Ocwen Financial Corporation is partnering with another servicer, New Residential Investment Corporation, according to a press release issued on Monday, which announced the two companies have put pen to paper on a deal that was originally discussed back in May.
Under the terms of the agreement, Ocwen will transfer New Residential Mortgage (a subsidiary of New Residential Investment Corp) the mortgage servicing rights (MSR) and subservicing of approximately $110 billion in unpaid principle balance (UPB). Further, all subservicing agreements implemented with the transfer will replace existing agreements between New Residential Investment Corp and Ocwen.
According to the press release, Ocwen will continue to service the loans under the newly drafted subservicing agreement for at least five years; New Residential could pay as much as $400 million for the servicing rights.
In return, New Residential will be making an equity investment into Ocwen in the form of a common stock purchase for the price of $13.9 million. That amount is equal to 4.9 percent of Ocwen’s total market share. Transfer of the MSRs could begin in September 2017 and continue into 2018.
Both companies’ leadership have expressed their pleasure with this new cooperative deal.
“This is a great transaction for both companies and we are extremely pleased to announce our new strategic partnership with Ocwen,” said Michael Nierenberg, Chairman and CEO of New Residential. “We believe the new subservicing arrangement will further secure our interests in our MSR investments and provide additional stability to the overall servicing industry. 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.”
President and CEO of Ocwen, Ronald M. Faris, also commented, “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.”