Flagstar Bank Sells Mortgage Servicing Business to Mr. Cooper for $1.4 Billion

New York Community Bancorp's unit Flagstar Bank is selling its residential mortgage servicing business to Mr. Cooper for $1.4 billion. Stated reasons include financial and operational risks due to volatile interest rates. NYCB posted a $333 million loss in Q2 2023, contrasting with last year’s $405 billion profit.

New York Community Bancorp's unit Flagstar Bank is divesting its residential mortgage servicing business to non-bank mortgage platform Mr. Cooper for nearly $1.4 billion, the bank announced on Thursday.

'While the mortgage servicing business has made significant contributions to the Bank, we also recognize the inherent financial and operational risk in a volatile interest rate environment,' said NYCB CEO Joseph Otting. This strategic move coincides with the bank posting a loss of $333 million, or $1.14 per share, for the three months ending June 30, compared with a profit of $405 billion, or $1.66 per share, in the same period last year.

The transaction is a response to the ongoing instability in interest rates, highlighting the bank's need to mitigate financial exposure. It also reflects the challenges banks face in maintaining profitability amid economic fluctuations.

(With inputs from agencies.)