Wells Fargo Selling 2% Of Its Servicing Rights To Ocwen

Posted by Patrick Barnard on January 22, 2014 No Comments
Categories : Required Reading

Wells Fargo is selling 184,000 loans with a total principal balance of $39 billion, or about 2% of its residential mortgage servicing portfolio, to Ocwen Financial Corp.

Terms of the deal weren't disclosed, and the effect won't be material, the bank says in a statement.

The sale is part of an overall trend among the larger banks, which have been selling off their mortgage servicing rights (MSRs) due to implementation of the Basel III rules, which will require banks to hold more capital in their reserves to cover potential losses on the mortgage loans they service.

Just last week, Citigroup announced that it was selling about 64,000 Fannie Mae residential first-mortgage loans with about $10.3 billion in unpaid principal balances.

Bank of America is also among the larger banks retreating from the almost $10 trillion mortgage servicing market.

Meanwhile, non-bank servicers including Ocwen, Walter Investment Management Corp. and Nationstar Mortgage Holdings Inc. have been snapping up MSRs as they seek to scale in an increasingly tight-margined market.

Most of the loans are held by private investors and weren't originated or owned by Wells Fargo, according to the statement. The sale will be completed as the servicing is transferred, likely this year, the bank said.

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