By Andrew R. Johnson
Ally Financial Inc.'s (GMA.XX) mortgage subsidiary Residential
Capital lost $109.3 million during its first six weeks in
bankruptcy, according to a court filing Wednesday.
ResCap, which had been hit with lawsuits over mortgage-backed
securities and looming bond payments, filed for Chapter 11
protection May 14 in a move intended to help Ally separate itself
from those issues. Neither Ally, which is 74% owned by the U.S.
government, nor its bank unit are part of the bankruptcy, which
would potentially give Ally a release from legal claims.
ResCap's net loss between May 14 and June 30 was driven largely
by a $112.8 million decline in the value of its mortgage-servicing
rights stemming from a decline in interest rates, which the company
hasn't hedged since filing for bankruptcy, said Susan Fitzpatrick,
spokeswoman for ResCap.
As part of its bankruptcy, ResCap is proposing selling its
mortgage assets through a court-supervised auction. Last month,
Berkshire Hathaway Inc.'s (BRKA, BRKB) $1.7 billion bid made it the
lead bidder in the auction for ResCap's legacy loan portfolio.
Nationstar Mortgage Holdings Inc. (NSM), majority owned by Fortress
Investment Group LLC (FIG), was named the lead bidder for ResCap's
mortgage-servicing portfolio with a $2.5 billion bid.
Earlier this month, ResCap sought court approval to pay $17.8
million in bonuses to about 200 employees to keep them motivated
during the bankruptcy.
Ally, whose main business is providing financing to General
Motors Co. (GM) and Chrysler Group LLC dealers and customers, took
more than $17 billion in bailout funds during the financial crisis.
It continues to owe the government about $12 billion of that
amount.
--Joseph Checkler contributed to this article.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com.
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