By Saabira Chaudhuri
Wells Fargo & Co. on Wednesday said it would sell
residential-mortgage servicing rights on $39 billion in loans to
Ocwen Financial Corp.
Financial terms of the deal weren't disclosed.
The 184,000 loans formed about 2% of Wells Fargo's total
residential-servicing portfolio as of the end of fourth
quarter.
The bank expects the sale to be completed this year. It said the
transaction won't be material to financial results. The loans
behind the residential-mortgage servicing rights sold are mainly
owned by private investors and weren't originated or owned by Wells
Fargo.
Wells's move follows similar moves by other lenders who have
been shedding parts of their mortgage businesses. Last year,
government-owned auto lender Ally Financial Inc. said its bank had
reached a deal to sell a portfolio of mortgage-servicing rights to
Ocwen for an estimated $585 million.
Wells Fargo has been working to limit its exposure to the
mortgage market as a refinancing boom that boosted bank profits
continues to fizzle. Last week, Wells Fargo--the largest mortgage
lender in the U.S.--had profits for mortgage lending drop by 49%
from the fourth quarter of 2012 to $1.6 billion. The bank's
home-lending originations totaled $50 billion, compared with the
$125 billion a year earlier and $80 billion in the previous
quarter.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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