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Walter Originations Down, Servicing Portfolio Up

Quarterly business was down at Walter Investment Management Corp., though the company increased the size of its servicing portfolio. Pre-tax earnings were a mixed bag.

Residential loan fundings during the period beginning Oct. 1 and ending Dec. 31 came in at $5.3 billion, the Tampa, Fla.-based firm said in its fourth-quarter 2013 earnings report.

Business slid from the third quarter, when $6.5 billion in home loans were originated.

No originations were generated in the fourth-quarter 2012.

Fourth-quarter 2013 volume consisted of $4.7 billion in residential loans and $0.566 billion in home-equity conversion mortgages.

Of the latest non-HECM activity, 55 percent was originated through the retail channel and 45 percent came from correspondent lending acquisitions.

During its first full year of originations, production totaled $18.6 billion.

“The company’s originations segment’s performance moderated toward a more normalized operating level in the quarter, delivering solid results and strong margins from the consumer direct channel, while continuing to develop its retail and correspondent channels,” Walter said.

First-quarter mortgage production could decline based on applications, which fell to $6.3 billion in the fourth quarter from the prior period’s $7.6 billion.

This year, between $6 billion and $8 billion in originations is expected from the retention channel, and $13 billion to $17 billion is projected from the correspondent channel. In addition, the retail channel is expect to generate between $1 billion and $2 billion in business.

Reverse originations are forecasted to come in between $2.5 billion and $3.0 billion.

Walter Investment Chairman and Chief Executive Officer Mark J. O’Brien noted in the report that the company was “the #1 HECM issuer in the reverse mortgage space.”

Data previously reported by Reverse Market Insight indicate that Walter-subsidiary Security One Lending-Reverse Mortgage Solutions closed 7,536 home-equity conversion mortgages in 2013 — more than any other lender.

The mortgage servicing portfolio finished last year at 2.1 million loans for $218.0 billion. The portfolio rose from 1.9 million loans for $204.9 billion as of the end of the third quarter was up significantly from $85.2 billion at the end of 2012.

The most recent servicing total included 2.0 million residential loans for $202.1 billion and 96,859 HECMs for $15.9 billion.

“Full year and fourth quarter results reflected strong earnings growth in the servicing segment, predominantly driven by the higher volume of units serviced as compared to the prior year periods,” the report said. “Servicing results also reflected increases in the value of the company’s mortgage servicing rights, which added approximately $0.38 to both GAAP net income and core earnings per diluted share in the quarter and approximately $2.86 per diluted share for the full year.”

Walter projected that servicing new business additions will range from $85 billion to $115 billion in 2014, while servicing portfolio additions will be between $15 billion and $25 billion. Reverse mortgage servicing is expected to average between $18 billion and $20 billion.

Mortgage assets increased to $11.736 billion from $11.589 billion as of Sept. 30 and $8.201 billion as of Dec. 31, 2012.

The Dec. 31, 2013, total included $1.395 billion in residential loans at net amortized costs and $10.341 billion in residential loans at fair value.

A $7 million profit before income taxes was reported for the fourth quarter, declining from a $121 third-quarter profit. But earnings swung from a $55 million year-earlier loss.

Full-year income swung to a whopping $413 million profit from a $35 million loss in 2012.

Walter closed out 2013 with more than 6,400 employees, up from over 6,200 at three months earlier.

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