New York Community Bancorp (NYCB) has announced that its subsidiary, Flagstar Bank, is selling its residential mortgage servicing business to Mr Coop for $1.4 billion. The deal is expected to close in the fourth quarter. This strategic move aims to boost capital and sharpen focus on NYCB’s core businesses.
The sale comes as NYCB faces pressure due to its exposure to commercial real estate loans. The bank has deemed the mortgage servicing business highly sensitive to interest rate changes, which has contributed to its recent financial struggles. In the second quarter of 2023, NYCB reported a loss of $333 million, compared to a profit of $405 million in the same period last year.
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The company has lowered its 2025 profit forecast to up to 5 cents per share, compared with a prior view of 35 cents to 40 cents. This reflects the challenges NYCB is facing in a volatile market environment. The sale of the mortgage servicing unit is a significant step towards addressing these challenges and strengthening its financial position.