MetLife Inc. agreed to buy the residential mortgage origination and servicing business of First Horizon National Corp. as the insurance giant continues its push into the mortgage business.
The deal, terms of which were undisclosed, is set to close in the third quarter and includes all of First Horizon's origination business outside its home state of Tennessee and the servicing rights on some $20 billion in mortgages. More than 230 retail and wholesale offices nationally will be transferred.
MetLife also signed a sub-servicing agreement for the remaining $65 billion of First Horizon's first lien servicing portfolio. The company said it won't be assuming any subprime or Alt-A mortgages.
The deal, along with last week's purchase of EverBank Reverse Mortgage, will help the company gain a stronger foothold in the mortgage business. "This will significantly accelerate the growth potential of MetLife Bank's residential mortgage business as it allows us to acquire significant expertise, scale and platforms," said MetLife Bank President Donna DeMaio.
MetLife closed at $59.61 and there was no premarket trading. First Horizon ended at $9.62 and jumped 3.4% premarket.
First Horizon intends to sell more than 90% of the mortgage loans in its warehouse operations, with assets in its mortgage banking segment declining by at least $3 billion by year-end. First Horizon expects the reduction to free up at least $200 million of tangible capital and result in pretax charges of $50 million to $70 million this year.
Early in May, First Horizon sold nine Atlanta branches to Fifth Third Bancorp as part of its plans to divest its 34 non-Tennessee branches to redeploy capital to the company's higher-return businesses.
