Ally To Take $270 Million Charge In 4Q For Foreclosure Matters

NEW YORK (Dow Jones)–Ally Financial Inc., one of the mortgage servicers in discussions with state and federal officials over a settlement of alleged foreclosure abuses, said Tuesday it will record a charge of about $270 million in the fourth quarter for expected regulatory penalties.

The charge is mainly for its Residential Capital mortgage subsidiary, which has caused headaches for Ally as it tries to launch an initial public offering to help pay back a government bailout it accepted during the financial crisis.

Ally said it recorded the charge effective Dec. 31, and it is expected to result in an overall net loss for the company in the fourth quarter. Ally is scheduled to report results Thursday.

The charge is for “penalties expected to be imposed by certain of our regulators and other governmental agencies in connection with foreclosure related matters,” the company said in a regulatory filing.

State and federal officials are close to finalizing a settlement worth as much as $25 billion with the largest mortgage servicers, including Ally, the Wall Street Journal reported this week. At least four other servicers are involved in the discussions: Bank of America Corp. (BAC), Citigroup Inc. (C), J.P. Morgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC).

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