Residential Capital (ResCap), the mortgage servicing and lending division of Ally Financial, is ‘on the verge of being put into bankruptcy,’ according to a report from Reuters.
The article says ‘pressure is increasing on the company and its government overseers to find a solution.’ The company owes the Treasury approximately $12 billion, but both GM and Chrysler – which are responsible for the majority of Ally's business – appear to be pulling back support for the institution, according to Reuters.
‘ResCap faces litigation from private investors as well as the regulator of Fannie Mae and Freddie Mac over underwriting standards it used in making [loans], bringing a whole new set of liabilities that again threaten to take Ally down with it unless it is somehow separated. ResCap is seriously considering filing for bankruptcy by May 14 when it must repay a portion of its debt, and it is seeking to sell some assets,’ the report says.
Read the article HERE.