GMAC Financial Services was one of only three major mortgage lenders to report an increase in quarterly mortgage production. But just as originations rose, so did losses.
U.S. mortgage originations were $17.6 billion during the fourth quarter, according to earnings data released today. Volume increased from the prior quarter’s $15.4 billion and more than doubled from $8.2 billion the prior year.
Mortgage operations include activity from Ally Bank, Residential Capital LLC and ResMor Trust.
The latest quarter included $10.7 billion in prime-conforming loans, $0.3 billion in prime non-conforming mortgages and $6.7 billion in government activity.
Full-year fundings climbed to $64.7 billion from 2008’s $55.1 billion.
The U.S. mortgage servicing portfolio declined to $349.8 billion from $353.3 billion on Sept. 30, 2009, and $365.0 billion on Dec. 31, 2008.
Pre-tax losses from mortgage operations were $4.0 billion, worsening from an $0.7 billion third-quarter loss and an $0.8 billion fourth-quarter 2008 loss.
“Strategic mortgage actions” negatively impacted fourth-quarter income by $3.3 billion. Those actions included marking down the value of mortgage holdings by $2.6 billion as they were moved from held-for-investment to held-for-sale. In addition, the company had $0.6 billion in mortgage repurchase reserve expense.
GMAC Chief Executive Officer Michael A. Carpenter noted in the report that major restructuring actions were implemented “to minimize risk related to the legacy mortgage business.”
Company-wide, GMAC had a $4.5 billion loss from continuing operations before taxes, deteriorating substantially from the $0.8 billion third-quarter net loss and a $7.6 billion profit in the fourth-quarter 2008.
Full-year pre-tax losses were a $7.9 billion loss, substantially deteriorating from the $3.4 billion profit earned in 2008.
Among GMAC’s upcoming strategic objectives is the exploration of “strategic alternatives to maximize value of mortgage operations and further limit risk.”
