New Residential Investment Corporation has announced that it has completed an additional closing of excess mortgage servicing rights (MSRs) that it agreed to acquire as part of the previously announced transaction between Nationstar Mortgage LLC and Bank of America. This closing relates to loans held in private label securitizations with an unpaid principal balance of $43 billion, which represents approximately 45 percent of the total PLS UPB associated with the Transaction.
New Residential invested approximately $53 million to acquire the right to receive one-third of the monthly cash flow generated by the mortgage servicing rights, net of a basic fee paid to Nationstar. Nationstar is the servicer of the loans and has retained a one-third interest in the Excess MSRs; a Fortress Investment Group managed fund has acquired the remaining one-third interest. New Residential will not own the servicing rights and therefore will not have any servicing duties, advance obligations or liabilities associated with the portfolio.
Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting MSRs will be included in the portfolio, subject to certain limitations. This is expected to significantly reduce the impact of prepayments on New Residential's investment.
New Residential expects to complete the remainder of the Transaction in the third quarter, subject to regulatory approvals and customary closing requirements.