Ocwen to Raise Equity, Agrees to Buy $15B of MSRs from JPM

Mortgage & Real Estate

Ocwen Financial Corp. this morning said it would raise $375 million of new equity and use some of the proceeds to buy $15 billion of mortgage servicing rights from JPMorgan Chase Co.

According to a research note from Sterne Agee, Ocwen is actually paying a total of $950 million for the JPM MSRs, but the figure includes servicing advances.

When the advances are factored out of the equation, the MSRs are valued at $165 million or 110 basis points of UPB.

However, a subsequent look at the deal has the MSR price being as low as $82 million, said one analyst. “It’s a good deal for Ocwen,” he said.

Overall, Ocwen priced 25 million shares of public common stock at $13 per unit.

The specialty servicer granted its underwriters a 30-day option to purchase up to 3.75 million additional shares to cover overallotments.

The transaction is expected to close on Nov. 16.

J.P. Morgan Securities LLC, B of A Merrill Lynch and Citigroup Global Markets Inc. are acting as joint book-running managers for the common stock offering. Keefe, Bruyette Woods, Inc. is acting as co-manager.

Daily Briefing | Thursday, November 10, 2011

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