Well, 2025 is off to a rocky start as one of the world’s biggest lenders says it’s over.
Ally Financial is reportedly made entirely of mortgages, according to a statement from their spokesman Peter Gilchrist.
He told the Charlotte Observer that the company plans to exit the mortgage business in the first half of the year.
As a result, the company will see “less than 5% of its workforce” affected by layoffs.
Apparently they will “right size” the company, cutting staff in some areas (like mortgages) but hiring in others.
Ally Financial Exits Mortgage Business
Despite being in the mortgage business under the Ally Financial name for just over a decade, they are clearly done.
And the delinquent at this time may have high mortgage rates for a long time, not subprime mortgages or automatic increases in mortgages as was the case in the early 2000s.
By the way, Ally Financial was formerly known as GMAC until 2010, which is a division of General Motors.
They also managed Residential Capital (ResCap), their subprime lending division that was caught up in the subprime mortgage crisis at the time.
They eventually shut down ResCap as their multi-billion dollar subprime mortgage portfolio went kaput, leading to bailouts and bailouts from the Treasury.
But as things got better, they rebranded Ally Bank and a year later renamed it Ally Financial.
And then Ally Home was born, specializing in consumer mortgages and offering everything from conforming mortgages to jumbo mortgages.
Their strategy was to provide a “high-touch experience” unlike many of their digital competitors such as Better Mortgage, which has ditched the loan officer altogether.
Although it seems to work for a while, their loan volume decreases when the loan rates are no longer pathetic.
Ally Financial raised approximately $1 Billion in funding last year
When I looked into their financials, I found that Ally Financial only raised about $1 billion in total mortgage loans over the past year.
While that sounds respectable, it’s not enough for a big bank like theirs.
The company funded $0.2B in the first quarter, and $0.3B in the second and third quarters of 2024.
Interestingly, they noted that they continue to focus on “digital experience and operational efficiency” at the channel.
So apparently the touch-up method proved more expensive, even if it was no longer the preferred method to begin with.
In the most recent quarter, the company said $256 million in total loans “reflects [the] the current environment,” also called a high mortgage rate.
Indeed, 70%+ of direct consumer loans are taken from existing bank depositors.
Which means they were not seen following customers outside the bank. But with very low volume, the business may not make sense to move forward.
Non-Banks Continue to Gain Market Share in the Real Estate Space
The move makes you wonder if other banks will follow suit, as mortgage lending is increasingly dominated by non-banks.
By 2023, United Wholesale Mortgage was the largest mortgage lender in the country. Not only are they a nonbank, but they only work with real estate buyers. So there are no sales jobs.
They were followed by Rocket Mortgage, which accounted for about 10 percent of the startup’s total.
Chase and Wells Fargo took third and fourth place, but we know that Wells Fargo is actively reducing its mortgage portfolio.
And after that CrossCountry Mortgage took fifth, and Fairway Independent Mortgage took seventh, and DHI Mortgage (DR Horton’s lender) and Depot Lending rounded out the top 10.
It makes you wonder what kind of appetite savings banks have for loans, other than hundreds.
Oh, and despite being a savings bank, Ally Financial said less than 1% of its mortgage originations in the most recent quarter were kept on its balance sheet.
Read on: Check out the latest mortgage foreclosures, foreclosures, and mergers
Before creating this site, I worked as an account manager for a real estate broker in Los Angeles. My experiences in the early 2000s inspired me to start writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the mortgage process. Follow me on Twitter for the latest.
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