Nov. 12 (Bloomberg) -- Residential Capital LLC's bonds lost almost half their value today after the U.S. Treasury scrapped plans to buy toxic mortgage assets and Fitch Ratings said parent GMAC LLC may stop propping up the home lender.

ResCap's $1.2 billion of 6.375 percent notes due in June 2010 tumbled 9.5 cents on the dollar, or 48 percent, to 10.5 cents at 4 p.m. New York time, according to Trace, the bond- price reporting system of the Financial Industry Regulatory Authority. The debt yields 243 percent.

Treasury Secretary Henry Paulson said today that the second half of the $700 billion financial rescue will be used to ease pressure on consumer credit, shifting from buying mortgage assets. Fitch said yesterday that a ResCap failure wouldn't have ``direct or immediate implications'' for Detroit-based GMAC because the entities are separate. GMAC is the largest lender to General Motors Corp. car dealers.

``GMAC's ability and willingness to continue to provide support is nearing an end,'' Fitch said yesterday in downgrading GMAC's debt. Fitch rates GMAC CCC and Minneapolis-based ResCap is rated D.

ResCap recorded its eighth straight deficit in the third quarter, losing $1.9 billion and accounting for most of GMAC's $2.5 billion loss. In the report last week, GMAC said ResCap may not survive. Loans no longer collecting interest jumped to 22 percent of related receivables from 13 percent a year earlier.

`Substantial Doubt'

``Adverse market conditions have made it difficult for ResCap to maintain adequate capital and liquidity levels,'' the lender said. ``Absent economic support from GMAC, substantial doubt exists regarding ResCap's ability to continue as a going concern.''

GMAC spokeswoman Gina Proia said the company is ``pursuing strategies to increase flexibility and access to liquidity.'' Regarding the Treasury's shift to loosen consumer credit, she said, ``we're encouraged that the government recognizes the constriction in auto finance and the difficulty in making funds available to consumers and businesses.''

GM sold 51 percent of GMAC to a group led by buyout firm Cerberus Capital Management LP in 2006, retaining minority control.

ResCap was the 12th-largest U.S. issuer of subprime mortgages in 2006, according to trade publication Inside Mortgage Finance. After slumping housing prices prompted record foreclosures, GMAC announced plans in September to dismiss 60 percent of ResCap's employees and close all 200 GMAC Mortgage retail offices.

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

Last Updated: November 12, 2008 18:12 EST