GMAC Financial Services and its Residential Capital LLC unit plan to close all 200 GMAC Mortgage retail offices and reduce ResCap's work force by 60% to streamline operations, reduce costs and refocus resources on strategic lending and servicing.

ResCap, one of the nation's largest subprime mortgage lenders, has been struggling to turn around its fortunes as GMAC and its owners consider the home lender's future. ResCap lost $4.3 billion in 2007, and GMAC spent much of the year restructuring the firm, including job cuts and an overhaul of the business model. But the losses have continued to mount.

GMAC said Wednesday it's evaluating options for the GMAC Home Services Business and the noncore servicing business. That, when combined with ceasing originations through the Homecomings wholesale broker channel and curtailing business lending and international business activities, will reduce the ResCap work force by approximately 5,000 employees, including a range of administrative and managerial positions. Approximately 3,000 will receive notification this month, with the majority of the rest expected 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 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."

ResCap expects to record charges of $90 million to $120 million for the work force reductions and streamlining initiatives. The majority of the charges should occur in the third quarter, and further potential charges haven't yet been determined.

ResCap said it will continue to originate loans in the U.S. and internationally, where there is a secondary market to sell the loans. The company said its commitment to servicing loans is unchanged, and it will continue to expand its servicing platform.

In July, GMAC — 51% owned by private-equity firm Cerberus Capital Management LP — reported it swung to a second-quarter net loss as it took a $716 million write-down and recorded more losses from ResCap. ResCap's net loss ballooned to $1.86 billion from $254 million on asset sales. The company noted at the time that its U.S. residential-finance business "is beginning to stabilize" as ResCap cuts its balance sheet.

GMAC is being pressured by falling used-vehicle prices and the ongoing credit crunch, resulting in the firm announcing it would no longer offer subsidized leases in Canada. The company was expected to announce curtailments to U.S. leasing offers as well.

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