Ally Bank looks to move away from mortgages
MIDVALE, Utah -- Ally Bank, wanting to focus on auto lending and consumer deposits, is trying to take another step away from the mortgage industry.
The banking unit of Ally Financial Inc., the former financing arm of General Motors, said Friday that it's exploring options for the bulk of its remaining mortgage business, its agency mortgage servicing portfolio and a business lending operation.
The agency mortgage servicing rights portfolio has $122 billion in mortgage loans. The lending unit buys mortgages from lenders and brokers. The company has been cutting back that business since November. It's also exiting another type of mortgage lending, which it expects to be completed by the end of the year. Ally Bank said it will continue to originate a "modest" level of high-quality residential jumbo mortgages.
The mortgage business has been problematic for Ally Financial since it was part of GM and called GMAC Financial Services. It received a $17.2 billion government bailout after the banking and auto downturn in 2008. It has paid back $5.5 billion so far, but is still 74 percent owned by the U.S. government.
Separately, Ally Financial's mortgage lending and servicing subsidiary, Residential Capital LLC, filed for bankruptcy protection in May. Earlier this week, the company's board gave preliminary approval to a $3 billion buyout offer from Ocwen Financial Corp. Meanwhile, Warren Buffett's Berkshire Hathaway Inc. won the auction for ResCap's loan portfolio with a $1.5 billion bid. A bankruptcy judge must approve the deals.
Ally has ramped up its direct banking business, offering consumers low-cost, online-only accounts. But it remains primarily an auto finance company. It is also in the midst of selling off its international operations to help it pay back the government.