Bank of America will move its mortgage servicing back onto Black Knight Financial Services' LoanSphere MSP servicing system of record.
The Charlotte, N.C., bank signed an agreement with the Jacksonville, Fla., mortgage technology company on June 3 to service first and second mortgages, according to a Black Knight regulatory disclosure filed Monday.
B of A used to service its mortgages with MSP when the system was managed by Black Knight's predecessor, Lender Processing Services. But after acquiring Countrywide in 2008, the bank moved its roughly 4 million loans to Countrywide's proprietary technology.
Black Knight, which holds approximately a 55% market share among servicing system of record vendors, has been vying to regain B of A's business ever since. At an investor conference nearly two years ago, an executive even went so far as to confidently predict that B of A would migrate its loans — at the time, a roughly $782 billion portfolio — to Black Knight's servicing system of record.
"This deal is important, in our view, as B of A was the largest of three major servicers not on Black Knight's platform," SunTrust Robinson Humphrey analysts Andrew Jeffrey and Oscar Turner wrote in a note, citing Citigroup and Nationstar as the other servicers still using in-house systems. "While B of A has lost considerable share in recent years, it still represents 5% to 7% of the total market."
In 2008, Countrywide's servicing platform, called the Loan Servicing, or LS, system, was already managing a portfolio of about 10 million loans for what was at the time, the country's largest mortgage servicer. Back then, the move off MSP made sense because Countrywide's technology infrastructure was considered to be among the strongest assets B of A got in the $4.1 billion, all-stock deal to acquire the troubled lender.
Since then, the Consumer Financial Protection Bureau has introduced two sets of sweeping rules changes to regulate key mortgage servicing functions. And growing scrutiny of how the handoff of mortgages is managed after loan closings and bulk sales has forced servicers to overhaul their processes and technology to create a consistent and accurate onboarding experience for borrowers.
Black Knight's stock price was up $1.30, or 3.66%, to $36.80 at market close Monday.