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May 9 (Reuters) - Bank of America Corp will sell a commercial mortgage servicing rights portfolio valued at around $110 billion to a KeyCorp 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 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 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.