Sub-prime crisis hurts US lender

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The crisis in the US sub-prime mortgage market has led to losses at US consumer finance firm GMAC.

GMAC said it made a loss of $724m (Â£368m) in the fourth quarter of 2007 compared with a $1bn profit in the same period a year earlier.

Most of the losses stemmed from GMAC's struggling home lending unit, Residential Capital, it said.

GMAC blamed the loss on "continued disruption in the mortgage, housing and capital markets".

For 2007 as a whole, GMAC made a net loss of $2.3bn compared with a net income of $2.1bn of 2006.

Profits at its car loan and insurance businesses were offset by a $4.3bn loss at Residential Capital.

Like rivals, such as Countrywide, Residential Capital has been hurt by rising defaults and tighter conditions in credit markets.

Last year, the firm said it would cut 5,000 jobs and cut back on sub-prime lending - loans made to those with poor or patchy credit histories.

GMAC is a former unit of General Motors, which still retains a 49% stake.

Private equity group Cerberus Capital Management owns the remaining 51%.

GMAC started out offering car loans before expanding into the mortgage industry.