GMAC Financial Services is expected to get about $3.5 billion of additional U.S. government aid to help the troubled lender absorb mortgage losses, a financial industry source familiar with the matter said on Wednesday.

The money will help shore up the auto loan and mortgage company, which was formerly owned by General Motors, as it wrestles with the worst housing market in decades.

Many analysts see GMAC's mortgage assets, which make up about a third of the company's $178.2 billion balance sheet, as the main obstacle to the company reaching profitability.

One bondholder said that the best route for GMAC to follow now would be to sell off GMAC's mortgage servicing business, which collects payments from borrowers and is worth more than $3 billion on the company's books.

The company could continue to make new home loans through its Ally Bank unit, he said, requesting anonymity because he is not authorized to speak for attribution. GMAC's remaining mortgage assets could be used to pay off coming debt obligations, he added.

GMAC's auto finance operations were profitable in the third quarter, earning about $164 million after taxes, while the mortgage business lost nearly $600 million.

An announcement of a capital infusion is expected within days, the financial industry source said, speaking anonymously because the talks have been private.

GMAC has already received $12.5 billion of aid from the U.S. government since December 2008, representing about half of the bank's equity as of Sept 30.

News of the potential capital infusion lowered the cost of protecting GMAC's debt against default in the credit derivatives market.

GMAC has been speaking to the Treasury about its capital needs for months, after a government stress test found that the former financing unit of General Motors needed about $11.5 billion. The company has been unable to raise private capital.

Treasury spokesman Andrew Williams said: As we stated on November 9, Treasury is in discussions with GMAC to ensure its capital needs as determined last May by the Stress Tests are met.

In November, GMAC Chief Executive Al de Molina resigned and was replaced by Michael Carpenter, a board member and former Citigroup executive.

GMAC said in November that it asked the Treasury to postpone decisions about putting more capital into GMAC until Carpenter and other managers had assessed the company's condition.

The cost to insure GMAC's debt against default in the credit derivatives market fell to around 4.4 percentage points, or $440,000 a year for five years, from 4.66 percentage points at Tuesday's close, according to market data company Markit.

(Reporting by Karey Wutkowski, Additional reporting by Tim Ahmann in Washington, and Dan Wilchins and Karen Brettell in New York; Editing by Derek Caney, Dave Zimmerman and Steve Orlofsky)