New Residential and Ocwen Financial Announce Agreement Relating to Mortgage Servicing Rights Transfer and Subservicing Agreem...
July 24 2017 - 6:46AM
Business Wire
New Residential Investment Corp. (NYSE:NRZ, “New Residential”)
and Ocwen Financial Corporation (NYSE:OCN, “Ocwen”) today announced
the companies have signed definitive agreements for the transfer of
Ocwen’s interest in mortgage servicing rights (“MSRs”) and
subservicing relating to approximately $110 billion UPB (1) of
non-agency MSRs (2). Upon the transfer of the MSRs to NRZ, the
subservicing agreement will replace certain existing agreements
between NRZ and Ocwen. The transaction includes the following key
terms:
- Under the MSR transfer agreement, Ocwen
will transfer to New Residential Mortgage LLC (“NRM”), a
wholly-owned subsidiary of NRZ, approximately $110 billion UPB of
seasoned non-agency MSRs subject to the parties’ current
agreements. Upon obtaining the required third-party consents and
the transfer of the MSRs, a subsidiary of NRZ 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 (3) in aggregate if all of the applicable MSRs are
transferred to NRM. Subject to the approval of certain
counterparties to the related securitizations and other customary
closing conditions, the transfers may begin as early as September
2017 and continue into 2018.
- Concurrently with the MSR transfer
agreement, NRM has entered into a 5-year subservicing agreement
with Ocwen, pursuant to which Ocwen will subservice the mortgage
loans underlying the transferred MSRs.
- In connection with the transaction, NRZ
has agreed to make an equity investment of approximately $13.9
million to purchase approximately 4.9% of Ocwen’s common
equity.(4)
“This is a great transaction for both companies and we are
extremely pleased to announce our new strategic partnership with
Ocwen,” said Michael Nierenberg, Chairman and Chief Executive
Officer 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.”
Ronald M. Faris, President and Chief Executive Officer of Ocwen
commented, ”New Residential has been a close business partner and
this new arrangement extends and builds upon a mutually beneficial
relationship. We look forward to working closely with New
Residential to help homeowners in their servicing portfolio.”
1)
Unpaid principal balance as of June 30,
2017. Stated UPB is different from the previously estimated value
in Ocwen’s May 2017 press release due to amortization of the UPB of
the MSR portfolio.
2)
New Residential already owns the fee
economics and servicer advances on the portfolio and pays Ocwen a
monthly servicing fee as a result of the HLSS transaction which
closed in April 2015.
3)
Payment amount based on transfer of all
loans on June 30, 2017. Stated amount is different from previously
estimated value in Ocwen’s May 2017 press release that referenced a
March 2017 month-end date due to contractual adjustments that
account for payments received by Ocwen under existing agreements
through the transfer date.
4)
Stated investment amount is calculated
based on Ocwen’s closing price of $2.29 per common share on April
28, 2017.
ABOUT NEW RESIDENTIAL INVESTMENT CORP.
New Residential focuses on opportunistically investing in, and
actively managing, investments related to residential real estate.
The Company primarily targets investments in mortgage servicing
related assets and other related opportunistic investments. New
Residential is organized and conducts its operations to qualify as
a real estate investment trust (“REIT”) for federal income tax
purposes. The Company is managed by an affiliate of Fortress
Investment Group LLC (NYSE: FIG), a global investment management
firm.
ABOUT OCWEN FINANCIAL CORPORATION
Ocwen Financial Corporation is a financial services holding
company which, through its subsidiaries, originates and services
loans. Ocwen is headquartered in West Palm Beach, Florida, with
offices throughout the United States and in the U.S. Virgin Islands
as well as in India and the Philippines. Ocwen has been serving
their customers since 1988. Ocwen may post information that is
important to investors on its website (www.ocwen.com).
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, such as statements
regarding the receipt, and timing of receipt, of approvals to
transfer Ocwen’s interest in MSRs to New Residential from Ocwen,
New Residential’s ability to further secure its interests in its
MSRs, the transaction providing stability to the overall servicing
industry, the ability of New Residential and Ocwen to maintain a
good subservicing relationship, and any anticipated benefits of
such agreements for the shareholders of New Residential and Ocwen.
These statements are based on the current expectations and beliefs
of management of each of New Residential and Ocwen and are subject
to a number of trends and uncertainties that could cause actual
results to differ materially from those described in the
forward-looking statements, many of which are beyond the control of
New Residential and Ocwen, such as regulatory approvals. Neither
New Residential nor Ocwen can give any assurance that its
expectations will be attained as described herein, or at all.
Accordingly, you should not place undue reliance on any
forward-looking statements contained in this press release. For a
discussion of some of the risks and important factors that could
affect such forward-looking statements, see the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in each company’s
Form 10-Q and Annual Reports on Form 10-K, which are available on
each company’s website (www.newresi.com; www.ocwen.com). Factors
which could have a material adverse effect on each company’s
operations, future prospects or the transactions described herein
include, but are not limited to, various risks relating to such
transactions, including in respect of the satisfaction of closing
conditions to the transactions, including obtaining the necessary
third party approvals; unanticipated difficulties financing such
transactions; unanticipated expenditures relating to the
transactions; uncertainties as to the timing or completion of
transfers related to the transactions; litigation relating to the
transactions; and the inability to obtain, or delays in achieving,
the expected benefits of the transactions. In addition, new risks
and uncertainties emerge from time to time, and it is not possible
for New Residential or Ocwen to predict or assess the impact of
every factor that may cause its actual results to differ from those
contained in any forward-looking statements. Such forward-looking
statements speak only as of the date of this press release. New
Residential and Ocwen expressly disclaim any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in their expectations with
regard thereto or change in events, conditions or circumstances on
which any statement is based.
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New Residential Investment Corp.Investor
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Relations203-614-0141
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