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The Week Ahead: What Does Q2 Hold For Walter Investment?

Money Two BHWith Walter Investment Management Corp [1].taking a loss during Q1 and both Ocwen Financial Corp [2]. and Nationstar Mortgage Holdings [3]reporting net losses for Q2, all eyes will fall on Walter to see what their Q2 earnings report holds. A significant rate decline in the first quarter negatively impacted earnings for Walter, and as a result, the company took a net loss of $172.7 million during the three-month period, according to the company’s Q1 2016 financial results [4] released in May. The net loss represented a year-over-year decline of about $142 million in net income; in Q1 2015, Walter suffered a net loss of $31 million. Walter’s total serviced portfolio had $275.7 billion in unpaid principal balance (UPB) at the end of Q1 2016, an increase of 3 percent from the previous quarter, and the company was ranked nationally as a top 10 servicer, according to the announcement from Walter. The company’s total revenue in the first quarter declined by $244.1 million year-over-year down to $66.8 million, largely due to a $196.6 million decline in net servicing revenue and fees reflecting a $197.3 million change in fair value changes to mortgage servicing rights, according to Walter.

Likewise a similar disappointing outlook found both Ocwen and Nationstar during Q2. Financially, it has not been a good year for Ocwen. through the first six months. After reporting a net loss of $111 million for the first quarter of 2016, the nonbank servicer came back in the second quarter with a net loss of $87.2 million (71 cents per share), according to Ocwen’s Q2 earnings report released earlier this month. Following Ocwen’s reported net loss last week of $87 million for Q2, Nationstar Mortgage Holdings reported a net loss (for GAAP purposes) of $92 million [5] for the three-month period ending June 30.

Walter's Q2 earnings report will be released Tuesday, August 9.