Business Context and Reporting Period
This Form 8-K is filed by New Residential Investment Corp. (the "Company") for the reporting period of October 2, 2015. The filing addresses a triggering event involving HLSS Servicer Advance Receivables Trust ("HSART"), a wholly-owned subsidiary of the Company.
Key Financial Metrics and Obligations
- Accelerated Debt: $2.525 billion in term notes issued by HSART became immediately due and payable.
- Repayment Status: The Company repaid the full $2.525 billion in term notes on October 2, 2015.
- Funding Source: Repayment was funded via draws on variable funding notes previously issued by HSART.
- Outstanding Debt: Following repayment, the aggregate principal balance of outstanding variable funding notes is approximately $2.9 billion.
- Other Metrics: The filing text does not provide clear values for revenue, profit, cash flow, margins, or liquidity ratios beyond the specific debt transaction described.
Material Changes and Events
A "Specified Default" occurred on October 1, 2015, under the HSART indenture. This event was triggered solely by Standard & Poor's Rating Services downgrading Ocwen Loan Servicing, LLC's master servicer rating to "Below Average" on September 29, 2015. Consequently, Ocwen ceased to be an "Eligible Subservicer," causing the "Collateral Test" to fail. This failure accelerated the $2.525 billion term notes. The Company successfully resolved the acceleration by repaying the notes the following day.
Outlook, Risks, and Management Commentary
- Risk Mitigation: Holders of the variable funding notes had previously agreed that the Specified Default would not constitute an event of default for their notes, allowing the Company to draw on these facilities to repay the term notes.
- Current Status: No other material obligations of HSART arose, increased, or accelerated as a result of these transactions.
- Disclosure: The Company issued a press release on October 2, 2015, confirming the full repayment of the term notes using surplus servicer advance financing.
Investor Verification Checklist
- Verify the current servicer rating of Ocwen Loan Servicing, LLC and its impact on future collateral tests.
- Confirm the terms and interest rates of the $2.9 billion in outstanding variable funding notes.
- Review the attached press release (Exhibit 99.1) for additional details on the surplus servicer advance financing.
- Assess the Company's liquidity position post-repayment to ensure sufficient coverage for the variable funding notes.