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
Bad News/Good News on Foreclosure Filings
Foreclosure filings increased 7% in October from the prior month with servicers and banks recording default notices, scheduled auctions, and lender repossessions on 230,678 U.S. properties, according to new figures compiled by RealtyTrac.
Average 30-year Rate Drops Below 4% Again
The average rate for a 30-year fixed rate mortgage during the week ending Nov. 10 came in below 4% for the second time this year, remaining near record lows.
Farmer Mac Loss Due to Derivatives
Farmer Mac lost $23 million in the third quarter due to changes in the fair market value of its financial derivatives. But the company does not include its derivative positions in what it terms its core earnings, which showed a profit of $11 million, up from $8 million for the same period in 2010.
FHFA Responds to Criticism of GSE Bonuses
The bonuses paid to Fannie Mae and Freddie Mac executives are structured to retain managers who have the skills to run the giant mortgage companies, according to a letter Federal Housing Finance Agency acting director Edward DeMarco sent to several senators on Thursday.
Radian Gaining Market Share
Radian Guaranty’s efforts to build market share seem to be paying off in a big way. The company had nearly $2.1 billion of primary mortgage insurance written during October, up from $1.2 billion written for the same month one year prior.
Fiserv: More Room to Fall for Home Prices
Home prices, which have fallen nearly 6% over the past four quarters (ending June 30), could fall another 3.6% by the second quarter of next year, according to analysts at Fiserv, which owns and generates the Case/Shiller house price indexes.
CRE May Perform Better Than Expected
The residential mortgage-backed securities and related collateralized debt obligation sectors lead the pack in both realized and expected future credit losses from U.S. structured finance issuances, according to Fitch Ratings. But it added commercial MBS are expected to experience losses at a lower level than many may have anticipated.
GAO Asked to Study Costs of Financial Crisis
For more than a year, Republicans have been hammering Democrats for what they say are the hefty economic costs of new financial regulations.
Covered Bond Bill Introduced in the Senate
A bipartisan group of senators, including Bob Corker (R-Tenn.), Mike Crapo (R-Idaho), Kay Hagan (D-N.C.), and Charles Schumer (D-N.Y.), Wednesday sponsored new legislation that would set up a covered bond framework in the U.S.
New Wells Fargo Unit Will Finance REITs
Wells Fargo Co. this week launched a new unit to provide financial services to publicly traded real estate investment trusts involved in commercial properties.