JPMorgan Chase & Co., the second-biggest servicer of U.S. mortgages, agreed to buy the right to manage about $45 billion in home loans from Ocwen Financial Corp. starting June 1.
The deal involves servicing rights for 266,000 mortgages owned by Fannie Mae, the New York-based bank said Thursday in a statement that didn’t disclose terms. Bloomberg reported in March that JPMorgan was acquiring the rights.
The agreement will bring JPMorgan’s portfolio for overseeing billing, collections and foreclosures on U.S. mortgages to about $1 trillion, a threshold last exceeded in the fourth quarter of 2013. Its $948.8 billion loan-servicing portfolio as of Dec. 31 trailed only Wells Fargo & Co.’s $1.75 trillion, according to data compiled by Bloomberg.
“Buying this prime servicing book will improve the quality of our servicing portfolio and will help drive a stronger and less volatile mortgage business,” Kevin Watters, head of JPMorgan’s mortgage division, said in the statement.
The bank bought contracts on $70 billion of mortgages from MetLife Inc. in November 2012. Since then, JPMorgan has surpassed Bank of America Corp. as the nation’s No. 2 servicer.
Ocwen Chief Executive Officer Ronald Faris is shrinking the Atlanta-based company amid regulatory scrutiny and complaints from consumers and bond investors. A December settlement with Benjamin Lawsky, superintendent of the New York Department of Financial Services, prevents the firm from acquiring more servicing rights until it improves its processes.
JPMorgan shares climbed 0.5 percent to $65.83 at 10:08 a.m. in New York. Ocwen slid 1.6 percent to $10.03 and has tumbled 34 percent this year.