The General Motors Acceptance Corp., known as GMAC, has been lending out money as a mortgage company, and they have fallen on hard times much like every other mortgage company in the country. Understand the importance of GMAC mortgages with information from a portfolio manager in this free video on finance.
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Remember when General Motors was this cash cow and they really didn't know what to do with all of their cash? Hi, this is Roger Groh of Groh Asset Management. Well, that was a while ago, but one of the things that they did was to set up a corporation to lend out their excess cash to homeowners in mortgages. They became one of the largest within the United States. The name of their group was General Motors Acceptance Corp. Over the last couple of years, though, GMAC, as it's known, has fallen on hard times like many other mortgage companies. As the value of homes have declined and the value of the mortgages has declined, GMAC has run into maybe trouble. You would have to access their website and look at the financial data in GMAC in order to determine the health of the business. GMAC's important for the overall health of the housing market here in the United States. They were a large lender, and with them out of the market certainly hurts all of our ability to get a better rate on loans as one big player would be gone if GMAC did fold. Could that happen? Yes, it can. They are certainly talking to the government about using the tarp funds that are now eligible through the Treasury program in order to preserve the liquidity in the United States housing market. If you have an existing mortgage with GMAC, don't worry about it. If you're a bond holder with GMAC, well, you've seen the credit rating on the bonds go down steadily over the last couple of years, and you should do your homework thoroughly. Last, but not least, if you're considering a new mortgage, would you consider buying one from GMAC? Sure, if it were the best rate in town because, after all, if they're lending you money, you'll be okay. Hope that helps. This is Roger Groh of Groh Asset, and thank you very much for spending time with me.