GMAC Expected to Cut 25 Percent of Mortgage Workforce

October 16, 2007 No Comments »

GMAC’s finance arm Residential Capital LLC is expected to announce a 25 percent reduction in its workforce tomorrow, according to a report by The Wall Street Journal.

ResCap currently employs about 12,000, so roughly 3,000 are expected to be laid off.

I heard similar reports last week after speaking to people very close to the situation, though they were unsure who would be affected by the layoffs.

Those sources told me that sizable layoffs would occur Wednesday October 17 in many, if not all aspects of GMAC’s mortgage business.

ResCap Holdings includes a variety of mortgage lending companies, including retail unit Ditech.com and wholesale Alt-A loan unit Homecomings Financial.

It’s probable that job cuts will occur at both mortgage divisions, as I’ve been told that business at Homecomings has been non-existent for many of the Account Executives, and programs are essentially little more than agency product.

Earlier this summer, Ditech.com reported 181 layoffs to the Employment Development Department in Costa Mesa, CA.

And last week, mortgage lender GMAC-RFC shut down its UK subprime subsidiary High Street Home Loans, resulting in 200 layoffs.

See the latest list of mortgage layoffs, closed lenders, mergers and rumors.

Update: The layoffs have been confirmed, with restructuring costs ranging from $90 to $110 million, and 460 job losses coming from its Minneapolis area headquarters.

ResCap CEO Jim Jones said, “We deeply respect and value all of our associates. While workforce reductions are very difficult, we will treat our departing associates with sensitivity in keeping with our values.”

It is believed that Homecomings Financial will be closing branches in Newport Beach, Detroit, and New Jersey, resulting in the loss of 207 Account Executive positions and 284 total jobs within the company.

A great deal of consolidation is expected in all areas of ResCap, while the company plans to expand its servicing business and rely more upon GMAC bank.


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