TAMPA, Fla., Dec. 20, 2012 /PRNewswire/ -- Walter Investment Management Corp. (NYSE MKT: WAC) ("Walter Investment" or the "Company") today responded to the FHA's announced moratorium on its Full-draw HECM Reverse Mortgage product.
Mark J. O'Brien, Chairman and CEO of Walter Investment said, "We had anticipated this week's announced moratorium on the Full-draw HECM Reverse Mortgage product and have already begun moving customers towards other FHA HECM products. We applaud Commissioner Galante and the FHA for taking actions to reduce risk to both the FHA and borrowers and believe these actions will, in fact, help improve and sustain what is a very important mortgage product. We believe the reverse mortgage sector remains a very attractive growth opportunity for Walter Investment."
The Company indicated that while approximately 90% of 2012 originations at its Reverse Mortgage Solutions subsidiary were in the Full-draw HECM Reverse Mortgage product, it expects to be able to redirect most of the expected demand for that product into other reverse mortgage products after the Full-draw product is discontinued. While the Company expects the transition of borrowers to the HECM Variable Rate Standard and HECM Fixed Rate and Variable Saver products will likely result in a reduction to the average size of the initial draws for these borrowers, it anticipates that the impact to Reverse Mortgage Solutions' overall origination volume will not be significant, as demand for the reverse mortgage product is largely needs-based and less driven by the product's interest features.
The Company also strongly supports other changes being considered by FHA for the program, including establishing formal guidelines for conducting financial assessments of borrowers and the creation of set-asides for the payment of taxes and insurance, which the Company believes will enhance the long-term attractiveness and viability of the reverse mortgage product.