Ocwen Financial Corporation (NYSE: OCN) moved one step closer to finalizing a major servicing transfer deal with New Residential Investment Corp. (NYSE: NRZ), a transaction that could net $400 million for the beleaguered Ocwen.
The West Palm Beach, Fla.-based originator and servicer announced a master agreement with New Residential, under which Ocwen will sell off the servicing rights to a portfolio of loans with $110 billion in unpaid principal balance. Ocwen estimated the total windfall at “up to $400 million,” assuming all of the loans are transferred, according to an 8-K form filed Monday.
Ocwen had initially announced the deal in early May, pegging the total value of the transfer at more $425 million. The transaction would formalize a previously nebulous relationship between Ocwen and New Residential, a New York City-based mortgage real estate investment trust (REIT): New Residential had “rights to mortgage servicing rights” associated with the loans up until the proposed transaction.
But before the deal can formally go through, Ocwen and New Residential must work with unnamed third parties to receive the required consent, Ocwen said in its filing. Assuming the players clear those hurdles and the transaction closes, Ocwen will continue to subservice the loans for New Residential under a five-year agreement. Ocwen also sold more than 6 million shares of its stock to New Residential as part of the transaction, giving the servicer an additional $13.9 million in proceeds.
Ocwen services and originates reverse mortgages through its Liberty Home Equity Solutions subsidiary.
The announcement represents a bright spot amid Ocwen’s continuing troubles. The servicer disclosed last Thursday that it agreed to shell out up to $56 million to settle a class-action lawsuit stemming from improper financial filings, as RMD reported last week. Ocwen continues to face cease-and-desist orders from up to 30 states, preventing it from acquiring new mortgage servicing rights, as well as a lawsuit brought by the Consumer Financial Protection Bureau.
Written by Alex Spanko