Supported by
Mortgage Unit Produces Loss for GMAC
DETROIT, May 2 (Reuters) General Motors’ former finance arm, GMAC, posted a first-quarter loss on Wednesday as pressure on the mortgage market forced the company to take charges at its housing finance unit.
GMAC, in which G.M. retains a 49 percent stake, posted a net loss of $305 million, in contrast to a profit of $495 million a year earlier.
GMAC’s mortgage unit, ResCap, posted a quarterly loss of $910 million, more than offsetting gains from its insurance and auto finance divisions, which earned $605 million.
GMAC said it had taken steps to lower the risks for ResCap by selling off subprime mortgages at a loss, marking down its remaining portfolio and curtailing new loans to borrowers with weaker credit.
Even so, the loss prompted Moody’s and Fitch Ratings to cut their outlooks on ResCap.
The company also injected $500 million into ResCap in the first quarter and another $500 million last month. That $1 billion infusion was financed by G.M., to complete the sale of GMAC to an investment group led by Cerberus Capital Management.
Explore Our Business Coverage
Dive deeper into the people, issues and trends shaping the world of business.
A Billionaire Online Warrior: Bill Ackman, an obstinate hedge-funder who loves a public crusade, has used X to push himself into a new realm of celebrity.
Cancel Smartphones: The N.Y.U. professor Jonathan Haidt became a favorite in Silicon Valley for his work on what he called the “coddling” of young people. Now, he has an idea for fixing Gen Z.
Landline Pride: Traditional phones may seem like relics in the iPhone era, but a recent AT&T cellular service outage had some landline lovers extolling their virtues.
C.E.O. Dreams: Fresh business school graduates are raising “search funds” from willing investors to buy companies they can lead.
Nelson Peltz Wants Respect: The longtime corporate agitator feels misunderstood. Maybe his fight with Disney could change that.
The Palm Oil Supply Chain: An E.U. ban on imports linked to deforestation has been hailed as a “gold standard” in climate policy. Southeast Asian countries say it threatens livelihoods.
Advertisement