Ocwen Financial in Atlanta has agreed to buy Homeward Residential Holdings from WL Ross & Co. for $750 million in cash and stock.

Homeward  services 422,000 mortgage loans with an aggregate unpaid balance of $77 billion. WL Ross, the private-equity firm headed by billionaire Wilbur Ross, formed Homeward in 2007 by combining American Home Mortgage Servicing, Option One Mortgage, a large servicing portfolio from Citi Residential Lending and other entities.

"The acquisition of Homeward significantly advances Ocwen's twin strategic growth initiatives to add high-return servicing assets to its portfolio and expand origination capacity to provide for a sustainable source of future growth," William Erbey, Ocwen's executive chairman, said in a press release Wednesday.

Ocwen would pay $588 million in cash and $162 million in convertible stock. The agreement also includes loss-sharing provisions "related to certain pre-closing liabilities," the release said. The transaction is expected to close by yearend.

Homeward has been a moneymaker for WL Ross, but the opportunity to make it part of a larger company was attractive, Wilbur Ross said in the release.

"Homeward has been profitable in each year of its existence and has also been a wonderful cash-flow producer, distributing to us approximately $900 million of cash since the initial investment," Ross said. "Mortgage banking is a business of scope and scale, and we believe that the combined company will fill the void created by the ongoing departures of many banks from the overall industry."

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