Growing Troubles with GM Likely to Take Company’s Mortgage Unit Down

Detroit–With shares of General Motors Corp. dipping to their lowest point in 60 years, the company’s mortgage unit of its finance arm may not survive, the company said in a government filing.Delphi Corp., GM’s former parts operation that was spun off as a separate company in 1999, also might not be able to emerge from Chapter 11 bankruptcy protection. In this morning’s trading, GM shares tumbled 56 cents, or 17 percent, to $2.80 after earlier falling as low as $2.75. This easily passes Monday’s more than 60-year low of $3.02.According to the Associated Press, JPMorgan analyst, Himanshu Patel said he expects GM to receive some form of federal aid, but advised investors to be cautious given the uncertainty. He added that he expects the automaker to end 2008 with $12.6 billion in cash on hand, just above midrange minimum cash and excluding government loans.GM’s quarterly report with the U.S. Securities and Exchange Commission said that the troubled mortgage industry and frozen credit markets have raised doubts that the mortgage business of its GMAC LLC financial arm can survive.The filing says that the value of Residential Capital’s mortgage loans have deteriorated due to weak housing prices, delinquencies and defaults. GMAC is also having trouble raising capital.GM owns 49 percent of GMAC LLC, with the rest owned by Cerberus Capital Management LP.Market developments have so harmed Residential Capital, called ResCap, that there is ”substantial doubt about ResCap’s ability to continue as a going concern,” GM said in the filing.