GMAC Announces $5B Q4 Loss, Job Cuts

GMAC Financial Services, which on Thursday announced a loss of $10.3 billion for 2009, plans to cut more than 300 jobs from its mortgage units, in addition to shuttering one of its offices, BusinessWeek reports.

BusinessWeek reported Wednesday that, between Residential Capital LLC's offices in Costa Mesa, Calif., and Charlotte, N.C., 313 positions would be eliminated. The Charlotte office will be closed, and the California office will keep about 30 people, GMAC spokesperson Gina Proia said. The company also announced that more than 200 jobs in its auto-loan servicing units would be cut, as well.

The operations belonging to Ditech, GMAC's online lending outfit, are located at the Costa Mesa site.

On Thursday, GMAC reported $5 billion in losses for the fourth quarter of 2009. The fourth-quarter results, as well as the full-year results, were "largely affected by losses related to legacy assets in the mortgage operations," a company statement says.

GMAC's mortgage operations, which include ResCap and the mortgage activities of Ally Bank and ResMor Trust, reported a pre-tax loss from continuing operations of $4 billion during the fourth quarter of 2009, versus a pre-tax loss from continuing operations of $790 million in the comparable prior-year period. Results from continuing operations in the fourth quarter of 2009 were driven by the recent strategic actions taken by GMAC to sell certain legacy mortgage assets, which resulted in a $2.6 billion loss. The segment also reported a mortgage repurchase reserve expense for the fourth quarter of $573 million.

These actions, inclusive of estimated operating losses for the period, required a total capital contribution to ResCap of approximately $2.8 billion in the form of mortgage loans acquired by GMAC from Ally Bank, GMAC debt forgiveness and cash..

SOURCES: GMAC, BusinessWeek


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