With the economic panic currently gone, you’d like to believe bailout loans now require a demonstrated need for the additional cash, not just a checking account. The administration needs some assurance that the applicant in question is operating as a unified organization with a sound business model that simply needs a few billion (more) to get them free and clear of their troubled past. Words come cheap so you better be able to point to something specific that shows your organization is operating as one in this fight. Luckily for GMAC, now they’ve got one.

GMAC’s UK subprime mortgage lender, GMAC-RFC, is doing its part to demonstrate a clear funding need by racking up over £10m in fines and damages for mistreating its customers. The unit has embarked on a comprehensive four point plan designed to tilt the scales in favor of GMAC’s $5.6 billion request.

The (FSA) said GMAC had been guilty of “serious failings” including:
• Excessive and unfair charges for customers that did not reflect administration costs.
• Proposing repayment plans that did not always consider a customer’s individual circumstances.
• Inadequate training of mortgage servicing staff in the handling of arrears and repossessions.
• Issuing repossession proceedings before fully considering the alternatives.

This sounds promising but you really need some numbers to make the case your plan is working.

The FSA also published figures today which showed that complaints about arrears handling increased by 41% to 39,181 in the first six months of this year compared to the second half of last year. Complaints about misleading advice rose by 19% to 207,967.

Time to get the taxpayer checkbook out.
GMAC fined £2.8m for ‘mistreating’ mortgage customers [Guardian]