Walter Investment Management Corp. has entered into a definitive agreement to buy Reverse Mortgage Solutions (RMS) in a deal worth $120 million.
The transaction comprises $600 million of cash, $25 million of the company's stock and a $35 million seller MSR note.
Spring, Texas-based RMS offers services to the reverse mortgage sector such as servicing, loan origination, asset management and technology. RMS now services about $12 billion in
RMS and has issued roughly $1.1 billion of reverse mortgage-backed Ginnie Mae securities (HBMS) in 1H12. RMS is majority-owned by funds managed by Jacobs Asset Management.
Walter expects that the RMS acquisition will considerably increase both earnings and cash flow. RMS' puchase will position Walter Investment as a full service provider in the $140 billion reverse mortgage servicing sector.
"We are extremely pleased to add the RMS business to the Walter Investment portfolio," said
Mark O'Brien, chairman and CEO of Walter. "RMS is led by a very experienced and well-respected management team and has performed exceptionally well since its inception in 2007. RMS is viewed as a preeminent servicer and originator in the reverse mortgage industry."
He added that the sector has very attractive long-term growth potential and is now undergoing considerable structural change by providing people with a chance to capitalize on those dynamics. "We believe the combined strengths of our businesses will enhance our ability to take advantage of these opportunities, O'Brien said.