Walter Investment Management Corp. (NYSE:WAC) Files An 8-K Entry into a Material Definitive Agreement

Walter Investment Management Corp. (NYSE:WAC) Files An 8-K Entry into a Material Definitive Agreement

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Item1.01.

Entry into a Material Definitive Agreement.

On May22, 2017, Reverse Mortgage Solutions, Inc. (RMS), a wholly
owned indirect subsidiary of Walter Investment Management Corp.
(the Company) and RMS REO BRC, LLC, a wholly owned subsidiary of
RMS (the REO Subsidiary and, together with RMS, the RMS Sellers),
entered into an Amended and Restated Master Repurchase Agreement
with Barclays Bank PLC (Barclays) (the AR Warehouse Agreement)
and related Pricing Side Letter with Barclays. The Company
entered into a related Amended and Restated Guaranty
(collectively, the AR Warehouse Documents).

The AR Warehouse Agreement amends and restates in its entirety
the Master Repurchase Agreement, dated as of September29, 2015,
but effective as of October15, 2015, between the RMS Sellers,
Sutton Funding LLC (Sutton) and Barclays (as amended, restated,
supplemented or otherwise modified from time to time, the
Original Warehouse Agreement). The Original Warehouse Agreement
provided for a RMS warehouse facility which had an aggregate
committed and uncommitted capacity of $200.0million and was
scheduled to mature on May22, 2017 (the RMS Warehouse Facility).

The RMS Sellers, the Company and Barclays entered into the AR
Warehouse Documents in order to, among other things, renew the
RMS Warehouse Facility for another approximately one-year term,
increase the committed and uncommitted capacities thereunder and
replace Sutton, which was a subsidiary of Barclays, with Barclays
as the purchaser. After giving effect to the increase to the
committed and uncommitted capacity enumerated in the AR Warehouse
Documents, the RMS Warehouse Facility has an aggregate capacity
of $300.0million.

The AR Warehouse Documents generally contain affirmative and
negative covenants and representations and warranties customary
for financings of this type and requires RMS to comply with
certain financial covenants relating to liquidity, adjusted
tangible net worth and leverage.

The AR Warehouse Documents include amendments that:

reduce RMSs advance rates; and
at any time there are obligations outstanding under the AR
Warehouse Agreement, prohibit the Company from having more
than $20.0million of revolving loans and letters of credit in
the aggregate outstanding at any one time under the Companys
Amended and Restated Credit Agreement, dated as of
December19, 2013 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the AR
Credit Agreement), regardless of whether the Company would
then be permitted to access amounts in excess thereof to the
terms of the AR Credit Agreement.

The Company also agreed to similar amendments in favor of
Barclays concerning the obligations of Ditech Financial LLC, a
wholly owned indirect subsidiary of the Company (Ditech), to an
Amended and Restated Master Repurchase Agreement, dated as of
April23, 2015 (as amended, restated, supplemented or otherwise
modified from time to time), among Ditech, Sutton and Barclays.

The foregoing description of the AR Warehouse Documents does not
purport to be complete and is qualified in its entirety by
reference to the full text of the AR Warehouse Agreement, which
will be filed as an exhibit to the Companys next Quarterly Report
on Form 10-Q.

Item2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement
of a Registrant.

The description of
the AR Warehouse Documents in Item1.01 of this Current Report on
Form 8-K is incorporated in its entirety into this Item2.03 by
reference.

Item4.02.
Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review.

(a) On May26,
2017, management of the Company, after consultation with Ernst
Young LLP (EY), the Companys independent registered public
accounting firm, concluded that, due to an accounting error, as
described below, the previously issued audited consolidated
financial statements and other financial information contained in
the Companys Annual Report on Form 10-K for the fiscal year ended
December31, 2016 and the previously issued unaudited consolidated
financial statements and other financial information contained in
the Companys Quarterly Reports on Form 10-Q for the fiscal
periods ended June30, 2016, September30, 2016 and March31, 2017
(the Original Filings) should no longer be relied upon. The Audit
Committee of the Board of Directors of the Company, acting on the
recommendations of management and after consultation with EY,
also concluded that, due to such accounting error, the previously
issued audited and unaudited consolidated financial statements
and other financial information contained in the Original Filings
should no longer be relied upon. Similarly, related earnings
releases and other financial communications for these periods
should no longer be relied upon.

The Company has
become aware of an error in the calculation of the valuation
allowance on the deferred tax asset balances in the Original
Filings. The Companys methodology effectively resulted in a
duplication of the reversal of taxable temporary differences.
Accordingly, the Company is in the process of revising its
calculation to eliminate the duplication.

Although the
Company has not determined the precise amount of the adjustments
to the valuation allowance on the deferred tax asset balances
included in the Original Filings, such amounts are anticipated to
be material. The Companys net deferred tax asset balances were
$273.8million as of June30, 2016, $425.9million as of
September30, 2016, $299.9million as of December31, 2016, and
$299.6million as of March31, 2017. The impact of these
adjustments will be to materially reduce the overall net deferred
tax asset balances by increasing the valuation allowance, and
reducing the tax benefit recorded in the Companys previously
issued consolidated statements of comprehensive loss.

These adjustments
are not anticipated to have an effect on the reported net
operating cash flows of the Company for the restated periods
reflected in the Original Filings.

The Company will
work with the Audit Committee to determine the amendments
required to be made to the Original Filings to reflect the
adjustment to the valuation allowance on the deferred tax asset
balances as expeditiously as possible. Upon the completion of
this process, which could identify further adjustments in
addition to those discussed above, the Company anticipates filing
required amendments to the Original Filings with the Securities
and Exchange Commission (the SEC) as soon as practicable to
reflect the impact of the correction of the error.

The Company has
reassessed the Companys internal control over financial reporting
and disclosure controls and procedures in light of the error. The
Company has determined that a material weakness relating to the
ineffective review of the tax calculations associated with the
valuation allowance on the deferred tax asset balances existed
for the affected periods, and therefore the Companys internal
controls over financial reporting and disclosure controls and
procedures were ineffective. Further details and remediation
plans will be reflected in the amended filings.

The Audit
Committee and the Companys management have discussed the matters
disclosed in this Item4.02(a) with EY, the Companys independent
registered public accounting firm.

The need to
restate the Companys financial statements will require that the
Company seek appropriate amendments, waivers and / or
forbearances to a number of its and its subsidiaries credit and
financing arrangements, including the agreements described in
Items 1.01 and 2.03 above, and certain other agreements.

Cautionary
Statements Regarding Forward-Looking Information

This Current
Report on Form 8-K includes forward-looking statements within the
meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. Certain of
these forward-looking statements can be identified by the use of
words such as believes, expects, intends, plans, estimates,
assumes, may, should, will, seeks, targets, or other similar
expressions. Such statements may include, but are not limited to,
statements about the adjustments to the Companys valuation
allowance for the deferred tax asset balances, future financial
and operating results, any need to restate financial statements
and related matters, the Companys plans, objectives, expectations
and intentions and other statements that are not historical
facts.

Forward-looking
statements are subject to significant known and unknown risks,
uncertainties and other important factors, and our actual
results, performance or achievements could differ materially from
future results, performance or achievements expressed in these
forward-looking statements. These forward-looking statements are
based on the Companys current beliefs, intentions and
expectations and are not guarantees or indicative of future
performance, nor should any conclusions be drawn or assumptions
be made as to any potential outcome of any strategic review we
conduct. Risks and uncertainties relating to the error in the
valuation allowance for deferred tax assets include: the timing
of and definitive findings regarding the Companys assessment of
the error in its valuation allowance, including the expected
materiality of the adjustments; whether any additional accounting
errors or other issues are identified; reactions from the
Companys creditors, stockholders, or business partners; potential
delays in the preparation of restated financial statements; our
ability to remediate control deficiencies and material
weaknesses, and the timing and expense of such remediation; our
ability to successfully negotiate and obtain any necessary
waivers, amendments and / or forbearances to credit and financing
arrangements and certain other agreements; and the impact and
result of any litigation or regulatory inquiries or
investigations related to the findings of the Companys assessment
or the Companys restatement of its financial statements.
Important assumptions and other important factors that could
cause actual results to differ materially from those
forward-looking statements include, but are not limited to, those
factors, risks and uncertainties described above and in more
detail under the heading Risk Factors in the Companys annual and
quarterly reports filed with the SEC.

The above factors,
risks and uncertainties are difficult to predict, contain
uncertainties that may materially affect actual results and may
be beyond the Companys control. New factors, risks and
uncertainties emerge from time to time, and it is not possible
for management to predict all such factors, risks and
uncertainties. Although the Company believes that the assumptions
underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and
therefore any of these statements included herein may prove to be
inaccurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by
the Company or any other person that the results or conditions
described in such statements or our objectives and plans will be
achieved. The Company makes no commitment to revise or update any
forward-looking statements in order to reflect events or
circumstances after the date any such statement is made, except
as otherwise required under the federal securities laws. If the
Company were in any particular instance to update or correct a
forward-looking statement, investors and others should not
conclude that the Company would make additional updates or
corrections thereafter except as otherwise required under the
federal securities laws.


About Walter Investment Management Corp. (NYSE:WAC)

Walter Investment Management Corp. is a diversified mortgage banking firm focused primarily on the servicing and origination of residential loans, including reverse loans. The Company operates through three segments: Servicing, Originations and Reverse Mortgage. The Servicing segment consists of operations that perform servicing for third-party credit owners of mortgage loans, as well as its own mortgage loan portfolio. The Servicing segment also includes Insurance, and Loans and Residuals businesses. The Originations segment consists of operations that originate and purchase mortgage loans that are intended for sale to third parties. The Reverse Mortgage segment consists of operations which purchases and originates home equity conversion mortgage that are securitized, but remain on the consolidated balance sheet as collateral for secured borrowings.

Walter Investment Management Corp. (NYSE:WAC) Recent Trading Information

Walter Investment Management Corp. (NYSE:WAC) closed its last trading session up +0.07 at 1.41 with 154,423 shares trading hands.

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