Latest Automotive News

Subscribe in a reader





GMAC second quarter profit tumbles as mortgage unit suffers losses

Email   small font medium font large font

Google
 
Web AutoNews24h.com

NEW YORK (AP) _ GMAC Financial Services, the finance company formerly controlled by General Motors Corp., said Monday continued losses from its home lending operations caused second-quarter profits to fall sharply.

The New York-based company reported a profit of US$293 million, compared with $787 million in the same period last year. Revenue fell to $4.02 billion from $5 billion in the year-ago period.

GMAC blamed the drop on losses in its Residential Capital LLC home lending unit, more commonly known as ResCap. The unit lost $254 million during the second quarter, compared with a loss of $910 million a year earlier.

Eric Feldstein, GMAC's chief executive, said the company made great strides during the first half of 2007 to stem losses from the troubled residential mortgage unit. GMAC's exposure to the subprime mortgage market caused the company to post a $305 million net loss during this year's first quarter.

``The net losses incurred by ResCap continue to constrain GMAC's bottom-line profitability,'' he said in a statement. ``But we are encouraged to see that the aggressive risk-mitigation initiatives implemented in the first half of this year have reduced ResCap's losses _ quickly and significantly _ despite increasing challenges in the U.S. mortgage market.''

In November 2006, GM sold a 51 per cent controlling interest in GMAC to a consortium of investors led by Cerberus Capital Management LP. The automaker maintains a 49 per cent stake.

GMAC said its prospects in the long-term ``remain favourable.'' It expects continued improvement in earnings performance at its mortgage-lending unit during the second half of the year.

The company said it continues to reduce its exposure to subprime mortgages, and will restrict origination of those that have ``limited market liquidity.''

At the end of the second quarter, ResCap's U.S. nonprime held-for-sale portfolio was reduced to $1.9 billion from $3.1 billion at the end of March, and from $5.4 billion at year-end 2006.

Stripping out losses from the Residential Capital unit, second-quarter profit would have been $547 million _ more than double the year-ago period for the same operations.

Receive the latest automotive news by email!

Enter your email address:


Related news
GMAC Financial Services said Wednesday it will cut about 3,000 jobs, or 25 per cent of the workforce at its Residential Capital LLC mortgage operation. The financial services company, partly owned by auto ...
Rising delinquency rates on car and truck loans have some industry analysts concerned that subprime mortgage troubles could spill into the U.S. automotive finance business. In a note to investors Monday, Lehman Brothers ...
General Motors Corp.'s lending arm, GMAC Financial Services, has told employees that it is targeting Nov. 30 as the closing date for the sale of a controlling stake in the ...
GMAC Financial Services, and its wholly owned subsidiary, Residential Capital, LLC (ResCap), today announced one of the largest global refinancings ever completed. The companies have executed a comprehensive series of transactions, which include ...
Mazda, a rare bright spot in the Ford group, reported a 29 per cent jump in profit for the second fiscal quarter Friday on brisk demand for its small cars in the ...
Fiat SpA reported a 76 per cent drop in third-quarter earnings Thursday compared to results inflated by one-time gains a year ago. But its core automaking division posted its fourth ...
Goodyear Tire & Rubber Co., helped by the sale of its engineered products unit, swung to a big profit in the third quarter from a loss a year ago. But strong results in ...
By Yuri Kageyama TOKYO (AP) _ Scandal-tarnished Mitsubishi Motors trimmed its losses for the third quarter, although it continued to struggle to boost revenue. The Japanese automaker reported a 4.3-billion-yen ($36-million-US) net loss for the ...
STOCKHOLM, Sweden (AP) _ Volvo AB's profit dropped 14 per cent in the second quarter, the truckmaker said Wednesday, as it was hurt by higher costs and tough market conditions in North ...

Best Investment Newsletter

- 46% in 2008

- invest in the best performing US stocks only and sell them when the uptrend is over

- very easy to follow, simple buy/sell signals

- no need to have investing or trading experience

Find More Now!


GMAC second quarter profit tumbles as mortgage unit suffers losses
> © 2006-2017 AutoNews24h.com except where otherwise noted