Walter Grows Mortgage Servicing Business Amid Ocwen, Nationstar Probes

Walter Investment Management Corp. (NYSE:WAC) has been able grow its mortgage servicing business during the first quarter amid regulatory probes into competitors Ocwen Financial Corp. (NYSE:OCN), Nationstar Mortgage Holdings, Inc.(NYSE:NSM), and even itself, Bloomberg reports.

The third-largest non-bank servicer has been expanding while its bigger competitors have been shrinking, Bloomberg writes, citing first quarter data from the companies. 

Both Ocwen and Nationstar lost market share in the first quarter, while Walter Investment increased its mortgage servicing business by 20% and enlarged its loan holdings to $234 billion during that period, according to company filings cited in the article.

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The first quarter growth still places Walter, which had a 2.4% share of the servicing market during the quarter, behind Ocwen’s 4.5% and Nationstar’s 3.9% shares.

All three, however, were behind Wells Fargo & Co., which led with an 18% share.

Actions from federal regulators, particularly on behalf of New York’s Department of Financial Services’ Benjamin Lawsky, may have impacted growth from the big-three non-bank servicers.

In February, Ocwen claimed the department led it to “freeze” its agreement to purchase servicing rights to $39 billion of loans from Wells Fargo.

Lawsky also placed Nationstar under the microscope earlier this year, writing a letter to the company requesting information about its servicing portfolio growth and business practices in 2013.

But while its rivals have garnered an increasing amount of regulatory scrutiny this year, Walter is no exception. 

Last month, Walter’s Green Tree Servicing subsidiary failed eight compliance metrics, according to the Office of the Mortgage Settlement Oversight. 

Joseph Smith, Jr., monitor of the National Mortgage Settlement, found that Green Tree did not meet eight of the 29 metrics tested for compliance under NMS guidelines for loans the subsidiary acquired from Residential Capital LLC.

The company has since announced that it is already making the corrective measures necessary to be compliant under NMS guidelines, according to remarks made by CEO Mark O’Brien.

Since 2012, Walter has become a powerhouse in the reverse mortgage space with its $120 million purchase of Reverse Mortgage Solutions and $31million acquisition of Security One Lending—both of which are top-10 reverse lenders.

The shift in mortgage servicing from banks to non-banks has created a rapidly changing landscape, said Karen Shaw Petrou, managing partner of research firm Federal Financial Analytics Inc., in the article. 

“No one can know who the winners and the losers will be until the dust settles,” she said.

Read more at Bloomberg.

Written by Jason Oliva

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