Westcorp is leaving the mortgage servicing business.
This week its Western Financial Bank announced the pending sale of a $4 billion portfolio of mortgage servicing rights. The sale will result in a writedown of about $2.3 million after taxes, which will contribute to a previously announced third-quarter loss.
Countrywide Servicing Exchange, a subsidiary of Countrywide Credit Industries Inc. of Calabasas, Calif., brokered the deal. Lee Whatcott, Westcorp's chief financial officer, declined to name the buyer or the price. Servicing brokers not involved in the transaction guessed it could have sold for $40 million to $50 million.
Westcorp will continue to service about $1 billion of single-family and multifamily mortgages that it holds in its portfolio until the loans wind down, Mr. Whatcott said. But it will no longer service loans for other investors.
The company is shifting its mortgage banking business away from originating A-quality loans and toward subprime loans, he said.
Westcorp said it would be "a prudent move to utilize capital tied up in servicing" elsewhere. Aside from mortgages, Westcorp has a huge auto lending business and a commercial banking business.