The Detroit, Mich.-based Ally Financial is exiting the mortgage origination business, as first reported by The Charlotte Observer. The holding company and financial services provider offers mortgage lending services through its digital-only banking subsidiary, Ally Bank.
Ally Financial was known as GMAC until 2010. A spokesperson for Ally Financial, Peter Gilchrist, told NMP in a statement that employees had been notified on Tuesday. Gilchrist said the company will cease originations in the first quarter and "gradually run-off our remaining assets."
In an effort to "right-size" the company, Gilchrist said Ally Financial is "making the tough, yet necessary, decisions to guide our business into the future," which includes a heightened focus "on our strengths and our highest-returning businesses."
Ally Financial’s third-quarter 2024 earnings statement showed pre-tax income from mortgage finance-related operations as flat from the second quarter at $27 million, up only $1 million from the year prior.
Gilchrist added that they would "selectively reduce our workforce in some areas," impacting less than 5% of its approximately 11,000-person workforce, "while continuing to hire in our other areas of our business" as it looks for "strategic alternatives for our credit card business in the first quarter of this year.”
The company reported $256 million in direct-to-consumer (DTC) originations in the third quarter, $261 million in the second quarter, and $233 million in the first quarter, with existing deposit customers comprising more than 70% of its DTC production volumes in all three quarters.
"We are deeply committed to supporting those affected," Gilchrist said, "and are offering a robust severance package and career out-placement support, and those impacted will have the opportunity to apply for openings."
