Home Loan Servicing Solutions and HLSS Management LLC have entered into a senior secured term loan facility agreement with JPMorgan Chase Bank that pertains to the servicing of certain Ocwen Financial Corp. mortgages.
Under the terms of the agreement Home Loan borrowed term loans in an aggregate principal amount valued at $350 million with loan terms subject to a 1.5% original issue discount on the stated principal amount that result in proceeds of approximately $340 million.
According to a report issued by the Securities and Exchange Commission, Home Loan is combining these proceeds with proceeds from an equity issuance reported by the bank earlier in June and cash the servicer plans to use to pay fees and expenses incurred due to the agreement, as well as “the acquisition of the rights to receive certain servicing advances for the servicing of subprime and alt-A residential mortgage loan portfolios acquired from
Home Loan will repay the principal amount of the term loans in consecutive quarterly installments of $875,000 starting on Sept. 30 with the obligation to provide full payments before June 27, 2020 and 12 months prior to the termination of the subservicer agreement between HLSS Holdings and Ocwen.
Terms and conditions applicable on borrowings include interest with an enrollment rate of not lower than 1% plus the 3.5% applicable margin.
The agreement is binding for all of Home Loan’s current and future wholly owned subsidiaries that are not securitization entities.
Provisions limit the amount of debt the servicer or its subsidiaries may incur going forward. In addition, it limits their ability “to make investments, sell assets, create liens, engage in mergers and acquisitions, pay dividends” and includes other restricted payments.
Home Loan and its subsidiaries can make unlimited restricted junior payments, including cash dividends, “as long as no default as defined in the credit agreement exists or would result therefrom,” and other default remedies that according to the SEC, “are customary for this type of loan facility.”
The company has also agreed “to use commercially reasonable efforts” to continue to be rated by Moody’s Investors Service and Standard & Poor’s.
