Ocwen Makes It Official: Sells $45B In MSRs To JPMorgan

Posted by Patrick Barnard on May 14, 2015 No Comments
Categories : Mortgage Servicing

Ocwen Financial has officially announced the sale of $45 billion in mortgage servicing rights (MSRs) to JPMorgan Chase.

The sale, which includes 266,000 ‘high-quality’ Fannie Mae loans, was previously announced in the Wall Street Journal in March. However, Ocwen didn't make it official until this week because the deal was still subject to a definitive agreement and required approval from Fannie Mae and the Federal Housing Finance Agency (FHFA).

‘Buying this prime servicing book will improve the quality of our servicing portfolio and will help drive a stronger and less volatile mortgage business,’ Kevin Waters, CEO of Chase Mortgage Banking, says in a statement. ‘We expect the portfolio, in addition to lower delinquency rates overall, will help improve the value of our business.’

‘Ocwen previously announced that the company signed a letter of intent with a buyer on the sale of mortgage servicing rights on a portfolio of performing agency loans owned by Fannie Mae with a total unpaid principal balance of approximately $45 billion,’ Ocwen says in a release. ‘The letter of intent was subject to a definitive agreement and Fannie Mae and FHFA approvals. The agreement is now signed and the necessary approvals have been obtained. This sale to Chase furthers Ocwen's corporate strategy of reducing the size of the company's Agency servicing portfolio.’

The sale is part of Ocwen's recent efforts to reorganize after a spate of regulatory enforcement actions that nearly crippled its operations, ravaged its stock and strained its relationships with investors. As a result of these actions, the company recently decided to discontinue servicing agency-backed mortgages.

In March, Ocwen announced that its subsidiary, Ocwen Loan Servicing, was selling an additional $25 billion in MSRs to Nationstar Mortgage, an indirectly held, wholly owned subsidiary of Nationstar Mortgage Holdings Inc. A month prior to that, Ocwen announced that it had agreed to sell $9.8 billion in agency-backed MSRs to Nationstar.

Also in March, the company announced that it was selling servicing rights on a portfolio consisting of about 55,500 loans owned by Freddie Mac – with a total principal balance of approximately $9.6 billion – to Green Tree Loan Servicing, an indirectly held, wholly owned, subsidiary of Walter Investment Management Corp.

In more recent news, Ocwen announced May 11 that it has filed its 2014 Form 10-K with the Securities and Exchange Commission without a qualification as to its ability to operate as a going concern.

‘We believe the filing of our 2014 Form 10-K, without a qualification as to our ability to operate as a going concern, is additional evidence that our strategy to strengthen our compliance management system, strengthen the service we provide to our customers and improve our financial stability is working and that confidence in the company is being restored,’ says Ron Faris, president and CEO of Ocwen, in a release.

Faris adds that the filing means the company ‘can now focus more of our resources and energies on building our origination capabilities and executing on our 2015 strategic initiatives’ which include ‘improving the company's risk management, compliance and corporate governance programs; improving capital efficiency and utilization; achieving internal earnings per share targets; improving customer satisfaction/reducing defect rates; improving delinquency rates and increasing non-foreclosure resolutions; improving diversity and inclusion programs; improving franchise value and brand enhancement; and completing key technological initiatives.’

Ocwen recently reported that it had returned to profitability in the first quarter, with net income of about $34.4 million, thus reversing a trend that saw it lose $546 million in 2014.

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