Struggling real estate finance company Residential Capital said today that it needs roughly $2 billion by the end of the month to meet increasing liquidity demands.
The company had previously disclosed that it only needed $600 million, a clear sign that ResCap is still struggling to survive amid the ongoing mortgage crisis.
“The additional cash requirement is primarily the result of the inability to consummate certain asset sales, due to adverse conditions, aggregating approximately $1.3 billion, which were previously included in its liquidity forecast and expected to be completed by June 30,” the company said in a filing.
As a result, ResCap has entered into an agreement with parent GMAC to provide it with an expanded credit facility to the tune of $1.2 billion, up from a previous $750 million.
The company said it plans to borrow approximately $450 million today as part of its effort to stabilize and appropriately operate its mortgage unit under its financial covenants.
The company has also agreed to sell roughly $475 million in model home assets to private equity firm Cerberus for $225 million in cash.
Cerberus has also committed to buying certain non-performing and performing mortgage loans and mortgage-backed securities from ResCap, resulting in net proceeds of $300 million.
Additionally, ResCap agreed to sell its resort funding business at 90 percent of book value to GMAC and will receive servicing advances from GMAC Commercial Finance.
Despite all the fire sales and capital raising efforts, the financial conglomerate, which includes brands such as Ditech, wholesale mortgage lender Homecomings Financial, and GMAC-RFC, could still face bankruptcy.
“There can be no assurance that ResCap’s liquidity needs will not be greater or less than currently anticipated as a result of additional factors and events. If liquidity needs are greater, ResCap may be unable to independently satisfy its near-term liquidity requirements,” the company said.