Ally gets Subpoenas from U.S. Investigators on Mortgage Loans

Ally, previously GMAC, got $17.2 Billion in bailouts. They packaged loans sold to pools/trusts that posted a 2Nd quarter loss of $100 million. (by Joe Vera)

Ally gets subpoenas from U.S. investigators on mortgage loansBradley Keoun and Donal Griffin/ Bloomberg News
Ally Financial Inc., the auto and home lender that got a $17.2 billion bailout, said it received subpoenas from the U.S. Department of Justice and the Securities and Exchange Commission relating to how it handled home loans.

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The Justice Department is seeking information for an investigation of potential fraud related to “the origination and/or underwriting of mortgage loans,” Ally said today in a filing. The SEC subpoena is in connection with mortgages placed in securitization trusts, the Detroit-based lender said. The subpoenas were received this month, the company said.
Ally, 74 percent owned by the U.S. Treasury Department also said it will record a second-quarter cost of about $100 million to cover losses suffered by trusts that bought its mortgages. A separate April settlement with federal regulators investigating shoddy mortgage practices will also cost between $30 million and $40 million each year through 2013, according to the filing.
Ally, run by former Citigroup Inc. executive Michael Carpenter, is among the five largest U.S. mortgage originators and servicers.
“We are working closely with the Department of Justice and the SEC to deliver the requested information within the required timeframes,” Gina Proia, a spokeswoman for Ally, said in an e- mailed statement.
The disclosures were in an update to the prospectus, initially filed in March, for the company’s planned public share offering. The share sale has been delayed until equity markets improve, a person familiar with the plans said earlier this month.

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The $100 million cost will help cover losses on insured mortgages where guarantors later canceled the policies because “they believe certain loan underwriting requirements have not been met,” according to the filing. The mortgages had been sold to trusts, which packaged them into securities to sell to bond investors.

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“These payments resulted from a review of securitized mortgages as to which mortgage insurance was rescinded, although no claims have been made against us to date with respect to these mortgages,” Ally said in the filing. Proia said the firm doesn’t expect further charges related to the matter.
The majority of costs linked to Ally’s settlement with federal regulators in April are for “additional servicing, vendor management, legal, compliance, and internal audit personnel,” the firm said in the filing.
State attorneys-general are conducting a nationwide probe into allegations that the largest U.S. loan servicers used sloppy documentation during home seizures.
“We continue to cooperate with the ongoing investigations of various regulators,” Ally said. “Any additional results of these investigations are uncertain, but we expect that Ally or its subsidiaries will become subject to additional penalties, sanctions, or other adverse actions, including monetary fines, that could be substantial and have a material adverse impact on us.”

From The Detroit News: http://detnews.com/article/20110629/BIZ/106290392/Ally-gets-subpoenas-from-U.S.-investigators-on-mortgage-loans#ixzz1QgQzRDWZ