Ocwen Financial Corporation has announced the completion of a previously announced transaction with funds managed by Oaktree Capital Management LP to operate a mortgage servicing rights (MSR) investment joint venture, MSR Asset Vehicle LLC (MAV).
Ocwen and Oaktree will invest up to $250 million of capital into MAV to acquire Fannie Mae and Freddie Mac MSRs. The parties will fund the investment on a pro rata basis equal to their respective ownership interest of 15% for Ocwen and 85% for Oaktree. MAV is currently approved to purchase Freddie Mac MSRs, and expects to receive approval to purchase Fannie Mae MSRs in the near future.
“We are very pleased to complete the transaction and begin operating MAV with Oaktree,” said Glen A. Messina, President and CEO of Ocwen. “This is an important component of our growth strategy as it allows us to significantly expand our participation in the bulk market and grow servicing and subservicing on a capital efficient basis.”
PHH Mortgage Corporation, a subsidiary of Ocwen, will act as the sole provider of subservicing, portfolio recapture services and certain other administrative services to MAV. The company expects MAV to add up to $60 billion of subservicing unpaid principal balance (UPB) for PHH.
Ocwen recently reached multiple agreements with Texas Capital Bank to acquire the Bank’s Correspondent Lending business, which originated approximately $2.4 billion of volume in the fourth quarter of 2020. Ocwen also entered into an agreement with Texas Capital Bank to purchase, in bulk, MSRs attributable to a mortgage loan portfolio approximating $14 billion, with approximately 60,000 loans expected to transfer to the PHH Mortgage servicing platform in Q3 of 2021.
“Our recently announced transaction with Texas Capital Bank to purchase $14 billion in bulk MSRs is expected to provide roughly 25% of the targeted servicing UPB for MAV, and we expect to accelerate funding in the third quarter,” said Messina. “We are excited about our alliance with Oaktree and look forward to working with them to reach the full potential of MAV.”