GMAC/ResCap to lay off 5,000 - Close GMAC Retail, Homecoming Wholesale
GMAC/ResCap are pulling way out of the mortgage industry as they announced the closing of all 200 GMAC Mortgage retail branches and the elimination of Homecoming wholesale loan originations. The company also announced the layoff of 5,000 employees tied to the two operations. The company is also looking at a possible sale of its home loan servicing division.
Not surprising as ResCap has taken huge hits, forcing the belagured parent company to inject tons of capital in to a money losing venture. ResCap will continue to originate mortgages through correspondent and direct lending channels.
From the press release:
On Sept. 2, 2008, a plan was approved that included closing all 200 GMAC Mortgage retail offices, ceasing originations through the Homecomings wholesale broker channel, further curtailing business lending and international business activities, and right-sizing functional staff support. In addition, the company is evaluating strategic alternatives for the GMAC Home Services business and the non-core servicing business. These collective actions will reduce the ResCap workforce by approximately 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.
“While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment,” said ResCap Chairman and Chief Executive Officer Tom Marano. “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.”
Not surprising as ResCap has taken huge hits, forcing the belagured parent company to inject tons of capital in to a money losing venture. ResCap will continue to originate mortgages through correspondent and direct lending channels.
From the press release:
On Sept. 2, 2008, a plan was approved that included closing all 200 GMAC Mortgage retail offices, ceasing originations through the Homecomings wholesale broker channel, further curtailing business lending and international business activities, and right-sizing functional staff support. In addition, the company is evaluating strategic alternatives for the GMAC Home Services business and the non-core servicing business. These collective actions will reduce the ResCap workforce by approximately 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.
“While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment,” said ResCap Chairman and Chief Executive Officer Tom Marano. “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.”
Labels: GMAC Financial Services, layoffs
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