Coming just one month after Walter Investment Management Corp. (WAC) agreed to pay $29.63 million in fines to settle charges brought by the Department of Justice, the company announced Monday that Mark O’Brien, the company's chairman and chief executive officer, is retiring this week.
According to an announcement from Walter Investment, O’Brien’s retirement will take effect on Oct. 10.
In its announcement, Walter Investment said that O’Brien has agreed to continue as chairman of the board of directors through the end of this year, and the company expects to “benefit from his continued service” as a director after that period.
According to a Monday filing with the Securities and Exchange Commission, Walter Investment will pay O’Brien $3 million as part of his retirement agreement.
Denmar Dixon, who is currently Walter Investment’s vice chairman of the board, chief investment officer and executive vice president, will take over as CEO and president, the company said Monday.
"We respect Mark's decision to retire and are grateful for his service and leadership during the significant growth and transformation of Walter Investment over the last six years," said Mike Tokarz, lead independent director.
"We are fortunate that Mark selected Denmar to join the company five years ago, as he has worked side-by-side with Mark and proven to be a critical player in the transformation of Walter Investment's business and the execution of its corporate vision,” Tokarz said. “His knowledge of the mortgage sector and strong business acumen coupled with his hands-on management style make Denmar uniquely well-suited to lead Walter Investment."
In a statement, O’Brien thanked the Walter Investment’s employees, customers and shareholders for the opportunity to lead the company.
“I am pleased that Denmar agreed to join me on this journey in 2010 and believe he is ideally positioned to lead Walter Investment in its future success,” O’Brien said. “I will miss the wonderful people throughout the company, but know that they will work well with Denmar to continue to build on the strong record of achievements we have delivered through the transformation of Walter Investment."
In a brief note to clients, Fred Small, an analyst from Compass Point Research & Trading, said that O’Brien’s departure “appears in-line with WAC's overall cost saving initiatives,” adding that he does not expect an outsize positive or negative reaction due to the change.
O’Brien’s departure comes nearly one month to the day after the company agreed to settle the DOJ charges, which accused several Walter Investment subsidiaries of submitting false reverse mortgage claims to the Department of Housing and Urban Development, a violation of the False Claims Act.
According to the DOJ, Walter Investment subsidiaries Reverse Mortgage Solution Inc., REO Management Solutions and RMS Asset Management Solutions violated the False Claims Act in connection with their participation in HUD’s Home Equity Conversion Mortgages program.
The government alleged that, from August 2009 to March 2015, Reverse Mortgage Solution, with the “knowledge and support” of its corporate parent, Walter Investment, submitted false claims for debenture interest from HUD by failing to properly disclose that it had not met certain deadlines and, therefore, was not entitled to such interest payments.
That fine represented the second fine incurred by Walter Investment on behalf of one of its subsidiaries in the last few months.
In April, the Consumer Financial Protection Bureau and the Federal Trade Commission announced a $63 million fine against Green Tree Servicing, another subsidiary of Walter Investment, for “mistreating borrowers” who were attempting to save their homes from foreclosure.
According to the CFPB and the FTC, Green Tree failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers.
“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” CFPB Director Richard Cordray said at the time. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”
Walter Investment later announced that it was merging of Green Tree with another of Walter Investment’s well-known subsidiaries, Ditech Mortgage Corp, to form a new company, ditech, a Walter company, leaving Green Tree’s legacy behind.
Now, O’Brien leaves behind his legacy as well.
Dixon thanked O’Brien for his service and said that he’s looking forward to the challenge.
"It is an exciting time to be leading the Walter Investment team and I greatly appreciate the trust and confidence that the board has placed in me," Dixon said.
"We have a significant amount of work ahead to realize the full value and potential of our platform, and our team will remain highly focused on delivering shareholder value as we continue to execute on our strategic initiatives," he added.
"I also want to extend my appreciation to Mark for all he has accomplished on behalf of Walter Investment," Dixon concluded. "I look forward to his continued counsel as we work to enhance Walter Investment's position as an industry leader."