Detroit-based Quicken Loans Inc. plans to hire about 100 people locally, and significantly boost its mortgage servicing business, by buying mortgage servicing rights from Ally Financial Inc.'s banking subsidiary Ally Bank.
Ally and Quicken announced Thursday that Quicken would acquire servicing rights on mortgage loans that have a combined unpaid balance of about $34 billion.
In the past year, Quicken has built its mortgage servicing portfolio to $90 billion, which is the nation's 17th largest. The mortgage company said the acquisition could move it into the top 10 by mid-year.
"We have not been bashful in making the market aware of our interest in acquiring servicing rights," Quicken Loans CEO Bill Emerson said in a statement. "This transaction with Ally Bank allows us to purchase a well-performing pool of loans, and will help grow our servicing footprint.
This servicing pool will also create a large opportunity for Quicken Loans to refinance a substantial amount of these clients into significantly lower monthly payments."
Ally Bank said the deal, valued at $280 million at the end of January, is expected to close in the second quarter, but must be approved by Fannie Mae and Freddie Mac. The portfolio includes mortgage loans that likely will be refinanced after closing.
Quicken Loans employs 7,000 workers in Detroit. Quicken has added 85 employees in the past year who work in the mortgage servicing area, and the company plans to hire 100 employees with the Ally acquisition, said Aaron Emerson, director of public relations for Quicken. That would bring employment in mortgage servicing to about 450 employees.
Ally Financial is based in Detroit, but its banking subsidiary is based in Utah.
Ally has about 1,200 workers in Michigan. The deal has no impact on Ally's employment.
The deal with Quicken will shed Ally's mortgage servicing rights assets.
Earlier this month Ally said it would sell $90 billion in mortgage servicing rights to Ocwen Financial Corp.
Ally's mortgage servicing operation was part of its Residential Capital LLC unit, which was sold to Ocwen through ResCap's bankruptcy.
"This agreement marks a key milestone for Ally and, upon successful completion of the MSR transactions, Ally Bank will have exited all the non-strategic mortgage activities," Ally Bank President and CEO Barbara Yastine said in a statement.
"Going forward, the bank's full focus and resources will be centered on its leading direct-banking franchise and advancing its customer-centric deposit activities, as well as continuing to grow its key role in Ally's auto finance operation."
Ally, which is 74 percent owned by the Treasury as part of a $17.2 billion bailout, has been working to shed non-core assets to raise funds to repay its government bailout.
For example, Ally is selling its international operations — most to GM, to "generate cash that can used to repay Treasury," Tim Massad, the assistant Treasury secretary overseeing the bailouts, has said.