Low Lending Standards Now Haunt GM
The days of lax lending standards are coming back to haunt GMAC, the lending arm of General Motors. "Bad loans at the retail mortgage operations of General Motors more than doubled last year as it increased lending to poorer customers."
FT.com reports, "Non-performing loans in the mortgage business of GMAC, the finance arm that is the most profitable part of the carmaker, increased from $1.3bn to $3.4bn in 2004. The proportion of the loan portfolio that is more than 60 days overdue rose to 8.8 per cent from 5.2 per cent the previous year, according to regulatory filings submitted this month. The company has not previously disclosed non-performing loans."
Why GM is even planning to sell GMAC because its credit is so bad. So while most of the media keeps talking about SUVs, this blog will stick to the real story.