Detroit-based Quicken Loans Inc. entered an agreement to purchase $34 billion in mortgage servicing rights (MSR) from Ally Bank, the company announced Thursday.
The servicing pool comprises non-delinquent Fannie Mae and Freddie Mac-backed mortgages that currently have higher-than-market interest rates that are expected to be refinanced post-closing.
The purchase price for the MSR asset is estimated to be approximately $280 million as of the end of January.
The acquisition, expected to close in the second quarter following approvals from Fannie Mae and Freddie Mac, will increase Quicken Loans’ servicing portfolio to exceed $125 billion.
“This transaction with Ally Bank allows us to purchase a well performing pool of loans, and will help grow our servicing footprint,” said Quicken Loans CEO Bill Emerson. “This servicing pool will also create a large opportunity for Quicken Loans to refinance a substantial amount of these clients into significantly lower monthly payments.”
In the last year, Quicken built a $90 billion mortgage servicing portfolio, making it the nation’s 17th largest servicer.
The company also announced that it will continue to pursue servicing pools, while also growing its servicing portfolio through its mortgage origination business.
In 2012, Quicken Loans originated a company record $70 billion in residential home mortgages, making it the nation’s third largest mortgage lender.
“This agreement marks a key milestone for Ally and, upon successful completion of the MSR transactions, Ally Bank will have exited all the non-strategic mortgage activities,” said Ally Bank President and Chief Executive Officer Barbara Yastine.
Moving forward, Yastine says Ally’s full focus and resources will be centered on its direct banking franchise, as well as advancing its customer-centric deposit activities.
On March 12, 2013, Ally announced the sale of $90 billion in unpaid principal balance of MSR to Ocwen Financial Corp.
Upon closing of the transactions with both Quicken Loans and Ocwen, Ally said it will have no further MSR assets.
Written by Jason Oliva