April 13, 2020
Cadwalader advised PennyMac Financial Services, Inc. (NYSE: PFSI) and its affiliates on amendments to its Ginnie Mae mortgage servicing rights (MSR) securitization program to permit servicing advance financing. The structure enhancement, which has been in development since early 2019, will provide PFSI enhanced liquidity to directly support its servicing advance obligations to Ginnie Mae as necessary and enable the company to better afford borrowers critical relief as required under the recently enacted CARES Act.
“It is an honor to represent PennyMac in its efforts to garner liquidity necessary for the company to provide relief to borrowers at such a critical time,” said Cadwalader partner Chris Gavin, who led the transaction. “The numerous relief efforts for borrowers included in the CARES Act and other initiatives are needed and important, but they have created liquidity needs for many residential mortgage servicers. This transaction serves as a model to enable servicers to access private sources of capital necessary to provide borrowers relief during this crisis, which has become even more important given the Fed’s removal of servicing advance receivable notes as eligible collateral under the TALF program.”
The PennyMac advance financing is an extension of the existing issuer trust that PFSI, with assistance from Cadwalader, put in place in December 2016 to finance Ginnie Mae MSRs pursuant to a series of structured finance transactions. That trust was an important development in the evolution of PennyMac’s capital structure. With the new enhancement, PennyMac can now finance principal and interest, corporate and escrow advances associated with pooled Ginnie Mae loans in an even more efficient manner.
PennyMac Financial Services, Inc. is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market.
In addition to Chris Gavin, the Cadwalader team included partners Gary Silverstein and James Frazier, associates Michelle Abad and John Michael Lyon.