PennyMac Financial Services, Inc. (NYSE:PFSI) Files An 8-K Entry into a Material Definitive Agreement

PennyMac Financial Services, Inc. (NYSE:PFSI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement.

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Repurchase Agreement with BNP Paribas

On November 17, 2017, PennyMac Financial Services, Inc. (the “Company”), through two of its controlled subsidiaries, PennyMac Loan Services, LLC (“PLS”) and Private National Mortgage Acceptance Company, LLC (“PNMAC”), entered intoa master repurchase agreement, by and among BNP Paribas (“BNP”), PLS and PNMAC (the “Repurchase Agreement”). to the terms of the Repurchase Agreement, PLS may sell, and later repurchase, newly originated mortgage loans in an aggregate principal amount of up to $200 million, of which $100 million is committed. The Repurchase Agreement will be used to fund newly originated mortgage loans originated through PLS’ consumer direct lending channel or purchased from correspondent lenders through a subsidiary of PennyMac Mortgage Investment Trust (NYSE: PMT) and, in either case, held by PLS pending sale and/or securitization.The scheduled maturity date of the Repurchase Agreement is November 16, 2018, and the obligations of PLS are fully guaranteed by PNMAC. The mortgage loans are serviced by PLS.

The principal amount paid by BNP for each eligible mortgage loan is based upon a percentage of the lesser of the market valueor the unpaid principal balance of such mortgage loan. Upon the repurchase of a mortgage loan, PLS is required to repay BNP the principal amount related to such mortgage loan plus accrued interest (at a rate reflective of the current market and based on LIBOR plus a margin) to the date of such repurchase. The Company, through PLS, is required to pay BNP a commitment fee, as well as certain other administrative costs and expenses associated with the Repurchase Agreement.

The Repurchase Agreement contains margin call provisions that provide BNP with certain rights in the event of a decline in the market value of the purchased mortgage loans.Under these provisions, BNP may require PLS to transfer cash and/or additional eligible mortgage loans with an aggregate market value sufficient to eliminate any margin deficit resulting from such decline.

The Repurchase Agreement also requiresPLS to make certain representations and warranties and to maintain various financial and other covenants, whichinclude maintaining (i)a minimum adjusted tangible net worth at all times greater than or equal to $500 million; (ii)a minimum in unrestricted cash and cash equivalents at all times greater than or equal to $40 million; (iii)a ratio of total indebtedness to adjusted tangible net worth at all times less than or equal to 10:1; and (iv)profitability of no less than $1.00 for at least two consecutive quarters.

In addition, the Repurchase Agreement containsevents of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross-defaults, guarantor defaults, material adverse changes, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the Repurchase Agreement and the liquidation by BNP of the mortgage loans then subject to the Repurchase Agreement.

The foregoing descriptions of the Repurchase Agreement and the related guaranty donot purport to be complete and arequalified in theirentirety by reference to the full text of the Repurchase Agreement and the related guaranty, which have been filed with this Current Report on Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively.

Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.

Description

10.1

Master Repurchase Agreement, dated as of November 17, 2017, by and among BNP Paribas, PennyMac Loan Services, LLC and Private National Mortgage Acceptance Company, LLC

10.2

Guaranty, dated as of November 17, 2017, by and among BNP Paribas and Private National Mortgage Acceptance Company, LLC


PENNYMAC FINANCIAL SERVICES, INC. Exhibit
EX-10.1 2 ex-10d1.htm EX-10.1 Ex 10.1 – PLS BNP MRA (11-17-17) Exhibit 10.1 EXECUTION VERSION MASTER REPURCHASE AGREEMENT Between: BNP PARIBAS,…
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About PennyMac Financial Services, Inc. (NYSE:PFSI)

PennyMac Financial Services, Inc. (PFSI) is a financial services company. The Company is focused on the production and servicing of the United States residential mortgage loans and the management of investments related to the United States mortgage market. It operates through three segments: loan production, loan servicing and investment management. Its loan production segment is sourced through approximately two channels: correspondent production and consumer direct lending. Its loan servicing segment performs loan administration, collection and default management activities, including the collection and remittance of loan payments; response to customer inquiries; accounting for principal and interest; counseling delinquent mortgagors, and supervising foreclosures and property dispositions. Its investment management segment represents the activities of the Company’s investment manager, which include sourcing, performing diligence, bidding and closing investment asset acquisitions.

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