Ally Financial (GJM) swung to a loss in the third quarter as the valuation of its mortgage servicing rights took a heavy cut. The bank reported net loss of $210 million for the quarter. In the same quarter last year, Ally reported a $269 million profit. Revenue totaled $1.4 billion, down roughly 39% from one year ago. The bank also cut the value of its MSR by $471 million in the quarter due to what Ally CEO Michael Carpenter called "a period of extraordinary market turmoil." He added the bank will make significant reductions in correspondent lending originations but relationships will be maintained with key customers. The bank will continue to participate in the consumer and broker lending channels, which are higher margin businesses. Correspondent lending represented roughly 84% of the bank's mortgage originations over the last year. "The combination of MSR volatility in the quarter, reduced margins due to regulatory costs and the impending impact of Basel III has caused us to begin significantly scaling back originations in the mortgage correspondent segment," Carpenter said. "As the mortgage industry changes, the model for mortgage businesses will also change, and we believe a fee-based structure would enable less risk and a greater ability to serve customers." Ally's mortgage origination and servicing department reported a $311 million loss after a $425 million gain one year ago. Originations totaled $16 billion in the quarter, down nearly 22% from last year. The servicing arm of Ally, GMAC Mortgage completed more than 745,000 workouts for borrowers. The overall bank was able to cut its loan loss provision to $49 million, the lowest since the same quarter of last year when it held $9 million in provisions. Ally doesn't report loan loss provisions specifically for GMAC. Expenses totaled $67 million in the quarter in sorting out representation and warranty claims from Fannie Mae, Freddie Mac, and other counterparties through representation and warranty claims, down from more than $378 million one year ago. Write to Jon Prior. Follow him on Twitter @JonAPrior.