The mortgage operations of Ally Financial Inc. had a second-quarter loss of $127 million because of its legacy portfolio, compared with profits of $34 million in the first quarter and $230 million a year earlier.
Ally's chief executive, Michael Carpenter, said in a press release Tuesday that the company took additional repurchase reserves during the second quarter. "Reducing risk in our legacy portfolio has been among our top priorities. This is evidenced by our leading position in loss mitigation efforts and the repurchase settlements reached last year with Fannie Mae and Freddie Mac." Ally's mortgage business results include ResCap.
The mortgage origination and servicing segment earned $47 million for Ally in the second quarter, compared with $73 million in the first quarter and $249 million a year earlier. Mortgage servicing rights valuation adjustments, lower production volume versus one year prior and compressed origination margins all contributed to the income drop.
However, a $174 million loss attributed to the legacy portfolio, which among other things consists of loans originated before Jan. 1, 2009, brought the entire Ally mortgage operation into the red. The company reported a mortgage repurchase expense of $184 million for the period. Total originations at Ally were $12.6 billion, compared with $12.2 billion in the first quarter and $13.6 billion a year earlier. Ally earned $113 million in the second quarter, compared with $565 million a year earlier.
