Ocwen Loan Servicing, a subsidiary of Ocwen Financial Corporation, and Nationstar Mortgage, a subsidiary of Nationstar Mortgage Holdings, have agreed in principle to the sale by Ocwen of the mortgage servicing rights (MSR) on an Agency portfolio with approximately $25 billion in unpaid principal balance, according to an announcement on Ocwen's website on Tuesday.
There are approximately 142,000 residential mortgage loans owned by Fannie Mae and Freddie Mac in the portfolio, according to Ocwen. The transaction is subject to a definitive agreement as well as approvals from the two GSEs and their conservator, the Federal Housing Finance Agency (FHFA). According to Ocwen, both companies expect the transaction to close by the middle of the year.
This will be the second time in as many months that Ocwen has announced an MSR sale on an Agency portfolio of residential loans to Dallas, Texas-based Nationstar. In February, Ocwen announced its intention to sell the MSR on a portfolio of about 81,000 performing residential loans owned by Freddie Mac with a UPB of about $9.8 billion to Nationstar. Combined, the two MSR deals between Ocwen and Nationstar announced in the last two months include about 223,00 Agency residential mortgage loans with $34.8 billion in UPB.
"This transaction, on top of the one announced in February between Ocwen and Nationstar, furthers our announced corporate strategy and demonstrates the strong working relationship we have developed with Nationstar," said Ron Faris, CEO of Ocwen.
At the time the February transaction was announced between Ocwen and Natonstar, Faris left the door open by saying that deal may be just the beginning of MSR transactions between the two companies.
"This transaction builds upon our strong track record of portfolio acquisitions while serving the needs of homeowners, and we look forward to expeditiously closing and boarding this portfolio," said Jay Bray, CEO of Nationstar. "We will continue to work cooperatively with Ocwen as they evaluate the sale of additional agency portfolios and look forward to continuing discussions with all counterparties."
The transaction announced Tuesday was the fourth multi-billion sale of an Agency MSR portfolio announced by Ocwen in the last two months. Aside from the two deals with Nationstar, Ocwen announced earlier in March an MSR sale of a portfolio with 55,000 loans owned by Freddie Mac with a UPB of $9.6 billion to Green Tree Loan Servicing. The announcement of the agreement with Green Tree came just one day after reports surfaced 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 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.
Atlanta-based Ocwen Financial is the largest non-bank, non-government mortgage servicer in the nation. The company is reportedly looking to downsize after a tumultuous year of extensive regulatory trouble and scrutiny that resulted in multi-million dollar settlements in both New York and California.
On Monday, Ocwen announced that it had received a deficiency letter from New York Stock Exchange Regulation on March 18 which stated that the servicer was not in compliance with the listing standards of the NYSE as a result of Ocwen's failure to timely file its annual report for the fiscal year ending on December 31, 2014. Ocwen had previously received an extension to file the report on March 17, but was unable to do so by that date and does not currently have an estimated date of when the report will be filed.
Ocwen said in the announcement that it required additional time to prepare its annual report because of the ongoing review and analysis of Home Loan Servicing Solutions' ability to continue to meet its obligations to fund new servicing advances.
Because Ocwen received the letter of deficiency, NYSE Regulation will closely monitor the status of Ocwen's late filing and related public disclosures for up to six months from the annual report's due date. If Ocwen is late filing the annual report, it could be delisted from the NYSE.