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Ally Struggles With Mortgage Ops

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Losses from mortgage operations took a big bite out of Ally Financial Inc.’s earnings. Still, the lender managed to increase quarterly originations and keep delinquency from rising.

Fourth-quarter mortgage production came in at $16.5 billion, according to earnings data released Thursday by the New York-based company. Volume climbed from $15.6 billion reported for the third quarter but tumbled from $23.2 billion in the same period a year earlier.

The most recent activity included $13.7 billion in prime conforming business, $0.5 billion in jumbo mortgages and $2.3 billion in government loans.

Full-year 2011 originations totaled $56.2 billion, weaker than the $69.5 billion closed during 2010.

The primary servicing portfolio slipped to $351 billion from $355 billion as of Sept. 30 and $356 billion as of Dec. 31, 2010. Around 95 percent of the portfolio is serviced for investors.

In its third-quarter 2011 10-Q filing with the Securities and Exchange Commission, Ally reported that around $6 billion of its servicing portfolio was outside the United States. That put the Dec. 31 mortgage servicing portfolio at around $345 billion.

Mortgage assets held for investment finished last year at $9.3 billion, the same as three months earlier but lower than $9.5 billion a year earlier.

Delinquency of at least 30 days was unchanged from Sept. 30 at 3.3 percent and was lower than 3.9 percent at the end of 2010.

Commercial mortgage assets climbed to $1.925 billion from $1.642 billion and were $1.660 billion in the fourth-quarter 2010.

Net repurchase expense was $51 million, dropping from the third quarter’s $75 million and plummeting from $515 million in the final quarter of 2010. Outstanding repurchase claims, meanwhile, eased to $1.069 billion from $1.090 billion but grew from a year prior when the balance was $0.919 billion.

The mortgage operations took a $237 million hit before taxes in the final three months of last year. But that was an improvement from the $292 million loss suffered in the third quarter. Income swung from a $173 million profit in the fourth-quarter 2010.

For the full year earnings at the mortgage unit swung to a $391 million loss from a $920 million profit.

Residential Capital LLC’s tangible net worth fell below $250 million as of Dec. 31, 2011, triggering a covenant breach for ResCap’s credit facilities despite that Ally immediately made a $197 million capital contribution through debt forgiveness that remedied the breach. ResCap is seeking — and expects to receive — waivers from its lenders.

The auto finance giant reported a company-wide fourth-quarter loss before taxes of $24 million, deteriorating from the third quarter’s $119 million profit and a profit of $526 million in the fourth-quarter 2010.

“The fourth quarter of 2011 was impacted by a $270 million charge for penalties expected to be imposed by certain regulators and other governmental agencies in connection with foreclosure-related matters,” Ally said.

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