Thursday, January 10, 2013

Sell Mortgage Servicing Rights ~ Why?

A lot of us have been reading about banks doing the Service Release/Transfers. And, in the middle of a Short-Sale, we wonder 'What the heck would another bank want this loan for?'

As a Santa Clarita Valley/San Ferndando Valley Realtor, I have to read, understand, and share the information about what is going on in Real Estate in my community.

Top of the list is MSR, Mortgage Servicing Rights. To the specialists that are working with Short-Sales this is devastating....some times.....and confusing as hell!

When talking to my contacts at different banks, they just say it's a big upper management decision. The article I read this morning is a little bit clearer on the subject.

Let's face it, it's all about the profit in banking. That's the business they are in. If they can show their shareholders greater profit, that's always a good thing!

So, they jumble together a huge volume of mortgages, some performing, more not, and sell them to another servicer. Yes, sell them. For a lot less than it says, on paper, it is worth. B of A sold 215 Billion in MSR to Nationstar in a 1.3 Billion deal. Another 93 Billion in a 519 Million dollar deal. See why the new servicer buys these! A killer deal!

If they don't get rid of them, they may not be able to provide as much out in new loans as they would possibly have to keep more capital in the bank vs. out. As well, the values show lower for Mortgage Servicing Rights and therefore...unhappy shareholders.

A Bank of America spokesperson stated this: "By reducing the size of our portfolio, we improve customer service capacity and resolve legacy mortgage issues and reduce risk in our portfolio"

I'm certainly not sure how long this technique will be hampering our Short-Sales, but it is here now and we all have to be aware of it.

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