Ally’s Mortgage Business Now In ‘Rearview Mirror,’ Says CEO

Posted by Patrick Barnard on November 06, 2013 No Comments
Categories : Required Reading

Ally Financial Inc., one of the largest U.S. lenders, has closed the book on its mortgage business, Bloomberg News reports.

Jeff Brown, senior executive vice president for finance, told investors during a conference call on Wednesday that the bank's pipeline of pending mortgages now stands at zero, according to the report.

Michael Carpenter, CEO of Ally (formerly GMAC), added that the bank's mortgage business – which drove it to the brink of collapse – is now in its ‘rearview mirror.’

Since late 2008, Ally Financial has been majority-owned by the U.S. government, following a partial bailout in response to concerns over the bank's stability.

Ally, which is now focused almost entirely on auto loans, no longer offers or services home loans. It is one of 18 financial institutions sued by the Federal Housing Finance Agency (FHFA) in 2011 as part of the fallout from the financial crisis.

Last month, the bank agreed to pay about $170 million to the FHFA in order to settle allegations that it made misstatements on more than $6 billion in mortgage-backed securities (MBS) between 2005 and 2007. Ally also agreed to pay $55.3 million to resolve similar claims from the Federal Deposit Insurance Corp.

‘These settlements are key steps in Ally addressing its remaining legacy mortgage risks,’ Carpenter said in a statement.

Exact terms of the settlements were not divulged.

Meanwhile, Ally's former mortgage unit, ResCap, is under Chapter 11 bankruptcy protection in New York, with a hearing slated for Nov. 19 on its bankruptcy exit plan.

Last month, ResCap reached a settlement with the National Credit Union Administration (NCUA), also over alleged misstatements regarding MBS. The NCUA was seeking more than $290 million but received an allowed claim of $78 million, according to a Reuters report.

Meanwhile, Ally has been working toward repaying its taxpayer bailout obligation.

Register here to receive our Latest Headlines email newsletter




Leave a Comment