NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Contingent Liabilities  Private mortgage reinsurance  Noncancelable lease obligations and other commitments  Residential mortgage loans sold with representation and warranty provisions  Conforming residential mortgage loans sold to unrelated third  parties are generally sold with representation and warranty  provisions. A contractual liability arises only in the event of a  breach of these representations and warranties and, in general,  only when a loss results from the breach. The Bancorp may be  required to repurchase any previously sold loan or indemnify  (make whole) the investor or insurer for which the representation  or warranty of the Bancorp proves to be inaccurate, incomplete or  misleading.  The Bancorp’s subsidiaries have entered into a number of  noncancelable lease agreements. The minimum rental commitments under noncancelable lease agreements are shown in  the summary of commitments table. The Bancorp or its  subsidiaries have also entered into a limited number of agreements  for work related to banking center construction and to purchase  goods or services.   For certain mortgage loans originated by the Bancorp, borrowers  may be required to obtain PMI provided by third-party insurers.  In some instances, these insurers cede a portion of the PMI  premiums to the Bancorp, and the Bancorp provides reinsurance  coverage within a specified range of the total PMI coverage. The  Bancorp’s reinsurance coverage typically ranges from 5% to 10%  of the total PMI coverage. The Bancorp’s maximum exposure in  the event of nonperformance by the underlying borrowers is  equivalent to the Bancorp's total outstanding reinsurance coverage, which was $122 million and $182 million at December  31, 2010 and 2009, respectively. As of December 31, 2010 and  2009, the Bancorp maintained a reserve of $42 million and $44  million, respectively, related to exposures within the reinsurance  portfolio. During the second quarter of 2009, the Bancorp  suspended the practice of providing reinsurance of private  mortgage insurance for newly originated mortgage loans. In the  third quarter of 2010, the Bancorp allowed one of its third-party  insurers to terminate its reinsurance agreement with the Bancorp,  resulting in the Bancorp releasing collateral to the insurer in the  form of investment securities and other assets with a carrying  value of $19 million, and the insurer assuming the Bancorp’s  obligations under the reinsurance agreement, resulting in a  decrease to the Bancorp’s reserve liability of $20 million and  decrease in the Bancorp’s maximum exposure of $53 million. As of December 31, 2010 and 2009, the Bancorp maintained  reserves related to these loans sold with representation and  warranty provisions totaling $85 million and $37 million,  respectively. The following table summarizes activity in the  reserve for representation and warranty provisions for the years  ended December 31:  The Bancorp establishes a residential mortgage repurchase  reserve related to various representations and warranties that  reflect management’s estimate of losses based on a combination  of factors. Such factors incorporate historical investor audit and  repurchase demand rates, appeals success rates and historical loss  severity. At the time of a loan sale, the Bancorp records a  representation and warranty reserve at the estimated fair value of  the Bancorp’s guarantee and continually updates the reserve  during the life of the loan as losses in excess of the reserve  become probable and reasonably estimable. The provision for the  estimated fair value of the representation and warranty guarantee  arising from the loan sale is recorded as an adjustment to the gain  on sale, which is included in other noninterest income at the time  of sale. Updates to the reserve are recorded in other noninterest  expense. The majority of repurchase demands occur within the  first 36 months following origination.  There are legal claims pending against the Bancorp and its  subsidiaries that have arisen in the normal course of business. See  Note 19 for additional information regarding these proceedings.  The Bancorp has performance obligations upon the occurrence of  certain events under financial guarantees provided in certain  contractual arrangements as discussed in the following sections. The Bancorp previously sold certain residential mortgage loans in  the secondary market with credit recourse. In the event of any  customer default, pursuant to the credit recourse provided, the  Bancorp is required to reimburse the third party. The maximum  amount of credit risk in the event of nonperformance by the  underlying borrowers is equivalent to the total outstanding  balance. In the event of nonperformance, the Bancorp has rights  to the underlying collateral value securing the loan. The  outstanding balances on these loans sold with credit recourse were  $916 million at December 31, 2010 and $1.1 billion at December  31, 2009 and the delinquency rates were approximately 8.7% and  8.1%, respectively. At December 31, 2010 and 2009, the Bancorp  maintained an estimated credit loss reserve on these loans sold  with credit recourse of $16 million and $21 million, respectively,  recorded in other liabilities in the Consolidated Balance Sheets. To  determine the credit loss reserve, the Bancorp used an approach  that is consistent with its overall approach in estimating credit  losses for residential mortgage loans held in its loan portfolio. In the event the VIE was unable to issue commercial paper,  the Bancorp agreed to provide liquidity support in the form of a  line of credit and the repurchase of assets from the VIE. As of  December 31, 2009, the liquidity asset purchase agreement was  $1.4 billion. In addition, due to dislocation in the short-term  funding market which caused the VIE difficulty in obtaining  sufficient funding through the issuance of commercial paper, the  Bancorp purchased commercial paper from the VIE throughout  2008 and 2009. As of December 31, 2009, the Bancorp held $805  Through 2008, the Bancorp had transferred at par, subject to  credit recourse, certain primarily floating-rate, short-term investment grade commercial loans to a VIE, which prior to  January 1, 2010, was an unconsolidated special purpose entity  wholly-owned by an independent third party. The VIE issued  asset-backed commercial paper and used the proceeds to fund the  acquisition of commercial loans transferred to it by the Bancorp.  Generally, the loans transferred to the VIE provided a lower yield  due to their investment grade nature and, therefore, transferring  these loans allowed the Bancorp to reduce its interest rate  exposure to these lower yielding loan assets while maintaining the  customer relationships. The outstanding balance of these loans at  December 31, 2009 was $771 million. At December 31, 2009, the  Bancorp’s loss reserve related to the credit enhancement provided  to the VIE was $45 million and was recorded in other liabilities in  the Consolidated Balance Sheets. To determine the credit loss  reserve, the Bancorp used an approach that was consistent with its  overall approach in estimating credit losses for various categories  of commercial loans held in its loan portfolio. Liquidity support and credit enhancement agreement  Legal claims  Guarantees  Residential mortgage loans sold with credit recourse  102 Fifth Third Bancorp ($ in millions)  2010 2009 Balance, beginning of period  $37 12 Net additions to the reserve  115 65 Losses charged against the reserve  (67) (40) Balance, end of period  $85 37