HW Media connects and informs decision makers across the housing economy. Professionals rely on HW Media for breaking news, reporting, and industry data and rankings. Moving the Housing Market Forward.
Politics & Money

ResCap To Shed 700 More Jobs Amid Subprime Turndown

GMAC LLC’s Residential Capital home-lending unit will let go of roughly 700 workers — or five percent of its U.S.-based employees — as a continued subprime credit crunch has nearly every lender in the space wondering what will come next. About 600 to 700 workers will lose their jobs in cuts expected to take effect during the next few months, GMAC spokeswoman Gina Proia said in an interview with Bloomberg earlier yesterday. “The decision was influenced by current market conditions and the deterioration of the U.S. mortgage market,” said Proia. The newly-announced layoffs come on top of the elimination of 1,000 other jobs at the mortgage financing giant; the company had announced those cuts previously in January amid a rough financial patch for the former financing arm of General Motors Corp. ResCap reported a $651 million fourth-quarter loss in January as the subprime downturn just began to gather steam.

Since the start of 2006, at least 60 mortgage lenders have halted their operations, sought buyers or gone bankrupt, according to a well-known blog known as the Mortgage Lender Implode-o-Meter. Most of the job cuts will come from ResCap’s mortgage services divisions, though some corporate services jobs will be affected, Proia told Bloomberg. General Motors Corp. sold a majority stake in GMAC, including ResCap, to a consortium of investors led by Cerberus Capital Management last April in a deal worth an estimated $14 billion. In spite of difficulties at ResCap, the private equity investor is not running away from the subprime market, as HW reported this morning that the company will purchase Option One Mortgage from tax services provider H&R Block for approximately $970 million.

Don’t subscribe? Be sure to sign up today to get our free email updates delivered direct to your inbox!

Most Popular Articles

Latest Articles

Better.com partners with Palantir on new proprietary loan platform HW+

Struggling digital mortgage lender Better.com is teaming up with secretive big data firm Palantir to create a proprietary loan platform that is says will enable Fannie Mae, Freddie Mac and mortgage investors to make “richer and deeper data-driven mortgage capital allocation decisions.”

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please