Ally Bank has started to explore strategic alternatives for its business lending operations and its servicing rights on agency mortgages.
The decision was made because the agency-MSR portfolio and lending unit "are no longer strategic activities for the bank," Barbara Yastine, the chief executive of Ally Bank, said in a news release Friday.
The agency-MSR portfolio had an unpaid principal balance of roughly $122 billion in the third quarter, said Ally Bank, the direct banking unit of Ally Financial.
The business lending unit purchases higher quality mortgages from correspondent lenders and wholesale brokers. In November, Ally Bank began reducing its volume of correspondent originations to focus on a smaller group of strategic clients. The bank said in July it would exit the warehouse lending business; that move is expected to be completed by the end of the year.
Ally Bank will continue to originate a modest level of high-quality residential jumbo mortgages for its own portfolio through correspondent and wholesale brokers, it said.
Ally Financial, which is 74% owned by the Treasury Department, has been selling some of its operations in an effort to narrow its focus, strengthen its capital and repay the government. The company has agreed to sell its Canadian auto finance operation to the Royal Bank of Canada (RBC) for $4.1 billion. Ally Financial also said it would sell its Mexican insurance business to Ace Limited (ACE) for $865 million in cash.
Ocwen Financial won a $3 billion bankruptcy auction for Residential Capital's loan-servicing unit. Ally Financial had allowed ResCap, its subprime mortgage unit, to file for bankruptcy in May.