NEW YORK - GMAC Financial Services said Wednesday it was restructuring its mortgage unit, Residential Capital (ResCap) and cutting 3,000 jobs, citing "severe weakness" in the credit and housing markets.
The US company said it would eliminate about 25 percent of the ResCap worldwide staff of 12,000, as it streamlines the unit's operations to meet changing market conditions.
The measures were being taken "as severe weakness in the housing market and mortgage industry continues to prevail," said GMAC, which employs 31,000 people worldwide.
The majority of job cuts will occur in the fourth quarter of 2007, said the parent company, which eliminated 2,000 jobs in the first half of the year.
"The reduction in ResCap's workforce was influenced by sharp downturns in the US residential real estate markets and the global dislocation of the mortgage finance and credit markets," it said.
ResCap's operations focus primarily on the residential real estate market in the United States, Canada, Europe, Latin America and Australia.
GMAC plans to take restructuring charges estimated between 90 million and 110 million dollars, of which 55-65 million for severance and employee-related costs. Most of the charges would be taken in the October-December period.
A consortium of investors led by Cerberus Capital Management bought a controlling 51 percent interest last year in GMAC from US auto maker General Motors Corp., which retained a 49 percent stake.
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10/17/2007 20:47 GMT