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GMAC knocked by toxic mortgage writedowns

GMAC Financial Services, which is majority-owned by the US government, said yesterday it swung to a $5bn (£3.2bn) loss in the fourth quarter after writing down bad mortgage assets.

That compares with a net profit of $7.5bn in the fourth quarter of 2008.

GMAC said in December it did not expect to record more major losses from its mortgage unit. Home loans fuelled GMAC’s growth earlier this decade but have since triggered billion-dollar losses for the company.

The losses, combined with the effects of the recession and General Motors filing for bankruptcy, forced GMAC into the arms of the government and triggered the resignation of its chief executive Al de Molina.