Ocwen Financial Corp.
) list of acquisitions, the company announced a deal to buy
mortgage servicing rights (MSRs) from Calif.-based OneWest Bank,
FSB. The company will be paying nearly $2.53 billion for MSRs
worth $78 billion.
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Of the total purchase price, $446 million will be paid with
respect to MSRs and roughly $2.1 billion to be paid for servicing
advances. Ocwen will be financing the deal through available cash
in hand, funds generated from operations and available credit.
The deal, still subject to customary closing conditions and
regulatory approvals, is expected to close by the end of this
year. Further, both Ocwen and OneWest Bank have agreed to
termination fees of $50 million if the transaction is not
completed by Jan 31, 2014. Moreover, the majority of the loans
will be integrated in to the company's primary servicing platform
licensed from Altisource Portfolio Solutions S.A.
Over the last couple of years, Ocwen has been on an acquisition
spree. In Apr 2013, the company acquired Genworth Financial Home
Equity Access, Inc. from
Genworth Financial, Inc.
) for approximately $22 million in cash. In the same month, it
also completed the acquisition of $84.6 billion worth of Fannie
Mae's MSRs from Ally Bank.
Earlier, in Feb 2013, collaborating with Walter Investment
Management Corp., Ocwen acquired Residential Capital LLC's MSRs.
In Dec 2012, the company completed the acquisition of Homeward
Residential Holdings Inc. from WL Ross & Co. LLC for $766
Additionally, in Apr 2012, Ocwen completed the acquisition of
particular MSRs and related assets from Saxon Mortgage Services
Inc. - a mortgage subsidiary of
). Prior to that, in 2011, Ocwen had acquired Litton Loan
The Goldman Sachs Group, Inc.
All these deals have resulted in a notable improvement in Ocwen's
financial performance. In first-quarter 2013, the company's
earnings more than doubled year over year, driven by top-line
growth due to acquisitions. As the housing sector gradually
rebounds, Ocwen is expected to get further opportunities to
acquire distressed servicing portfolios at attractive prices.
Currently, Ocwen carries a Zacks Rank #3 (Hold).