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OCWEN BUYS RESCAP'S MORTGAGE PORTFOLIO, ACQUIRES HOMEWARD RESIDENTIAL ment Management Corp. outbid Nationstar Mortgage Holdings and received prelimi- nary approval for the purchase of Residential Capital's (ResCap) mortgage servicing and origination assets on October 24. Ocwen and Nationstar were the only two Ocwen Loan Servicing and Walter Invest- million in Ocwen convertible preferred stock. Homeward Residential was organized by bidders for ResCap's portfolio, according to the Wall Street Journal. Ocwen's submitted a bid of $3 billion; Nationstar's was $2.91 billion. Af- ter being outbid by Ocwen, Nationstar declined to submit a higher offer. ResCap, a wholly owned subsidiary of Ally Financial, was one of the nation's largest mort- gage originators and servicers. ResCap filed for Chapter 11 bankruptcy in May. The sale of ResCap's assets to Ocwen is contingent on ap- proval in bankruptcy court November 19. As of the end of March, ResCap serviced the private equity firm WL Ross & Co. in 2007 and was previously known as Ameri- can Home Mortgage Servicing. Homeward services about 422,000 mortgage loans with an aggregate unpaid principal balance of more than $77 billion. In late 2011, Homeward also launched its loan origination business which includes correspondent and retail lending. The acquisition will give Ocwen a footprint THE LEADER IN DEFAULT SERVICING NEWS more than 2.4 million mortgages, with an un- paid principal balance of $374 billion. Of those loans, about 68 percent were owned, insured, or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. Ocwen's partner Walter Investment Man- in the origination market for the first time. Ac- cording to William Erbey, Ocwen's executive chairman, Homeward's growing origination business is already operating at a $10 billion annual run-rate. Ron Faris, Ocwen's CEO, says the origination platform will translate to organic growth for Ocwen and will further the compnay's ability to work with existing borrow- ers on refinancing options. Fitch Ratings, though, has doubts about agement will acquire the Fannie Mae mortgage servicing rights (MSR) portion of ResCap's portfolio, which represents a balance of about $50.4 billion. Walter will also take over Res- Cap's lending and capital markets businesses. Just three weeks prior to the ResCap pick- up, Ocwen entered into an agreement to pur- chase Homeward Residential Holdings, Inc., for $750 million—$588 million in cash and $162 the move. The agency said it placed Ocwen's "B+" long-term Issuer Default Rating (IDR) on Rating Watch Negative following the servicer's announcement. Fitch cited in its decision the risks of various difficulties involved in the integration of Homeward Residential which could result in potential service disruptions, as well as the current regulatory environment in the mortgage sector. Ocwen's acquisition of Homeward Residen- tial is still subject to regulatory approval. The deal is expected to be complete before the end of 2012. SURVEY: 32% OF AMERICANS JUSTIFY STRATEGIC DEFAULT critical view of strategic default. According to a recent survey that polled 1,026 The housing crisis led Americans to take a less U.S. adults, 32 percent stated homeowners should be able to strategically default without facing consequences. JZ Analytics conducted the online survey on behalf of ID Analytics. ID Analytics also reported 13 percent of the results," Zogby said. "What jumped out is how many Americans feel it is acceptable for homeowners to walk away from a mortgage and go into foreclosure. If Americans carry on with that mindset, it will continue to cause problems as the economy undergoes a slow recovery." Some of the survey respondents justified their surveyed Americans said they are likely to strategically default on a mortgage, and 17 percent said they know someone who has strategically defaulted. The statistics were revealed at ID Analytics' Advance 2012 conference last month. John Zogby, senior analyst at JZ Analytics and creator of the Zogby Poll, presented the results at the event. "Our research into the consumer opinion of the economic crisis of 2008 found alarming 38 position on strategic default because the "mortgage market has been a scam for many years, built on false promises that took advantage of people that didn't understand what was happening," according to a statement from ID Analytics. Low credit scores don't appear to bother people very much either with 36 percent of those surveyed stating it's socially acceptable to have a poor credit score. In addition, 17 percent said they would exag- gerate personal information to obtain credit. Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com.

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