Residential Mortgage seeking Chapter 11 protection

Ally Financial says its Residential Mortgage unit seeks Chapter 11 bankruptcy protection

Associated Press

NEW YORK (AP) -- Ally Financial Inc.'s mortgage division known as ResCap is seeking Chapter 11 bankruptcy protection.

The government-owned lender had been weighing a bankruptcy filing for Residential Capital LLC for some time, as the division has been burdened by old, souring loans.

Ally, which was formerly the financing arm of General Motors Co., says it is also exploring strategic options for all of its international operations, which includes auto finance, insurance and banking and deposit operations in Canada, Mexico, Europe, the U.K. and South America.

The company also said Monday that it has paid about $5.5 billion to the Treasury department and, with its new announcements, expects to return at least another third of the investment. Ally received government rescue packages worth more than $16 billion.

Detroit-based Ally anticipates taking an approximately $1.3 billion charge in the second quarter related to the ResCap filing.

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