Walter Investment Management Corp.
) announced an agreement to buy a mortgage unit from the banking
subsidiary of Ally Financial Inc.
The mortgage unit conducts purchase of home loans originated
through correspondents and brokers. The unit employs about 300
professionals, has 1,770 active clientele and intellectual
property related to the business.
Walter Investment recently acquired Residential Capital, LLC's
(ResCap) originations platform. This platform has presented it
with plethora of opportunities to expand its mortgage origination
We believe Walter Investment's motive behind purchasing the
mortgage unit from Ally financial is to utilize the latter's
well-trained and experienced team to tap the growth opportunities
as presented by ResCap origination platform.
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As far as Ally Financial is concerned, we know that the company
is shedding its non-core assets to speed up the payment of the
outstanding $14.6 billion dues it received from the Treasury's
Troubled Asset Relief Program (TARP). To repay the TARP dues,
Ally Financial is now focusing on its lucrative auto finance
business and is divesting non-core assets as well as reducing its
exposure to mortgage business to concentrate on auto finance and
online retail banking.
Over the last several months, Walter Investment has been on an
acquiring spree. The company has purchased mortgage-servicing
rights (MSRs) from
Bank of America Corporation
Federal National Mortgage Association
). Walter Investment, in collaboration with
Ocwen Financial Corp.
), won a $3 billion bid to buy MSRs of ResCap. Further, it
acquired Security One Lending from Jacobs Asset Management, LLC
and servicing platform from MetLife Bank, N.A - a wing of
Nationstar Mortgage Holdings Inc.
We believe that Walter Investment is determined to emerge as a
successful organization in the mortgage origination business,
given its acquisition activities. As delinquency rates continue
to fall, mortgage servicing is turning out to be a lucrative
business unlike the situation 4 years ago, when majority of the
companies were turning away from it. Hence, foraying into the
business will definitely improve Walter Investment's financial
performance in the longer term.