Ally banking subsidiary sells mortgage unit to Walter

(Reuters) - Ally Financial Inc's banking subsidiary said on Monday it agreed to sell a mortgage unit to Walter Investment Management Corp (WAC.N) as the U.S. auto lender continues to pull back from the home loan business.

Ally Bank said in October that it was selling its business lending operation, which buys mortgages from other lenders and makes loans through brokers. The transaction, which includes 300 employees, is expected to close on February 28.

The companies did not disclose the terms of the deal.

Ally Financial, which is 74 percent owned by the U.S. government after a series of bailouts, is focusing on U.S. auto lending and Internet banking as it works to pay back taxpayers. In May, the lender's Residential Capital mortgage unit filed for bankruptcy, and Ally announced plans to sell its international operations.

Ally Bank also said in October that it was selling collection rights on $122 billion in mortgages. Reuters reported last month that Ocwen Financial Corp (OCN.N) was in the lead to buy the portfolio.

Ally Bank has said it plans to continue making a "modest level" of jumbo and conventional mortgages through third-party lenders.

(Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by Marguerita Choy)