GMAC ResCap

GMAC ResCap, Inc.
TypeSubsidiary
IndustryFinancial services
Founded1982; 44 years ago (1982)
DefunctDecember 17, 2013 (2013-12-17)
FateChapter 11 bankruptcy and liquidation
HeadquartersMinneapolis, Minnesota
ProductsMortgage loans
ParentAlly Financial

GMAC ResCap, Inc., earlier Residential Funding Company LLC and Residential Capital Corporation, was a residential mortgage loan originator and servicer based in Minneapolis, Minnesota. It was a subsidiary of GMAC (now Ally Financial). As a result of its exposure to subprime lending during the subprime mortgage crisis, the company filed for bankruptcy protection in 2012 and underwent liquidation in December 2013.

History

Residential Funding Company LLC was formed in 1982 as a subsidiary of Northwest Bank and began operations in 1986. The company was acquired by GMAC Mortgage Corporation in 1990.

In 2005, GMAC (now Ally Financial), a subsidiary of General Motors, transferred ownership of GMAC Mortgage Corporation and Residential Funding Corporation (GMAC-RFC) to Residential Capital Corporation (ResCap) and contributed $2 billion of equity.

By of the end of the next year, the company had $48 billion, or 76% of its mortgage portfolio invested in subprime loans.

The company eliminated 1,000 jobs in January 2007, and an additional 3,000 positions that October.

In May 2008, the company reported concerns that it may not meet its financial and debt obligations. Two months later, the company completed a $60 billion refinancing.

On April 17, 2012, the company missed an interest payment. Following a missed interest payment in the previous month, the company filed for the company filed for a pre-packaged bankruptcy in May 2012. The filing included the separation of the company from its parent, Ally Financial.

The company's Plan of Reorganization was approved by the bankruptcy court in December of the following year.

Litigation

In 2008, the New Jersey Carpenters Health Fund filed a securities class action lawsuit against the company and the underwriters of residential mortgage-backed securities issued by its affiliates. The plaintiffs alleged that the securities' prospectuses and registration statements contained misleading information and failed to adequately disclose risks, therefore violating federal securities laws. While the case against Citigroup, Goldman Sachs Group and UBS AG was settled for $235 million in 2015, the company separately settled the claims against it for $100 million.

References

  1. ↑ "Supplement dated February 25, 2008". U.S. Securities and Exchange Commission. February 25, 2008.
  2. ↑ "GMAC completes acquisition of RFC". United Press International. February 12, 1990.
  3. ↑ "GMAC Capitalizes New Residential Mortgage Subsidiary; Elects Jacob And Melzer To Board Of Directors" (Press release). The Auto Channel. May 4, 2005.
  4. ↑ Chakravorty, Jui (August 10, 2007). "GMAC to get $1 bln from GM, cites subprime pressure". Reuters.
  5. ↑ "ResCap says to cut 1,000 jobs, sees $10 mln charge". Reuters. January 21, 2007.
  6. ↑ Stempel, Jonathan (October 17, 2007). "GMAC's ResCap mortgage unit to cut 3,000 jobs". Reuters.
  7. ↑ "Mortgage lender to cut staff 25%". CNN. October 17, 2007. Archived from the original on October 19, 2007.
  8. ↑ DiStefano, Joseph N. (May 5, 2008). "GMAC's ResCap scrambles for cash". Philadelphia Media Network.
  9. ↑ "$60 Billion Refinance Package for GMAC's Mortgage Lender". The New York Times. Associated Press. June 5, 2008.
  10. ↑ "Ally Financial mortgage unit misses bond payment". Reuters. April 17, 2012.
  11. ↑ "Chapter 11 move divorces ResCap from Ally". Pittsburgh Tribune-Review. Associated Press. April 17, 2012.
  12. ↑ "ResCap Plan of Reorganization Approved by U.S. Bankruptcy Court" (Press release). PR Newswire. December 11, 2013.
  13. ↑ Kass, Dani (August 3, 2015). "$235M Citi, Goldman, UBS Settlement Approved In MBS Case". Law360.
  14. ↑ "Plan Support Agreement among Residential Capital, LLC, Ally | Ally Financial Inc. | Business Contracts | Justia". contracts.justia.com. Retrieved 2026-09-08.