PHH announced last week that it would sell off its remaining mortgage servicing rights portfolio to New Residential Investment.
Based on the MSR portfolio composition as of Oct. 31, 2016 and market conditions as of Wednesday, total proceeds are expected to be approximately $912 million, of which approximately $612 million is from the sale of MSRs and approximately $300 million is related to the sale of servicing advances, according to PHH.
PHH already announced that it would sell its Ginnie Mae portfolio to Lakeview Loan Servicing earlier this year.
Here’s an excerpt from the PHH announcement:
The MSR proceeds exclude estimated transaction fees and expenses of approximately five percent of MSR value, and represent a valuation of 84 basis points on total UPB of $72 billion as of October 31, 2016. PHH’s MSR-related hedges, including those related to GNMA MSRs, have experienced aggregate realized and unrealized losses of approximately $135 million during the fourth quarter to date, and the Company expects to terminate its related hedge positions in conjunction with the signing of this agreement.
In addition, PHH entered into a subservicing agreement with New Residential, pursuant to which PHH will subservice the 480,000 mortgage loans underlying the MSRs to be acquired by New Residential for an initial period of three years, subject to certain termination provisions.
Glen A. Messina, President and CEO of PHH Corporation, said, “We are pleased to announce that we have concluded these agreements with New Residential and thank them for their efforts. 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. 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.”
The initial sale under the transaction is targeted for closing during the second quarter of 2017, but in no event later than the third quarter, according to PHH. The transaction is subject to PHH stockholder approval and customary closing requirements, including anti-trust approval and customary closing requirements.
