March 26 (Bloomberg) -- Bonds of GMAC LLC's Residential Capital division, or ResCap, were cut to ``neutral'' from ``buy'' by Banc of America Securities LLC following the departure of two top finance executives.

GMAC announced the resignation of ResCap's chief financial officer, James Giertz, on March 23. Three days earlier, treasurer Louise Herrle said she planned to leave in April. The company attributed the resignations to personal reasons. Yield premiums on ResCap bonds have increased since the beginning of the year on concerns about rising default rates on subprime mortgages.

``We view the departure of ResCap's two most senior finance executives as a significant negative given the challenges the company is facing,'' Banc of America credit analyst John Guarnera in Charlotte, North Carolina, wrote in a research note today.

Minneapolis-based Rescap is the seventh-largest originator and servicer of U.S. residential mortgage loans, and operates under brands including GMAC Mortgage and Ditech.com.

The company is owned by GMAC, which is 51 percent controlled by Cerberus Capital Management LP. The New York-based hedge fund purchased the stake from General Motors Corp. in November as the automaker sought to stabilize its finance unit's credit ratings.

Credit default swaps based on $10 million of the company's bonds rose to about $220,000 on March 5 from about $100,000 on Feb. 16. The premiums have since dropped to about $160,000. An increase indicates deterioration in the perception of credit quality.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They were conceived to protect bondholders against default and pay the buyer face value in exchange for the underlying securities should the company fail to adhere to its debt agreements.

New-home sales in the U.S. fell 3.9 percent in February to an annual pace of 848,000 from a revised 882,000 rate in January that was lower than previously reported, the Commerce Department said today in Washington. The supply of unsold homes at the current sales pace rose to the highest in 16 years.

To contact the reporter on this story: Christine Richard in New York at crichard5@bloomberg.net

Last Updated: March 26, 2007 11:09 EDT