Ocwen Financial (OCN) Unit Completes ResCap Asset Acquisitions

February 19, 2013 8:56 AM EST
On February 15, 2013, Ocwen Loan Servicing, LLC, a Delaware limited liability company and a wholly owned subsidiary of Ocwen Financial Corporation (NYSE: OCN), completed the acquisition of certain Purchased Assets (as described below) pursuant to an asset purchase agreement (the “Asset Purchase Agreement”) with Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services, LLC, ETS of Washington, Inc., EPRE LLC and the additional Sellers identified on Schedule A thereto (collectively, the “Sellers”) in connection with the Sellers’ proposed asset sale pursuant to a plan under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). Each of the Sellers is an indirect subsidiary of Ally Financial Inc.

Pursuant to the Asset Purchase Agreement, Ocwen purchased approximately $49.6 billion in “private label” mortgage servicing rights (“MSRs”), $19.2 billion in Freddie Mac MSRs, $38.5 billion in Ginnie Mae MSRs, $42.1 billion in master servicing MSRs, $25.9 billion in subservicing contracts, $1.5 billion of related servicing advance receivables, and related elements of the servicing platform for these MSRs and advances (collectively, the “Purchased Assets”), in each case as measured by unpaid principal balances as of December 31, 2012. The aggregate purchase price for Purchased Assets, net of adjustments for assumed liabilities, was approximately $2.1 billion, subject to post-closing adjustments for the unpaid principal balance of the related Purchased Assets as of the date of closing and other customary post-closing adjustments. In addition, until certain consents and court approvals are obtained, Ocwen will subservice approximately $9 billion in “private label” MSRs previously serviced by the Sellers. When such consents and approvals are obtained, Ocwen will purchase those MSRs as well.

The transactions described in the previous two paragraphs are referred to herein as the “Transaction.”

Ocwen deployed approximately $840 million of net additional capital, all in the form of additional term debt described in greater detail in item 2.03 below. To finance the acquisition of the servicing advance receivables, Ocwen borrowed approximately $1.25 billion pursuant to three servicing advance facilities with Barclays Bank PLC, JPMorgan Chase Bank, N.A. and Bank of America, N.A.

The foregoing summary of the Asset Purchase Agreement is qualified in its entirety by reference to the Asset Purchase Agreement, which was filed with the Registrant’s November 8, 2012 Current Report on Form 8-K as Exhibit 2.1 and incorporated herein by reference.

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