GMAC sells its UK financial arm as part of European exit strategy

GMAC Financial Services has agreed to sell its UK financial arm GMAC-RFC to asset manager Fort-ress Investment Group.

The deal sees GMAC FS effectively exit the European mortgage market, with the sale of all its European mortgage assets to Fortress.

The assets sold come from GMAC FS’ mortgage subsidiary Residen-tial Capital, also known as ResCap.

Separately, GMAC FS sold a UK loan book for £116m on March 31.

A GMAC FS spokesman says that with the £116m loan transaction, the deals with Fortress affiliates and certain other whole loan sales in progress the firm will effectively be leaving the European mortgage market.

The spokesman adds that there will be no redundancies.

The transactions represent some 10% of ResCap’s total assets and 40% of the company’s total holdings on a pro forma basis.

The assets in the transactions are valued at near the levels established in Q4 2009 and no material gain or loss is expected.

Michael Carpenter, chief executive officer of GMAC FS, says: “The agreement to sell the European mortgage concerns and businesses is an important step towards our objective of reducing exposure from the legacy operation.

“This agreement is a significant achievement that will help get our company on the road to improved performance.”

GMAC-RFC was a big player in the securitisation market in its day, making over 100 portfolio sales. A large number of these were to Bradford & Bingley.

GMAC-RFC has been authorised by the Financial Services Authority since October 2004, with permission to arrange and administer regulated mortgage contracts.

It operated as a non-bank lender in the prime, sub-prime and buy-to-let mortgage sectors.

The company reduced its loan originations from August 2007 and stopped all lending in May 2008.

Since then GMAC-RFC has concentrated on the management of its loan book.

It had around £3.9bn of regulated mortgage contracts under administration at its peak and administered some 188,543 regulated mortgage contracts with a total balance of around £24.6bn.