Minneapolis-based GMAC Financial Services plans to restructure its mortgage operations – Residential Capital LLC (ResCap) – in response to the housing market's recent weakness.
ResCap says it will reduce its current worldwide workforce of 12,000 associates by approximately 25% – or approximately 3,000 associates – with the majority of reductions occurring in the fourth quarter of 2007. This reduction in workforce is in addition to the measures undertaken in the first half of 2007, in which 2,000 positions were eliminated.
Restructuring charges, estimated to range from $90 million to $110 million, will include costs related to severance and other employee-related costs of approximately $55 million to $65 million and the closure of facilities of approximately $35 million to $45 million.
ResCap will continue to modify its product offerings based on market conditions and has greatly reduced its exposure to nonprime and prime nonconforming loans this year, the company adds.