Walter: Not Done Yet With Reverse Mortgage Acquisitions

After announcing two major reverse mortgage acquisitions in 2012 and 2013, Walter Investment Management Corp. says it is still seeking additional opportunities in the reverse mortgage space.

The company forecasts between $4 and $5 billion of originations in 2013 after the acquisitions of Reverse Mortgage Solutions and a pending deal to acquire Security One Lending, Walter executives told participants in an earnings conference call Tuesday.

To help support its position in the reverse mortgage market, Walter execs said the company is seeking additional acquisition opportunities in reverse mortgage servicing.

“But as we’ve said in the past, we’re actively looking to acquire servicing in the industry, and you could assume that there are several transactions that we’ve been working that would allow us to accomplish that number,” said Walter Vice Chairman and Executive Vice President Denmar John Dixon.

As for the company’s servicing sector of its reverse mortgage business, it expects to add roughly $3 billion in unpaid principal balance to its servicing portfolio. Additionally, Walter expects this portfolio to double to approximately $25 billion by end of Q2 2013.

Walter’s reverse mortgage segment generated $7 million for the months of November and December 2012, which included $5.1 million in servicing fees and $1.9 million of net other revenue.

The reverse mortgage segment also contributed adjusted EBITDA of $7.7 million for these last two months of 2012, with the company anticipating its reverse sector to be a key driver of EBITDA growth heading into 2013.

“The reverse mortgage business is a model for profitable, sustainable growth,” the executives said.

Walter entered into the reverse mortgage space in November 2012 when the company acquired RMS for $122 million. In January, the company bolstered its reverse business with an agreement to acquire all of the stock of Security 1 Lending for $31 million in cash.

Walter reported a net loss of $22.1 million, or 73 cents a share, for 2012, compared to a net loss of $66.4 million, or $2.41 a share, in 2011.

For the fourth quarter of 2012, the company’s net loss was $34.4 million, or 98 cents a share, compared to a net loss of $3.9 million, or 14 cents a share, in the fourth quarter of 2011.

Results for 2012 were impacted by a charge of $48.6 million, reflecting the loss on the early extinguishment of the company’s debt.

Written by Jason Oliva

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