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Bank of America Corp. is selling servicing rights on $10.4 billion in residential mortgages to Newcastle Investment Corp. and Nationstar Mortgage Holdings Inc., Newcastle and Nationstar said Tuesday.
Newcastle and Nationstar said they are acquiring the rights to service loans in government-sponsored enterprise pools. Nationstar will service the loans, while Newcastle said it invested $44 million for the right to 65 percent of the monthly cash flow from the mortgage services.
Bank of America serves about half of American households with mortgages and has been working to simplify its business by selling assets, cutting costs and paying back debt. It recently closed a division that helped third-party home lenders. The company has been losing money in its mortgage business and buying back soured loans from the government.
Nationstar said it services approximately 635,000 residential mortgages with an unpaid principal balance of $103 billion. In May it agreed to buy about $374 billion in mortgage servicing assets from Residential Capital LLC, which filed for Chapter 11 bankruptcy protection. ResCap is the mortgage unit of Ally, the former financing unit of General Motors Co.
In April Nationstar agreed to buy MetLife Bank's reverse mortgage servicing portfolio as MetLife Inc. exits that business. Terms were not disclosed.
Shares of Bank of America rose 20 cents, or 2.8 percent, to $7.10 in afternoon trading. Newcastle shares picked up 21 cents, or 3.4 percent, to $6.48, and Nationstar stock rose 45 cents, or 2.3 percent, to $19.98.