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BofA to sell $300 billion in mortgage service rights: sources
NEW YORK |
NEW YORK (Reuters) - Bank of America Corp (BAC.N) is in talks to sell mortgage servicing rights on more than $300 billion of loans, two sources familiar with the situation said, in an effort to offload problem mortgage exposure after huge losses on its disastrous 2008 Countrywide Financial acquisition.
Ocwen Financial Corp (OCN.N), Nationstar Mortgage Holdings (NSM.N) and Walter Investment Management Corp WAC.A are among the firms that are in talks to purchase a portion of the mortgage servicing rights, said the sources, who declined to be identified because they are not permitted to speak to the press.
It could not be determined how much each firm would buy or what they are paying for the MSRs. Sources said they expect a deal to be announced within the next few weeks.
Bank of America spokesman Dan Frahm said the company does not comment on "market rumor or speculation." Representatives of Nationstar, Ocwen and Walter did not immediately respond.
Nationstar is looking to take the biggest position in the mortgage servicing rights, said one of the sources.
Servicing mortgage loans - collecting payments and assisting delinquent homeowners - has grown more expensive in the housing bust and requires more capital under new international rules.
Bank of America is eager to reduce expenses in its mortgage servicing unit, where costs have ballooned as the bank has added employees to work with customers who are behind on their payments. The bank currently has nearly 42,000 employees in the unit, about 15 percent of its total workforce.
The bank has said quarterly expenses in the business have peaked and should eventually fall to about $500 million per quarter, down from $3.4 billion in the third quarter.
In November, Bank of America Chief Executive Officer Brian Moynihan said the bank plans to reduce its mortgage servicing portfolio to about 6 million loans, down from 8 million. At its peak, the firm had 12 million in loans.
The No. 2 U.S. bank by assets serviced $1.1 trillion in loans at the end of the third quarter, compared to $1.5 trillion a year earlier.
"We continue to look at transactions," Moynihan said at an investor conference in New York. "We have been selling servicing in relatively sizable chunks to the market."
In June, Bank of America agreed to sell $10.4 billion in residential mortgage servicing rights, as measured by unpaid principal balance, to Nationstar.
Non-bank mortgage servicers such as Nationstar, Ocwen and Walter have been buying up servicing rights from banks such as Bank of America, Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) that were burned during the U.S. housing meltdown.
(Reporting by Jessica Toonkel in New York; Rick Rothacker in Charlotte, N.C.; Editing by Marguerita Choy, Bernard Orr)
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