Ocwen breaks down ResCap purchase
Ocwen Financial (OCN) recently won the bid for the mortgage servicing rights to Residential Capital, a subsidiary of Ally Financial. Ocwen also received a little help from Walter Investment Management (WAC) The two firms submitted a joint, winning bidwith a purchase price of $3 billion.
According to a filing with the Securities and Exchange Commission, Ocwen agreed to purchase approximately $62.9 billion in private-label mortgage servicing rights.
Additionally the purchase includes $21.7 billion in Freddie Mac MSRs, $42 billion in Ginnie Mae MSRs, $46 billion in master servicing MSRs, $30.1 billion in subservicing contracts and $1.71 billion of related servicing advance receivables.
Walter agreed to acquire all of ResCap's Fannie Mae mortgage servicing rights, and related advances for $540 million.
Ocwen also received $1.5 billion senior secured term loan from Barclays Bank to put toward the bid.
Ocwen does not expect to issue any additional equity to finance this purchase and projects that it will earn pretax net income of approximately $120 million on this acquisition for the 12 months post-closing.