HLSS Holdings has paid $238 million in exchange for the right to “receive servicing fees” on $6.7 billion of subprime and Alt-A mortgages from Ocwen Financial Corp. 

HLSS Holdings is a subsidiary of Home Loan Servicing Solutions, which was spun off by Ocwen into its own publicly traded company earlier this year. HLSS is based in the Cayman Islands. Ocwen is headquartered in Atlanta.

The sale was revealed in a public filing late last week. (Bill Erby, Ocwen’s CEO, is the largest individual shareholder in HLSS with 342,245 shares of stock.)

HLSS said to finance the sale it borrowed $216 million under its servicing advance financing facility.

“The characteristics of these mortgage servicing assets are similar to those we previously acquired from OLS [Ocwen], and we expect this transaction to be accretive to earnings,” the company said.

The deal was part of an agreement between the parties when HLSS went public.

HLSS noted that it is “committed to purchase servicing advances that arise under the related pooling and servicing agreements after the closing date. In return, OLS continues to service the related mortgage loans, receives a monthly base fee equal to 12% of the servicing fees collected in any given month, and retains any ancillary income (excluding investment income earned on any custodial accounts) payable to the servicer pursuant to the related pooling and servicing agreements.”

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.