Friday, December 2, 2011
Good Riddance GMAC Mortgage
GMAC Mortgage is not happy with Martha Coakley and the Commonwealth of Massachusetts. As of Monday, GMAC Mortgage, the mortgage lender of Ally Financial Inc., will cease purchases of wholesale and correspondent-originated loans in Massachusetts.
The move seems to have been spurred by Attorney General Martha Coakley's lawsuit against several large banks over foreclosure and loan modification practices, which was announced yesterday afternoon.
"GMAC Mortgage has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable....The company is disappointed that it can no longer participate in offering certain financing options in Massachusetts; however, it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer," the company said in a statement.
"The costs related to the mortgage business overall have increased and when additional litigation costs are added to the equation the business case in certain channels such as correspondent and broker are no longer viable," Gina Proia, chief communications officer for Ally Financial, GMAC's parent company, said in an email to Banker & Tradesman.
Brokers and lenders around the state expressed dismay over the news. While many homeowners with GMAC mortgages are saying good riddance as they have failed to help the struggling homeowners.
GMAC's withdrawal is "very surprising," said Jerami A. Marshal, chief operating officer of Reliant Mortgage Company in Beverly. "This is another blow to the mortgage industry, and further limits the availability of funds to the Massachusetts homeowner."
"I think it's unfortunate that a company like GMAC has decided to exit correspondent lending. They're a quality company, and they have a lot of great products," said Paul Gershkowitz, president of Greenpark Mortgage Corp in Needham.
But their biggest worry wasn't so much GMAC's move itself but whether it would inspire other banks to follow them.
"The most important thing is going to be to watch what other major lenders in the U.S. do...if you see Wells, Chase, Citi [and others] following suit, that would be a terrible thing for homeowners in Massachusetts," Gershkowitz added.
"Losing GMAC will not impact us in any big way, they don't do anything that other lenders do not have," agreed Amy Tierce of Fairway Independent Mortgage Corp. in Needham.
Ally Bank, GMAC's parent company, ranked 36th among Massachusetts lenders so far in 2011, originating 1,670 loans for $401 million in volume.
Some are already working on contingency plans in case the other major banks follow suit. The broker community was already reeling from Bank of America's decision earlier this year to withdraw from the correspondent and wholesale channels.
"The bigger trend now is lenders leaving [the wholesale and correspondent channels] than lenders coming in to fill the void," said Geof McLaughlin, a broker with Mortgage Master of Walpole. "Let's hope this is a one-off."