UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
January 29, 2015 (January 26, 2015)
HOME LOAN SERVICING SOLUTIONS, LTD.
(Exact name of registrant as specified in its charter)
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Cayman Islands | | 1-35431 | | 98-0683664 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
Home Loan Servicing Solutions, Ltd.
c/o Intertrust Corporate Services (Cayman) Limited
190 Elgin Avenue
George Town, Grand Cayman
KY1-9005
Cayman Islands
Registrant’s telephone number, including area code: (345) 945-3727
Not applicable.
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
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| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
On January 26, 2015, HLSS Holdings, LLC, Administrator to the HLSS Servicer Advance Receivables Trust (the "HSART Trust") and a wholly owned subsidiary of Home Loan Servicing Solutions, Ltd. ("HLSS"), announced that it sent a letter to the indenture trustee of the HSART Trust, Deutsche Bank National Trust Company, in response to allegations contained in a letter from lawyers representing BlueMountain Capital Management, LLC, a purported holder of notes issued by the Trust (“BlueMountain”). HLSS intends to vigorously defend against any claims that may be asserted by BlueMountain. The letter is attached hereto as Exhibit 99.1.
Forward-Looking Statements
This Form 8-K and exhibit hereto contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts included in this report including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements.
These forward-looking statements include declarations regarding our management’s beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” "might," “should,” “could,” "would," “intend,” “consider,” “expect,” “foresee,” “plan,” “anticipate,” “believe,” “estimate,” “predict” or “continue” or the negative of such terms or other comparable terminology. Such statements are not guarantees of future performance as they are subject to certain assumptions, inherent risks and uncertainties in predicting future results and conditions that could cause the actual results to differ materially from those projected in these forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to, the following:
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• | Assumptions about the availability of and our ability to make acquisitions of Residential Mortgage Assets from Ocwen or others on terms consistent with our business and economic model; |
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• | Estimates regarding prepayment speeds, default rates, delinquency rates, severity, servicing advances, amortization of Notes receivable - Rights to MSRs, custodial account balances, interest income, operating costs, interest costs and other drivers of our results; |
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• | The potential for fluctuations in the valuation of our Notes receivable - Rights to MSRs and Loans held for investment; |
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• | The impact of the change in our accounting convention related to the valuation of our Notes receivable - Rights to MSRs and timing and cost of the remediation of a related material weakness in our internal control over financial reporting as described in Part II, Item 4, "Controls and Procedures" of our Amendment No. 1 to Form 10-K filed on August 18, 2014 (the "2013 Form 10-K/A"); |
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• | Assumptions regarding the availability of refinancing options for subprime and Alt-A borrowers; |
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• | Expectations regarding incentive fees in our servicing contract and the stability of our net servicing fee revenue; |
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• | Assumptions about the effectiveness of our hedging strategy; |
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• | Assumptions regarding amount and timing of additional debt or equity offerings; |
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• | Assumptions related to sources of liquidity, our ability to fund servicing advances, our ability to pursue new asset classes and the adequacy of our financial resources; |
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• | Assumptions regarding our financing strategy, advance rate, costs and other other terms for financing new asset classes; |
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• | Assumptions regarding margin calls on financing facilities; |
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• | Changes in rating methodologies by our rating agencies and our ability to obtain or maintain ratings of our financing facilities; |
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• | Our status with respect to legal ownership of the rights to mortgage servicing rights we acquired from Ocwen; |
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• | Our ability to pay monthly dividends; |
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• | The performance of Ocwen as mortgage servicer; |
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• | Our competitive position; |
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• | Our dependence on the services of our senior management team; |
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• | Regulatory investigations and future legal proceedings against us; |
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• | Regulatory investigations and legal proceedings against Ocwen, Altisource or others with whom we may conduct business; |
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• | Uncertainty related to future government regulation and housing policies; |
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• | Assumptions regarding our tax rate and decisions by taxing authorities; and |
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• | General economic and market conditions. |
All forward-looking statements are subject to certain risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results, performance or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Important factors that could cause or contribute to such difference include those risks specific to our business detailed within this report and our other reports and filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2013 (the "2013 Form 10-K") as amended by our Form 10-K/A and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 (the "Q3 Form 10-Q") filed with the SEC. We undertake no obligation to update or revise forward-looking statements¸ whether as a result of new information, future events or otherwise. You should carefully consider the risk factors described under the heading “Risk Factors” within our 2013 Form 10-K/A, Part II, Item 1A and our Q3 Form 10-Q.
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Item 9.01 | Financial Statements and Exhibits. |
(a)-(c) Not applicable.
(d) Exhibits:
Exhibit No.
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99.1 | | Letter to Deutsche Bank National Trust Company dated January 26, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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Date: January 29, 2015 | | HOME LOAN SERVICING SOLUTIONS, LTD. |
| | (Registrant) |
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| | By: | /s/ James E. Lauter |
| | | James E. Lauter |
| | | Senior Vice President and Chief Financial Officer (On behalf of the Registrant and as its principal financial officer) |
January 26, 2015
Via Email
Deutsche Bank National Trust Company,
as Indenture Trustee, Calculation Agent,
Paying Agent, and Securities Intermediary
1761 East St. Andrew Place
Santa Ana, CA 92705
Attn: Trust Administration - OC10S2
Re: HLSS Servicer Advance Receivables Trust
Dear Sir or Madam:
We write concerning the January 23, 2015 letter of Erik Haas, counsel to BlueMountain Capital Management, LLC (“BlueMountain”), to HLSS Holdings, LLC (“HLSS”), HLSS Servicer Advance Receivables Trust (the “Trust”), Ocwen Loan Servicing, LLC (“Ocwen”), and Deutsche Bank National Trust Company (the “Indenture Trustee”).
BlueMountain’s letter suggests that certain purported Events of Default have occurred under the Indenture governing Notes issued by the Trust¹. We have reviewed the purported Events of Default and disagree with BlueMountain’s assessment. We have no reason to believe that any such Events of Default have occurred. To the contrary, we believe that the Trust and Ocwen are in full compliance with their obligations under the Indenture and intend to continue to comply with those obligations. We have notified each of the Trust’s Administrative Agents of BlueMountain’s letter and have endeavored to assist with their evaluation in all respects.
We look forward to responding to any questions you may have concerning BlueMountain’s letter. To the extent you believe your evaluation of their assertions would benefit from the establishment of an orderly investigative or adjudicative process, we would be happy to work with you and the Administrative Agents to develop such a process. We note, in this regard, that the Trust has been meeting its payment obligations under the Notes and will continue to do so; BlueMountain does not, and could not, allege that the Trust is experiencing any financial distress. Consequently, no harm will result from the Indenture Trustee taking the time needed to conduct an orderly and proper evaluation of BlueMountain’s assertions. In contrast, a presumptive determination of the validity of these allegations, undertaken without measured consideration, would cause enormous and irreparable harm to the Trust and its Noteholders.
We have very serious concerns about BlueMountain’s motivations for publicly filing their letter. As BlueMountain disclosed in the press release it issued along with its January 23 letter, it
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¹Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Sixth Amended and Restated Indenture, dated as of January 17, 2014, by and among the HSART Trust, the Indenture Trustee, HLSS, Ocwen, Barclays Bank PLC, Wells Fargo Securities, LLC, and Credit Suisse AG, New York Branch (the “Indenture”).
190 Elgin Avenue | George Town, KY1-9005 | Cayman Islands
Deutsche Bank National Trust Company
January 26, 2015
Page 2
“hold[s] a short position in, and put options with respect to, the common stock of Ocwen Financial Corporation and . . . hold[s] a short position in, and put options with respect to, the common stock of Home Loan Servicing Solutions, Ltd.” See http://www.prnewswire.com/news-releases/bluemountain-capital-management-llc-delivers-notice-of-default-on-certain-notes-to-trustee-of-the-hlss-servicer-advance-receivables-trust-300024840.html. It appears that BlueMountain’s assertions may be motivated by its financial interest in profiting from these short positions, rather than by any interest it may have as a holder of Notes issued by the Trust. Notably, while BlueMountain’s letter states that it holds “certain” Series 2012-T2 and Series 2013-T3 Notes issued by the Trust, the letter does not state the amount of these holdings, which may be de minimis.
We look forward to discussing these matters with you at your earliest convenience.
Sincerely,
HLSS SERVICER ADVANCE RECEIVABLES TRUST
By: HLSS HOLDINGS, LLC
By: /s/ James E. Lauter
James E. Lauter
Authorized Signatory
cc: Barclays Bank plc
745 Seventh Avenue
New York, New York 10019
Attention: Securitized Products Group
Credit Suisse AG, New York Branch
Eleven Madison Avenue
New York, New York 10010
Attention: Asset Finance
Wells Fargo Securities, LLC
550 S. Tryon Street, 5th Floor
Charlotte, NC 28202
Attention: Goetz Rokahr
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