Mr. Cooper axes transition of 400 Flagstar employees

Hundreds of former Flagstar employees will not transition to Mr. Cooper after the $1.4 billion purchase of the Michigan-based bank's servicing and TPO operations is completed early this year.

About 400 positions will be impacted, according to a Mr. Cooper spokeswoman. The decision was made after the megaservicer "boarded the bulk of the servicing portfolio, and through this integration ... determined that [it] will not bring on as many team members from Flagstar as anticipated," the spokeswoman added.

Dozens of former Flagstar servicing employees, including loss mitigation specialists,  had "open to work" signs up as of last Friday, via LinkedIn.

"We are committed to being transparent and respectful during this time and are working in partnership with Flagstar to ensure team members are supported as they transition to the next phase of their careers," the company's spokeswoman said Monday.

Close to 350 Flagstar servicing employees are expected to be fully integrated into Mr. Cooper's team. The TPO team, however, will have to make a second transition to Florida-based A&D Mortgage, which announced it acquired this part of the business in January.Mr. Cooper's purchase of Flagstar's mortgage assets has increased the non-depositiers' foothold in the servicing business.

The servicer revealed its servicing portfolio grew to nearly $1.56 trillion in UPB as it closed on its Flagstar asset acquisition, in its most recent earnings. Portfolio size was up 26% in the quarter and 57% compared to a year ago.

"This is by far the largest customer acquisition in our history," Mr. Cooper CEO Jay Bray said of the Flagstar deal during the company's fourth quarter earnings call.

The acquisition increased the company's portfolio to a size 50% larger than its closest competitor, Bray added. To the question of why Mr. Cooper sold Flagstar's third-party origination business, executives said the broker channel was a better fit for buyer A&D Mortgage.

An A&D executive, who initially confirmed the acquisition, said Mr. Cooper approached the company with the offer. The transaction will close at the end of March, though employees have already begun the onboarding process.

The Florida-based non-QM shop has been on the lookout to acquire another company and the addition of Flagstar's TPO business will result in a "substantial boost in production," the executive said. Counting last year's production, Flagstar's TPO business and A&D Mortgage will be "a $10 billion a year business," they claimed.