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NRZ > SEC Filings for NRZ > Form 8-K on 23-Dec-2013All Recent SEC Filings

Show all filings for NEW RESIDENTIAL INVESTMENT CORP. | Request a Trial to NEW EDGAR Online Pro

Form 8-K for NEW RESIDENTIAL INVESTMENT CORP.


23-Dec-2013

Entry into a Material Definitive Agreement, Creation of a Direct


Item 1.01 Entry into a Material Definitive Agreement.

On December 17, 2013, Advance Purchaser LLC, a joint venture entity (the "Buyer") capitalized by New Residential Investment Corp. ("New Residential") and certain third-party co-investors, entered into a Master Servicing Rights Purchase Agreement and three related Sale Supplements (collectively, the "Purchase Agreement") with Nationstar Mortgage LLC ("Nationstar"). A wholly owned subsidiary of New Residential is the managing member of the Buyer.

Pursuant to the Purchase Agreement, the Buyer agreed to:

acquire from Nationstar the right to repayment with respect to approximately $3.3 billion of servicer advances (the "Servicer Advances") currently outstanding on three pools (the "Pools") of non-Agency mortgage loans with an aggregate unpaid principal balance ("UPB") of approximately $58 billion as of November 30, 2013;

acquire from Nationstar the right to receive the basic fee component (the "Basic Fee") of the mortgage servicing right (the "MSR") on the Pools, provided that the Buyer will remit a portion of the Basic Fee to Nationstar in exchange for Nationstar continuing to service the Pools, as described below in more detail; and

purchase all future Servicer Advances on the Pools (together with the acquisition of the currently outstanding Servicer Advances and the Basic Fee, the "December Transaction").

In addition, under the Purchase Agreement the Buyer has the right, but not the obligation (the "Call Right"), to purchase up to $3.1 billion of outstanding Servicer Advances and the related Basic Fees on Nationstar's two other pools of non-Agency loans in a transaction (the "Follow-On Transaction") on substantially similar terms as the December Transaction, subject to the receipt of applicable consents. The Call Right expires on June 30, 2014. There can be no assurance that the Call Right will be exercised.

As background, an MSR provides a mortgage servicer with the right to service a pool of mortgages in exchange for a portion of the interest payments made on the underlying mortgages. This amount is expressed as a percentage of the UPB of the mortgages, and typically ranges from 25 to 50 basis points. The economics of the MSR are divided into (i) a "basic fee," which is the amount of compensation for the performance of servicing duties, including advance obligations, and (ii) the remainder, or the "Excess MSR." The Pools are the pools identified in New Residential's filings with the Securities and Exchange Commission as Pool 10 (a portion of which is excluded from the December Transaction and is expected to be included in the Follow-On Transaction), Pool 17 and Pool 18, and the pools subject to the Follow-On Transaction are the pools identified in New Residential's filings with the Securities and Exchange Commission as Pool 5, the portion of Pool 10 not included in the December Transaction, and Pool 12. New Residential previously acquired an interest in the Excess MSRs related to each of these pools.


The purchase price for the December Transaction is approximately $3.3 billion, which is subject to adjustment based on changes in the calculation of the UPB of the Pools or the Servicer Advances. The Buyer will fund approximately $384 million of the purchase price (or $440 million including working capital) with equity and the remainder with debt incurred by certain wholly owned subsidiaries of the Buyer that have become the borrowers under the financing for the Servicer Advances, as described in more detail below under "Summary of Advance Facilities."

The completion of the December Transaction will occur in stages. On December 17, 2013, the Buyer completed the purchase of approximately $2.4 billion of Servicer Advances and Basic Fees on approximately $43.4 billion UPB occurred (the "First Closing"). The closing for the purchase of the remaining $908 million of Servicer Advances and Basic Fees on approximately $14.3 billion UPB is expected to occur on or prior to January 31, 2014, subject to certain conditions.

As of the First Closing, New Residential owned approximately 37% of the Buyer, and the third-party co-investors owned the remainder. New Residential expects an additional co-investor to be admitted as a member of the Buyer, and the respective ownership percentages of New Residential and the co-investors will change in connection with the remaining closings of the December Transaction and, if completed, the Follow-On Transaction. Each member has the right, but not the obligation, to make pro rata capital contributions in excess of its stated commitment, provided that any member's decision not to fund any such capital contribution will result in a reduction of its membership percentage.

Servicing Fees

Pursuant to the Purchase Agreement, Buyer will pay Nationstar a monthly servicing fee representing a portion of the Basic Fee, and, subject to the Buyer achieving a 14% return (the "Targeted Return") on invested capital (as such term is defined in the Purchase Agreement), additional performance fees representing an additional portion of the Basic Fee. The fee arrangement allocates the economics of the Basic Fees (which, on a weighted average basis across the Pools, is 22.4 basis points) as follows:

Approximately 2 basis points of the Basic Fee (the "Servicing Fee") are paid to Nationstar;

Up to 15.4 basis points of the Basic Fee (the "Retained Amount") is retained in full by the Buyer to the extent necessary to achieve the Targeted Return, and 50% of the portion of the Retained Amount that is not required to achieve the Targeted Return is paid to Nationstar; and

Up to 5 basis points of the Basic Fee (the "Performance Fee") is retained in full by the Buyer to the extent necessary to achieve the Targeted Return, and any portion of the Performance Fee that is not required to achieve the Targeted Return is paid entirely to Nationstar.

Nationstar is entitled to retain investment income on servicing accounts, prepayment interest excess and all ancillary income in connection with servicing the mortgage loans.

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement (including the related Sale Supplements), copies of which are attached hereto as Exhibits 2.1, 2.2, 2.3 and 2.4, respectively, and which are incorporated herein by reference.


Summary of the Advance Facilities

Special purpose subsidiaries of Nationstar previously issued approximately $2.13 billion of limited recourse variable funding notes (the "Notes") to finance the advances funded or acquired by Nationstar. The Notes were issued through two wholly owned special purpose subsidiaries (the "Issuers") pursuant to two servicer advance facilities (the "Barclays Facility" and the "CS Facility" and, collectively, the "Facilities"). The Notes bear interest equal to the sum of
(i) a floating rate index rate equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 2.0% to 2.6%.

In connection with the transaction, Buyer purchased the equity of wholly owned special purpose subsidiaries of Nationstar (the "Depositors") that own the Issuers. Accordingly, on December 17, 2013, Buyer and Nationstar amended and restated the transaction documents for each Facility, including:

an amended and restated indenture (the "Barclays Facility Base Indenture") between NRZ Servicer Advance Receivables Trust BC (the "Barclays Facility Issuer"), Wells Fargo Bank, N.A., as indenture trustee (the "Barclays Facility Indenture Trustee"), Nationstar, as servicer (prior to the transfer of the related MSRs) and subservicer (following transfer of the related MSRs), Buyer, as administrator and as servicer (following transfer of the related MSRs), and Barclays Bank PLC, as administrative agent;

an amended and restated series 2013-VF1 indenture supplement to the Barclays Facility Base Indenture between the Barclays Facility Issuer, the Barclays Facility Indenture Trustee, Nationstar, as servicer (prior to the transfer of the related MSRs) and subservicer (following transfer of the related MSRs), Buyer, as administrator and as servicer (following transfer of the related MSRs), and Barclays Bank PLC, as administrative agent;

an amended and restated receivables pooling agreement between the Barclays Facility Issuer and NRZ Servicer Advance Facility Transferor BC, LLC (the "Barclays Facility Depositor");

an amended and restated receivables sale agreement between the Barclays Facility Depositor, the Buyer and Nationstar;

an amended and restated indenture (the "CS Facility Base Indenture") between NRZ Servicer Advance Receivables Trust CS (the "CS Facility Issuer"), Wells Fargo Bank, N.A., as indenture trustee (the "CS Facility Indenture Trustee"), Nationstar, as servicer (prior to the transfer of the related MSRs) and subservicer (following transfer of the related MSRs), . . .



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

The information set forth in Item 1.01 is incorporated herein by reference into this Item 2.03.




Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number                                    Description

 2.1         Master Servicing Rights Purchase Agreement between Nationstar Mortgage
             LLC and Advance Purchaser LLC, dated as of December 17, 2013

 2.2         Sale Supplement (Shuttle 1) between Nationstar Mortgage LLC and
             Advance Purchaser LLC, dated as of December 17, 2013

 2.3         Sale Supplement (Shuttle 2) between Nationstar Mortgage LLC and
             Advance Purchaser LLC, dated as of December 17, 2013

 2.4         Sale Supplement (First Tennessee) between Nationstar Mortgage LLC and
             Advance Purchaser LLC, dated as of December 17, 2013

 4.1         Amended and Restated Indenture among NRZ Servicer Advance Receivables
             Trust BC (f/k/a Nationstar Servicer Advance Receivables Trust
             2013-BC), as issuer, Wells Fargo Bank, N.A., as indenture trustee,
             calculation agent, paying agent and securities intermediary, Advance
             Purchaser LLC, as administrator, as owner of the rights to the
             servicing rights and as servicer, Nationstar Mortgage LLC, as
             subservicer, and as servicer, and Barclays Bank PLC, as administrative
             agent, dated as of December 17, 2013

 4.2         Series 2013-VF1 Amended and Restated Indenture Supplement among NRZ
             Servicer Advance Receivables Trust BC (f/k/a Nationstar Servicer
             Advance Receivables Trust 2013-BC), as issuer, Wells Fargo Bank, N.A.,
             as indenture trustee, calculation agent, paying agent and securities
             intermediary, Advance Purchaser LLC, as administrator and as servicer,
             Nationstar Mortgage LLC, as subservicer, and as servicer, and Barclays
             Bank PLC, as administrative agent, dated as of December 17, 2013

 4.3         Amended and Restated Indenture among NRZ Servicer Advance Receivables
             Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust
             2013-CS), as issuer, Wells Fargo Bank, N.A., as indenture trustee,
             calculation agent, paying agent and securities intermediary, Advance
             Purchaser LLC, as administrator, as owner of the rights to the
             servicing rights and as servicer, Nationstar Mortgage LLC, as
             subservicer, and as servicer, and Credit Suisse AG, New York Branch,
             as administrative agent, dated as of December 17, 2013

 4.4         Series 2013-VF1 Amended and Restated Indenture Supplement among NRZ
             Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer
             Advance Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A.,
             as indenture trustee, calculation agent, paying agent and securities
             intermediary, Advance Purchaser LLC, as administrator and as servicer,
             Nationstar Mortgage LLC, as subservicer, and as servicer, and Credit
             Suisse AG, New York Branch, as administrative agent, dated as of
             December 17, 2013

--------------------------------------------------------------------------------
 4.5    Series 2013-VF2 Amended and Restated Indenture Supplement among NRZ
        Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance
        Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A., as
        indenture trustee, calculation agent, paying agent and securities
        intermediary, Advance Purchaser LLC, as administrator and as servicer,
        Nationstar Mortgage LLC, as subservicer, and as servicer, and Natixis, New
        York Branch, as administrative agent, dated as of December 17, 2013

 4.6    Series 2013-VF3 Amended and Restated Indenture Supplement among NRZ
        Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance
        Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A., as
        indenture trustee, calculation agent, paying agent and securities
        intermediary, Advance Purchaser LLC, as administrator and as servicer,
        Nationstar Mortgage LLC, as subservicer, and as servicer, and Morgan
        Stanley Bank, N.A., as administrative agent, dated as of December 17, 2013

10.1    Amended and Restated Receivables Sale Agreement among Nationstar Mortgage
        LLC, as initial receivables seller and as servicer, Advance Purchaser LLC,
        as receivables seller and as servicer, and NRZ Servicer Advance Facility
        Transferor BC, LLC, as depositor, dated as of December 17, 2013

10.2    Amended and Restated Receivables Pooling Agreement between NRZ Servicer
        Advance Facility Transferor BC, LLC, as depositor, and NRZ Servicer
        Advance Receivables Trust BC (f/k/a Nationstar Servicer Advance
        Receivables Trust 2013-BC), as issuer, dated as of December 17, 2013

The following agreements are being omitted in reliance on Instruction 2 to Item 601 of Regulation S-K, as discussed in Item 1.01 above:

Amended and Restated Receivables Sale Agreement among Nationstar Mortgage LLC, as initial receivables seller and as servicer, Advance Purchaser LLC, as receivables seller and as servicer, and NRZ Servicer Advance Facility Transferor CS, LLC (f/k/a Nationstar Servicer Advance Facility Transferor, LLC 2013-CS), as depositor, dated as of December 17, 2013

Amended and Restated Receivables Pooling Agreement between NRZ Servicer Advance Facility Transferor CS, LLC, as depositor, and NRZ Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust 2013-CS), as issuer, dated as of December 17, 2013


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