- Source: GMAC ResCap
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
In 1982, Residential Funding Company LLC was formed as a subsidiary of Northwest Bank. It began operations in 1986.
In 1990, the company was acquired by GMAC Mortgage Corporation.
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.
As of the end of 2006, the company had $48 billion, or 76% of its mortgage portfolio invested in subprime loans.
In January 2007, the company eliminated 1,000 jobs.
In October 2007, the company eliminated 3,000 jobs. At the beginning of 2007, the company had 14,000 employees.
In May 2008, the company reported that it may run out of money.
In June 2008, the company completed a $60 billion refinancing.
On April 17, 2012, the company missed an interest payment.
On May 14, 2012, the company filed for a pre-packaged bankruptcy that included the separation of the company from its parent, Ally Financial.
On December 11, 2013, the company's Plan of Reorganization was approved by the bankruptcy court.
Litigation
In September 2008, after suffering heavy losses during the subprime crisis, New Jersey Carpenters Health Fund sued the company and the underwriters of residential mortgage-backed securities issued by affiliates of the company, claiming that the prospectuses and registration statements of the RMBS did not adequately disclose the risks, were misleading to investors, and violated securities law. The company settled for $100 million and the 3 underwriters, Citigroup, Goldman Sachs Group and UBS AG, settled for $235 million, which was approved by the court in 2015.