Altisource Portfolio Solutions: Ocwen's History Of Adding Value To NRZ And RMBS Bond Investors Presents Buy Opportunity

Summary

• The ASPS Shorts do not understand the ASPS / Ocwen service agreements and are putting out false analysis in direct contrast to recent ASPS Management statements of "Positive Development".
• The Ocwen Financial and Altisource Portfolio Solutions partnership has proven benefits to NRZ's prior acquisition of HLSS assets better than any other servicer. Upsetting the apple cart hurts NRZ.
• Current price is going to wind up being a very valuable entry point for existing longs to add, new longs to take positions, and shorts to cover as clarity unfolds.

I.) History of the 425mm OCN MSR Sale to NRZ and NRZ true Motivations

It is important to note that Ocwen Financial (NYSE: OCN) disclosed that the 425mm OCN/NRZ MSR transaction was in the works for over a month. This transaction was something that was in the best interest of New Residential Investment (NYSE: NRZ) and Ocwen Financial providing valuable benefits to both sides.

NRZ was, and still is, motivated to get the MSR's into their name and OCN is interested in extended their agreement to continue to service the portfolio by 3 years and receive this substantial cash payment helping OCN have certainty of these cash flows and the extended OCN/NRZ relationship.

It is very unlikely that either NRZ or OCN during these previous discussions contemplated any disruptive changes to Ocwen's proven ability to provide, what any analyst in the industry would state, is the best performance over any servicer to the valuable asset that NRZ bought previously from HLSS. I discuss this point below.

The comments by Michael Nierenburg on the NRZ call seem to frankly be a surprise to those at OCN. OCN stated on their earnings call that they had been in discussions for over a month and that "they did not anticipate any changes to downstream service vendors including Altisource Portfolio Solutions (NASDAQ: NASDAQ:ASPS)"

It's possible Michael might have spoken out of turn. I do not believe that Michael or NRZ are interested in doing anything that would be disruptive to the previously positive performance that Ocwen has provided to NRZ's valuable HLSS asset.

a.) Ocwen makes NRZ the most money on private label MSR over any servicer through high mod count

Ocwen's industry leading count of loan mods by far makes NRZ more money over any servicer by lowering the interest cost on the

Analyst’s Disclosure: I am/we are long ASPS, OCN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.