Nationstar snaps up $9.8B MSR portfolio from Ocwen

This transaction is only the beginning

Ocwen Loan Servicing (OCN) is selling the residential mortgage servicing rights on a $9.8 billion portfolio to Nationstar Mortgage (NSM), potentially marking the beginning of more servicing transfers.

The portfolio consists of approximately 81,000 performing loans owned by Freddie Mac.

The deal is still subject to approval by Freddie Mac and the Federal Housing Finance Agency and is expected to close by March 31 with the loan servicing to transfer in April 2015.  

"We are pleased to enter into an agreement to acquire this portfolio from Ocwen," said Jay Bray, CEO of Nationstar.  "We look forward to expeditiously closing this portfolio and welcome the new customers to Nationstar."

"This transaction represents the first step in the execution of our previously-announced strategy to transfer certain types of non-strategic servicing," said Ronald Faris, CEO of Ocwen. "We look forward to exploring additional MSR transactions with Nationstar."

At the end of December, Ocwen unveiled its plans for the future, which included Ocwen's plan to exit agency servicing. “We are going to focus our servicing business primarily on non-agency servicing,” Ocwen CEO Ron Faris said.

Faris said at the time that the sales of its agency mortgage servicing rights portfolio will not be done in bulk. “Given the current environment, we believe it is unlikely that you will see large bulk transactions like we have seen in recent years,” Faris said. “We expect to be in a position to execute this strategy with smaller transactions.”

Also on Monday morning, Home Loan Servicing Solutions (HLSS) announced that it entered into a definitive merger agreement with New Residential Investment (NRZ), which is managed by an affiliate of Fortress Investment Group (FIG).

Meanwhile, on Friday, Fitch Ratings followed through on one of its threats and downgraded hundreds of RMBS classes because they contained Ocwen-serviced loans.

Fitch previously placed 297 RMBS classes from 135 separate transactions on “negative rating watch,” due to the presence of Ocwen-serviced loans in the transactions.

All the news on Ocwen sent the company's stock in a giant roller coaster. The stock dropped about 10% following the sale of its portfolio and the sale of Home Loan Servicing. However, Ocwen has retaken nearly all of that loss and experienced a brief halt in trading for its volatility after hitting its circuit breaker, an article in Seeking Alpha explained.

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