I think you were right about NRZ anticipating this.
Why else would they have paid less then book value for HLSS? I believe they knew from their DD and adjusted the price accordingly. When the former shareholders of HLSS were threatening to sue over the sale/price they didn't know all the details. Like you said, NRZ anticipated this and the price was adjusted accordingly. Hope you and yours are well.
I did know people that worked there. OCN never intended to originate loans. that was part of the reason they teamed up with Walter (WAC) to buy the RESCAP from Ally at the auction. Walter got the origination business which is called Ditect.
Also, why is it that NRZ can pay a dividend by being classified as a REIT and OCN cannot? The dividend paying part of OCN was HLSS and guess what? NRZ bought it. If OCN is using cash flow to service debt, the question is are they going to eventually pay dividends by the time the debt is at a manageable level or is management just going to ride this camel 'till it dies?
Fortress (FIG) always buys distressed assets at a discount. They manage NRZ, NCT, SNR, NEWM and look at the pattern. Also look at LEAF, NSM, SNOW, FTAI, which they spun off - IPO'd and still hold sizable positions, which means they still call the shots.
Look at the servicing rights NRZ has. IMO, FIG is going to keep chewing on this turkey (OCN) until they eat the whole bird, but on bite at a time, instead of putting the whole thing in their mouth like OCN did and choking on it.
Meantime, I'll still keep collecting my dividends and reinvesting all my FIG stuff. I'm not selling anytime soon so I'm not that worried about the share price.
OCN is selling MSR's to pay down debt. OK, I got that. So the bondholders like this so they are receiving their principal and interest. Of course they are going to give them favorable reviews. They're getting paid back. OCN's revenue is going up. Yes, it will continue to increase as they liquidate assets and holdings. Things are still looking good. So how does that look long term?
They announced in their Q2 earnings they are looking to purchase more MSR's. If they are looking to expand earnings/revenue long term, why are they selling MSR's instead of holding them and buying additional MSR's and using the increased earnings to pay down debt?
And here is the good one. If they are trying to buy additional servicing rights, why are they laying off servicing staff who perform these functions?? They announced they are laying off people in Iowa last week and they laid off people in Houston back in the Spring. And how many did they cut loose in India?
These guys are winding this business down and getting out. Read all the announcements, not just their puff articles and you might come up with the same conclusions.
Good luck. Bob S.
From what I get, the judge already ruled in the plaintiff's favor ($150 million), then why doesn't someone file a RICO case for triple damages? There is certainly enough evidence that there is more than one predicate act plus the NY and CA claims. It shouldn't be too hard to prove this is an ongoing criminal enterprise.
Also, in their "latest" announcement, they stated they are selling MSR's and using the proceeds to pay down debt. I haven't seen announcement where they are buying them. Did I miss that announcement? They seem to announce everything else. If they are using the income to pay down debt, where is the cash to buy new ones?
OCN also stated they are going to originate mortgages. Where is the money to lend coming from? Also, when they bought the RESCAP stuff, Walter ended up with the origination business (Ditect). Where is the operating money coming from for that?
Next time you're at the supermarket and ready to check out, pick up a copy of the National Inquirer for their next recycled announcement.
Check NRZ's action today and have a nice day.
They're selling MSR's to get a handle on their debt. If they are going to acquire additional MSR's or mortgage backed CDO's, and keep a lid on debt, they just might consider a shelf offering.
You guys might want to consider covering your bets by buying puts.
I don't trust these guys. Besides, who in the REIT business hasn't done a shelf offering (or several)? At least consider the possibility before the thumbs down start.
Gradprof - your answers.
NSM was bought by FIG several years ago by Fortress, was cleaned up and IPO'd. that's why FIG still still owns 75%. give or take.
NRZ was spun off from Newcastle (NCT). FIG externally manages NCT, NRZ, SNR, and NEWM - the three latter companies all NCT spinoffs.
NRZ could take down the MSR's in $45 billion clips over time. The same rate that Treasury was buying them. They don't have to buy them all and they don't have to buy them on a regular basis. Look at the Dodd-Frank rules banks have to operate under. With the regulations put in place, banks couldn't make money servicing them and they also had to put more assets on their balance sheets.
Three-four years ago when Tim Geitner ran the Ney York Fed, there was an auction every Wednesday about 1:30 for mortgages. They were selling them off to pay back what AIG owed them for the TARP money. Goldman wanted to buy some of them and were told to stay away - Goldman helped put everybody in the situation we are still trying to recover from. Fortress was invited to bid. Among other things FIG bought was American Finance General from AIG. It's called Springleaf now (symbol LEAF).
If the Goldmans et.al. took the TARP bailout, they had to change to an investment bank so they are under the FINREG requirements laid out in Dodd-Frank..
Finally, what do any of the above listed companies export? Except Ocwan, which exports servicing to India?
FIG is being very patient. They're eating this turkey one bite at a time instead of trying to swallow the whole thing at once like OCN did.
Now NRZ (read FIG) holds the debt. They saw what happened when OCN tried to grow too fast and they learned. Then they saw what Blue Mountain did and they learned. FIG will probably buy additional OCN debt from whoever holds it and needs cash to cover some of the margin calls that must have gone out over the last couple of weeks. And then they'll make OCN "an offer they couldn't refuse". But they'll be patient. And they'll get what they want.
My real take on this? When the next administration take over in Washington and the fd. govt. starts to shed assets/downsize, FIG is going to be at the front of the line for the servicing rights to the $trillion or so of the mortgages Treasury bought under TARP, QE1, QE2, QE3 etc. if not the mortgages themselves.
All JIMHO. I truly hope cparker has this one on ignore.
You have to follow Fortress and how they operate. FIG buys distressed assets at a discount. They, either through themselves or their managed affiliates own Italian real estate debt (EUIVF) golf courses (NCT), newspapers (NEWM) assisted living facilities (SNR), MSR's (NRZ), and the list goes on. They even hold Argentina debt - they are one of the hedge funds suing over nonpayment.
In the past, they were the largest landlord in Germany (Gagfah), owned railroads (Rail America), aircraft leasing company (Aircastle) other senior living (BKD) and sold out at a profit. And the lis goes on and on. Through one of their wholly owned companies even forclosed on Stuytown and Peter Cooper Village in NYC when it was co-owned by Blackrock and Tishman. These guys nasty.
They will identify an asset they want to acquire and figure out a way to get it. In this case, my guess is they refinanced to HLSS receivables owed by OCN and payable to NRZ through NRZ's purchase of HLSS. Now FIG has it's nose under OCN's tent.
I feel that OCN is hiding the fact that revenue from performing the servicing work is actually declining and they are hiding that fact by reporting the revenue of the sale of the MSR's as an increase in revenue. OCN reported laying off 100+ people in the servicing dept. located in Houston this past spring. It was stated it was a "duplication of efforts". They did not mention the purchase of any additional MSR's to increase revenue from ongoing operations. Also, they do not have an origination business. When OCN bought the RESCAP stuff at the bankruptcy auction, they teamed up with Walter (WAC) and WAC got the origination business. I believe it's called Ditect out of Detriot. FIG already has a mortgage origination business. Look up Nationstar (NSM).
OCN really screwed themselves with the RECAP purchase. Their eyes were much larger than their stomachs and they way overpaid. And they choked on it. More .....
Please explain to me what your take is on this. Then I'll explain mine.
cparker, as far as your $2million bet. My son is an attorney in Scottsdale if you are serious. Instead of wasting $$ and wanting to bet, why didn't you buy the calls instead of just running your mouth?
I bought the calls on NRZ. I'm also long NRZ. Click on my name and read my posts going way back. Now, if you are that confident, what odds are you willing to give me? Hmmm? Punk.
$2mil? I can see you doing that.
100,000 shares of HLSS you valued at $20/share. Or maybe 50,000 shares of OCN you bought at $40. Good luck with that.
HLSS is winding down the business. NRZ sent them the $$ and stock. They own it. All HLSS is doing is winding down the remaining paperwork/taxes/filings etc. What is not to understand? HLSS has not traded in several weeks. Don't believe me - check out the historical prices. OCN is next. Next time you shoot off your mouth, check your facts first.
BTW, thank you for your kind words, ignorant, arrogant fool. No wonder you're broke.
HLSS was bought by NRZ. The purchase was completed in June this year. Your DD is somewhat dated or nonexistent.
I'm beginning to think Arky and Richelle may be on to something about you.
They sold or tried to sell MSRs some time ago to OCN.
Watch FIG make a grab. They buy distressed assets at a discounts and this fits the bill perfectly.
You mention 1000 sq ft units selling for $180,000 each. They're not renting apartments - they're renting senior assisted living facilities. Take the communal dining areas, kitchen space, physical therapy and treatment rooms, recreational space, areas for worship, maintainance and work shop areas, laundry, medical treatment space, and offices and add that in to the total square footage of the entire property..
When you do, that drops the cost per square foot substantially. Then add the cost of the medical equipment (which we know isn't cheap). Keep something else in mind. If residents do need medical attention or some form of therapy, that's extra. It's either billed to Medicare or some other insurance provider.
What people pay to stay there is just where it starts. Not where it ends.
I hope you have a better understanding.
Richelle, I might take a piece of that bet.
Grad, NRZ is working with nonbanks. NSM is their partner in the servicing part of the business. They also deal with LEAF which FIG bought from AIG.
FIG, which manages NRZ, NCT, etc., and owns the majority of NSM only buys distressed assets at a deep discount. FIG bid against OCN & WAC when OCN/WAC bought RESCAP at the bankruptcy auction. I think they know the real value of OCN's assets are. And OCN fits FIG's description of "distressed assets".
From the federal governments perspective, I would think that the govt. would just like OCN to go away. If OCN did file for bankruptcy, they would not like to see it back in the courts after having sold it to OCN in the first place. Way too many political issues involved, specially in light of national elections around the corner. I don't have to remind you of the issues involving AIG, Bear, Indy Mac, LaSalle, Countrywide, Ally (read GM) and the such.
Which brings me to a question I hope you can answer. Under the various Quantative Easings, how much mortgage paper did Treasury buy. I figure is right around one trillion. Who is servicing those?
Also, with the China currency devaluation, there may be a serious threat of deflation, which should mean that they are not going to raise interest rates. If this is in fact true, these MSR's should become more valuable, raised rates or not, with their fixed rate of return over time.
Grad, please read my comments posted today on the OCN board. It relates here. Then comment - either favorably or not. Thanks.
Who was downgraded? OCN or NRZ? I believe it was OCN. Regulatory issues, ability to service debt, civil action, etc. I don't recall any of these issues related to NRZ. NRZ keeps raising dividends and making acquisitions. OCN is contracting.
If NRZ is not a servicer, then why are they being paid? NRZ & NSM are partners in the servicing business. NSM is also a mortgage originator. When OCN bought the RESCAP stuff from ALLY during the bankruptcy auction, they teamed up with Walter Investment (WAC). WAC got the origination business. It's called Quicken.
NRZ management (read Fortress) is going to take down OCN when they can digest it. Not in terms of being able to buy it, but also able to handle the work. They will also seek regulatory approval first. All their ducks will be lined up and they will not jump the starting gun. I bet serious $$ I'm right. Meanwhile, the NRZ dividend pays 11% to wait and find out. Tell cparker good luck.
Why? Because the real book value is what it's selling for, if that. And they know it.
OCN is paying NRZ $3million/month to service mortgages. Why didn't they have ASPS service them? They also laid off 100 or so servicers in Houston because of "duplication of efforts". Yep, they sold MSR's and subcontracted out a bunch. That doesn't sound to me like they are in an "acquisition mode".
Their (OCN) stated book value is $20. Has that been verified by anyone else?
Here is my best guess. OCN is having NRZ service that stuff because they can't sell it anywhere near what they paid for it. If they just sold it to NRZ for what it's really worth and not what they paid for it, they would have to write down what they have left on the GAAP mark-to-market rules.
And their real book value might be negative. Now start the thumbs down.