GMAC To Cut Jobs In Order To Increase Sales
You're reading GMAC To Cut Jobs In Order To Increase Sales, posted on Thursday, September 4th, 2008 at 1:57 pm in Businesses, News, on BrainBloggers at the The Business World blog. More after the jump.
GMAC Financial Services and Residential Capital LLC have made the decision to shut down 200 mortgage retail offices and to reduce the workforce for ResCap by close to 60% in order to streamline operations, lower the amount of costs, and to refocus resources on strategic servicing and lending.
ResCap is one of the nation’s largest subprime mortgage lenders and it has been working hard to help make things look up. They lost $4.3 billion in 2007 and spent much of the year restructuring. However, none of their previous plans seemed to work as the losses began to become higher.
GMAC said Wednesday it is evaluating options for the GMAC Home Services Business and the noncore servicing business. That, when combined with ceasing originations through the Homecomings wholesale broker channel and curtailing business lending and international business activities, will reduce the ResCap work force by about 5,000 employees, including a range of administrative and managerial positions. About 3,000 will receive notification this month, with the majority of the rest expected by year-end.
“While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment,” said ResCap Chairman and Chief Executive Tom Marano. “Conditions in the mortgage and credit markets have not abated and, therefore, we need to respond aggressively by further reducing both operating costs and business risk.”