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The MReport Webcast: Friday 5/15/2015

An Agency mortgage servicing rights deal worth approximately $45 billion between Chase and Ocwen Financial Corp. has been finalized after two and a half months, according to an announcement from Chase on Thursday. Ocwen first announced on March 2 it had signed a letter of intent to sell the $45 billion portfolio, which includes about 266,000 high-quality Fannie Mae loans, to an anonymous buyer. Media reports that surfaced later that week indicated that the buyer was Chase, which was confirmed on Thursday by both parties in the transaction.

For Chase, purchasing the high-quality Agency loans is consistent with the New York-based bank's strategy of enhancing the quality of its mortgage business. Chase announced that it will begin welcoming new customers later this month and that it will begin onboarding the loan portfolio on June 1. Chase said that about half of the new customers already have another product with the bank. The Chase deal is the latest in a series of multi-billion dollar Agency MSR portfolio sales Ocwen has conducted this year.

The Federal Housing Finance Agency recently released a new working paper identifying a conservative lower bound for home prices in relation to long-term trend. Both credit risk and capital are associated with mortgage assets and are usually calculated using a stress test. Factors that should be considered when determining the severity of credit-related losses include: how far house prices are above long-term trend and how far they are below trend. The paper describes how to determine how far homes are falling below trend.

About Author: Jordan Funderburk

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