Flagstar, a subsidiary of New York Community Bancorp (NYCB.US), sold its mortgage lending business to Mr. Cooper (COOP.US) for $1.4 billion.

Wealthy City Financial reported that Flagstar Bank, the bank subsidiary of New York Community Bancorp (NYCB.US), agreed to sell its residential mortgage servicing business to mortgage lender Mr. Cooper (COOP.US) for about $1.4 billion, with the transaction expected to close in the fourth quarter of 2024. Following the transaction, Flagstar expects its common equity tier 1 (CET1) ratio to increase by approximately 60 basis points.

The chairman, president and chief executive officer of New York Community Bancorp said that Flagstar would receive a premium for selling its mortgage servicing platform. He said, "While the mortgage servicing business has been a significant contributor to the bank, we also recognize that in an environment of interest rate volatility, this business has inherent financial and operational risks and increased regulatory scrutiny. During the transition, Flagstar will continue to offer residential mortgage products to its retail and private wealth customers."

In addition, New York Community Bancorp reported second-quarter losses higher than expected, after the company expanded its review of commercial real estate and multi-family loans and increased loan loss reserves.