Bankruptcy Judge Martin Glenn yesterday approved Residential Capital LLC's request to stop funding home-equity lines of credit as the subprime lender looks to preserve value for creditors, Dow Jones Newswires reported. The approval gives ResCap, a subsidiary of government-owned auto lender Ally Financial Inc., the green light to begin notifying borrowers it will no longer honor their draw requests under existing home-equity lines of credit, according to Judge Glenn's order. ResCap "must consider the possibility that borrowers will seek to draw on available lines rather than seek new lines from another lender," the company said in a May 14 motion. "The debtors cannot risk borrowers drawing on the maximum availability, which currently exceeds $2 billion."
