Mr Cooper Group Agreement reached to acquire third-party origination (TPO) platform and $356 billion in mortgage servicing rights (MSR), prepayments and subprime servicing contracts Flagstar Bankowner New York Community Bank (New York City Department of Commerce).
As part of the deal, the Dallas-based servicer and lender will pay $1.4 billion in cash, funded by a combination of available cash and draws on existing MSR lines. The transaction, expected to close in the fourth quarter of 2024, will add 1.3 million customers to Mr. Cooper and increase NYCB’s capital levels.
Mr. Cooper took the opportunity to acquire businesses to expand his services portfolio, which according to the data reached $1.206 trillion in the second quarter of 2024 Securities and Exchange Commission (U.S. Securities and Exchange Commission) Filings. The company acquired Hongdian Capital and roosevelt management corp. 2023.
“Our ability to provide Flagstar customers with a smooth, positive experience will be our top priority,” Cooper Chairman and CEO Jay Bray said in a statement. “We have long respected Flagstar as a mortgage servicer and we feel very aligned with their cultural values.”
New York City Commercial Bank, Completed the merger with Flagstar in December 2022 and acquired some signature bankassets, liabilities and deposits Federal Deposit Insurance Corporation (FDIC) faced a crisis of confidence in March 2023 related to its commercial real estate portfolio.
The bank recently secured a $1 billion equity investment from a group led by former U.S. Treasury Secretary Steven Mnuchin’s private equity firm, Free Strategic Capital. To improve its capital and liquidity position, it also sold $5 billion in warehouse mortgage loans to: JPMorgan Chase Bankcausing it to exit the mortgage warehouse lending space.
Flagstar Mortgage President Lee Smith informed employees of the sale during a conference call Wednesday afternoon. Sources told HousingWire that 1,100 employees across the three divisions will have the opportunity to join Mr. Cooper.
The pending deal appears to be the largest mortgage M&A transaction of the 2022-2024 cycle and represents an exit from TPO for NYCB/Flagstar, which has been a player in the space since 1987.
Flagstar’s TPO business is primarily an agency business, but it also works with mortgage brokers.
NYCB expects the transaction to increase its CET1 capital ratio by 60 basis points. The bank will continue to offer residential mortgage products to retail and private wealth clients but will transition to a regional banking model.
“While our mortgage servicing business makes significant contributions to the bank, we also recognize the financial and operational risks inherent in a volatile interest rate environment and the regulatory intensity that governs this business,” said Joseph Otting, NYCB Chairman, President and Chief Executive Officer. Increase.
Jefferies LLC is NYCB’s financial advisor in this transaction.
