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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, 2009oro

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 1100Tampa, 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 o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ   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, 2009
    INDEX
   
 PART IItem 1.


Business


2Item 1A.


Risk Factors


5Item 1B.


Unresolved Staff Comments


31Item 2.


Properties


31Item 3.


Legal Proceedings


31Item 4.


Reserved


32PART IIItem 5.


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


32Item 6.


Selected Financial Data


33Item 7.


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


33Item 7 A.


Quantitative and Qualitative Disclosure about
    Market Risk


58Item 8.


Financial Statements and Supplementary Data


58Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


58Item 9A(T).


Controls and Procedures


58Item 9B.


Other Information


59PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


59Item 11.


Executive Compensation


59Item 12.


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


60Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


60Item 14.


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


60PART IVItem 15.


Exhibits and Financial Statement Schedules


60Signatures





61EX-10.25EX-23.1EX-31.1EX-31.2EX-32




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Safe
    Harbor Statement Under the Private Securities Litigation Reform
    Act of 1995
  Form 10-K. Form 10-K
  and/or and/or
   1




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PART I  ITEM 1.
    BUSINESS  Our
    Company
    Form 10-K, face-to-face
         2




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Our
    Strategy
  sub-performing
   3




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sub-performing
    debt-to-equity
      Regulation
    Property
    Trade
    Names, Trademarks and Copyrights
   4




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##### Table of Contents



Competition
    Employees
    Available
    Information
  www.walterinvestment.com Form 10-K, Form 10-Q, Form 8-K, Form 10-K.
  (813) 421-7694.
  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 that we
    currently are unaware of, or that we currently deem to be
    immaterial, also may become important factors that adversely
    impact us. Further, to the extent 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
 5




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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
    Associated With Recent Adverse Developments in the Mortgage
    Finance and Credit Markets
  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 be unsuccessful in our business
    strategies. A prolonged economic slowdown, recession or period
    of declining real estate values 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 which could cause us to take
    charges and/or add to our allowance for loan losses in amounts
    which may be material.
       6




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Risks
    Related to Our Business
  We
    have limited experience operating as a stand-alone publicly
    traded REIT and therefore may have difficulty in successfully
    and profitably operating our business and complying with
    regulatory requirements applicable to public companies. In
    addition, we are dependent on key members of our senior
    management team that have limited experience operating as a
    REIT.
        We
    cannot assure you that we will be successful in identifying and
    consummating investments in residential loans on attractive
    terms, or at all.
   7




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We may
    not be successful in achieving our growth
    objectives.
    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 Merger
    and the integration of Hanovers business with our business
    could prove difficult.
    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.
   8




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and/or
  
    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.      We
    operate in a highly competitive market for investment
    opportunities and more established competitors may be able to
    compete more effectively for investment opportunities than we
    can.
     9




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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
          Certain
    of our existing financing facilities contain covenants that
    restrict our operations and may inhibit our ability to grow our
    business and increase revenues.
   10




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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.
   11




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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.
  2005-1, Trust 2005-1, 2006-1, Trust 2006-1, Trust 2005-1 Trust 2005-1 Trust 2006-1 Trust 2006-1
    Our
    failure to effectively service our portfolio of residential
    loans would materially and adversely affect us.
   12




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and/or
  Residential
    loans are subject to risks, including borrower defaults or
    bankruptcies, special hazard losses, declines in real estate
    values, delinquencies and fraud.
    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.
   13




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Natural
    disasters and adverse weather conditions could disrupt our
    business and adversely affect our results of operations,
    including those of our insurance business.
    and/or
  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.
   14




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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.
    ,
 15




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There
    can be no assurance that the actions of the U.S. government,
    Federal Reserve, U.S. Treasury and other governmental and
    regulatory bodies for the purpose of stabilizing the financial
    markets, including the establishment of the TALF and the PPIP,
    or market response to those actions, will achieve the intended
    effect, and our business may not benefit from these actions;
    further government actions or the cessation or curtailment of
    current U.S. government programs and/or participation in the
    mortgage and securities markets could adversely impact
    us.
    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.
   16




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We
    will 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 would subject us to potential risks.
    Our
    success will depend, in part, on our ability to attract and
    retain qualified personnel.
    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.
    Risks
    Related To Our Investments
  We
    invest in subprime, non-conforming and other credit-challenged
    residential loans, which are subject to increased risks relative
    to performing loans.
  sub-performing sub-performing sub-performing and/or
 17




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sub-performing and/or
        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.
   18




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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;
    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.   19




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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
  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; 20




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
    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
  Risks
    Related To The Funds Obtained in Our 2009 Secondary Offering and
    Our Common Stock
  We may
    allocate the net proceeds from the offering 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.
 21




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
    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.
    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.
   22




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Risks
    Related to Our Organization and Structure
  Certain
    provisions of Maryland law could inhibit a change in our
    control.
          Our
    authorized but unissued shares of common and preferred stock may
    prevent a change in our control.
   23




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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      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
  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.
   24




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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.
    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.
   25




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Complying
    with REIT requirements may force us to liquidate otherwise
    attractive investments.
    Failure
    to qualify as a REIT 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.
   26




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
    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;
    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
   27




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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.
    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.
   28




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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.
    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.
  2009-15, non-U.S. holders,
  2009-15
  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.
     29




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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.
   30




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Dividends
    payable by REITs do not qualify for reduced tax rates available
    for some dividends.
    There
    are uncertainties relating to the estimate of our special
    E&P distribution, which could result in our
    disqualification as a REIT.
    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, th
 31




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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      2009

2008High

Low

High

LowFirst Quarter

$
11.50


$
5.50


$
43.50


$
18.50Second Quarter


14.15



5.90



25.00



8.00Third Quarter


18.13



13.01



13.50



4.00Fourth Quarter


16.23



11.83



27.50



4.00     Cash DividendsDeclared per Share2009First 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


1.002008First Quarter ended March 31, 2008

$
0.00Second Quarter ended June 30, 2008


0.00Third Quarter ended September 30, 2008


0.00Fourth Quarter ended December 31, 2008


0.00  32




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Common
    Stock Offering
  Form S-11 333-162067),
    ITEM 6.
    SELECTED
    FINANCIAL DATA    ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K.
  Our
    Company
    Form 10-K,
 33




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face-to-face
  2004-1 Trust 2004-1, 2005-1 Trust 2005-1, 2006-1 Trust 2006-1
    Trust 2005-1, Trust 2006-1 Trust 2005-1 Trust 2005-1 Trust 2006-1 Trust 2006-1
  sub-performing
   34




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Business
    Separation and Merger
        
    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.    Basis of
    Presentation
   35




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Critical
    Accounting Policies
    Residential
    Loans and Revenue Recognition
     36




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Allowance
    for Loan Losses on Residential Loans
    Real
    Estate Owned
   37




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Accounting
    for the Impairment of Long-Lived Assets Including
    Goodwill
        Hedging
    Activities
    Insurance
    Claims (Hurricane Losses)
      Share-Based
    Compensation Plans
   38




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Income
    Taxes
      Litigation
    and Investigations
    Casa Linda Homes, et al. v. Walter Mortgage
    Company, et al. No. C-2918-08-H, th
   39




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


Increase/2009


2008


(Decrease)Residential loans, unencumberedInterest income

$
32,767


$
34,833


$
(2,066
)Less: Interest expense






3,509



(3,509
)Less: Interest rate hedge ineffectiveness






16,981



(16,981
)Net interest income


32,767



14,343



18,424Less: Provision for loan losses


4,359



5,894



(1,535
)Net interest income after provision for loan losses


28,408



8,449



19,959Residential loans held in securitization trustsInterest income


142,605



156,230



(13,625
)Less: Interest expense


89,726



98,606



(8,880
)Net interest income


52,879



57,624



(4,745
)Less: Provision for loan losses


10,823



15,074



(4,251
)Net interest income after provision for loan losses


42,056



42,550



(494
)Non-interest incomePremium revenue


11,465



11,773



(308
)Other income, net


569



(3,139
)


3,708Total


12,034



8,634



3,400Total revenues, net


82,498



59,633



22,865Total non-interest expenses


44,880



54,097



(9,217
)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   Net
    Interest Income
     40




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Provision
    for Loan Losses
    Non-Interest
    Income
    Non-Interest
    Expenses
    Income
    Taxes
    Residential
    Loan Portfolio and Related Liabilities
   41




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For the Year EndedDecember 31,2009


2008Average residential loan balance(1)

$
1,726,326


$
1,817,122Average mortgage-backed debt balance


1,320,138



1,539,520Average net investment

$
406,188


$
277,602Interest income

$
175,372


$
191,063Less: Interest expense


89,726



102,115Less: Interest rate hedge ineffectiveness






16,981Net interest income

$
85,646


$
71,967Effective interest income yield on the residential loan portfolio


10.16
%


10.51
%Effective interest expense rate on the mortgage-backed debt


6.80
%


6.63
%Net interest spread


3.36
%


3.88
%Average equity balance

$
489,831


$
273,939Average leverage ratio(2)


2.70



5.62Net interest margin(3)


4.96
%


4.89
%Net yield on net investment(4)


21.09
%


32.04
%     (1)
    
    Average residential loan balance is net of yield adjustments and
    gross of allowance for losses for the period.(2)
    
    Average leverage ratio is calculated as average mortgage-backed
    debt balance divided by average equity.(3)
    
    Net interest margin for the year ended December 31, 2008
    does not include the interest rate hedge ineffectiveness charge
    of $17.0 million. There were no hedging costs for the year
    ended December 31, 2009. Net interest margin is calculated
    by dividing net interest income by the average residential loan
    balance.(4)
    
    Net yield on net investment for the year ended December 31,
    2008 does not include the interest rate hedge ineffectiveness
    charge of $17.0 million. There were no hedging costs for
    the year ended December 31, 2009. Net yield on net
    investment is calculated by dividing net interest income by the
    net investment.  Average
    Net Investment
    Net
    Interest Spread
    Average
    Leverage Ratio
   42




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##### Table of Contents



Net
    Interest Margin
    Net Yield
    on Net Investment
    2008
    Summary Results of Operations
  Revenue
    by Portfolio Type
    For the Year EndedDecember 31,


Increase/2008


2007


(Decrease)Residential loans, unencumberedInterest income

$
34,833


$
19,940


$
14,893Less: Interest expense


3,509



6,953



(3,444
)Less: Interest rate hedge ineffectiveness


16,981







16,981Net interest income


14,343



12,987



1,356Less: Provision for loan losses


5,894



2,737



3,157Net interest income after provision for loan losses


8,449



10,250



(1,801
)Residential loans held in securitization trustsInterest income


156,230



180,051



(23,821
)Less: Interest expense


98,606



112,149



(13,543
)Net interest income


57,624



67,902



(10,278
)Less: Provision for loan losses


15,074



10,739



4,335Net interest income after provision for loan losses


42,550



57,163



(14,613
)Non-interest incomePremium revenue


11,773



9,771



2,002Other income, net


(3,139
)


1,028



(4,167
)Total


8,634



10,799



(2,165
)Total revenues, net


59,633



78,212



(18,579
)Total non-interest expenses


54,097



39,419



14,678Income before income taxes


5,536



38,793



(33,257
)Income tax expense


3,099



14,530



(11,431
)Net income

$
2,437


$
24,263


$
(21,826
)  43




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##### Table of Contents



Net
    Interest Income
      Provision
    for Loan Losses
    Non-Interest
    Income
    Non-Interest
    Expenses
    Income
    Taxes
   44




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##### Table of Contents



Residential
    Loan Portfolio and Related Liabilities
    For the Year EndedDecember 31,2008


2007Average residential loan balance(1)

$
1,817,122


$
1,816,233Average mortgage-backed debt balance


1,539,520



1,721,462Average net investment

$
277,602


$
94,771Interest income

$
191,063


$
199,991Less: Interest expense


102,115



119,102Less: Interest rate hedge ineffectiveness


16,981



Net interest income

$
71,967


$
80,889Effective interest income yield on the residential loan portfolio


10.51
%


11.01
%Effective interest expense rate on the mortgage-backed debt


6.63
%


6.92
%Net interest spread


3.88
%


4.09
%Average equity balance

$
273,939


$
103,227Average leverage ratio(2)


5.62



16.68Net interest margin(3)


4.89
%


4.45
%Net yield on net investment(4)


32.04
%


85.35
%     (1)
    
    Average residential loan balance is net of yield adjustments and
    gross of allowance for losses for the period.(2)
    
    Average leverage ratio is calculated as average mortgage-backed
    debt balance divided by average equity.(3)
    
    Net interest margin for the year ended December 31, 2008
    does not include the interest rate hedge ineffectiveness charge
    of $17.0 million. There were no hedging costs for the year
    ended December 31, 2007. Net interest margin is calculated
    by dividing net interest income by the average residential loan
    balance.(4)
    
    Net yield on net investment for the year ended December 31,
    2008 does not include the interest rate hedge ineffectiveness
    charge of $17.0 million. There were no hedging costs for
    the year ended December 31, 2007. Net yield on net
    investment is calculated by dividing net interest income by the
    net investment.  Average
    Net Investment
    Net
    Interest Spread
   45




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##### Table of Contents



Average
    Leverage Ratio
    Net
    Interest Margin
    Net Yield
    on Net Investment
    Additional
    Analysis of Residential Loan Portfolio
  Allowance
    for Loan Losses
         46




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##### Table of Contents



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

Residential Loans(In thousands)December 31, 2009

$
17,661



1.06
%

$
16,490



0.96
%December 31, 2008

$
18,969



1.06
%

$
15,991



0.88
%December 31, 2007

$
13,992



0.76
%

$
12,495



0.69
%     (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.    Unencumbered Residential Loans


Residential Loans Held in Securitization Trustsfor the Year Ended December 31,


for the Year Ended December 31,2009


2008


2009


2008Balance, December 31

$
3,418


$
1,737


$
15,551


$
12,255Provision charged to income


4,359



5,894



10,823



15,074Less: Charge-offs, net of recoveries


(4,317
)


(4,213
)


(12,173
)


(11,778
)Balance, December 31

$
3,460


$
3,418


$
14,201


$
15,551   Delinquency
    Information
    December 31,


December 31,2009


2008Total number of residential loans outstanding


34,205



36,767Delinquencies as a percent of number of residential loans
    outstanding:31-60 days


1.15
%


1.32
%61-90 days


0.58
%


0.60
%91 days or more


2.51
%


2.23
%4.24
%


4.15
%Principal balance of residential loans outstanding (in thousands)

$
1,819,859


$
1,964,978Delinquencies as a percent of amounts outstanding31-60 days


1.33
%


1.58
%61-90 days


0.74
%


0.72
%91 days or more


3.37
%


3.05
%5.44
%


5.35
%  47




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##### Table of Contents



Unencumbered Residential Loans


Residential Loans Held in Securitization TrustsDecember 31,


December 31,


December 31,


December 31,2009


2008


2009


200831-60 days


1.98
%


2.29
%


1.17
%


1.39
%61-90 days


1.53
%


0.92
%


0.54
%


0.67
%91 days or more


5.84
%


4.03
%


2.74
%


2.78
%9.35
%


7.24
%


4.45
%


4.84
%       December 31,

December 31,2009

2008Unencumbered residential loansNumber of loans


204



153Balance (in millions)

$
21.4


$
16.0Residential loans held in securitization trustsNumber of loans


656



666Balance (in millions)

$
39.8


$
42.3TotalNumber of loans


860



819Balance (in millions)

$
61.2


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


December 31,2009


20080.00 - 70.00


1.55
%


1.66
%70.01 - 80.00


2.92
%


3.04
%80.01 - 90.00(1)


70.19
%


69.49
%90.01 - 100.00


25.34
%


25.81
%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.   48




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##### Table of Contents



December 31,


December 31,2009


2008<=600


56.49
%


51.07
%601 - 640


13.39
%


11.30
%641 - 680


8.44
%


7.68
%681 - 720


4.91
%


4.60
%721 - 760


2.83
%


2.45
%761 - 800


2.37
%


2.39
%>800


0.96
%


1.00
%Unknown or unavailable


10.61
%


19.51
%100.00
%


100.00
%     December 31,


December 31,2009


2008Texas


33.90
%


33.41
%Mississippi


15.45
%


15.36
%Alabama


8.70
%


8.86
%Louisiana


6.52
%


6.49
%Florida


6.08
%


6.24
%Others


29.35
%


29.64
%Total


100.00
%


100.00
%     December 31,


December 31,2009


2008Year 2009 Origination


3.28
%


Year 2008 Origination


7.48
%


9.87
%Year 2007 Origination


12.99
%


13.85
%Year 2006 Origination


11.86
%


11.66
%Year 2005 Origination


8.56
%


8.79
%Year 2004 Origination and earlier


55.83
%


55.83
%Total


100.00
%


100.00
%   Real
    Estate Owned
    Units


BalanceBalance at December 31, 2008


151


$
12,435Repossessions


289



25,049Sales


(169
)


(15,503
)Balance at December 31, 2009


271


$
21,981  49




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##### Table of Contents



Units


BalanceBalance at December 31, 2008


673


$
35,763Repossessions


1,092



58,833Sales


(1,005
)


(53,453
)Balance at December 31, 2009


760


$
41,143   Liquidity
    and Capital Resources
  Overview
          Mortgage-Backed
    Debt and Warehouse Facilities
     50




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##### Table of Contents



and/or
  Credit
    Agreements
          Statements
    of Cash Flows
    For the Year EndedDecember 31,2009


2008Cash flows provided by operating activities

$
28,434


$
1,956Cash flows provided by investing activities


113,897



171,376Cash flows used in financing activities


(44,364
)


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

$
97,967


$
(1,803
)      51




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##### Table of Contents



Off-Balance
    Sheet Arrangements
      Dividends
       52




---



##### Table of Contents



Lease
    Obligations
    2010

$
1,6582011


8172012


6472013


6272014


645Thereafter


889Total

$
5,283   Market
    Risk
    Credit
    Risk
          Interest
    Rate Risk
     53




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##### Table of Contents



Prepayment
    Risk
      Liquidity
    Risks
      Inflation
    Risk
  and/or
  Effect
    of Governmental Initiatives on Market Risks
   54




---



##### Table of Contents



Recent
    Accounting Guidance
    Consolidation
    and Business Combinations
        Investments
  other-than-temporary
 55




---



##### Table of Contents



held-to-maturity available-for-sale
  Transfers
    and Servicing
        Derivatives
    and Hedging
   56




---



##### Table of Contents



Fair
    Value Measurements and Disclosures
          Financial
    Instruments
  other-than-temporary other-than-temporary
 57




---



##### Table of Contents



Compensation
    Subsequent
    Events
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK    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(T).
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15 15d-15(e)
 58




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##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
      Form 10-K Form 10-K.
  Changes
    in Internal Control Over Financial Reporting
    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.
 59




---



##### Table of Contents



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  (a)

(1) Financial StatementsSee Part II, Item 8 hereof.(2) Financial Statement SchedulesThe required financial statement schedules are omitted because
    the information is disclosed elsewhere herein.(b)

ExhibitsExhibits required to be attached by Item 601 of Regulation
    S-K are listed in the Exhibit Index attached hereto, which
    is incorporated herein by reference.
  60




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##### Table of Contents



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 2, 2010/s/  Ellyn
    L. BrownEllyn
    L. Brown

Director

March 2, 2010/s/  Denmar
    J. DixonDenmar
    J. Dixon

Vice Chairman and
    Executive Vice President

March 2, 2010/s/  William
    J. MeurerWilliam
    J. Meurer

Director

March 2, 2010/s/  Shannon
    E. SmithShannon
    E. Smith

Director

March 2, 2010/s/  Michael
    T. TokarzMichael
    T. Tokarz

Director

March 2, 2010/s/  Kimberly
    A. PerezKimberly
    A. Perez

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

March 2, 2010  61




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##### Table of Contents



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 LLC3
.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
.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, 2009.10
.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, 2009 62




---



##### Table of Contents



ExhibitNo

Notes

Description10
.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
.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. Cauthen10
.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. Perez10
.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
    Corporation10
.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 of Denmar Dixon10
.25

(25)

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. 63




---



##### Table of Contents



ExhibitNo

Notes

Description10
.26.3

(1)

Amendment to the Second Amended and Restated Employment
    Agreement, entered into February 12, 2009 between
    Registrant and Irma N. Tavares14


(24)

Code of Conduct21


(13)

Subsidiaries of the Registrant23
.1

(25)

Consent of Ernst & Young LLP31
.1

(25)

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

(25)

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


(25)

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. 64




---



##### Table of Contents



Note

Notes to Exhibit Index(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.(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)


Filed herewith  65




---



##### 



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, 2009
    and 2008 and for the Years Ended December 31, 2009, 2008
    and 2007: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




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING
    FIRM           ERNST &
    YOUNG LLP
    F-2




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
  December 31,2009


2008(In thousands, except share and per share data)ASSETSCash and cash equivalents

$
99,286


$
1,319Cash and short-term investments, restricted


51,654



49,196Receivables, net


3,052



5,447Residential loans, net of allowance for loan losses of $17,661
    and $18,969, respectively


1,644,346



1,771,675Subordinate security


1,801



Real estate owned


63,124



48,198Deferred debt issuance costs


18,450



19,745Other assets


5,961



3,261Total assets

$
1,887,674


$
1,898,841LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable

$
14,045


$
2,181Accrued expenses


28,296



46,367Deferred income taxes, net


173



55,530Mortgage-backed debt


1,267,454



1,372,821Accrued interest


8,755



9,717Other liabilities


767



748Total liabilities


1,319,490



1,487,364Commitments and contingencies (Note 16)Stockholders equity:Member unitIssued  0 and 1 member units at December 31,
    2009 and 2008, respectively






Preferred stock, $0.01 par value per share:Authorized  10,000,000 sharesIssued and outstanding  0 shares at
    December 31, 2009 and 2008, respectively






Common stock, $0.01 par value per share:Authorized  90,000,000 sharesIssued and outstanding  25,642,889 and 0 shares
    at December 31, 2009 and 2008, respectively


256



Additional paid-in capital


122,552



52,293Retained earnings


443,433



684,127Accumulated other comprehensive income


1,943



1,747568,184



738,167Less: Receivable from Walter Energy






(326,690
)Total stockholders equity


568,184



411,477Total liabilities and stockholders equity

$
1,887,674


$
1,898,841    F-3




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
  Year Ended December 31,2009


2008


2007(In thousands, except share and per share data)Net interest income:Interest income

$
175,372


$
191,063


$
199,991Less: Interest expense


89,726



102,115



119,102Less: Interest rate hedge ineffectiveness






16,981



Total net interest income


85,646



71,967



80,889Less: Provision for loan losses


15,182



20,968



13,476Total net interest income after provision for loan losses


70,464



50,999



67,413Non-interest income:Premium revenue


11,465



11,773



9,771Other income, net


569



(3,139
)


1,028Total non-interest income


12,034



8,634



10,799Non-interest expenses:Claims expense


4,483



5,180



4,831Salaries and benefits


20,568



15,934



18,570Legal and professional


4,166



1,249



1,720Occupancy


1,364



1,509



1,522Technology and communication


2,980



1,404



1,360Depreciation and amortization


436



416



1,175General and administrative


9,537



7,422



5,125Other expense


493



1,370



1,433Related party  allocated corporate charges


853



3,469



3,683Goodwill impairment charges






12,291



Provision for estimated hurricane insurance losses






3,853



Total non-interest expenses


44,880



54,097



39,419Income before income taxes


37,618



5,536



38,793Income tax expense (benefit)


(76,161
)


3,099



14,530Net income

$
113,779


$
2,437


$
24,263Basic earnings per common and common equivalent share

$
5.26


$
0.12


$
1.22Diluted earnings per common and common equivalent share

$
5.25


$
0.12


$
1.22Weighted average common and common equivalent shares
    outstanding  basic


21,496,369



19,871,205



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


21,564,621



19,871,205



19,871,205    F-4




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
    AND COMPREHENSIVE INCOME
    FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
  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, 2006

$
70,052






$



$
91,704






$
661,677


$
3,136


$
(686,465
)Adjustment to initially apply FIN 48


(4,421
)


















(4,421
)Adjusted balance at January 1, 2007


65,631











91,704







657,256



3,136



(686,465
)Comprehensive income:Net income


24,263














$
24,263



24,263Other comprehensive loss, net of tax:Change in postretirement benefit plans, net of $112 tax effect


(299
)














(299
)






(299
)Net amortization of realized gain on hedges, net of $144 tax
    effect


(282
)














(282
)






(282
)Net unrealized loss on hedges, net of $3,445 tax effect


(6,385
)














(6,385
)






(6,385
)Comprehensive income

















$
17,297Net activity with Walter Energy


50,917











(25,864
)














76,781Share-based compensation


2,556











2,556Balance 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


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, net of tax:Change in postretirement benefit 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







48$
113,975Net activity with Walter Energy


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 WIM 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


$
    F-5




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2009


2008


2007(In thousands)Operating activities:Net income

$
113,779


$
2,437


$
24,263Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for loan losses


15,182



20,968



13,476Amortization of residential loan discount to interest income


(14,965
)


(18,334
)


(25,140
)Depreciation and amortization


436



416



1,175Proceeds from sale of mortgage securities classified as trading


2,387







Benefit from deferred income taxes


(81,749
)


(7,777
)


(7,088
)Amortization of deferred debt issuance costs to interest expense


1,204



1,845



2,867Share-based compensation


1,352



974



2,556Goodwill impairment charges






12,291



Other


(550
)


(258
)


(298
)Decrease (increase) in assets, net of effect of reverse
    acquisition:Receivables


(3,108
)


(3,802
)


1,227Other


(770
)


(649
)


46Increase (decrease) in liabilities, net of effect of reverse
    acquisition:Accounts payable


(1,384
)


(161
)


372Accrued expenses


(2,415
)


(3,758
)


1,478Accrued interest


(965
)


(2,236
)


(893
)Cash flows provided by operating activities


28,434



1,956



14,041Investing activities:Purchases of residential loans from unrelated third parties










(39,900
)Principal payments received on residential loans


117,388



148,432



214,632Additions to real estate owned


(10,155
)


(8,885
)


(5,228
)Cash proceeds from sales of real estate owned


10,731



11,863



17,138Additions to property and equipment, net


(2,176
)


(217
)


(156
)Cash proceeds from sale of property and equipment






259



1(Increase) decrease in cash and short-term investments,
    restricted


(2,665
)


19,924



15,177Cash acquired in reverse acquisition with Hanover


774







Cash flows provided by investing activities


113,897



171,376



201,664Financing activities:Issuance of mortgage-backed debt






25,000



189,200Payments on mortgage-backed debt


(108,169
)


(358,459
)


(219,793
)Net activity with Walter Energy


26,583



158,324



(184,932
)Dividends to WIM interest-holders


(16,000
)






Dividends and dividend equivalents declared


(23,621
)






Stock options exercised


54







Secondary offering, net of issuance costs


76,789







Debt issuance costs paid










(530
)Cash flows used in financing activities


(44,364
)


(175,135
)


(216,055
)Net increase (decrease) in cash and cash equivalents


97,967



(1,803
)


(350
)Cash and cash equivalents at beginning of year


1,319



3,122



3,472Cash and cash equivalents at end of year

$
99,286


$
1,319


$
3,122Supplemental Disclosure of Cash Flow Information:Cash paid for interest

$
89,480


$
119,600


$
117,286Cash paid for income taxes

$
5,551


$
12,443


$
20,633Supplemental Disclosure of Non-Cash Investing &
    Financing Activities:Real estate owned acquired through foreclosure

$
87,869


$
73,036


$
64,885Residential loans originated to finance the sale of real estate
    owned

$
56,849


$
42,345


$
36,281Residential loans acquired with warehouse proceeds and/or
    advances from Walter Energy

$
2,504


$
107,593


$
235,849Dividends to Walter Energy

$
306,458


$
17,077


$
25,864Dividends and dividend equivalents declared, not yet paid

$
13,248


$



$
Consummation of reverse acquisition with Hanover

$
2,186


$



$
    F-6




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Business
    and Basis of Presentation    face-to-face
  The
    Spin-off
      The
    Merger
    Basis
    of Presentation
  Form 10-K Regulation S-X.
   F-7




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Principles
    of Consolidation
  2004-1 Trust 2004-1, 2005-1 Trust 2005-1, 2006-1 Trust 2006-1
    Reclassifications
   F-8




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2.
    Summary
    of Significant Accounting Policies  Use of
    Estimates
    Concentrations
    of Credit Risk
        Cash
    and Cash Equivalents
    Cash
    and Short-Term Investments, Restricted
   F-9




---



##### Table of Contents



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




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Allowance
    for Loan Losses on Residential Loans
    Real
    Estate Owned
    Property
    and Equipment
    Accounting
    for the Impairment of Long-Lived Assets and
    Goodwill
       F-11




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Deferred
    Debt Issuance Costs
    Mortgage-Backed
    Debt
      Hedging
    Activities
    Insurance
    Claims (Hurricane Losses)
     F-12




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008


2007Gross liability, beginning of year

$
2,906


$
1,510


$
2,501Less: Reinsurance recoverables






(79
)


(1,383
)Net liability, beginning of year


2,906



1,431



1,118Incurred losses related to:Current year


4,801



8,759



4,718Prior years


(318
)


(236
)


17Total incurred


4,483



8,523



4,735Paid related to:Current year


4,136



6,593



4,059Prior years


2,238



648



1,713Less: Reinsurance recoveries






(193
)


(1,350
)Total Paid


6,374



7,048



4,422Net liability, end of year


1,015



2,906



1,431Plus: Reinsurance recoverables










79Gross liability, end of year

$
1,015


$
2,906


$
1,510Reported claims liability

$
365


$
1,505


$
709Incurred but not reported claims liability


650



1,401



801Gross liability, end of year

$
1,015


$
2,906


$
1,510   Share-Based
    Compensation Plans
    Income
    Taxes
     F-13




---



##### Table of Contents



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
    Recent
    Accounting Guidance
   F-14




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidation
    and Business Combinations
        Investments
  other-than-temporary other-than-temporary held-to-maturity available-for-sale
  Transfers
    and Servicing
   F-15




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Derivatives
    and Hedging
    Fair
    Value Measurements and Disclosures
   F-16




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Financial
    Instruments
  other-than-temporary other-than-temporary
 F-17




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Compensation
    Subsequent
    Events
    3.
    Business
    Separation and Merger      
    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




---



##### Table of Contents



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  F-19




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the PeriodApril 17, 2009to December 31, 2009Total revenue

$
1,622Net loss

$
(686
)       For the Year EndedDecember 31,2009

2008Total revenue

$
187,740


$
202,269Net income

$
35,924


$
38,357       4.
    Fair
    Value    Basis or
    Measurement
         F-20




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        As of December 31, 2009Quoted Prices inActive Markets





Significantfor Identical


Significant Other


UnobservableAssets


Observable Inputs


Inputs(Level 1)


(Level 2)


(Level 3)


TotalSubordinate security

$



$



$
1,801


$
1,801Total

$



$



$
1,801


$
1,801       As of and forthe Year EndedDecember 31, 2009Beginning balance

$
Principal reductions


Total gains (losses):Included in net income


Included in other comprehensive income


189Purchases, sales, issuances and settlements, net


1,612Transfer into or out of Level 3 category


$
1,801Total 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

$
    F-21




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    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, 2009

$
63,124


$



$



$
63,124


$
(15,045
)December 31, 2008


48,198











48,198



(12,628
)     December 31, 2009

December 31, 2008Carrying Amount

Estimated Fair Value

Carrying Amount

Estimated Fair ValueFinancial assets:Cash and cash equivalents

$
99,286


$
99,286


$
1,319


$
1,319Cash and short-term investments, restricted


51,654



51,654



49,196



49,196Receivables, net


3,052



3,052



5,447



5,447Residential loans, net


1,644,346



1,533,267



1,771,675



1,460,000Subordinate security


1,801



1,801







Real estate owned


63,124



63,124



48,198



48,198Financial liabilities:Accounts payable


14,045



14,045



2,181



2,181Accrued expenses


28,296



28,296



46,367



46,367Mortgage-backed debt, net of deferred debt issuance costs


1,249,004



1,147,142



1,353,076



1,075,000Accrued interest


8,755



8,755



9,717



9,717     Cash, restricted cash and short-term investments,
    receivables, accounts payable, accrued expenses, and accrued
    interest
  Residential loans
  Subordinate security
 F-22




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary,
  Real estate owned
  Mortgage-backed debt, net of deferred debt issuance
    costs
  5.
    Residential
    Loans    December 31, 2009


December 31, 2008Unencumbered residential loans, net

$
333,636


$
363,741Residential loans held in securitization trusts, net


1,310,710



1,407,934Residential loans, net

$
1,644,346


$
1,771,675     For the Year Ended December 31,2009

2008

2007Balance, December 31

$
18,969


$
13,992


$
13,011Provision charged to income


15,182



20,968



13,476Less: Charge-offs, net of recoveries


(16,490
)


(15,991
)


(12,495
)Balance, December 31

$
17,661


$
18,969


$
13,992     December 31, 2009


December 31, 200831-60 days


1.33
%


1.58
%61-90 days


0.74
%


0.72
%91 days or more


3.37
%


3.05
%5.44
%


5.35
%  F-23




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Unencumbered
    Residential Loans
    December 31, 2009


December 31, 2008Unencumbered residential loans, principal balance

$
365,797


$
399,099Less: Yield adjustment, net(1)


(28,701
)


(31,940
)Less: Allowance for loan losses


(3,460
)


(3,418
)Unencumbered residential loans, net(2)

$
333,636


$
363,741     (1)
    
    Deferred origination costs, premiums and discounts are amortized
    over the life of the note portfolio. Deferred origination costs
    included in the yield adjustment, net for unencumbered
    residential loans, net at December 31, 2009 and 2008 were
    $2.8 million and $3.1 million, respectively. Premiums
    and discounts, net included in the yield adjustment, net for
    unencumbered residential loans, net at December 31, 2009
    and 2008 were $35.9 million and $38.8 million,
    respectively.(2)
    
    The weighted average life of the portfolio approximates
    10 years based on assumptions for prepayment speeds,
    default rates and losses.    For the Year Ended December 31,2009

2008

2007Balance, December 31

$
3,418


$
1,737


$
293Provision charged to income


4,359



5,894



2,737Less: Charge-offs, net of recoveries


(4,317
)


(4,213
)


(1,293
)Balance, December 31

$
3,460


$
3,418


$
1,737       December 31, 2009


December 31, 200831-60 days


1.98
%


2.29
%61-90 days


1.53
%


0.92
%91 days or more


5.84
%


4.03
%9.35
%


7.24
%   Residential
    Loans Held in Securitization Trusts, Net
   F-24




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31, 2009


December 31, 2008Residential loans held in securitization trusts, principal
    balance

$
1,454,062


$
1,565,879Less: Yield adjustment, net(1)


(129,151
)


(142,394
)Less: Allowance for loan losses


(14,201
)


(15,551
)Residential loans held in securitization trusts, net(2)

$
1,310,710


$
1,407,934     (1)
    
    Deferred origination costs, premiums and discounts are amortized
    over the life of the note portfolio. Deferred origination costs
    included in the yield adjustment, net for residential loans held
    in securitization trusts, net at December 31, 2009 and 2008
    were $8.8 million and $9.6 million, respectively.
    Premiums and discounts, net included in the yield adjustment,
    net for residential loans held in securitization trusts, net at
    December 31, 2009 and 2008 were $145.8 million and
    $162.2 million, respectively.(2)
    
    The weighted average life of the portfolio approximates
    8 years based on assumptions for prepayment speeds, default
    rates and losses.    For the Year Ended December 31,2009

2008

2007Balance, December 31

$
15,551


$
12,255


$
12,718Provision charged to income


10,823



15,074



10,739Less: Charge-offs, net of recoveries


(12,173
)


(11,778
)


(11,202
)Balance, December 31

$
14,201


$
15,551


$
12,255      F-25




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31, 2009


December 31, 200831-60 days


1.17
%


1.39
%61-90 days


0.54
%


0.67
%91 days or more


2.74
%


2.78
%4.45
%


4.84
%   6.
    Subordinate
    Security    December 31, 2009


December 31, 2008Principal balance

$
3,812


$
Purchase price and other adjustments


(2,200
)


Amortized cost

$
1,612


$
Unrealized gain


189



Carrying value (fair value)

$
1,801


$
    F-26




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   7.
    Mortgage-Backed
    Debt and Related Collateral  Mortgage-Backed
    Debt
    WeightedAverage StatedInterest Rate atDecember 31,


December 31,


Final2009


2008


2009


MaturityTrust IV Asset-Backed Notes

$
123,588


$
144,950



8.33
%


2030Trust VI Asset-Backed Notes


110,373



121,776



7.42
%


2035Trust VII Asset-Backed Notes


100,852



106,874



6.34
%


2036Trust VIII Asset-Backed Notes


111,549



120,506



7.79
%


2038Trust X Asset-Backed Notes


169,512



183,489



6.30
%


2036Trust XI Asset-Backed Notes


159,042



167,448



5.51
%


2038Trust 2004-1
    Trust Asset-Backed
    Notes


150,432



160,277



6.64
%


2037Trust 2005-1
    Trust Asset-Backed
    Notes


160,799



172,921



6.15
%


2040Trust 2006-1
    Trust Asset-Backed
    Notes


179,006



194,580



6.28
%


2040Hanover Capital Grantor Trust Collateralized Mortgage
    Obligations


2,301







5.46
%


2029Total

$
1,267,454


$
1,372,821        F-27




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      and/or
    Collateral
    for Mortgage-Backed Debt
    December 31, 2009


December 31, 2008Residential loans in securitization trusts, principal balance

$
1,454,062


$
1,565,879Real estate owned


41,143



35,763Restricted cash and short-term investments


45,752



48,985Total mortgage-backed debt collateral

$
1,540,957


$
1,650,627   8.
    Share-Based
    Compensation Plans     F-28




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Option
    Activity
       F-29




---



##### Table of Contents



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, 2007


130,337


$
16.64Granted


13,625



53.45Exercised


(85,703
)


14.56Forfeited






Outstanding 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


$
937Exercisable at December 31, 2009


62,906


$
21.05



7.00


$
288     (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-30




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Method
    and Assumptions Used to Estimate Fair Value of
    Options
    2009

2008

2007Risk free interest rate


2.32
%


2.78
%


4.75
%Dividend yield


13.40
%


0.65
%


0.73
%Expected life (years)


5.00



5.11



4.31Volatility


60.39
%


40.85
%


34.47
%Forfeiture rate


4.62
%


4.62
%


4.62
%     Non-vested
    Share Activity
           F-31




---



##### Table of Contents



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, 2007


58,043Granted


11,716Vested


(11,282
)Cancelled


Outstanding 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



9.14     (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-32




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Share-Based
    Compensation Expense
    December 31,2009


2008


2007(In millions)Plans sponsored by Walter Energy

$
0.2


$
0.5


$
1.5Walter Investment stock options, restricted stock and restricted
    stock units


1.2







Total

$
1.4


$
0.5


$
1.5       9.
    Letters
    of Credit    10.
    Credit
    Agreements  Syndicated
    Credit Agreement
  sub-facility
 F-33




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Revolving
    Credit Agreement and Security Agreement
      Support
    Letter of Credit Agreement
   F-34




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    11.
    Transactions
    with Walter Energy    Form S-4
  12.
    Comprehensive
    Income and Accumulated Other Comprehensive Income    For the Year Ended December 31,2009


2008


2007Net income

$
113,779


$
2,437


$
24,263Other comprehensive income (loss):Change in postretirement benefit plans, net of $502, $69 and
    $112 tax effect, respectively


(41
)


(106
)


(299
)Net unrealized gain on subordinate security


189







Net amortization of realized gain on closed hedges, net of $347,
    $137 and $144 tax effect, respectively


48



(258
)


(282
)Net recognized loss on hedges, net of $0, $3,329 and $3,445 tax
    effect, respectively






6,130



(6,385
)Comprehensive income

$
113,975


$
8,203


$
17,297  F-35




---



##### Table of Contents



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


$
1,943   13.
    Common
    Stock and Earnings Per Share   F-36




---



##### Table of Contents



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


2008


2007Basic earnings per share:Net income

$
113,779


$
2,437


$
24,263Less: net income allocated to unvested restricted stock units


(603
)






Net income available to common stockholders (numerator)

$
113,176


$
2,437


$
24,263Weighted-average common shares outstanding


21,008



19,871



19,871Add: vested restricted stock units


488







Total weighted-average common shares outstanding (denominator)


21,496



19,871



19,871Basic earnings per share

$
5.26


$
0.12


$
1.22Diluted earnings per share:Net income

$
113,779


$
2,437


$
24,263Less: net income allocated to unvested restricted stock units


(601
)






Net income available to common stockholders (numerator)

$
113,178


$
2,437


$
24,263Weighted-average common shares outstanding


21,008



19,871



19,871Add: Potentially dilutive stock options and restricted stock
    units


557







Diluted weighted-average common shares outstanding (denominator)


21,565



19,871



19,871Diluted earnings per share

$
5.25


$
0.12


$
1.22     Common
    Stock Offering
  Form S-11 333-162067),
  Share-Based
    Payment Grants Subsequent to the Balance Sheet
    Date
   F-37




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          14.
    REIT
    Qualification       F-38




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   15.
    Income
    Taxes      StateFederal


and Local


TotalFor the years ended December 31:2009Current

$
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
)

$
3,0992007Current

$
20,291


$
1,327


$
21,618Deferred


(8,052
)


964


$
(7,088
)Total

$
12,239


$
2,291


$
14,530     For the Years Ended December 31,2009


2008


2007Income from operations before income tax expense

$
37,618


$
5,536


$
38,793Tax provision at the statutory tax rate of 35%(1)

$
13,166


$
1,938


$
13,578Effect of:State and local income tax


(1,534
)


(2,914
)


701REIT income not subject to federal income tax


(6,658
)






Non-deductible goodwill






3,813



REIT conversion


(81,293
)






Other


158



262



251Tax expense (benefit) recognized

$
(76,161
)

$
3,099


$
14,530Effective tax rate(2)


(202.5
)%


56.0
%


37.5
%     (1)
    
    Statutory tax rate applies to the Companys income for the
    period prior to the Merger and the taxable REIT subsidiaries for
    the year ended December 31, 2009.(2)
    
    The Companys effective tax rate for 2009 was (202.5)%,
    compared to 56.0% for 2008 and 37.5% for 2007. The effective tax
    rate for 2009 was significantly different that the rates used in
    2008 and 2007 due to the REIT conversion in 2009 and the
    resulting reversal of deferred taxes. The effective tax rate for
    2008 was higher than the rate used for 2007 primarily due to
    non-deductible goodwill, net of state and local income tax
    benefits related to uncertain tax positions. F-39




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2009


2008Deferred tax assets:Contingent interest

$



$
3,854Allowance for losses on instalment notes receivable






6,940Interest rate hedge agreements






(343
)Accrued expenses


284



6,358Federal benefit of state deductions






3,028Federal net operating loss carryfowards


3,337



Other


1,900



Total deferred tax assets


5,521



19,837Valuation allowance


(5,101
)


Total deferred tax assets, net of valuation allowance


420



19,837Deferred tax liabilities:Depreciation/Amortization






(63
)Interest income on instalment notes






(68,337
)Deferred origination costs






(4,659
)Prepaid assets


(593
)


(2,308
)Total deferred tax liabilities


(593
)


(75,367
)Net deferred tax liabilities

$
(173
)

$
(55,530
)     Income
    Tax Exposure
  and/or
 F-40




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Adoption
    of Uncertain Tax Position Guidance
      December 31,2009


2008Gross unrecognized tax benefits at the beginning of the year

$
8,651


$
12,173Decreases for tax positions taken in prior years


(980
)


(1,072
)Increases for tax positions for the current year






Decreases for changes in temporary differences






(2,450
)Gross unrecognized tax benefits at the end of the year

$
7,671


$
8,651Accrued interest and penalties

$
6,297


$
6,405    F-41




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Taxable
    Income
          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-42




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      16.
    Commitments
    and Contingencies  Securities
    Sold with Recourse
    Employment
    Agreements
  change-in-control
  Lease
    Obligations
      2010

$
1,6582011


8172012


6472013


6272014


645Thereafter


889Total

$
5,283   Income
    Tax Exposure
    Miscellaneous
    Litigation
   F-43




---



##### Table of Contents



WALTER
    INVESTMENT MANAGEMENT CORP. AND SUBSIDARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   17.
    Subsequent
    Events  Share-Based
    Payment Grants
      Mid-State
    Trust X Trigger Cure
   F-44