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Flagstar Financial's Unit Closes Sale of Mortgage Servicing Business
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The bank subsidiary of Flagstar Financial, Inc. (FLG - Free Report) , Flagstar Bank, N.A., closed the previously announced sale of its residential mortgage servicing, mortgage servicing rights and the third-party origination platform to Mr. Cooper Group Inc. (COOP - Free Report) for $1.3 billion in cash.
The transaction is projected to increase the company's CET1 capital ratio by nearly 60 basis points on a pro-forma basis as of Sept. 30, 2024.
In October 2024, New York Community Bancorp, Inc., the holding company of Flagstar Bank, announced that its board of directors approved changing the company's name to Flagstar Financial, Inc.
Flagstar Financial Management Remarks
Chairman, president and chief executive officer Joseph M. Otting said, "We are very pleased to announce the successful sale of our mortgage serving business and third-party origination platform to Mr. Cooper. The completion of this sale reflects another significant milestone toward our strategy to simplify our business model and transform Flagstar into a regional bank focused on the core business of Retail Banking, Commercial and Private Banking, and Commercial Real Estate lending. The Bank will continue to provide residential mortgage products through our retail origination channels and the Private Bank, with particular focus on serving our branch and private banking customers."
Rationale Behind FLG’s Sale of Mortgage Servicing Unit
Flagstar Financial’s spinoff of residential mortgage servicing reflects Flagstar Bank’s ongoing efforts to simplify its business and diversify its loan portfolio.
In line with this, in July 2024, Flagstar Financial completed the sale of $5.9 billion in mortgage warehouse loans to JPMorgan Chase Bank, N.A., the Subsidiary of JPMorgan (JPM - Free Report) . Flagstar Financial expects to close mortgage warehouse loans of an additional $200 million in the upcoming period once necessary customer approvals are received. The transaction adds approximately 70 basis points to its CET1 ratio.
During the third quarter 2024 earnings, FLG's management stated that it continued to de-risk the loan portfolio. The CRE exposure continues to decline through a combination of par pay-offs and proactively managing problem loans. Total CRE loans have dropped 3% from the previous quarter and 6% year to date.
Image: Bigstock
Flagstar Financial's Unit Closes Sale of Mortgage Servicing Business
The bank subsidiary of Flagstar Financial, Inc. (FLG - Free Report) , Flagstar Bank, N.A., closed the previously announced sale of its residential mortgage servicing, mortgage servicing rights and the third-party origination platform to Mr. Cooper Group Inc. (COOP - Free Report) for $1.3 billion in cash.
The transaction is projected to increase the company's CET1 capital ratio by nearly 60 basis points on a pro-forma basis as of Sept. 30, 2024.
In October 2024, New York Community Bancorp, Inc., the holding company of Flagstar Bank, announced that its board of directors approved changing the company's name to Flagstar Financial, Inc.
Flagstar Financial Management Remarks
Chairman, president and chief executive officer Joseph M. Otting said, "We are very pleased to announce the successful sale of our mortgage serving business and third-party origination platform to Mr. Cooper. The completion of this sale reflects another significant milestone toward our strategy to simplify our business model and transform Flagstar into a regional bank focused on the core business of Retail Banking, Commercial and Private Banking, and Commercial Real Estate lending. The Bank will continue to provide residential mortgage products through our retail origination channels and the Private Bank, with particular focus on serving our branch and private banking customers."
Rationale Behind FLG’s Sale of Mortgage Servicing Unit
Flagstar Financial’s spinoff of residential mortgage servicing reflects Flagstar Bank’s ongoing efforts to simplify its business and diversify its loan portfolio.
In line with this, in July 2024, Flagstar Financial completed the sale of $5.9 billion in mortgage warehouse loans to JPMorgan Chase Bank, N.A., the Subsidiary of JPMorgan (JPM - Free Report) . Flagstar Financial expects to close mortgage warehouse loans of an additional $200 million in the upcoming period once necessary customer approvals are received. The transaction adds approximately 70 basis points to its CET1 ratio.
During the third quarter 2024 earnings, FLG's management stated that it continued to de-risk the loan portfolio. The CRE exposure continues to decline through a combination of par pay-offs and proactively managing problem loans. Total CRE loans have dropped 3% from the previous quarter and 6% year to date.
Flagstar Financial's Zacks Rank & Price Performance
Flagstar Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past three months, shares of FLG have gained 9.6% compared with the industry’s 7.4% rise.