Wells Fargo to sell mortgage-servicing rights on $39B in loans

Wells Fargo said Wednesday it has agreed to sell residential-mortgage servicing rights on $39 billion in loans to Atlanta's Ocwen Financial Corp.

Financial terms of the deal were not disclosed by the companies. The deal is expected to close this year.

The portfolio is composed of approximately 184,000 loans, or roughly 2 percent of Wells Fargo’s residential servicing portfolio as of the end of last year, Wells Fargo said.

America's Servicing Company, a division of Wells Fargo Home Mortgage, has been servicing the loans, which Wells Fargo does not own and did not originate.

It's the latest example of a big bank retreating from servicing mortgages, which is becoming less lucrative for lenders.

Last week, New York-based Citigroup said it agreed to sell the servicing rights for about 64,000 Fannie Mae loans with approximately $10.3 billion in unpaid principal balances. Last year, Charlotte-based Bank of America announced plans to sell the servicing rights on residential mortgage loans with approximately $306 billion in unpaid principal balances.

San Francisco-based Wells Fargo is a major purchaser of residential mortgages originated by other lenders. Most of the company's servicing portfolio is made of Fannie Mae, Freddie Mac and government-backed loans.

As of the end of last year, Wells Fargo serviced $1.8 trillion in residential mortgages, according to a securities filing. The majority, $1.5 trillion, was made of loans not owned by Wells Fargo.

Wednesday's announcement by Wells Fargo comes after CFO Tim Sloan said in March that the lender might want to "test" the sale of its mortgage-servicing rights.