TROY, MI-Locally-based Flagstar Bancorp reports it plans to sell servicing rights on $40.7 billion in mortgages to Minnetonka, MN-based Two Harbors Investment Corp.

According to an announcement by Two Harbors, its wholly owned subsidiary Matrix Financial Service Corp. will acquire the bulk pool of mortgage serving rights on residential mortgages that have an aggregated unpaid principal balance of $40.7 billion for a purchase price of approximately $500 million.

The $40.7 billion sum represents approximately 55% of mortgages that Flagstar was servicing for other firms as of Sept. 30, the company states.

“We periodically evaluate the sale of MSRs as a way to reduce the concentration of the asset and strengthen the quality of our capital,” Chief Executive Officer Alessandro DiNello states. “Today's transaction is an important step in our continued effort to augment our mortgage origination business.”

“We are pleased to announce this significant acquisition of MSRs from Flagstar Bank, a top-tier national mortgage lender,” states Thomas Siering, Two Harbors' President and Chief Executive Officer. “This purchase represents substantial ongoing progress related to our MSR investment initiative.” See story in Crain's Detroit Business.