The largest subprime mortgage servicer in the world is about to get even bigger.

Home Loan Servicing Solutions, a foreign investment firm designed to buy mortgage servicing rights from Ocwen Financial Corp. (OCN), is expected to launch its IPO in February, according to a Securities Exchange Commission filing.

The IPO was initially planned in August. The stock market proved too volatile at the time, and the offering was delayed.

HLSS will use proceeds from the IPO to buy MSRs from Ocwen.

In return, Ocwen would use that cash to buy other servicing rights. Because HLSS would be responsible for making the servicer advances on the loans it buys, Ocwen will have more cash to expand.

"Should the HLSS IPO be effective, Ocwen would begin to migrate to a fee-for-service model with lower leverage and lower balance sheet requirements," the company said. "The transaction could potentially make Ocwen and HLSS more competitive in bidding for servicing."

In September, Ocwen completed its acquisition of Litton Loan Servicing from Goldman Sachs (GS) to become the largest subprime mortgage servicer in the U.S. After boarding loans from other acquisitions of Saxon Mortgage Services and HomEq, it holds a servicing portfolio of $129.9 billion.

The company cuts costs on servicing loans by using a platform that relies heavily on technology and a workforce in India, where employee cost is one-eight that of U.S-based operations, according to the filing. Ocwen has been in India for the last decade.

Roughly $106 billion of the Ocwen portfolio is subprime. The next closest subprime servicer is JPMorgan Chase (JPM) with $87 billion. Overall, Chase has a $1.2 trillion servicing portfolio.

Ocwen expects to close on another $15 billion of subprime MSRs in early 2012, and disclosed in its filing Tuesday that it was reviewing at a new purchase of $300 billion in unpaid principal.