UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

On November 2, 2012, Ocwen Loan Servicing, LLC (“Ocwen”), a Delaware limited liability company and a wholly owned subsidiary of Ocwen Financial Corporation (the “Registrant”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services, LLC, ETS of Washington, Inc., EPRE LLC and the additional Sellers identified on Schedule A thereto (collectively, the “Sellers”) in connection with the Sellers’ proposed asset sale pursuant to a plan under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”).  Each of the Sellers is an indirect subsidiary of Ally Financial Inc.  In addition, prior to entering into the Asset Purchase Agreement, Ocwen and Walter Investment Management Corp. (“Walter”) entered into an agreement pursuant to which Walter agreed to fund a portion of the aggregate purchase price as calculated pursuant to the Asset Purchase Agreement in exchange for certain of the purchased assets, as more fully described below. 

Pursuant to the Asset Purchase Agreement, Ocwen agreed to purchase approximately $62.9 billion in “private label” mortgage servicing rights (“MSRs”), $21.7 billion in Freddie Mac MSRs, $42.0 billion in Ginnie Mae MSRs, $46.0 billion in master servicing MSRs, $30.1 billion in subservicing contracts, $1.711 billion of related servicing advance receivables, and related elements of the servicing platform for these MSRs and advances (collectively, the “Ocwen Assets”), in each case as measured by unpaid principal balances as of August 30, 2012.  The aggregate purchase price for Ocwen’s purchased assets will be approximately $2.45 billion, subject to adjustment for the unpaid principal balance of the related Ocwen Assets as of the date of closing and other customary post-closing adjustments.  In addition, Walter will pay an amount not to exceed $550 million to purchase approximately $50 billion in Fannie Mae MSRs and $183 million in related advances, in each case as measured by unpaid principal balances as of August 30, 2012, and the Seller’s origination and capital markets platforms.  The transactions described in the previous two paragraphs are referred to herein as the “Transaction.”

Ocwen expects to deploy approximately $0.9 billion of capital, excluding borrowing on the new servicer advance facility described below, to acquire the Ocwen Assets.  Ocwen does not expect to issue any additional equity to finance this purchase.  Ocwen projects that it will earn pre-tax net income of approximately $120 million on this acquisition for the 12 months post-closing, before any related transition expenses.

To finance the Transaction, Ocwen has received a commitment letter from Barclays Bank PLC to provide a senior secured term loan facility of up to $1.5 billion.  Ocwen has also received a commitment letter from Barclays Bank PLC for a servicing advance facility to finance up to $1.2 billion in servicing advances outstanding as of closing.  The closing of the financing contemplated by these facilities are not conditions to the closing under the Asset Purchase Agreement.

In connection with the Transaction, each of the Sellers has filed petitions for relief under the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and the transaction will be consummated pursuant to the provisions of the Bankruptcy Code. Consummation of the Transaction is subject to, among other things, (i) approval of the transaction by the Bankruptcy Court, (ii) certain licensing and regulatory approvals, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and (iii) certain customary closing conditions and termination rights. In connection with the entry into the Asset Purchase Agreement, Ocwen and Walter jointly made an earnest money cash deposit of $72 million, which will be applied towards the purchase price upon closing of the Transaction.  Subject to approval by the Bankruptcy Court, the Transaction is expected to close during first quarter of 2013.

The Asset Purchase Agreement contains specified termination rights for the parties. Among other circumstances, the Asset Purchase Agreement may be terminated by either Ocwen or the Sellers if the closing has not occurred by March 31, 2012.  Each party has the right to require the other party’s specific performance to close the Transaction (provided all closing conditions are satisfied).

The foregoing summary of the Asset Purchase Agreement is qualified in its entirety by reference to the Asset Purchase Agreement, which is filed with this Current Report on Form 8-K as Exhibit 2.1 and incorporated herein by reference