Ally Financial closes mortgage origination business
January 9, 2025
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Higher-for-longer mortgage rates have claimed their first victim of 2025. Ally Financial announced Wednesday that it would exit the mortgage origination business as part of a broader strategy to pursue higher returns on investments.
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The company also plans to explore strategic alternatives for its credit card business in the first quarter of 2025. These changes are expected to result in a workforce reduction of less than 5% of Ally’s approximately 11,000 employees. Bloomberg was the first to report the developments.
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“As we continue to transform Ally to be more focused on our strengths and our highest-returning businesses, we announced that we will be exiting the mortgage origination business and looking at strategic alternatives for our credit card business in the first quarter of this year,” Peter Gilchrist, a spokesperson for Ally Financial, told HousingWire in an email.
“Additionally, as we continue to rightsize our company, we made the difficult decision to selectively reduce our workforce in some areas, while continuing to hire in our other areas of our business.”
Detroit-based Ally Financial exited the mortgage business in 2012, reentered in 2016 with the launch of its direct-to-consumer mortgage platform, Ally Home, and went fully digital in 2019 through a partnership with Better.com.
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As part of the collaboration, Ally participated in Better’s Series C funding round, which raised $70 million, including an “add-on investment” from Ally. But by 2022, Ally recorded a $136 million impairment tied to its investment in Better.
The Nationwide Multistate Licensing System (NMLS) showed that Ally Financial had six branches as of Wednesday in Arizona, California, Florida, Illinois, North Carolina and Texas. It had no sponsored loan officers.
Ally’s recent job cuts, according to Gilchrist, are not tied to any specific business line or location. Impacted employees were notified on Tuesday and provided with a “robust severance package, career outplacement support, and opportunities to apply for other roles within the company.”
These steps, Gilchrist added, “will help us more effectively and efficiently deliver for our customers and stakeholders, and we’ll continue to be diligent in our expense management going forward.”
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