May 9 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
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
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
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.