BofA sells $110 billion CMBS servicing rights portfolio to KeyBank

Thu May 9, 2013 10:14pm EDT

A man walks next to a Bank of America branch in New York October 24, 2012. REUTERS/Eduardo Munoz

A man walks next to a Bank of America branch in New York October 24, 2012.

Credit: Reuters/Eduardo Munoz

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(Reuters) - Bank of America Corp (BAC.N) will sell a commercial mortgage servicing rights portfolio valued at around $110 billion to a KeyCorp (KEY.N) unit for an undisclosed amount, the latest offloading of servicing assets which many big banks consider costly to collect on.

Bank of America announced similar deals for more than $300 billion of servicing rights earlier this year. Terms of those deals showed comparatively small amounts of money changing hands.

It sold servicing rights on $215 billion of mortgages for $1.3 billion to Nationstar Mortage Holdings (NSM.N) and rights to $93 billion of mortgages for $519 million to Walter Investments.

In the wake of the housing crisis, many borrowers have gone into foreclosure and collecting mortgage payments has become expensive. The level of capital needed to back the loans is also higher for banks while smaller companies that specialize in servicing these loans do not have to follow bank capital rules.

Bank of America and other banks are still being pursued in relation to the housing meltdown. New York Attorney General Eric Schneiderman said on Monday he plans to sue it and Wells Fargo & Co (WFC.N) for violating the terms of a settlement designed to end mortgage servicing abuses.

KeyBank Real Estate Capital said in a statement it will more than double its servicing portfolio to $205 billion with the acquisition, which includes about $14 billion in special servicing rights.

The transaction needs the approval of private investors.

KeyBank said it has made a sub-servicing agreement with Berkadia Commercial Mortgage on the CMBS primary servicing portfolio it is acquiring from Bank of America. It is also acquiring Berkadia's $10 billion special servicing portfolio.

(Reporting by Caroline Humer; Editing by Edwina Gibbs)

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Comments (2)
Harry079 wrote:
“KeyBank said it has made a sub-servicing agreement with Berkadia Commercial Mortgage on the CMBS primary servicing portfolio it is acquiring from Bank of America.”

What is there to prevent Berkadia to sub-sub-servicing the CMBS primary servicing portfolio to Bill & Ted’s Mother’s Basement Mortgage Collection Services?

Sounds like 2007-2008 all over again except it won’t be the Big Banks holding the bag.

May 10, 2013 8:19am EDT  --  Report as abuse
Harry079 wrote:
From Berkadia’s web site.

Berkadia’s history began in 1994, when GMAC Commercial Mortgage Corporation (GMACCM) was established as a separate operating unit of the GMAC Mortgage Group. GMACCM grew to become one of the largest commercial real estate finance companies in the industry, with operations in the United States, Mexico, Canada, Europe and Asia.

In March 2006, an investor group led by affiliates of Kohlberg, Kravis Roberts & Co. (KKR), Five Mile Capital Partners, LLC and Goldman Sachs Capital Partners completed the acquisition of a majority interest in GMAC Commercial Holding Corp. The company then changed its name to Capmark Financial Group Inc. (Capmark) and established a new executive team.

In December 2009, Berkshire Hathaway and Leucadia National Corporation (LUK) formed Berkadia Commercial Mortgage in order to acquire Capmark’s North American loan origination and servicing business, creating the company we operate today. Currently, Berkadia has more than 20 offices in the United States, an operation in India and approximately 900 employees.

Berkadia’s CEO Mr. Hugh R. Frater was a VP at Lehman Brothers.

Appears to be the same people doing the same things just under different names.

May 10, 2013 8:33am EDT  --  Report as abuse
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