Tuesday, February 5, 2008

GMAC Posts $724 Million Loss as Home Loans Sour

GMAC LLC, the auto and mortgage lending company once owned by General Motors Corp., posted a $724 million loss in the fourth quarter as home buyers fell behind on their mortgage payments.

The net loss compares with a profit of $1 billion a year earlier, the Detroit-based company said in a statement today. GMAC said it's talking to buyers for parts of the Residential Capital mortgage unit, which recorded a $921 million quarterly loss.

GMAC vowed today to make money in 2008 after falling home prices and record U.S. foreclosures led to a $2.3 billion companywide loss for 2007. Provisions for bad mortgages probably will decrease this year, GMAC predicted. The auto finance unit remained profitable, overcoming a 6.1 percent decline in GM's North American auto sales last year.

``While results were weak, we suspect investors will take some encouragement from GMAC's expectation of profitability in 2008,'' said Himanshu Patel, an analyst at JPMorgan Chase & Co.

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