GMAC to Sell European Mortgage Assets and Operations
Apr 12, 2010
MINNEAPOLIS, April 12, 2010 -- GMAC Financial Services today announced that its mortgage subsidiary, Residential Capital, LLC (ResCap), has agreed to sell its European mortgage assets and businesses to affiliates of certain funds managed by affiliates of Fortress Investment Group LLC (NYSE: FIG).
These transactions represent approximately 10 percent of ResCap's Dec. 31, 2009 total assets and approximately 40 percent of total assets on a pro forma basis, adjusted for the required FAS 167 accounting treatment for certain off-balance sheet securitizations that are recorded on-balance sheet effective Jan. 1, 2010. The assets in the transactions are valued at approximately the levels established in the fourth quarter of 2009 and there is no material gain or loss expected.
"The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation. This is a significant achievement and will contribute in putting GMAC on a path toward improved performance," said GMAC Chief Executive Officer Michael A. Carpenter.
"We are pleased to have reached agreements to sell these assets and operations and believe this is a favorable outcome for all parties involved," commented ResCap Chief Executive Officer Thomas Marano. "These transactions validate the approach we are taking to pursue alternatives for our legacy mortgage businesses that strive to reduce exposure and preserve value."
Under the agreements, the sale will include certain loan assets (including non-performing loans) and servicing rights, and the shares of the related operating entities in the United Kingdom, Germany and The Netherlands. The closing of the transactions are subject to regulatory approval and customary closing conditions.
Separately, GMAC closed a whole loan transaction in the United Kingdom for USD $177 million (GBP 116 million) on March 31, 2010. With the combination of this whole loan transaction, the transactions with the Fortress affiliates, and certain other whole loan sales that are in progress, GMAC will effectively exit the European mortgage market.
About GMAC Financial Services
GMAC Financial Services is one of the world's largest automotive services companies. As the preferred source of financing for General Motors, Chrysler, Saab, and Thor Industries, GMAC offers a full suite of automotive financing products and services in key markets around the world. GMAC's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. With over $172 billion in assets, GMAC operates as a bank holding company. For more information, visit the GMAC media site at http://media.gmacfs.com.
About Residential Capital, LLC
Residential Capital, LLC (ResCap) is a wholly owned subsidiary of GMAC Financial Services specializing in residential mortgage finance. ResCap's subsidiary GMAC Mortgage LLC originates and services residential mortgages under the GMAC Mortgage and ditech(SM) brand names.
In this press release and any related comments by GMAC Inc. ("GMAC") management, the use of the words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "explore," "positions," "intend," "evaluate," "pursue," "seek," "may," "would," "could," "should," "believe," "potential," "continue," or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements herein and in related charts and management comments, other than statements of historical fact, including without limitation, statements about future events and financial performance, are forward-looking statements that involve certain risks and uncertainties.
While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and GMAC's actual results may differ materially due to numerous important factors that are described in the most recent reports on SEC Forms 10-K and 10-Q for GMAC, each of which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: uncertainty of GMAC's ability to enter into transactions or execute strategic alternatives to realize the value of its Residential Capital, LLC ("ResCap") operations; our inability to repay our outstanding obligations to the U.S. Department of the Treasury, or to do so in a timely fashion and without disruption to our business; our inability to successfully accommodate the additional risk exposure relating to providing wholesale and retail financing to Chrysler dealers and customers and the resulting impact to our financial stability; uncertainty related to Chrysler's and GM's recent exits from bankruptcy; uncertainty related to the new financing arrangement between GMAC and Chrysler; securing low cost funding for GMAC and ResCap and maintaining the mutually beneficial relationship between GMAC and GM, and GMAC and Chrysler; our ability to maintain an appropriate level of debt and capital; the profitability and financial condition of GM and Chrysler; our ability to realize the anticipated benefits associated with our recent conversion to a bank holding company, and the increased regulation and restrictions that we are now subject to; disruptions in the market in which we fund GMAC's and ResCap's operations, with resulting negative impact on our liquidity; changes in the credit ratings of ResCap, GMAC, Chrysler or GM; changes in economic conditions, currency exchange rates or political stability in the markets in which we operate; and changes in the existing or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations.
Investors are cautioned not to place undue reliance on forward-looking statements. GMAC undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other such factors that affect the subject of these statements, except where expressly required by law.