At Least $25 Billion in MSR Sales Under Way: Hibernia
Hibernia has completed the sale of its $10 billion third-party residential mortgage servicing portfolio to CitiMortgage, though it will continue to service some loans held in portfolio.
Paul Bonitatibus, president of consumer banking at Hibernia, told MSN the bank's decision to exit third-party mortgage servicing is part of a two-pronged realignment of Hibernia's mortgage business that began earlier this year.
Mr. Bonitatibus said that interest rate conditions were not a major factor affecting the timing of the sale. Regardless of the market condition for MSRs, he said issues relating to economies of scale, operational issues and strategic concerns were the primary drivers of the company's decision to exit the business.Those factors remain present "absent market conditions," he noted.
And he reiterated that Hibernia remains active as a loan originator within the bank's geographic footprint in Mississippi, Louisiana and Texas.
The company did not release financial details about the transaction, and a spokesperson said no financial details will be available until Hibernia releases its third-quarter financial results.
Earlier this year, the company exited correspondent lending and has stopped acquiring third-party servicing rights through acquisitions of correspondent loans, he said.
Transfer of the mortgage files is expected to occur in the first quarter of 2005, and Hibernia will continue to service those loans until that time. Hibernia said the transaction will not have a material impact on the company's quarterly or annual earnings.
As previously announced, Hibernia will continue to originate home loans, directing its mortgage banking efforts toward retail residential origination and releasing the servicing rights to others.
Hibernia will continue to service about $2 billion of adjustable-rate mortgages owned by the bank, the company said. It will also continue to own a portfolio of about $600 million in home loans that are subserviced by others for Hibernia.
"The sale of the third-party residential mortgage servicing portfolio eliminates the earnings volatility associated with this asset and, as a result, Hibernia will not record charges or reversals associated with mortgage servicing rights impairment in the third quarter or subsequent quarters," said Herb Boydstun, Hibernia's president and CEO, in a news release.
Hibernia recorded MSR impairment expenses in first quarter 2004 and a reversal of a portion of temporary MSR impairment in the next quarter.
Hibernia has $21.3 billion in assets and 310 locations in 34 Louisiana parishes and 34 Texas counties. The company is listed on the New York Stock Exchange.
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