Fannie Mae is urging Troy, Mich.-based Flagstar Bancorp. to sell its mortgage servicing rights (MSRs) on troubled loans owned or guaranteed by Fannie, according to a Bloomberg report.
The report, based on comments from ‘people briefed on the matter,’ indicates that the government-sponsored enterprise (GSE) wants defaulted loans to be handled more aggressively by another servicer, while Flagstar would be able to retain its MSRs on current loans.
According to the bank's second-quarter earnings report, Flagstar services about $60.5 billion of loans for the GSEs, and its total MSRs were valued at $658.2 million. If Fannie forces Flagstar to sell its MSRs on late Fannie-owned or -guaranteed loans, it would likely come at a loss.
Bloomberg's inquiries to Flagstar have gone unanswered, while Fannie spokesperson Brian Faith offered no comment.