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A word of advice for U.S. taxpayers looking to recover their $12.5 billion investment in GMAC Inc.: Don't hold your breath.

For GMAC, the continuing torrent of red ink at its battered mortgage unit means more funds will likely have to be deployed to cushion against future losses. These funds could otherwise have been used by GMAC to increase its diminished lending business and return to profitability, which, in turn, would put the company on the path to repaying federal funds.

In fact, the government may have to plow billions more into GMAC as it nears a Nov. 9 deadline to raise capital in accordance with the government-conducted stress tests earlier this year.

"It is questionable whether taxpayers will get a full return of their GMAC investment," said Mark Wasden, an analyst at Moody's Investors Service.

While some of the government's bailout investments have turned a profit - as well as preventing a collapse of the financial system - others are much more questionable. More than 30 banks aren't paying dividends on their government-owned preferred stock, for instance, and American International Group Inc. (AIG) will likely struggle to repay its government bailout.

But GMAC is in a special position as a company that may get more help than it can repay. The auto lender is vital to federal efforts to resuscitate ailing auto makers General Motors Co. (GM) and Chrysler Group LLC. GMAC provides loans to auto dealers that use the funds to stockpile their inventory of new vehicles. It also lends to consumers buying these vehicles.

"We have taken a series of actions to strengthen the business and will continue to take necessary steps to improve the performance of the company," said Gina Proia, a GMAC spokeswoman. "GMAC fully intends to repay the TARP investment over time and has made all scheduled dividend payments since accepting the funds."

GMAC was granted bank holding company status in December. This status gave it access to the Treasury Department's Troubled Asset Relief Program, or TARP, and also access to federal programs aimed at helping financial companies raise cheap debt in a frozen credit market.

The Treasury said in May it would swap $884 million of its existing preferred-stock investment in GMAC 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, further converted the government's investments into common equity.

Despite the help from taxpayers, GMAC is struggling to return to profitability as it takes hit after hit on its mortgage unit, Residential Capital LLC. ResCap, one of the largest lenders to borrowers with shaky credit, is still reeling from its souring mortgages.

ResCap reported a loss of $841 million for the second quarter, its 11th consecutive quarterly loss. But excluding gains stemming from its debt being forgiven by GMAC, ResCap's loss totaled $1.7 billion. In the same quarter, GMAC's credit loss provisions jumped 50% from a year earlier to $1.16 billion.

For 2008 and 2007, ResCap's net loss totaled a staggering $9.9 billion. GMAC also plowed in $6 billion of capital, which included forgiving ResCap debt, during those two years. Propping its mortgage unit delays GMAC's return to profitability, which, in turn, renders uncertain the lender's ability to repay federal funds.

In addition, GMAC has to raise $5.6 billion by Nov. 9 to satisfy the requirements of the government-conducted stress tests earlier this year. GMAC could raise this capital by issuing new equity, divesting its businesses or asking for additional federal help.

"If GMAC wants to raise outside capital, it will have to be profitable," said Christopher Wolfe, an analyst at Fitch Ratings. It "can't get there overnight."

Also, the extent of the government's investments could discourage external investors from helping with the capital raising.

"The [Federal Reserve] has helped us a great deal already," Robert Hull, GMAC's chief financial officer, said in an interview in August. "If and when the time comes where we need more capital, we will explore a variety of avenues, including the Fed."

-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729; aparajita.saha-bubna@dowjones.com