GMAC to close offices
Its four isle mortgage locations will close, leaving all 42 workers here without jobs
LOS ANGELES » Lender GMAC Financial Services said yesterday it is laying off all of its 42 Hawaii employees in the next month and closing its four isle locations as part of a national closure of all 200 GMAC Mortgage retail offices.
The company is laying off about 5,000 employees as part of plan to reduce its mortgage lending and servicing operations because of the housing market downturn.
GMAC has isle mortgage locations in Honolulu, Kailua, Kahului and Kihei. Calls to Honolulu and Kailua branch manager Bill Rizzo were not returned, while the phone at the Honolulu location had been disconnected.
"Some stores will close in a matter of days and some will close at other times in the month," New York-based spokeswoman Gina Proia said in a Star-Bulletin interview. "It's important to say we are going to honor our commitments to customers."
Proia declined to discuss how many mortgage customers GMAC has in Hawaii or give more specifics on store closures.
Nationally, the majority of the layoffs are slated for GMAC's mortgage lending division, Residential Capital LLC, or ResCap, and will reduce work force at the unit by 60 percent, the company said.
ResCap will continue servicing loans and lending through brands such as Ditech or GMAC Mortgage Direct, which customers can reach online or through call centers, spokeswoman Jeannine Bruin said.
The Fort Washington, Pa.-based company also said it would stop making mortgage loans through external, wholesale brokers.
"We're not going to have a retail presence where customers walk in the door," Bruin said. "We are very much still originating loans and servicing the customer."
Some 3,000 employees may receive word of the cutbacks this month. Other cutbacks are expected to take place by the end of the year, the company said.
"While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment," Tom Marano, ResCap's chairman and chief executive, said in a statement. "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."
Some of the job cuts also will come from the company's Business Capital Group, which originates loans for homebuilders, reflecting a slowing homebuilding market.
To cover severance costs, ResCap will take a charge of $90 million to $120 million against earnings.
In July, GMAC said ResCap's second-quarter losses widened to $1.86 billion from $254 million in the prior-year period as a result of losses from asset sales.
GMAC is majority owned by private equity firm Cerberus Capital Management, but Detroit-based General Motors Corp. still holds 49 percent stake of the business.