Blockbuster deal valued at about $1.4bn
Mr. Cooper Group has agreed a deal to buy the residential mortgage-servicing business of New York Community Bancorp’s (NYCB’s) Flagstar Bank in a transaction thought to be worth around $1.4 billion.
In a statement released on Thursday, Flagstar said the move would add about 60 basis points to its common equity tier 1 capital ratio, with the deal expected to be completed at some point in Q4.
Joseph Otting, NYCB’s chief executive officer, said in prepared remarks that the bank was focused on transforming into a “leading, relationship-focused regional bank,” and acknowledged the financial and operational risks that its mortgage-servicing side could present in the current unpredictable rate environment.
Otting added that the move was “not a decision we took lightly,” but pointed to Mr. Cooper’s status as a key player in the US’s mortgage origination and servicing business as a leading factor behind the deal. “It was important to us that we commit to a buyer with strong mortgage expertise and reputation,” he said, “and a shared commitment to customer service excellence and employee values.”
The transaction was announced as Mr. Cooper revealed its second-quarter financial results, posting net income of $204 million and a 37% year-over-year growth in its servicing portfolio (to just over $1.2 billion).
The company said its book value per share jumped to $71.24, while funded volume was up 32% compared with the previous quarter to $3.8 billion.
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