Item 1.01 Entry into a Material Definitive
Agreement.
On July 23, 2017, Ocwen Financial Corporation
and certain subsidiaries of Ocwen Financial Corporation (collectively, Ocwen) entered into a series of agreements (collectively,
the Agreements) with New Residential Investment Corp. and certain subsidiaries
of New Residential Investment Corp. (collectively, New Residential) that modify and supplement the arrangements among the parties
set forth in (i) the Master Servicing Rights Purchase Agreement, dated as of October 1, 2012, as amended by Amendment No. 1 to
Master Servicing Rights Purchase Agreement and Sale Supplements, dated as of December 26, 2012, and Amendment No. 2 to Master
Servicing Rights Purchase Agreement and Sale Supplements, dated as of April 6, 2015 (as so amended, the Existing MSR Purchase
Agreement) and (ii) certain sale supplements to the Existing MSR Purchase Agreement, as amended by Amendment No. 1 to Master Servicing
Rights Purchase Agreement and Sale Supplements, dated as of December 26, 2012, Amendment to Sale Supplements dated as of July
1, 2013, Amendment to Sale Supplement, dated as of September 30, 2013, Amendment to Sale Supplements, dated as of February 4,
2014, Amendment No. 2 to Master Servicing Rights Purchase Agreement and Sale Supplements, dated as of April 6, 2015, and February
Amendment, dated as of February 17, 2017 (as so amended, the Existing Sale Supplements and, together with the Existing MSR Purchase
Agreement, the Existing Agreements). In addition, Ocwen sold New Residential 6,075,510 shares of Ocwen common stock, par value
$0.01 per share, at a price per share of $2.29 for gross proceeds of approximately $13.9 million. These transactions are described
in further detail below.
Transfer of Remaining Interests in
MSRs
On July 23, 2017, Ocwen and New Residential
entered into a master agreement (the Master Agreement) and a transfer agreement (the Transfer Agreement) pursuant to which Ocwen
and New Residential agreed to undertake certain actions to facilitate the transfer from Ocwen to New Residential of Ocwen’s
remaining interests in the mortgage servicing rights relating to loans with an aggregate unpaid principal balance of approximately
$110 billion that are subject to the Existing Agreements (the Subject MSRs) and with respect to which New Residential holds the
Rights to MSRs (as defined in the Existing Agreements).
The Master Agreement provides, among
other things:
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the parties will cooperate to obtain any
third-party consents required to transfer Ocwen’s rights to the Subject MSRs to New Residential;
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upon obtaining the required third-party
consents and the transfer of the applicable Subject MSRs to New Residential, New Residential will pay a lump sum restructuring
fee to Ocwen upon each transfer of such Subject MSRs in exchange for Ocwen forgoing payments under the existing agreements. These
lump sum restructuring fees may total up to approximately $400 million in the aggregate if all of the Subject MSRs are transferred
to New Residential. Upon transfer, Ocwen will subservice the mortgage loans related to such Subject MSRs pursuant to the Subservicing
Agreement (as defined below);
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in the event that the required third-party
consents are not obtained within one year (by July 23, 2018) or such earlier date mutually agreed to by the parties, the applicable
Subject MSRs may (i) become subject to a new mortgage servicing rights agreement to be negotiated between Ocwen and New Residential,
(ii) be acquired by Ocwen at a price determined in accordance with the terms of the Master Agreement, (iii) be sold to one or more
third-parties in accordance with the terms of the Master Agreement, or (iv) remain subject to the Existing Agreements; and
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New Residential agrees to up to an eighteen
month standstill with respect to certain rights it has under the Existing Agreements (until January 23, 2019, subject to certain
conditions) on the rights of New Residential to replace Ocwen as named servicer with respect to the Subject MSRs.
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Subservicing
On July 23, 2017, Ocwen and New Residential
entered into a subservicing agreement (the Subservicing Agreement) pursuant to which Ocwen will subservice the mortgage loans related
to the Subject MSRs that are transferred to New Residential pursuant to the Master Agreement. In consideration for subservicing
such mortgage loans, Ocwen will receive a subservicing fee as set forth in the Subservicing Agreement. The initial term of the
Subservicing Agreement is five years. At any time during the initial term, New Residential may terminate the agreement for convenience,
subject to Ocwen’s right to receive a termination fee and proper notice. Following the initial term, New Residential may
extend the term of the Subservicing Agreement for additional three month periods by delivering written notice to Ocwen of its desire
to extend such contract thirty days prior to the end of such three month period. Furthermore, the Subservicing Agreement may be
cancelled by Ocwen on an annual basis. In addition, New Residential and Ocwen shall have the ability to terminate the agreement
for cause if certain conditions specified in the Subservicing Agreement occur.
Share Purchase
On
July 23, 2017, Ocwen and New Residential entered into a share purchase agreement (the Share Purchase Agreement) pursuant to which
Ocwen sold New Residential 6,075,510 shares of newly-issued Ocwen common stock (representing approximately 4.9% of Ocwen’s
outstanding common stock) at a price per share of $2.29, which price was based on the closing price of Ocwen common stock at the
time Ocwen and NRZ reached an agreement in principle for the transactions described herein. The shares
have
not been registered under the Securities Act of 1933 (Securities Act) and were issued and sold in reliance upon the exemption from
registration contained in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder. The shares may not be offered
or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements
under the Securities Act.