TIAA Bank is selling its correspondent lending platform to Pentagon Federal Credit Union for an undisclosed amount of money.
The deal represents the latest mortgage space exit for the Jacksonville-based financial firm. TIAA Bank has laid off more than 200 workers over the past six months as it pivots away from mortgage servicing.
In 2019, the lender announced that it would leave the retail channel, barely three years after it acquired EverBank for $2.5 billion in cash. TIAA has focused on digital mortgages since then.
The company issued a statement this week saying it was in the process of communicating with the 200-plus mortgage lenders it works with in the correspondent channel about transitioning to PenFed.
“We anticipate a smooth transition for our correspondent lending associates and business partners, with no disruption in service as the TIAA Bank team moves to PenFed,” TIAA said in a statement.
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In PenFed, TIAA has found a deal partner who knows its business intimately. TIAA’s former chief financial officer, Jill Streit, left to become the CFO of PenFed in 2020.
PenFed, the second-largest credit union in the country, is seeing a surge in mortgages. The credit union originated a record $8.2 billion in mortgages last year, primarily in the Washington, D.C. area. PenFed said that in the first quarter of 2021, it originated $3 billion in mortgages, the best quarter in its history. PenFed’s membership grew to over 2.2 million and its assets rose to $27 billion.
“We appreciate the reputation the TIAA team has earned over the past decade and believe this non-delegated business will be a strong complement to our delegated program,” PenFed told its partners. “You will now have the choice of either channel or may contract for both options.”
It’s the second big correspondent business sale in recent months. Texas Capital Bank is selling its entire $14 billion book of mortgage servicing rights and the correspondent platform to PHH Mortgage, a subsidiary of Ocwen Financial Corp, for a “modest profit.” It will transfer about 60,000 loans to PHH Mortgage’s servicing platform.