Ally Financial said Tuesday that it has settled all claims with its subprime mortgage unit Residential Capital and between all third parties and ResCap excluding securities claims brought by the Federal Housing Finance Agency and the Federal Deposit Insurance Corp.
The settlement amount will not be disclosed until next week when debtors approve the agreement, which also must be approved by the bankruptcy court. The plan releases Ally from any claims that could be brought by ResCap, including all representation and warranty claims. The $182 billion-asset Ally said in a press release that the “economic consideration payable by Ally is not subject to further negotiation.”
The former lending arm of General Motors has tried to move forward with its auto finance business while struggling to contain the costs for subprime mortgage lender ResCap, which filed for bankruptcy protection exactly one year ago.
"This agreement is a seminal moment for Ally," Michael Carpenter, Ally’s chief executive, said in a press release. "We are pleased to have reached a consensual and comprehensive agreement that enables the company to put the issues related to the mortgage industry behind us.”
In March, Ally sold ResCap’s origination and servicing rights for roughly $3 billion to the tandem of Ocwen Financial and Walter Investment Management Corp., which beat out rival Nationstar Mortgage.
Ally is 74% owned by the U.S. Treasury.
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