Dear Fellow Shareholders,

In 2010, Walter Investment Management Corp. continued to post best-in-class results, while taking dramatic steps to help ensure our future growth. We finished the year on a strong note, posting 2010 income before income taxes of $38.3 million, paying quarterly dividends of $0.50 per share and generating a total return for our shareholders of 39% for the year.

And while these financial results were certainly noteworthy in a period of record foreclosures and unprecedented challenges in our industry, just as notable were several major events that we expect to be keys to building shareholder value in years to come:

  • In November, WIMC completed the purchase of Marix Servicing LLC, a Phoenix, Arizona-based specialty mortgage servicer. We expect that Marix, one of the technology leaders in the mortgage industry, will form the foundation of our high-touch asset management and servicing platform; and will allow us to pursue growth opportunities on a national basis.
  • To provide funding for growth, in November we closed a private placement of $135 million of residential mortgage-backed notes, a significant event in the market for residential mortgage assets. The completion of the securitization, one of the first of its kind in the recovery cycle for this market, was a reflection of the high regard for WIMC and our history of solid performance.
  • We took a series of actions to counter the runoff of our legacy portfolio, including the acquisition of $100 million worth of residential first-lien mortgage loans, while executing letters of intent for additional pools worth over $25 million. Our acquisition pipeline currently contains over $1.6 billion of performing residential loans that we are considering, and we continue to see opportunities for loan pools that are attractive in terms of return and risk profile.

Driving growth while taking care of everyday business in a challenging environment certainly isn't easy, and it's a tribute to our 340 employees that we were able to accomplish both short- and long-term goals in 2010. Our company has a compelling story — we are a long-established business built on personal service, leveraging technology and forward thinking to focus on the goals of growing our business and increasing shareholder value.

WIMC's high-touch approach with our less-than-prime portfolio continued to pay off significantly in 2010, even as a number of companies in our industry niche encountered problems:

  • Our portfolio performance was significantly better than that of comparable pools, with 2010 delinquencies of 4.68%. When compared to the subprime industry, based on the most recent Mortgage Banking Association survey, our delinquency rate is 42% better than the industry average.
  • Our delinquencies improved 76 basis points versus 2009, and our annual recovery rate of 85.8% was comparable to rates we achieved in 2004-2006, before the economy went into free-fall. This was accomplished by diligent attention to every late-paying account — something we pride ourselves in, day in and day out.

As WIMC grows, we know what our specialty is — servicing residential, first-mortgage, less-than-prime loans for occupied homes. Our field force, spread throughout the South, has shown the ability to handle a significant number of accounts, and the acquisition of Marix Servicing not only enhances that capability in our current footprint but allows us to expand both the size of our footprint and the scope of the services that we can provide to an ever-broadening customer base.

Looking Ahead

As we move into 2011, we cannot assume that the economic environment will improve markedly anytime soon. As long as unemployment remains an issue, we can expect foreclosures to be high and customer payment challenges to continue. In addition, government intervention into our sector threatens to impose new, more stringent regulations that may make our job tougher and more costly.

Nonetheless, we are focused on doing everything we can to continue to post strong results, while using our expanded platform and capital to look at more opportunities for growth.

Our objectives for this year can be summarized with three overarching goals:

  • Continue to post industry-leading performance as we service our existing portfolio, never taking our eye off the ball in terms of keeping delinquencies at industry-leading levels.
  • Leverage the expanded technology platform provided by the Marix acquisition to confidently expand our income streams and pursue more opportunities to grow WIMC's business.
  • At every turn, pursue ways to build shareholder value and long-term success for our company.

It is extremely gratifying to work with our leadership team and employees as we continue to find ways to succeed in this environment. If anything, we believe there is good reason to be bullish about Walter Investment Management Corp.'s future, and look forward to more success in 2011.

Mark J. O'Brien
Chairman and Chief Executive Officer
March 22, 2011

WIMC OUTPERFORMS THE INDUSTRY

DELINQUENCIES AS COMPARED TO OTHER PORTFOLIOS

WIMC Outperforms the Industry

1.Delinquencies are derived from a voluntary survey by the Mortgage Bankers Association (MBA) of over 120 mortgage lenders, including mortgage banks, commercial banks, thrifts, savings and loan associations, subservicers, and life insurance companies. Delinquency rate is derived by combining the MBA delinquency rate for subprime loans plus subprime foreclosure starts. MBA delinquency rate considers all accounts in bankruptcy to be delinquent. Source: Mortgage Bankers Association.

2. WIMC (industry method) calculation consider all accounts in bankruptcy to be delinquent. WIMC (internal) calculation ages accounts in bankruptcy based upon payment status in accordance with their bankruptcy plan.