Ally Financial post mortgage unit loss

Ally Financial recently announced its second quarter profit fell 80 percent due to losses in its mortgage unit. While Ally showed strong numbers in car financing, the weak housing market generated a low demand for home loans, Reuters reported.

Ally reported a $113 million profit in the second quarter, down from $565 million a year ago. The lender argued that North American consumers are financing used and leased vehicles at a higher rate in 2011 than in 2010, but new car financing has declined.

According to The Wall Street Journal, Standard and Poor's Investor Services has upgraded the company twice in 2011, indicating the lender is improving ahead of its expected initial public offering.

Ally CEO, Michael Carpenter, said, "We continue to be vigilant in evaluating risks related to our mortgage business and addressing them appropriately. As a result we took some additional repurchase reserves during the second quarter."

Ally Financial's CFO, James Mackey, said the lender had $184 million in repurchase expenses within its mortgage operations in the second quarter, and $150 million of that total was related to payments to trusts resulting from rescinded mortgage insurance on securitized assets, Dow Jones reported.  

More News