Although a handful of bidders have pondered the thought of buying roughly $40 billion of servicing rights being peddled by HSBC Bank USA, it appears the deal has stalled for now.
For months, the British-owned bank has refused to provide any updates on the auction process, including how many MSRs are even out for bid. (The range has been $40 billion to $60 billion.)
“I haven’t heard anything about the deal in a while,” said one servicing executive whose firm buys MSRs. This executive, asking that his name not be used, added that, “the bid was either nonexistent or so low that HSBC passed.”
HSBC’s servicing platform is located in Depew, N.Y., a suburb of Buffalo.
The bank was once a top 20 funder of mortgages in the U.S. but has greatly downsized its involvement in residential finance after getting burned by its $14 billion purchase of subprime lender Household Finance early last decade.
In the fall of 2010 HSBC said it was considering its “strategic options” regarding the mortgage business, a code phrase for a sale. (The unit and MSRs being offered for sale are conventional in nature, not subprime.)
The sale of MSRs in the secondary market has been hurt by uncertainties over servicing compensation and the issue of representation and warranties. Some sellers are willing to give reps and warranties while others only offered limited assurances.
In other MSR news, Interactive Mortgage Advisors recently came to market with a $251 million MSR package backed by Fannie Mae loans.