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Ocwen pays down more debt with MSR sales proceeds

Continues in stated plan to deleverage

Ocwen Financial (OCN) announced Wednesday morning that it is using the proceeds of a sale of mortgage servicing rights to pay down a portion of its senior secured term loan.

Ocwen began a quest to rid itself of its massive agency mortgage servicing rights holdings in December when the company unveiled a new direction for its future.

In March, the company said it was selling a $25 billion MSR portfolio to Nationstar Mortgage (NSM), just over a month after agreeing to sell another $9.8 billion portfolio of agency servicing to Nationstar.

On Wednesday, the company announced that it paid down $53.2 million of its senior secured term loan using proceeds from previously announced sales of mortgage servicing rights, but the nonbank did not disclose which sale of MSRs the funds came from.

Ocwen disclosed the payment in a filing with the Securities and Exchange Commission.

According to the SEC filing, following this most recent pay down, Ocwen has $939.4 million outstanding under its senior secured term loan.

This latest payment is the next step in Ocwen’s push to pay down its debt, a tactic that Moody’s Investors Service recently said is a good thing for the company.

In a report released recently, Moody’s upgraded several of Ocwen’s ratings and wrote that Ocwen’s MSR sales and the proceeds of those sales can go a long way to preserving the future of the beleaguered nonbank.

“The rating actions follow the company's recently announced mortgage servicing rights sales which will provide the company significant liquidity,” Moody’s said in the report.

“The company has stated their intention to use the cash generated from the sales to deleverage, if so, we estimate that the cash from the announced and proposed 2015 sales would be sufficient to fully repay the company's outstanding senior secured term loan,” the report continued.

“Furthermore, we estimate that cash plus unencumbered servicer advances would provide the company with sufficient liquidity to fully repay the company's unsecured debt, if it so elected,” Moody’s said. “In addition, the company's receipt of an unqualified audit opinion is a positive development.”

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