MetLife Sells $70B in Mortgage Servicing Rights to J.P. Morgan

MetLife Inc. (NYSE: MET) has agreed to sell its mortgage-servicing portfolio to JPMorgan Chase & Co. (NYSE: JPM) in a transaction comprising $70 billion worth of servicing rights.

The deal will increase JPMorgan’s $1.1 trillion servicing business by more than 5%, according to a statement released by MetLife earlier this week. 

Since MetLife announced it is getting out of the mortgage business, the biggest U.S. life insurer has turned instead to focus on its core business. Given MetLife’s focus as a global insurance and employee benefits leaders, the company decided in 2011 that a bank holding company structure was no longer appropriate, according to a statement released by MetLife. 

“Since that time, MetLife has entered into agreements to sell MetLife Bank’s deposit business to GE Capital, sold the bank’s warehouse finance business to EverBank, sold the bank’s reverse mortgage servicing rights to Nationstar, and ceased writing residential mortgages,” said MetLife Bank President Jim Rose. 

In April, MetLife agreed to sell its reverse mortgage portfolio to Nationstar upon exiting the reverse mortgage space. 

For JPMorgan, the deal increases the the company’s pool of borrowers with loans it can service and refinance, further increasing the New York-based lender’s reputation as the third-largest mortgage servicer behind Wells Fargo & Co. (NYSE: WFC) and Bank of America Corp. (NYSE: BAC).

“The acquisition of this high-quality portfolio reflects our strategy to strengthen and grow our Servicing business,” said Eric Schuppenhauer, head of mortgage servicing at Chase. 

“We will be able to provide our full range of products and services to an additional 350,000 individuals and families. We expect that many of these customers will take advantage of historically low interest rates by refinancing.”

MetLife’s entire retail banking business, mortgages included, represented less than 2% of its 2011 operating earnings, according to the company. 

Shares for non-bank mortgage servicers Ocwen Financial (NYSE: OCN) and Nationstar Mortgage Holdings (NYSE: NSM) tumbled following MetLife’s announcement of a deal with JPMorgan. As of Monday afternoon, Ocwen was down more than 5% to 33.20, while Nationstar had fallen more than 6% to 31.04. Both ranked among the New York Stock Exchange’s biggest decliners.

The deal is subject to certain regulatory approvals and customary closing conditions.

Written by Jason Oliva

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