Nationstar Purchases $215B in MSRs from BofA

""Nationstar Mortgage LLC,"":https://www.nationstarmtg.com/ based in Lewisville, Texas, has agreed to purchase residential mortgage servicing rights (MSRs) in the amount of $215 billion in unpaid principal balance from ""Bank of America,"":https://www.bankofamerica.com/ the company ""announced Monday."":http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsLang=en&newsId=20130107006025&div=1488259278 Nationstar entered the agreement with backing from ""Newcastle Investment Corp.,"":http://www.newcastleinv.com/default.aspx based in New York, and ""Fortress Fund,"":https://www.fortressfund.com/ based in Barbados.

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Each company will retain one-third interest in the MSRs, and Nationstar will service all the loans. The purchase price for the portfolio is $1.3 billion.

""We are confident that we will be able to offer customers a smooth transition and look forward to improving the overall portfolio performance for all stakeholders,"" said Jay Bray, CEO of Nationstar.

While the agreement between BofA and Nationstar is solid, Nationstar awaits approvals from investors and other third parties. The company expects most of the MSR purchases to obtain approvals in the first quarter of this year.

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In terms of unpaid principal balance, the MSR portfolio from BofA is 47 percent government-backed--with guarantees from Fannie Mae, Freddie Mac, or Ginnie Mae. The remaining 53 percent of the portfolio consists of private-label securitizations.

With the purchase, Nationstar's customer base grows from 1.2 million to more than 1.5 million, and its servicing portfolio reaches $425 billion.

An additional $13 billion is also being added to Nationstar's portfolio as a result of another servicing acquisition from BofA in the final quarter of last year.

Newcastle will invest $340 million in the deal announced Monday. Additionally, Newcastle has pursued its own excess MSR deal with Ginnie Mae, in which the company invested $27 million in a Ginnie Mae portfolio with $13 billion in unpaid principal balance.

Newcastle plans to distribute shares of its subsidiary New Residential Investment Corp., thus spinning off all its excess MSRs in the first quarter of this year.

""I am very pleased to announce these significant investments in Excess MSRs and the spin-off of New Residential,"" ""said"":http://www.businesswire.com/news/home/20130107006028/en/Newcastle-Agrees-Acquire-Excess-MSRs-Announces-Spin-Off Kenneth Riis, CEO of Newcastle. ""We believe these investments offer a compelling opportunity to drive attractive returns for shareholders.""

Monday's announcements from Nationstar and Newcastle follow ""announcements"":http://www.themreport.com/articles/bofa-fannie-mae-resolve-repurchase-claims-2013-01-07 from Fannie Mae and BofA regarding their repurchase claim agreement. As part of the agreement, BofA will transfer 941,000 loans to specialty servicers such as Nationstar.