GMAC Financial Services today announced that its mortgage subsidiary, Residential Capital, LLC (ResCap), has agreed to sell its European mortgage assets and businesses to affiliates of certain funds managed by affiliates of Fortress Investment Group LLC.
These transactions represent approximately 10 percent of ResCap’s Dec. 31, 2009 total assets and approximately 40 percent of total assets on a pro forma basis, adjusted for the required FAS 167 accounting treatment for certain off-balance sheet securitizations that are recorded on-balance sheet effective Jan. 1, 2010. The assets in the transactions are valued at approximately the levels established in the fourth quarter of 2009 and there is no material gain or loss expected.
“The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation. This is a significant achievement and will contribute in putting GMAC on a path toward improved performance,” said GMAC Chief Executive Officer Michael A. Carpenter.
“We are pleased to have reached agreements to sell these assets and operations and believe this is a favorable outcome for all parties involved,” commented ResCap Chief Executive Officer Thomas Marano. “These transactions validate the approach we are taking to pursue alternatives for our legacy mortgage businesses that strive to reduce exposure and preserve value.”
Under the agreements, the sale will include certain loan assets (including non-performing loans) and servicing rights, and the shares of the related operating entities in the United Kingdom, Germany and The Netherlands. The closing of the transactions are subject to regulatory approval and customary closing conditions.
Separately, GMAC closed a whole loan transaction in the United Kingdom for USD $177 million (GBP 116 million) on March 31, 2010. With the combination of this whole loan transaction, the transactions with the Fortress affiliates, and certain other whole loan sales that are in progress, GMAC will effectively exit the European mortgage market.