Ally Financial Inc. is taking a further step back from the mortgage banking industry by curtailing its purchase of residential mortgages from the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA).
According to a MarketWatch report, Ally has notified its partners that, effective today, it will ‘significantly limit its purchasing of FHA, VA or USDA loans’ from correspondent lenders and wholesale brokers. However, it will still continue the purchase of these government-backed loans from a ‘very limited number of strategic clients’ while continuing to honor ‘existing commitments from all clients.’ The lender will also continue to offer FHA, VA and USDA loans through its direct-to-consumer retail channel.
‘This action, while difficult, is part of the company's effort to limit activity in certain areas of the correspondent and broker channels and utilize capital most efficiently with strategic customers and products,’ said an Ally spokesperson in an email statement.
This is the second decision by Ally in two weeks to whittle down its mortgage banking presence. Last week, it announced that its Ally Securities subsidiary would cease its mortgage-related operations.