For Immediate Release
Chicago, IL – January 8, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Bank of America Corporation (BAC), Ocwen Financial Corp. (OCN), Nationstar Mortgage Holdings Inc. (NSM), Morgan Stanley (MS) and Goldman Sachs Group Inc (GS).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday’s Analyst Blog:
BofA Considering Sale of MSRs
According to Reuters, Bank of America Corporation (BAC) is contemplating the sale of mortgage servicing rights (MSRs) worth $300 billion. This step will be taken by BofA in order to scale down its non-core operations and further strengthen the balance sheet.
Among the companies that are in talks to buy MSRs from BofA (in full or part) include Ocwen Financial Corp. (OCN) and Nationstar Mortgage Holdings Inc. (NSM). The deal is expected to be announced in the next few weeks.
MSRs, in general, are becoming burdensome for the banks. Stringent capital regulations and increasing balance sheet risk have made these an expensive business. Hence, the banks are trying to offload these to specialized mortgage-servicing companies that include three of the above-mentioned firms.
In the last couple of years, major banks like Morgan Stanley (MS) and Goldman Sachs Group Inc (GS) have sold their respective mortgage servicing subsidiaries to Ocwen. Last year, Ocwen, in partnership with Walter Investment, also won the bid to acquire Residential Capital's (ResCap) MSRs for $3 billion.
Getting back to the original story, BofA’s mortgage servicing expenses has shot up tremendously. In the third quarter, it stood at $3.4 million as the company had to hire employees to work with those customers who are late in loan repayments. As of September 30, 2012, the company serviced loans worth $1.1 trillion, down from $1.4 trillion as of December 31, 2011.
Moreover, in June 2012, BofA announced a deal to sell $10.4 billion worth of MSRs to Nationstar Mortgage Holdings’ wholly owned subsidiary – Nationstar Mortgage LLC. The MSRs comprise of loans in government-sponsored enterprise (GSE) pools.
Escalating servicing costs and strict regulations is expected to force BofA and many other banks to do away with once lucrative MSRs operations. Currently, BofA retains a Zacks #3 Rank, which translates into a short-term Hold rating.
We believe that BofA’s plan to vend off MSRs will be slightly positive for the company. Hence, there a marginal chance for upward estimate revisions. This in turn, could also lead to an improvement in its Zacks Rank.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: https://twitter.com/zacksresearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com