West Palm Beach, located in Florida Onity group has entered into a deal to acquire all assets of Mortgage Asset Management (MAM), who are estimated to have a net worth of $55 million, the company announced Friday. The parties entered into an agreement on October 9.
The deal includes Home Equity Conversion Mortgages (HECMs) and Mortgage Servicing Rights (MSRs) with an estimated $3 billion in unpaid principal balance (UPB). The MSRs are currently managed by a subsidiary of Onity PHH Mortgage Corp.
Onity will also acquire $20 million in cash and other related assets from MAM. If we add in the proceeds from future debt secured by mortgage assets, the cash associated with the transaction could be as much as $46 million.
The negotiations involved funds managed by Waterfall asset managementowner of MAM. Investors will receive Onity’s shares of a new series of non-convertible perpetual preferred stock, with a liquidation preference of approximately $52.7 million, subject to certain adjustments.
According to a declaration to the Securities and Exchange Commission (SEC), each stock
of the Series B preferred stock has a liquidation preference of $25, plus an amount equal to any accrued and unpaid dividends. Tuesday morning was Onity trade almost $30 per share.
The deal is expected to close in the fourth quarter of 2024, subject to certain conditions, including approvals from Ginny Mae.
Onity Group, the parent company of the top five reverse mortgage lenders Liberty Reverse Mortgagefirst mentioned the deal in August during its second-quarter earnings report. Onity and Waterfall signed a letter of intent for the acquisition on July 26.
During the period, a decline in the values of certain MSRs led to a slight decline in Onity’s income, but the company touted improvements in several other metrics.
“We expect this transaction to be accretive to earnings and cash flows immediately upon closing, while strengthening our position in reverse services as a hedge for future transactions. [mortgage servicing rights (MSRs)]providing incremental asset management capabilities and improving our capital structure,” Onity CEO Glen Messina said at the time.
