Washington Mutual is selling all of its government mortgage servicing and part of its conforming, fixed-rate loan portfolio to Wells Fargo & Co. — about $140 billion in debt, all told, held by 1.3 million customers.
To smooth the transition, most of Washington Mutual’s loan servicing and support staff in Milwaukee will become Wells Fargo employees late this year and early next year, the companies said in a press release.
Terms of the deal were not disclosed. But Washington Mutual said the move was part of a strategy to focus the bank’s home loan business on higher-margin products and reduce mortgage-servicing rights as a percentage of capital. Washington Mutual last week announced plans to farm out residential appraisals to two outside appraisal management companies as part of a move to cut 900 jobs.
After the sale, Washington Mutual’s total mortgage-servicing portfolio will stand at about $692 billion in outstanding principle held by 4 million customers.
Wells Fargo, which says its mortgage servicing portfolio has grown at a compound annual rate of 25 percent a year since 1995, will be servicing $1.25 trillion in mortgage debts held by 7.5 million customers — a 13 percent increase from current levels — when the deal closes.