New Residential weighs shift to a higher gear on Ocwen MSR deal

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New Residential Investment Corp. may seek to accelerate the process of transferring more than $100 billion in mortgage servicing rights it agreed to buy from Ocwen for $400 million.

"One of the things we are going to do, until we get everything vetted out with the trustees and get all the appropriate approvals, we're likely going to enter into an excess MSR transaction with Ocwen where we'll be able to deploy the capital sooner," CEO Michael Nierenberg said in the company's recent third-quarter earnings call.

"And then over time, that will unwind as the MSR is transferred into our name," he added.

The move could be helpful to New Residential because it is looking to deploy capital into mortgage and servicing-related assets in a market where "nothing is that interesting," said Nierenberg.

Quicker deployment of New Residential's capital also could be helpful to Ocwen Financial Corp., which could use the money to replenish funds spent battling or settling various state and federal allegations that it engaged in improper servicing practices.

New Residential has transferred to date 16% of the MSRs involved in the Ocwen deal, according to the earnings call.

"They closed 16% of the previously announced deal to buy $100 billion of Ocwen MSRs for $400 million. This means Ocwen already got $64 million and they are working to pay Ocwen the balance of $336 million early," Ocwen investor John Devaney said in an email Monday.

New Residential estimates that it will be able to transfer all of the pooling and servicing agreements associated with the nonagency residential mortgage-backed securities involved in the MSR deal into its name by early next year.

"I'm hoping that we get it done by the first quarter," Nierenberg said in the earnings call last Friday.

New Residential earned $226 million in net income during the third quarter, down from $322 million in the previous quarter but up from $98.9 million in the third quarter of last year.

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MSR RMBS Nonconforming loans State regulators New Residential Investment Corp. Ocwen Financial