Ally Financial income falls 80% on higher mortgage buyback costs
Ally Financial Inc.'s (GJM) second-quarter income fell 80% from a year earlier, as increased mortgage repurchases hurt results. The company earned $113 million for the three months ended June 30, down from $565 million a year earlier. Ally reported a second-quarter loss of $174 million from its legacy portfolio and other mortgage operations, wider than a loss of $19 million a year ago. The company attributed the loss to mortgage repurchase costs of $184 million that were offset somewhat by a lower loan loss provision from stabilizing delinquencies. Overall, the mortgage unit posted a loss of $127 million for the quarter, down from income of $230 million a year ago. "We continue to be vigilant in evaluating risks related to our mortgage business and addressing them appropriately," CEO Michael Carpenter said. "As a result, we took some 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," he added. Ally said payments made to trusts in connection with rescinded mortgage insurance on securitized assets led to the higher repurchase expense. The company, which extends car and home loans, earned $703 million in its global automotive services unit, down from income of $795 million for the year-earlier second quarter. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.