Many shareholders, investors, and consumers were intrigued when on March 2, Ocwen Financial Corporation or "Ocwen," a leading financial services holding corporation, posted an update on its website which hinted about a deal they will be signing soon, reports DSNews.
The note informed the shareholders about a buyer's letter of intent which Ocwen signed. This is regarding the "sale of mortgage servicing rights (MSRs) on a portfolio consisting of approximately 277,000 performing Agency loans owned by Fannie Mae". The update even divulged the amount of these loans to have "a total unpaid principal balance of approximately $45 billion."
Although it was said that the transaction is subject to "definitive agreement, approvals by Fannie Mae and FHFA" and with other "customary conditions" the company expects it to be processed and closed by mid-year. The buyer who will be the receiving end of the loan servicing transfer by the 2nd half of 2015 was unnamed at that time.
Ocwen stated in the same update that it is one of the steps the company sees to "reduce interest rate risk" and "improve liquidity" ---aligned with their previously "announced plans".
With this massive portfolio amounting to $45B of MSRs, this act of Ocwen is a point of interest in the housing market.
Just this week, the name, JPMorgan Chase & Co., the second-largest servicer of mortgages in America, surfaced as the buyer of the said MSRs containing hundreds of thousands of performing loans, according to Bloomberg.
Bloomberg reports that a source familiar with the deal --- whose identity wished to be withheld---, said that JPMorgan Chase & Co. is the buyer of these $45B rights.
When this transaction between Ocwen and JPMorgan is officially processed and closed, this will reportedly make JPMorgan's loan-servicing portfolio closer to $1 trillion. As of 2014 closing date of December 31, Bloomberg says it has amassed a total of $948.8B already under its name. It may still be far behind the nation's leading service-provider, Wells Fargo & Co.'s portfolio of $1.75 trillion, but still, it was a great leap for JPMorgan and Chase & Co., Bloomberg adds.
As for Ocwen, its Chief Executive Officer Ronald Faris "is shrinking the company amid regulatory scrutiny and complaints from consumers and bond investors. A December settlement with Benjamin Lawsky, superintendent of the New York Department of Financial Services, prevents the firm from acquiring more servicing rights until it improves its processes," according to Bloomberg.
