The disastrous adventure into the subprime mortgage business is still plaguing the General Electric Company (NYSE:GE) even after a decade. The company has closed the subprime mortgage business WMC in the year 2007 after the lending to the risky investors. It is still facing the lawsuits filed by the investors. The justice department has also ordered an investigation for its WMC Mortgage Unit and GE Capital violating the US law with respect to the subprime mortgages.

According to GE, WMC may file for bankruptcy if it fails to win the lawsuits. It is the first time that GE has come out with an indication to proceed with bankruptcy filing for its failed mortgage business. At the time of takeover in 2004, WMC was the 6th largest subprime lender in the US.

WMC has witnessed foreclosures of over 10,000 during 2005 and 2007. During the foreclosure of the subprime business, it has caused huge loss to the investors.

According to the investors claim, WMC failed to judge the quality of the mortgages. As a result, investors of WMC suffered huge losses in terms of several billion. According to demand of investors should get back those mortgages.

The successor of the Law Debenture Trust of New York, TMI Trust Company (TMI) has suffered a loss of over $400 million on WMC mortgage loans amounting to $800 million. The final closing for arguments in this case is scheduled on June 12, 2018. According to GE, if it fails to win the case, proceedings for bankruptcy filing will be initiated.

Such instances are galore against the WMC and probably more than its assets. However, the troubles will not be over for GE despite WMC filing for bankruptcy.

GE has earmarked $1.5 million to pay for the damages caused due to an investigation ordered by the Justice Department. The company is actively pursuing the settlements.

It is an indication that the loses GE on account of WMC bankruptcy and a number of pending lawsuits will continue to rise. The losses of WMC is estimated to be around $500 million over and above its reserves.

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