Federal regulators subpoenaed Ally Financial Inc. this month, asking the lender for documents tied to mortgage deals and information related to a Justice Department investigation. Detroit-based Ally, a mortgage and auto lender, said in a Securities and Exchange Commission filing that it made payments of $152 million into a securitization trust during the second quarter to cover any losses related to mortgage insurance rescissions. Ally said mortgage loan rescissions occur when mortgage insurers rescind a mortgage insurance contract after discovering misrepresentations were made during the securitization process. A rescission by a mortgage insurer essentially “triggers our obligation to repurchase the associated loans, or provide loss reimbursement to the securitization trust,” Ally wrote in a public filing. The firm said it expects to record a $100 million charge in the second quarter. In June, the Securities and Exchange Commission asked Ally to submit documents related to some of the bulk settlements it made with loan originators over bad loans packed into securitization trusts. In some of the agreements, Ally said it received compensation in lieu of having the mortgage originators repurchase bad loans. The Justice Department submitted a separate subpoena. Ally describes their filing as “a broad request for documentation and other information in connection with its investigation of potential fraud related to the origination and/or underwriting of mortgage loans.” Write to: Kerri Panchuk.
Regulators subpoena Ally Financial in mortgage probe
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