ResCap profits plunge 73%

Residential Capital LLC today reported third-quarter net income of $76 million, down 73 percent from the $280 million earned in the same quarter last year.

The decrease was attributed to ResCap's U.S. residential mortgage business, where competitive pricing pressures negatively impacted margins and lower gains despite year-over-year increases in loan production.

Results were also affected by higher credit provisions resulting from increases in delinquencies, lower net interest margins as a result of a flatter yield curve, and a decrease in net servicing income due to the effect of lower long-term rates on expected prepayments of mortgages.

Mortgage originations were $51.5 billion for the third quarter of 2006, representing a slight increase from $51.3 billion in the same period in the prior year.

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