Treasury to send GMAC $3.8B for bad mortgages

December 31, 2009

WASHINGTON - The U.S. Treasury said Wednesday that it will inject an additional $3.8 billion into troubled lender GMAC, part of a deal that will boost the federal government's stake to 56 percent and attempt to staunch the company's losses from bad mortgages. All of the money injected by the Treasury will essentially go to shoring up GMAC's ResCap unit, the arm best known for ditech.com and other housing-boom related mortgage offers that crashed as housing prices withered over the last couple of years. GMAC said the move, along with a $3.3 billion write-down in mortgages at ResCap and Ally Bank, should allow it to explore a sale or other action for ResCap. The money comes on top of $12.5 billion that the U.S. Treasury had previously invested in GMAC to keep it afloat as the lender of choice for car buyers and dealers at General Motors and Chrysler. The U.S. Treasury said that under the new deal it would appoint four of GMAC's nine board members, up from two now. - McClatchy-Tribune

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