Flagstar Bank Sells Mortgage Servicing to Mr. Cooper

Flagstar Bank, a subsidiary of New York Community Bancorp, sells its mortgage servicing business to Mr. Cooper Group for $1.4 billion.

In a significant maneuver within the financial sector, Flagstar Bank, a subsidiary of New York Community Bancorp, has entered into an agreement to divest its residential mortgage servicing business to Mr. Cooper Group Inc. for an estimated $1.4 billion. This transaction encompasses not only the mortgage servicing rights but also the third-party origination platform. The backdrop to this sale is marked by New York Community Bancorp's tumultuous year, particularly following its acquisition of Signature Bank—one of two institutions that succumbed to failure in early 2023 amid escalating interest rates. The bank has been compelled to seek multiple financial lifelines from investors, prompting a comprehensive restructuring of its business model and balance sheet to mitigate risks associated with both the Signature acquisition and its broader operations. The completion of this deal is anticipated in the fourth quarter.

Dallas-based Mr. Cooper has indicated that this acquisition will enable it to expand its customer base by an additional 1.3 million individuals. Concurrently, New York Community Bancorp disclosed its second-quarter financial results, revealing a staggering loss of $323 million, equating to $1.14 per share. When adjusted for merger and acquisition-related expenses, the loss was reported at $1.05 per share, significantly exceeding analysts' expectations, which had predicted a loss of only 38 cents per share. The bank's revenue for the quarter amounted to $1.66 billion, with adjusted revenue at $671 million—both figures falling short of Wall Street's forecasts, which had projected revenue of $701.4 million. Earlier in March, New York Community Bancorp had announced it secured over $1 billion from a consortium of investors after witnessing its stock plummet by more than 80% earlier in the year. The institution has faced challenges stemming from weaknesses in the commercial real estate sector and the complexities arising from its acquisition of a troubled bank. Following the announcement, shares of the Hicksville, New York-based company experienced a decline of over 4% in afternoon trading, while Mr. Cooper's stock saw an uptick of nearly 7%.