Flagstar Bancorp Inc. (FBC:US), the Michigan lender rescued by MatlinPatterson Global Advisers LLC in 2009, is considering a sale of the collection rights on more than $70 billion in mortgages, people with knowledge of the matter said.
Flagstar interviewed banks in recent weeks to manage the sale of its mortgage-servicing rights because of new rules that make them costlier to own, said the people, who asked not to be identified because the matter is private. The talks were preliminary and Flagstar hasn’t hired an adviser, one person said.
The holders of mortgage-servicing rights collect fees for managing loans on behalf of investors who own them. Servicing involves sending out bills, performing collections and handling the costly foreclosure process if the borrowers don’t pay. Wells Fargo & Co. (WFC:US), Bank of America Corp. and other lenders have been selling servicing rights because proposed capital rules would classify them as riskier assets that require more equity to cover potential losses. Buyers have included firms, such as Ocwen Financial Corp. (OCN:US), that specialize in servicing and aren’t subject to the same rules as banks.
Susan Cherry-Bergesen, a spokeswoman for Flagstar, declined to comment. Representatives for MatlinPatterson didn’t respond to a request for comment.
Flagstar, based in Troy, Michigan, had servicing rights valued at $727 million on mortgages with an unpaid principal balance of $73.9 billion at the end of March, according to a statement last month. It has regularly sold batches of servicing rights in recent years as part of its business plan, according to its annual report.
Wells Fargo, the nation’s biggest home lender, sold servicing rights to $12.2 billion of reverse mortgages to Walter Investment Management Corp. (WAC:US), according to a statement last month. Nationstar Mortgage Holdings Inc. (NSM:US) said in January it would acquire $215 billion in residential mortgage servicing rights from Bank of America for about $1.3 billion. In March, Ally Financial Inc. agreed to sell agency mortgage-servicing rights to Ocwen Financial for about $585 million.
Flagstar increased less than 1 percent to $13.36 at the close in New York, after climbing as much as 5.6 percent.
Last year Flagstar posted its first annual profit (FBC:US) since 2006, following $1.33 billion in losses spurred by the mortgage crisis. MatlinPatterson, based in New York, has invested at least $1 billion in the company since 2009, according to regulatory filings. It held about 64 percent of Flagstar as of March 31, according to data compiled by Bloomberg, valuing its stake at more than $470 million based on yesterday’s close.
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