Ocwen Financial Corp., which has been dealing with a spate of regulatory enforcement actions as of late, is transferring the servicing rights and subservicing on a pool of non-agency mortgage loans with approximately $110 billion in unpaid principal balance to New Residential Investment Corp.
Upon the transfer of the MSRs to New Residential, a new subservicing agreement will replace certain existing agreements between New Residential and Ocwen, according to a company press release.
Upon obtaining the required third-party consents and the transfer of the MSRs, New Residential will make a lump sum restructuring fee payment to Ocwen upon each transfer, in exchange for Ocwen forgoing payments under the existing agreements.
These lump sum restructuring fee payments may total up to approximately $400 million in aggregate if all of the applicable MSRs are transferred to New Residential.
Subject to the approval of certain counterparties to the related securitizations and other customary closing conditions, the transfers may begin as early as September and could continue into 2018, according to the release.
Concurrently with the MSR transfer agreement, New Residential has entered into a five-year subservicing agreement with Ocwen under which Ocwen will subservice the transferred mortgage loans.
In connection with the transaction, New Residential has agreed to make an equity investment of approximately $13.9 million to purchase approximately 4.9% of Ocwen’s common equity.
“This is a great transaction for both companies and we are extremely pleased to announce our new strategic partnership with Ocwen,” says Michael Nierenberg, chairman and CEO of New Residential. “We believe the new subservicing arrangement will further secure our interests in our MSR investments and provide additional stability to the overall servicing industry. 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.”
”New Residential has been a close business partner and this new arrangement extends and builds upon a mutually beneficial relationship,” adds Ronald M. Faris, president and CEO of Ocwen. “We look forward to working closely with New Residential to help homeowners in their servicing portfolio.”