Ocwen sells servicing rights to $110 billion in unpaid principal

by Paolo Taruc26 Jul 2017
Mortgage REIT New Residential Investment announced on Monday it has signed “definitive agreements” with Ocwen Financial that transfer Ocwen’s mortgage servicing rights (MSRs) on $110 billion in unpaid principal balance to the former’s subsidiary, New Residential Mortgage (NRM).

New Residential said the restructuring fee payments may total “up to approximately $400 million in aggregate” if all of the applicable MSRs are transferred to NRM.

“We believe the new subservicing arrangement will further secure our interests in our MSR investments and provide additional stability to the overall servicing industry,” said Michael Nierenberg, chairman and CEO of New Residential. “We are encouraged by the performance of our investment portfolio to date and remain optimistic in our ability to continue driving shareholder value going forward.”

Concurrent with the transfer, NRM agreed to a five-year subservicing agreement with Ocwen which will see the latter subservice the mortgage loans underlying the transferred MSRs.

New Residential also agreed to acquire 4.9% of Ocwen’s outstanding shares for about $13.9 million. “New Residential has been a close business partner and this new arrangement extends and builds upon a mutually beneficial relationship,” said Ronald Faris, president and CEO of Ocwen.

This is not the first transaction between both firms this year. Last February, New Residential Invest agreed to purchase Ocwen spinoff Home Loan Servicing Solutions (HLSS) for $1.3 billion. HLSS was formed by former Ocwen chairman William Erbey to acquire the servicing rights and other income streams from servicing mortgages.

Related stories:
PHH to sell off its mortgage servicing rights portfolio in massive deal
Mortgage REIT to acquire Ocwen spinoff for $1.3B


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