Walter Investment Management Corp. in Tampa, Fla., sank into a deeper $172.7 million net loss during the first quarter, as lower interest rates caused pressure on the company's mortgage servicing rights valuation.
The net loss was 4.6 times greater than the net loss of $31 million posted a year ago. Unadjusted losses per share were $4.85, well below the 10 cent loss estimated on average by the analysts polled by Bloomberg.
The net loss for the quarter reflected the impact of the declined rate environment on valuation inputs and assumptions used in assessing the fair value of assets and liabilities. Altogether, this led to $226.6 million in charges. When taking these charges into account, the adjusted net loss for the quarter was $17.8 million after tax.
"The decline in rates drove a volatile MSR market and negatively impacted results through the revaluation of mortgage servicing rights and accelerated prepayments," Walter Investment Chief Executive and President Denmar Dixon said in a news release Tuesday. "We are moving with a sense of urgency to improve upon both the customer experience and our operating performance."
Total revenue in the servicing segment dropped to negative $63.3 million, as a result of the fair value charges to MSRs and lower interest income following the sale of residual interests in seven of the residual trusts. The servicing segment ended the quarter with $255.3 billion in unpaid principal balance. Expenses, meanwhile, remained flat, making for a $256 million loss in this segment alone.
In the originations segment, revenue dropped 23% from a year earlier to $100.3 million because of a decrease in the net gains on sales of loans. Higher origination fees helped to offset that decline however. Altogether, the segment's net income dropped 60% to $16.4 million.
The reverse mortgage segment managed to eke out a $5.2 million profit versus a $13.5 million loss a year ago. Revenue increased as a result of higher HMBS obligations and the absence of any net loss on loan sales.
Companywide, operating expenses improved to $343.4 million, 7.5% lower than a year ago. A reduction in the number of employees led to lower costs related to compensation, benefits and incentives, and lower origination volume equated to less spent on commissions. In January, Ditech
