Wells Fargo announced Wednesday that it will purchase Washington Mutual's government mortgage servicing portfolio. Wells Fargo will also purchase a portion of WaMu's conforming, fixed-rate portfolio. The total servicing portfolio after the transaction is complete will be $692 million, and affect 4 million customers with outstanding principal balances. Wells will additionally acquire WaMu's Milwaukee servicing operation. No terms of the deal were disclosed. Washington Mutual has expressed an interest to focus on more profitable products and businesses, and not on the slowing mortgage industry. Mortgage servicing is the business of collecting mortgage payments from borrowers while providing customer service. Wells Fargo has been expanding its mortgage servicing portfolio in the past ten years. It has seen a compound annual growth rate of 25% since 1995. The WaMu acquisition will increase Wells Fargo's mortgage servicing portfolio by 13%. Wells will become the nation's largest servicer, surpassing Countrywide Financial Corp. "We expect this transaction to exceed our required internal rate of return even before factoring in any cross-sell to these new customers," said Howard Atkins, Wells Fargo's chief financial officer. Washington Mutual recently laid off 900 mortgage employees across the country last week. Three-hundred and fifty of these employees were mortgage property appraisers. The company has been working towards slimming down operations and outsourcing to other countries |
