Ally Financial swings to a profit in 3Q 2010
Ally Financial (Ally) earned $269 million for the third quarter of 2010, compared to a net loss of $767 million for the third quarter of 2009, as the financial institution continued its cost-cutting efforts. Revenue for the quarter was $2.05 billion, compared to $1.99 billion in the year-ago period. "The third quarter demonstrated continued positive momentum for Ally with all four operating segments recording profitable results," said Ally CEO Michael A. Carpenter. "We have made substantial progress toward our strategic objectives, including … reducing balance sheet risk in the legacy mortgage business," Carpenter said. During the third quarter, Ally's indirect subsidiary, GMAC Mortgage, temporarily suspended evictions and foreclosure sales in 23 states while it reviewed foreclosures after the robo-signing scandal came to light in which affidavits were being filed without proper review. To date, 9,523 files have been reviewed and where necessary, re-executed. When deemed appropriate, foreclosures for those select cases continues to move forward, Ally said. Less than 15,500 additional files will be reviewed and when needed, remediated with the majority completed over the next few months. The company said it hasn’t found any evidence of inappropriate foreclosures in the review. GMAC Mortgage also is conducting an independent review of its foreclosure policies and practices to ensure that the company is in accordance with appropriate standards for each state. Also, in October, GMAC Mortgage began conducting an additional quality assurance review of any case going to foreclosure sale in all 50 states. The nation’s fifth largest mortgage loan originator and servicer also reported the following highlights: * Residential Capital, or ResCap, completed the sales of its European mortgage assets and operations, including a combination of approximately $11 billion of securitized loans, other loan assets (including nonperforming loans) and servicing rights, and the shares of the related operating entities in the U.K., Germany and the Netherlands. * Sold legacy mortgage assets totaling approximately $1.9 billion of unpaid principal balance to date in 2010, at a gain. * Sold the Resort Finance portfolio, which had an unpaid principal balance of approximately $1 billion, at a gain. Overall, the mortgage segment reported pre-tax income from continuing operations of $154 million during the third quarter of 2010, versus a pre-tax loss from continuing operations of $652 million in the comparable period last year. Resulsts were driven by strong production and margins; servicing fees; favorable servicing valuation, among other factors. For the third quarter of 2010, the company increased its reserve for mortgage repurchases to $1.1 billion, which resulted in a $344 million pre-tax expense. Write to Kerry Curry.