GMAC blames mortgage unit for $724 million Q4 loss

GMAC Financial Services said today losses at its mortgage lending subsidiary drove a $724 million loss for the quarter and a $2.3 billion loss for the year.

Residential Capital LLC's fourth-quarter losses totaled $921 million, GMAC said, blaming write-downs on credit residuals and mortgage-backed securities, higher funding costs, market-driven impairments on real estate assets and equity investments, and restructuring charges. For the year, ResCap's losses totaled $4.35 billion.

ResCap took a $125 million restructuring charge related to layoffs of 3,000 employees announced in October and related facility closures. ResCap took actions in 2007 that will reduce its workforce by 5,000 employees, or 35 percent.

"ResCap's U.S. residential finance business continued to experience significant challenges related to falling home prices, higher delinquencies and limited market liquidity," the company said in a report to investors.

For the fourth quarter, ResCap's domestic mortgage production fell 62 percent from a year ago, to $15.5 billion. ResCap slashed prime, nonconforming loans from $17.5 billion to $0.3 billion, and virtually shutdown subprime loan originations, which dropped from $6.9 billion to $0.1 billion. Prime second-lien loan production also plummeted from $5.2 billion in the fourth quarter of 2006 to $0.9 billion.

Reductions in nonconforming, subprime and second loans were only partially offset by an increase in conforming and government-backed loans. Conforming loan production grew 20 percent, to $13 billion, while government-backed loans increased 50 percent to $1.2 billion.

For all of 2007, ResCap's U.S. mortgage loan production totaled $93.9 billion, down 41 percent from 2006.

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