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GMAC Cuts More Than 500 Jobs in Mortgage, Auto Finance Units
2010-02-03 17:01:18.466 GMT
By Dakin Campbell and David Mildenberg
Feb. 3 (Bloomberg) -- GMAC Inc., the auto and home lender
controlled by the U.S. government, plans to cut about 554 jobs
and close three offices as the firm tries to stanch loan losses.
Employees are being told today about plans to cut 313
positions at Residential Capital LLC’s offices in Costa Mesa,
California and Charlotte, North Carolina, according to GMAC
spokeswoman Gina Proia. The Charlotte mortgage office will be
shut, while Costa Mesa will retain about 30 people, she said.
The Semperian auto-loan servicing offices in Charlotte and
Knoxville, Tennessee will close, cutting 241 jobs, she said.
GMAC may report an annual loss tomorrow of more than
$10 billion for 2009 after mortgage defaults piled up at ResCap.
Investors have pressed GMAC to stop supporting the home lending
unit, whose Costa Mesa office houses Ditech, GMAC’s online
mortgage lender. Proia declined to comment on ResCap’s future
before the release of quarterly results.
“It’s really disappointing to see this happen,” said Paul
Reddam, who founded Ditech in 1995 and sold it to GMAC in 1999.
“We had 800 employees when I left the company and I know the
staff grew significantly over the following couple of years.”
Reddam now owns CashCall, a privately held lender based in
Anaheim, California.
Ditech became known for television ads that pitched low
rates and showed a rival lender exclaiming, “Lost another loan
to Ditech.” The Ditech brand remains intact, with work being
absorbed at other GMAC offices, Proia said.
Semperian’s “anchor sites” are in Jacksonville, Florida
and Lewisville, Texas, she said.
Data on ResCap’s current workforce weren’t available. The
company employed about 6,100 people at the end of 2008,
according to data compiled by Bloomberg. GMAC listed about
22,700 employees at the end of 2008, including about 1,500 jobs
at ResCap that were slated for elimination in the first quarter
of 2009, according to a company filing.
Making Loans
The reductions “are part of getting our structural costs
in line with business activities,” Proia said. ResCap continues
to make home loans through its own staff and correspondent
lenders, while operating a servicing unit that ranked fifth
nationally in 2009, she said.
The government rescued GMAC three times to help prop up
U.S. automakers by financing car purchases. The firm has said it
wants to expand that role and resolve the fate of Minneapolis-
based ResCap, which GMAC Chief Executive Officer Michael
Carpenter has called “a millstone around the company’s neck.”
Carpenter has said GMAC considered and rejected bankruptcy as an
option for ResCap, and the company on Dec. 30 said it “does not
expect to incur additional substantial losses” from the
business.
Bailouts
Taxpayers gave GMAC a $3.79 billion infusion from the
Treasury Department on Dec. 30, on top of about $13.5 billion
previously earmarked for the firm in two previous bailouts. The
government controls a 56 percent stake and could wind up with
more than 70 percent, the lender has said.
During 2006, ResCap ranked among the nation’s biggest
suppliers of subprime mortgages, according to trade journal
Inside Mortgage Finance. Such loans have been blamed for
contributing to the global financial crisis because they were
made to people who were more prone to default. ResCap has lost
more than $10 billion since 2007, and GMAC has shifted
originations to its Ally Bank unit.
GMAC disclosed last month that its fourth-quarter loss was
about $5 billion. Combined with losses from three previous
quarters, that could boost the firm’s full-year deficit above
$10 billion.
The job cuts don’t affect GMAC’s Charlotte corporate
office, which employs more than 200 people, Proia said.
For Related News and Information:
GMAC debt: GM1 US <Equity> AGGD <GO>
GMAC balance sheet: GM1 US <Equity> FA BS <GO>
Bloomberg credit crunch scorecard: WDCI CHART <GO>
TARP news: NI TARP <GO>
Top finance news: FTOP <GO>
--Editors: Rick Green, Dan Kraut
To contact the reporters on this story:
Dakin Campbell in San Francisco at +1-415-617-7174 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
;
David Mildenberg in Charlotte at +1-704-331-6587 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
To contact the editors responsible for this story:
Alec McCabe in New York at +1-212-617-4175 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
;
Rick Green in New York at +1-212-617-5804 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
.
GMAC Cuts More Than 500 Jobs in Mortgage, Auto Finance Units
2010-02-03
By Dakin Campbell and David Mildenberg
Feb. 3 (Bloomberg) -- GMAC Inc., the auto and home lender
controlled by the U.S. government, plans to cut about 554 jobs
and close three offices as the firm tries to stanch loan losses.
Employees are being told today about plans to cut 313
positions at Residential Capital LLC’s offices in Costa Mesa,
California and Charlotte, North Carolina, according to GMAC
spokeswoman Gina Proia. The Charlotte mortgage office will be
shut, while Costa Mesa will retain about 30 people, she said.
The Semperian auto-loan servicing offices in Charlotte and
Knoxville, Tennessee will close, cutting 241 jobs, she said.
GMAC may report an annual loss tomorrow of more than
$10 billion for 2009 after mortgage defaults piled up at ResCap.
Investors have pressed GMAC to stop supporting the home lending
unit, whose Costa Mesa office houses Ditech, GMAC’s online
mortgage lender. Proia declined to comment on ResCap’s future
before the release of quarterly results.
“It’s really disappointing to see this happen,” said Paul
Reddam, who founded Ditech in 1995 and sold it to GMAC in 1999.
“We had 800 employees when I left the company and I know the
staff grew significantly over the following couple of years.”
Reddam now owns CashCall, a privately held lender based in
Anaheim, California.
Ditech became known for television ads that pitched low
rates and showed a rival lender exclaiming, “Lost another loan
to Ditech.” The Ditech brand remains intact, with work being
absorbed at other GMAC offices, Proia said.
Semperian’s “anchor sites” are in Jacksonville, Florida
and Lewisville, Texas, she said.
Data on ResCap’s current workforce weren’t available. The
company employed about 6,100 people at the end of 2008,
according to data compiled by Bloomberg. GMAC listed about
22,700 employees at the end of 2008, including about 1,500 jobs
at ResCap that were slated for elimination in the first quarter
of 2009, according to a company filing.
Making Loans
The reductions “are part of getting our structural costs
in line with business activities,” Proia said. ResCap continues
to make home loans through its own staff and correspondent
lenders, while operating a servicing unit that ranked fifth
nationally in 2009, she said.
The government rescued GMAC three times to help prop up
U.S. automakers by financing car purchases. The firm has said it
wants to expand that role and resolve the fate of Minneapolis-
based ResCap, which GMAC Chief Executive Officer Michael
Carpenter has called “a millstone around the company’s neck.”
Carpenter has said GMAC considered and rejected bankruptcy as an
option for ResCap, and the company on Dec. 30 said it “does not
expect to incur additional substantial losses” from the
business.
Bailouts
Taxpayers gave GMAC a $3.79 billion infusion from the
Treasury Department on Dec. 30, on top of about $13.5 billion
previously earmarked for the firm in two previous bailouts. The
government controls a 56 percent stake and could wind up with
more than 70 percent, the lender has said.
During 2006, ResCap ranked among the nation’s biggest
suppliers of subprime mortgages, according to trade journal
Inside Mortgage Finance. Such loans have been blamed for
contributing to the global financial crisis because they were
made to people who were more prone to default. ResCap has lost
more than $10 billion since 2007, and GMAC has shifted
originations to its Ally Bank unit.
GMAC disclosed last month that its fourth-quarter loss was
about $5 billion. Combined with losses from three previous
quarters, that could boost the firm’s full-year deficit above
$10 billion.
The job cuts don’t affect GMAC’s Charlotte corporate
office, which employs more than 200 people, Proia said.
For Related News and Information:
GMAC debt: GM1 US <Equity> AGGD <GO>
GMAC balance sheet: GM1 US <Equity> FA BS <GO>
Bloomberg credit crunch scorecard: WDCI CHART <GO>
TARP news: NI TARP <GO>
Top finance news: FTOP <GO>
--Editors: Rick Green, Dan Kraut
To contact the reporters on this story:
Dakin Campbell in San Francisco at +1-415-617-7174 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
;
David Mildenberg in Charlotte at +1-704-331-6587 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
To contact the editors responsible for this story:
Alec McCabe in New York at +1-212-617-4175 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
;
Rick Green in New York at +1-212-617-5804 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
. |