Nationstar, Green Tree to acquire billions in BofA MSRs
Special mortgage servicers Nationstar Mortgage Holdings and Green Tree Servicing are acquiring billions of dollars worth of mortgage servicing rights and other assets from Bank of America (BAC) as part of a major settlement agreement between Fannie and BofA.
NationStar confirmed its involvement in a press release, while a source confirmed Green Tree's involvement.
The MSR purchases are part of a larger deal that BofA cut with Fannie to end putback claims with the GSE and resolve outstanding legacy mortgage issues. As part of the settlement, BofA agreed to sell servicing rights on two million home loans — many of which are securitizes by Fannie Mae — with an unpaid principal balance of $306 billion.
Nationstar Mortgage Holdings confirmed it will buy $215 billion in unpaid principal balance from the BofA MSR pool for $1.3 billion.
Roughly 47% of the servicing portfolio Nationstar is acquiring from BofA consists of loans insured by Fannie Mae, Freddie Mac and Ginnie Mae. The remaining 53% of the portfolio consists of loans tied to private-label securitizations.
The deals are pending while the firms await investor and third-party approvals. Ed DeMarco, acting director of the FHFA, signed off on the BofA agreement, allowing for the transfer of MSRs tied to the housing agencies.
"Resolving these issues at this time is in the best interest of taxpayers and reduces uncertainty in the nation’s mortgage finance market," said Edward DeMarco, FHFA acting director. "This is a major step forward in resolving issues from the past and providing greater certainty in the marketplace, which remain critical FHFA goals as conservator. I am pleased with the resolution achieved and thank everyone involved for their efforts."
The transaction solidifies Nationstar as a mega player in the special servicing space, with the deal adding 1.3 million to its existing customer base of 1.2 million.
Nationstar announced a separate deal Monday, with it acquiring $5.8 billion in servicing advance receivables. The company will use third-party financing agreements to fund those servicing advances.
"This landmark transaction is a testament to our employees and their record of servicing performance and the support of our business partners," said Nationstar CEO Jay Bray. "This transaction builds upon our strong track record of portfolio acquisitions and is further validation of our strategy to drive profitability over the entire economic cycle through our servicing, solutions, and origination businesses."
Nationstar plans to fund $680 million of the MSR purchase price using proceeds from a co-investment with its Newcastle Investment subsidiary. Nationstar will pay its portion of the $665 million MSR transaction with investable cash.