Bulk Market Rebounds?
Is the buy/sell market for bulk residential servicing rights coming back to life?
It's been an ugly 12 months for brokerage firms that rely on the bulk market for business. Servicing rights have been running off so fast that selling "existing" servicing rights (bulk) has been next to impossible.
The "flow" market has held steady, but according to many brokers, large bulk deals have been scarce.
But with the yield on the 10-year Treasury up more than 100 basis points in the past two months, things could soon heat up - that is, as long as rates don't fall unexpectedly.
At least one deal was set to close in late August - the sale of $5.4 billion in Fannie Mae servicing rights being offered by Phoenix Capital, Denver. The servicing belongs to Ohio Savings Bank, Cleveland, a $20 billion servicer.
"The package is getting good attention," said Dean DeMeritte, a servicing broker for Phoenix. He declined to name potential bidders.
In July, Flagstar Bank FSB, Troy, Mich., sold $4.6 billion in bulk servicing in a deal brokered by Countrywide Servicing Exchange, Calabasas, Calif.
Steve Tannehill of CSE declined to say who won the bid. Sources in the market said CitiMortgage, St. Louis, was a bidder on the deal.
Mr. Tannehill thinks that as long as the yield on the 10-year does not sink again, "We'll see more deals."
He noted, however, that the big mega-buyers of bulk deals need about a month to "get their purchase machines up and running again."
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