Wells Fargo has agreed to sell the loans, which make up about 2% of its residential servicing portfolio, to Ocwen Financial Corp., according to a Bloomberg report. The big bank is the latest lender, joining Citigroup and Bank of America, to reduce its involvement in the mortgage servicing market as tough new regulations make holding the assets more expensive.
Ocwen, along with Nationstar Mortgage Holdings and Walter Investment Management Corp., have been among the most active firms in snapping up servicing rights, Bloomberg reported.
Most of the loans in the deal are held by private investors and weren’t originated by Wells Fargo, Bloomberg reported. The sale is likely to be completed sometime this year.
Wells Fargo CEO John Stumpf seemed to hint at the sale in October when he said the bank would “test the waters” of the servicing market.
“There’s more demand for mortgage servicing rights today than there was six months ago, a year ago,” Stumpf told investors in an October earnings call. “From a risk management standpoint, it’s good to go ahead and test the waters every once in a while, and you should expect that we’ll probably be doing that in the next few quarters.”
The nation’s largest mortgage lender has agreed to sell servicing on about 184,000 loans.