GM could owe 1-Billion to cover bad loans
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From: Southern California (SoCal)
Today I heard on CNBC with Maria Bartiromo, there's a possibility the partial sale of GMAC to a private equity group might end up falling apart because of all the problems with subprime loans and etc. If this deal does go south, it will suddenly put GM in a very bad position.
Dont forget that having such high delinquencies on mortgages is not a good thing when the unemployment level is really low @ 4.5%. How high will delinquences get if unemployment suddenly shoots up to 5% or higher?
http://www.cnbc.com/id/17596135
The previous record of foreclosures was back in the second quarter of 2002, which just happened to be near the bottom of the last recession we had, which bottomed out in October of 2002.
http://money.cnn.com/2007/03/13/real...ion=2007031312
Banks seeking some level of foreclosure against 1 out of every 200 borrowers.
http://www.cnbc.com/id/17593760
Dont forget that having such high delinquencies on mortgages is not a good thing when the unemployment level is really low @ 4.5%. How high will delinquences get if unemployment suddenly shoots up to 5% or higher?
http://www.cnbc.com/id/17596135
General Motors Acceptance Corp., the former finance arm of General Motors, on Tuesday said it would receive another $1 billion from GM and warned it would be hit by pressure from a weakening market for U.S. mortgages.
GMAC said GM would transfer about $1 billion to the finance company in the form of common equity by the end of the first quarter to shore up its balance sheet under the terms of its sale to a group led by Cerberus Capital Management.
GMAC also cautioned that "continuing pressures in the U.S. mortgage sector" would weigh on its future results even as it posted a sharply higher fourth-quarter profit driven by a one-time tax gain linked to its spin-off from GM General Motors Corp.
"Our most pressing priority ... is to continue implementing changes at our U.S. mortgage operations to address a rapidly changing market environment," GMAC Chief Executive Eric Feldstein said in a statement.
Feldstein said GMAC was tightening its underwriting standards for mortgages to borrowers with weaker credit and taking more aggressive steps to address delinquent loans.
Problems in the subprime mortgage sector, which involves loans to riskier borrowers, have emerged as a major risk factor for the U.S. financial markets in recent weeks.
Late payments on U.S. mortgages increased in the fourth quarter to their highest level in three and a half years and foreclosures rose, driven by subprime borrowers with weak credit.
GM sold a 51% stake in GMAC for $14 billion in November, and a provision of the sale required that the book value of GMAC be above $14.4 billion at the time of the closing of the transaction.
GMAC said it earned $1 billion in the fourth quarter of 2006, compared with $112 million a year earlier. The results included a $791 million tax benefit from its conversion to a limited liability company.
The one-time gain more than offset a huge loss in GMAC's ResCap unit, which provides mortgage financing. ResCap posted a fourth-quarter loss of $651 million, compared with a profit of $118 million a year earlier.
GMAC said GM would transfer about $1 billion to the finance company in the form of common equity by the end of the first quarter to shore up its balance sheet under the terms of its sale to a group led by Cerberus Capital Management.
GMAC also cautioned that "continuing pressures in the U.S. mortgage sector" would weigh on its future results even as it posted a sharply higher fourth-quarter profit driven by a one-time tax gain linked to its spin-off from GM General Motors Corp.
"Our most pressing priority ... is to continue implementing changes at our U.S. mortgage operations to address a rapidly changing market environment," GMAC Chief Executive Eric Feldstein said in a statement.
Feldstein said GMAC was tightening its underwriting standards for mortgages to borrowers with weaker credit and taking more aggressive steps to address delinquent loans.
Problems in the subprime mortgage sector, which involves loans to riskier borrowers, have emerged as a major risk factor for the U.S. financial markets in recent weeks.
Late payments on U.S. mortgages increased in the fourth quarter to their highest level in three and a half years and foreclosures rose, driven by subprime borrowers with weak credit.
GM sold a 51% stake in GMAC for $14 billion in November, and a provision of the sale required that the book value of GMAC be above $14.4 billion at the time of the closing of the transaction.
GMAC said it earned $1 billion in the fourth quarter of 2006, compared with $112 million a year earlier. The results included a $791 million tax benefit from its conversion to a limited liability company.
The one-time gain more than offset a huge loss in GMAC's ResCap unit, which provides mortgage financing. ResCap posted a fourth-quarter loss of $651 million, compared with a profit of $118 million a year earlier.
The previous record of foreclosures was back in the second quarter of 2002, which just happened to be near the bottom of the last recession we had, which bottomed out in October of 2002.
http://money.cnn.com/2007/03/13/real...ion=2007031312
Record foreclosures in fourth quarter
Mortgage Bankers Association reports a spike in loans entering into some stage of foreclosure. Number of subprime borrowers late with payments is on the rise.
By Les Christie, CNNMoney.com staff writer
March 13 2007: 12:28 PM EDT
NEW YORK (CNNMoney.com) -- A record high number of homeowners faced a serious threat of foreclosure during the fourth quarter of 2006, according to a survey released Tuesday by the Mortgage Bankers Association.
The percentage of all outstanding loans that entered the foreclosure process was 0.54, 0.08 percentage points higher than the third quarter and the highest ever recorded in the survey. The previous record was 0.50 in the second quarter of 2002.
Mortgage Bankers Association reports a spike in loans entering into some stage of foreclosure. Number of subprime borrowers late with payments is on the rise.
By Les Christie, CNNMoney.com staff writer
March 13 2007: 12:28 PM EDT
NEW YORK (CNNMoney.com) -- A record high number of homeowners faced a serious threat of foreclosure during the fourth quarter of 2006, according to a survey released Tuesday by the Mortgage Bankers Association.
The percentage of all outstanding loans that entered the foreclosure process was 0.54, 0.08 percentage points higher than the third quarter and the highest ever recorded in the survey. The previous record was 0.50 in the second quarter of 2002.
http://www.cnbc.com/id/17593760
Lenders launched foreclosure actions against more than one of every 200 U.S. mortgage borrowers in the fourth quarter of 2006, the biggest share of homes at the start of the repossession process on record.
Last edited by johnsocal; Mar 13, 2007 at 05:13 PM.
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Joined: Dec 1969
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From: Southern California (SoCal)
This was the news back in September:
http://www.businessweek.com/ap/finan.../D8KCKS800.htm
http://www.businessweek.com/ap/finan.../D8KCKS800.htm
GMAC's growth in China is one of several factors that made the lending unit attractive to investors when GM announced last October it would sell GMAC, as part of a plan to boost the finance arm's credit rating arm and raise money to finance a broader restructuring at the auto maker.
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