UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 8, 2015
PennyMac Financial Services, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001- 35916 | 80-0882793 |
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
| 6101 Condor Drive, Moorpark, California | 93021 |
| (Address of principal executive offices) | (Zip Code) |
(818) 224-7442
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| | ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| | ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| | ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
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Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Management Agreement
On December 15, 2015, PennyMac Financial Services, Inc. (the “Company”), through its controlled subsidiary, PNMAC Capital Management, LLC (the “Manager”), entered into an amendment (the “Amendment”) to its Amended and Restated Management Agreement, dated as of February 1, 2013 (the “Management Agreement”), by and among the Manager, PennyMac Operating Partnership, L.P. and PennyMac Mortgage Investment Trust (“PMT”) (NYSE: PMT). The Amendment was approved by a committee of the Company’s board of directors comprised solely of independent members thereof.
Pursuant to the terms of the Management Agreement, PMT is managed externally by the Manager, an investment adviser registered with the Securities and Exchange Commission that specializes in and focuses on residential mortgage loans. In consideration for the management services provided by the Manager, PMT pays the Manager a base management fee and an incentive fee, both payable quarterly and in arrears. The Management Agreement expires February 1, 2017 but automatically renews for an additional eighteen (18) month term unless terminated prior to the expiration date.
Pursuant to the terms of the Amendment, the total costs and expenses incurred by the Manager in any quarter and reimbursable by PMT is capped at an amount equal to the quotient of (i) the product of (A) 70 basis points (0.0070), multiplied by (B) shareholders’ equity (as defined in the Management Agreement) as of the last day of such quarter, divided by (ii) four (4). All other terms of the Management Agreement remain the same in all material respects.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which has been filed with this Current Report on Form 8-K as Exhibit 10.1 and incorporated herein by reference, and the full text of the Management Agreement, which was filed as Exhibit 10.12 to the Company’s Form S-1 Registration Statement filed on February 7, 2013.
Amendment to Mortgage Banking and Warehouse Services Agreement
On December 15, 2015, the Company, through its controlled subsidiary, PennyMac Loan Services, LLC (“PLS”), entered into an amendment (the “MBWS Amendment”) to its Mortgage Banking and Warehouse Services Agreement, dated as of February 1, 2013 (the “MBWS Agreement”), by and between PLS and PennyMac Corp. (“PMC”), a wholly-owned subsidiary of PMT. The MBWS Amendment was approved by a committee of the Company’s board of directors comprised solely of independent members thereof.
Under the terms of the MBWS Agreement, PLS provides PMC with certain mortgage banking services, including fulfillment and disposition-related services, with respect to loans acquired by PMC from correspondent lenders, and certain warehouse lending services, including fulfillment and administrative services, with respect to loans financed by PMC for its warehouse lending clients. In consideration for the mortgage banking services provided by PLS with respect to PMC’s acquisition of mortgage loans, PLS is entitled to a fulfillment fee based on the type of mortgage loan that PMC acquires and equal to a percentage of the unpaid principal balance of such mortgage loan. PLS is also entitled to fees relating to the early purchase program and warehouse lending services it provides. The MBWS Agreement expires February 1, 2017 but automatically renews for an additional eighteen (18) month term unless terminated prior to the expiration date.
Pursuant to the terms of the MBWS Amendment, PMC and PLS eliminated any separate fulfillment fees relating to mortgage loans eligible under the Home Affordable Refinance Program (“HARP”). The MBWS Agreement previously provided for a fulfillment fee equal to the product of the unpaid principal balance of a HARP mortgage loan, multiplied by either (i) 0.80% if such HARP mortgage loan had a loan-to-value ratio of 105%, or, (ii) 1.20% if such HARP mortgage loan had a loan-to-value ratio of greater than 105%. As a result of the MBWS Amendment, the fulfillment fee for all HARP mortgage loans will be 0.50%, consistent with the fulfillment fee for all other conventional mortgage loans.
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The MBWS Amendment also modified the fees payable in connection with the early purchase program and warehouse lending services provided by PLS. As amended, PLS is entitled to (i) early purchase program fees that accrue (a) at a rate equal to $1,500 per annum for each early purchase program, and (b) in the amount of $35 with respect to each mortgage loan purchased by PMC thereunder, and (ii) warehouse lending fees that accrue (a) at a rate equal to $40,000 per annum for each of the first twenty (20) warehouse lending facilities active in any month and $10,000 per annum for each additional such facility active in any month, and (b) in the amount of $50 with respect to each mortgage loan that is subject to a transaction thereunder. All other terms of the MBWS Agreement remain the same in all material respects.
The foregoing description of the MBWS Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the MBWS Amendment, which has been filed with this Current Report on Form 8-K as Exhibit 10.2 and incorporated herein by reference, the full text of the MBWS Agreement, which was filed as Exhibit 10.9 to the Company’s Form S-1 Registration Statement filed on February 7, 2013, and any amendments to the MBWS Agreement filed thereafter.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
| 10.1 | Amendment Number One to Amended and Restated Management Agreement, dated as of December 15, 2015, by and among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC. |
| 10.2 | Amendment No. 3 to Mortgage Banking and Warehouse Services Agreement, dated as of December 15, 2015, by and between PennyMac Loan Services, LLC and PennyMac Corp. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PENNYMAC FINANCIAL SERVICES, INC. | ||
| Dated: December 18, 2015 | By: | /s/ Anne D. McCallion |
| Anne D. McCallion Chief Financial Officer | ||
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EXHIBIT INDEX
| Exhibit No. | Description |
| 10.1 | Amendment Number One to Amended and Restated Management Agreement, dated as of December 15, 2015, by and among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC. |
| 10.2 | Amendment No. 3 to Mortgage Banking and Warehouse Services Agreement, dated as of December 15, 2015, by and between PennyMac Loan Services, LLC and PennyMac Corp. |
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Exhibit 10.1
AMENDMENT NO. 1
TO AMENDED AND RESTATED MANAGEMENT AGREEMENT
Amendment No. 1 to Amended and Restated Management Agreement, dated as of December 15, 2015 (the “Amendment”), by and among PennyMac Mortgage Investment Trust, a Maryland real estate investment trust (the “Trust”), PennyMac Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”), and PNMAC Capital Management, LLC, a Delaware limited liability company (the “Manager”).
RECITALS
WHEREAS, the Trust, the Operating Partnership and the Manager are parties to that certain Amended and Restated Management Agreement, dated as of February 1, 2013 (the “Existing Management Agreement” and, as amended by the Amendment, the “Management Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Management Agreement.
WHEREAS, the Trust, the Operating Partnership and the Manager have agreed, subject to the terms and conditions of this Amendment, that the Existing Management Agreement be amended to incorporate certain agreed upon revisions that reflect the original intent of the Existing Management Agreement.
NOW, THEREFORE, in consideration of the mutual premises and mutual obligations set forth herein, the Trust, the Operating Partnership and the Manager hereby agree that the Existing Management Agreement is hereby amended as follows:
SECTION 1. Expenses of the Trust. Section 8 of the Existing Management Agreement is hereby amended by deleting the first paragraph of Section 8(b) in its entirety and replacing it with the following:
(b) The Trust and the Subsidiaries shall pay all of their costs and expenses and the Operating Partnership (or any other Subsidiary, as provided below) shall reimburse the Manager or its Affiliates for expenses of the Manager and its Affiliates incurred on behalf of the Trust or any Subsidiary, excepting only those expenses that are specifically the responsibility of the Manager pursuant to Section 8(a) of this Agreement and provided that the total amount of reimbursed costs and expenses hereunder shall not, for any quarter, exceed the quotient of (i) the product of (A) 70 basis points (0.0070), multiplied by (B) Shareholders’ Equity as of the last day of such quarter, divided by (ii) four (4). Without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses of the Trust or any Subsidiary shall be paid by the Operating Partnership (or such other Subsidiary) and shall not be paid by the Manager or Affiliates of the Manager:
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SECTION 2. Conditions Precedent. This Amendment shall become effective on as of the date first set forth above (the “Amendment Effective Date”) subject to the satisfaction of the following conditions precedent:
2.1 Delivered Documents. On the Amendment Effective Date, each party shall have received the following documents, each of which shall be satisfactory to such party in form and substance:
(a) this Amendment, executed and delivered by duly authorized officers of the Trust, the Operating Partnership and the Manager; and
(b) such other documents as such party or counsel to such party may reasonably request.
SECTION 3. Representations and Warranties. Each party represents that it is in compliance in all material respects with all the terms and provisions set forth in the Existing Management Agreement on its part to be observed or performed.
SECTION 4. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Management Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6. Counterparts. This Amendment may be executed in one or more counterparts and by different parties hereto on separate counterparts, each of which, when so executed, shall constitute one and the same agreement.
SECTION 7. Conflicts. The parties hereto agree that in the event there is any conflict between the terms of this Amendment, and the terms of the Existing Management Agreement, the provisions of this Amendment shall control.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.
| The Trust: | PENNYMAC MORTGAGE INVESTMENT TRUST | |
| By: | /s/ Anne D. McCallion | |
| Name: Anne D. McCallion Title: Chief Financial Officer | ||
| The Operating Partnership: | PENNYMAC OPERATING PARTNERSHIP, L.P | |
| By: PennyMac GP OP, Inc., | ||
| its General Partner | ||
| By: | /s/ Anne D. McCallion | |
| Name: Anne D. McCallion Title: Chief Financial Officer | ||
| The Manager: | PNMAC CAPITAL MANAGEMENT, LLC | |
| By: | /s/ Andrew S. Chang | |
| Name: Andrew S. Chang Title: Chief Business Development Officer | ||
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Exhibit 10.2
AMENDMENT NO. 3
TO MORTGAGE BANKING AND
WAREHOUSE SERVICES AGREEMENT
Amendment No. 3 to Mortgage Banking and Warehouse Services Agreement, dated as of December 15, 2015 (the “Amendment”), by and between PennyMac Loan Services, LLC, a Delaware limited liability company (the “Service Provider”), and PennyMac Corp., Delaware corporation (the “Company”).
RECITALS
WHEREAS, the Service Provider and the Company are parties to that certain Mortgage Banking and Warehouse Services Agreement, dated as of February 1, 2013 (the “Existing MBWS Agreement” and, as amended by this Amendment, the “MBWS Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing MBWS Agreement.
WHEREAS, the Service Provider and the Company have agreed, subject to the terms and conditions of this Amendment, that the Existing MBWS Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing MBWS Agreement.
NOW, THEREFORE, in consideration of the mutual premises and mutual obligations set forth herein, the Service Provider and the Company hereby agree that the Existing MBWS Agreement is hereby amended as follows:
SECTION 1. Exhibits. Exhibit A of the Existing MBWS Agreement is hereby amended by deleting it in its entirety and replacing it with the form attached hereto as Exhibit A.
SECTION 2. Conditions Precedent. This Amendment shall become effective as of the date first set forth above (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:
2.1 Delivered Documents. On the Amendment Effective Date, each party shall have received the following documents, each of which shall be satisfactory to such party in form and substance:
(a) this Amendment, executed and delivered by duly authorized officers of the Service Provider and the Company; and
(b) such other documents as such party or counsel to such party may reasonably request.
SECTION 3. Representations and Warranties. Each party represents that it is in compliance in all material respects with all the terms and provisions set forth in the Existing MBWS Agreement on its part to be observed or performed.
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SECTION 4. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing MBWS Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6. Counterparts. This Amendment may be executed in one or more counterparts and by different parties hereto on separate counterparts, each of which, when so executed, shall constitute one and the same agreement.
SECTION 7. Conflicts. The parties hereto agree that in the event there is any conflict between the terms of this Amendment, and the terms of the Existing MBWS Agreement, the provisions of this Amendment shall control.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.
| The Service Provider: | PENNYMAC LOAN SERVICES, LLC | |
| By: | /s/ Anne D. McCallion | |
| Name: Anne D. McCallion Title: Chief Financial Officer | ||
| The Company: | PENNYMAC CORP. | |
| By: | /s/ Andrew S. Chang | |
| Name: Andrew S. Chang Title: Chief Business Development Officer | ||
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EXHIBIT A
(Compensation)
Fulfillment Fees
The Fulfillment Fee for each Mortgage Loan purchased from an approved Correspondent shall equal the product of (a) in the case of a Fannie Mae Mortgage Loan or a Freddie Mac Mortgage Loan, (i) the product of .50% and (ii) the aggregate unpaid principal balance of such Fannie Mae Mortgage Loan or Freddie Mac Mortgage Loan, (b) in the case of a Ginnie Mae Mortgage Loan, (i) the product of .88% and (ii) the aggregate unpaid principal balance of such Ginnie Mae Mortgage Loan, and (c) in the case of any other Mortgage Loan not otherwise contemplated in (a)-(b) above, the product of (i) .50%, and (ii) the aggregate unpaid principal balance of such Mortgage Loan. Notwithstanding the foregoing, the Service Provider may, in its sole discretion and with respect to the purchase of any Mortgage Loan, reduce the amount of its Fulfillment Fee as otherwise provided herein and credit the amount of such reduction toward the amount of any reimbursement otherwise due from the Service Provider in accordance with the following paragraph; provided, however, that such reduction may only be credited to the reimbursement applicable to the month in which the related Mortgage Loan was funded. The Fulfillment Fee with respect to each such Mortgage Loan shall be due and payable by the Company upon the funding of such Mortgage Loan by the Company.
In the event the Company purchases Mortgage Loans with an aggregate unpaid principal balance in any month of greater than $2.5 billion, the Service Provider shall reimburse the Company an amount equal to the percentage of such aggregate unpaid principal balance relating to Mortgage Loans for which the Service Provider collected Fulfillment Fees for such month, multiplied by the sum of the following: (a) the product of (i) .025%, and (ii) the amount of unpaid principal balance in excess of $2.5 billion and less than or equal to $5.0 billion, plus (b) the product of (i) .05%, and (ii) the amount of unpaid principal balance in excess of $5.0 billion. Any such reimbursement due from the Service Provider to the Company as provided herein shall be paid within five (5) Business Days of such determination.
Warehouse Fees
With respect to each Facility, the Service Provider shall be entitled to fees that accrue (a) at a rate equal to $40,000 per annum for each of the first twenty (20) Facilities active in any month and $10,000 per annum for each additional Facility active in any month, and (b) in the amount of $50 with respect to each Mortgage Loan that is subject to a Transaction thereunder. The fee described in clause (a) shall accrue and be payable monthly not later than the last Business Day of each month from and after the execution of the related Facility Documents. The fee described in clause (b) shall accrue and be payable monthly not later than the fifth (5th) Business Day following the month during which the related Mortgage Loan first becomes subject to a Transaction.
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Early Purchase Program Fees
With respect to each Early Purchase Program, the Service Provider shall be entitled to fees that accrue (a) at a rate equal to $1,500 per annum, and (b) in the amount of $35 with respect to each Mortgage Loan purchased by the Company thereunder. The fee described in clause (a) shall accrue and be payable monthly not later than the last Business Day of each month from and after the execution of the Early Purchase Program documentation. The fee described in clause (b) shall accrue and be payable monthly not later than the fifth (5th) Business Day following the month during which the related Mortgage Loan first becomes subject to a Transaction.
Notwithstanding anything in the Agreement to the contrary, the Service Provider shall not be entitled to collect the Early Purchase Program Fees described in clause (b) above under the heading Early Purchase Program Fees with respect to any Mortgage Loans purchased by the Company under an Early Purchase Program to the extent the Service Provider already collected Warehouse Fees with respect to such Mortgage Loan under a Facility. In such instances, the Service Provider shall be entitled to collect only the Warehouse Fees as described in clause (b) above under the heading Warehouse Fees.
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