The 135,000-member Royal Credit Union in Eau Claire, Wis., has announced a deal to buy the mortgage servicing rights to approximately $600 million in mortgage loans from a Minnesota-based bank.
The move will add roughly 4,200 mortgage loans to the $1.2 billion Royal CU’s portfolio. According to a Royal Executive, the CU already services roughly $900 million in mortgage loans that have been sold on the secondary market. This purchase brings that number up to $1.5 billion.
“We have now come to a turning point in our business model that we need to make a change,” The RiverBank, the bank which sold the mortgages, said in a letter to its customers. “Realizing the importance of the local servicing, we have partnered with Royal Credit Union to transition the servicing.”
The transfer of the servicing of the mortgage loan does not affect any term or condition of the mortgages.
“We welcome these 4,200 mortgage customers to RCU,” said Charles Grossklaus, CEO of RCU. “Our commitment to staying local is strong and, consistent with our vision to satisfy all of our members’ financial needs; we look forward to building relationships with these members so we can be there when they need their next financial product.”
Royal said it expects the servicing to transfer between the two institutions by Oct. 17.
The sale took place as FDIC authorities were closing The RiverBank and guiding its assets into a sale to the Central Bank, headquartered in Stillwater, Minn. The credit union has not yet returned calls seeking comment about the purchase.
In spring 2010, Royal CU purchased $177 million in assets and 11 branches from the ailing AnchorBank in Madison, Wis.