By Peter Rudegeair
(Reuters) - Wells Fargo & Co (WFC) said on Wednesday that it would sell Ocwen Financial Corp (OCN) the right to collect payments on 184,000 home loans representing roughly 2 percent of its residential portfolio.
The total principal balance on the loans is $39 billion. Terms of the deal were not disclosed.
The sale of the servicing rights comes as new companies like Atlanta-based Ocwen, which focuses on collecting payments on residential and commercial mortgages, have driven up demand for these assets.
The higher prices make it more attractive to sell some of the rights for both financial and risk management reasons, Wells Fargo Chief Financial Officer Tim Sloan told investors at a November conference.
Sloan also said that any sale would focus on customers who use Wells Fargo only to service their mortgages. The San Francisco-based bank neither made nor owned the underlying mortgages in Wednesday's deal.
Many lenders have also felt pressure to sell large portfolios of mortgage servicing rights in recent years because of new international capital rules.
Wells Fargo collects payments on nearly one out of every five U.S. home loans, making it the largest mortgage servicer in the country, according to Inside Mortgage Finance, an industry publication.
The parties expect to complete the sale later this year.
(Editing by Lisa Von Ahn)
- Sectors & Industries