Nov. 5 (Bloomberg) -- GMAC LLC, the financing arm of General Motors Corp. gripped by a cash squeeze, posted its fifth straight loss and said its mortgage unit may not survive.

The third-quarter net loss widened to a record $2.52 billion from $1.6 billion a year earlier, the Detroit-based company said in a statement today. Total net revenue declined 43 percent to $1.72 billion. The Residential Capital home-loan unit lost $1.9 billion during the quarter, and GMAC's auto finance business lost $294 million.

GMAC, led by Chief Executive Officer Alvaro de Molina, 51, was crushed by slumps in the housing market, where foreclosures are running at record levels, and in auto sales, which GM labeled the worst since 1945 when it reported October results this week. ResCap, which ranked among the biggest U.S. subprime lenders two year ago, has posted losses totaling $9.1 billion over the past eight quarters.

Without more support from GMAC, ``substantial doubt exists regarding ResCap's ability to continue as a going concern,'' GMAC said in today's statement.

``Investing in the housing industry did what it was intended to do for GMAC for a while, but the tremendous changes in the market conditions have left many of those previous bets exposed,'' said Keith Gumbinger, vice president of HSH Associates Inc., a Pompton Plains, New Jersey research firm. ``They never suspected the road would end with a cliff.''

`Most Difficult Environment'

GMAC has been shut out of some credit markets, and the firm today repeated its hopes of converting to a bank holding company, which could make it eligible for help from the Treasury's $700 billion bailout fund. It's unclear whether regulators will approve GMAC's application, Chief Financial Officer Robert Hull said on a conference call.

To stem losses, GMAC has cut off auto loans to customers who don't have the highest credit ratings and curtailed operations. The lender had about $161 billion of debt outstanding as of last month, including $32 billion that matures within a year, the company said.

The company's search for financing is ``extremely challenging'' and GMAC isn't able to package loans and sell them to investors, Hull said. ``This is the most difficult environment we've ever faced.''

ResCap Loans Slump

GMAC has increased its use of an $11.4 billion revolving credit line because it doesn't have access to the asset-backed securities market, Hull said. GMAC's current and potential borrowing capacity through secured bank facilities declined to $22.1 billion from $34.7 billion in the second quarter, according to a filing.

GMAC is the primary lender to customers of GM, the biggest U.S. automaker, which holds a 49 percent stake. Cerberus Capital Management, the New York private-equity firm, owns 51 percent. GMAC already has a banking subsidiary that offers certificates of deposit by telephone and the Internet.

ResCap, GMAC's Minneapolis-based home lending subsidiary, said loan production slumped 59 percent to $11.9 billion during the quarter as the company closed retail mortgage offices, stopped making loans through brokers and cut back on business and international lending. ResCap has halted lending outside of the U.S. and Canada, the company said.

ResCap wasn't receiving interest on 22 percent of its loans as of Sept. 30, up from 5 percent a year earlier. The company made loans using brand names including Ditech, Homecomings Financial and GMAC Mortgage.

No Questions

GMAC's lending on new vehicles declined 22 percent to $11.3 billion during the quarter because of tighter credit standards and lower industry sales. The company is ending loans on new cars in Australia and New Zealand by the end of the year after making similar cuts in seven European nations as of Nov. 1.

Deposits at GMAC Bank advanced to $17.7 billion during the quarter from $16.9 billion at the end of the second quarter. GMAC is paying above-market interest rates to attract deposits through its bank.

GMAC officials didn't take questions from analysts or investors, breaking a longstanding tradition. Hull said it would be ``speculative'' to comment about a possible merger involving GMAC and another auto finance company.

GM and Chrysler LLC, the automaker owned by Cerberus, have been discussing a possible merger with hopes that the U.S. will provide financial aid to help complete a deal, people familiar with the situation have said. Cerberus' ownership of Chrysler includes the financing arm of the third-largest U.S. automaker.

GMAC's $1 billion of 5.85 percent debt due in January fell 1 cent today to 90.5 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 64.2 percent, or 63.8 percentage points more than similar-maturity Treasuries, Trace data show.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: November 5, 2008 16:17 EST