ResCap Posts First Quarter Profit

After several quarters of horrendous losses, GMAC's residential mortgage division posted a small profit in the first quarter, attributing the turnaround to improved servicing revenue and lower loan losses and buyback costs. Residential Capital Corp., the nation's fourth largest funder of home mortgages, earned $110 million compared to a loss of almost $1 billion in the same period a year ago. The mortgage division is continuing to dispose of delinquent assets, though like most sellers, is not revealing much information about the buyers of such loans. During a conference call on Monday the company said it is contemplating an initial public offering to help the car and home lender repay some of its $17.3 billion of federal bailout funds. GMAC chief executive, Michael Carpenter, said he plans to meet with Treasury Department officials Tuesday to discuss several matters "which may well include an IPO [to] allow us to repay [the] Treasury in a reasonable period of time." The government has a 56% stake in GMAC. ResCap originated $13.3 billion of home mortgages during 1Q, a 26% decline from 4Q. Compared to 1Q 09, production was relatively flat. GMAC has retained Goldman Sachs & Co. as its advisor.