Bank of America is gearing up to sell large chunks of its residential servicing portfolio on a regular basis as it continues to whittle down its presence in the mortgage market, according to servicing advisors and investors who have been briefed on the bank's plans.
In the fall the bank confirmed in an earnings conference call that it would be a net seller of MSRs going forward, but has issued few details about its disposition plans.
“They want to skinny down and get rid of this stuff before it goes delinquent,” said one specialty servicer who conducts business with the bank. The servicer, requesting anonymity, said servicing transfers may even happen on a monthly basis.
In the third quarter of last year it sold a $74 billion portfolio of MSRs to Fannie Mae, a transaction that the GSE would not discuss, but then eventually confirmed in an Securities and Exchange of Commission filing.
But the industry has yet to learn how much Fannie paid for the $74 billion of receivables, 15% of which were considered delinquent. Brokers estimate that the GSE probably paid 2-times the servicing fee, which would put the price at about 50 basis points.
The market for MSRs has been deeply damaged because of delinquencies and ultra low mortgage rates which cause prepayment speeds to accelerate. However, most servicing brokers believe the depressed market for MSRs has created a buyer's market for receivables, at historically low prices.
At the end of the third quarter, BofA's servicing portfolio totaled $1.9 trillion, down 10% from the prior year, according to figures compiled by ASR sister publication National Mortgage News and the Quarterly Data Report.