RMS President Ousted in Major Walter Leadership Shake-Up

The president of top-10 industry lender Reverse Mortgage Solutions, Inc. (RMS) was released from the company this week as part of a larger leadership shake-up at parent company Walter Investment Management Corp. (NYSE: WAC), sources close to the company have confirmed.

Among nine executive departures effective Thursday, former RMS President Christopher Mullins will no longer be with the company. He will be replaced by Walter executive Jeff Baker, who will report to Walter’s new CEO as of August, Anthony Renzi, sources have confirmed.

Along with Mullins, other departing Walter executives include David Schneider, president of Walter’s Ditech Financial LLC business; as well as Sheryl Newman, Greg Williamson, Steve Stein, Rich Smith, Jim Van House, Arlene Hyde and Catherine French.

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The terminations are part of Walter’s plans to make its operating team “flatter,” with the goal of improving company communication and simplifying its management structure, according to an internal memo issued by Renzi and obtained by RMD.

Walter reported a net loss of $232.4 million, or $6.49 per share, for the second quarter ending June 30, 2016—a sizable loss compared to a year ago, when the company reported a net loss of $38.1 million, or $1.01 per share, for the comparable quarter.

Meanwhile, the company’s reverse mortgage operations, comprising the RMS and Security One Lending platforms, reported a loss of $9.1 million, a decrease of approximately $11.7 million compared to the prior year quarter. Year-to-date, RMS totals 1,643 Home Equity Conversion Mortgages through September 2016, according to the latest industry data.

Changes to the company’s management structure were perhaps foreshadowed in comments made by Walter leadership during the second quarter earnings call, which discussed the beginning of a “re-engineering project” focused on improving various aspects of the company’s operations, including the evaluation of strategic options for its reverse mortgage business.

“Consistent with our strategy for Walter, options include pursuing third-party capital to purchase our existing securitized loan book, and entering into flow arrangements for future reduction and sub-servicing,” said Walter Chief Financial Officer Gary Tillett during the call. “If we are successful in this endeavor, we will be able to significantly reduce our future capital commitments to the business.”

Mullins’ departure arrives one year after joining RMS as the company’s president. His arrival came just four months after former RMS president and CEO Scott Clarke announced his retirement in June 2015.

Before accepting the position with RMS, Mullis served as chief operating officer at American Advisors Group from June 2009 to April 2015.

Walter Investment Management Corp. acquired RMS for $122 million in November 2012; and Security One Lending in a deal valued at up to $31 million in cash in January 2013.

Walter did not return RMD’s request for comment as of press time.

Written by Jason Oliva

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  • RMS has never veen the organization that it has been held up as being. One major mistake was attempting origination.

    When it was clear that a mistake was made, they tried to fix it with the acquisition of S1L but did not latch hold of its management. Then Walter acquired RMS and they began trying to fix the RMS problems by using their internal staff. That failed miserably.

    Apparently that same failure is now rippling through the entire organization. Changes alone will not turn things around. There is now a need to determine points of failure and swiftly correct them. It is now time for very pro active management.

  • Another shake up! The future does not look bright for RMS that they will stay in the industry, at this point anyway!

    I think The_Cynic makes some very good points. I will not count them out yet but I am sure there are a lot of fears amongst the staff, which I always hate to see something like this happen!

    We have had our share of turmoil in our industry over the past 18 months, I would like to think positive and say, I hope we have seen the storm starting to end and the Sun shining through the clouds.

    I can only wish everyone at RMS the best of luck and hope there is a bright light at the end of the tunnel for all of them.

    John A. Smaldone
    http://www.hanover-financial.com

  • As I stated a couple of months ago when Walters started talking about “re-engineering” their RM business and reduction their capital commitments to the space, I expect them to announce their withdrawal from the origination side by year-end, first quarter of 2017 at the latest. This is a failed effort for them.

    • REVGUYJIM,

      Yet their auditors did not stop with forcing the total write off of all goodwill on the S1L acquisition but forced them to write off all of their goodwill related to the RMS acquisition as well. The S1L goodwill ($37.6 million) was minor when compared to the RMS goodwill of $101.2 million.

      This means that the origination side is a minor consideration in looking at the overall reason why all of the goodwill related to reverse mortgages was written off. Remember RMS has fallen in the GNMA issuance ranks since Walter has acquired them.

      The impact of financial assessment is partially reflected in these financial statements but there is even more to be recognized in the 2016 WIMC financial statements.

      It looks as if WIMC must dump all of their reverse mortgage business to right their boat as to losses from the reverse mortgage business.

  • This is sad news indeed. The_Cynic is onto what happened here. I was the first homegrown CD LO at S1L and saw this whole thing unfold. S1L was a great originator, but Walter’s made the terrible decision of putting RMS over S1L. Why put a failed originator in charge of running successful originator? It never made sense. And proof is in the pudding, Torrey, Tyler, Rhiannon, David, Alex, Dan and Chris K are still tops in our industry. Look at RFS’ ranking! Chris M made a valiant effort to save this thing, but he got boggled down with the servicing issues before he could turn his attention to the faltering origination side. I wonder if he truly even had an opportunity to show what could be done. I hope they sort it all out. I hate to see my Alma Mater just wither away. JL3, HECM VP, The Federal Savings Bank

    http://www.thefederalsavingsbank.com/jameslyles

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