Ocwen Financial Corp. announced a number of items in a recent filing with the Securities and Exchange Commission (SEC).
Ocwen entered into a new agreement with New Residential Investment Corp. over mortgage servicing rights (MSRs), came to agreement with two more states to settle regulatory matters, made a decision on the future of its automotive capital services business and completed the settlement of a class-action lawsuit against the firm.
The biggest news is on the new agreement with New Residential, which works to convert New Residential’s current right to MSRs to fully owned MSRs.
“In effect, the new arrangements provided for the conversion of the existing arrangements into a more traditional subservicing arrangement and involved upfront payments to Ocwen for MSRs to be transferred to New Residential over time,” Ocwen’s 8-K filing with the SEC stated of the original agreement announced in July 2017.
Under the existing agreements, Ocwen sold and transferred certain rights to MSRs and other assets related to mortgage servicing rights to for loans with an unpaid principal balance of $86.8 billion as of the opening balances Jan. 1, 2018.
Under the new deal, Ocwen will continue to service the mortgage loans related to those MSRs until the necessary third-party consents are obtained to transfer them to New Residential. Ocwen will be paid $279.6 million up front and receive substantially identical compensation for servicing the related mortgage loans underlying the MSRs that it would receive if the MSRs had been transferred to New Residential as named servicer and Ocwen subserviced such mortgage loans for New Residential as named servicer.
In addition, New Residential agrees to waive any rights it may have had to replace Ocwen as named servicer with respect to the MSRs based on Ocwen’s residential servicer rating agency related downgrades.
On the state front, Ocwen came to agreements with North Carolina and South Dakota to settle regulatory actions taken. Ocwen said the agreements contain key terms that are similar to the agreements Ocwen previously disclosed.
That brings a total of 27 jurisdictions which have reached settlements with Ocwen, leaving six more unsettled, four regulatory agencies and two state attorneys general.
The company also publicly announced it completed its strategic review of its automotive capital services business and that it would exit the business.
“As part of this strategic assessment, Ocwen has been evaluating its long-term strategy for its Automotive Capital Services, Inc. business which provides floor plan lending to independent car dealers. Ocwen has determined that it will exit this business,” the filing stated. “We will be providing some transition-related support to existing customers, and we expect to have fully exited the business by the end of the second quarter of 2018. We do not expect the exit to have a material impact on earnings.”
Finally, Ocwen said it had completed the stock distribution required to settle a class action lawsuit filed against it in Florida district court, with the judgment approved Dec. 22. It also paid down $20 million of its senior secured term loan, leaving about $298.3 million outstanding under its senior secured term loan.