Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.
New York Community Bancorp subsidiary Flagstar Bank is laying off 700 employees and will part ways with another 1,200 workers when it closes the $1.4 billion sale of its mortgage servicing business to Mr. Cooper later this year.
The 700 workers being laid off across Flagstar’s footprint represent about 8 percent of the company’s workforce.
But “the majority” of the 1,200 Flagstar employees being let go in the sale of the company’s mortgage servicing business “will be offered the opportunity to transfer to the buyer, facilitating a smooth transition and ensuring continued employment,” NYCB announced Thursday.
NYCB, which will rebrand as Flagstar Financial Inc. on Oct. 25, has struggled in the aftermath of its $2.6 billion acquisition of Flagstar Bancorp, which closed in 2022, and Flagstar’s $2.7 billion acquisition of troubled Signature Bank the following year.
Since disclosing “material weaknesses” in internal controls and a $2.7 billion fourth quarter loss in February, NYCB has overhauled its executive suite and raised money by selling off some of its operations.
JPMorgan Chase Bank in May agreed to buy nearly $6 billion in mortgages from NYCB. When the deal closed in July, Flagstar Bank exited the warehouse mortgage lending business.
Three days later, NYCB announced that it had reached a deal with mortgage servicing giant Mr. Cooper to sell Flagstar’s servicing business and correspondent lending platform.
NYCB has been trying to avoid the fate of Silicon Valley Bank, Signature Bank and First Republic Bank, whose failures were driven largely by rising interest rates and delinquencies on commercial real estate loans.
For the six months ended June 30, 2024, NYCB reported a net loss of $650 million, compared to net income of $2.4 billion in the first half of 2023.
With the Mr. Cooper deal expected to close by the end of the year, NYCB President and CEO Joseph Otting said Thursday that the company has made “significant progress this year” and will continue to “pursue opportunities to optimize our operations and enhance efficiency.”
Joseph Otting
“While these strategic actions involve difficult decisions, including impacts on jobs, we believe they are essential for strengthening our financial foundation and building a more agile, competitive company,” Otting said in a statement. “This will enable us to focus on strategic investments in other areas and better serve our clients and shareholders, ensuring long-term sustainability and profitability.”
Flagstar Mortgage continues to operate nationally through a wholesale network of approximately 3,000 third-party mortgage originators.
NYCB and Flagstar’s systems were integrated in February, with all of the merged company’s consumer-facing businesses now operating under the Flagstar brand.
Beginning Oct. 28, the company’s New York Stock Exchange ticker will be “FLG” instead of “NYCB.”
Shares in NYCB, which in the last 12 months have traded for as little as $5.10 and as much as $34.47, were down 1 percent in light trading Friday from Thursday’s closing price of $12.38.
Mr. Cooper’s servicing portfolio hits $1.56T
Source: Mr. Cooper earnings reports.
For Mr. Cooper, the deal to acquire Flagstar Bank’s mortgage servicing business and correspondent lending platform is projected to swell the company’s mortgage servicing rights (MSR) portfolio to $1.56 trillion.
In reporting a $204 million second quarter profit, Mr. Cooper said acquiring Flagstar’s mortgage operations for $1.4 billion in cash would add 1.3 million customers and $356 billion in unpaid principal balance to its MSR portfolio.
Having achieved a long-term goal of amassing a $1 trillion servicing portfolio at the beginning of the year, Mr. Cooper continues to invest in technology that it expects will allow it to cut costs and manage its growing loan servicing portfolio more efficiently.
Last week Mr. Cooper named Sridhar Sharma — who is credited with developing the company’s patented AI and advanced machine learning platform — chief innovation and digital officer.
Dallas-based Mr. Cooper also hired three new tech leaders from outside the company, including Sabre veteran Jeff Carroll who is the company’s new chief technology officer.
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
