Company: Walter Investment Management Corp.
Ticker: WAC (NYSE Amex)
An asset manager, mortgage portfolio owner and mortgage servicer specializing in
less-than-prime, non-conforming and other credit-challenged mortgage assets.
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 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
Apr. 2009 Dec. 2010Dec. 2009
2011 Peer Group
Price of Common Stock vs. Peer Group
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
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
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.
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.
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)
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.
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%