Ally Contemplating Bankruptcy for Residential Unit?

Ally Financial Inc. is actively considering putting its ailing Residential Capital Corp. mortgage lending unit into bankruptcy, according to a report from Dow Jones.

Dow, quoting sources “familiar with the situation” said Ally is being advised by Kirkland Ellis and Evercore on a possible restructuring of ResCap.

At press time, a spokeswoman for Ally called the Dow report “highly speculative,” adding that “we don’t engage in commenting on speculation.”

Rumors about a possible bankruptcy for ResCap — the nation’s fourth largest residential lender and fifth largest servicer — first surfaced last week when during a conference call, Ally CEO Michael Carpenter said, “While Ally has, and continues to be supportive of ResCap that should not be interpreted to mean there is a blank check from the parent.”

Ally had hoped to take ResCap public this year, but scuttled such plans in the spring.

Mortgage industry officials that have been in meetings with Carpenter have described him as not being very fond of the residential business.

Ally, as a whole, lost $210 million in 3Q because of a large writedown on its mortgage servicing rights. It recently trimmed its correspondent lending division but maintains that it is committed to the channel as well as retail and wholesale lending.

The U.S. Treasury is a majority owner of Ally Financial

Daily Briefing | Friday, November 11, 2011

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Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_472/ally_contemplating_bankruptcy-1027386-1.html

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