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| Loan fundings continued to decline at Residential Capital LLC. But quarterly losses eased and its parent reported a big quarterly profit tied to massive gains from a recent corporate bond exchange.U.S. residential originations were $55.1 billion last year, parent GMAC Financial Services reported today. Volume tumbled from $93.9 billion during 2007.
Production was $8.2 billion during just the fourth quarter, falling for the third consecutive period from $11.2 billion in the third quarter and $15.5 billion a year earlier. Prime conforming business accounted for $5.2 billion of fourth-quarter activity, while government originations were $3.0 billion. ResCap’s servicing portfolio ended last year at $365.0 billion, down from $391.9 billion at the end of the third quarter. Prime mortgages held-for-investment were $20.3 billion on Dec. 31, down from $23.1 billion on Sept. 30. Subprime holdings fell to $5.6 billion from $6.7 billion. ResCap had a $5.6 billion loss during 2008, worse than $4.3 billion a year earlier. After an $0.8 billion after-tax gain for the retirement of ResCap debt tied to the bond exchange, the fourth-quarter net loss at ResCap was $1.0 billion. Earnings improved from the third quarter’s $1.9 billion loss and a fourth-quarter 2007 loss of $0.9 billion. “Adverse mortgage and housing market conditions domestically and internationally continued to persist,” the report said. GMAC made a $1.7 billion equity injection into ResCap during the fourth quarter, including $0.7 billion in debt forgiveness on the mortgage servicing rights credit line. Across all of GMAC, annual earnings were $1.9 billion — improving from a $2.3 billion loss in 2007. Company-wide profits were $7.5 billion in the fourth quarter, reflecting an $11.4 billion gain from the “largest corporate bond exchange ever completed,” GMAC said. During the prior quarter, GMAC had $2.5 billion in losses, while fourth-quarter 2007 losses were $0.7 billion. Among factors impacting fourth-quarter income were provisions for loan losses as credit quality trends and asset values continued to decline. GMAC highlighted its conversion to a bank-holding company and the government’s Troubled Asset Relief Program investments. “As a bank holding company, GMAC is better positioned to manage through this downturn with improved access to funding and a stronger capital position,” the report said. |
