Shares of Tampa's Walter Investment Management hit by losses, federal investigations

The Tampa mortgage company posts sharp losses amid federal and state scrutiny.
Published February 26 2015
Updated February 27 2015

TAMPA — Walter Investment Management Corp., a mortgage banking business and one of Tampa Bay's 10 largest public companies by revenue, on Thursday morning reported sharp losses for the fourth quarter and all of 2014. The company also provided more details on earlier disclosures that it was under investigation by multiple federal and state agencies.

The 6,700-employee company said in a Securities and Exchange Commission filing that it is facing "increased scrutiny and potential enforcement actions by federal and state agencies, including a pending investigation by the CFPB (Consumer Financial Protection Bureau) and the FTC (Federal Trade Commission) and a pending investigation by the Department of Justice and HUD (Department of Housing and Urban Development)."

Why? Walter states it involves "inquiries from government agencies into advertising and loan solicitation, underwriting, loan origination, securitization, collection, foreclosure, loss mitigation, bankruptcy, loan servicing transfers and insurance, including lender-placed insurance."

The company's operations include Green Tree Lending, whose loan servicing problems have attracted the attention of regulators, and a second mortgage lending unit called Ditech.

On Thursday, Walter said Green Tree would be consolidated under the Ditech name.

In a statement, Mark J. O'Brien, Walter Investment CEO, said the company has agreed to a "proposed stipulated order with the FTC and CFPB which is subject to approval by the FTC, CFPB and the court" and expects the settlement approval process may take a month or two.

"We believe the proposed settlement is in the best interest of our business and all stakeholders," O'Brien said.

Walter reported a fourth-quarter loss of $44 million, or $1.17 per share, after reporting a profit in the same period a year earlier. Wall Street had expected earnings of 64 cents per share.

For all of 2014, the company reported a loss of $110.3 million on revenue of $1.49 billion.

Walter's stock closed Thursday at $18.96 a share, down about 16 percent.

Contact Robert Trigaux at rtrigaux@tampabay.com.

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