GMAC LLC, corporate parent of ailing mortgage lender and servicer Residential Capital LLC, faces “substantial difficulty” if market conditions don’t improve, Bloomberg reported Thursday after obtaining an investor letter from Cerberus Capital Management LP. From the report:

“We have detailed contingency plans in a continuing worsening environment,” [Steven Feinberg, Cerberus founder] wrote in a Jan. 22 letter to investors, a copy of which was obtained by Bloomberg News. “However, if the credit markets continue to decline and we find ourselves in a prolonged environment of capital market shutdown, GMAC could run into substantial difficulty.” … “The good news is that we bought GMAC cheaply enough so that even with all the bad news in the mortgage market and credit markets, we still are in reasonable shape with our overall investment,” Feinberg, 47, wrote in the nine-page letter. The letter outlines worst-case scenarios for investors, Cerberus partner Tim Price said in an interview today. “The point of the letter was to underscore the risks in the investment,” Price said, referring to GMAC. “We don’t expect everything we outlined to go wrong and we remain bullish on the investment.”

GMAC reported a fourth-quarter loss of $724 million on February 5, with ResCap posting a $924 million loss on its own. ResCap lost $4.3 billion in 2007 as the mortgage industry endured perhaps its worst year ever, and shed 35 percent of its workforce.