Newcastle Investment Corp. (NCT) said Tuesday that it has agreed to acquire an approximately 65 percent interest in Excess Mortgage Servicing Rights from Nationstar Mortgage LLC for about $170 million. The deal is in connection with Newcastle's acquisition of mortgage servicing assets from Aurora Bank FSB, a subsidiary of Lehman Brothers Bancorp Inc.
The investment, subject to regulatory and third-party approvals, is expected to close in the second quarter of 2012. Newcastle noted that Nationstar will be the servicer of the loans and will invest alongside the company by acquiring the remaining approximately 35 percent stake in Excess Mortgage Servicing Rights or MSRs.
Newcastle, which primarily invests in real estate securities, said that the unpaid principal balance of the total portfolio is expected to be approximately $63 billion at closing. The company expects it to be comprised of approximately 75 percent non-conforming loans in private label securitizations and approximately 25 percent conforming loans in GSE pools.
New York-based Newcastle is managed by an affiliate of investment management firm Fortress Investment Group LLC.
Separately, Nationstar Mortgage said it has agreed to acquire about $63 billion in residential mortgage servicing assets, as measured by unpaid principal balance, and certain other assets from Aurora Bank FSB.
Aurora is the 19th largest servicer of residential mortgages in the U.S., according to Inside Mortgage Finance as of December 31, 2011.
Nationstar Mortgage said that the cash purchase price of the MSRs is about $268 million. The cash purchase price of the related servicing advance receivables is approximately $210 million, net of financing. Nationstar expects to enter into about $1.45 billion of advance financing facilities to fund the balance of the related servicing advance receivables.
Nationstar will fund up to approximately $170 million of the MSR purchase price with the proceeds of a co-investment by Newcastle Investment, whereby Nationstar will sell to Newcastle the right to receive about 65 percent of the excess MSRs after receipt of a fixed basic servicing fee per loan.
NCT closed Monday's trading at $5.96, up $0.19 on a volume of 1.25 million shares.
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