Virginia Beach Home Loans: Did GMAC do the right thing?

Did GMAC do the right thing?

Their goal from what I can tell based on the news circling the company that I have read is to return to profitability by the end of 2008. They have been frantically cutting costs, raising capital, and consolidating shops for the past couple of months.

I really like a couple of Assistant Underwriters here who were sent to the Charlotte branch from Jersey when they consolidated the two shops; this was only a couple of months ago. Now GMAC is shutting down the Charlotte branch and moving everyone to Texas.

When they first consolidated a couple of branches I noticed a huge gap in service and it gets worse every time they shut down and consolidate branches.

The reason that I am asking you all if you think that GMAC has done the right thing is because it seems to me that they are swapping lower overhead for service. I just kind of think that this way of thinking is short sighted. Their overhead may be lower but they are also going to originate a lot less and do a lot less business in general.

I'd bet that while they are reducing costs that their operating ratios are not improving all that much. Whats your take?

Christopher Ohlsen

37 Boynton Ave

(845) 243-5293 (Office)

(518) 565-0799 (Cell)



Comment balloon 9 commentsChristopher Ohlsen • June 18 2008 08:54AM


I wonder if they're supplying relocation packages to these people they keep moving, and if people bought houses in their new locations, is GMAC going to pay to make sure they don't lose any money on the house when they sell it to move again...

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - over 12 years ago

I am actually glad I did not end up at GMAC several months ago when my previous emplyer, American Home Mortgage, folded their retail operations. I had 2 interviews with the Regional Manager and then the phone calls never stopped coming from him and his assistants. Thank you for making me feel better about my decision.

Posted by Hans Iduma, Certified Mortgage Planning Specialist over 12 years ago

Christopher, you have no choice but to consolidate if you don't have the income.  How do you pay your bills?  You can't keep paying rent without income.  Everyone is consolidating.  There have been large losses for a lot of companies.  Swapping lower overhead for service???? what choice!

Posted by Miriam Bernstein, CRS over 12 years ago

unfortunately many lenders are doing this. laying off & consolidating to cut overhead & stay off the imploded list.but customer service will suffer. if you recall in the late 90's business slowed down & everyone had layoffs as soon as things picked up we were left dealing with people that were either inexperienced & couldnt get it done, or the experienced but overloaded & couldnt get it done. and yes customer service suffered, as did underwritting turnaround gets worse befor it gets better.

Posted by alisa bracksmayer (camelot funding) over 12 years ago

Donna - I know that they are providing incentives for people to relocate... Not exactly sure what they are though. I know that my favorite Assistant UW is not planning on transferring again but I hope that GMAC helps its own with the burden that it is imposing upon all of their lives.

Hans - GMAC and specifically HomeComings Financial have always been a great bank to work with until recently. They have deteriorated very quickly and I get the impression sometimes that they are intentionally trying to kill good files in an attempt to hold onto some of their reserves.

Miriam - What choice do they have? Well, for one they could adopt better accounting practices. Initially they indicated that they needed to raise $600 Million to keep their triple A credit rating and ultimately stay in business and just recently they announced that their figures were off. They actually need $2 billion in additional capital in order to stay in business. They are trying to raise that capital buy selling preferred stocks at the same time as they are reducing the dividends that those stocks pay. There is plenty that they could of done to prevent this internal implosion. I just think that it is a little crazy that they are consolidating this particular branch again after just doing so around 2 - 3 months ago. If they had managed their balance sheets better they could've saved the money that it cost to consolidate several of their branches into Charlotte, SC and instead just consolidated straight to Dallas, TX. I think the fact that they wasted all of this money only to make another move a couple of months later in conjunction with their miscalculations that is probably going to put ResCap under by the end of the year is ample reason to question the way that they do business; and it is too bad because for years I have enjoyed working with this otherwise fine bank.

Alisa - Yes many banks are currently doing this. Even some of the best banks in the business like Fifth Third are running into liquidity problems due to bad debt on their books. I believe that the root of the problem stems from our overall economy and that the "subprime" mess could've been avoided with better accounting practices, more jobs, lower energy costs and smarter lending. The subprime mess did not create the situation that we are in, it was created by it. If we did not lose hundred and hundreds of thousands of jobs in this country while spending 12b per month on an unneccesary war overseas and people were able to maintain their current lifestyle we would've been OK. It is not just mortgages that are imploding, debt portfolios across the board are failing and it started with subprime mortgages because the people in those subprime mortgages are the people who got hit the hardest by job losses and just could not afford to pay their bills.

Posted by Christopher Ohlsen (Credit Werx, LLC.) over 12 years ago

I am here in Texas and I love GMAC!!!!!  I don't know if it will change in the near future but turntimes and u/w is awsome I think that they are good only pricing is not as agressive as before I have noticed but service is great!!!!

Posted by Frank Marta, Texas Home Loan Specialist NMLS#: 245813 (Nuhome Group, LLC NMLS#:835196 - Houston Tx | Mortgage Broker| 713-373-0345) over 12 years ago

Frank - I love GMAC too and I hope that the service remains good. I noticed a huge downgrade in service in going from dealing with the Jersey Branch to the Chalotte branch. Pricing is definitely not as good but we are seeing that across the board at quite a few lenders. Maybe it is just Charlotte that did not perform very well... Anyway, I really hope that they put an emphasis on service and turn times because to me that is very, very important.

Posted by Christopher Ohlsen (Credit Werx, LLC.) over 12 years ago

Christopher, the movement in many of the wholesalers is directed towards eliminating outside representation of their company.  When the companies wanted to grow, they were willing to exchange risk of poor originating in exchange for massive increase in volume.  Now that things aren't as great for them, they are wisely dropping unnecessary accounts and focusing on higher graded accounts.

Posted by Mark Organek, It's not a game, it's your life. (And the United States of America) over 12 years ago

Mark - Yeah, I see that now... it is getting friggin ugly out there. Times are tough and lenders are doing eveything that they can just to stay afloat. In retrospect I agree that GMAC is doing the right thing and they they are a smart player in this game. I hope that they make it through this as I suspect they will because they are one of my top picks with regard to the lenders that I most enjoy working with. Thank you for your insight!

Posted by Christopher Ohlsen (Credit Werx, LLC.) over 12 years ago