PHH to sell off its mortgage servicing rights portfolio in massive deal

After taking heavy losses on its MSR-related hedges, PHH is selling its entire mortgage servicing rights portfolio in a massive $912 million deal

PHH is selling its entire mortgage servicing rights portfolio for nearly a billion dollars, according to a report by HousingWire.

The company had already announced the sale of its Ginnie Mae servicing rights portfolio a couple of months ago. Now PHH says it plans to sell its entire remaining servicing rights portfolio — involving about 480,000 mortgages with a total unpaid principal balance of $72 billion — to New Residential Investment, HousingWire reported.

PHH expects the proceeds of the deal to be about $912 million based on the “MSR portfolio composition,” the company said. About $612 million of that will be from the sale of the mortgage servicing rights themselves, while the remaining $300 million will come from the sale of servicing advances, HousingWire reported.

The sale comes in the wake of losses incurred by PHH on its MSR-related hedges, HousingWire reported. PHH said it has taken aggregate realized and unrealized losses of $135 million in the fourth quarter alone.

However, the company isn’t bowing out of the servicing business entirely. As part of its deal with New Residential, PHH has entered into a subservicing agreement which will allow it to subservice the loans underlying the MSR portfolio for the next three years, HousingWire reported.

“This transaction is an important next step in our strategic review process and enables PHH to efficiently monetize its remaining owned MSR portfolio at the highest available price while maintaining the flexibility to maximize the value of our subservicing platform,” said Glenn Messina, president and CEO of PHH. “We are continuing to evaluate the strategic options for our remaining business platforms and remain on track to complete the strategic review by the end of January 2017.”

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