-
Ally Bank continued its retreat from home lending by agreeing Tuesday to sell a portfolio of mortgage servicing rights to Ocwen Financial Corp. (OCN) for roughly $585 million.
March 12 -
The Detroit online lender recently licensed its loan origination platform to JPMorgan Chase last month and struck a co-branding deal with Charles Schwab Bank; now it is looking to grow profits by selling components of its mortgage technology to other banks.
January 31 -
The No. 2 home lender will market the government's Home Affordable Refinancing Program to hundreds of thousands of customers acquired from MetLife. To speed closings, it's licensing Quicken Loans' technology.
January 23
In acquiring a pool of mortgage servicing rights from Ally Bank, Quicken Loans is seeking to extend the refinancing boom just a little longer while
Detroit-based Quicken Loans, the largest U.S. nonbank mortgage lender, said Thursday that it would pay Ally $280 million to buy the servicing rights for a $34 billion portfolio of performing loans.
In the short-term, the deal would help Quicken maintain its position as one of the nation's top refinancing shops. The portfolio includes a large percentage of loans with higher-than-market interest rates that can still be refinanced, particularly through
"Every mortgage originator out there is trying to find ways to keep refinance volume up," says Matt Maurer, a managing director at MountainView Servicing Group, a Denver advisory firm. "It makes a lot of sense for Quicken to buy a seasoned portfolio of higher-coupon product that can potentially be refinanced."
Long-term, the deal would provide Quicken with a steady stream of income that observers say could offset the inevitable decline in refinancing activity. Banks and mortgage lenders are increasingly searching for new income streams because refinancing activity is widely
Refinancings have made up roughly 75% of all mortgage transactions in the first quarter, but are expected to plummet dramatically in the next year, to an estimated 34% in the first quarter of 2014, according to the Mortgage Bankers Association.
Quicken has benefited from the boom; its lending volume hit $70 billion last year, a 133% jump from 2011. The privately held company does not break out its volume of refinancings versus home purchases.
Quicken joins a host of nonbank lenders including Ocwen Financial (OCN), Nationstar (NSM), Walter Investment (WAC) and PennyMac, that have
For Ally, the $94.8 billion-asset unit of Ally Financial, the sale marks its final retreat from the legacy servicing business of its bankrupt Residential Capital unit. Ally is preparing for an initial public offering and unloading servicing rights is consistent with its plan to market itself as a pure-play auto lender.
Quicken is still a relatively minor player in mortgage servicing, but the deal for the Ally portfolio — its largest-ever servicing acquisition — signals its grander ambitions. "We have not been bashful in making the market aware of our interest in acquiring servicing rights," Bill Emerson, Quicken's chief executive, said in a press release.
As a direct-to-consumer online lender, Quicken may be more vulnerable to a refinancing slowdown as interest rates rise. The company has struck a number of recent deals, including selling its
Daniel Jacobs, the president of retail branching at Residential Finance Corp., a Columbus, Ohio-based lender, said nonbank mortgage originators cannot survive on refinancings alone and will need to generate income from both lending and servicing.
"We are going to go through a dark period for refinances," says Jacobs. "Those lenders that are heavily reliant on refinancings are going to find themselves out of business unless they come up with other income streams. They will not be able to keep their doors open when interest rates rise."
Still, most observers expect refinancing activity to remain strong for the next couple of quarters, in part because as many as 3 million borrowers could be eligible to refinance through HARP.
In an interview Thursday, Quicken's Emerson said the Ally acquisition represents a chance to move many borrowers into HARP loans.
At the same time, Quicken intends to mine the portfolio for opportunities to originate new loans to borrowers who are looking to buy new homes, Emerson said.
"It's an additional origination opportunity," he said.