Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Housing News

Ally Financial cuts the cord on mortgage lending

Ally Financial announced in 2011 they would be ceasing mortgage operations and the final nail in that coffin has come. Now, the company will focus on retail operations as they pay back billions in taxpayer dollars.

Ally Financial pulls out of mortgage lending

Ally Financial, Inc. has announced that its broker-dealer subsidiary, Ally Securities will bow out of mortgage-related activities as it continues their strategy of reducing noncore businesses and focusing on retail lending as they stated they would do back in 2011. The company said in a statement that they would be winding down the operation “in an orderly manner over the coming weeks.”

Ally is 74 percent owned by the U.S. government, having accepted over $17 billion in bailout funds during the mortgage meltdown, and is expected to pay back $134 million to the U.S. Department of the Treasury in short order, as they make their mortgage services exit.

The bank has paid back $5.5 billion since February of 2009, owing roughly $12 billion to the government, thus taxpayers. Ally is expected to put it subsidiary, Residential Capital (ResCap) mortgage into bankruptcy after supporting ResCap with financial support through forgiveness of intercompany debt which is not expected to continue.

According to the Wall Street Journal, ResCap faces maturity deadlines on two senior credit facilities that Ally provides it on Friday, and Standard & Poor’s has expressed uncertainty over whether Ally will extend the maturities as a reason for downgrading ResCap’s ratings in February.

Advertisement. Scroll to continue reading.

In a regulatory filing, Ally said it has reached an agreement with the majority of its stockholders to waive the provision in their bylaws that requires stockholder approval for transactions over $5 million which has now been reset to $25 million.

Ally’s cutting their broker-dealer mortgage activities affects 33 employees which may be offered positions elsewhere in the company.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

7 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

Business News

(FINANCE) An anti-trust lawsuit against major players in the residential real estate industry sheds light on misinformation and misunderstandings about commissions - when you're...

Business Marketing

(MARKETING) Opcity is the Austin startup making big changes to the ways that lead generation happens in real estate.

Business News

(REAL ESTATE NEWS) NAR CEO Dale Stinton is set to retire after his successor is named. Stinton is known for his steady leadership and...

Austin

When looking to buy a home, taking the long view is important before making such a huge investment - where are the best places...

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.