Ocwen Financial Corporation (NYSE:OCN) announced plans Monday to sell a $9.8 billion portfolio of mortgage servicing rights (MSR) to Nationstar Mortgage Holdings Inc. (NYSE:NSM).
Ocwen is the owner of top-10 reverse mortgage lender Liberty Home Equity Solutions, Inc. The deal does not include reverse mortgages, a spokesman with Nationstar confirmed with RMD. Nationstar formerly owned a reverse mortgage origination platform, but announced plans last year to “stop originating reverse mortgages.”
Ocwen’s wholly-owned subsidiary Ocwen Loan Servicing signed an agreement in principle for the sale with Nationstar Mortgage LLC, an indirectly held, wholly owned, subsidiary of Nationstar.
The portfolio consists of about 81,000 performing loans owned by Freddie Mac with a total principal balance of approximately $9.8 billion, Ocwen said in a statement.
Subject to a definitive agreement, approvals by Freddie Mac and FHFA and other customary conditions, Ocwen and Nationstar expect the transaction to close by March 31, 2015 and the loan servicing to transfer in April 2015.
Ocwen issued a letter to shareholders earlier this month noting that the company was back on track following months of regulatory controversy.
“This transaction represents the first step in the execution of our previously-announced strategy to transfer certain types of non-strategic servicing,” said Ronald M. Faris, CEO of Ocwen, in a statement released Monday. “We look forward to exploring additional MSR transactions with Nationstar.”
Ocwen previously indicated that it plans, in a series of $10 to $20 billion transactions, to sell all of its roughly $198 billion in government sponsored enterprise (GSE) servicing, notes Sterne Agee analyst Henry J. Coffey, Jr. in a statement.
“[Nationstar] could also be well positioned to step in as either the owner or a special servicer for [Ocwen]/[Home Loan Servicing Solutions] HLSS,” Coffey said. “The latter would minimize any potential wrangling with the parties suing [Ocwen] over servicer performance.”
Real-estate investment trust New Residential Investment Corp. (NYSE:NRZ) and Home Loan Servicing Solutions, Ltd. (NASDAQ: HLSS) announced a definitive merger agreement Sunday under which New Residential will acquire all of the outstanding shares of HLSS for $18.25 per share in cash, totaling approximately $1.3 billion.
HLSS was founded by an Ocwen executive in 2010 to acquire mortgage-servicing rights and other income from servicing mortgage loans. HLSS had acquired mortgage servicing rights from Ocwen in the past, and was recently urged by Mangrove Partners Master Fund Ltd. to cut ties with Ocwen because of its past legal woes, media report.
“[Ocwen’s] largest competitor was just given the key to the house so to speak with the pending acquisition of HLSS,” Coffey said. “HLSS is the largest single counter party in [Ocwen’s] non agency servicing business and it, more than anyone else can/could play a major role in deciding where this servicing will go.”
Written by Cassandra Dowell