* may become bank holding company
* targets significant new capital
* plans large debt swap, to reduce overall debt load
* Moody's downgrades, further rating cuts possible (Adds Moody's downgrade of GMAC)
NEW YORK, Oct 30 (Reuters) - GMAC LLC, the money-losing auto finance and mortgage provider, on Thursday confirmed it was seeking to become a bank holding company, and said it plans to overhaul and slash its debt load, barely four months after completing a $60 billion refinancing package.
The Detroit-based lender said it was in talks with federal regulators about becoming a bank holding company, which would make it easier to participate in U.S. Treasury Secretary Henry Paulson's $250 billion bank recapitalization plan.
On Tuesday, GMAC said it won the right to take part in a U.S. Federal Reserve commercial paper program designed to help unlock credit markets.
Late on Thursday, Moody's Investors Service cut its long-term ratings on GMAC's senior unsecured debt to "Caa1" from "B3" and said it may cut it further due to the exchange offer plan that could heighten the risk for unsecured creditors.
"Moody's believes there is a possibility that GMAC's offering will be a distressed exchange," it said, adding that distressed exchanges can cause debt holders to recognize an economic loss.
A GMAC representative was not immediately available for comment.
GMAC has lost $7.2 billion in the seven quarters ending June 30, hurt by soaring credit losses at its Residential Capital LLC mortgage unit, and more recently by writedowns of leases on sport-utility vehicles that drivers no longer want.
Its credit ratings have fallen deep into junk status, and many analysts have questioned its survival prospects.
Private equity firm Cerberus Capital Management LP [CBS.UL] owns 51 percent of GMAC, while General Motors Corp (GM.N) owns 49 percent.
GMAC's fate is intertwined with a possible merger of GM and Chrysler LLC, also majority-owned by Cerberus.
GM and Cerberus have resolved major issues, but the final form of any merger depends on financing and government support available, people familiar with the talks said on Wednesday.
GMAC said it may raise significant new capital to help it become a bank holding company. To that end, it plans to soon announce details of a private offer to exchange a "significant amount" of its existing debt for a lower amount of new debt.
"The benefits of this type of restructuring would allow us to put additional capital and liquidity resources immediately to work in financing consumers and automotive dealers," GMAC Chief Executive Alvaro de Molina said in a statement.
GM shares fell 10.21 percent to $6.07 Thursday. (Reporting by Jonathan Stempel; Editing by Maureen Bavdek and Lincoln Feast)