GMAC bolsters ResCap with $750 million credit line

GMAC, the lender part-owned by General Motors Corp., will prop up its Bloomington-based Residential Capital mortgage unit with a loan of as much as $750 million while the unit tries to sell a financing business.

ResCap borrowed $635 million Thursday, the company said Friday in a regulatory filing. GMAC Chief Executive Eric Feldstein has cited the financing operation, which funds development of vacation resorts, as one of the company's best-performing businesses.

Pressure on Detroit-based GMAC increased Friday after Standard & Poor's downgraded its credit ratings and those of the ResCap home-lending unit because of difficulty in funding loans. GMAC, controlled by buyout firm Cerberus Capital Management, said Wednesday it will shut down three-quarters of its North American auto-financing offices this year and cut 930 workers after a $2.3 billion loss last year.

"It's going to be difficult for them to sell anything," said Bradley Rubin, a credit analyst at BNP Paribas in New York. "The appetite to buy real estate assets is limited at best."

S&P said Friday that GM and Cerberus support for GMAC "must be materially less than it was several quarters ago." GMAC's counterparty credit rating was cut to B+/C from BB+/B. The rating on ResCap was lowered to B/C from BB+/B, S&P said in a statement.

"We're extremely disappointed in Standard & Poor's action today," GMAC spokeswoman Gina Proia said in an interview. "We remain committed to taking the steps needed to improve our business."

Selling the resort-finance unit could help restore capital at ResCap, which had a $4.3 billion loss in 2007 and ended the year with net worth of $6 billion.