Bulk Market Is Heating Up
Mortgage rates have been firming up the past few months and that means the market for "bulk" servicing rights is finally taking off.
As Mortgage Servicing News went to press, at least one large transaction had been announced and several others were being worked on.
Commercial Federal Corp., Omaha, agreed to sell $10 billion in servicing rights (and its correspondent lending division) to Wells Fargo Bank for an undisclosed sum.
Meanwhile, MIAC, New York, was on the verge of coming to market with a $1 billion package of multifamily servicing rights. The package represents Fannie Mae DUS servicing.
Also, Interactive Mortgage Advisors, Denver, Countrywide Servicing Exchange of California, and other brokerage firms were working on deals.
The Commercial Federal sale (the rights belonged to its affiliate, Commercial Federal Mortgage) was brokered by Lehman Brothers.
A spokesman for the bank told MSN that despite the sale of receivables, the bank is keeping its servicing platform.
"We are not exiting the business," the spokesman said. The company will continue to fund residential loans through its bank footprint and service some of those loans, said a company spokesman.
However, 135 workers at the bank/mortgage company will be let go, but can apply for new jobs at the company.
At year-end, Commercial Federal Mortgage Corp. serviced $13.4 billion in loans, ranking 43rd nationwide, according to MSN and the Quarterly Data Report.
The spokesman said the bank is selling its mortgage assets because of the "volatility" inherent in the residential finance industry.
Wells Fargo, brokers said, has re-emerged as an aggressive bidder of receivables. As far as servicing purchases are concerned, the bank has been somewhat quiet the past few years.
In the months ahead more bulk servicing packages are expected to hit the market.
"There's a decent amount of activity brewing," said one New York-based servicing advisor. "I'm not sure if we'll see deals as large as Commercial Fed but you never know."
Dan Thomas, a broker at MIAC, said he thinks more publicly traded midsized banks might decide to sell some of their receivables in the months ahead.
Copyright 2005 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.mortgageservicingnews.com