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Exclusive: Bank of America to sell use rights on $100 billion of mortgages

Tue Jan 8, 2013 5:18pm EST

NEW YORK (Reuters) – Bank of America Corp is looking to sell collection rights on during slightest another $100 billion of mortgages after announcing identical deals for some-more than $300 billion on Monday, according to dual sources informed with a situation.

Any sale would be a latest instance of a large bank determining that collecting debt payments on some loans is too costly, and a cost of capitalizing a business was too high given new collateral rules. Banks have been unloading these resources for years.

These sales are an event for smaller companies like Nationstar Mortgage Holdings and Walter Investment Management that specialize in handling these collection rights, famous as debt servicing rights, and do not have to follow bank collateral rules.

Bank of America pronounced on Monday that Nationstar was shopping servicing rights on $215 billion of mortgages for $1.3 billion, and Walter Investment was shopping servicing rights on $93 billion of mortgages for $519 million.

Ally Financial Inc’s banking auxiliary is also looking to sell $122 billion of debt servicing rights. Ocwen Financial Corp, Nationstar and Walter are among a handful of firms looking during purchasing a apportionment of Ally’s MSRs, according to a sources.

Representatives during Ocwen, Nationstar and Walter did not lapse calls. Ally mouthpiece Gina Proia declined to comment.

Denmar Dixon, executive clamp authority of Walter Investment Management, pronounced he approaching some-more MSR sales coming.

“I consider we are in a third, fourth inning of a diversion here,” he said, in a discussion call deliberating a MSR merger from Bank of America. “There’s copiousness some-more to do.”

Bank of America is expected to announce some-more debt servicing rights sales in a subsequent several weeks, pronounced a sources, who declined to be identified since they are not authorised to pronounce to a press.

Bank of America orator Dan Frahm declined to criticism on any specific transactions, though pronounced a bank had been offered debt servicing rights for years and that proceed remained partial of a strategy.

“By shortening a distance of a portfolio, we urge patron use ability and solve bequest debt issues and revoke risk in a portfolio,” he said.

Bank of America shares fell 0.9 to $11.98 on Tuesday.


Mortgage servicing rights concede banks to acquire fees from debt investors in sell for collecting home loan payments from borrowers. The housing bust has done collecting such payments an costly business as some-more borrowers turn derelict and go into foreclosure.

New collateral rules, famous as a Basel III rules, will also make debt servicing rights some-more costly for banks.

JPMorgan Chase might confirm to sell some of a MSRs, pronounced dual sources informed with a situation.

The New York-based bank bought a $70 billion debt servicing portfolio from MetLife Inc in November, though a organisation could sell a rights on some of a subprime debt loans, a sources said. J.P. Morgan services a sum of 7.4 million loans value $1.1 trillion.

A J.P. Morgan Chase mouthpiece declined to comment.

Companies like Nationstar, Ocwen and Walter have been building adult their debt servicing businesses by shopping resources strew by incomparable banks such as Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp.

Lewisville, Texas-based Nationstar, before a section of homebuilder Centex Corp, was acquired by private equity organisation Fortress Investment Group LLC in 2006. In Mar 2012, it went public.

Atlanta-based Ocwen and Tampa, Florida-based Walter scored a outrageous feat in Oct when they won Residential Capital LLC’s debt business for $3 billion in a failure auction final month.

Ocwen, founded in 1988, also concluded in Oct to buy Homeward Residential Holdings from private-equity organisation WL Ross Co LLC for $750 million in money and stock.

(Additional stating by Rick Rothacker in Charlotte, N.C.; modifying by Jeffrey Benkoe, Matthew Lewis and Leslie Gevirtz)

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