First Horizon National Corp. has found a buyer for its mortgage unit.
Subsidiary First Tennessee Bank, N.A., will sell more than 230 retail and wholesale mortgage offices to MetLife Bank, N.A., an announcement today said.
MetLife will also acquire $20 billion in first mortgage servicing assets, while it will sub-service $65 billion for the Memphis, Tenn.-based company.
The deal, expected to close in the third quarter, excludes subprime loans, Alt-A mortgages and 21 Tennessee-area offices that will continue to be operated by First Horizon, which announced $7.5 billion in first-quarter residential originations.
First Horizon recently reported a problem portfolio of one-time close loans of around 5,000 mortgages for $1.8 billion, which it expected to reduce to around $0.6 billion by the end of this year. It also held $5.5 billion in home-equity loans that it projected will fall to $0.7 billion by Dec. 31.
As of March 31, First Horizon reported its owned servicing portfolio totaled $99 billion.
First Horizon -- which was considering shutting down the mortgage unit if no deal emerged -- plans to eliminate its remaining servicing portfolio through portfolio run-off and additional bulk sales over the next several years. Loans held on its warehouse line are expected to be sold in the normal course of business -- with 90 percent of the warehouse being eliminated this year.
The transactions, along with planned loan and servicing sales, are expected to free up $200 million in tangible capital during 2008 for First Horizon. Pre-tax charges associated with the deal are expected to cost it between $50 million to $70 million.
MetLife Inc. announced in April an agreement to acquire EverBank Reverse Mortgage LLC in a transaction expected to close in July.
First Horizon Mortgage Unit to Either Be Sold or Closed
Executives of First Horizon National Corp. told investors they were committed to either selling or shutting down the mortgage unit this year.