2010 ANNUAL Ticker: WAC (NYSE Amex) Employees: 340 Business: An asset manager, mortgage portfolio owner

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  • Company: Walter Investment Management Corp. Ticker: WAC (NYSE Amex) Employees: 340 Business: An asset manager, mortgage portfolio owner and mortgage servicer specializing in less-than-prime, non-conforming and other credit-challenged mortgage assets. Our history: Over our more than 50-year history, we have specialized in a disciplined approach to underwriting, coupled with a high-touch servicing platform. This approach has served us well, especially in the current distressed economic environment.

    Our difference: Our high-touch servicing approach relies on our field servicing organization to establish relationships with our customers and to keep delinquencies low. We help our customers stay in their homes by instilling financial discipline and helping them balance the competing demands for their limited financial resources.

    AT A GLANCE

    COMPARISON OF CUMULATIVE TOTAL RETURN

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    Apr. 2009 Dec. 2010Dec. 2009

    WIMC

    NYSE Amex

    2011 Peer Group

    In ve

    st m

    en t

    Price of Common Stock vs. Peer Group Period Ending

    Apr 2009 Dec 2009 Dec 2010

    Walter Investment Management Corp. $100.00 $199.67 $280.90 NYSE Amex $100.00 $128.83 $155.89 2011 Peer Group $100.00 $131.67 $174.43

  • DEAR FELLOW SHAREHOLDERS,

    2010 ANNUAL REPORT

    Walter Investment Management Corp.

    In 2010, Walter Investment Management Corp.

    continued to post best-in-class results, while taking

    dramatic steps to help ensure our future growth.

    We finished the year on a strong note, posting

    2010 income before income taxes of $38.3 million,

    paying quarterly dividends of $0.50 per share and

    generating a total return for our shareholders of 39%

    for the year.

    And while these financial results were certainly

    noteworthy in a period of record foreclosures and

    unprecedented challenges in our industry, just as

    notable were several major events that we expect

    to be keys to building shareholder value in years

    to come:

    In November, WIMC completed the purchase

    of Marix Servicing LLC, a Phoenix, Arizona-

    based specialty mortgage servicer. We expect

    that Marix, one of the technology leaders in

    the mortgage industry, will form the foundation

    of our high-touch asset management and servicing

    platform; and will allow us to pursue growth

    opportunities on a national basis.

    To provide funding for growth, in November we

    closed a private placement of $135 million of

    residential mortgage-backed notes, a significant

    event in the market for residential mortgage

    assets. The completion of the securitization, one

    of the first of its kind in the recovery cycle for

    this market, was a reflection of the high regard

    for WIMC and our history of solid performance.

    We took a series of actions to counter the runoff

    of our legacy portfolio, including the acquisition

    of $100 million worth of residential first-lien

    mortgage loans, while executing letters of intent

    for additional pools worth over $25 million. Our

    acquisition pipeline currently contains over $1.6

    billion of performing residential loans that we are

    considering, and we continue to see opportunities

    for loan pools that are attractive in terms of

    return and risk profile.

  • Driving growth while taking care of everyday business

    in a challenging environment certainly isn’t easy,

    and it’s a tribute to our 340 employees that we were

    able to accomplish both short- and long-term goals

    in 2010. Our company has a compelling story – we

    are a long-established business built on personal

    service, leveraging technology and forward thinking

    to focus on the goals of growing our business and

    increasing shareholder value.

    WIMC’s high-touch approach with our less-than-

    prime portfolio continued to pay off significantly

    in 2010, even as a number of companies in our

    industry niche encountered problems:

    Our portfolio performance was significantly

    better than that of comparable pools, with

    2010 delinquencies of 4.68%. When compared

    to the subprime industry, based on the most

    recent Mortgage Banking Association survey,

    our delinquency rate is 42% better than the

    industry average.

    Our delinquencies improved 76 basis points

    versus 2009, and our annual recovery rate of

    85.8% was comparable to rates we achieved in

    2004-2006, before the economy went into free-

    fall. This was accomplished by diligent attention

    to every late-paying account – something we

    pride ourselves in, day in and day out.

    As WIMC grows, we know what our specialty is –

    servicing residential, first-mortgage, less-than-prime

    loans for occupied homes. Our field force, spread

    throughout the South, has shown the ability to

    handle a significant number of accounts, and the

    acquisition of Marix Servicing not only enhances

    that capability in our current footprint but allows

    us to expand both the size of our footprint and the

    scope of the services that we can provide to an

    ever-broadening customer base.

    Looking ahead As we move into 2011, we cannot assume that

    the economic environment will improve markedly

    anytime soon. As long as unemployment remains

    an issue, we can expect foreclosures to be high

    and customer payment challenges to continue. In

    addition, government intervention into our sector

    threatens to impose new, more stringent regulations

    that may make our job tougher and more costly.

    Nonetheless, we are focused on doing everything

    we can to continue to post strong results, while

    using our expanded platform and capital to look at

    more opportunities for growth.

    Our objectives for this year can be summarized with

    three overarching goals:

    Continue to post industry-leading performance

    as we service our existing portfolio, never taking

    our eye off the ball in terms of keeping

    delinquencies at industry-leading levels.

    Leverage the expanded technology platform

    provided by the Marix acquisition to confidently

    expand our income streams and pursue more

    opportunities to grow WIMC’s business.

    At every turn, pursue ways to build shareholder

    value and long-term success for our company.

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    Q1 2008 2008 2008 2008

    Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010

    Q2 Q3 Q4 2009 2009 2009 2009

    Industry Average (1)

    WIMC (industry method)

    WIMC (internal) (2)

    (2)

    WIMC OUTPERFORMS THE INDUSTRY

    DELINQUENCIES AS COMPARED TO OTHER PORTFOLIOS

    Delinquencies are derived from a voluntary survey by the Mortgage Bankers Association (MBA) of over 120 mortgage lenders, including mortgage

    banks, commercial banks, thrifts, savings and loan associations, subservicers, and life insurance companies. Delinquency rate is derived by combining

    the MBA delinquency rate for subprime loans plus subprime foreclosure starts. MBA delinquency rate considers all accounts in bankruptcy to be

    delinquent. Source: Mortgage Bankers Association.

    WIMC (industry method) calculation considers all accounts in bankruptcy to be delinquent. WIMC (internal) calculation ages accounts in bankruptcy

    based upon payment status in accordance with their bankruptcy plan.

    1)

    2)

    Walter Investment Management Corp.

    2010 ANNUAL REPORT

    It is extremely gratifying to work with our leadership team and employees as we

    continue to find ways to succeed in this environment. If anything, we believe there is

    good reason to be bullish about Walter Investment Management Corp.’s future, and

    look forward to more success in 2011.

    Mark J. O’Brien

    Chairman and Chief Executive Officer

    March 22, 2011

  • CONSOLIDATED FINANCIAL HIGHLIGHTS

    Residential Loans, Net

    Principal Yield Allowance for Carrying Balance Adjustment Balance Loan Losses Value

    Securitized $ 1,682.1 $ 139.1 $ 1,543.0 $ 15.2 $ 1,527.8

    Unencumbered 121.6 27.2 94.4 0.7 93.7

    Total per GAAP balance sheet $ 1,803.7 $ 166.3 $ 1,637.4 $ 15.9 $ 1,621.5

    2010 Q4 2010 Q3 2010 Q2 2010 Q1

    Net interest income $ 21.3 $ 21.0 $ 20.9 $ 20.4 Average consolidated residential loans(1)(2) $ 1,632.7 $ 1,630.2 $ 1,635.1 $ 1,649.9 Net interest margin 5.21% 5.15% 5.10%