The WSJ [sub] reports that $3.5 billion of GMAC’s nearly $4 billion in second quarter losses are the result of one-time reincorporation costs, however a significant government investment also helped hide the losses. And is leading GMAC towards full-on nationalization. Per the WSJ‘s report:

The Treasury Department said in May it would swap $884 million of its existing $5 billion preferred-stock investment for common stock, giving the U.S. government a 35.4% equity stake in the lender. This stake could increase to more than 50% if GMAC, amid potential mounting losses and meager capital levels, converted the government’s investments into common equity.

The loss also comes despite GMAC’s floating of $3.5 billion in bonds backed by the FDIC’s Temporary Liquidity Guarantee Program. “As long as they can keep the federal government’s support in place, they’ll be in fine shape,” one bond-rater tells Bloomberg. “They’re a ward of the state.”

GMAC’s one-time expenses include:

• $1.2 billion tax charge related to the incorporation of GMAC;

• $1.6 billion loss on the disposition of international mortgage assets and provision, impairments, and reserves on domestic non-Bank mortgage assets;

• $607 million goodwill impairment of GMAC’s U.S. consumer property and casualty insurance business related to a strategic review of the operation; and

• $105 million of additional provision on resort finance assets.

Otherwise, GMAC’s global auto financing business saw a net loss of $727 million, although pre-tax auto financing revenue was $346 million. GMAC’s credit losses edged up to 2.24 percent, while delinquencies rose to 3.44 percent. But GMAC’s mortgage business is what’s really doing the lender in, racking up $2 billion in pre-tax losses.