UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, DC
    20549
  Form 10-K
   þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-13417
 Walter Investment Management
    Corp.
 (Exact name of registrant as
    specified in its charter)
  Maryland

13-3950486(State or other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)3000 Bayport Drive, Suite 1100
    Tampa, FL(Address of principal
    executive offices)

33607(Zip
    Code)   (813) 421-7600
  (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Exchange on Which RegisteredCommon Stock, $0.01 Par Value per Share

NYSE Amex   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      Documents
    Incorporated by Reference




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WALTER
    INVESTMENT
    MANAGEMENT CORP.FORM 10-K
    ANNUAL
    REPORT
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
    INDEX
  PART IItem 1.


Business


5Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


36Item 2.


Properties


36Item 3.


Legal Proceedings


36Item 4.


Reserved


37PART IIItem 5.


Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities


37Item 6.


Selected Financial Data


39Item 7.


Managements Discussion and Analysis of Financial Condition
    and Results of Operations


40Item 7A.


Quantitative and Qualitative Disclosure about Market Risk


58Item 8.


Financial Statements and Supplementary Data


61Item 9.


Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure


61Item 9A.


Controls and Procedures


61Item 9B.


Other Information


64PART IIIItem 10.


Directors, Executive Officers and Corporate Governance


64Item 11.


Executive Compensation


64Item 12.


Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters


64Item 13.


Certain Relationships and Related Transactions, and Director
    Independence


64Item 14.


Principal Accounting Fees and Services Disclosure of Fees
    Charged by Principal Accountants


64PART IVItem 15.


Exhibits and Financial Statement Schedules


64Signatures


65  2




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Safe
    Harbor Statement Under the Private Securities Litigation Reform
    Act of 1995
  Form 10-K. Form 10-K
    
    local, regional, national and global economic trends and
    developments in general, and local, regional and national real
    estate and residential mortgage market trends and developments
    in particular;
    the effects of a continued decline in the volume of
    U.S. home sales and home prices, due to adverse economic
    changes or otherwise;
    our ability to raise capital to make suitable investments to
    expand our business;
    the availability of suitable investments for any capital that we
    are able to raise and risks associated with any such investments
    we may pursue;
    risks associated with expanding our business outside of our
    current geographic footprint
    and/or
    expanding the scope of our business to include activities not
    currently undertaken by our business;
    limitations imposed on our business due to our real estate
    investment trust, or REIT, status;
    our continued qualification as a REIT for federal income tax
    purpose or our Board of Directors determination that it is
    no longer in the best interests of the Company to continue to be
    qualified as a REIT;
    financing sources and availability, and future interest expense;
    our ability to qualify and remain qualified as a
    government-sponsored entity-approved servicer or component
    servicer, including the ability to continue to comply with the
    government-sponsored entities respective servicing guides,
    including any changes caused by the Dodd-Frank Wall Street
    Reform and Consumer Protection Act;
    the effects of any changes to the servicing compensation
    structure for mortgage servicers pursuant to the programs of
    government-sponsored entities;
    fluctuations in interest rates and levels of mortgage
    prepayments;
    the effects of competition on our existing and potential future
    business, including the impact of competitors with greater
    financial resources and broader scopes of operation;
    natural disasters and adverse weather conditions, especially to
    the extent they result in material payouts under insurance
    policies placed with our captive insurance subsidiary; 3




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
    changes in federal, state and local policies, laws and
    regulations affecting our business, including mortgage financing
    or servicing, changes to licensing requirements,
    and/or the
    rights and obligations of property owners, mortgagees and
    tenants; changes caused by the Dodd-Frank Wall Street Reform and
    Consumer Protection Act, the status of government-sponsored
    entities and state, federal and foreign tax laws and accounting
    standards;
    the effectiveness of risk management strategies;
    unexpected losses resulting from pending, threatened or
    unforeseen litigation or other third party claims against us;
    the ability or willingness of Walter Energy, Inc. and other
    counterparties to satisfy material obligations under agreements
    with us;
    our continued listing on the NYSE Amex;
    uninsured losses or losses in excess of insurance limits and the
    availability of adequate insurance coverage at reasonable costs;
    the integration of Marix Servicing, L.L.C., or Marix, into our
    business, and the realization of anticipated synergies, cost
    savings and growth opportunities from the acquisition;
    the ability to maintain our relationships with our existing
    clients, particularly those of Marix following our acquisition
    of that business, and to establish relationships with new
    clients;
    future performance generally; and
    other presently unidentified factors.   4




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PART I  ITEM 1.
    BUSINESS  Our
    Company
  less-than-prime,
  Form 10-K, face-to-face
         5




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Our
    Strategy
  sub-performing
 6




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sub-performing
    debt-to-equity
    Regulation
    over-the-counter
 7




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Trade
    Names, Trademarks and Copyrights
    Competition
  and/or
  Employees
    Available
    Information
  www.walterinvestment.com Form 10-K, Form 10-Q, Form 8-K, Form 10-K.
  (813) 421-7694.
 8




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ITEM 1A.
    RISK
    FACTORS  You should carefully review and consider the risks described
    below. If any of the risks described below should occur, our
    business, prospects, financial condition, cash flows, liquidity,
    results of operations, and our ability to make cash
    distributions to our stockholders could be materially and
    adversely affected. In that case, the trading price of our
    common stock could decline and you may lose some or all of your
    investment in our common stock. The risks and uncertainties
    described below are not the only risks that may have a material
    adverse effect on us. Additional risks and uncertainties of
    which we are currently unaware, or that we currently deem to be
    immaterial, also may become important factors that adversely
    impact us. Further, to the extent that any of the information
    contained in this Annual Report on
    Form 10-K
    constitutes forward-looking information, the risk factors set
    forth below are cautionary statements identifying important
    factors that could cause our actual results for various
    financial reporting periods to differ materially from those
    expressed in any forward-looking statements made by or on behalf
    of us.
  Risks
    Related to Our Industry
  The
    business in which we engage is complex and heavily regulated,
    and changes in the regulatory environment affecting our
    business, including the enactment of the Federal Dodd-Frank Act,
    or Dodd Frank, could have a material adverse effect on our
    business, financial position, results of operations or cash
    flows.
     9




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The
    enactment of the Dodd-Frank Act has impacted our business and
    may continue to do so in ways that we cannot predict until such
    time as rules and regulations related thereto are
    enacted.
        We may
    be subject to liability for potential violations of predatory
    lending and/or servicing laws, which could adversely impact our
    results of operations, financial condition and
    business.
   10




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The
    expanding body of federal, state and local regulations and/or
    the licensing of loan servicing, collections or other aspects of
    our business, may increase the cost of compliance and the risks
    of noncompliance.
        The
    Financial Reform Plan could have an adverse effect on our
    operations.
   11




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,
  Difficult
    conditions in the mortgage and real estate markets, financial
    markets and the economy generally may cause us to incur losses
    on our portfolio or otherwise to be unsuccessful in our business
    strategies. A prolonged economic slowdown, recession, period of
    declining real estate values or sustained high unemployment
    could materially and adversely affect us.
      Continued
    weakness in the mortgage and residential real estate markets may
    hinder our ability to acquire assets and implement our growth
    plans and could negatively affect our results of operations and
    financial condition, including causing credit and market value
    losses related to our holdings that could cause us to take
    charges and/or add to our allowance for loan losses in amounts
    that may be material.
    less-than-prime
 12




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Risks
    Related to Our Business
  We may
    not be successful in achieving our growth
    objectives.
    We
    cannot assure you that we will be successful in identifying and
    consummating sufficient investments in residential loans on
    attractive terms, or at all to sustain or grow our portfolio
    business.
    Failure
    to procure adequate capital and funding on favorable terms, or
    at all, would adversely affect our results and may, in turn,
    negatively affect the market price of shares of our common stock
    and our ability to distribute dividends to
    stockholders.
  and/or
 13




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
    general market conditions;
    the markets perception of our business and growth
    potential;
    our current and potential future earnings and cash distributions;
    the market price of the shares of our common stock; and
    the markets view of the quality of our assets.      There
    may be risks associated with the growth of our business,
    including risks that third parties with which we contract may
    not perform as expected.
    We may
    not realize the growth opportunities expected from our
    acquisition and the integration of Marixs business with
    our business could prove difficult.
   14




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The
    industry in which we operate is highly competitive and, to the
    extent we fail to meet these competitive challenges, it would
    have a material adverse effect on our business, financial
    position, results of operations or cash flows.
    We may
    leverage our investments, which may adversely affect our return
    on our investments and may reduce cash available for
    distribution to stockholders.
  debt-to-equity
   15




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Certain
    of our existing financing facilities contain covenants that
    restrict our operations and may inhibit our ability to grow our
    business and increase revenues.
     16




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The
    repurchase agreements, warehouse facilities, credit facilities
    (including term loans and revolving facilities), structured
    financing arrangements, securitizations, term CMOs and other
    forms of term debt, in addition to transaction or asset-specific
    financing arrangements that we may use to finance our
    investments, may contain restrictions, covenants, and
    representations and warranties that restrict our operations or
    may require us to provide additional collateral and may restrict
    us from leveraging our assets as fully as desired.
      Our
    current and possible future use of term CMO and securitization
    financings with over-collateralization requirements may have a
    negative impact on our cash flow.
   17




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Our
    existing securitization trusts contain servicer triggers that,
    if exceeded, could result in a significant reduction in cash
    flows to us.
  2006-1, Trust 2006-1, Trust 2006-1 Trust 2006-1
    Our
    failure to effectively service our portfolio of residential
    loans would materially and adversely affect us.
  and/or
  Residential
    loans are subject to risks, including borrower defaults or
    bankruptcies, special hazard losses, declines in real estate
    values, delinquencies and fraud.
   18




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The
    lack of liquidity in our portfolio may adversely affect our
    business.
    We are
    highly dependent on information systems and third parties, and
    systems failures could significantly disrupt our business, which
    may, in turn, negatively affect the market price of our common
    stock and our ability to pay dividends to
    stockholders.
    Economic
    conditions in Texas, Louisiana, Mississippi, Alabama and Florida
    may have a material impact on our profitability because we
    conduct a significant portion of our business in these
    markets.
    Natural
    disasters and adverse weather conditions could disrupt our
    business and adversely affect our results of operations,
    including those of our insurance business.
   19




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and/or
  If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately determine our financial results or
    prevent fraud. As a result, our stockholders could lose
    confidence in our financial results, which could harm our
    business and the market value of our common
    shares.
    We
    utilize, and will continue to utilize, analytical models and
    data in connection with the valuation of our future investments,
    and any incorrect, misleading or incomplete information used in
    connection therewith may subject us to potential
    risks.
    Our
    success will depend, in part, on our ability to attract and
    retain qualified personnel.
   20




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While
    we expand our business, we may not be successful in conveying
    the knowledge of our long-serving personnel to newly hired
    personnel and retaining our internal culture.
    We may
    change our investment and operational policies without
    stockholder consent, which may adversely affect the market value
    of our common stock and our ability to make distributions to our
    stockholders.
    We may
    be required to report taxable income from certain investments
    earlier then and possibly in excess of our realization of the
    economic income ultimately provided from them.
           21




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Risks
    Related To Our Investments
  We
    invest in
    less-than-prime,
    non-conforming and other credit-challenged residential loans,
    which are subject to increased risks relative to prime
    loans.
  less-than-prime sub-performing sub-performing sub-performing and/or
  sub-performing and/or
       22




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We may
    not realize expected income from our portfolio.
    Increases
    in interest rates could negatively affect the value of our
    portfolio, which could result in reduced earnings or losses and
    negatively affect the cash available for distribution to
    stockholders.
    Accounting
    rules for certain of our transactions continue to evolve, are
    highly complex, and involve significant judgments and
    assumptions. Changes in accounting interpretations or
    assumptions could impact our financial statements.
    A
    prolonged economic slowdown, a recession or declining real
    estate values could impair our portfolio and harm our operating
    results.
    Failure
    to hedge effectively against interest rate changes may adversely
    affect results of operations.
    
    interest rate hedging can be expensive, particularly during
    periods of rising and volatile interest rates;
    available interest rate hedges may not correspond directly with
    the interest rate risk for which protection is sought;
    the duration of the hedge may not match the duration of the
    related liability;
    the amount of income that a REIT may earn from non-qualified
    hedging transactions (other than through TRSs) to offset
    interest rate losses is limited by U.S. federal tax
    provisions governing REITs; 23




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
    the credit quality of the party owing money on the hedge may be
    downgraded to such an extent that it impairs our ability to sell
    or assign our side of the hedging transaction;
    the party owing money in the hedging transaction may default on
    its obligation to pay; and
    a court could rule that such an agreement is not legally
    enforceable.    Changes
    in prepayment rates could negatively affect the value of our
    residential loan portfolio, which could result in reduced
    earnings or losses and negatively affect the cash available for
    distribution to stockholders.
    faster-than-expected faster-than-expected faster-than-expected
  A
    decrease in prepayment rates may adversely affect our
    profitability.
  lower-than-expected
  The
    residential loans we invest in are subject to delinquency,
    foreclosure and loss, which could result in losses to
    us.
  debtor-in-possession
 24




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Our
    real estate investments are subject to risks particular to real
    property.
    
    acts of God, including earthquakes, floods and other natural
    disasters, which may result in uninsured losses;
    acts of war or terrorism, including the consequences of
    terrorist attacks, such as those that occurred on
    September 11, 2001;
    adverse changes in national and local economic and market
    conditions;
    changes in governmental laws and regulations, fiscal policies
    and zoning ordinances and the related costs of compliance with
    laws and regulations, fiscal policies and ordinances;
    costs of remediation and liabilities associated with
    environmental conditions such as indoor mold;
    condemnation; and
    the potential for uninsured or under-insured property losses.    Insurance
    on residential loans and their collateral may not cover all
    losses.
    We may
    be exposed to environmental liabilities with respect to
    properties to which we take title, which may in turn decrease
    the value of the underlying properties.
  clean-up
 25




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Risks
    Related To Our Common Stock and Funds We Raise for
    Investment
  We may
    allocate the net proceeds from our recent bond offering and in
    other future capital raises to investments with which you may
    not agree.
    There
    is a risk that you may not receive distributions or that
    distributions may not grow over time.
  Form 10-K.
  
    the profitability of the investment of the net proceeds of our
    secondary offering;
    our ability to make profitable investments;
    defaults in our asset portfolio or decreases in the value of our
    portfolio; and
    the fact that anticipated operating expense levels may not prove
    accurate, as actual results may vary from estimates.  year-to-year
  Market
    interest rates may have an effect on the trading value of our
    shares.
    Investing
    in our shares may involve a high degree of risk.
   26




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Broad
    market fluctuations could negatively impact the market price of
    our common stock.
    Our
    existing portfolio of residential loans was primarily purchased
    from and originated by Walter Energys homebuilding
    affiliate, JWH, and we may not be successful in identifying and
    consummating suitable investment opportunities independent of
    this origination platform, which may impede our growth and
    negatively affect our results of operations.
    Risks
    Related to Our Organization and Structure
  Certain
    provisions of Maryland law could inhibit a change in our
    control.
     27




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Our
    authorized but unissued shares of common and preferred stock may
    prevent a change in our control.
    Your
    investment return may be reduced if we are required to register
    as an investment company under the Investment Company Act of
    1940. In seeking to qualify for an exemption from registration
    under the Investment Company Act, our ability to make certain
    investments will be limited, which also may reduce our
    returns.
    
    limitations on capital structure;
    restrictions on specified investments;
    prohibitions on transactions with affiliates; and
    compliance with reporting, record keeping, voting, proxy
    disclosure and other rules and regulations that would
    significantly increase our operating expenses   28




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Rapid
    changes in the values of our residential loans and other real
    estate-related assets may make it more difficult for us to
    maintain our qualification as a REIT or exclusion from the
    Investment Company Act.
  and/or and/or
  Our
    Board of Directors may revoke or terminate our REIT election
    which would result in the elimination of our REIT requirement to
    distribute substantially all of our net taxable income to our
    stockholders.
    Tax
    Risks
  Summary
    of U.S. federal income tax risks.
  Form 10-K
  Complying
    with REIT requirements may cause us to forego otherwise
    attractive opportunities.
    Complying
    with REIT requirements may force us to liquidate otherwise
    attractive investments.
   29




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Failure
    to qualify as a REIT, or if we elect to forego REIT status,
    would subject us to U.S. federal income tax and applicable state
    and local taxes, which would reduce the cash available for
    distribution to our stockholders.
      Classification
    of a securitization or financing arrangement we enter into as a
    taxable mortgage pool could subject us or certain of our
    stockholders to increased taxation.
    
    not be allowed to be offset by a stockholders net
    operating losses;
    be subject to a tax as unrelated business income if a
    stockholder were a tax-exempt stockholder and not a disqualified
    organization as discussed below; 30




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
    be subject to the application of U.S. federal income tax
    withholding at the maximum rate (without reduction for any
    otherwise applicable income tax treaty) with respect to amounts
    allocable to foreign stockholders; and
    be taxable (at the highest corporate tax rate) to us rather than
    to you, to the extent the excess inclusion income relates to
    stock held by disqualified organizations (generally, tax-exempt
    organizations not subject to tax on unrelated business income,
    including governmental organizations).  REIT
    distribution requirements could adversely affect our ability to
    execute our business plan and may require us to incur debt or
    sell assets to make such distributions.
    debt-for-debt
    The
    tax on prohibited transactions will limit our ability to engage
    in transactions, including certain methods of securitizing
    residential loans, that would be treated as sales for U.S.
    federal income tax purposes.
   31




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We may
    be required to report taxable income for certain investments in
    excess of the economic income we ultimately realize from
    them.
        Even
    if we qualify as a REIT, we may face tax liabilities that reduce
    our cash flow.
    The
    failure of mortgage loans subject to a repurchase agreement to
    qualify as a real estate asset would adversely affect our
    ability to qualify as a REIT.
   32




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We may
    choose to make distributions in our own stock, in which case you
    may be required to pay income taxes in excess of the cash
    dividends you receive.
  2010-12, non-U.S. holders,
  2010-12
  The
    percentage of our assets represented by TRSs and the amount of
    our income that we can receive in the form of TRS dividends are
    subject to statutory limitations that could jeopardize our REIT
    qualification.
     33




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Despite
    our qualification as a REIT, a significant portion of our income
    may be earned through TRSs that are subject to U.S. federal
    income taxation.
    Complying
    with REIT requirements may limit our ability to hedge
    effectively.
    We may
    be subject to adverse legislative or regulatory tax changes that
    could reduce the market price of our common stock.
    Dividends
    payable by REITs do not qualify for reduced tax rates available
    for some dividends.
   34




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There
    are uncertainties relating to the estimate of our special
    E&P distribution, which could result in our
    disqualification as a REIT.
    Risks
    Relating to Our Relationship with Walter Energy
  We may
    have substantial additional liability for U.S. federal income
    tax allegedly owed by Walter Energy.
      30-Day
   35




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The
    tax separation agreement between us and Walter Energy allocates
    to us certain tax risks associated with the spin-off of the
    financing division and the Merger and imposes other obligations
    that may affect our business.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS      Casa Linda Homes, et al. v. Walter Mortgage
    Company, et al. No. C-2918-08-H,
 36




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ITEM 4.
    RESERVED PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES      2010

2009High

Low

High

LowFirst Quarter

$
16.81


$
13.56


$
11.50


$
5.50Second Quarter


18.99



15.00



14.15



5.90Third Quarter


18.00



15.58



18.13



13.01Fourth Quarter


18.44



16.51



16.23



11.83     Cash DividendsDeclared per Share2010First Quarter ended March 31, 2010

$
0.00Second Quarter ended June 30, 2010


0.50Third Quarter ended September 30, 2010


0.50Fourth Quarter ended December 31, 2010


1.002009First Quarter ended March 31, 2009

$
0.00Second Quarter ended June 30, 2009


0.00Third Quarter ended September 30, 2009


0.50Fourth Quarter ended December 31, 2009


1.00  37




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2010 Total

2010

2010Declaration

Ex-Dividend

Record

Payable

Distribution

Ordinary

Long-TermDate

Date

Date

Date

per Share

Income

Capital Gain4/30/2010


5/12/2010



5/14/2010



5/28/2010


$
0.50


$
0.457


$
0.0438/3/2010


8/11/2010



8/13/2010



8/27/2010



0.50



0.457



0.04311/2/2010


11/9/2010



11/12/2010



11/24/2010



0.50



0.457



0.04312/10/2010


12/21/2010



12/23/2010



1/14/2011



0.50



0.457



0.043      38




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ITEM 6.
    SELECTED
    FINANCIAL DATA      Years Ended December 31,2010


2009


2008


2007


2006(In thousands, except share and per share data)Total net interest income

$
83,477


$
85,646


$
71,967


$
80,889


$
82,508Less: Provision for loan losses


6,526



9,441



13,103



8,226



4,253Total net interest income after provision for loan losses


76,951



76,205



58,864



72,663



78,255Total non-interest income


14,729



12,970



9,653



10,648



10,656Total non-interest expenses


53,335



51,557



62,981



44,518



43,162Income before income taxes


38,345



37,618



5,536



38,793



45,749Income tax expense (benefit)


1,277



(76,161
)


3,099



14,530



17,261Net income

$
37,068


$
113,779
(1)

$
2,437
(2)

$
24,263


$
28,488Basic income per common and common equivalent share

$
1.38


$
5.26


$
0.12


$
1.22


$
1.43Weighted average common and common equivalent shares
    outstanding  basic(3)


26,431,853



21,496,369



19,871,205



19,871,205



19,871,205Diluted income per common and common equivalent share

$
1.38


$
5.25


$
0.12


$
1.22


$
1.43Weighted average common and common equivalent shares
    outstanding  diluted(3)


26,521,311



21,564,621



19,871,205



19,871,205



19,871,205Cash dividends declared per common and common equivalent share

$
2.00


$
1.50


$
0.00


$
0.00


$
0.00Residential loans

$
1,621,485


$
1,644,346


$
1,771,675


$
1,829,607


$
1,775,463Total assets

$
1,895,490


$
1,887,674


$
1,898,841


$
1,977,358


$
1,937,213Total mortgage-backed debt

$
1,281,555


$
1,267,454


$
1,372,821
(4)

$
1,706,218


$
1,736,706Equity

$
555,488


$
568,184


$
411,477


$
136,401


$
70,053     (1)
    
    During the year ended December 31, 2009, the Company
    recorded $2.1 million of spin-off and merger-related
    charges, as well as a $77.1 million tax benefit largely due
    to the reversal of $82.1 million in mortgage-related
    deferred tax liabilities that were no longer applicable as a
    result of the Companys REIT qualification.(2)
    
    During the year ended December 31, 2008, the Company
    recorded a $17.0 million interest rate hedge
    ineffectiveness charge, a $12.3 million goodwill impairment
    charge and a $3.9 million provision for estimated hurricane
    insurance losses.(3)
    
    In accordance with the accounting standards on earnings per
    share, the basic and diluted earnings per share amounts have
    been adjusted for the years ended December 31, 2010 and
    2009 to include outstanding unvested restricted stock and
    restricted stock units in the basic weighted average shares
    outstanding calculation. The 39




---



##### 



basic and diluted earnings per share amounts for the years ended
    December 31, 2008, 2007, and 2006 were not adjusted
    retrospectively as these amounts reflect the shares issued on
    April 17, 2009, the date of the spin-off from Walter Energy.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K.
  Our
    Company
    Form 10-K, face-to-face
  2004-1 Trust 2004-1, 2005-1 Trust 2005-1, 2006-1 Trust 2006-1, Trust 2010-1, Trust 2010-1. Trust 2010-1
 40




---



##### 



Trust 2006-1 Trust 2005-1 Trust 2006-1 Trust 2005-1
  sub-performing
  Business
    Separation and Merger
     41




---



##### 




    Walter Energy distributed 100% of its interest in WIM to holders
    of Walter Energys common stock;
    All intercompany balances between WIM and Walter Energy were
    settled with the net balance recorded as a dividend to Walter
    Energy;
    In accordance with the Tax Separation Agreement, Walter Energy
    will, in general, be responsible for any and all taxes reported
    on any joint return through the date of the separation, which
    may also include WIM for periods prior to the separation. WIM
    will be responsible for any and all taxes reported on any WIM
    separate tax return and on any consolidated returns for Walter
    Investment subsequent to the separation;
    Walter Energys share-based awards held by WIM employees
    were converted to equivalent share-based awards of Walter
    Investment, with the number of shares and the exercise price
    being equitably adjusted to preserve the intrinsic value. The
    conversion was accounted for as a modification under the
    provisions of the guidance concerning stock compensation.    Acquisition
    of Marix
        Basis of
    Presentation
   42




---



##### 



Critical
    Accounting Policies
    Residential
    Loans and Revenue Recognition
       43




---



##### 



Allowance
    for Loan Losses on Residential Loans
    case-by-case
 44




---



##### 



Real
    Estate Owned
   45




---



##### 



Results
    of Operations
  2010
    Summary Results of Operations
  Revenue
    by Portfolio Type
    For the Year EndedDecember 31,


Increase/2010


2009


(Decrease)Net interest income:Interest income

$
166,188


$
175,372


$
(9,184
)Less: Interest expense


82,711



89,726



(7,015
)Net interest income


83,477



85,646



(2,169
)Less: Provision for loan losses


6,526



9,441



(2,915
)Net interest income after provision for loan losses


76,951



76,205



746Non-interest incomePremium revenue


9,163



10,041



(878
)Servicing revenue and fees


2,267







2,267Other income, net


3,299



2,929



370Total


14,729



12,970



1,759Total revenues, net


91,680



89,175



2,505Total non-interest expenses


53,335



51,557



1,778Income before income taxes


38,345



37,618



727Income tax expense (benefit)


1,277



(76,161
)


(77,438
)Net income

$
37,068


$
113,779


$
(76,711
)   Net
    Interest Income
      For the Twelve Months Ended December 31,2010

2009Average





AverageBalance

Interest

Yield

Balance

Interest

YieldInterest-bearing assetsResidential Loans

$
1,649,700


$
166,188



10.07
%

$
1,726,326


$
175,372



10.16
%Interest-bearing liabilitiesMortgage-backed debt

$
1,274,505


$
82,711



6.49
%

$
1,320,138


$
89,726



6.80
%Net interest spread(1)





$
83,477



3.58
%





$
85,646



3.36
%Net interest margin(2)










5.06
%










4.96
%  46




---



##### 



(1)
    
    Net interest spread is calculated by subtracting the weighted
    average yield on interest-bearing liabilities from the weighted
    average yield on interest-earning assets.(2)
    
    Net interest margin is calculated by dividing the net interest
    spread by total average interest-earning assets.  Net
    Interest Spread
    Net
    Interest Margin
    Provision
    for Loan Losses
    Non-Interest
    Income
    Non-Interest
    Expenses
    Income
    Taxes
   47




---



##### 



2009
    Summary Results of Operations
  Revenue
    by Portfolio Type
    For the Year EndedDecember 31,


Increase/2009


2008


(Decrease)Residential loansInterest income

$
175,372


$
191,063


$
(15,691
)Less: Interest expense


89,726



102,115



(12,389
)Less: Interest rate hedge ineffectiveness






16,981



(16,981
)Net interest income


85,646



71,967



13,679Less: Provision for loan losses


9,441



13,103



(3,662
)Net interest income after provision for loan losses


76,205



58,864



17,341Non-interest incomePremium revenue


10,041



9,233



808Other income, net


2,929



420



2,509Total


12,970



9,653



3,317Total revenues, net


89,175



68,517



20,658Total non-interest expenses


51,557



62,981



(11,424
)Income before income taxes


37,618



5,536



32,082Income tax expense (benefit)


(76,161
)


3,099



(79,260
)Net income

$
113,779


$
2,437


$
111,342     For the Twelve Months Ended December 31,2009


2008Average








AverageBalance


Interest


Yield


Balance


Interest


YieldInterest-bearing assetsResidential Loans

$
1,726,326


$
175,372



10.16
%

$
1,817,122


$
191,063



10.51
%Interest-bearing liabilitiesMortgage-backed debt

$
1,320,138


$
89,726



6.80
%

$
1,539,520


$
102,115



6.63
%Net interest spread(1)





$
85,646



3.36
%





$
88,948



3.88
%Net interest margin(2)










4.96
%










4.89
%     (1)
    
    Net interest spread is calculated by subtracting the weighted
    average yield on interest-bearing liabilities from the weighted
    average yield on interest-earning assets.(2)
    
    Net interest margin is calculated by dividing the net interest
    spread by total average interest-earning assets. 48




---



##### 



Net
    Interest Spread
    Net
    Interest Margin
    Provision
    for Loan Losses
    Non-Interest
    Income
    Non-Interest
    Expenses
    Income
    Taxes
   49




---



##### 



Additional
    Analysis of Residential Loan Portfolio
    Net Losses and

Net Losses andCharge-offs

Charge-offs as a %Allowance

Allowance as a % of

Deducted from the

of Averagefor Loan Losses

Residential Loans(1)

Allowance(3)

Residential Loans(2)(In thousands)December 31, 2010

$
15,907



0.97
%

$
14,799



0.90
%December 31, 2009

$
17,661



1.06
%

$
16,490



0.96
%December 31, 2008

$
18,969



1.06
%

$
15,991



0.88
%     (1)
    
    The allowance for loan loss ratio is calculated as period end
    allowance for loan losses divided by period end residential
    loans before the allowance for loan losses.(2)
    
    The charge-off ratio is calculated as charge-offs, net of
    recoveries divided by average residential loans, before the
    allowance for loan losses.(3)
    
    Managements calculation of the charge-off ratio
    incorporates an economic view which considers all costs through
    disposition of the REO property as a charge-off.    For the Year Ended December 31,2010


2009


2008Balance, December 31

$
17,661


$
18,969


$
13,992Provision charged to income


6,526



9,441



13,103Less: Transfers to REO


(5,218
)


(7,645
)


(5,759
)Less: Charge-offs, net of recoveries


(3,062
)


(3,104
)


(2,367
)Balance, December 31

$
15,907


$
17,661


$
18,969   Delinquency
    Information
    December 31,


December 31,2010


2009Total number of residential loans outstanding


33,801



34,205Delinquencies as a percent of number of residential loans
    outstanding:31-60 days


1.12
%


1.15
%61-90 days


0.39
%


0.58
%91 days or more


1.99
%


2.51
%3.50
%


4.24
%Principal balance of residential loans outstanding (in thousands)

$
1,803,758


$
1,819,859Delinquencies as a percent of amounts outstanding31-60 days


1.54
%


1.33
%61-90 days


0.49
%


0.74
%91 days or more


2.65
%


3.37
%4.68
%


5.44
%    50




---



##### 



December 31,

December 31,2010

2009Residential loansNumber of loans


672



860Unpaid principal balance (in millions)

$
47.8


$
61.2   Portfolio
    Characteristics
  loan-to-value,
  December 31,


December 31,2010


20090.00  70.00


2.03
%


1.55
%70.01  80.00


4.14
%


2.92
%80.01  90.00(1)


65.82
%


70.19
%90.01  100.00


28.01
%


25.34
%Total


100.00
%


100.00
%     (1)
    
    For those residential loans in the portfolio prior to electronic
    tracking of original LTVs, the maximum LTV was 90%, or 10%
    equity. Thus, these residential loans have been included in the
    80.01 to 90.00 LTV category.        December 31,


December 31,2010


2009<=600


55.11
%


56.49
%601  640


13.71
%


13.39
%641  680


9.25
%


8.44
%681  720


4.86
%


4.91
%721  760


2.77
%


2.83
%761  800


2.37
%


2.37
%>800


0.96
%


0.96
%Unknown or unavailable


10.97
%


10.61
%100.00
%


100.00
%  51




---



##### 



December 31,


December 31,2010


2009Texas


34.62
%


33.90
%Mississippi


14.67
%


15.45
%Alabama


8.23
%


8.70
%Louisiana


6.24
%


6.52
%Florida


6.78
%


6.08
%South Carolina


5.64
%


6.00
%Others


23.82
%


23.35
%Total


100.00
%


100.00
%     December 31,


December 31,2010


2009Year 2010 Origination


4.07
%


Year 2009 Origination


3.39
%


3.28
%Year 2008 Origination


8.42
%


7.48
%Year 2007 Origination


14.25
%


12.99
%Year 2006 Origination


10.93
%


11.86
%Year 2005 Origination


7.69
%


8.56
%Year 2004 Origination and earlier


51.25
%


55.83
%Total


100.00
%


100.00
%   Real
    Estate Owned
    Units


BalanceBalance as of December 31, 2007


660


$
36,407Foreclosures and other additions, at fair value


1,176



67,055Financed Sales


(800
)


(40,683
)Cash sales to third parties and other dispositions


(212
)


(12,203
)Fair value adjustment






(2,378
)Balance as of December 31, 2008


824


$
48,198Foreclosures and other additions, at fair value


1,393



79,879Financed Sales


(1,012
)


(52,472
)Cash sales to third parties and other dispositions


(174
)


(11,263
)Fair value adjustment






(1,218
)Balance as of December 31, 2009


1,031


$
63,124Foreclosures and other additions, at fair value


1,329



80,675Financed Sales


(1,210
)


(68,334
)Cash sales to third parties and other dispositions


(109
)


(7,007
)Fair value adjustment






(829
)Balance as of December 31, 2010


1,041


$
67,629  52




---



##### 



Liquidity
    and Capital Resources
  Overview
    over-collateralization
  Trust 2006-1 Trust 2005-1 Trust 2006-1 Trust 2005-1
    Mortgage-Backed
    Debt and Warehouse Facilities
   53




---



##### 



and/or
  Credit
    Agreements
      Statements
    of Cash Flows
    For the Year EndedDecember 31,2010


2009Cash flows provided by operating activities

$
21,891


$
18,962Cash flows provided by investing activities


32,566



123,369Cash flows used in financing activities


(39,391
)


(44,364
)Net increase in cash and cash equivalents

$
15,066


$
97,967         year-over-year
 54




---



##### 



For the Year EndedDecember 31,2009


2008Cash flows provided by operating activities

$
18,962


$
(6,436
)Cash flows provided by investing activities


123,369



179,768Cash flows used in financing activities


(44,364
)


(175,135
)Net increase (decrease) in cash and cash equivalents

$
97,967


$
(1,803
)           Sources
    and Uses of Cash
  Form 10-K,
 55




---



##### 



Year EndedDecember 31,2010


2009Beginning cash and cash equivalents balance

$
99.3


$
1.3Principal sources of cash:Cash collections from the unencumbered portfolio


47.5



54.7Cash releases from the securitized portfolio


44.7



32.1Cash flow from ancillary business revenue


12.3



14.6104.5



101.4Other sources of cash:Proceeds from securitization, net


131.2



Proceeds from equity offering, net






76.8Walter Energy






10.6Sale of trading securities






2.4Other






0.9Total sources of cash


235.7



192.1Principal uses of cash:Claims paid


(3.6
)


(3.8
)Operating expenses paid


(41.6
)


(45.4
)Servicing advances, net


(7.3
)


(3.1
)(52.5
)


(52.3
)Other uses of cash:Whole loan purchases


(73.7
)


Dividends paid


(53.5
)


(39.6
)Trust bond repurchases


(36.2
)


Capital expenditures, net


0.3



(2.2
)Other


(5.0
)


0.0Total uses of cash


(220.6
)


(94.1
)Net sources of cash


15.1



98.0Ending cash and cash equivalents balance

$
114.4


$
99.3      56




---



##### 



Off-Balance
    Sheet Arrangements
      Dividends
       57




---



##### 



Contractual
    Obligations
    2011


2012


2013


2014


2015


Thereafter


Total(Dollars in thousands)Mortgage-backed debt(1)(2)

$
96,009


$
101,490


$
102,556


$
98,554


$
91,880


$
791,866


$
1,282,355Operating leases


1,943



1,552



743



660



671



225



5,794Other purchase commitments


67,273























67,273Total

$
165,225


$
103,042


$
103,299


$
99,214


$
92,551


$
792,091


$
1,355,422     (1)
    
    The table above excludes future cash payments related to
    interest expense. Interest payments during 2010 total $81.6
    million. Interest is calculated on our debt obligations based on
    fixed rates.(2)
    
    Represents the expected maturities for mortgage-backed debt as
    of December 31, 2010 based on the expected cash inflows
    related to the securitized residential loans.        Recently
    Accounting Pronouncements and Developments
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK  Qualitative
    Information on Market Risk
    Credit
    Risk
     58




---



##### 



Interest
    Rate Risk
      Prepayment
    Risk
      Liquidity
    Risks
      held-for-investment
 59




---



##### 



Real
    Estate Risk
    Inflation
    Risk
    Effect
    of Governmental Initiatives on Market Risks
    Quantitative
    Information on Market Risk
      At December 31, 2010Principal Amounts Maturing and Effective Rates During
    Period

Principal2011

2012

2013

2014

2015

Thereafter

Value

Book Value

Fair Value(Dollars in thousands)Residential loansPrincipal

$
112,694


$
109,056


$
117,242


$
116,732


$
110,025


$
1,238,009


$
1,803,758


$
1,621,485


$
1,566,000Interest rate


9.04
%


9.04
%


9.04
%


9.04
%


9.04
%


9.04
%Mortgage-backed debtPrincipal

$
96,009


$
101,490


$
102,556


$
98,554


$
91,880


$
791,866


$
1,282,355


$
1,281,555


$
1,235,000  60




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  page F-1 Form 10-K.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE  Form 10-K.
  ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
     61




---



##### 



Form 10-K.
  Changes
    in Internal Control Over Financial Reporting
   62




---



##### 



Report of
    Independent Registered Certified Public Accounting
    Firm
  The Board of Directors and Stockholders of
 Walter Investment Management Corp.
                    63




---



##### 



ITEM 9B.
    OTHER
    INFORMATION  Form 8-K Form 10-K
 PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Form 10-K.
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Form 10-K.
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K.
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Form 10-K.
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES DISCLOSURE OF FEES CHARGED BY
    PRINCIPAL ACCOUNTANTS  Form 10-K.
 PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Financial Statements
    Financial Statement Schedules
    Exhibits
   64




---



##### 



SIGNATURES      By:
    /s/  Mark
    J. OBrien   Chief Executive Officer
 (Principal Executive Officer)
  Form 10-K
  Signature

Title

Date/s/  Mark
    J. OBrienMark
    J. OBrien

Chairman of the Board and Chief Executive Officer (Principal
    Executive Officer)

March 8, 2011/s/  Steven
    R. BerrardSteven
    R. Berrard

Director

March 8, 2011/s/  Ellyn
    L. BrownEllyn
    L. Brown

Director

March 8, 2011/s/  Denmar
    J. DixonDenmar
    J. Dixon

Vice Chairman and 
    Executive Vice President

March 8, 2011/s/  William
    J. MeurerWilliam
    J. Meurer

Director

March 8, 2011/s/  Shannon
    E. SmithShannon
    E. Smith

Director

March 8, 2011/s/  Michael
    T. TokarzMichael
    T. Tokarz

Director

March 8, 2011/s/  Kimberly
    A. PerezKimberly
    A. Perez

Vice President and Chief Financial Officer (Principal Financial
    Officer and Principal Accounting Officer)

March 8, 2011  65




---



##### 



INDEX TO
    EXHIBITS
  ExhibitNo

Notes

Description2
.1

(1)

Second Amended and Restated Agreement and Plan of Merger dated
    as of February 6, 2009, among Registrant, Walter
    Industries, Inc., JWH Holding Company, LLC, and Walter
    Investment Management LLC.2
.2

(1)

Amendment to the Second Amended and Restated Agreement and Plan
    of Merger, entered into as of February 17, 2009 between
    Registrant, Walter Industries, Inc., JWH Holding Company, LLC
    and Walter Investment Management LLC2
.3

(26)

Securities Purchase Agreement by and between Marathon Asset
    Management, L.P., Michael OHanlon, Marix Servicing
    LLC, and the Registrant dated August 25, 20103
.1

(4)

Articles of Amendment and Restatement of Registrant effective
    April 17, 2009.3
.2

(3)

By-Laws of Registrant, effective April 17, 2009.4
.1

(6)

Specimen Common Stock Certificate of Registrant4
.2

(4)

Joint Direction and Release, by and among Registrant, Hanover
    Statutory Trust I, and The Bank of New York Mellon
    Trust Company, N.A. (as successor to JPMorgan Chase Bank,
    N.A.) as trustee, dated April 17, 2009.4
.3

(4)

Discharge Agreement, by and among Registrant, Hanover Statutory
    Trust I, The Bank of New York Mellon
    Trust Company, N.A. (as successor to JPMorgan Chase Bank,
    N.A.) as trustee, dated April 17, 2009.4
.4

(4)

Joint Direction and Release, by and among Registrant, Hanover
    Statutory Trust II, and Wilmington Trust Company, as
    trustee, dated April 17, 2009.4
.5

(4)

Discharge Agreement, by and among Registrant., Hanover Statutory
    Trust II, Wilmington Trust Company, as trustee, dated
    April 17, 2009.10
.1

(2)

1999 Equity Incentive Plan10
.2

(8)

Amendment No. 1 to the Walter Investment Management Corp.
    1999 Equity Incentive Plan10
.3

(8)

Amendment No. 2 to the Walter Investment Management Corp.
    1999 Equity Incentive Plan10
.4

(1)

Software License Agreement, dated as of September 30, 2008,
    between Registrant and JWH Holding Company, LLC.10
.5

(4)

Assignment and Assumption of Software License Agreement, by and
    among Registrant, JWH Holding Company, LLC, and Walter
    Investment Management LLC, dated April 17, 2009.10
.6

(4)

Revolving Credit Agreement between Registrant, as borrower,
    Regions Bank, as syndication agent, SunTrust Bank, as
    administrative agent, and the additional lenders thereto, dated
    as of April 20, 2009.10
.7

(11)

Amendment No. 1 dated February 16, 2010 to Revolving
    Credit Agreement between Registrant, as borrower, Regions Bank,
    as syndication agent, SunTrust Bank, as administrative agent,
    and the additional lenders thereto, dated as of April 20,
    2009.10
.7.1

(30)

Amendment No. 2 dated June 23, 2010 to Revolving Credit
    Agreement between Registrant, as borrower, Regions Bank, as
    syndication agent, SunTrust Bank, as administrative agent, and
    the additional lenders thereto, dated as of April 20, 2009.10
.8

(4)

Subsidiary Guaranty Agreement by and among Registrant, each of
    the subsidiaries listed on Schedule I thereto, SunTrust
    Bank as administrative agent, and the additional lenders
    thereto, dated April 20, 2009.10
.9

(4)

Revolving Credit Agreement and Security Agreement, between
    Registrant as borrower, and Walter Industries, Inc. as lender,
    dated as of April 20, 2009.10
.10

(4)

L/C Support Agreement among Registrant and certain of its
    subsidiaries and Walter Industries, Inc., dated April 20,
    2009.10
.11

(4)

Trademark License Agreement, between Walter Industries, Inc. and
    Walter Investment Management LLC, dated April 17, 2009. 66




---



##### 



ExhibitNo

Notes

Description10
.12

(4)

Transition Services Agreement, between Walter Industries, Inc.
    and Walter Investment Management LLC, dated April 17, 2009.10
.13

(4)

Tax Separation Agreement, between Walter Industries, Inc. and
    Walter Investment Management LLC, dated April 17, 2009.10
.14

(4)

Joint Litigation Agreement, between Walter Industries, Inc. and
    Walter Investment Management LLC, dated April 17, 200910
.15

(8)

The 2009 Long Term Incentive Award Plan of Walter Investment
    Management Corp.10
.16.1

(5)

Agreement dated as of December 23, 2008, between JWH
    Holding Company, L.L.C. and Mark J. OBrien10
.16.2

(24)

Form of Executive RSU Award Agreement of Mark J. OBrien10
.17

(9)

Executive RSU Award Agreement of Mark J. OBrien10
.17.1

(9)

Form of Non-Qualified Option Award Agreement of Mark J.
    OBrien dated January 4, 201010
.18.1

(5)

Agreement dated as of December 23, 2008, between JWH
    Holding Company, L.L.C. and Charles E. Cauthen10
.18.2

(24)

Form of Executive RSU Award Agreement of Charles E. Cauthen10
.19

(9)

Form of Executive RSU Award Agreement of Charles E. Cauthen
    dated January 4, 201010
.19.1

(9)

Form of Non-Qualified Option Award Agreement of Charles E.
    Cauthen dated January 4, 201010
.20.1

(5)

Agreement dated as of December 23, 2008, between JWH
    Holding Company, L.L.C. and Kimberley Ann Perez10
.20.2

(9)

Form of Executive RSU Award Agreement of Kimberly A. Perez dated
    January 4, 201010
.20.3

(9)

Form of Non-Qualified Option Award Agreement of Kimberly A.
    Perez dated January 4, 201010
.21

(24)

Form of Director Award Agreement10
.22.1

(7)

Form of Indemnity Agreements dated April 17, 2009 between
    the Registrant and the following officers and directors: Mark
    OBrien, Ellyn Brown, John Burchett, Denmar Dixon, William
    J. Meurer, Shannon Smith, Michael T. Tokarz, Charles E. Cauthen,
    Irma Tavares, Del Pulido, William Atkins, William Batik,
    Joseph Kelly, Jr. and Stuart Boyd.10
.22.2

(16)

Indemnity Agreements dated July 1, 2004 between the
    Registrant and the following: John A. Burchett, John A. Clymer,
    Joseph J. Freeman, Roberta M. Graffeo, Douglas L. Jacobs, Harold
    F. McElraft, Richard J. Martinelli, Joyce S. Mizerak, Saiyid T.
    Naqvi, George J. Ostendorf, John N. Rees, David K. Steel, James
    F. Stone, James C. Strickler, and Irma N. Tavares10
.22.3

(17)

Indemnity Agreement between Registrant and Harold F. McElraft,
    dated as of April 14, 200510
.22.4

(18)

Indemnity Agreement between Registrant and Suzette Berrios,
    dated as of November 28, 200510
.23

(7)

Office Sublease dated between Registrant and Municipal Mortgage
    and Equity, L.L.C10
.23.1

(19)

Office Lease Agreement, dated as of March 1, 1994, between
    Metroplex Associates and Registrant, as amended by the First
    Modification and Extension of Lease Amendment dated as of
    February 28, 199710
.23.2

(20)

Second Modification and Extension of Lease Agreement dated
    April 22, 2002 between Metroplex Associates and Registrant10
.23.3

(20)

Third Modification of Lease Agreement dated May 8, 2002
    between Metroplex Associates and Hanover Capital Mortgage
    Corporation10
.23.4

(20)

Fourth Modification of Lease Agreement dated November 2002
    between Metroplex Associates and Hanover Capital Mortgage
    Corporation 67




---



##### 



ExhibitNo

Notes

Description10
.23.5

(21)

Fifth Modification of Lease Agreement dated October 9, 2003
    between Metroplex Associates and Hanover Capital Partners Ltd.10
.23.6

(22)

Sixth Modification of Lease Agreement dated August 3, 2005
    between Metroplex Associates and HanoverTrade Inc.10
.23.7

(23)

Seventh Modification of Lease Agreement dated December 16,
    2005 between Metroplex Associates and Hanover Capital Partners
    2, Ltd.10
.24

(10)

Employment Agreement between the Registrant and Denmar Dixon
    dated January 22, 201010
.25

(28)

Separation and General Release Between the Registrant and John
    A. Burchett10
.26.1

(14)

Amended and Restated Employment Agreement of Irma N. Tavares,
    effective as of July 1, 200710
.26.2

(15)

Second Amended and Restated Employment Agreement dated as of
    September 30, 2008 between Registrant and Irma N. Tavares.10
.26.3

(1)

Amendment to the Second Amended and Restated Employment
    Agreement, entered into February 12, 2009 between
    Registrant and Irma N. Tavares10
.27

(32)

Employment Agreement between the Registrant and Rick Smith dated
    December 28, 201010
.28

(32)

Office Lease by and between NBS Pinnacle 1925/2001 LLC and Marix
    Servicing. LLC dated June 13, 200710
.29

(9)

Form of Executive RSU Award Agreement between the Registrant and
    Stuart D. Boyd dated January 4, 201010
.29.1

(29)

Form of Executive RSU Award Agreement between the Registrant and
    Del Pulido dated January 4, 201010
.29.2

(29)

Non-Qualified Option Award Agreement between the Registrant and
    Stuart D. Boyd dated January 4, 201010
.30

(29)

Non-Qualified Option Award Agreement between the Registrant and
    Del Pulido dated January 4, 201010
.31

(25)

Restricted Stock Unit Agreement between the Registrant and
    Denmar Dixon dated January 22, 201010
.32

(25)

Restricted Stock Unit Agreement between the Registrant and
    Denmar Dixon dated January 22, 201010
.33

(25)

Nonqualified Option Award Agreement of Denmar Dixon dated
    January 22, 201010
.35

(29)

Amended and Restated Employment Agreement between the Registrant
    and Mark OBrien dated March 15, 201010
.36

(29)

Amended and Restated Employment Agreement between the Registrant
    and Charles Cauthen dated March 15, 201010
.37

(29)

Amended and Restated Employment Agreement between the Registrant
    and Kimberly Perez dated March 15, 201010
.38

(32)

Employment Agreement between the Registrant and Stuart D. Boyd
    dated April 28, 201010
.39

(27)

Amendment to Revolving Credit Agreement by and between the
    Registrant and Walter Energy, Inc. dated September 23, 201010
.40

(27)

Amendment to L/C Support Agreement by and between the Registrant
    and Walter Energy, Inc. dated September 23, 201010
.41

(7)

Form of Indemnity Agreement dated March 3, 2010 between the
    Registrant and Steven R. Berrard10
.42

(31)

Supplement No. 1 dated October 28, 2010 to the
    Indenture dated November 2, 2006 relating to certain asset
    backed notes between Mid-State Capital Corporation 2006-1 as
    Issuer and The Bank of New York Mellon (formerly known as The
    Bank of New York) as Indenture Trustee14


(24)

Code of Conduct 68




---



##### 



ExhibitNo

Notes

Description21


(32)

Subsidiaries of the Registrant23
.1

(32)

Consent of Ernst & Young LLP31
.1

(32)

Certification by Mark J. OBrien pursuant to Securities
    Exchange Act
    Rule 13a-14(a),
    as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31
.2

(32)

Certification by Kimberly Perez pursuant to Securities Exchange
    Act
    Rule 13a-14(a),
    as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32


(32)

Certification by Mark J. OBrien and Kimberly Perez
    pursuant to 18 U.S.C. Section 1352, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   Note

Notes to Exhibit Index(1)

Incorporated herein by reference to the Annexes to the proxy
    statement/ prospectus forming a part of Amendment No. 4 to
    the Registrants Registration Statement on
    Form S-4,
    Registration
    No. 333-155091,
    as filed with the Securities and Exchange Commission on
    February 17, 2009.(2)

Incorporated herein by reference to Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 1999, as filed with the
    Securities and Exchange Commission on March 30, 2000.(3)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 21, 2009.(4)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 23, 2009.(5)

Incorporated by reference to the Exhibits to Amendment
    No. 2 to the Registrants Registration Statement on
    Form S-4,
    Registration
    No. 333-155091,
    as filed with the Securities and Exchange Commission on
    February 6, 2009.(6)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2009, as filed with the
    Securities and Exchange Commission on May 15, 2009(7)

Incorporated by reference to Registrants Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2009, as filed with the
    Securities and Exchange Commission on August 14, 2009(8)

Incorporate by reference to the Exhibits to the
    Registrants Registration Statement on
    form S-8,
    Registration
    No. 333-160743,
    as filed with the Securities and Exchange Commission on
    July 22, 2009.(9)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    January 8, 2010.(10)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    January 26, 2010.(11)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    February 19, 2010.(12)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K/A
    filed with the Securities and Exchange Commission on May 1,
    2009.(13)

Incorporate by reference to the Exhibits to the
    Registrants Registration Statement on
    form S-11,
    Registration
    No. 333-162067,
    as filed with the Securities and Exchange Commission on
    September 22, 2009.(14)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 3, 2007.(15)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    October 1, 2008.(16)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2004, as filed with the
    Securities and Exchange Commission on November 9, 2004.(17)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2005, as filed with the
    Securities and Exchange Commission on May 16, 2005.(18)

Incorporated herein by reference to Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2005, as filed with the
    Securities and Exchange Commission on March 16, 2006. 69




---



##### 



Note

Notes to Exhibit Index(19)

Incorporated herein by reference to Registrants
    Registration Statement on
    Form S-11,
    Registration
    No. 333-29261,
    as amended, which became effective under the Securities Act of
    1933, as amended, on September 15, 1997.(20)

Incorporated herein by reference to Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2002, as filed with the
    Securities and Exchange Commission on March 28, 2003.(21)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2004, as filed with the
    Securities and Exchange Commission on May 24, 2004.(22)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2005, as filed with the
    Securities and Exchange Commission on August 9, 2005.(23)

Incorporated herein by reference to Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2005, as filed with the
    Securities and Exchange Commission on March 16, 2006.(24)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on May 5,
    2009.(25)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    January 28, 2010.(26)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    August 25, 2010.(27)

Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    September 27, 2010.(28)

Incorporated by reference to Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2009, as filed with the
    Securities and Exchange Commission on March 2, 2010.(29)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2010, as filed with the
    Securities and Exchange Commission on May 5, 2010.(30)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2010, as filed with the
    Securities and Exchange Commission on August 9, 2010.(31)

Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2010, as filed with the
    Securities and Exchange Commission on November 3, 2010.(32)

Filed herewith  70




---



##### 



TABLE OF
    CONTENTS TO FINANCIAL STATEMENTS
  PageWALTER INVESTMENT MANAGEMENT CORP. AND SUBSIDIARIESReport of Independent Registered Certified Public Accounting Firm


F-2Consolidated Financial Statements as of December 31, 2010
    and 2009 and for the Years Ended December 31, 2010, 2009
    and 2008:Balance Sheets


F-3Statements of Income


F-4Statements of Stockholders Equity and Comprehensive Income


F-5Statements of Cash Flows


F-6Notes to Financial Statements


F-7  F-1




---



##### 



Report of
    Independent Registered Certified Public Accounting
    Firm  The Board of Directors and Stockholders of
 Walter Investment Management Corp.
              F-2




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE
    SHEETS
  December 31,2010


2009(In thousands, except share and per share data)ASSETSCash and cash equivalents

$
114,352


$
99,286Restricted cash and cash equivalents


52,289



51,654Receivables, net


2,643



3,052Servicing advances and receivables, net


11,223



Residential loans, net of allowance for loan losses of $15,907
    and $17,661, respectively


1,621,485



1,644,346Subordinate security


1,820



1,801Real estate owned


67,629



63,124Deferred debt issuance costs


19,424



18,450Deferred income tax asset, net


221



Other assets


4,404



5,961Total assets

$
1,895,490


$
1,887,674LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and other accrued liabilities

$
33,556


$
29,860Dividend payable


13,431



13,248Deferred income tax liabilities, net






173Mortgage-backed debt


1,281,555



1,267,454Servicing advance facility


3,254



Accrued interest


8,206



8,755Total liabilities


1,340,002



1,319,490Commitments and contingencies (Note 21)






Stockholders equity:Preferred stock, $0.01 par value per share:Authorized  10,000,000 sharesIssued and outstanding  0 shares at
    December 31, 2010 and 2009, respectively






Common stock, $0.01 par value per share:Authorized  90,000,000 sharesIssued and outstanding  25,785,693 and
    25,642,889 shares at December 31, 2010 and 2009,
    respectively


258



256Additional paid-in capital


127,143



122,552Retained earnings


426,836



443,433Accumulated other comprehensive income


1,251



1,943Total stockholders equity


555,488



568,184Total liabilities and stockholders equity

$
1,895,490


$
1,887,674     December 31,2010


2009(In thousands)ASSETS OF THE CONSOLIDATED SECURITIZATION TRUSTS THAT CAN
    ONLY BE USED TO SETTLE THE OBLIGATIONS OF THE CONSOLIDATED
    SECURITIZATION TRUSTS:Restricted cash

$
42,859


$
42,691Residential loans, net of allowance for loan losses of $15,217
    and $14,201, respectively


1,527,830



1,310,710Real estate owned


38,234



41,143Deferred debt issuance costs


19,424



18,450Total assets

$
1,628,347


$
1,412,994LIABILITIES OF THE CONSOLIDATED SECURITIZATION TRUSTS FOR
    WHICH CREDITORS OR BENEFICIAL INTEREST HOLDERS DO NOT HAVE
    RECOURSE TO THE COMPANY:Accounts payable and other accrued liabilities

$
387


$
556Mortgage-backed debt


1,281,555



1,267,454Accrued interest


8,206



8,755Total liabilities and stockholders equity

$
1,290,148


$
1,276,765    F-3




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF
    INCOME
  Year Ended December 31,2010


2009


2008(In thousands, except share and per share data)Net interest income:Interest income

$
166,188


$
175,372


$
191,063Less: Interest expense


82,711



89,726



102,115Less: Interest rate hedge ineffectiveness










16,981Total net interest income


83,477



85,646



71,967Less: Provision for loan losses


6,526



9,441



13,103Total net interest income after provision for loan losses


76,951



76,205



58,864Non-interest income:Premium revenue


9,163



10,041



9,233Servicing revenue and fees


2,267







Other income, net


3,299



2,929



420Total non-interest income


14,729



12,970



9,653Non-interest expenses:Claims expense


2,319



4,483



5,180Salaries and benefits


27,495



20,568



15,934Legal and professional


3,830



4,166



1,249Occupancy


1,490



1,364



1,509Technology and communication


2,955



2,980



1,404Depreciation and amortization


383



436



416General and administrative


12,602



10,966



9,811Gain on mortgage-backed debt extinguishment


(4,258
)






Real estate owned expenses, net


6,519



5,741



7,865Related party  allocated corporate charges






853



3,469Goodwill impairment charges










12,291Provision for estimated hurricane insurance losses










3,853Total non-interest expenses


53,335



51,557



62,981Income before income taxes


38,345



37,618



5,536Income tax expense (benefit)


1,277



(76,161
)


3,099Net income

$
37,068


$
113,779


$
2,437Basic earnings per common and common equivalent share

$
1.38


$
5.26


$
0.12Diluted earnings per common and common equivalent share

$
1.38


$
5.25


$
0.12Total dividends declared per common and common equivalent share

$
2.00


$
1.50


$
Weighted average common and common equivalent shares
    outstanding  basic


26,431,853



21,496,369



19,871,205Weighted average common and common equivalent shares
    outstanding  diluted


26,521,311



21,564,621



19,871,205    F-4




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF
    STOCKHOLDERS
    EQUITY AND COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2010, 2009
    and 2008
  AccumulatedMember Unit/


Additional








Other


ReceivableCommon Stock


Paid-In


Comprehensive


Retained


Comprehensive


from WalterTotal


Shares


Amount


Capital


Income


Earnings


Income (Loss)


Energy(In thousands, except share data)Balance at December 31, 2007

$
136,401






$



$
68,396






$
681,519


$
(3,830
)

$
(609,684
)Comprehensive income:Net income


2,437














$
2,437



2,437Other comprehensive income (loss), net of tax:Change in postretirement benefit plans, net of $69 tax effect


(106
)














(106
)






(106
)Net amortization of realized gain on hedges, net of $137 tax
    effect


(258
)














(258
)






(258
)Net recognized loss on hedges, net of $3,329 tax effect


6,130















6,130







6,130Comprehensive income

















$
8,203Effects of changing the plan measurement date pursuant to FASB
    Statement 158:Service cost and interest cost for October 1,
    2007  December 31, 2007, net of $92 tax effect


171



















171Amortization of actuarial gain and prior service cost for
    October 1, 2007  December 31, 2007, net of
    $102 tax effect


(189
)






















(189
)Net activity with Walter Energy, Inc.


265,917











(17,077
)














282,994Share-based compensation


974











974Balance at December 31, 2008


411,477











52,293







684,127



1,747



(326,690
)Comprehensive income:Net income


113,779














$
113,779



113,779Other comprehensive income (loss), net of tax:Change in postretirement (loss) plans, net of $502 tax effect


(41
)














(41
)






(41
)Net unrealized gain on subordinate security, net of $0 tax effect


189















189







189Net amortization of realized gain on closed hedges, net of $347
    tax effect


48















48







48Comprehensive income

















$
113,975Net activity with Walter Energy, Inc.


19,914











(5,172
)






(301,604
)






326,690Consummation of spin-off and Merger


(2,508
)


19,871,205



199



(2,707
)Share-based compensation


1,352











1,352Dividends to Walter Investment Management LLC interest-holders


(16,000
)


















(16,000
)Dividends and dividend equivalents declared


(36,869
)


















(36,869
)Issuance of restricted stock






15,390







Shares issued upon exercise of stock options


54



6,456







54Cancellation of common stock






(162
)






Secondary offering, net of issuance costs


76,789



5,750,000



57



76,732Balance at December 31, 2009


568,184



25,642,889



256



122,552







443,433



1,943



Comprehensive income:Net income


37,068














$
37,068



37,068Other comprehensive income (loss), net of tax:Change in postretirement (loss) plans, net of $52 tax effect


(431
)














(431
)






(431
)Net unrealized gain on subordinate security, net of $0 tax effect


19















19







19Net amortization of realized gain on closed hedges, net of $0
    tax effect


(280
)














(280
)






(280
)Comprehensive income

















$
36,376Share-based compensation


3,763











3,763Shares issued upon exercise of stock options and vesting of RSUs


1,094



161,800



2



1,092Repurchase and cancellation of common stock


(264
)


(18,996
)






(264
)Dividends and dividend equivalents declared


(53,665
)


















(53,665
)Balance at December 31, 2010

$
555,488



25,785,693


$
258


$
127,143






$
426,836


$
1,251


$
    F-5




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Years Ended December 31,2010


2009


2008(In thousands)Operating activities:Net income

$
37,068


$
113,779


$
2,437Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Provision for loan losses


4,410



7,277



11,122Recovery of charged-off servicing advances


(2,518
)






Amortization of residential loan discount to interest income


(13,493
)


(14,965
)


(18,334
)Depreciation and amortization


383



436



416Loss on disposal of fixed assets


918







Gain on bargain purchase


(423
)






Gain on mortgage-backed debt extinguishment


(4,258
)






(Gains) losses on real estate owned, net


(3,490
)


(1,567
)


1,454Proceeds from sale of mortgage securities classified as trading






2,387



Benefit from deferred income taxes


(374
)


(81,749
)


(7,777
)Amortization of deferred debt issuance costs to interest expense


1,084



1,204



1,845Share-based compensation


3,763



1,352



974Goodwill impairment charges










12,291Other


(450
)


(550
)


(258
)Decrease (increase) in assets, net of effect of acquisitions:Receivables


(145
)


(3,108
)


(3,802
)Servicing advances and receivables, net


(1,835
)






Other


1,940



(770
)


(649
)Increase (decrease) in liabilities, net of effect of
    acquisitions:Accounts payable and other accrued liabilities


(140
)


(3,799
)


(3,919
)Accrued interest


(549
)


(965
)


(2,236
)Cash flows provided by (used in) operating activities


21,891



18,962



(6,436
)Investing activities:Purchases of residential loans


(73,650
)






Principal payments received on residential loans


99,235



117,388



148,432Cash proceeds from sales of real estate owned, net


4,758



10,048



11,370Additions to property and equipment, net


340



(2,176
)


42(Increase) decrease in restricted cash and cash equivalents


198



(2,665
)


19,924Acquisition of business, net of cash acquired


1,685



774



Cash flows provided by investing activities


32,566



123,369



179,768Financing activities:Issuance of mortgage-backed debt


134,355







25,000Payments on mortgage-backed debt


(79,670
)


(108,169
)


(358,459
)Mortgage-backed debt extinguishment


(36,152
)






Servicing advance facility, net


(2,760
)






Net activity with Walter Energy






26,583



158,324Dividends to Walter Investment Management LLC interest-holders






(16,000
)


Dividends and dividend equivalents paid


(53,482
)


(23,621
)


Shares issued upon exercise of stock options and vesting of RSUs


1,094



54



Repurchase and cancellation of common stock


(264
)






Secondary offering, net of issuance costs






76,789



Debt issuance costs paid


(2,512
)






Cash flows used in financing activities


(39,391
)


(44,364
)


(175,135
)Net increase (decrease) in cash and cash equivalents


15,066



97,967



(1,803
)Cash and cash equivalents at beginning of year


99,286



1,319



3,122Cash and cash equivalents at end of year

$
114,352


$
99,286


$
1,319Supplemental Disclosure of Cash Flow Information:Cash paid for interest

$
81,587


$
89,480


$
119,600Cash paid for income taxes

$
1,291


$
5,551


$
12,443Supplemental Disclosure of Non-Cash Investing &
    Financing Activities:Real estate owned acquired through foreclosure

$
78,653


$
79,640


$
67,220Residential loans originated to finance the sale of real estate
    owned

$
73,038


$
56,301


$
42,345Residential loans acquired with warehouse proceeds and/or
    advances from Walter Energy

$



$
2,504


$
107,593Dividends to Walter Energy

$



$
306,458


$
17,077Dividends and dividend equivalents declared, not yet paid

$
13,431


$
13,248


$
Consummation of reverse acquisition with Hanover

$



$
2,186


$
    F-6




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    Business
    and Basis of Presentation    face-to-face
  Form 10-K,
  The
    Spin-off from Walter Energy
      The
    Merger with Hanover Capital
   F-7




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    The
    Acquisition of Marix Servicing, LLC
    Basis
    of Presentation
      Principles
    of Consolidation
  2004-1 Trust 2004-1, 2005-1 Trust 2005-1, 2006-1 Trust 2006-1, Trust 2010-1, Trust 2010-1
 F-8




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Reclassifications
    2.
    Summary
    of Significant Accounting Policies  Use of
    Estimates
    Concentrations
    of Credit Risk
       F-9




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Cash
    and Cash Equivalents
    Restricted
    cash and cash equivalents
    Residential
    Loans and Revenue Recognition
       F-10




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          Allowance
    for Loan Losses on Residential Loans
     F-11




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  case-by-case
        Real
    Estate Owned
    Servicing
    Revenue and Fees
   F-12




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Servicing
    Advances
      Custodial
    Accounts
    Property
    and Equipment
    Accounting
    for the Impairment of Long-Lived Assets and
    Goodwill
   F-13




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      less-than-prime
  Mortgage-Backed
    Debt
    Hedging
    Activities
    Insurance
    Claims (Hurricane Losses)
     F-14




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2010


2009


2008Gross liability, beginning of year

$
1,015


$
2,906


$
1,510Less: Reinsurance recoverables










(79
)Net liability, beginning of year


1,015



2,906



1,431Incurred losses related to:Current year


2,748



4,801



8,759Prior years


(429
)


(318
)


(236
)Total incurred


2,319



4,483



8,523Paid related to:Current year


2,292



4,136



6,593Prior years


586



2,238



648Less: Reinsurance recoveries










(193
)Total Paid


2,878



6,374



7,048Net liability, end of year


456



1,015



2,906Plus: Reinsurance recoverables










Gross liability, end of year

$
456


$
1,015


$
2,906Reported claims liability

$
206


$
365


$
1,505Incurred but not reported claims liability


250



650



1,401Gross liability, end of year

$
456


$
1,015


$
2,906   Share-Based
    Compensation Plans
    Income
    Taxes
     F-15




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Basic
    and Diluted Net Income Available to Common Stockholders per
    Share
    Litigation
    and Investigations
    Casa Linda Homes, et al. v. Walter Mortgage
    Company, et al. No. C-2918-08-H, th
    Recently
    Adopted Accounting Guidance
  Receivables
   F-16




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Consolidation
    of Variable Interest Entities
    Transfers
    and Servicing
    Fair
    Value Measurements and Disclosures
    Subsequent
    Events
   F-17




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Receivables
    Recently
    Issued Accounting Guidance
    3.
    Business
    Separation from Walter Energy and Merger with Hanover      
    Walter Energy distributed 100% of its interest in WIM to holders
    of Walter Energys common stock;
    All intercompany balances between WIM and Walter Energy were
    settled with the net balance recorded as a dividend to Walter
    Energy;
    In accordance with the Tax Separation Agreement, Walter Energy
    will, in general, be responsible for any and all taxes reported
    on any joint return through the date of the separation, which
    may also include WIM for periods prior to the separation. WIM
    will be responsible for any and all taxes reported on any WIM
    separate tax return and on any consolidated returns for Walter
    Investment subsequent to the separation;
    Walter Energys share-based awards held by WIM employees
    were converted to equivalent share-based awards of Walter
    Investment, with the number of shares and the exercise price
    being equitably adjusted to preserve the intrinsic value. The
    conversion was accounted for as a modification pursuant to the
    guidance concerning stock compensation. F-18




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
             Cash

$
774Receivables


330Subordinate security


1,600Residential loans, net


4,532Other assets


388Accounts payable and accrued expenses


(2,093
)Mortgage-backed debt


(2,666
)Other liabilities


(679
)$
2,186     For the PeriodApril 17, 2009to December 31, 2009Total revenue

$
1,622Net loss

$
(686
)    F-19




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    For the Year EndedDecember 31,2009

2008Total revenue

$
187,740


$
202,269Net income

$
35,924


$
38,357       4.
    Acquisition
    of Marix Servicing, LLC         F-20




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Cash

$
1,685Restricted cash


833Receivables


163Servicing advances and receivables, net


6,870Other assets


2,024Accounts payable and accrued expenses


(5,138
)Servicing advance facility and related liabilities


(6,014
)Bargain purchase recognized

$
423     For the PeriodNovember 1, 2010to December 31, 2010Total revenue

$
1,813Net loss

$
(529
)       For the Years EndedDecember 31,2010

2009

2008Total revenue

$
98,666


$
95,750


$
70,630Net income (loss)

$
31,420


$
107,079


$
(5,915
)   5.
    Fair
    Value    Basis or
    Measurement
  Level 1
  Level 2
 F-21




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Level 3
      Items Measured
    at Fair Value on a Recurring Basis
    As of December 31,Quoted Prices inActive Markets





Significantfor Identical


Significant Other


UnobservableAssets


Observable Inputs


Inputs(Level 1)


(Level 2)


(Level 3)


TotalSubordinate security2010

$



$



$
1,820


$
1,820Total

$



$



$
1,820


$
1,8202009

$



$



$
1,801


$
1,801Total

$



$



$
1,801


$
1,801       
    Yield: 18.5%
    Probability of default: 2.1%
    Loss severity: 76.7%
    Prepayment: 3.1% F-22




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     As of and forthe Year EndedDecember 31,2010Beginning balance

$
1,801Principal reductions


Total gains (losses):Included in net income


Included in other comprehensive income


19Purchases, sales, issuances and settlements, net


Transfer into or out of Level 3 category


$
1,820Total gains (losses) for the period included in earnings
    attributable to the change in unrealized gains or losses
    relating to assets still held at the reporting date

$
   Items Measured
    at Fair Value on a Non-Recurring Basis
      Fair Value Measurements at Reporting Date UsingQuoted Prices inReal

Active Markets for

Significant Other

SignificantEstate

Identical Assets

Observable Inputs

Unobservable Inputs

Fair ValueFair Value at

Owned

(Level 1)

(Level 2)

(Level 3)

AdjustmentDecember 31, 2010

$
67,629


$



$



$
67,629


$
829December 31, 2009


63,124











63,124



1,218    F-23




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Fair
    Value of Financial Instruments
    December 31, 2010


December 31, 2009Carrying


Estimated


Carrying


EstimatedAmount


Fair Value


Amount


Fair ValueFinancial assets:Cash and cash equivalents

$
114,352


$
114,352


$
99,286


$
99,286Restricted cash and cash equivalents


52,289



52,289



51,654



51,654Receivables, net


2,643



2,643



3,052



3,052Servicing advances and receivables, net


11,223



11,223







Residential loans, net


1,621,485



1,566,000



1,644,346



1,533,000Subordinate security


1,820



1,820



1,801



1,801Real estate owned


67,629



67,629



63,124



63,124Financial liabilities:Accounts payable and other accrued liabilities


33,555



33,555



29,860



29,860Dividends payable


13,432



13,432



13,248



13,248Mortgage-backed debt, net of deferred debt issuance costs


1,262,131



1,235,000



1,249,004



1,147,000Servicing advance facility


3,254



3,254







Accrued interest


8,206



8,206



8,755



8,755     Cash and cash equivalents, restricted cash and cash
    equivalents, receivables, accounts payable and other accrued
    liabilities, dividends payable, and accrued interest
  Servicing advances and receivables, net
  Residential loans
  Subordinate security other-than-temporary,
 F-24




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Real estate owned
  Mortgage-backed debt, net of deferred debt issuance
    costs
  Servicing advance facility
  6. Servicing
    Advances and Receivables, net
    December 31, 2010


December 31, 2009Principal and interest

$
3,285


$
Taxes and insurance


17,128



12,779Other servicing advances


4,183



1,882Subservicing fees receivable


783



Servicing advances and receivables


25,379



14,661Less: Allowance for uncollectible servicing advances


(14,156
)


(14,661
)Servicing advances and receivables, net

$
11,223


$
     7.
    Residential
    Loans   F-25




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        December 31, 2010


December 31, 2009Residential loans, principal balance

$
1,803,758


$
1,819,859Less: Yield adjustment, net(1)


(166,366
)


(157,852
)Less: Allowance for loan losses


(15,907
)


(17,661
)Residential loans, net(2)

$
1,621,485


$
1,644,346     (1)
    
    Yield adjustment, net consists of deferred origination costs,
    premiums and discounts and other costs which are generally
    amortized over the life of the residential loan portfolio.
    Deferred origination costs at December 31, 2010 and 2009
    were $10.6 million and $11.6 million, respectively.
    Premiums and discounts at December 31, 2010 and 2009 were
    $189.5 million and $181.7 million, respectively. Other
    costs, including accrued interest receivable, net of deferred
    gains and other costs, at December 31, 2010 and 2009 were
    $12.5 million and $12.2 million, respectively.(2)
    
    The weighted average life of the portfolio approximates 9 and
    10 years, at December 31, 2010 and 2009, respectively,
    based on assumptions for prepayment speeds, default rates and
    losses.  Residential
    Loan Pool Acquisitions
    Purchased Credit-Impaired Residential Loans
   F-26




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Contractually required cash flows for acquired loans at
    acquisition

$
26,277Nonaccretable difference


(12,755
)Expected cash flows for acquired loans at acquisition


13,522Accretable yield


(4,174
)Purchase price

$
9,348   Disclosures
    About the Credit Quality of Residential Loans and the Allowance
    for Loan Losses
    2010


2009


2008Balance, December 31

$
17,661


$
18,969


$
13,992Provision charged to income


6,526



9,441



13,103Less: Transfers to REO


(5,218
)


(7,645
)


(5,759
)Less: Charge-offs, net of recoveries


(3,062
)


(3,104
)


(2,367
)Balance, December 31

$
15,907


$
17,661


$
18,969     December 312010


2009Allowance for loan losses:Loans individually evaluated for loss potential

$
3,599


$
5,395Loans collectively evaluated for loss potential


12,308



12,266Loans acquired with deteriorated credit quality






Total

$
15,907


$
17,661Recorded investment in Residential Loans:Loans individually evaluated for loss potential

$
44,737


$
55,207Loans collectively evaluated for loss potential


1,583,315



1,606,800Loans acquired with deteriorated credit quality


9,340



Total

$
1,637,392


$
1,662,007  F-27




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Impaired
    Residential Loans as of December 31, 2010
    Unpaid





Average


InterestRecorded


Principal


Related


Recorded


IncomeInvestment


Balance


Allowance


Investment


RecognizedAmortized cost:With no related allowance recorded:2010

$
11,932


$
13,911


$



$
10,164


$
13With an allowance recorded:2010

$
32,805


$
35,799


$
3,599


$
39,808


$
106Purchased credit impaired:With no related allowance recorded:2010

$
9,340


$
14,329


$



$
4,670


$
40With an allowance recorded:2010

$



$



$



$



$
   Aging of
    Past Due Residential Loans as of December 31,
    2010
    30-59


60-89


Greater








Total


Non-Days Past


Days Past


Than 90


Total





Residential


Accrual


Recorded Investment >Due


Due


Days


Past Due


Current


Loans


Loans


90 Days and AccruingAmortized Cost:2010 Total

$
24,262


$
8,274


$
43,355


$
75,891


$
1,561,501


$
1,637,392


$
43,355


$
   Credit
    Risk Profile Based on Delinquencies
      December 31, 2010Performing

$
1,561,501Nonperforming


75,891Total

$
1,637,392  F-28




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  8.
    Loan
    Servicing Portfolio  Serviced for other
    investors    Number of


UPB


Percentage ofLoans 2010


2010


Total 2010California


700


$
291,192



21.6
%Florida


882



216,300



16.0New York


422



163,466



12.1New Jersey


232



71,875



5.3Other < 5%


3,303



605,496



45.05,539


$
1,348,329



100.0
%   9.
    Subordinate
    Security    December 31, 2010


December 31, 2009Principal balance

$
3,812


$
3,812Purchase price and other adjustments


(2,200
)


(2,200
)Amortized cost

$
1,612


$
1,612Unrealized gain


208



189Carrying value (fair value)

$
1,820


$
1,801    F-29




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  10.
    Mortgage-Backed
    Debt and Related Collateral  Mortgage-Backed
    Debt
    WeightedAverage StatedInterest Rate atDecember 31,


December 31,


Final2010


2009


2010


MaturityTrust IV Asset-Backed Notes

$
102,237


$
123,588



8.33
%


2030Trust VI Asset-Backed Notes


101,523



110,373



7.42
%


2035Trust VII Asset-Backed Notes


94,180



100,852



6.34
%


2036Trust VIII Asset-Backed Notes


101,729



111,549



7.79
%


2038Trust X Asset-Backed Notes


168,246



169,512



6.30
%


2036Trust XI Asset-Backed Notes


150,621



159,042



5.51
%


2038Trust 2004-1
    Trust Asset-Backed
    Notes


140,931



150,432



6.64
%


2037Trust 2005-1
    Trust Asset-Backed
    Notes


151,246



160,799



6.15
%


2040Trust 2006-1
    Trust Asset-Backed
    Notes


134,791



179,006



6.28
%


2040Trust 2010-1
    Trust Asset-Backed
    Notes


134,141







5.47
%


2045Hanover Capital Grantor Trust Collateralized Mortgage
    Obligations


1,910



2,301



4.28
%


2029Total

$
1,281,555


$
1,267,454          F-30




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Trust 2006-1 Trust 2005-1 Trust 2006-1 Trust 2005-1
    Collateral
    for Mortgage-Backed Debt
    December 31, 2010


December 31, 2009Residential loans in securitization trusts, principal balance

$
1,682,138


$
1,454,062Real estate owned


38,234



41,143Restricted cash and cash equivalents


42,859



42,691Total mortgage-backed debt collateral

$
1,763,231


$
1,537,896   11.
    Servicing
    Advance Facility       F-31




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  12.
    Servicing
    Revenue and Fees    For the Year Ended December 31,2010


2009


2008Servicing fees

$
582


$



$
Incentive fees


491







Other servicing fees


478







Other ancillary fees


716







Servicing revenues and fees

$
2,267


$



$
   13.
    Share-Based
    Compensation Plans           F-32




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Option
    Activity
               F-33




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Weighted-Weighted-


AverageAverage


RemainingExercise


Contractual


AggregatePrice


Term


IntrinsicShares


per Share


(In years)


Value(In $000s)Option activity under Walter Energys equity plans prior
    to spin-offOutstanding at December 31, 2008


58,259


$
28.30



6.77


$
183Awards remaining with Walter Energy(1)


(28,781
)


16.50Outstanding at April 17, 2009


29,478



34.10Option activity under the Companys plans subsequent to
    the spin-offAdditional options issued by the Company at spin-off to preserve
    intrinsic value(2)


70,204



11.24Granted(3)


334,998



14.57Exercised


(6,456
)


8.40Forfeited






Outstanding at December 31, 2009


428,224


$
13.89



8.86


$
937Granted


234,518



14.71Exercised


(92,963
)


11.78Forfeited or expired


(8,356
)


14.39Outstanding at December 31, 2010


561,423


$
14.57



8.38


$
2,588Exercisable at December 31, 2010


144,659


$
16.81



7.42


$
852     (1)
    
    Represents options of the Companys employees who elected
    to retain Walter Energy options rather than to convert them to
    those of the Company in connection with the spin-off.(2)
    
    Represents additional options granted at spin-off. The number of
    shares and the exercise price were equitably adjusted to
    preserve the option holders intrinsic value.(3)
    
    Represents options granted after the spin-off. Includes 1,005
    fully vested options held by employees of Hanover that were
    converted to those of the Company in connection with the Merger.   F-34




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Method
    and Assumptions Used to Estimate Fair Value of
    Options
    2010


2009


2008Risk free interest rate


2.52
%


2.32
%


2.78
%Dividend yield


10.69
%


13.40
%


0.65
%Expected life (years)


5.00



5.00



5.11Volatility


56.58
%


60.39
%


40.85
%Forfeiture rate


0.00
%


4.62
%


4.62
%     Non-vested
    Share Activity
         F-35




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
            WeightedAggregate


AverageIntrinsic Value


ContractualShares


($000)


Term in YearsNon-vested share activity under Walter Energys equity
    plans prior to spin-offOutstanding at December 31, 2008


58,477


$
1,024



0.71Vested


(18,566
)Awards remaining with Walter Energy(1)


(17,933
)Outstanding at April 17, 2009


21,978Non-vested share activity under the Companys plans
    subsequent to the spin-offReplaced units at spin-off(2)


737,486Granted(3)


182,723Vested


Cancelled


Outstanding at December 31, 2009


942,187


$
13,502



9.14Granted


236,104Vested


(68,814
)Cancelled


(7,081
)Outstanding at December 31, 2010


1,102,396


$
19,777



7.86     (1)
    
    Represents restricted stock units of the Companys
    employees who elected to retain Walter Energy restricted stock
    units rather than to convert them to those of the Company in
    connection with the spin-off.(2)
    
    Represents additional restricted stock units granted at the
    spin-off. The number of restricted stock units were equitably
    adjusted to preserve the holders intrinsic value.(3)
    
    Represents restricted stock and restricted stock units granted
    after the spin-off.   F-36




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Share-Based
    Compensation Expense
    December 31,2010


2009


2008(In millions)Plans sponsored by Walter Energy

$



$
0.2


$
0.5Walter Investment stock options, restricted stock and restricted
    stock units


3.8



1.2



Total

$
3.8


$
1.4


$
0.5       14.
    Letters
    of Credit    15.
    Credit
    Agreements  Syndicated
    Credit Agreement
  sub-facility
 F-37




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Revolving
    Credit Agreement and Security Agreement
      Support
    Letter of Credit Agreement
   F-38




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      16.
    Transactions
    with Walter Energy    17.
    Comprehensive
    Income and Accumulated Other Comprehensive Income    Excess ofAdditionalPostretirement


Net Amortization of


Net Unrealized GainEmployee Benefits


Realized Gain on


on SubordinateLiability


Closed Hedges


Security


TotalBalance at December 31, 2008

$
1,158


$
589


$



$
1,747Pre-tax amount


(543
)


(299
)


189



(653
)Tax benefit


1



58







59Change in tax due to REIT conversion


501



289







790Balance at December 31, 2009


1,117



637



189


$
1,943Pre-tax amount


(483
)


(280
)


19



(744
)Tax benefit


52











52Balance at December 31, 2010

$
686


$
357


$
208


$
1,251   18.
    Common
    Stock and Earnings Per Share   F-39




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      For the Year Ended December 31,2010


2009


2008Basic earnings per share:Net income

$
37,068


$
113,779


$
2,437Less: Net income allocated to unvested participating securities


(505
)


(603
)


Net income available to common stockholders (numerator)

$
36,563


$
113,176


$
2,437Weighted average common shares outstanding


25,713



21,008



19,871Add: Vested participating securities


719



488



Total weighted average common shares outstanding (denominator)


26,432



21,496



19,871Basic earnings per share

$
1.38


$
5.26


$
0.12Diluted earnings per share:Net income

$
37,068


$
113,779


$
2,437Less: Net income allocated to unvested participating securities


(503
)


(601
)


Net income available to common stockholders (numerator)

$
36,565


$
113,178


$
2,437Weighted average common shares outstanding


25,713



21,008



19,871Add: Potentially dilutive stock options and vested participating
    securities


808



557



Diluted weighted average common shares outstanding (denominator)


26,521



21,565



19,871Diluted earnings per share

$
1.38


$
5.25


$
0.12     Common
    Stock Offering
  Form S-11 333-162067),
 F-40




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Dividends
    on Common Stock
    19.
    REIT
    Qualification          20.
    Income
    Taxes   F-41




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    StateFederal


and Local


TotalFor the years ended December 31:2010Current

$
1,535


$
116


$
1,651Deferred


(323
)


(51
)


(374
)Total

$
1,212


$
65


$
1,2772009Current

$
6,248


$
(660
)

$
5,588Deferred


(76,173
)


(5,576
)


(81,749
)Total

$
(69,925
)

$
(6,236
)

$
(76,161
)2008Current

$
11,628


$
(752
)

$
10,876Deferred


(5,299
)


(2,478
)


(7,777
)Total

$
6,329


$
(3,230
)

$
3,099     For the Years Ended December 31,2010


2009


2008Income from operations before income tax expense

$
38,345


$
37,618


$
5,536Tax provision at the statutory tax rate of 35%(1)

$
13,420


$
13,166


$
1,938Effect of:State and local income tax


42



(1,534
)


(2,914
)REIT income not subject to federal income tax


(12,198
)


(6,658
)


Non-deductible goodwill










3,813REIT conversion






(81,293
)


Other


13



158



262Tax expense (benefit) recognized

$
1,277


$
(76,161
)

$
3,099Effective tax rate(2)


3.3
%


(202.5
)%


56.0
%     (1)
    
    Statutory tax rate applies to the Companys income from the
    taxable REIT subsidiaries for the years ended December 31,
    2010 and 2009, as well as income for the period prior to the
    Merger.(2)
    
    The Companys effective tax rate for 2010 was 3.3%,
    compared to (202.5)% for 2009 and 56.0% for 2008. The effective
    tax rate for 2009 was significantly different than the rates
    used in 2010 and 2008 due to the REIT conversion in 2009 and the
    resulting reversal of deferred taxes. The effective tax rate for
    2008 (a pre REIT year) was higher than the statutory rate
    primarily due to non-deductible goodwill, net of state and local
    income tax benefits related to uncertain tax positions. F-42




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     2010


2009Deferred tax assets:Accrued expenses

$
514


$
284Federal net operating loss carryforwards


3,337



3,337Other


1,764



1,900Total deferred tax assets


5,615



5,521Valuation allowance


(5,101
)


(5,101
)Total deferred tax assets, net of valuation allowance


514



420Deferred tax liabilities:Prepaid assets


(293
)


(593
)Total deferred tax liabilities


(293
)


(593
)Net deferred tax assets (liabilities)

$
221


$
(173
)       Income
    Tax Exposure
  and/or Form 10-Q,
 F-43




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    30-Day
    Other
    Tax Exposure
    Uncertain
    Tax Position
   F-44




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      December 31,2010


2009Gross unrecognized tax benefits at the beginning of the year

$
7,671


$
8,651Decreases for tax positions taken in prior years






(980
)Gross unrecognized tax benefits at the end of the year

$
7,671


$
7,671Accrued interest and penalties

$
6,828


$
6,297     Taxable
    Income
       F-45




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    For the Year Ended December 31, 2010REIT Group


TRS Group


TotalReported GAAP income before income taxes

$
34,854


$
3,491


$
38,345Tax adjustments:Exclusion of debt discharge income


(4,132
)






(4,132
)Tax amortization of market discount


22,403







22,403GAAP amortization of yield adjustment


(14,022
)






(14,022
)GAAP provision for loan losses


13,053







13,053Compensation timing differences


1,189



(155
)


1,034Loan costs previously deducted


2,659







2,659Marix purchase gain differences






709



709Non deductible contingent interest


531







531Retirement benefits timing differences


(303
)






(303
)Other


60



(63
)


(3
)Taxable income before dividends paid deduction


56,292



3,982



60,274Dividends paid deduction


(56,292
)






(56,292
)Taxable income

$



$
3,982


$
3,982     For the Year Ended December 31, 2009REIT Group


TRS Group


TotalReported GAAP income before income taxes

$
31,785


$
5,833


$
37,618Hanover pre-Merger income (loss) before income taxes


38,968



(676
)


38,292WIM pre-Merger income before income taxes


(13,123
)






(13,123
)Adjusted GAAP income before income taxes


57,630



5,157



62,787Tax adjustments:Exclusion of debt discharge income


(43,730
)






(43,730
)Tax amortization of market discount


22,130







22,130GAAP amortization of yield adjustment


(10,303
)






(10,303
)GAAP provision for loan losses


10,154







10,154Disallowed pre-Merger loss






676



676Other


(291
)


36



(255
)Taxable income before dividends paid deduction


35,590



5,869



41,459Dividends paid deduction


(35,590
)






(35,590
)Taxable income

$



$
5,869


$
5,869    F-46




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        21.
    Commitments
    and Contingencies  Securities
    Sold with Recourse
    Employment
    Agreements
  change-in-control
  Lease
    Obligations
    2011

$
1,9432012


1,5522013


7432014


6602015


671Thereafter


225Total

$
5,794   Income
    Tax Exposure
   F-47




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Purchase
    Commitments
    Miscellaneous
    Litigation
    22.
    Quarterly
    Results of Operations  (Unaudited)    December 31,(2)


September 30,


June 30,


March 31,2010Total net interest income

$
21,272


$
20,991


$
20,860


$
20,354Less: Provision for loan losses(1)


1,985



1,377



1,709



1,455Total net interest income after provision for loan losses


19,287



19,614



19,151



18,899Total non-interest income


5,880



2,215



3,183



3,451Total non-interest expenses(1)


14,011



11,831



13,386



14,107Income before income taxes


11,156



9,998



8,948



8,243Income tax expense


449



312



385



131Net income

$
10,707


$
9,686


$
8,563


$
8,112Basic income per common and common equivalent share

$
0.40


$
0.36


$
0.32


$
0.30Weighted average common and common equivalent shares
    outstanding  basic


26,493,676



26,474,001



26,414,338



26,343,279Diluted income per common and common equivalent share

$
0.40


$
0.36


$
0.32


$
0.30Weighted average common and common equivalent shares
    outstanding  diluted


26,611,786



26,569,897



26,512,492



26,403,281 F-48




---



##### 



WALTER
    INVESTMENT
    MANAGEMENT CORP. AND SUBSIDARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  December 31,(2)


September 30,


June 30,


March 31,2009Total net interest income

$
20,093


$
20,790


$
22,023


$
22,740Less: Provision for loan losses(1)


2,140



1,864



2,590



2,847Total net interest income after provision for loan losses


17,953



18,926



19,433



19,893Total non-interest income


2,818



3,288



3,639



3,225Total non-interest expenses(1)


12,684



12,626



14,486



11,761Income before income taxes


8,087



9,588



8,586



11,357Income tax expense (benefit)


(436
)


1,345



(81,225
)


4,155Net income

$
8,523


$
8,243


$
89,811


$
7,202Basic income per common and common equivalent share

$
0.34


$
0.40


$
4.33


$
0.36Weighted average common and common equivalent shares
    outstanding  basic


25,074,070



20,586,199



20,750,501



19,871,205Diluted income per common and common equivalent share

$
0.34


$
0.40


$
4.30


$
0.36Weighted average common and common equivalent shares
    outstanding  diluted


25,172,433



20,687,965



20,910,099



19,871,205     (1)
    
    The quarters prior to December for 2010 and 2009 have been
    reclassified to conform to the current year presentation. The
    amounts presented reflect real estate loan expenses, net as a
    separate line item. The amounts were previously reflected as a
    portion of provision for loan losses.(2)
    
    The amounts for the fourth quarter 2010 include the impact of
    the Marix acquisition of ($0.4) million, additional gain on
    extinguishment of mortgage-backed debt of $2.6 million, the
    effect of the change to the estimate of the allowance for
    uncollectible servicing advances of $2.5 million, as well
    as the annual adjustment to the Companys incurred but not
    reported insurance reserve to the actuarial report of
    $1.3 million F-49