Can Bank of America Successfully Streamline?
As if the first $300 billion of mortgages that Bank of America (NYSE:BAC) sold the service rights to wasn’t enough, the bank is said to be trying to sell servicing rights to another $100 billion of mortgages.
CEO Brian Moynihan said that the bank is working to streamline and reduce long-term expenses. Selling off the servicing rights to the massive amount of mortgages that Bank of America owns will help the company move away from mortgage servicing, which is just the kind of streamlining Moynihan wants.
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Bank of America will sell servicing rights on the first $300 billion of mortgages to Walter Investment Management (AMEX:WAC) and Nationstar Mortgage Holdings (NYSE:NSM), with Nationstar taking on the majority of the servicing rights with $215 billion worth for $1.3 billion and Walter buying $93 billion worth for $519 million. There is no news as to whom Bank of America will sell the next $100 billion in mortgage servicing rights, but according to Reuters sources, Bank of America can be expected to report more mortgage servicing rights sales later this week.
After the recent development of Bank of America settling to pay Fannie Mae $10 billion over trouble mortgage claims, it is uncertain how the extensive mortgage servicing rights sales will affect the bank in the short term. A previous prediction had the bank at a fourth-quarter net loss of $2.5 billion, but the added sale of $100 billion in servicing rights could help reduce that number some, though not dramatically. As the sales are part of a long-term focus, only time will tell how effective the move to streamline Bank of America will be.
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