JPMorgan Chase has agreed to buy the right to handle $45bn of home loans from Ocwen Financial Corporation.
The acquisition of the mortgage portfolio indicates a reversal of JP Morgan’s strategy as it had pulled back from the mortgage servicing industry citing increased regulatory scrutiny and costs, as well as new international rules that require banks to hold extra capital against the rights.
The sale aligns with Ocwen’s recently announced plan to sell agency mortgage servicing rights (MSR) relating to approximately $55bn of unpaid principal balance in the next six months.
The sale of the $55bn in servicing rights, including the rights to service mortgages owned by the government-supported entities Freddie Mac and Fannie Mae, is expected to yield about $550m in proceeds.
The deal with Ocwen will add to JPMorgan’s portfolio for overseeing billing, collections and foreclosures on US mortgages, bringing it to nearly $1tn.