Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) Further, we have identified a significant number of loans in our total defaulted portfolio (in particular , our older defaulted  portfolio) for which “Appropriate Proceedings” (actions or proceedings such as foreclosure that provide the insured with title to  the property) may not have been commenced within the outermost deadline in our master insurance policy . We currently are in  discussions with the servicers for these loans regarding this potential violation and our corresponding rights under the master  insurance policy. While we can provide no assurance regarding the outcome of these conversations or the ultimate resolution of  these issues, it is possible that this matter could result in arbitration or legal proceedings.  The elevated levels of our rate of rescissions, claim denials and claim curtailments (related to servicer negligence) have  led to an increased risk of litigation by lenders, policyholders and servicers challenging our right to rescind coverage, deny  claims or curtail claim amounts. Although we believe that our loss mitigation actions are justified under our policies, if we are  not successful in defending these actions, we may need to reassume the risk on and increase loss reserves for previously  rescinded policies or pay additional claims on curtailed amounts. See Note 10 for further information. Securities regulations became effective in 2005 that impose enhanced disclosure requirements on issuers of  ABS  (including mortgage-backed securities). To allow our customers to comply with these regulations at that time, we typically  were required, depending on the amount of credit enhancement we were providing, to provide: (1) audited financial statements  for the insurance subsidiary participating in the transaction; or (2) a full and unconditional holding company-level guarantee for  our insurance subsidiaries’ obligations in such transactions. Radian Group has guaranteed  two structured transactions for  Radian Guaranty involving approximately  $152.5 million of remaining credit exposure as of  December 31, 2012. On March 1, 2011, our subsidiary EFSG sold its 45% interest in the holding company of a Brazilian insurance company ,  which specializes in surety and agricultural insurance, to another owner for a nominal purchase price.  This holding company  and its subsidiaries are subject to regulation by  The Superintendence of Private Insurance, the regulatory agency responsible for  the supervision and control of the insurance market in Brazil.  Although EFSG wrote off its entire interest in this company in  2005 and has sold its ownership interest, under Brazilian law , it is possible that EFSG could become liable for its proportionate  share of the liabilities of the company related to the period in which EFSG was a significant shareholder , if the company was to  become insolvent and had insufficient capital to satisfy its outstanding liabilities. EFSG’ s share of the liabilities of the company  attributable to this period was approximately  $103.4 million as of December 31, 2010, the date of the most recent financial  information available to us. As part of the non-investment grade allocation component of our investment program, we had unfunded commitments of  $9.5 million at December 31, 2012 related to alternative investments that are primarily private equity structures.  These  commitments have capital calls expected through 2015, with the possibility of additional calls through 2017, and certain fixed  expiration dates or other termination clauses. Our mortgage insurance business provides an outsourced underwriting service to its customers known as contract  underwriting. Typically, we agree that if we make a material error in underwriting a loan, we will provide a remedy to the  customer, by purchasing the loan or placing additional mortgage insurance coverage on the loan, or by indemnifying the  customer against loss up to a maximum specified amount. By providing these remedies, we assume some credit risk and  interest-rate risk if an error is found during the limited remedy period in the agreements governing our provision of contract  underwriting services. Recently, we limited the recourse available to our contract underwriting customers to apply only to those  loans that are simultaneously underwritten for compliance with secondary market compliance and for potential mortgage  insurance. In 2012, we paid losses related to contract underwriting remedies of approximately  $8.0 million. Rising mortgage  interest rates or further economic uncertainty may expose our mortgage insurance business to an increase in such costs. In  2012, our provision for contract underwriting expenses was approximately  $7.2 million and our reserve for contract  underwriting obligations at December 31, 2012 was $3.7 million. We monitor this risk and negotiate our underwriting fee  structure and recourse agreements on a client-by-client basis.  We also routinely audit the performance of our contract  underwriters. We have incentive, retention and severance agreements with certain employees in our financial guaranty business.  The  total amount expected to be paid under these agreements is  $14.5 million, of which $5.6 million of unearned retention has not  been recorded as expense as of December 31, 2012. The remaining expense for these agreements is expected to be recorded by  the end of 2015. 262