Walter Continues Expansion, Acquires $30B in Fannie MSRs

Walter Investment Management Corp. has agreed to purchase an aggregate unpaid principal balance of $30 billion in Fannie MSRs that represents the first phase of a previous plan to acquire assets with a UPB of approximately $62 billion.

This transaction “further extends our strategic client relationships with large national depository institutions” underscoring the mortgage industry’s focus on “outsourcing noncore assets to specialty servicers,” stated Mark O'Brien, chairman and CEO of Walter Investment upon the announcement.

The portfolio consists of approximately 270,000 accounts expected to be approximately 99% current at transfer, including over 100,000 accounts eligible for the government sponsored Home Affordable Refinance Program.

Servicing transfers are scheduled to occur during the first three quarters of 2014. Current and pending acquisitions are subject to closing conditions that include final GSE approval.

In preparation for future expansion earlier in December the Tampa, Fla.-based asset manager, mortgage servicer and originator announced plans to enter into a new secured credit agreement of $1.6 billion in new secured credit facilities guaranteed by “current and future wholly owned domestic subsidiaries” and secured by substantially “all assets of the company and the guarantors.”

In addition, Walter proposed a private offering of $500 million aggregate principal amount of its senior notes due 2021. Borrowings under the credit facilities together with the net proceeds from the proposed notes “will be used to finance the acquisition of MSRs,” repay debt outstanding, and related fees and expenses, according to executives.

As of today Walter has entered into definitive agreements to acquire only MSRs with an aggregate unpaid principal balance of approximately $54 billion, “while letters of intent have been executed in connection with the remaining transactions.”