Citigroup owned the servicing rights on $301 billion of mortgage balances at the end of June, according to the lender’s quarterly securities filing. The bank valued those contracts at $2.52 billion at midyear.
Banks are scaling back from the almost $10 trillion market for mortgage servicing rights, or MSRs, amid looming Basel III regulations. That’s attracting private-equity firms and hedge funds to assets that can increase in value when borrowing costs rise and giving them increased control over the rights to collect Americans’ monthly mortgage payments. Lenders such as Bank of America Corp. are also cutting home-loan staff after refinancings dropped more than 60 percent since May, according to the Mortgage Bankers Association.
Citigroup selling mortgage servicing rights