Walter Investment Prepping for Post-HARP Market

Walter Investment Management Corp. executives expect the Home Affordable Refinance Program will be a meaningful part of its business through its recently extended 2016 deadline. But the nonbank lender and servicer is also preparing to refinance and retain loans through other channels after the program ends, said chief financial officer Gary Tillett.

The company is a "strong retention shop with or without HARP," he said.

Here are some additional highlights from Tillett's presentation at Tuesday's Keefe, Bruyette & Woods Mortgage Finance Conference in New York:

• Efforts to extend the Ditech origination brand to its Green Tree servicing arm are aimed at bolstering Walter's retention strategies.
• Walter has been working with government lending, Federal Housing Finance Agency and Conference of State Bank Supervisors officials to make sure it complies with various new capital requirement guidelines. The CSBS's proposal raises some questions for the company as to whether the regulation will apply at the holding company level, but Walter is working with officials on that during the comment period.
• Although the company is taking on more performing servicing, it will continue to also provide and specialize in distressed servicing.
• Given the cost of regulatory requirements, executives expect servicers will have to have a certain amount of scale to operate effectively.
• The company's executives expect consolidation among lenders due to excessive back-office costs, but there will also be difficulties agreeing on prices for acquisitions due to wide bid-ask spreads. Walter will consider acquisitions on an "opportunistic" basis.