The embattled servicer is nearing completion of a deal that would give another company 4.9% ownership
In a move that could give the embattled servicer some much-needed good news, Ocwen Financial Corporation is nearing completion of a $425 million deal on mortgage servicing rights, the company has announced.
Ocwen is working on an agreement with New Residential Corporation that relates to about $117 billion in MSRs. The agreement would convert New Residential’s existing rights to MSRs to fully owned MSRs, according to Ocwen.
As the MSRs transfer to New Residential, they will move to a new subservicing agreement with a 5-year term. “In effect, the new arrangement would convert the existing arrangement (between the companies) into a more traditional subservicing arrangement and involve upfront payments to Ocwen of $425 million as MSRs transfer,” Ocwen said.
The agreement also involves an equity investment which would make New Residential a 4.9% owner of Ocwen.
“We are excited about the prospect of this new arrangement and expect that this agreement will further strengthen what I view as an already strong partnership by eliminating some of the uncertainties inherent in the existing arrangement, which will be good for shareholders of both companies.” said Ron Faris, Ocwen president and CEO.
The deal comes as Ocwen reels in the wake of a mass of regulatory enforcement actions by more than 20 states. Most of the states’ enforcement actions prohibited Ocwen from doing new servicing business. The same day the states announced the enforcement actions, the Consumer Financial Protection Bureau sued the servicer for servicing violations, accusing the company of “failing borrowers at every stage of the mortgage process.”
Ocwen has said it will vigorously defend itself against both the state and federal actions.
Related stories:
Ocwen’s terrible, horrible, no-good, very bad day
Ocwen challenges CFPB’s constitutionality
Ocwen is working on an agreement with New Residential Corporation that relates to about $117 billion in MSRs. The agreement would convert New Residential’s existing rights to MSRs to fully owned MSRs, according to Ocwen.
As the MSRs transfer to New Residential, they will move to a new subservicing agreement with a 5-year term. “In effect, the new arrangement would convert the existing arrangement (between the companies) into a more traditional subservicing arrangement and involve upfront payments to Ocwen of $425 million as MSRs transfer,” Ocwen said.
The agreement also involves an equity investment which would make New Residential a 4.9% owner of Ocwen.
“We are excited about the prospect of this new arrangement and expect that this agreement will further strengthen what I view as an already strong partnership by eliminating some of the uncertainties inherent in the existing arrangement, which will be good for shareholders of both companies.” said Ron Faris, Ocwen president and CEO.
The deal comes as Ocwen reels in the wake of a mass of regulatory enforcement actions by more than 20 states. Most of the states’ enforcement actions prohibited Ocwen from doing new servicing business. The same day the states announced the enforcement actions, the Consumer Financial Protection Bureau sued the servicer for servicing violations, accusing the company of “failing borrowers at every stage of the mortgage process.”
Ocwen has said it will vigorously defend itself against both the state and federal actions.
Related stories:
Ocwen’s terrible, horrible, no-good, very bad day
Ocwen challenges CFPB’s constitutionality
