In the past, mortgage companies avoided write-downs because their worried 1) reactions from the shareholders 2) a flood of another borrowers requesting write-downs.
GMAC, the servicing arm of Ally Financial (GJM: 23.53 +1.20%), stood out to analysts, who surveyed 433 deals in the nonagency space. In one security, GMAC liquidated 45 mortgages for a $3.2 million loss. At the same time, however, it modified nearly 1,200 of the loans that included $5.5 million in principal forgiveness.
Read it all"This is the first time we have seen large-scale principal forgiveness from GMAC," JPMorgan analysts said. Outside of GMAC, however, principal forgiveness has been contained only in the subprime sector, but even those have occurred on a smaller scale to GMAC's January numbers.