The mortgage operations at Ally Financial lost $127 million for the second quarter due to its legacy portfolio, down from profits of $34 million in the first quarter and $230 million for the second quarter 2010.
CEO Michael Carpenter said in a press release that the company, formerly GMAC, 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," Carpenter said. Ally's mortgage business results include ResCap.
The mortgage origination and servicing segment earned $47 million for Ally during the second quarter, compared with $73 million in the first quarter and $249 million one year ago. Mortgage servicing rights valuation adjustments, lower production volume versus one year prior and compressed origination margins all contributed to the reduced income.
However, a $174 million loss attributed to the legacy portfolio, which among other things consists of loans originated prior to Jan. 1, 2009, brought the entire Ally mortgage operation into the red. The company reported 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 in the second quarter 2010.
Ally Financial had net income of $113 million for the second quarter, compared with $565 million one year prior.
