- Company Expected to Record Gain on Sale -
- Proceeds to be Used to Repay Term Loan and Ultimately Invested Into
MSRs -
MOORESTOWN, N.J.--(BUSINESS WIRE)--Nov. 15, 2016--
Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) (“Cherry Hill”
or the “Company”) today announced it has agreed to sell back to Freedom
Mortgage the Excess MSRs that Freedom Mortgage had previously sold to
the Company.
The sale will be a two-step process. Pool 1/Pool 2014 were sold on
November 15 and Pool 2 will be sold approximately one month later. The
price for the pools will be the product of 60 basis points and the
aggregate UPB of the pools as of October 31 for Pool 1/Pool 2014 and
November 30 for Pool 2. In addition, Freedom will pay yield maintenance
to Cherry Hill equivalent to $750,000 per quarter in 2017 as partial
consideration for the sale. This feature of the agreement is intended to
help mitigate any earnings deterioration as the Company works to
reinvest the proceeds in newly originated MSRs. A portion of the
purchase price for Pool 2 may consist of full MSRs on loans backing
Ginnie Mae securities if Ginnie Mae and the Company’s independent
directors approve. Cherry Hill is hopeful to receive its GNMA issuer
approval shortly and would then seek GNMA approval to purchase the MSRs
from Freedom.
Cherry Hill expects to recognize a net gain on sale of approximately $16
million as a result of the transaction, which is expected to result in
an increase in book value. A portion of the expected proceeds from the
transaction will be used to repay the $21 million currently outstanding
on its term loan, while the remainder of the proceeds will be
temporarily invested into RMBS, as Cherry Hill identifies and begins to
deploy the capital into servicing-related MSRs over time.
“Freedom expressed an interest in reacquiring our Excess MSRs and
eventually presented a compelling offer,” stated Jay Lown, Cherry Hill
Mortgage Investment Corporation’s President. “The Excess MSR assets are
particularly illiquid, and after careful consideration, we acted
opportunistically and accepted the offer. Overall, we remain committed
to maintaining the balance of our entire portfolio of assets, which has
allowed us to take advantage of rate fluctuations in our efforts to
create value for shareholders.”
About Cherry Hill Mortgage Investment Corporation
Cherry Hill Mortgage Investment Corporation is a real estate finance
company that acquires, invests in and manages residential mortgage
assets in the United States. Cherry Hill Mortgage Investment Corporation
is externally managed and advised by Cherry Hill Mortgage Management,
LLC.
Forward-Looking Statements
This press release contains forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
other federal securities laws. These forward looking statements are
based upon the Company’s present expectations, but these statements are
not guaranteed to occur. For a description of factors that may cause the
Company's actual results or performance to differ from its
forward-looking statements, please review the information under the
heading “Risk Factors” included in the Company's Annual Report on Form
10-K for the year ended December 31, 2015, and other documents filed by
the Company with the Securities and Exchange Commission.
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Source: Cherry Hill Mortgage Investment Corporation
Cherry Hill Mortgage Investment Corporation
Investor Relations
877-870–7005
InvestorRelations@CHMIreit.com