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GM considers GMAC sale

Shares in General Motors have risen by 11% after the company revealed it is considering selling a controlling stake in its financing, mortgage and insurance business, General Motors Acceptance Corp.

It is believed to be considering selling the a stake to help restore its investment grade rating and renew its access to low-cost funding.

GMAC made profits of $675m during the quarter, at a time when GMs core North American care operations lost $1.6bn.

Mortgage operations earned a record $408m in the third quarter of 2005, up from $266m in the third quarter of 2004. GMAC’s residential mortgage businesses benefited from increased gains of sales of mortgages as well as certain investment securities.

GMAC’s commercial mortgage business also experienced an increase in third-quarter earnings, largely due to increases in fee and investment business.

In August 2005, GMAC entered into a definitive agreement to sell a 60% interest in the commercial mortgage business. The transaction, which would protect its investment grade credit rating, is on track to close around year-end.


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