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Non-Tech : Income Investing -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (5042)	3/20/2013 8:43:10 PM
From: E_K_S	Read Replies (1) \| Respond to of 52115

Walter Investment Management Corp. (WAC) You might want to check out WAC. I have been looking at their 2011 annual report trying to figure out this newly merged REIT. They generate a lot of their fees from servicing loans. They also have several loans they own but it's small compared to the total in the portfolio they manage. This may be a good one to own if they are not too exposed on the real estate. I do like the certainty of those servicing revenues but if they do not collect, they do not get paid. This is what they earn from their loan service business: Here is the link to their 2011 annual report. I know you study these companies, so I would like your opinion on this one. There may be some hidden gems here, especially if they acquired some of these loans at a significant discount to market. No dividends paid since 9/2011. So, WAC could be classified as a speculative investment that seems to be generating significant revenues from servicing loans. They still may have sour loans on their books and I am not sure if they have written these down, If acquired at the right "discounted" price, perhaps the lows are in. EKS

To: Elroy who wrote (5042)	3/21/2013 10:03:39 AM
From: MCsweet	Respond to of 52115

Re: NSM, HLSS, WAC, and NCT are companies in this space. These companies don't charge much for servicing, but they have massive portfolios, so they can earn good income on their portfolios. NCT is not a pure play. It is a commerical mortgage REIT that is partnered with NSM in investing in MSRs. NCT is spinning off its MSR investment side from its regular mortgage REIT side. I like the concept -- mortgage servicing rights have negative interest rate sensitivity, since servicers do better if prepays stay down, which happens when rates rise. And some of the returns on servicing are attractive. However, all these companies have massively run up, and honestly I have a hard time evaluating these companies at this time. What I do believe is that any regular mortgage REIT announcing they are moving into MSRs will likely rally, since these companies trade at a premium to regular mortgage REITs. MC