Exclusive: Ocwen leads in deal to buy Ally mortgage rights - sources
By Jessica Toonkel and Rick Rothacker
NEW YORK (Reuters) - Ocwen Financial Corp OCN.N is in the lead to buy mortgage servicing rights on $122 billion of loans from Ally Bank, three people familiar with the situation said on Thursday.
The deal is expected to be valued at around $1 billion and could be announced soon, said one of the sources, who declined to be identified because details of the auction are not public.
Ally, the U.S. auto lender that is 74 percent-owned by the U.S. government, received five offers for the mortgage servicing rights and the outcome of the auction is not certain, the source said.
While Ocwen is currently the lead bidder, its offer is "neck and neck" with that of another bidder, a second source said.
An Ally spokeswoman declined to comment. A call to Ocwen was not immediately returned.
Ocwen and other non-bank mortgage servicers such as Nationstar Mortgage Holdings Inc (NSM.N: Quote) and Walter Investment Management Corp WAC.N have been growing rapidly in recent years as they buy up the right to handle mortgages from banks that are scaling back in the business because of increased capital requirements and growing expenses.
Bank of America Corp (BAC.N: Quote) this month reached an agreement to sell the rights to collect payments on $306 billion loans to Nationstar and Walter, and the bank is looking to sell MSRs on another $100 billion of loans. <ID: nL1E9C83P2>
Mortgage servicers collect payments on home loans and modify loans if borrowers fall behind on payments. After the housing bust, the business has grown more difficult and expensive for servicers as homeowners struggle to make payments and face foreclosure. Continued...