Mortgage servicing company Nationstar Mortgage Holdings Inc. (NSM) has agreed to acquire roughly $10.4 billion in residential mortgage servicing rights from Bank of America Corp. (BAC) in a co-investment with Newcastle Investment Corp. (NCT).
As a mortgage servicer, Nationstar provides administrative functions on loans that are held by banks, government organizations, private investment funds and other owners of mortgage loans and securities. It earns revenue based primarily on the unpaid principal balance of loans serviced.
The company said Tuesday that the servicing portfolio being acquired from Bank of America consists entirely of loans in government-sponsored enterprise, or GSE, pools.
Nationstar noted it will fund a portion of the purchase price with $44 million co-investment being made by Newcastle that gives it the right to receive 65% of the monthly cash flow generated by the mortgage servicing rights.
Further financial details weren't disclosed.
Nationstar went public in March in a lackluster debut on the New York Stock Exchange. While most residential mortgage loan servicing is concentrated among a few banks, Nationwide is a non-bank servicer, and has said it believes the industry is shifting away from banks toward non-bank servicers as banks seek to exit the business, which can be volatile and capital-intensive.
