Flagstar sells mortgage

Flagstar Bank, a subsidiary of New York Community Bancorp, has agreed to sell its residential mortgage servicing business to Mr. Cooper for approximately $1.4 billion, a move aimed at strengthening its capital position and focusing on core operations. The transaction, expected to finalize in Q4 2024, is projected to enhance Flagstar's common equity tier 1 capital ratio by about 60 basis points. CEO Joseph Otting highlighted the financial and operational risks associated with the mortgage servicing sector, especially in a volatile interest rate environment. Following the announcement, Flagstar's shares fell 7%, and the bank reported a $333 million loss for Q2, contrasting with a $405 million profit from the previous year. Additionally, the bank revised its 2025 profit forecast down significantly, from 35-40 cents per share to 5 cents. Despite these challenges, Flagstar plans to continue offering residential mortgage products to its retail and private wealth clients.