GMAC Posts $2.3 Billion Loss, Hires Collectors

Creditor GMAC Financial Services yesterday reported losses of $724 in the fourth quarter and $2.3 billion for 2007, driven down by a $4.3 billion loss for the year by the company’s ResCap home lending division. The company finished the year with $22.7 billion in assets.

GMAC reported it is tightening lending standards and hiring collectors as delinquencies rise. In its auto finance division, GMAC bulked up its collection staff by 400 collectors, an increase of 40 percent. 

The auto finance division reported profits of $137 million in the fourth quarter, down from $593 million a year ago. The decline was due to lower gain on the sale of auto receivables in North America. However, the fourth quarter saw new vehicle financing originations rise to $13.4 billion compared with $10.8 billion in the same period a year ago.

Auto loan delinquencies in North America in the fourth quarter rose to 2.77 percent from 2.62 percent a year ago. Internationally, delinquencies in the fourth quarter rose to 2.68 percent from 2.61 percent. Annualized net retail charge offs for 2007 were flat at 1.2 percent, same as year end 2006.

ResCap lost $921 million in the fourth quarter, attributable to write downs on credit residuals and mortgage-backed securities, higher funding costs, declines in home values, and restructuring charges.

ResCap’s net charge offs as a percent of loans held for investment more than doubled to 0.76 percent in the fourth quarter, up from 0.33 percent a year ago.

GMAC increased its provision for loan losses in 2007 to $3.1 billion from $2 billion in 2006.