ResCap Working on Changes to GMACM Servicing Practice
March 10, 2010
ResCap has been working to change a practice involving the netting of cash flows of multiple RMBS deals serviced by its GMAC Mortgage (GMACM) subsidiary.
The practice recently led to Moody's Investors Service to put $5.9 billion in RMBS serviced by GMACM on review for possible downgrade. A call placed to Moody's late Tuesday about whether it might change the rating status of the GMAC-serviced RMBS as a result had not been returned at press time Wednesday.
"The practices in question involve commingling and netting of the cash flows of multiple RMBS deals in a shared custodial bank account," Moody's said in its original report explaining the review. "If these competing claims are successful in diverting cash, they could adversely affect the probability that certain of the affected RMBS could be paid in full."
In a statement, ResCap said it "is in the process of separating the trusts into individual custodial bank accounts, which it believes it will resolve any issues."
ResCap said it "has presented this change to Moody's and is awaiting their review." A call to ResCap about how far along it is in making the change had not been returned at press time.
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