The U.S. government may end up being the majority stakeholder in General Motor’s struggling finance unit GMAC, according to the Detroit News.
The Treasury Department is reportedly preparing to offer the provider of auto and home loan financing another $7.5 billion, on top of the $5 billion extended back in December.
The agency also loaned GM nearly $900 million so it could GMAC stock; if the Treasury exercises options from all those investments, it could own the greater part of the ailing unit.
Earlier this month, the Treasury and Federal Reserve said GMAC needed an additional $11.5 billion in capital reserves after running a stress test on the company.
Some of that money will help the unit assume lending operations for Chrysler dealers and consumers from Chrysler Financial.
GMAC is seeking to obtain the additional capital by November 9, and said it would have a plan filed with the Federal Reserve Bank of Chicago by June 8.
Aside from providing auto loans, GMAC also provides numerous real estate-related services through Residential Capital, including retail mortgage lending via its Ditech and GMAC Mortgage brands, and loan servicing and warehousing lending.
Last summer, mortgage lender Residential Capital announced it would close 200 GMAC Mortgage retail locations and cease lending its wholesale subsidiary Homecomings Financial as a result of the ongoing mortgage crisis.
GMAC reported U.S. mortgage loan origination volume of $13.2 billion during the first quarter, compared with $8.2 billion in the fourth quarter of 2008 and $18.7 billion in the first quarter a year ago.