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

Tue Jan 8, 2013 5:18pm EST
 
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By Jessica Toonkel

NEW YORK (Reuters) - Bank of America Corp is looking to sell collection rights on at least another $100 billion of mortgages after announcing similar deals for more than $300 billion on Monday, according to two sources familiar with the situation.

Any sale would be the latest example of a big bank deciding that collecting mortgage payments on some loans is too costly, and the cost of capitalizing the business was too high given new capital rules. Banks have been unloading these assets for years.

These sales are an opportunity for smaller companies like Nationstar Mortgage Holdings and Walter Investment Management that specialize in managing these collection rights, known as mortgage servicing rights, and do not have to follow bank capital rules.

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

Ally Financial Inc's banking subsidiary is also looking to sell $122 billion of mortgage servicing rights. Ocwen Financial Corp, Nationstar and Walter are among a handful of firms looking at purchasing a portion of Ally's MSRs, according to the sources.

Representatives at Ocwen, Nationstar and Walter did not return calls. Ally spokeswoman Gina Proia declined to comment.

Denmar Dixon, executive vice chairman of Walter Investment Management, said he expected more MSR sales coming.

"I think we are in the third, fourth inning of the game here," he said, in a conference call discussing the MSR acquisition from Bank of America. "There's plenty more to do."   Continued...

 
The logo of the Bank of America is pictured atop the Bank of America building in downtown Los Angeles November 17, 2011. REUTERS/Fred Prouser