Walter Investment Management Corp. will close its Ditech subsidiary's Irving, Texas, office by the end of 2017, as the nonbank lender and servicer continues restructuring efforts amid mounting losses.
"Despite the progress we are making on our 2017 operating plan, our financial results have been disappointing and the need to accelerate our consolidation is clear," Walter CEO Anthony Renzi said in an internal memo sent to employees on July 12 and reviewed by National Mortgage News.
"[W]e have made the difficult decision to close the Irving office by the end of 2017…Leading up to the closing of the Irving office, we will continue to maintain a strong leadership presence in Irving to ensure a smooth transition," the memo adds.
Through a spokesperson, Fort Washington, Pa.-based Walter Investment declined requests for comment.
Walter ultimately intends to consolidate its operations into three "core" Ditech sites in Fort Washington, Pa., Jacksonville, Fla., and Tempe, Ariz., as well as one core site in Houston for the Reverse Mortgage Solutions business it acquired in 2012. Walter also acquired reverse mortgage lender Security One Lending in 2013, but the company stopped originating reverse mortgages at the beginning of this year and now only services the loans.
Walter is evaluating options for its eight other locations, which have been deemed "legacy" sites. The review process for the legacy offices should be completed by late 2017 or early 2018 and "could result in additional site closings or other outcomes," the Renzi memo states.
Some employees at the Irving office were laid off the day of the announcement and more rounds of layoffs are planned for September and November, according to a worker who was laid off this week and spoke to NMN.
It's unclear how many workers will ultimately lose their jobs due to the closing of the Irving site, which is located a few miles east of the Dallas Fort Worth International Airport. Walter employs about 4,500 total workers, down nearly 25% from 5,900 workers at the end of 2015, according to regulatory filings. About 230 LinkedIn profiles for people in the Dallas-Fort Worth area list Ditech or Walter as their current company. While it's an imprecise measure, the figure would represent as much as 5% of Walter's total workforce.
As of midday Friday, the Texas Workforce Commission had not published a notice of the Irving office's closing. Companies are generally required to provide 60 days' notice of mass layoffs of more than 50 workers and office closings under the Worker Adjustment and Retraining Notification Act.
The Dallas-Fort Worth region is a significant employment hub for the mortgage industry. Nationstar Mortgage, Caliber Home Loans and Prime Lending are all headquartered in North Texas, along with the default servicing operations for both Fannie Mae and Freddie Mac. The area's housing market is also experiencing rapid increases in both home sales and prices.
Renzi was hired as Walter's CEO in September 2016 to try and turn around the troubled company, which reported three years of losses. Walter earned $1.9 million in the first quarter of 2017, though the results included a $42 million after-tax gain from the sale of Green Tree Insurance Agency.
After acquiring Ditech as part of its purchase of Ally Bank's correspondent and wholesale mortgage operations, Walter revived the brand — well known for its humorous television ads before the housing crisis — in March 2014 and later, rebranded its Green Tree servicing business as Ditech in August 2015.
But Walter has been downsizing for the past two years and has spent more than $44.3 million to restructure its operations, according to regulatory filings. Ditech exited the brick-and-mortar retail mortgage business in January 2016.
Ditech is expected to report second quarter earnings in mid-August.