GMAC

GMAC to close mortgage offices and cut staff

GMAC Financial Services and its Residential Capital subsidiary plan to close all 200 GMAC mortgage retail offices nationwide and cut the ResCap work force by 5,000 employees, or 60 percent.

Approximately 3,000 employees will receive notification this month with the majority of the remaining 2,000 reductions expected to occur by year-end, the company said. Twelve St. Louis employees will lose their jobs, reducing the Missouri work force to 546, a spokeswoman said.

ResCap, a large subprime-mortgage lender that lost $4.3 billion last year, will incur a charge expected to range from $90 to $120 million that reflects the 3,000 workforce.

The workforce reductions will include a range of administrative and managerial positions. All eligible employees affected by the workforce reduction will be provided severance packages and outplacement assistance.

"While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment," said ResCap Chairman and Chief Executive Tom Marano, in a statement. "Conditions in the mortgage and credit markets have not abated and, therefore, we need to respond aggressively by further reducing both operating costs and business risk."

ResCap said it will continue to originate loans both in the United States and abroad where there is a secondary market to sell the loans.

Fort Washington, Pa.-based GMAC Financial Services is a financial services company that operates in 40 countries in automotive finance, real estate finance, insurance and commercial finance businesses. Once a unit of General Motors, it is now 51 percent owned by Cerberus Capital Management, a private-equity firm.

(Published by St. Louis Business Journal - September 4, 2008)