Now that Residential Capital Corp. (ResCap) has auctioned off its $374 billion of servicing contracts, it’s Ally Bank’s turn to unload its MSRs.
In total, $122 billion of mortgage servicing rights are up for grabs.
According to a statement put out by the government-controlled bank, Ally has “launched a process to explore strategic alternatives for its agency mortgage servicing rights (MSR) portfolio and its business lending operations.”
“Strategic alternatives” is business-speak for exploring a sale.
At deadline, a spokeswoman for Ally could offer little color on what’s behind the MSR contracts. In a statement, the bank noted that its business lending unit purchases “higher quality mortgages from correspondent lenders and wholesale brokers.
In November 2011, Ally Bank began to reduce its volume of correspondent originations to focus on a smaller group of strategic clients. In July 2012, the Bank announced it would exit the warehouse lending business, which is expected to be completed by year-end.”
One analyst familiar with Ally and ResCap said the $122 billion of MSRs are being subserviced by ResCap.
In a statement Ally CEO Barbara Yastine said, “After careful consideration, the decision was made to explore alternatives for the agency MSR portfolio and the business lending operation as they are no longer strategic activities for the bank. We are focused on exploring the best option for these activities going forward."
The bank’s parent, Ally Financial, is roughly 74% owned by the U.S. Treasury. It hopes to go public some day and is heavily promoting itself as an auto lender.
In other MSR news, Bank of America, which is already an active seller of MSRs, is expected to step up its disposition of servicing-related assets now that the ResCap auction is complete, according to industry advisors and investors involved in the market.
“They’ve been waiting for ResCap to be completed and now that it is, we’ll see more from them – maybe a lot more,” said one investor who spoke on the issue and requested that his name not be published.
As reported by National Mortgage News, BofA was recently out in the market with a $14 billion MSR package dubbed ‘Hollywood.’ The bank declined to comment on that auction and has said little publicly about its disposition plans, though BofA executives in earnings conference calls have admitted they are a seller of servicing rights.
The Hollywood auction is due diligence now, one source saod. Phoenix Capital, Denver, has been BofA’s advisor on the sales and like the bank has not commented about its activities.
In Augus.t the bank had a $7 billion MSR package in the market.