Mechanics Bancorp in Walnut Creek, Calif., agreed to sell its Fannie Mae Delegated Underwriting and Servicing business line to Fifth Third Bancorp in Cincinnati.
The $22.7 billion-asset Mechanics, which inherited the business through its purchase of HomeStreet, said that Fifth Third will pay an undisclosed cash amount for the line. The deal is expected to close in the first quarter.
The business is a specialized division focused on multifamily lending and servicing. The program lets lenders independently underwrite, close and service multifamily loans on behalf of Fannie Mae.
Fifth Third will also buy Mechanics’ $1.8 billion DUS servicing portfolio, including escrow amounts.
“This transaction is compelling for all parties and creates a great opportunity for our talented DUS team,” C.J. Johnson, Mechanics’ president and CEO, said in a press release. “Fifth Third will provide an enhanced platform for growth and we are confident the DUS Business will thrive under their leadership.”
J.P. Morgan Securities and Wachtell, Lipton, Rosen & Katz advised Mechanics. Goldman Sachs and Alston & Bird advised Fifth Third.