Walter shareholders file lawsuit
Nationstar (NSM), Ocwen Financial (OCN) and Walter Investments (WAC) have all come under increased scrutiny in recent months. The nonbank service companies have been purchasing mortgage-servicing rights by the truckload and as each company grows its portfolio, critics are highlighting supposed cracks in each company’s foundation.
In February, Moody’s Investor Service cited concerns that each of the nonbank mortgage service companies will begin originating nonprime mortgages. Nationstar and Ocwen were both recent targets of Benjamin Lawsky, New York’s top banking regulator.
Now, Walter Investments has come under fire from a group of its stockholders.
A group of Walter Investment common stockholders is alleging that the company made false and misleading statements that violate Federal Securities Law.
The group filed a lawsuit which alleges that between May 9, 2012 and Feb. 26, 2014, Walter Investments made false and misleading statements, failed to disclose that the company lacked adequate internal controls over financial accounting, was in violation of applicable laws, rules and regulations and that its business practices violated consumer financial protection laws and jeopardized future revenues and profits.
In March 2013, Walter Investments disclosed a material weakness in its internal control over financial reporting found after an evaluation of its Board of Directors and management.
On Feb. 27, 2014 Walter Investment also disclosed in filing with the U.S. Securities and Exchange Commission that the Federal Trade Commission issued a “Civil Investigation Demand” to Green Tree Servicing, a wholly owned subsidiary of Walter Investments, requesting information about the company’s operations.
Walter Investment’s reported net income for 2013 totaled $253.5 million, or $6.63 per diluted share, compared to a net loss of $22.1 million, or 73 cents per diluted share for 2012