we use information provided to us by our  counterparties to these reinsurance transactions, which are the primary insurers (the “primaries”) of the underlying credits,  including the primaries’ fair valuations for these credits.  The information obtained from our counterparties is not received with  sufficient time for us to properly record the mark-to-market liability as of the balance sheet date.  Therefore, the amount  recorded as of December 31, 2012 is based on the most recent available financial information, which is reported on a quarterly  lag. The lag in reporting is consistent from period to period.  The fair value is based on credit spreads obtained by the primaries  from market data sources published by third parties (e.g., dealer spread tables for collateral similar to assets within the  transactions being valued), as well as collateral-specific spreads provided by trustees or obtained from market sources if such  data is available. If observable market spreads are not available or reliable for the underlying reference obligations, then the  primaries’ valuations are predominantly based on market indices that most closely resemble the underlying reference  obligations, considering asset class, credit quality rating and maturity of the underlying reference obligations. In addition, these  valuations incorporate an adjustment for non-performance risk.  The primaries’ models used to estimate the fair value of these  instruments include a number of factors, including credit spreads, changes in interest rates and the credit ratings of referenced  entities. In establishing our fair value for these transactions, we assess the reasonableness of the primaries’  valuations by:  (1) reviewing the primaries’ publicly available information regarding their mark-to-market processes, including methodology  and key assumptions; and (2) analyzing and discussing the changes in fair value with the primaries where the changes appear  unusual or do not appear materially consistent with credit loss related information when provided by the primaries for these  transactions. These credit derivatives are categorized in Level III of the fair value hierarchy . 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. 201 Other Financial Guaranty VIE Consolidated Assets/Liabilities Assumed Financial Guaranty Credit Derivatives