Walter Investment to finance part of $591 million BofA asset purchase

By Lisa Kerner

Charlotte, N.C., Jan. 7 - Walter Investment Management Corp. plans to finalize financing in "the next weeks to months" to fund a portion of the $591 million purchase price of its purchase of $93 billion of unpaid principal balance of Fannie Mae-backed residential servicing assets from Bank of America Corp., executive vice president Denmar J. Dixon said during a conference call on Monday.

Included in the purchase are related advance receivables of about $1 billion.

The purchase will be funded with 10% paid at signing and with an additional 40% due at close.

Dixon said the remaining portion will be funded using cash on hand, and the advances will be financed using existing facilities on a pro rata basis in conjunction with an agreed-upon transfer schedule.

The transaction is expected to close on Jan. 31, with the bulk of the servicing transfers taking place during the first and second quarters of 2013.

According to Dixon, Walter's target leverage range over time is "about two and half times" and the company has that capacity at where it sits today.

The purchase price for the mortgage servicing rights represents a multiple of about 2.05 times the 27 basis point base contractual servicing fee of the portfolio.

The portfolio of assets acquired consists of over 650,000 loans, of which about 80% are expected to be current at transfer.

Walter chairman and chief executive officer Mark O'Brien said the transaction will make the company of the top five servicers of Fannie Mae by volume.

The acquisition of the BofA assets and Met Life Bank, NA's residential mortgage servicing platform, also announced on Monday, more than doubles the size of Walter's service book in "a financially attractive way," he said on the call.

Walter Investment is a Tampa, Fla.-based asset manager, mortgage servicer and originator.

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