Ally Home adds three states to its mortgage footprint

Ally Home, the mortgage lending unit of Ally Bank, has expanded its operations to 46 states, adding Massachusetts, Vermont and Virginia to its footprint.

The company, which also lends in the District of Columbia, plans to add the last four states to its roster at some point in 2022: Hawaii and New Hampshire this spring, followed by Nevada and New York by the end of the year.

Ally’s business primarily comes from the direct-to-consumer channel, where it offers a digital experience in conjunction with Better.com.

Better handles sales, processing, underwriting and closing functions, while Ally retains control of marketing and advertising strategies and loan pricing.

In 2021, Ally originated $10.4 billion through the direct-to-consumer channel, according to a Securities and Exchange Commission filing. This compares with $4.7 billion for 2020.

“The past few years have brought unprecedented challenges for prospective homebuyers as they continue to navigate an especially competitive housing market, making speed and simplicity in the mortgage process more important than ever before,” Glenn Brunker, president of Ally Home, said in a press release.

The company also makes bulk purchases of mortgage loans from other originators in order to obtain the servicing rights and open up opportunities to refinance these customers, its Securities and Exchange Commission filing notes. Last year, it bought $3.9 billion worth, compared with $4.2 billion for 2020.

Pretax income for the mortgage-finance business fell to $32 million last year, from $53 million in 2020 and $40 million in 2019. Margin normalization meant the net gain on sale dropped to $87 million in 2021 from $93 million the prior year. Higher noninterest expenses also contributed to the decline.

Ally was born out of the remnants of General Motors’ financial arm that failed during the Great Recession and exited the mortgage business in 2013. However, in December 2016, Ally Home started operations as an online lender.