GMAC, the owner of Ditech.com in Costa Mesa and a lender to buyers of General Motors’ cars, is getting $5 billion from the U.S. government, the Treasury Department said today.

The Associated Press reports the move will help GMAC avoid bankruptcy but also limit General Motors control over the company. GM previously sold a 51% stake in GMAC to private investor Cerberus Capital Management.

GMAC said it would resume lending to consumers whom it previously said were too great a risk for auto loans. Such a move will boost auto sales but could expose the company to more loan defaults. Here’s more from AP:

In exchange for the slice of the $700 billion bank rescue package, the government will receive preferred shares that pay an 8 percent dividend and warrants to purchase additional shares in return for the money, the department said.

Treasury also said it will lend up to $1 billion to General Motors so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital.

Read the full AP story HERE. The article focuses on the car lending side of GMAC, so no details on Ditech.

And in other news…

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• O.C. supply of distressed homes for sale drops 7%
• More buyers for failed bank
• Banks get mixed message: lend more and increase capital too
• Investor close to buying failed bank
• Shopping for lowest rate is dumb way to get a mortgage
• Best business reads of ‘08
• Ditech.com parent closer to bailout money
• What are banks doing with your bailout money?
• Loan brokers sue U.S. government over fee disclosure
• Did IndyMac’s regulator let it backdate capital?
• State agency halts affordable home lending programs

Posted in: Bailout Buzz • Company Watch • Ditech • GMAC • Meltdown • Costa Mesa |

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