Flagstar and Two Harbors help each other out

|About: Flagstar Bancorp, Inc. (FBC)|By:, SA News Editor

Win-win. Both Flagstar Bancorp (FBC +2.1%) and Two Harbors (TWO +2.5%) fade mostly red action in their sectors following Flagstar's sale of MSRs with $40.7B of UPB to Two Harbors last night.

The sale represents 55% of Flagstar's mortgage loans serviced-for-others portfolio. Importantly, Flagstar will continue to receive income and fees as it will act as sub-servicer to the loans underlying the MSRs - in other words, the bank has unloaded the MSRs and the capital requirements they come with, but will still receive some income from the assets.

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