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Ocwen to Sell Agency MSR Portfolio with $9.6 Billion in UPB to Green Tree

Ocwen Financial Green Tree Loan Servicing [1]Ocwen Loan Servicing, a subsidiary of Ocwen Financial Corporation [2], has agreed in principle to sell the the mortgage servicing rights for an Agency portfolio with a total principal balance of $9.6 billion to Green Tree Loan Servicing, according to an announcement [3] from Ocwen on Wednesday morning.

According to Ocwen, the portfolio consists of approximately 55,000 performing loans owned by Freddie Mac. The transaction is subject to approval by Freddie Mac and its conservator, the Federal Housing Finance Agency (FHFA [4]), as well as other customary conditions. Ocwen reported that it expects the transaction to close by April 30, 2015, and expects the loan servicing to transfer in May 2015.

"We are pleased with the progress we are making on executing our plan," Ocwen CEO Ron Faris said. "Over the next several months, we expect to generate proceeds of at least $650 million from sales and transfers of mortgage servicing rights. We are also committed to ensuring a smooth and accurate transfer of information to the buyers of these mortgage servicing rights."

This will be the third multi-billion sale of an agency MSR portfolio announced by Ocwen in the last two months. Ocwen's announcement of the agreement with Green Tree came just one day after reports surfaced [5] that JPMorgan Chase was the previously unidentified buyer in Ocwen's sale of a portfolio of 277,000 performing loans owned by Fannie Mae with a total unpaid principal balance of $45 billion. Ocwen announced [6] on March 2 that it has agreed to sell an Agency portfolio with 277,000 loans with $45 billion in UPB but did not name the buyer in that transaction.

In February, Ocwen announced [7] that it intended to sell the MSR on a portfolio of approximately 81,000 performing residential loans owned by Freddie Mac with a total principal balance of about $9.8 billion to Dallas, Texas-based Nationstar. At the time of the deal with Nationstar, Ocwen CEO Ron Faris said it may be only the beginning of MSR transactions between the two companies.

Media reports [8] on Wednesday indicated that Ocwen intended to delay the filing of its annual report until Monday, March 23, after previously receiving an extension until Tuesday, March 17. Atlanta-based Ocwen, the largest non-bank, non-government mortgage servicer in the nation, has endured a tumultuous year of extensive regulatory trouble and scrutiny that resulted in multi-million dollar settlements in both New York and California as well as the departure of its founder and chairman, Bill Erbey.

Ocwen has also endured ratings downgrades [9] by both Fitch Ratings and Morningstar Credit Ratings since the first of the year and was terminated from a mortgage servicing deal [10] involving two bonds in late February by Wells Fargo, the trustee for the bonds, amid speculation that the ratings downgrades had triggered defaults in the mortgage bonds. Faris announced in a note to stakeholders [11] early in February that he expected the firm's earnings to take a loss based on mounting regulatory pressures, expenses, and ratings downgrades.