Ocwen Financial, a large mortgage-loan servicer, yesterday won court approval to buy $350 billion of mortgage-servicing rights from bankrupt ResCap.
Ocwen’s winning bid was $3 billion.
The win by Ocwen CEO William Erbey provides the company with a huge platform for growth in a very profitable niche of the housing sector.
It could also open the door for Erbey and Ocwen to grow the company’s nascent mortgage-origination business.
ResCap, the bankrupt mortgage unit of Ally Financial, is off-loading assets in Bankruptcy Court auctions.
News of the Ocwen win sent its shares up 4.3 percent, to $37.75. In addition, Ocwen’s 2009 spin-off, Altisource Portfolio Solutions, which provides fee-based services like title insurance to mortgage servicers, jumped 13.3 percent, to $124.33.
On the other hand, Nationstar Mortgage, which lost the bidding war to Ocwen, now the largest non-bank mortgage servicer, saw its shares slump 9.6 percent.
The sale of ResCap’s mortgage servicing business and its mortgage portfolio comes amid a larger move by banks to exit the business.
Ocwen, Nationstar, a unit of Fortress Investment Group, and others are quickly moving into the field.
Bank of America will follow other lenders out of the servicing game when, as is widely expected, it sells off a similarly sized mortgage-servicing business in pieces over the next year.
Nationstar is expected to bid on the BofA assets, sources told The Post.
Ocwen only gained the capacity to originate mortgages this month after buying WL Ross’ mortgage business.
The best source of origination are loans one already services, and gaining such a big portfolio, roughly two million mortgages, gives Ocwen a chance to become a full-service mortgage company.
As The Post wrote exclusively this week, Ocwen partnered with Walter Investment, and Walter bought $50 billion of the package, those loans serviced for Fannie Mae, because Fannie is uncomfortable with Ocwen’s primarily foreign-based service reps.
Ocwen did not return calls. BofA declined to comment.