Ocwen Financial Corporation (NYSE: OCN) (“Ocwen” or the “Company”),
a leading non-bank mortgage servicer and originator, today
announced significant developments on the Company’s growth plans
that are expected to generate approximately $80 to $100 billion of
new servicing UPB in the aggregate.
Ocwen has entered into a definitive agreement with funds managed
by Oaktree Capital Management, L.P. (collectively, “Oaktree”) to
form a strategic relationship that will acquire and hold mortgage
servicing rights (“MSRs”) through a licensed entity, or MSR asset
vehicle (“MAV”). The newly-formed company is expected to invest up
to $250 million of equity capital into the MAV to acquire Fannie
Mae and Freddie Mac MSRs. The parties will commit to fund the
investment on a pro rata basis of 15% for Ocwen and 85% for
Oaktree.
PHH Mortgage Corporation, a wholly-owned subsidiary of Ocwen,
will subservice the loans acquired through the MAV, perform
portfolio recapture services and provide certain other
administrative services. Over time, the Company believes that the
MAV could add approximately $50 to $60 billion of subservicing UPB
for Ocwen.
The transaction is expected to close in the first half of 2021,
subject to various closing conditions, including regulatory and
other approvals.
At the closing of the transaction, Oaktree may exercise an
option to purchase up to 4.9% of the Company’s outstanding common
stock at a price per share of $23.15. In addition, the Company will
issue Oaktree warrants to purchase an additional 3% of the
Company’s common stock at an exercise price of $24.31.
The Company also announced that it has been awarded multiple
contracts to provide subservicing, portfolio recapture and MSR
transaction services with a projected subservicing volume of $16 to
$24 billion. Ocwen expects to begin boarding loans in the first
quarter of 2021. Additionally, the Company signed three bulk MSR
purchase agreements totaling approximately $16 billion, which are
expected to close by December 31, 2020 and transfer in the first
quarter of 2021.
The Company originated approximately $10 billion of volume for
the first two months of the fourth quarter, exceeding its volume
levels for the comparable period in the third quarter by 32%. The
Company also added 23 new correspondent sellers and MSR co-issue
clients during the first two months of the fourth quarter.
Glen A. Messina, President and CEO of Ocwen, said, “We are very
pleased to announce our new strategic relationship with Oaktree, a
leading global investment firm, and the proposed transaction to
launch an MSR investment vehicle. This transaction will support our
subservicing and portfolio recapture growth objectives, drive
increased scale and provide access to growth capital in order to
acquire MSRs in a cost and risk efficient manner. We look forward
to working with Oaktree to launch MAV and realize its growth
potential.”
Messina continued, “The market has welcomed our enterprise sales
model and the team has done a tremendous job selling our full
portfolio of servicing offerings. Our recent signings are a
testament to the team’s hard work, strength of our service
offerings and new customer-focused technology. We are excited to
welcome our new clients to the Ocwen family and to help them grow
their business.”
About Ocwen Financial Corporation
Ocwen Financial Corporation (NYSE: OCN) is a leading non-bank
mortgage servicer and originator providing solutions through its
primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH
Mortgage is one of the largest servicers in the country, focused on
delivering a variety of servicing and lending programs. Liberty is
one of the nation’s largest reverse mortgage lenders dedicated to
education and providing loans that help customers meet their
personal and financial needs. We are headquartered in West Palm
Beach, Florida, with offices in the United States and the U.S.
Virgin Islands and operations in India and the Philippines, and
have been serving our customers since 1988. For additional
information, please visit our website (www.ocwen.com).
Forward-Looking Statements
This press release 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. These forward-looking statements may be identified by a
reference to a future period or by the use of forward-looking
terminology. Forward-looking statements are typically identified by
words such as “expect”, “believe”, “foresee”, “anticipate”,
“intend”, “estimate”, “goal”, “strategy”, “plan” “target” and
“project” or conditional verbs such as “will”, “may”, “should”,
“could” or “would” or the negative of these terms, although not all
forward-looking statements contain these words. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain. We are in the midst of a period of capital
markets volatility and experiencing significant changes within the
mortgage lending and servicing ecosystem which have magnified such
uncertainties. Readers should bear these factors in mind when
considering such statements and should not place undue reliance on
such statements.
Forward-looking statements involve a number of assumptions,
risks and uncertainties that could cause actual results to differ
materially. In the past, actual results have differed from those
suggested by forward looking statements and this may happen again.
Important factors that could cause actual results to differ
materially from those suggested by the forward-looking statements
include, but are not limited to, the ability to obtain regulatory
approvals and the satisfaction of the closing conditions under the
MAV transaction agreement and the expected timing for closing the
related transactions, uncertainty relating to the future impacts of
the COVID-19 pandemic, including with respect to the response of
the U.S. government, state governments, the Federal National
Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac, and together with Fannie Mae, the GSEs),
the Government National Mortgage Association (Ginnie Mae) and
regulators, as well as the potential for ongoing disruption in the
financial markets and in commercial activity generally, increased
unemployment, and other financial difficulties facing our
borrowers; impacts on our operations resulting from employee
illness, social distancing measures and our shift to greater
utilization of remote work arrangements; the adequacy of our
financial resources, including our sources of liquidity and ability
to sell, fund and recover servicing advances, forward and reverse
whole loans, and HECM and forward loan buyouts and put backs, as
well as repay, renew and extend borrowings, borrow additional
amounts as and when required, meet our MSR or other asset
investment objectives and comply with our debt agreements,
including the financial and other covenants contained in them;
increased servicing costs based on increased borrower delinquency
levels or other factors; our ability to collect anticipated tax
refunds, including on the timeframe expected; the future of our
long-term relationship and remaining servicing agreements with New
Residential Investment Corp. (NRZ), our ability to execute an
orderly and timely transfer of responsibilities in connection with
the previously disclosed termination by NRZ of the PMC subservicing
agreement, including our ability to respond to any concerns raised
by regulators, lenders and other contractual counterparties in
connection with such transfer; our ability to timely adjust our
cost structure and operations as the loan transfer process is being
completed in response to the previously disclosed termination by
NRZ of the PMC subservicing agreement; our ability to continue to
improve our financial performance through cost re-engineering
efforts and other actions; our ability to continue to grow our
origination business and increase our origination volumes in a
competitive market and uncertain interest rate environment;
uncertainty related to claims, litigation, cease and desist orders
and investigations brought by government agencies and private
parties regarding our servicing, foreclosure, modification,
origination and other practices, including uncertainty related to
past, present or future investigations, litigation, cease and
desist orders and settlements with state regulators, the Consumer
Financial Protection Bureau (CFPB), State Attorneys General, the
Securities and Exchange Commission (SEC), the Department of Justice
or the Department of Housing and Urban Development (HUD) and
actions brought under the False Claims Act regarding incentive and
other payments made by governmental entities; adverse effects on
our business as a result of regulatory investigations, litigation,
cease and desist orders or settlements and related responses by key
counterparties, including lenders, the GSEs and Ginnie Mae; our
ability to comply with the terms of our settlements with regulatory
agencies, as well as general regulatory requirements, and the costs
of doing so; increased regulatory scrutiny and media attention; any
adverse developments in existing legal proceedings or the
initiation of new legal proceedings; our ability to interpret
correctly and comply with liquidity, net worth and other financial
and other requirements of regulators, the GSEs and Ginnie Mae, as
well as those set forth in our debt and other agreements; our
ability to comply with our servicing agreements, including our
ability to comply with our agreements with, and the requirements
of, the GSEs and Ginnie Mae and maintain our seller/servicer and
other statuses with them; our ability to fund future draws on
existing loans in our reverse mortgage portfolio; our servicer and
credit ratings as well as other actions from various rating
agencies, including the impact of prior or future downgrades of our
servicer and credit ratings; as well as other risks and
uncertainties detailed in Ocwen’s reports and filings with the SEC,
including its annual report on Form 10-K for the year ended
December 31, 2019 and its current and quarterly reports since such
date. Anyone wishing to understand Ocwen’s business should review
its SEC filings. Our forward-looking statements speak only as of
the date they are made and, we disclaim any obligation to update or
revise forward-looking statements whether as a result of new
information, future events or otherwise.
FOR FURTHER INFORMATION CONTACT:
Investors: |
Media: |
June Campbell |
Dico Akseraylian |
T: (856) 917-3190 |
T: (856) 917-0066 |
E:
shareholderrelations@ocwen.com |
E: mediarelations@ocwen.com |