In a move expected to add 1.3 million new customers, Mr. Cooper Group announced plans for a $1.4 billion acquisition.
The Dallas-based mortgage servicer and originator announced plans to purchase the residential mortgage operations of Flagstar Bank, a subsidiary of New York Community Bank.
Along with more than 1 million customers, Mr. Cooper would add about $356 billion in unpaid principal balances, between mortgage servicing rights and subservicing contracts.
In addition to the mortgage servicing rights and subservicing contracts, the deal would include Flagstar’s advances and a third-party originating platform.
“We have the operational capacity to onboard Flagstar’s customers with a smooth and positive experience, which will be our top priority,” said Jay Bray, Mr. Cooper chairman and CEO. “We also look forward to welcoming Flagstar team members to the Mr. Cooper family. We have long respected Flagstar as a mortgage servicer, and we feel very closely aligned with their cultural values.”
Mr Cooper, which is publicly traded on the Nasdaq stock exchange, plans to fund the deal through a combination of available cash and drawdowns of existing mortgage servicing rights lines.
Joseph M. Otting, Flagstar’s chairman, president and CEO, said in a statement that the sale of the business was not taken lightly.
“Mr. Cooper is a major player in the mortgage origination and servicing business. It was important to us that we commit to a buyer with strong mortgage expertise and reputation and a shared commitment to customer service excellence and employee values,” said Otting.
The deal is expected to close in the fourth quarter.
Jefferies LLC is acting as exclusive financial adviser to New York Community Bancorp in the transaction.
Mr. Cooper, formerly Nationstar Mortgage, has been re-evaluating its office footprint in Dallas-Fort Worth and is examining the opportunity to sublet different spaces.
The company has emphasized a “home-centric” work environment during the past few years.
