Newcastle Investment Corp. (NYSE:NCT), Fortress Investment Group LLC (NYSE:FIG) and Nationstar Mortgage LLC signed a definitive agreement to acquire residential mortgage servicing rights from Bank of America, National Association for $1.3 billion on January 6, 2013. Upon execution of the purchase agreement, Nationstar deposited $72.6 million with the escrow agent, pursuant to a customary escrow arrangement as a deposit of a portion of the purchase price of the mortgage servicing rights. Nationstar shall pay to Bank of America 50% of the remaining portion of the purchase price upon closing of the purchase thereof, and 50% upon the transfer of the mortgage servicing rights from Bank of America to Nationstar.

Nationstar will fund approximately $680 million of the consideration with the proceeds of a co-investment by Newcastle Investment Corp. and Fortress Investment Group LLC. Nationstar will fund its portion of $665 million of acquisition price with investable cash. In a related transaction, Nationstar Mortgage LLC signed a definitive agreement to acquire $5.8 billion in related servicing advance receivables from Bank of America. The transaction is subject to investor and other third-party approvals and expected to close in first quarter of 2013. Nationstar estimates that this transaction will be accretive with incremental AEBITDA per share of $2.20 - $2.55 and EPS of $0.70 - $0.80 in 2013, and AEBITDA per share of $4.65 - $5.40 and EPS of $2.30 - $2.70 in 2014.

As on January 31, 2013 and February 1, 2013, Nationstar acquired the MSRs with respect to the Mortgage Loans with a total unpaid principal balance of approximately $97 billion, all of which are owned, insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. Nationstar Mortgage Holdings Inc. (NYSE:NSM) acquired approximately $97 billion of Mortgage Servicing Rights and certain assets from Bank of America Corporation (NYSE:BAC). Nationstar paid to Bank of America 50% of the purchase price for the Agency MSRs, and Nationstar will pay the remaining 50% of the purchase price upon the transfer of the Agency MSRs from Bank of America to Nationstar, which is expected to occur in stages at various times prior to the end of the second quarter of 2013.

As of July 1, 2013, Nationstar acquired MSRs with respect to certain Mortgage Loans with a total unpaid principal balance of approximately $43 billion. Nationstar paid to Bank of America 100% of the purchase price for the Private Label MSRs, which transferred from Bank of America to Nationstar on July 1, 2013. As of November 1, 2013, Nationstar acquired MSRs with respect to certain Mortgage Loans with a total unpaid principal balance of approximately $9.7 billion. Nationstar funded the purchase price for the Private Label MSRs through a combination of cash on-hand and the proceeds of the previously announced co-investment by New Residential Investment Corp. and certain funds managed by Fortress Investment Group LLC. Subject to customary closing conditions, Nationstar anticipates acquiring the remainder of the Private Label MSRs during the fourth quarter of 2013.

Chris E. Abbinante, Seth H. Katz, James A. Huizinga, David C. Miller, Ezra B. Prager, Matt Stevens, John K. Van De Weert Jr., Jeffrey D. Weinstein and Mark D. Werner of Sidley Austin LLP acted as legal advisors to Nationstar Mortgage. Merrill Lynch acted as the financial advisor for Bank of America. Laurence E. Platt of K&L Gates LLP acted as legal advisor to Bank of America. Wilmington Trust, N.A. acted as escrow agent in the transaction.