Quarterly mortgage originations leapt by more than half at Ally Financial Inc. as the home-loan business remained profitable. The mortgage servicing portfolio was higher.
Mortgage production shot up to $20.2 billion from the second quarter’s $13.2 billion, according to third-quarter earnings data release by Ally. Volume was also higher than $15.4 billion a year earlier.
Government share of third-quarter business was 23 percent, down from the second quarter’s 28 percent share. Jumbo production fell to $0.364 billion from $0.462 billion.
Production is generated from Residential Capital LLC, Ally Bank and ResMor Trust.
Through Sept. 30, year-to-date residential originations were $33.4 billion.
The home loan servicing portfolio ended September at $352.8 billion, more than $349.1 billion at the end of June. The portfolio wasn’t much different than $353.3 billion at the same time last year.
Sept. 30 mortgage investments included $1.9 billion in prime jumbo mortgages and $7.8 billion in legacy portfolio holdings. The company also had $2.0 billion in warehouse-line assets.
The report indicated that $1.9 billion in legacy mortgage assets have been sold at a gain so far this year. Ally Chief Executive Officer Michael A. Carpenter noted that much progress has been made in reducing balance-sheet risk in the legacy mortgage business.
GMAC Mortgage conducted a review of its foreclosure affidavit process on 9,523 files and re-executed affidavits where needed. During the next few months, another 15,500 files are expected to be reviewed.
Repurchase reserves were raised to $1.1 billion and resulted a $344 million pre-tax charge.
Mortgage operations swung to a $154 million pre-tax profit from the third-quarter 2009’s $652 million loss. Mortgage income fell, however, from $230 million in the second quarter.
Ally said that it completed a strategic review of its mortgage business and has reduced its non-core mortgages holdings. Ongoing operations will concentrate on conforming originations.
“The risk in the mortgage business has been materially reduced from historical levels,” the report stated.
Core pre-tax income of $636 million in the third quarter for all of Ally also swung from a core pre-tax loss of $565 million the prior year and was worse than a the prior quarter’s $738 million profit.
