A subsidiary of New York Community Bancorp, Flagstar Bank, is selling its residential mortgage servicing business to Mr. Cooper Group Inc. for about $1.4 billion.
The sale includes mortgage servicing rights and the third-party origination platform.
“While the mortgage servicing business has made significant contributions to (Flagstar), we also recognize the inherent financial and operational risk in a volatile interest rate environment, along with increased regulatory oversight for such businesses,” New York Community Bancorp and Flagstar Chairman, President and CEO Joseph Otting said in a statement on Thursday.
The company is concentrating on shifting Flagstar into a relationship-focused regional bank and will continue to provide residential mortgage products to its retail and private wealth customers, Otting added.
The deal is expected to close in the fourth quarter.
Mr, Cooper, based in Dallas, said separately the deal lets it add 1.3 million customers.
New York Community Bancorp Inc. also announced its second-quarter results on Thursday, reporting a loss of $323 million, or $1.14 per share.
Losses, adjusted for costs related to mergers and acquisitions, were $1.05 per share. Analysts surveyed by Zacks Investment Research were calling for a loss of 38 cents per share.
Revenue totaled $1.66 billion in the period. Adjusted revenue was $671 million, also missing Wall Street forecasts, which came in at $701.4 million.
New York Community Bancorp announced in March that it had received a lifeline of more than $1 billion from a group of investors after seeing its stock plunge by more than 80% earlier this year. The bank has struggled due to weakness in commercial real estate and growing pains resulting from its buyout of a distressed bank.
Shares of the Hicksville, New York-based company slid more than 11% in early trading. Mr. Cooper shares rose 4%.