GMAC LLC said Wednesday that it will cut 5,000 employees in its Residential Capital LLC, or 60% of the Minneapolis mortgage unit's work force.
ResCap will close the 200 retail offices that use the GMAC Mortgage brand, and it will cease originations through its Homecomings wholesale channel, GMAC said.
Matthew Detwiler, a vice president and managing director of national production at GMAC's bank, wrote in an e-mail to correspondents obtained by American Banker that his unit will continue to fund loans from correspondent lenders and offer warehouse financing. ResCap also will keep its direct-to-consumer channel and its mortgage servicing business, he wrote, and GMAC plans "to concentrate our efforts and capital on the best performing businesses."
GMAC said ResCap will continue originating loans "where there is a secondary market."
ResCap will take a third-quarter charge of $90 million to $120 million, GMAC said. The charge will cover expenses related to 3,000 of the job cuts; charges for the remaining 2,000 have not been determined.
ResCap has made several large cuts in the last year, but this will be the largest.
"Conditions in the mortgage and credit markets have not abated," Tom Marano, ResCap's chairman and chief executive, said in a press release Wednesday. As a result, "we need to respond aggressively by further reducing both operating costs and business risk."