Mortgage banker Residential Capital Corp. (ResCap) — whose parent recently completed a huge debt swap with bond holders — continued to bleed red ink in the fourth quarter, posting another huge loss as both its loan fundings and servicing rights suffered.

ResCap, which late last year closed its wholesale channel, funded $8.5 billion in home mortgages in the fourth quarter, a 59% decline from the fourth quarter of 2007. Its servicing portfolio fell to $393.8 billion at year-end 2008 from $453.3 a year earlier.

Moreover, its non-accrual rate spiked to 23.93% at December 31, compared to 12.13% twelve months earlier.

ResCap, a subsidiary of GMAC Financial Services, lost $981 million in the fourth quarter and $5.6 billion for the year.

The loss comes despite the fact that it posted a $754 million gain on a debt swap with bondholders. GMAC, on the other hand, earned $7.46 billion in the fourth quarter thanks to proceeds from its debt swap, which extinguished billions of dollars in liabilities.

GMAC said that overall the debt swap improved its results by a stunning $11.4 billion. GMAC, partly owned by General Motors and hedge fund giant Cerberus Capital, recently received $5 billion in government TARP money.

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