By on May 8, 2012

There is new trouble brewing in an important part of GM’s business: Ally, the former GMAC. Nearly 75 percent of the credit that GM dealers in the United States use to finance their inventories is from Ally, says a Reuters report. The report also says that Residential Capital (ResCap) – Ally’s mortgage servicing and lending unit – is again on the verge of being put into bankruptcy.

Ally still owes the U.S. Treasury Department about $12 billion. GM and Chrysler, two key sources of customers, are increasingly reluctant to steer business to it, says Reuters. This puts Ally deeper into trouble.

ResCap faces litigation over underwriting standards. The suits could bring a new set of liabilities that threaten to take Ally down with it unless it is somehow separated. According to Reuters, ResCap is seriously considering filing for bankruptcy by May 14 when it must repay a portion of its debt.


Get the latest TTAC e-Newsletter!


3 Comments on “GM’s Floorplan Banker Could Take Mortgage Arm Bankrupt...”

  • avatar

    “ResCap faces litigation over underwriting standards.”

    That’s about right – GMAC Mtg HAD no underwriting standards, aside from a verifiable pulse.

  • avatar

    Now that General Motors Financial is up and running, this just provides all the more incentive for GM and its dealers to sever their remaining ties with Ally and get the hell away from that walking corpse of a company.

    Chrysler would be the one really left holding the bag if Ally goes under again, as they have no captive financing business to speak of. Fiat and Chrysler have been talking about going back into that arena, but haven’t made the move yet. The clock is ticking.

  • avatar

    Ally is not all that’s going!!!

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Davekaybsc: I don’t know why anyone buys the TLX. The interior materials and design are worst in class. The...
  • White Shadow: That’s only because we hear it said wrong so often. The worst thing is when you hear people on...
  • whynotaztec: Having owned a body shop for several years I will say this; many people don’t even notice such...
  • White Shadow: The last thing I want is for some dealeship monkey to loosen and adjust the bodywork on my new car....
  • hamish42: I live in Toronto and spend 2 hours a day on the freeways. The number of people I see on their phones is...

New Car Research

Get a Free Dealer Quote