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GMAC Servicer Rating Hurt By ResCap Standing

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The possibility of bankruptcy at its parent has GMAC Mortgage’s servicing ratings on watch for a possible downgrade. Prime and nonprime ratings are affected.

Ally Financial Inc. filed a FORM 10-Q on Friday with the Securities and Exchange Commission indicating that subsidiary Residential Capital LLC successfully obtained waivers from all of its lenders that were impacted by a covenant breach during the fourth quarter when ResCap’s consolidated tangible net worth briefly fell below $250 million.

Ally stepped in to immediately cure the breach but noted that it might not do so again.

Then ResCap missed a semi-annual $20 million interest payment that was due on April 17 on $473 million in unsecured debt. If the payment is not made within 30 days of the due date, then the debt formally falls into default.

Among the options Ally is considering for ResCap is additional capital support, the sale of assets from ResCap to Ally and the sale of assets to third parties. A business reorganization is also on the table.

“This may include a reorganization under bankruptcy laws, which ResCap is actively considering,” the filing stated.

GMAC Mortgage is a subsidiary of ResCap.

On Wednesday, Moody’s Investors Service issued warning that several of GMAC’s servicer-quality ratings on review for a possible downgrade.

The prime residential servicer rating, which currently sits at SQ3+ is among the impacted ratings. Also affected by Moody’s warning are GMAC’s special servicer rating and its primary servicer ratings for subprime mortgages, second liens and high loan-to-value mortgages — all which currently carry an SQ3 rating.

In the SEC filing, Ally said that the domestic portion of its primary servicing portfolio was $337.982 billion, lower than $350.657 billion as of Dec. 31, 2011.

Moody’s put the primary servicing portfolio at 2.4 million loans for $368.5 billion as of April 30.

The ratings agency also said that GMAC-RFC’s master servicer-quality rating of SQ3+ was being put on watch for a downgrade. The master servicing portfolio at the company was 303,177 loans for $52.8 billion as of April 30.

“We believe there is an increased possibility of a reorganization through bankruptcy for its corporate parent, Residential Capital LLC, which it is actively considering according to a recent SEC filing,” Moody’s explained. “We also believe there is increased uncertainty of further liquidity and capital support for ResCap from Ally Financial Inc., GMAC Mortgage’s ultimate corporate parent.”

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