Ocwen Financial (NYSE:OCN) is planning to sell a pool of mortgage servicing rights (MSRs) to capital markets investors.
The non-bank mortgage servicer has been under the microscope recently in relation to its rapidly growing portfolio of MSRs, and a New York state regulator put Ocwen’s impending purchase of $39 billion of MSRs from Wells Fargo on “indefinite hold.”
Ocwen’s latest move is pre-marketing a mortgage servicing package called Ocwen Asset Servicing Income Series (OASIS) Interest-Only (IO) Mortgage Servicing Rights-Secured Note Series 2014-1, Barclays and Morgan Stanley announced, according to banking and financial services firm TD Waterhouse.
The packaged notes are secured direct-debt recourse obligations of Ocwen Loan Servicing, LLC and they will be subject to Ocwen credit risk and the prepayment risk of the underlying pool.
For the upcoming OASIS deal, investors will buy an interest only strip off an $11.8 billion reference pool of mortgage-servicing rights owned by Ocwen, explains TD Waterhouse citing a syndicate manager. Those investors will get servicing fees for a certain time-frame before receiving a redemption payment.
“In other words, the notes will pay a monthly amount calculated as 0.21% of interest on the principal balance of the mortgage loans over a 14-year period,” says TD Waterhouse. “They will also get a redemption payment equal to the initial purchase price times the principal balance of the mortgage pool at the stated final maturity.”
Deal documents indicate the approximate proceedings from the IO strip will total around $136 million, with Ocwen seeking to sell off some of the risk from its MSR pool, according to syndicate managers cited by the financial services firm.
Written by Alyssa Gerace