Ally Financial lost $898 million in the second quarter, blaming its troubled (and bankrupt) mortgage banking division, Residential Capital Corp. (ResCap), for its problems.

On an operating basis ResCap lost $1.28 billion compared to a $115 million profit in the first quarter.

Moreover, ResCap funded just $5.9 billion of home mortgages in the second quarter, a 31% dive from the first quarter, a period in which most firms saw originations soar. Compared to the second quarter of 2011, home production plummeted 52% at ResCap.

In a new U.S. Securities and Exchange Commission (SEC) filing, Ally also revealed that Berkshire Hathaway is now the official “stalking house” bidder for ResCap’s legacy mortgage portfolio. Previously, it had been Ally Financial.

Nationstar Mortgage, Lewisville, Texas, a publicly traded nonbank, is interested in certain ResCap assets, including parts of its $372 billion servicing portfolio. Ocwen Financial also has expressed interest in the MSRs.

Ally, a bank holding company, also reported that its total equity fell to $18.4 billion at June 30 compared to $19.7 billion at March 31.

Ally is 73% owned by the U.S. Treasury Department.

In a statement Ally CEO Michael Carpenter said, “The ResCap Chapter 11 case continues to move forward, and plans to pursue alternatives for Ally’s international operations are underway.”

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