During the past year, government originations tumbled as conforming activity increased at GMAC Financial Services. Income from mortgage operations saw a dramatic improvement. The company has virtually eliminated mortgages held-for-investment, and a name change is planned for next week.
First-quarter home loan production was $13.0 billion, earnings data released today indicated. Business tumbled from $17.6 billion three months earlier and edged down from $13.2 billion one year earlier.
Conforming loans represented $9.5 billion of the latest activity, 11 percent lower than the prior period but 11 percent higher than the first-quarter 2009. Government fundings were $3.1 billion, down more than half from the fourth quarter and one-third worse than a year ago. Prime non-conforming closings accounted for another $0.4 billion, up from less than $0.1 billion in the first quarter of last year.
The U.S. servicing portfolio was $349.0 billion on March 31, edging down from $349.8 billion at the end of last year. The portfolio was $385.9 billion 12 months earlier.
After selling $373 million in U.S. and U.K. whole loan pools, held-for-investment mortgages ended March at just $17 million, compared to $461 million on March 31, 2009.
Net income before income taxes for the mortgage operations improved to $0.2 billion from a $4.0 billion fourth-quarter loss and a $1.0 billion first-quarter 2009 loss. The improvement was attributed to “strategic actions taken by GMAC in the fourth quarter of 2009.”
The company said it continues to reduce risk in the mortgage business as it identifies “a viable long-term strategy” for the unit.
Pre-tax income for all of GMAC was an $0.6 billion profit, also a huge improvement from the $4.2 billion loss three months earlier and the $0.5 billion loss one year earlier.
It was the first profitable quarter for New York-based GMAC since the last quarter of 2008.
The report indicated that GMAC Inc. will change its name to Ally Financial Inc. on May 10. The move is a “strategic decision to implement a brand for the long-term where the trademark is company-owned.”
