View more on these topics

GM considers sale of stake in GMAC

General Motors says it is considering selling a controlling stake in its financial services division GMAC, prompting rating agencies to place ResCap’s debt under its watch list.

In June this year GMAC formed the Residential Capital Corporation, or ResCap, as a holding company sitting above its two residential mortgage businesses.

GMAC transferred ownership of its Residential Funding Corporation, GMAC-RFC – the US and international business-to-business mortgage lender – and GMAC Mortgage Corporation – the US business-to-consumer mortgage lender – to ResCap.

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

In a statement GM says it is “exploring the possible sale of a controlling interest” in its financial services division “to a strategic partner”.

Rating agencies, taking note of GM’s financial woes are keeping a close watch on ResCap’s debt. US magazine Mortgage Servicing News reports that Fitch has placed a BBB- rating on ResCap’s senior debt and has placed the company on its watch list.

The magazine says that with profit margins in mortgage banking coming under pressure, GMAC cannot afford to see its cost of funds increase dramatically.

In a research note, rating agency Fitch says the sale of GMAC presents “unique challenges” because of its size.

Mortgage operations earned a record US$408m in the third quarter of 2005, up from $266m in the third quarter of 2004.

GMAC’s residential mortgage businesses benefited from increased sales of mortgages as well as certain investment securities.

  • GMAC-RFC reported a record number of weekly applications last week. The rise in volumes is attributed to a combination of good service, the introduction of broker-friendly technology including the innovative cascade system, and competitive products.

Jeff Knight, head of marketing at GMAC-RFC says: “With our combination of competitive products, good service and, of course, our award winning online system, I’m looking forward to breaking more records soon.”


Tips for the top

Nick Robinson, managing director of Intelligent Finance, has been tipped as one of the UK’s top business leaders in 2015. Robinson was nominated by industry figures in The Times, along with Andy Hornby, chief operating officer at HBOS.

Kensington teams up with Pavillion Securities

Kensington Mortgages is teaming up with Pavillion Securities as part of its branded lending proposition. The first phase of this initiative went live on August 1 2005 while further branded lending initiatives will be announced in 2006.The new proposition will give Pavillion dual brand products with name and logo, and production of the offer pack […]

Home of choice reveals unprecedented recruitment success

Home of Choice has revealed an unprecedented recruitment success after three months of trading. It has received 500 appointed representative applications and another 600 directly authorised mortgage specialists are being processed. Keith Baldwin, chairman of Home of Choice, says: “We will soon have over a thousand mortgage specialists choosing Home Of Choice, after just three […]

We must cut out some paperwork

Better ways must be found to gather and provide information under statutory regulation or we run the risk of drowning our clients in paperwork, says Sue Read

The return of inflation

Alex Ralph, manager of the Artemis High Income Fund, sees further pressure on government bonds as inflationary pressures build on both sides of the Atlantic.


News and expert analysis straight to your inbox

Sign up