Ally Financial agreed to pay $2.1 billion to unsecured creditors of the auto-lender's bankrupt mortgage unit, Residential Capital, including securitization trusts suing for losses related to bad mortgages underwritten by ResCap.
ResCap announced last week that it Ally had reached a settlement with major creditors, but did not disclose the details. But today the mortgage lender disclosed in a press release that the terms included a contribution of $2.1 billion to ResCap’s estate. It said this was $1.35 billion more than Ally had agreed to pay in a pre-petition support agreement.
ResCap, based in New York, filed for bankruptcy last year, partly to help it resolve lawsuits brought by purchasers of mortgage bonds backed by home loans. The investors claimed the bonds lost value because many of the loans were bad.
The settlement disclosed today excludes certain securities claims by the Federal Housing Finance Agency and the Federal Deposit Insurance Corp. have made on behalf of failed banks