Walter Investment Management Corp. Announces Definitive Agreement To Acquire $93 Billion UPB Of Servicing Assets

TAMPA, Fla., Jan. 7, 2013 /PRNewswire/ -- Walter Investment Management Corp. (NYSE MKT: WAC) ("Walter Investment" or the "Company") today announced that it has signed a definitive agreement to acquire approximately $93 billion of unpaid principal balance ("UPB") of Fannie Mae backed residential servicing assets, including related advance receivables of approximately $1 billion, from Bank of America. The purchase price for the mortgage servicing rights ("MSRs") of $519 million represents a multiple of approximately 2.05x the 27 basis point base contractual servicing fee of the portfolio. The related advance receivables will be purchased at par. The purchase price will be subject to customary adjustments, including an adjustment to actual UPB as of the January 31, 2013 closing date.

The portfolio of assets acquired consists of over 650,000 loans that are projected to be approximately 80% current at transfer. The transaction will have an economic closing as of January 31, and the bulk of the servicing transfers will take place during the first andsecond quarters of 2013. The purchase will be funded with 10% paid at signing and with an additional 40% due with the January 31 economic close.  The remainder will be paid on a pro rata basis in conjunction with an agreed-upon transfer schedule. The Company intends to fund the acquisition from cash on hand and through the issuance of private and public debt securities, or through transactions with capital partners. Advance obligations will be met under existing facilities.

The Company expects the revenues from these MSRs to drive servicing EBITDA margins within its targeted range of 40% to 45% over the life of the portfolio. However, servicing revenues and margins are expected to be modestly lower than these averages in the first year as a result of the higher initial delinquency rate of the portfolio, the incurrence of certain one-time, up-front transfer costs and the expected ramp in earnings over time that occurs in incentives and performance-based fees. The Company expects a servicing EBITDA contribution of between $55 and $60 million in 2013, and an average servicing EBITDA contribution of between $70 and $80 million per year for the following two years.

In addition to the servicing revenues associated with these MSRs, the pool of assets being acquired also includes a significant number of customers that are eligible for the HARP 2.0 refinancing program. The Company expects to utilize the ResCap originations platform to target the estimated 290,000 accounts in the portfolio that are potentially eligible for HARP refinancing. Based on the expected levels of eligibility, pull through rates, and net originations margins, the Company expects to realize significant additional EBITDA associated with HARP refinancings in 2013, estimated to be in the range of $110 to $135 million. The contribution from originations is expected to return to more normalized levels in subsequent years, following the expiration of the HARP program.

Mark J. O'Brien, Chairman and CEO of Walter Investment said, "The acquisition of these assets stands as a testament to our long-standing strategic relationships with both Bank of America and Fannie Mae, as well as to the growing and vital role specialty servicers like Walter are playing in the mortgage sector. Upon completion of this transaction and the ResCap acquisition, Walter Investment will become one of Fannie Mae's top five servicers by servicing volume and will have more than 2,000,000 units and $225 billion of UPB in its servicing portfolio."

"The addition of these attractive residential servicing assets to our portfolio, at returns that exceed our hurdle rates, leverages not only our best-in-class servicing platform, but also the originations capabilities and profitability of the ResCap platform, as this pool contains a significant HARP-eligible population" continued O'Brien. "We continue to make substantial progress toward the closing and integration of the ResCap acquisition and anticipate that the origination capabilities of that platform will be a key component in driving increased profitability from our now much larger portfolio of serviced assets."

"We continue to see significant opportunity for growth in the sector based on the meaningful structural changes that have taken place and that are continuing to evolve. We are taking very deliberate steps to position Walter Investment as a valued partner and leader in the sector while focusing on maintaining strong profitability and sustainable growth. The entire Walter team has worked very hard to achieve these objectives and I commend them for their performance," said O'Brien.

 About Walter Investment Management Corp.

Walter Investment Management Corp. is an asset manager, mortgage servicer and originator focused on finding solutions for consumers and credit owners. Based in Tampa, Fla., the Company has over 2,900 employees and services a diverse loan portfolio. For more information about Walter Investment Management Corp., please visit the Company's website at www.walterinvestment.com.

Disclaimer and Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Walter Investment's plans, beliefs, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on Walter Investment's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Walter Investment's results to differ materially from current expectations include, but are not limited to: the achievement of anticipated EBITDA margin levels which can be adversely affected by costs of our business that are higher than expected, the inability to achieve anticipated incentive fees which are subject to factors beyond the Company's control, customer take up rates of HARP refinancing and other factors that may affect the Company's earnings or costs; the close of the ResCap acquisition on January 31 and the efficient integration of the ResCap business; the efficient transfer of the acquired loans to the Company's platforms; and other factors relating to our business in general as detailed in Walter Investment's 2011 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by Walter Investment that the projections will prove to be correct. This press release speaks only as of this date. Walter Investment disclaims any duty to update the information herein.

EBITDA

EBITDA is presented in accordance with its definition in the Company's credit agreements and represents income before income taxes, depreciation and amortization, interest expense on corporate debt, transaction and integration related costs, the net effect of the non-residual VIEs and certain other non-cash income and expense items. EBITDA also includes an adjustment to reflect synergies and, for periods prior to the acquisition, adjustments to reflect Green Tree as having been acquired at the beginning of the year. EBITDA is not a replacement or substitute for amounts or measures presented in accordance with generally accepted account principals, and its presentation may be materially different from amounts reported on that basis.

SOURCE Walter Investment Management Corp.



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