Speaking Tuesday at the Mortgage Finance Conference hosted by Keefe, Bruyette and Woods, executives from Walter Investment Management Corp. (WAC) shared the company’s plans for the rest of the year.
Walter’s chief financial officer, Gary Tillett, and chief information officer, Denmar Dixon, told the gathered investors that the company is well positioned for growth in the remaining two quarters of 2014.
Notable among the wide-ranging presentation was the discussion of Walter Capital Opportunity Corp. When Walter Investment released its 3rd quarter earnings for 2013, the company announced that it had “executed a letter of intent with York Capital Management for an initial capital commitment of $200 million to fund Walter Capital Opportunity Corp., an externally managed real estate investment trust.”
In Walter’s 2014 first quarter earnings release, the company announced that it had executed the final securities purchase agreement with York for the formation of Walter Capital.
During the presentation at the KBW event, one of Walter’s panelists said that the company anticipates Walter Capital launching by the end of second quarter.
The panelists said that they also anticipate Walter Capital to be licensed to purchase mortgage-servicing rights by the end of the year. “The plan would be to be for them to look at transactions and potentially acquire MSRs,” one of the panelists said.
The panelists said that Walter Capital could purchase MSRs and use Green Tree Servicing, which Walter also owns, as the sub-servicer.
The panelists also said that Walter Capital “will consider credit-based investments, loans, and actually carrying loans in a bigger way instead of (the company’s traditional) core of fee-based revenue.”
One panelist said that Walter Capital could also purchase non-performing loans in the future. “Any asset that would benefit from Green Tree’s high touch servicing is fair game for Walter Capital,” one panelist said. The panelist said that once Walter Capital has “a few transactions” under its belt, the company may consider taking Walter Capital public.
The panelists also commented on Green Tree’s performance ratings in the latest servicing compliance report from National Mortgage Settlement’s Office of Mortgage Settlement Oversight.
In that report, Joseph Smith, monitor of the NMS, reported that Green Tree failed eight of the 29 servicing metrics that are tested as part of the settlement.
Walter’s executives told the investors that headlines surrounding the company’s servicing failures were “a little bit misunderstood.” The panelist said that the company is currently working with the OMSO to remedy the eight areas where its servicing practices fell short.
“There is a process in the NMS to submit corrective action plans,” one panelist said. “Once they’re approved, you implement them and then you’re tested again. And we’re in that process now. We’ve got all the corrective action plans now submitted. So the way we think about is that if we are successful in the next cycle, Green Tree will have implemented the whole NMS settlement as soon or sooner than the other servicers.”
The panelists also touched on the potential enforcement action that the company is facing from the Consumer Financial Protection Bureau. “We can’t add much more than we said during our last earnings call,” one panelist said. “But we are in the process of working with them to try to get a settlement.”
