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Ocwen To Buy Mortgage Servicing Rights From OneWest Bank For $2.53 Bln

Loan servicing company Ocwen Financial Corp. (OCN) said Thursday that it has agreed to buy mortgage servicing rights and related servicing advance receivables from California-based OneWest Bank, FSB for $2.53 billion.

In a filing with the U.S. Securities and Exchange Commission or SEC, Ocwen said its wholly-owned subsidiary, Ocwen Loan Servicing LLC, will purchase about $78 billion in unpaid principal balance of mortgage servicing rights or MSRs and related servicing advance receivables, measured as of April 30, 2013. The company added that no operations or other assets are being purchased in the deal.

OneWest is a federal savings bank with 75 retail branches and more than $25 billion in assets.

The purchase price includes $446 million for the MSRs and about $2.1 billion for the servicing advances. Ocwen plans to finance the transaction primarily with a combination of cash on-hand, cash generated through operations and available credit. Ocwen has agreed to guarantee the obligations and performance of Ocwen Loan Servicing under the deal.

The transaction is anticipated to close in stages during the second half of 2013. Ocwen expects that the majority of loans will be boarded onto its primary servicing platform, which is licensed from Altisource Portfolio Solutions S.A., at each respective closing for such loans.

The company noted that a termination fee of $50 million may be payable by either party in certain circumstances. As part of the deal, OneWest Bank and Ocwen Loan Servicing agreed to indemnification provisions for the benefit of the other party.

Ocwen is emerging as one of the largest mortgage servicers in the U.S In October 2012, Ocwen agreed to acquire Homeward Residential Holdings Inc. from private equity firm WL Ross & Co. LLC for about $750 million. The move is expected to add high return servicing assets to the Ocwen portfolio.
Also in 2012, Ocwen bought Litton Loan Servicing from Goldman Sachs Group Inc. (GS), and Saxon Mortgage Services from Morgan Stanley (MS).

In May this year, Ocwen reported that its first-quarter net income increased to $42.58 million or $0.31 per share from $19.35 million or $0.14 per share in the year-ago period. Revenue for the quarter more than doubled to $406.7 million from $164.6 million in the same period last year.

OCN closed Thursday's trading at $45.74, up $1.58 or 3.58 percent on a volume of 2.09 million shares. In after-hours, the stock further gained $1.61 or 3.52 percent to $47.35.

by RTT Staff Writer

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