Ocwen Said to Seek $136 Million Sale of Servicing-Backed DebtJody Shenn
Ocwen Financial Corp., the mortgage servicer whose planned purchase of contracts from Wells Fargo & Co. was halted last week by New York regulators, is seeking to raise about $136 million by selling notes tied to fees from managing a pool of government-backed loans.
The bonds will pay investors about 0.21 percent of the balance of a pool of mortgages, initially $11.8 billion, according to a person with knowledge of the offering, who asked not to be named because the information isn’t public. The notes, with a final maturity in 2028, will be secured by Freddie Mac mortgage servicing rights, and will shrink with the balances of the related loans, the person said.
Ocwen said Feb. 6 that it had agreed “to put an indefinite hold” on its plans to purchase servicing rights on $39 billion of loans without government backing from Wells Fargo. The deal was shelved amid concern by Benjamin M. Lawsky, head of New York’s Department of Financial Services, that the servicer was growing too fast.
Atlanta-based Ocwen, the largest non-bank servicer, has a speculative-grade issuer rating of B from Fitch Ratings partly because of its “aggressive acquisition strategy,” the rankings firm said in a Feb. 11 statement.
Barclays Plc and Morgan Stanley are managing its bond sale, which is expected to be completed next week and offer cash for the company to finance or refinance purchases or originations of servicing rights, the person said.
Katarina Wenk-Bodenmiller, a spokeswoman for Ocwen at Sommerfield Communications Inc., and Thomas Fitzgerald, a spokesman for McLean, Virginia-based Freddie Mac, didn’t immediately return telephone messages seeking comment.