Walter: Reverse Mortgage Profitability Remains Challenging, For Now

Due to ongoing market factors, profitability for reverse mortgages remains challenging, but with a positive outlook ahead, says industry servicing and originations giant Walter Investment Management Corp. (NYSE: WAC.)

In an investor presentation Thursday, Walter’s Chief Investment Officer Denmar Dixon reviewed Walter’s business segments with reverse mortgages among its areas of focus.

“We are a leading franchise in the reverse business,” he said. “In both servicing and originations. It’s a sector that is undergoing significant change right now, but that we think holds a lot of promise for the future.”

Walter, the parent company of Reverse Mortgage Solutions and Security One Lending, has seen volumes tick up across the last several months as well as retail channel gains, though its first quarter performance was challenged, Dixon pointed out.

The company has continued to purchase mortgage servicing rights, with an additional $3.3 billion portfolio noted during the presentation. It has also come under scrutiny this year among its servicing counterparts including an ongoing investigation by the Consumer Financial Protection Bureau.

“Regulatory and compliance matters remain a strong area of focus for us,” Dixon said. “There’s a lot of activity going on we think that’s a normal part of the maturation of the sector. We are working through that and we think will see some improvement going forward.”

Further, he said, the sector has undergone substantial change in recent months and will continue to confront additional change, though Walter is prepared to adapt and grow in light of it.

“This is a sector that’s undergone monumental change. It’s only going to undergo more,” he said. “We’re well positioned with scale as we have done in the past.”

Written by Elizabeth Ecker

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