NetBank Tests Market

NetBank hopes to sell its mortgage servicing platform along with most of its mortgage servicing rights on a $13 billion portfolio of home loans, a transaction that - if it comes to fruition - will provide a barometer of how well the servicing market has recovered from a multiyear refinancing boom that put the lid on bulk servicing deals.

NetBank said the proposed sale, which it estimates will take 90 to 120 days, will allow the company to redeploy capital to higher growth areas of business. NetBank estimates the sale will free up $20 million to $35 million of capital.

"When we committed to this lien of business as part of our overall income diversification strategy for the company, we set a goal of growing the servicing asset to at least the $25 billion mark," said Douglas Freeman, chairman and CEO, in an announcement.

"Based on our analysis, we needed to reach this minimum level to rationalize our investment and to have the asset serve as an effective macro hedge against our mortgage production network."

He added that the economic environment has changed dramatically since NetBank decided to try to grow the MSR asset, and current market and economic conditions have made it difficult for NetBank to achieve its growth targets in the mortgage servicing arena.

"Given prevailing conditions, we have determined the mortgage servicing business no longer represents the best use of our capital," Mr. Freeman said.

NetBank said the sale is contingent upon the company's ability to receive an offer that meets its price expectations.

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