Dive Brief:
- Wells Fargo is selling the non-agency third-party servicing segment of its commercial mortgage servicing business to Atlanta-based Trimont, the companies announced Tuesday.
- The San Francisco-based bank’s divestiture is set to make Trimont the largest loan servicer in the U.S. commercial real estate sector, managing about $715 billion in U.S. and international CRE loans.
- Terms of the deal were not disclosed; it’s expected to close early next year.
Dive Insight:
Wells said it will continue servicing agency/government-sponsored enterprise loans, as well as those held on its balance sheet. The bank serviced and subserviced $543 billion in commercial mortgage loans as of June 30, according to its most recent quarterly securities filing.
Bank spokespeople declined to elaborate beyond the release, but Trimont CEO Bill Sexton told Bloomberg the company will assume servicing for about $475 billion of loans. A spokesperson for Trimont didn’t immediately respond to a request for comment.
The deal underscores Wells Fargo’s ongoing effort to offload non-core businesses.
“This transaction is consistent with Wells Fargo’s strategy of focusing on businesses that are core to our consumer and corporate clients,” said Kara McShane, head of the bank’s commercial real estate division. “We remain committed to our market-leading Commercial Real Estate business, and we will continue to serve our clients with a broad suite of lending, advisory and capital markets capabilities while leveraging our franchise to grow our Corporate and Investment Bank.”
Last year, the bank announced a new “strategic direction” for its home lending operations, aimed at reducing the size of its servicing portfolio.
The transaction is being funded by investment firm Värde Partners, which has owned Trimont through certain funds since 2015, according to Trimont’s release.
The move “allows Trimont to provide a unique and comprehensive service offering to the increasingly sophisticated CRE lending market,” Sexton said in the release.
“We look forward to welcoming the team from Wells Fargo, and working with them to capitalize on our strengths,” Sexton said in the release. Wells Fargo spokespeople declined to comment on the size of that team and whether all will migrate to Trimont.
The deal is also yet another recent example of banks looking to offload loan servicing to non-bank entities. New York Community Bank subsidiary Flagstar is selling its residential mortgage servicing business to nonbank mortgage firm Mr. Cooper for $1.4 billion, NYCB announced last month.
