Cerberus Might Get More of GMAC

New York-If General Motors and Chrysler LLC merge, as rumored, hedge fund giant Cerberus Capital will wind up owning an even larger stake in General Motors Acceptance Corp. and its home lending/servicing arm, Residential Capital Corp.

At press time, news reports began to surface that the two automakers were talking about a deal. Cerberus owns 51% of GMAC and 80.1% of Chrysler.

Cerberus, however, does not own any large stakes in General Motors, which owns 49% of GMAC. Among residential servicers ResCap ranks seventh with $397 billion in receivables, according to the Quarterly Data Report.

GMAC Mortgage is also one of the nation's largest subservicers with about $40 billion in contracts.

Since buying GMAC in the spring of 2006, the mortgage market has suffered tremendously.

Cerberus has moved to cut costs at ResCap and recently shuttered its wholesale division. Its one other bet in mortgages - Aegis Mortgage of Houston - did not end well. Aegis filed for bankruptcy protection in the summer of 2007.

Last year Cerberus agreed to buy subprime lender Option One Mortgage, but pulled out of the deal by year-end.

GMAC-RFC, based in Minneapolis, was one of the biggest player in securitizing and servicing nonconforming loans at the peak of the market. However, since the collapse of the subprime lending sector, the company has had to manage a severe contraction in business and has laid off thousands of employees. Parent GMAC has also taken writedowns related to its mortgage assets.

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