Driven by strong refinance activity, quarterly home-loan production jumped by more than a third at Ally Financial Inc. — though year-over-year activity was down by nearly half as a result of lost correspondent business. Mortgage and corporate income significantly strengthened.
Residential loan originations were $8.2 billion during the three months ended Sept. 30, according to third-quarter earnings data released Friday.
Business improved from $5.9 billion in the prior period but tumbled from $15.6 billion during the same quarter during 2011.
“The decrease in loan production year-over-year was largely driven by the company’s strategic decision to reduce its presence in the correspondent lending channel,” the report stated. “Additionally, Ally Bank announced it was exiting the warehouse lending business in July as it had become less strategic to the business, which in part affected production levels.”
The latest activity brought year-to-date production to $22.7 billion.
Prime conforming originations accounted for $7.3 billion of third-quarter fundings, while prime non-conforming production was $0.5 billion and government volume totaled $0.3 billion. Refinance share was a whopping 82 percent.
Ally’s mortgage servicing rights portfolio finished September at $123 billion.
The net carrying value of the mortgage investment portfolio was $9.3 billion, the same as on June 30 and on Sept. 30, 2011.
Third-quarter 30-day delinquency was unchanged from the second quarter at 3.2 percent. The rate was 3.3 percent at the same point last year.
Outstanding repurchase claims increased to $98 million from $82 million in the second quarter. The deterioration reflected $113 million in new claims, $36 million in rescinded claims and $61 million in paid claims.
The mortgage operations, excluding ResCap, generated $354 million in earnings, better than the $24 million earned three months earlier and swinging from a $409 million loss a year earlier.
“Also in October, Ally Bank announced it began a process to evaluate strategic alternatives for its agency MSR portfolio and mortgage business lending operation, which is another step in its plan to effectively exit the agency mortgage business,” Michael A. Carpenter, chief executive officer of the Detroit-based company, said in the report. “The steps we are taking, coupled with the strength of the underlying auto finance and direct banking franchises, will support Ally’s plan to repay the remaining U.S. Treasury investment and thrive going forward.”
Company-wide pre-tax income swung to a $559 million profit from the second-quarter loss of $753 million. Ally earned $119 million in the same period last year.
Government ownership of Ally stands at 74 percent.
