GMAC's Mortgage Operations Lose $125 Million
GMAC Financial Services posted a $675m net loss for Q109 in its preliminary first-quarter results, a widened loss from its $589m net loss last year. The losses in GMAC's mortgage operations, however, narrowed more than 85% from the year-ago period, coming in at -$125m, from -$859m a year earlier. The segment continued to experience pressure as credit performance weakened, but mortgage origination volume began showing signs of improvement, the company said. For example, GMAC experienced $13.2bn in loan production in Q109, compared with $8.2bn in Q408. "Margins have improved due to higher government production, and favorable interest rates have led to an increased level of refinance activity," company officials said in the preliminary earnings results. To mitigate losses from increased delinquency rates and declining home prices, GMAC began participating in the Making Home Affordable modification initiative. The company said it distributed 100,000 "financial packages" so far to homeowners who may qualify. Growing strength in GMAC's mortgage operations in recent months has grown the company's presence in warehouse lending, a segment of the mortgage industry that has suffered as retail lenders pull away from correspondent channels. HousingWire looks in depth at the warehouse shortage and GMAC's re-emergence as a leading warehouse provider in the June 2009 magazine issue. Write to Diana Golobay at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.