Citi analyst Michael Kaye views the Ocwen's (OCN) CFPB lawsuit and state cease and desist orders as a clear negative development for New Residential Investment (NRZ), but the analyst yesterday afternoon kept a Buy rating on the shares. The analyst believes Ocwen services about $120B of New Residential's $600B servicing portfolio. Kaye, however, thinks New Residential has some flexibility since Ocwen's Moody's servicer rating is below SQ3, which qualifies as a potential legal termination event. As such, New Residential has the legal right to move the servicing into its own name and let Ocwen stay on as a sub-servicer, which would provide additional protection, Kaye told investors in a research note. The company can also pull the servicing agreement from Ocwen to another sub-servicer, he adds. Kaye believes New Residential "has some built in protections that investors might be overlooking."