Mr. Cooper leaves reverse service space with sale to MAM
Mortgage, origination and transaction-based services company M. Cooper Group on Tuesday announced the sale of its portfolio of reverse mortgage services – operating under the Champion Mortgage mark – at Mortgage asset management (MAAM).
Terms of the deal were not disclosed, but statements from company management Mr. Cooper have clarified that the transaction will not have a significant impact on its second quarter 2021 results.
The development is particularly notable because of MAM’s recent activity in reverse mortgage service. MAM has emerged as the buyer of servicer Reverse mortgage solutions (RMS) in 2019, buying the company and its portfolio from its former parent company Ditech holding company after a long process supervised by a court. However, MAM recently sold RMS to Ocwen Financial Services, parent company of PHH Mortgage Corporation and primary reverse mortgage lender Liberty Reverse Mortgage.
With the recent acquisition of Champion Mortgage’s reverse service portfolio, MAM effectively re-entered the reverse mortgage service arena shortly after the sale of RMS, which itself became the subject of a lawsuit against the leaders who helped facilitate the initial agreement between MAM and RMS.
The Champion Sale
The sale of Champion’s reverse services portfolio will have to go through all relevant regulatory processes and other unspecified closing conditions before the deal can be closed, but is expected to close by the end of 2021, according to a statement. published by M. Cooper.
The sale is expected to reduce Mr. Cooper’s overall service portfolio by $ 16 billion in outstanding principal balance (UPB), and will also reduce his balance sheet by approximately $ 5 billion in value conversion mortgage servicing rights. domiciliary (HECM) and other unspecified rights. assets. Prior to the closing of this transaction, the company will continue its reverse operations before the brand passes to its new owners.
The move should allow the company to focus on its key drivers of profitability while improving the financial position of the entire organization, according to Cooper Group Chairman and CEO Jay Bray in an accompanying statement. announcement of the agreement.
“We are extremely grateful to the Champion Mortgage team for their unwavering commitment to our business, and we will work to make the transition for them and our clients as smooth as possible,” Bray said in the release regarding the sale. “From a strategic perspective, this is a major transaction – we can now fully focus on our core origination and service segments. It also improves profitability, strengthens our capital ratios and positions us to accelerate growth. “
Another executive explained that the decision to sell the Champion portfolio was not because the reverse mortgage service was putting Mr. Cooper at risk or depressing his profitability, but because the company was looking to streamline its financial statements and to accentuate what it intends to do with its main activities.
“Measured since its inception, Champion Mortgage has been a profitable operation for Mr. Cooper, but it is not a major driver of our business,” said Chris Marshall, vice president, president and chief financial officer of Mr. Cooper Group. . “This transaction strengthens our business model, simplifies our financial statements and allows us to reallocate liquidity to our core businesses. These benefits will contribute to an even stronger momentum for Mr. Cooper.
On the same day, Mr. Cooper announced the launch of the sale of Champion, the company also announced that it had completed the sale of title insurance and settlement service provider Title365 to digital lending software company Blend Labs, Inc. in a deal valued at $ 500 million in cash. and retained interests.
When contacted, representatives for Mr. Cooper Group declined to comment further on the sale of the portfolio. MAM representatives did not respond to a request for comment at the time of publication.
The buyer, recent history backwards
MAM has made new inroads into the reverse mortgage market and has accelerated its involvement in the space over the past two years. In June 2019, MAM was designated as a “stalking horse bidder” with the aim of acquiring RMS from the parent company Ditech Holding Corporation, which at the time had sought to simultaneously sell its portfolios of term and reverse mortgages to MAM for RMS and to New Residential for its term portfolio.
By the end of September, the legal obstacles to concluding the agreement had dissipated and MAM emerged as a buyer of RMS under an agreement, the terms of which were not disclosed. However, in the summer of 2020, documents filed by the courts indicated that MAM had complaint filed against one of his own executives, alleging inappropriate behavior and compensation towards a consulting firm with which the lawsuit also alleges the executive had a direct and undisclosed working relationship.
This recently resulted in MAM announce the sale of RMS to Ocwen Financial, the parent company of Liberty Reverse Mortgage and PHH Mortgage Corporation in a transaction valued at $ 12.4 million. Liberty President Mike Kent later described for RMD that the acquisition of RMS will allow Liberty to become a fully managed reverse mortgage lender, providing it with the ability to “directly create, securitize and manage reverse mortgages,” Kent said.
Earlier this year, the New York Attorney General’s Office (OAG) announced an amount of $ 500,000 regulation with Champion Mortgage regarding allegations that Champion failed to provide the proper advice and information to reverse mortgage borrowers to protect their homes from default or foreclosure. The terms of the settlement stated that Nationstar / M. Cooper is under no obligation to admit or deny the findings of the OAG.
Following the settlement, Nationstar / M. Cooper is to contribute $ 500,000 into an assistance program led by New York Attorney General Letitia James called the Equitable Reverse Mortgage Assistance (ERMA) program, launched in 2020 and dedicated to limiting cases of displacement among elderly homeowners in providing low cost deferred loans to reverse mortgage holders who are at risk of default due to municipal property taxes, home insurance obligations or other charges arising from a temporary inability to pay.
According to the attorney general’s office, the additional $ 500,000 in funds will be specifically intended to assist Champion clients who avail of the benefits of the ERMA program.