By Michael CollinsNEW YORK: Residential Capital, an affiliate of General Motors, may soon join the ranks of U.S. mortgage lenders that failed to navigate the deepening housing crisis.
The possibility of its failure rose after GMAC, its parent, said Wednesday that "substantial doubt exists regarding ResCap's ability to continue as a going concern" without more support from GMAC, which is best known for lending to GM customers.
GM owns 49 percent of GMAC, and both are trying to conserve cash as auto sales plummet, vehicle leases lose value and more borrowers miss payments. The private equity firm Cerberus Capital Management owns the rest of GMAC.
GMAC is trying to become a bank holding company, which would make it eligible to tap the U.S. Treasury Department's $700 billion bailout fund, and it may refinance much of its debt.
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