Mortgage losses bleeding over to car loans

DETROIT, Nov. 5 (UPI) -- Losses in the U.S. housing market may bleed directly over to tighter restrictions for auto loans at GMAC, a J.P. Morgan analyst said.

In a research note, analyst Himanshu Patel said liquidity issues at GMAC -- 49 percent owned by General Motors Corp. and 51 percent owned by Cerberus Capital Management -- could contribute to diminishing car sales, BusinessWeek reported Wednesday.

GMAC reported losses of $2.5 billion in the third quarter with $1.9 billion coming from losses at its ResCap unit, which handles mortgages, the report said.

In a conference call, GMAC Chief Financial Officer Robert Hull said the company may write fewer loans.

"This is the most difficult environment we have ever faced," he said.

In turn, GM, which has lost more than $18 billion this year, said half its 45 percent plummet in October sales was due to tight credit conditions. The lender, meanwhile, has informed auto dealers that it was restricting loans to prime-credit borrowers only, BusinessWeek said.