Wells Fargo to Sell Mortgage-Servicing Rights

Wells Fargo & Co. on Wednesday said it would sell residential-mortgage servicing rights on $39 billion in loans to Ocwen Financial Corp.

Financial terms of the deal weren't disclosed.

The 184,000 loans formed about 2% of Wells Fargo's total residential-servicing portfolio as of the end of fourth quarter.

The bank expects the sale to be completed this year. It said the transaction won't be material to financial results. The loans behind the residential-mortgage servicing rights sold are mainly owned by private investors and weren't originated or owned by Wells Fargo.

Wells's move follows similar moves by other lenders who have been shedding parts of their mortgage businesses. Last year, government-owned auto lender Ally Financial Inc. said its bank had reached a deal to sell a portfolio of mortgage-servicing rights to Ocwen for an estimated $585 million.

Wells Fargo has been working to limit its exposure to the mortgage market as a refinancing boom that boosted bank profits continues to fizzle. Last week, Wells Fargo--the largest mortgage lender in the U.S.--had profits for mortgage lending drop by 49% from the fourth quarter of 2012 to $1.6 billion. The bank's home-lending originations totaled $50 billion, compared with the $125 billion a year earlier and $80 billion in the previous quarter.

Write to Saabira Chaudhuri at [e-mail]

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