So if the mortgage supply coming onto the market is down, does that mean the value of servicing mortgages is going up? Seems to be a bet many are making.
Nationstar, Ocwen, and Walter Investment have certainly been buyers (non-depository buyers, by the way, not quite so directly worried about Basel III restrictions should they come to pass). There is certainly the argument to be made that servicing cash flows are much better than the value in the marketplace, especially if legacy issues are eliminated, and there have been some big moves lately.
The latest is Ally, the lender that had its capital plan rejected last week by the Federal Reserve, agreed to sell its remaining agency mortgage servicing rights to Quicken Loans for about $280 million (if approved by Freddie & Fannie). The loans had an unpaid principal balance of about $34 billion. Earlier this month Ally agreed to sell agency mortgage servicing rights to West Palm Beach, Florida-based Ocwen Financial for about $585 million.
And thus pretty much ends Ally’s, ex-GMAC, ex-RFC’s, role in the home loan lending industry. Or “non-strategic mortgage activities” as they put it:
“Going forward, the Bank’s full focus and resources will be centered on its leading direct banking franchise and advancing its customer-centric deposit activities, as well as continuing to grow its key role in Ally’s auto finance operation,” said Ally Bank President and Chief Executive Officer Barbara Yastine.
Ally Bank also completed the previously announced sale of its correspondent and wholesale broker mortgage operation on Feb. 28 to Walter Investment Management Corp.
And Ally was not on the recent list released by Fannie Mae, although GMAC was, announcing the results of its 2012 Servicer Total Achievement and Rewards (STAR) Program. The scorecard measures servicer performance. Here’s who received the highest results in 2012:
– GMAC Mortgage
– Green Tree Servicing
– Nationstar Mortgage
– PHH Mortgage
– Wells Fargo
The sale of mortgage servicing rights (MSRs) could be the place to be, as many firms who think that servicing is a breeze run a little short of funds. It is good to look at servicing packages occasionally – one can see what is important for buyers. In the last week or two I have received several offers of servicing packages. (Not me personally – I still can’t seem to even collect on the debts my kids owe me – but the entire market.) For example, here’s one from Tom Piercy with Interactive Mortgage Advisors in Denver:
“IMA, as exclusive broker for the Seller, is pleased to provide this $828 million Fannie Mae bulk residential mortgage servicing rights offering for your consideration. In addition to this bulk package, the Seller would like to establish a monthly flow relationship that will deliver $15 – $20 million per month of comparable product over the next twelve months. This portfolio offers a unique geographic profile that is not usually seen in the market. All recent production with 6 months of seasoning at 3.65% WAC. The Seller is an independent mortgage company with strong financials and solid reputation.”
And here are a couple from from Matt Maurer with MountainView MountainView Servicing Group in Denver:
“MountainView Servicing Group, LLC (“MountainView”), as exclusive sale advisor, is pleased to enclose for your review and consideration this $201 million FNMA non-recourse servicing portfolio that is being made available to the national market. Quality features of this portfolio include: 100% fixed rate, California 1st lien product, weighted average interest rate of 3.65 percent, weighted average original FICO of 773 and weighted average original LTV of 58.4 percent, no delinquencies, average loan size of $370,394.”
“MountainView is pleased to enclose for your review and consideration this $2.2 billion GNMA servicing portfolio that is being made available to the national market. Quality features of this portfolio include: the seller has representation and warranty protection for VA loss protection in its correspondent MLPAs and all reps and warrants are transferrable and assigned to successors or assignees, weighted average interest rate of 3.76 percent (3.91 percent on the 30 year fixed-rate product), low all-in delinquencies of 7.12 percent (1.25 percent in foreclosure), national portfolio with lead states of Texas (13%), California (10%), and Georgia (7%), average loan size of $189,507.”