GMAC Sells European Operations to Fortress

American financial institution GMAC announced yesterday it has decided to sell its European mortgage assets and businesses to Fortress Investment Group. Or rather, to certain funds managed by affiliates of Fortress, as the official statement reads.

The announcement stirred quite a controversy on the financial markets. While Fortress' stock rose some 25 percent after the announcement, some in industry didn't hold back the tough words and slammed the deal as being a scam.

The deal between GMAC and Fortress calls for 10 percent of ResCap's Dec. 31, 2009 total assets and approximately 40 percent of total assets on a pro forma basis to be sold, with "no material gain or loss expected."

The sale will include certain loan assets (including non-performing loans) and servicing rights, and the shares of the related operating entities in the United Kingdom, Germany and The Netherlands.

"The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation. This is a significant achievement and will contribute in putting GMAC on a path toward improved performance," said GMAC CEO Michael A. Carpenter says in a statement.

ResCap is held accountable by GMAC's new CEO for the disastrous situation of last year. In fact, shedding ResCap assets is in line with measures announced by Carpenter when he was appointed CEO last November.

“If it weren't for the mortgage business, I don't think GMAC would have needed federal support. ResCap dragged the company down.”