NEW YORK CITY—Mortgage REIT New Residential Investment Corp. (NRZ) and Ocwen Financial Corp. said Monday they had agreed to transfer Ocwen's servicing rights on non-agency mortgages with an unpaid principal balance of approximately $110 billion. The pact also entails a five-year agreement for Ocwen to subservice the mortgage loans.
Under terms of the agreement, a subsidiary of NRZ will make a total of about $400 million in lump-sum restructuring payments to Ocwen after the latter's mortgage servicing rights are transferred. NRZ will also take a 4.9% equity interest in Ocwen for about $13.9 million.
NRZ in fact already owns the fee economics and servicer advances on the mortgage portfolio and pays Ocwen a monthly servicing fee. This arrangement has been in place since April 2015, when a proposed merger between between Ocwen affiliate Home Loan Servicing Solutions and NRZ was called off.
“We believe the new subservicing arrangement will further secure our interests in our MSR investments and provide additional stability to the overall servicing industry,” says Michael Nierenberg, NRZ's chairman and CEO. “We are encouraged by the performance of our investment portfolio to date and remain optimistic in our ability to continue driving shareholder value going forward.”
At West Palm Beach, FL-based Ocwen, president and CEO Ronald M. Faris says, ”New Residential has been a close business partner and this new arrangement extends and builds upon a mutually beneficial relationship. We look forward to working closely with New Residential to help homeowners in their servicing portfolio.”
Ocwen and NRZ said in May that they were working toward an agreement which at the time would have covered mortgage servicing rights totaling $117 billion in UPB. The final amount announced on Monday differs due to amortization of the UPB of the MSR portfolio.
In its most recently quarterly report two months ago, Ocwen cited “certain challenges and uncertainties that could have significant adverse effects on our business, financial condition, liquidity and results of operations.” Among those challenges, according to the quarterly report, is “heightened regulatory and public scrutiny as an organization as well as stricter and more comprehensive regulation of the entire mortgage sector.”
This past December, NRZ struck another large portfolio deal, agreeing to pay $612 million to acquire approximately $72 billion in unpaid balance of mortgage servicing rights from PHH Mortgage Corp. The seasoned agency and private-label platform represented PHH's entire mortgage serving rights portfolio.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
