Ocwen Loan Servicing has launched a new platform to securitize IOUs from mortgage bond investors.
There are three deals under the NRZ Advance Receivables Trust 2015-ON1 platform: the $600 million Series 2015-T1, the $400 million Series 2015-T2, and the $500 million 2015-VF1, according to Standard & Poor’s.
Mortgage servicers collect payments from homeowners and distribute this money to investors who own the loans through mortgage securities. When homeowners miss payments, servicers are required to front the money.
All three transactions are backed by a single pool of collateral consisting of reimbursement rights for principal and interest, escrow payments that Ocwen has made on mortgages that it services. Collateral may also include the rights to payment of deferred servicing fees and repayment of the costs incurred foreclosure of a mortgaged property.
Some of the rights in the pool are being transferred from two existing securitizations, HLSS Servicer Advance Receivables Trust (HSART) and HLSS Servicer Advance Receivables Trust II.
The deals come to market just a few weeks after S&P downgraded Ocwen’s servicer rankings on June 18; it now considers the company’s overall servicer rankings as well as its servicing of residential mortgages to be below average.’
However this downgrade had “minimal” effect on the rating agency’s analysis of these transactions. That’s because S&P believes that Ocwen's advancing and recovery processes are “completed in accordance with investor guidelines and prudent industry practices” and that the servicer’s collection rates on advances will therefore remain similar to its historical rate.
S&P has assigned a preliminary AAA’ rating to the senior tranches of each deal.
Each of the transactions has a revolving period during which collections or draws on the notes issued by 2015-VFI may be used to fund additional advance receivables. The revolving period for 2015-T1 and 2015-VF1 are scheduled to last 12 months and the revolving period for series 2015-T2 is scheduled to last 36 months.
The transaction documents include a provision for a "servicer modification" allowing Nationstar, another servicer that has purchased billions of dollars in mortgage servicing rights from Ocwen over the past year as Ocwen scaled back its business, without causing an event of default and triggering a full amortization period.