Newcastle (NCT) to Acquire Up to $300M of Servicing Rights from Nationstar Mortgage
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Newcastle Investment Corp. (NYSE: NCT) has signed a definitive agreement to acquire up to a 65% interest in excess mortgage servicing rights from Nationstar Mortgage LLC in connection with Nationstar’s acquisition of certain residential mortgage servicing rights and other assets (collectively, the “Mortgage Servicing Assets”) from Residential Capital, LLC and related entities (collectively, “ResCap”) in connection with ResCap’s proposed sale of these assets pursuant to an auction supervised under the U.S. Bankruptcy Code (the “Transaction”).
Newcastle expects to invest between $150 million to $300 million to acquire an interest in Excess MSRs related to Nationstar’s proposed acquisition of primary mortgage servicing rights with an unpaid principal balance of approximately $201 billion as of February 29, 2012. (Newcastle has committed to invest up to $450 million to acquire a 65% interest in these Excess MSRs, but it has retained the flexibility to sell a portion of its commitment to certain Fortress affiliates.) Nationstar will be the servicer of the loans and will invest alongside Newcastle by retaining an approximately 35% interest in the Excess MSRs. Approximately 65% of loans associated with the primary mortgage servicing rights (by unpaid principal balance) are owned, insured or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae.
Under the terms of this proposed investment, to the extent that any loans in this portfolio are refinanced by Nationstar, the resulting primary mortgage servicing right will be included in the portfolio, subject to certain limitations. This should serve to significantly reduce the impact of prepayments on Newcastle’s investment. Newcastle will not have any servicing duties, advance obligations or liabilities associated with the portfolio.
Newcastle expects to invest between $150 million to $300 million to acquire an interest in Excess MSRs related to Nationstar’s proposed acquisition of primary mortgage servicing rights with an unpaid principal balance of approximately $201 billion as of February 29, 2012. (Newcastle has committed to invest up to $450 million to acquire a 65% interest in these Excess MSRs, but it has retained the flexibility to sell a portion of its commitment to certain Fortress affiliates.) Nationstar will be the servicer of the loans and will invest alongside Newcastle by retaining an approximately 35% interest in the Excess MSRs. Approximately 65% of loans associated with the primary mortgage servicing rights (by unpaid principal balance) are owned, insured or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae.
Under the terms of this proposed investment, to the extent that any loans in this portfolio are refinanced by Nationstar, the resulting primary mortgage servicing right will be included in the portfolio, subject to certain limitations. This should serve to significantly reduce the impact of prepayments on Newcastle’s investment. Newcastle will not have any servicing duties, advance obligations or liabilities associated with the portfolio.
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