OCWEN FINANCIAL CORPORATION (NYSE:OCN) Files An 8-K Entry into a Material Definitive Agreement

OCWEN FINANCIAL CORPORATION (NYSE:OCN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01

On January 27, 2020, PHH Mortgage Corporation (“PMC”), a wholly-owned subsidiary of Ocwen Financial Corporation (“Ocwen”), entered into a Joinder and Second Amendment Agreement (the “Amendment”) among PMC (as successor by merger to Ocwen Loan Servicing, LLC), as borrower, Ocwen and PHH Corporation, as guarantors, the financial institutions party thereto, as lenders, and Barclays Bank PLC, as Administrative Agent. The Amendment amends the Amended and Restated Senior Secured Term Loan Facility Agreement dated as of December 5, 2016, as amended by a Joinder and Amendment Agreement dated as of March 18, 2019 (as so amended, the “SSTL”). The Amendment provides for a net prepayment of $126.1 million of the outstanding loan amounts as of December 31, 2019 such that the facility has a maximum size and total initial outstanding amount of $200 million. The Amendment also (i) extends the maturity of the remaining outstanding loans under the SSTL to May 15, 2022, (ii) provides that the loans under the SSTL will bear interest at the one, two, three or six month Eurodollar Rate or the Base Rate (as defined in the SSTL), at PMC’s option, plus a margin of 6.00% per annum for Eurodollar Rate loans or 5.00% per annum for Base Rate loans (increasing to a margin of 6.50% per annum for Eurodollar Rate loans or 5.50% per annum for Base Rate loans on January 27, 2021) and (iii) provides for a prepayment premium of 2.00% until January 27, 2022. The loans under the SSTL are subject to quarterly amortization payments of $5 million.

The SSTL also contains financial covenants that require Ocwen to (a) maintain a loan-to-value ratio (i.e., the ratio of total outstanding loans under the SSTL to certain collateral and other assets) as of the last day of each fiscal quarter of not less than 40%; (b) maintain unrestricted cash of not less than $125 million as of the last day of each fiscal quarter and (c) maintain an unencumbered coverage ratio (i.e., the ratio of unrestricted cash and certain first priority perfected collateral to total outstanding loans under the SSTL) as of the last day of any fiscal quarter ending on or before December 31, 2020 of not less than 2:1 and thereafter, not less than 2.25:1.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of such document, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

On January 27, 2020, Ocwen issued a press release announcing the closing of the Amendment described in Item 1.01 above. The press release attached hereto as Exhibit 99.1 is incorporated herein by reference.

The information in this Item 7.01 and the information in the related exhibit attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

(d) Exhibits

10.1† Joinder and Second Amendment Agreement, dated as of January 27, 2020, to the Amended and Restated Senior Secured Term Loan Facility Agreement
99.1 Press Release of Ocwen Financial Corporation dated January 27, 2020


† Certain schedules and exhibits have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any referenced schedules will be furnished supplementally to the Securities and Exchange Commission upon request.

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Ocwen Financial Corporation is a financial services holding company. The Company, through its subsidiaries, operates as a mortgage company. The Company’s segments include Servicing, Lending, and Corporate Items and Other. The Company’s Servicing segment consists of its core residential servicing business. The Company’s Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans. The Company’s Corporate Items and Other segment includes business activities that include providing secured floor plan lending to used car dealerships through its Automotive Capital Services (ACS) venture and providing financing to investors to purchase single-family homes and apartments for lease through its Liberty Rental Finance venture. The Corporate Items and Other segment also includes the diversified fee-based businesses, which provide property valuation, real estate owned (REO) management, title and closing services.

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