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Washington Mutual Plans To Sell Mortgage-Servicing Rights
(WM) on Wednesday said it plans to sell its rights to service about $140 billion of mortgages, as the nation's largest savings and loan continues to revamp its home-loan unit amid weakening loan demand.
The Seattle company, the third-largest mortgage lender after Countrywide Financial Corp. (CFC) and Wells Fargo & Co. (WFC), said it will sell for an undisclosed amount its entire portfolio of government mortgage servicing and some of its fixed-rate servicing portfolio to San Francisco-based Wells Fargo. The portfolios to be sold represent about 1.3 million customers. Also, the mortgage-servicing rights are valued at $2.6 billion.
Chief Executive Kerry Killinger said in an interview the plan represents Washington Mutual's ongoing effort to move its home-loan business "away from the commoditized, 30-year, fixed-rate mortgages and into higher margin areas" such as option adjustable-rate mortgages, home-equity loans, subprime mortgages, and Alt-A mortgages - or loans whose risk falls between prime and subprime loans.
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UPDATE: Washington Mutual Plans To Sell Servicing Rights
(WM) on Wednesday said it plans to sell its rights to service about $140 billion of mortgages, as the nation's largest savings and loan continues to revamp its home-loan unit amid rising interest rates and weakening loan demand.
The Seattle company, the third-largest mortgage lender after Countrywide Financial Corp. (CFC) and Wells Fargo & Co. (WFC), said it will sell for an undisclosed price its entire portfolio of government mortgage servicing and some of its fixed-rate servicing portfolio to San Francisco-based Wells Fargo. The servicing portfolios, representing about 1.3 million customers, are valued by the company at $2.6 billion - or 30% of the total value of its mortgage-servicing rights.
The sale, expected to be completed at the end of this month, can help Washington Mutual reduce its hedging costs and related earnings volatility as well as accelerate its winding down of certain lower-yielding mortgage products.