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Dallas-headquartered Mr. Cooper Group Inc. (NASDAQ: COOP) is acquiring the mortgage operations of Flagstar Bank for $1.4 billion.

The acquisition encompasses Flagstar’s MSRs, advances, subservicing contracts, and a third-party origination platform. The purchase will be funded through available cash and drawdowns of existing MSR lines and is expected to close in the fourth quarter. Mr. Cooper stated it would absorb 1.3 million customers and add approximately $356 billion in unpaid principal balance when the transaction is completed.

“We have the operational capacity to onboard Flagstar’s customers with a smooth and positive experience, which will be our top priority,” said Mr. Cooper Group’s Chairman and CEO Jay Bray. “We also look forward to welcoming Flagstar team members to the Mr. Cooper family. We have long respected Flagstar as a mortgage servicer, and we feel very closely aligned with their cultural values.”

Joseph M. Otting, chairman, president and CEO of Flagstar’s parent company New York Community Bankcorp Inc. (NYSE:NYCB), added, “We also continued to simplify our business model by agreeing to sell certain parts of our mortgage business, including our mortgage servicing rights to Mr. Cooper, one of the leading mortgage companies in the country.  This comes on the heels of closing on the sale of our mortgage warehouse business earlier this week.  In addition to simplifying our business model, collectively these two transactions also bolster our liquidity profile and result in higher capital ratios.”