Report: BofA May Be Planning to Unload More MSRs

Report: BofA May Be Planning to Unload More MSRs

01/09/2013 BY: TORY BARRINGER

 

After announcing Monday the sale of nearly $306 billion in mortgage servicing rights (MSRs) on 2 million loans, Bank of America might be looking to unload a little more.

Reuters first reported Tuesday that the bank is planning to sell rights on at least another $100 billion of mortgages. BofA is likely to announce more MSR sales in the next several weeks, according to two unnamed sources who spoke to Reuters.

The bank announced Monday agreements to sell $215 billion in MSRs to Nationstar Mortgage Holdings (in a $1.3 billion deal) and $93 billion to Walter Investment Management (in a $519 million deal).

Sales of servicing rights have become more and more prevalent as associated costs rise and servicers fall to bankruptcy, leaving hungry institutions to purchase their MSRs. The most active buyers as of late have been Nationstar, Walter Investment, and Ocwen Financial Corp., which purchased the servicing rights of the bankrupt Residential Capital, LLC in a joint bid with Walter Investment.

Another factor leading the rapid transfer of MSRs is the impending implementation of Basel III capital rules, which will force banks to either hold more capital for mortgages serviced or to put less premium on the value of MSRs. As a result, more banks are trying to unload their servicing rights to cut costs.

Because servicing companies are exempt from the Basel III Accord, they can capitalize on the sales.

Sources also told Reuters that Ally Financial Inc.‘s banking subsidiary is looking to sell $122 billion of MSRs, and JPMorgan may try to do the same. According to Reuters, Ocwen, Nationstar, and Walter are among a handful of firms attracted to Ally’s MSRs.

A BofA spokesperson declined to comment to Reuters on specific transactions, but he did say the sale of MSRs is part of the bank’s strategy.
“By reducing the size of our portfolio, we improve customer service capacity and resolve legacy mortgage issues and reduce risk in our portfolio,” he said.

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