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Walter to issue debt to buy mortgage servicing rights for $519 million
By Susanna Moon
Chicago, Jan. 7 - Walter Investment Management Corp. said it plans to issue private and public debt securities to help fund the acquisition of mortgage servicing rights for $519 million.
The company signed a definitive agreement to acquire about $93 billion of unpaid principal balance of Fannie Mae-backed residential servicing assets, including related advance receivables of about $1 billion, from Bank of America, according to a company press release.
The purchase price for the mortgage servicing rights represents a multiple of about 2.05 times the 27 basis point base contractual servicing fee of the portfolio. The related advance receivables will be purchased at par.
The portfolio of assets acquired consists of over 650,000 loans that are projected to be about 80% current at transfer. The transaction will have an economic closing as of Jan. 31, and the bulk of the servicing transfers will take place during the first and second quarters of 2013.
Funding for the acquisition also will come from cash on hand or through transactions with capital partners. Advance obligations will be met under existing facilities, the release noted.
Walter Investment is a Tampa, Fla.-based asset manager, mortgage servicer and mortgage portfolio.
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