Most of the 1,200 Flagstar employees being let go in the $1.4 billion sale of the company’s mortgage services business will be given the opportunity to transfer to Mr. Dallas-based Cooper.
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New York Community Bancorp subsidiary Flagstar Bank is laying off 700 employees and will part with another 1,200 employees when it closes on the $1.4 billion sale of its mortgage business to Mr. Cooper later this year.
The 700 workers being laid off at the Flagstar location represent about eight percent of the company’s workforce.
But “the majority” of the 1,200 Flagstar employees being let go in the sale of the lender’s business “will be given the opportunity to transfer to the buyer, facilitating a smooth transition and ensuring continued employment,” NYCB announced Thursday.
NYCB, to be renamed Flagstar Financial Inc. on Oct. 25, struggled after 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 fourth-quarter loss of $2.7 billion in February, NYCB has reshuffled its executive team and raised capital by selling some of its operations.
JPMorgan Chase Bank in May agreed to buy nearly $6 billion in equity from NYCB. When the deal closed in July, Flagstar Bank got out of the mortgage business.
Three days later, NYCB announced that it had reached an agreement with the mortgage giant, Mr. Cooper, to sell Flagstar’s services business and journalistic lending platform.
NYCB was trying to avoid the fate of Silicon Valley Bank, Signature Bank and First Republic Bank, whose failures were largely due to rising interest rates and delinquencies on real estate loans.
For the six months ended June 30, 2024, NYCB reported a net loss of $650 million, compared to $2.4 billion in revenue in the first quarter of 2023.
With Mr. Cooper’s deal expected to close at the end of the year, NYCB President and CEO Joseph Otting said Thursday the company has made “substantial progress this year” and will continue to “pursue opportunities to improve our operations and improve efficiency.”
Joseph Otting
“While these strategic moves involve difficult decisions, including job impacts, we believe they are important to strengthening our financial base and building a more agile, competitive company,” Otting said in a statement. “This will enable us to focus on investing in other areas and better serve our customers and shareholders, ensuring long-term sustainability and profitability.”
Flagstar Mortgage continues to operate nationally through a sales network of approximately 3,000 third-party mortgage originators.
NYCB and Flagstar’s systems were merged in February, with all of the combined company’s consumer-facing businesses now operating under the Flagstar brand.
Effective October 28, the company’s New York Stock Exchange ticker will be “FLG” instead of “NYCB.”
Shares of NYCB, which in the past 12 months have traded as low as $5.10 and as high as $34.47, were down 1 percent in light trading on Friday from Thursday’s close of $12.38.
The service portfolio of Mr. Cooper reaches $1.56T
Source: Mr Cooper’s salary reports.
To Mr. Cooper, the deal to acquire Flagstar Bank’s real estate business and correspondent lending platform is expected to grow the company’s mortgage servicing rights (MSR) portfolio to $1.56 trillion.
Reporting a second quarter profit of $204 million, Mr. Cooper said the acquisition of Flagstar’s mortgage operations for $1.4 billion would add 1.3 million customers and an outstanding principal balance of $356 million to its MSR portfolio.
Having reached a long-term goal of amassing a $1 billion servicing portfolio earlier this year, Mr. Cooper continues to invest in technology that it expects will allow it to reduce costs and manage its growing credit portfolio more efficiently.
Last week Mr. Cooper named Sridhar Sharma — credited with developing the company’s patented AI and advanced machine learning platform — innovation and digital chief.
Mr. Dallas-based Cooper also hired three new technology leaders from outside the company, including Saber veteran Jeff Carroll who is the company’s new chief technology officer.
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