SEC Filing Summary: New Residential Investment Corp. (8-K)
Business Context and Reporting Period
This Form 8-K, dated October 25, 2016, reports a material definitive agreement entered into by New Residential Investment Corp. (the "Company"). The filing details a securitization transaction executed by the Company's indirect subsidiary, NRZ Advance Receivables Trust 2015-ON1 (the "Issuer"), involving Ocwen Loan Servicing, LLC ("Ocwen") and various financial institutions.
Key Financial Metrics and Transaction Details
The Company issued a total of $900,000,000 in rated receivables-backed term notes, structured as follows:
- Series 2016-T2 Notes: $500,000,000 principal amount.
- Series 2016-T3 Notes: $400,000,000 principal amount.
The notes are secured by receivables for corporate and escrow advances, principal and interest advances, and accrued servicing fees payable to Ocwen. The collateral cross-collateralizes four other series of outstanding notes previously issued by the Issuer.
| Note Series | Interest Rate Range (Fixed) | Revolving Period End Date | Amortization Terms |
|---|---|---|---|
| Series 2016-T2 | 2.5751% to 5.5737% | October 15, 2019 | 1/12th of remaining principal monthly after revolving period |
| Series 2016-T3 | 2.8332% to 5.9721% | October 15, 2021 | 1/12th of remaining principal monthly after revolving period |
Note: The filing text does not provide specific revenue, profit, cash flow, or margin figures for the Company as this is a transaction-specific report.
Material Changes and Obligations
The primary material change is the creation of a direct financial obligation of $900 million. The transaction introduces specific covenants and events of default, including:
- Failing interest coverage or collateral performance tests.
- Insolvency of Ocwen, the Sponsor, or relevant subsidiaries.
- Nonpayment of principal or interest.
- Failure to comply with deposit and remittance requirements under underlying servicing agreements.
Upon an event of default or target amortization event, consequences may include interest rate increases, forced amortization, or acceleration of principal repayment.
Guidance, Risks, and Contingencies
The filing outlines significant risks tied to the performance of the underlying collateral and the solvency of Ocwen. Key contingencies include:
- Amortization Risk: If notes remain outstanding after the revolving periods (2019 for T2, 2021 for T3), mandatory monthly amortization begins.
- Cross-Collateralization: The notes are cross-collateralized with four other series, meaning distress in one series could impact the others.
- Investment Company Status: The Issuer becoming subject to registration as an "investment company" under the 1940 Act constitutes an event of default.
Key Facts for Investor Verification
- Verify the current status of the underlying Ocwen servicing agreements and the quality of the receivables backing the $900 million issuance.
- Confirm the Company's ability to meet the interest coverage and collateral performance tests specified in the indenture.
- Monitor Ocwen's financial health, as its insolvency is explicitly listed as an event of default.
- Review the terms of the four other series of notes that are cross-collateralized with this transaction to assess total exposure.
- Check for any subsequent filings regarding the repayment schedule once the revolving periods for Series 2016-T2 and 2016-T3 conclude.