GM may owe $1B on mortgage loans

[Buickman]

GM may owe $1B on mortgage loans

Automaker might have to cover defaulted home loans made by unit of ex-finance arm, GMAC.

Sharon Terlep / The Detroit News

First, General Motors Corp. delayed releasing its much-anticipated financial results for 2006.

Then, the automaker missed the March 1 filing deadline with the Securities and Exchange Commission, requesting an extension to next week.

Now, risky mortgage loans doled out last year by GM's former finance arm are giving Wall Street another reason to be anxious.

GM may be on the hook for as much as $1 billion to cover defaulted mortgage loans made to high-risk borrowers by Residential Capital LLC, the former home-lending unit of General Motors Acceptance Corp., several analysts said this week. The automaker sold a 51 percent stake in GMAC last year for $14.4 billion to a group led by Cerberus Capital Management LP.

A GM spokeswoman declined to comment Tuesday, saying that GM hasn't yet seen GMAC's 2006 financial report.

"People are definitely getting frustrated," said analyst Brad Rubin at investment firm BNP Paribas.

full text at http://www.detnews.com/apps/pbcs.dll...TO01/703070365

[Buickman]

We will most likely see excuses like "it's in the past" and "GM can afford it with all the cash on hand". What we most likely won't see is anyone held accountable or responsible. Billons lost on Fiat, billions lost through poor marketing, billions more lost here and there, you know it's starting to add up to real money!

[GM-10]

Originally Posted by Buickman

We will most likely see excuses like "it's in the past" and "GM can afford it with all the cash on hand". What we most likely won't see is anyone held accountable or responsible. Billons lost on Fiat, billions lost through poor marketing, billions more lost here and there, you know it's starting to add up to real money!

More 'Bull **************** ' from Buickman.

Do you know anything about what really happened 'across the board' in the secondary markets for mortgages? Or are you just spewing more crap?

[BigAls87Z28]

This isnt just GM, its everyone in the business. Stick to selling Buick's to people near death.
I guess Rick was underwriting all these loans, Yeah, HE's the one.

[CRBoyd91]

Originally Posted by Buickman

We will most likely see excuses like "it's in the past" and "GM can afford it with all the cash on hand". What we most likely won't see is anyone held accountable or responsible. Billons lost on Fiat, billions lost through poor marketing, billions more lost here and there, you know it's starting to add up to real money!

You worry me. I don't see why you have such a problem in how GM is turning around. GM is being successful, so why do you complain? Their turnaround is almost unprecedented. Now go gripe about Ford and have a nice day.

[HoosierRon]

Yes, we need accountability! Who is going to take responsibility for the following boondoggles:

GM's revenue is 2006 was the largest in the history of the company. Bigger than even the Bob Smith era! (Those were the days.)

Fleet sales are down going down the tank! (Robert Stempel, now HE knew how to sell a Chevy to Hertz.)

Saturn sales are up 60%. (So much for globalization!)

The Silverado is about to pass the F150 the best selling vehicle in the country. (Way to put all your eggs in one basket.)

The new CTS, the new Malibu, the Outlook and Acadia. Doesn't Red Ink Rick realize that Americans want mid-sized sedans and crossovers?

And as if you people could not see the end of times when GM sold Electromotive (!), we now find out that GM sold 51% of a company that is going down the shi-er. It is obvious that GM should own 100% of such a company!

Heads will roll...

[iamwin]

Interesting, yet everyone was angry with GM for unloading GMAC before the mortgage market blew up. Maybe they knew something was up? Maybe they were being real smart. That can't be it... GM can do no right...

[D C]

Originally Posted by CRBoyd91

You worry me. I don't see why you have such a problem in how GM is turning around. GM is being successful, so why do you complain? Their turnaround is almost unprecedented. Now go gripe about Ford and have a nice day.

Because they laughed in his face when he revealed to them his wonderous plan to give free t-shirts and golf balls to employees who buy cars....or something like that.

All things considered, that WAS one of his better posts on here. :lol:

[Jesda]

Originally Posted by iamwin

Interesting, yet everyone was angry with GM for unloading GMAC before the mortgage market blew up. Maybe they knew something was up?

Seconded. GM lately has been one step ahead of the media.

[01cavalier]

Originally Posted by Buickman

We will most likely see excuses like "it's in the past" and "GM can afford it with all the cash on hand". What we most likely won't see is anyone held accountable or responsible. Billons lost on Fiat, billions lost through poor marketing, billions more lost here and there, you know it's starting to add up to real money!

Not sure I would want to make some silly excuses, but constanty bringing up things that you are bothered about when it is not the topic in the thread doesn't really mean much. Of course accountability is important, I just wish comments weren't so overly negative. GMAC would not have been the only company to give loans to high-risk buyers, and other companies have struggled with the poor decisions they have made.

[howpeculiar]

Take a quick look at pending legislation concerning Freddie-Mac and Fannie-May. THere are a LOT of 'sub-prime' borrowers out there defaulting on risky loans. What did you expect with the exponential growth in the housing market over the last decade? Everyone tried to cash in (my brother included), and now look at where a lot of them are. Crazy adjustables, interest-onlies, and other wild schemes gave too much borrowing power with very risky loans. The returns looked very rich on paper, but now that the market is sliding, foreclosures are hitting an astounding level. GMAC did not create this market, they just participated like everyone else. Looks to me like GM got out of GMAC just in time. It is a shame they held on to such a high percentage of the stock, but definately shields them from what could have been a much higher exposure.

[tgagneguam]

I wonder if someone in the know could comment on the current sub-prime loan fiasco unfolding in the mortgage industry. Companies own part of the problem as they apparently too aggressively pursued sub-prime consumers.

However, and the part I'm interested in learning more about, is there any truth that certain standards were applied by the government that encouraged sub-prime lending. As one example, in an effort to raise the amount of low-income home owners, companies were encouraged (or even forced) to meet certain requirements in which they demonstrated a specific mixture of first-time buyers, minority home owners, low-income buyers, and the like? I'm not articulating the question well, but I'm hoping someone understands the question and can comment on it.

Maybe this isn't the forum to discuss this, but I'd sure be interested in knowing.

[eaton53]

It is a shame they held on to such a high percentage of the stock, but definately shields them from what could have been a much higher exposure.

They'll want to get back in when this down cycle ends.

GM has made huge $$$ from GMAC. But anyone with two eyes could see the housing bubble was going to burst.
Their timing on cashing out wasn't half bad, but there was great wailing and gnashing of teeth here when they did. "They're selling off the crown jewel!!!"...

[TheGeneral]

Subprime mortgages are high risk. You have two outcomes GMAC makes a huge profit on the subprime loan or a huge loss on the subprime loan! They gave loans to extremely risky people. I'm 20 and chase asks me every time I walk in if I want a mortgage.

[t-rex]

An enlightened colleague of mine over in the Economics Department opened my eyes recently to the grave seriousness of the mortgage loan crisis and various other financial rackets that are currently propping up the US economy. The housing bubble is about to burst, and it's going to burst with a bang. There's the realistic possibility that this will not only have ripple effects, but could very well send the entire economy into a tailspin. All because lenders adopted a "lend to anyone with a pulse" credo.

While I've got fingers crossed hoping this scenario doesn't happen, if it does, it'll be the result of two post-WW2 trends that have slowly degraded America: unbridled greed, and the absence of accountability. It's the actions of corporate Ivy-leaguers like Ranger Rick, whose sole focus are shareholder dividends, with complete disregard to the huge socio-economic role their corporations play, that could possibly unravel the American economy, and ultimately American society. GM stopped being a car company years ago. Like most of corporate America, it's just another financial racket. So while some of you wish to cheer because GM sold 8000 Escalade EXT's instead of 5000, it's what's going on behind the scenes that we need to be equally concerned with.

We must be wary of becoming mere invisible men in some Battle Royal.