Ocwen Financial is expanding its reverse mortgage servicing business by acquiring the operations, assets and employees of the Reverse Mortgage Solutions platform for $12.4 million.
RMS was last purchased for $762 million by Mortgage Assets Management (an affiliate of Waterfall Asset Management) as part of Ditech's bankruptcy auction in September 2019. Walter Asset Management — Ditech's name prior to emerging from its initial bankruptcy filing in February 2018 — purchased RMS for $120 million in September 2012.
RMS serviced approximately 35,000 reverse mortgages, or about $7.8 billion in unpaid principal balance as of March 31, 2021. Those loans will now be subserviced by Ocwen and its PHH subsidiary under a five-year agreement. In addition, PHH will take over the existing subservicing contracts that RMS has.
Ocwen is also purchasing the outstanding equity interests in RMS's real estate owned business, REO Management Solutions.
"The acquisition is expected to double our reverse servicing/subservicing portfolio and will provide us with a high-quality reverse servicing platform, experienced people and customized reverse technology," Glen Messina, Ocwen's president and CEO, said in a press release. "In addition to our current relationship with Waterfall across the reverse mortgage product spectrum, we are excited and honored to broaden our partnership with them through the long-term subservicing agreement and to support their asset growth and investment objectives in the reverse mortgage industry."
The transaction is expected to close in the third quarter, subject to regulatory approvals.
Ocwen got into the reverse mortgage business in April 2013, when it bought what is now called Liberty Reverse Mortgage from Genworth Financial for $22 million in cash. Liberty has a portfolio of approximately 35,000 loans with an unpaid principal balance of $6.7 billion.
