The residential mortgage division of Ally Financial earned $123 million in the fourth quarter, a slight decline from 3Q but a major improvement over the same period last year when it lost $3.3 billion.
Ally's residential production division reported $24 billion of originations during the quarter, a 20% jump from 3Q, but officials at the firm signaled that applications are slowing.
In an earnings conference call Tuesday morning, the company said it is now reporting its mortgage results in two segments: originations/servicing, and "legacy portfolio," the latter of which reflects loans originated prior to Jan. 1, 2009.
The company also provided additional details about its buyback settlements with Fannie Mae and Freddie Mac and officials talked about the firm's exposure regarding private label repurchases, noting that in the PLS space it plans on "vigorously defending our contractual rights."
Ally, which hopes to go public this year, said that representations and warranties in the PLS sector are not as expansive and detailed as liability language in the GSE deals.
Discussing its repurchase settlement with Fannie, Ally paid $462 million to the GSE in a deal that releases its Residential Capital Corp. unit and subsidiaries from liability related to originations of $292 billion of original unpaid principal balance. (The UPB on this pool of assets now totals $84 billion.)
Ally officials told analysts and reporters on the conference call that unlike settlements struck by other lenders with the GSEs, Ally's deal protects it against all "future" buyback claims on these assets. (Ally is majority owned by the U.S. government.)
The bank and mortgage units of Ally continue to unload its nonperforming mortgage assets in the secondary market. In 4Q Ally/ResCap sold $596 million in NPLs to investors.
According to figures compiled by National Mortgage News and the Quarterly Data Report, ResCap ranks fifth nationwide in both originations and servicing.
