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New Residential and Ocwen Financial Announce Agreement Relating to Mortgage Servicing Rights Transfer and Subservicing Agreement

NEW YORK & WEST PALM BEACH, Fla.--(BUSINESS WIRE)--New Residential Investment Corp. (NYSE:NRZ, “New Residential”) and Ocwen Financial Corporation (NYSE:OCN, “Ocwen”) today announced the companies have signed definitive agreements for the transfer of Ocwen’s interest in mortgage servicing rights (“MSRs”) and subservicing relating to approximately $110 billion UPB (1) of non-agency MSRs (2). Upon the transfer of the MSRs to NRZ, the subservicing agreement will replace certain existing agreements between NRZ and Ocwen. The transaction includes the following key terms:

  • Under the MSR transfer agreement, Ocwen will transfer to New Residential Mortgage LLC (“NRM”), a wholly-owned subsidiary of NRZ, approximately $110 billion UPB of seasoned non-agency MSRs subject to the parties’ current agreements. Upon obtaining the required third-party consents and the transfer of the MSRs, a subsidiary of NRZ will make a lump sum restructuring fee payment to Ocwen upon each transfer in exchange for Ocwen forgoing payments under the existing agreements. These lump sum restructuring fee payments may total up to approximately $400 million (3) in aggregate if all of the applicable MSRs are transferred to NRM. Subject to the approval of certain counterparties to the related securitizations and other customary closing conditions, the transfers may begin as early as September 2017 and continue into 2018.
  • Concurrently with the MSR transfer agreement, NRM has entered into a 5-year subservicing agreement with Ocwen, pursuant to which Ocwen will subservice the mortgage loans underlying the transferred MSRs.
  • In connection with the transaction, NRZ has agreed to make an equity investment of approximately $13.9 million to purchase approximately 4.9% of Ocwen’s common equity.(4)

“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 Chief Executive Officer 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.”

Ronald M. Faris, President and Chief...