Home Loan Servicing Solutions, Ltd. (HLSS) is preparing an initial public offering (IPO) of 18.3 million shares. HLSS is a spin-off of Georgia-based Ocwen Financial Corporation.
Simultaneously with the offering, HLSS founder and chairman of the board of directors, William C. Erbey, will purchase $10 million of HLSS's ordinary shares at the same price as the IPO.
""We believe that our revenue and expense structure will be predictable and generate a stable income stream and that the quality of our assets will be strong,"" the company stated in its SEC filing.
HLSS plans to distribute at least 90 percent of its net income to shareholders through monthly cash dividends.
According to the SEC filing, the monthly dividend is not a condition of HLSS's tax status and will not alter its U.S. tax status.
HLSS aims to acquire mortgage servicing assets, including servicing rights, rights to fees, and other income from servicing loans.
However, HLSS will not originate or purchase mortgage loans.
HLSS plans to use the proceeds from the IPO to purchase a portion of the assets Ocwen obtained from HomeEq Servicing.
""The unpaid principal balance of the subprime and Alt-A mortgage loans underlying the Initial Mortgage Servicing Rights is approximately $17.0 billion and the amount of associated servicing advances outstanding is approximately $604 million, in each case as of June 30, 2011,"" according to the SEC filing.
HLSS's executive officers hold senior management roles at Ocwen but will resign and transition to HLSS's executive management team after completion of the IPO.