UPDATE 1-Ally to sell remaining mortgage servicing rights for $280 mln

Thu Mar 21, 2013 10:18am EDT

March 21 (Reuters) - Auto lender Ally Financial Inc's banking unit said it would sell its remaining mortgage servicing rights portfolio to online lender Quicken Loans Inc for about $280 million.

Ally, which is 74 percent-owned by the U.S. government after a series of bailouts, has been exiting the mortgage business as part of a plan to focus on auto lending and Internet banking.

Detroit-based Quicken is buying collection rights on $34 billion of non-delinquent Freddie Mac and Fannie Mae mortgages. Quicken, which has a $90 billion mortgage servicing portfolio, said it would become a top-10 servicer after the purchase.

The transaction is expected to close in the second quarter and is subject to approvals from Fannie Mae and Freddie Mac.

Earlier this month, Ally, the former lending arm of General Motors, said it was selling about $90 billion of mortgage servicing rights (MSR) to Ocwen Financial Corp.

Ally, also based in Detroit, will have no further MSR assets once it closes the transactions with Ocwen and Quicken.

Ally received $17.2 billion in bailouts during the financial crisis after losses ballooned in its subprime mortgage portfolio. It says it has paid back $5.9 billion, including dividends.

The lender's Residential Capital mortgage unit filed for bankruptcy in May 2012, and Ally has been selling international operations in a bid to speed up repayment to taxpayers.

The U.S. Federal Reserve this month singled out Ally as the weakest of 18 banks in an annual stress test meant to show how they would fare in a severe economic downturn. [ID: nL1N0C0AMK]

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