According to HousingWire, CrossCountry Mortgage's parent company has priced a bigger-than-expected bond offering. The company is selling $750 million in senior notes that mature in 2031 and carry a 7.75% interest rate. What's interesting here is that they originally planned to issue $500 million, but ended up going 50% larger with this offering.
This move is part of how CrossCountry is financing a major acquisition. The company is in the process of buying Two Harbors' mortgage servicing portfolio, a transaction worth around $1.26 billion. The money from these new bonds will go toward paying down the credit line that CrossCountry used to fund that deal, along with related costs and fees associated with the purchase.
The Two Harbors acquisition is significant for CrossCountry's standing in the industry. When that deal closes, the company will add a substantial servicing portfolio to what they already manage. According to HousingWire's reporting, this move is expected to jump CrossCountry from the fifteenth largest servicer up to number eight based on owned portfolios.
Credit rating agencies are watching this carefully. Fitch Ratings noted that the move from secured debt to unsecured debt is actually positive because it frees up collateral and improves the company's liquidity position. However, Fitch also flagged that CrossCountry's leverage will temporarily spike to higher levels because of the Two Harbors purchase, though the company believes its growing cash flows should bring that back down over time.
What I am seeing locally is that the mortgage servicing world keeps consolidating, with bigger players getting bigger and making these major portfolio acquisitions. For Bay Area borrowers and sellers, consolidation in servicing can mean changes in who handles your loan down the road, though it doesn't necessarily change your experience or rates. It's the kind of behind-the-scenes financial shuffling that shows how dynamic the mortgage industry remains.
