Posted on Tuesday, January 4, 2011
Ally Financial said Monday that it would pay $462 million to settle buyback claims on $292 billion in home loans it sold to Fannie Mae before the industry tightened underwriting standards in the wake of the financial crisis.
GMAC Mortgage, which is part of Ally’s Residential Capital unit, originates and services loans then sells them to the government-sponsored mortgage companies Fannie Mae and Freddie Mac. As part of their repurchasing deals, Fannie and Freddie have the option to challenge Ally’s underwriting standards. If successful, they could have required Ally to buy back the loans in question.
The settlement covers loans that GMAC serviced for Fannie Mae before June 30 and all mortgage-backed securities that Fannie Mae bought from the company. The $462 million is slightly more than the reserves that Ally had set aside to cover a potential deal.
By THE ASSOCIATED PRESS