Wells Fargo is selling a $50 billion package of MSRs. The package includes mortgage servicing rights (MSRs) on residential mortgage loans with over $200 billion in unpaid principal balance, originating from both Wells Fargo and other lenders. The MSRs are on prime and non-prime conventional, government-insured and government-guaranteed mortgages.
This move marks a shift in Wells Fargo’s position in the mortgage servicing market. Wells Fargo previously held a strong presence in servicing, but recently it has sold off several of its servicing portfolios- a move that many believed telegraphed their exit from this sector of the lending business. However, the sale of this significant MSR package signals their commitment to continuing to provide mortgage- servicers with a wide array of high- quality servicing assets to purchase.
This particular MSR package offers buyers significant opportunities for growth, as the portfolio includes both newly originated mortgages and seasoned loans. Buyers will benefit from the portfolio’s diversity and size, since it will allow them to achieve economies of scale and improved liquidity. Also, this MSI portfolio is well- diversified in terms of geographical location, product type and loan types, helping buyers increase the geographic footprint of their business and diversify their offerings across product types and loan types.
The sale of this MSR portfolio is expected to be a win-win for both Wells Fargo and potential investors, as buyers will have access to a high- quality portfolio of mortgages that they can use to expand their mortgage servicing capabilities and Wells Fargo will be able to reduce their exposure to mortgage servicing. Additionally, the sale of this MSR package is expected to be a highly competitive process, given the size and quality of this portfolio and the current demand for high- quality servicing assets.
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