After significant losses from GMAC’s mortgage division, the company has gone back at the end of the year to get more relief from the Federal Government. By doing so, the government is now a majority owner of the company holding 56.3% of the stock.
Add to the mix that DiTech Mortgages, one of the biggest lenders, is a wholly owned subsidiary of GMAC and one the lenders that worked on the margins of propriety in the lending crisis, we have an interesting situation.
Will DiTech get any special treatment from Freddie Mac and Fannie Mae? Will regulators scrutinize them as closely now that they are owned by the same government?
With the takeover of private enterprise by governmental agencies we are facing an interesting period of competition in our formerly capitalistic society.
Many analysts see GMAC’s mortgage assets, which make up about a third of the company’s $178.2 billion balance sheet, as the main obstacle to the lender reaching profitability.
Those assets have already forced GMAC to seek new funds. Before Wednesday’s capital infusion, GMAC had already received $12.5 billion of aid from the United States.
A government test of the company’s capital in May, known as the stress test, found that GMAC needed $11.5 billion of equity. About $9.1 billion of that equity had to be new capital, while the rest could come from converting existing capital into new instruments such as common equity. via Reuters
{ 6 comments… read them below or add one }
Ironically, my first short sale was with GMAC and they were fantastic to work with.
Maybe they can take my house payment out of my payroll taxes. I can save stamps. I’m not sure this is such a great idea.
GMAC needs to sell their mortgage division!
Another day another bailout.
-Tyler
Banks make no sense as it is, they don’t need the Government to confuse things even more. How long is it now going to take for them to make any kind of decisions? Typically it takes 30-45 days as it is for a short sale to go through, now you can probably expext that to double. I love it, the blind leading the clueless!
I should have bought stock in GMAC!