Mr. Cooper Acquires Flagstar’s TPO Platform, Servicing Rights

In a stunning Q2 announcement, Mr. Cooper Group says it is acquiring Flagstar Bank’s TPO platform and $356 billion in mortgage servicing rights (MSRs), advances, and subservicing contracts.

Mr. Cooper will pay $1.4 billion in cash in exchange, arranged from available cash and drawdowns of existing MSR lines.

“We have the operational capacity to onboard Flagstar’s customers with a smooth and positive experience, which will be our top priority. We have long respected Flagstar as a mortgage servicer, and we feel very closely aligned with their cultural values,” Mr. Cooper chairman and CEO Jay Bray noted.

The servicer will acquire 1.3 million customers and add approximately $356 billion in UPB, mainly in the wholesale sector.

Flagstar, for its part, pointed to the “volatile” market as the basis for its decision.

“While the mortgage servicing business has made significant contributions to the bank, 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’s chairman, president, and CEO Joseph Otting said in a statement. NYCB owns Flagstar.

“This was not a decision we took lightly and I want to thank our teammates in mortgage servicing and third-party mortgage originations and all of the support teams who deliver high-quality service day-in and day-out.”

The deal is expected to close in the last quarter of this year.

The announcement came packaged with Mr. Cooper’s Q2 2024 earnings, which showed a strong quarter resulting in a reported net income of $204 million.

This is Mr. Cooper’s third high-profile acquisition in the last year. In 2023, it also acquired Home Point Capital and Roosevelt Management Co.