Facing a potential default, an affiliate of Ocwen Financial Corp. has reached an agreement to be acquired by a Nationstar Mortgage Holdings Inc. affiliate.
Last month, Moody’s Investors Service reported that Ocwen-affiliate Home Loan Servicing Solutions LTD received a notice of an alleged event of default under its servicer advance securitization.
The ratings agency said that a
default would result in the loss of its primary source for funding advances on loans serviced by Ocwen — though HLSS could amend or refinance its existing facilities.
On Monday, a news release indicated that
George Town, Grand Cayman-based HLSS has reached a definitive agreement to be acquired by New Residential Investment Corp.
Like Nationstar, New Residential is a publicly traded company with ties to Fortress Investment Group LLC.
New York-based New Residential
invests in, and manages, residential real estate investments.
New Residential
will pay $18.25 in cash per share for all outstanding shares of HLSS. The deal is valued at $1.3 billion.
The merger has been approved by both companies’ boards of directors and is expected to close in the second quarter subject to HLSS shareholder approval and other closing conditions.
Word of the deal
comes as Ocwen announced that Nationstar will acquire mortgage servicing rights on nearly $10 billion in Freddie Mac loans from Ocwen.
“The acquisition will significantly add to the value of our book of mortgage servicing assets and expand our relationships with mortgage servicers to include both Nationstar Mortgage and Ocwen Financial Corp., which are the two largest non-bank servicers in the United States,” New Residential Chief Executive Officer Michael Nierenberg said in the announcement. “We are confident that this transaction will enhance our earnings growth potential and our ability to generate strong returns for our shareholders.”
HLSS CEO
John Van Vlack noted in the statement that while multiple strategic proposals were received, “New Residential’s was the most attractive for a variety of reasons including valuation and certainty of execution.”
