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ResCap Jumps to No. 5, Earnings Worse

Mortgage News

An increase in quarterly residential originations made GMAC Financial Services the fifth biggest U.S. originator. But earnings weren’t so good.

Second-quarter U.S. production was $18.5 billion, according to earnings data reported today. The total included mortgage originations from Residential Capital LLC, Ally Bank and ResMor Trust.

Fundings jumped from $13.2 billion during the first quarter and were higher than $17.0 billion in the second-quarter 2008. The improvement was attributed to higher government and refinance activity.

The latest activity pushed ResCap to the No. 5 U.S. lender spot based on second-quarter origination data analyzed by MortgageDaily.com.

Second-quarter business included $10.5 billion in prime production, $7.6 billion in government originations and $0.3 billion in prime non-conforming fundings.

The U.S. servicing portfolio finished June at $353.9 billion, lower than $359.3 billion at the end of March. Total mortgage assets rose to $54 billion from $50 billion.

The mortgage banking operation had a $2.0 billion pre-tax second-quarter loss, worse than the $1.1 billion first-quarter loss and the $1.8 billion loss a year earlier.

“Results reflect losses on international asset dispositions and higher credit related costs due to continued distress in the mortgage market,” the report said.

GMAC noted that it forgave $1.4 billion in face value of ResCap bonds during the second quarter. But the unit continues to rely of GMAC for support, and its capital and liquidity needs are being evaluated on an ongoing basis.

Second-quarter earnings across all of GMAC was a $3.9 billion loss, deteriorating from an $0.7 billion first-quarter loss.

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