GMAC, the former finance arm of GM, which offers insurance, auto finance, investment services, business financing, and mortgages posted a net loss of $305 million due mainly to weakness in its’ ResCap mortgage unit.
ResCap, or Residential Capital, LLC, posted a quarterly net loss of $910 million, which eclipsed the profits of $605 million made in GMAC’s insurance and auto finance divisions.
ResCap’s operations include Ditech.com, GMAC Mortgage, GMAC Bank, GMAC-RFC, Homecomings Financial, GMAC Real Estate, and GMAC Global Relocation Services.
GMAC did note that ResCap had cut its “nonprime” loan production to $3.3 billion during the first quarter from $9.1 billion a year earlier, but also noted increased delinquencies.
$1 billion was also spent on the ailing mortgage unit, though GMAC expects a “”considerable improvement” and “much-reduced” losses in their U.S. operations for the second quarter.
GM still owns 49 percent of their former finance unit GMAC, and the news comes just a day before they announce earnings.
Ratings agencies Moody’s and Fitch Ratings cut their outlook for ResCap to “negative” from “stable” following GMAC’s earnings release.
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