GMAC Financial Injects Capital to Support ResCap: 'ResCap should be far less vulnerable to further adverse developments.'.

NEW YORK -- GMAC Financial Services lost $305 million in the first quarter, citing a big loss at its Residential Capital unit as the main culprit behind the downturn.

GMAC Financial also said it had to inject $500 million of capital into ResCap, the home loan unit, to bolster its liquidity position during the first quarter.

However, ResCap's $910 million net loss drove the consolidated loss at the parent company. A year earlier, ResCap posted net income of $210 million during the first quarter.

The parent company injected $500 million of equity into ResCap during the first quarter to bolster the company's capital position. GMAC Financial said the infusion was financed as part of the previously announced $1 billion of common equity that GM had to put into GMAC in connection with the final settlement provisions of the GMAC sale transaction.

The company said that because of the sharp downturn in the U.S. mortgage market, ResCap had to unload many of its nonprime assets at a loss or substantially mark down their value. In addition, ResCap had to substantially increase reserves against many nonprime loans on its balance sheet, the company said. The higher reserves were necessary because both default frequency and loss severity have increased in the nonprime mortgage space, the company said.

But ResCap's loan production did not lose ground, with the company producing $27.8 billion of prime credit quality home loans in the first quarter of 2007, up from $27 billion one year earlier. But nonprime home loan volume decreased to $3.3 billion in the first quarter, compared with $9.1 billion in the first quarter of last year.

International mortgage originations climbed 18% to $6.5 billion in the first quarter of this year.