Ocwen Financial announced on Monday that it has closed an offering of fixed-rate asset-backed term notes issued by Ocwen Master Advance Receivables Trust (OMART) and totaling $600 million in aggregate principal.
The notes are used to finance the servicing advances that are used to fund RMBS investors, according to an Ocwen spokesman, who also noted that the company believes the securitization of the advances is the most efficient and lowest cost form of borrowing available to mortgage servicers.
“I am pleased to announce the closing of our recent servicing advance securitization,” said Michael Bourque, Executive Vice President and CFO of Ocwen. “We believe that this execution, which replaces floating rate debt with longer dated fixed rate term debt at favorable rates, demonstrates continued confidence in Ocwen within the capital markets.”
The notes carry a weighted average fixed interest rate of 3.25 percent and include $200 million worth of one-year notes and $400 million worth of two-year notes, according to Ocwen. The notes were issued on Friday, November 13, 2015 and announced on Monday, November 16.
Net proceeds from the sale of the notes were used to refinance $600 million worth of existing floating rate OMART servicing advance financing, according to Ocwen. The notes are secured by servicing advance receivables associated with Ocwen’s private-label servicing portfolio, according to the announcement. The notes were issued in various credit classes, rated from AAA to BBB by Standard & Poor’s, according to Ocwen.
The notes were offered and sold only to “qualified institutional buyers” and outside the United States to non-U.S. persons in offshore transactions in accordance with Regulation S under the Securities Act of 1933, according to Ocwen, and therefore they are subject to restrictions on transferability and resale.’
The sale of the notes marks a bright spot for the Atlanta-based servicer after a down third quarter. In late October, Ocwen announced a net loss of $66.8 million for the quarter. Also, toward the end of September, Ocwen laid off about 300 employees, or approximately 10 percent of its U.S. workforce. In mid-September, toward the end of Q3, Ocwen settled a class action suit for $140 million in a Miami court with homeowners who had sued over inflated “force placed insurance” premiums.