CSFB Closes the Deal to Buy SPS.

New York -- Credit Suisse First Boston has sealed its deal to get into the mortgage servicing business, agreeing to buy SPS Holdings for approximately $144.4 million in mid-August.

In addition, SPS said that it may pay up to $39.9 million more for mortgage loans that are currently serviced by SPS on behalf of third parties. In a separate announcement, the PMI Group said that it had agreed to indemnify CSFB for "certain liabilities relating to SPS's operations," a caveat that could reduce PMI's future cash payments from the sale. PMI said it expects to receive approximately $102 million at the closing.

However, PMI said that the expected proceeds from the sale exceed its carrying value for SPS, so the company does not expect to recognize impairment related to the deal.

CSFB said the transaction is likely to close in the fourth quarter.

Select Portfolio Servicing already services mortgage loans underwritten by CSFB for private-label mortgage backed securities. CSFB said it plans to integrate SPS into its MBS business. It also said that SPS will continue to offer third-party servicing to other companies.

CSFB is a major MBS underwriter, with $36.5 billion in volume through the first half of this year. In the second quarter, CSFB was the nation's seventh-biggest underwriter of mortgage-backed securities, accounting for 5.6% of MBS deals in the quarter.

"SPS will help CSFB grow its residential mortgage businesses and cut costs by capturing servicing fees now paid to outside vendors," said Andrew Kimura, co-head of structured products trading at CSFB, in a news release. "Owning an in-house servicer complements our residential mortgage growth strategy as we originate, securitize and invest in mortgages."