Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

For the fiscal year ended December 31, 2013

or

For the transition period from                    to                    

Commission file number: 001-13417

Walter Investment Management Corp.

(Exact name of registrant as specified in its charter)

(813) 421-7600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III or this Form 10-K or any amendment to this Form 10-K  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

The aggregate market value of the voting stock held by non-affiliates, based on the price at which the stock was last sold as of June 30, 2013, was $1.2 billion.

The registrant had 37,388,547 shares of common stock outstanding as of February 18, 2014.

Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement to be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of registrant’s fiscal year covered by this Annual Report are incorporated by reference into Part III.

Table of Contents

WALTER INVESTMENT

MANAGEMENT CORP.

FORM 10-K

ANNUAL REPORT

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013

INDEX

2

Table of Contents

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements in this report, including matters discussed under Part I, Item 1. “Business” and Item 3. “Legal Proceedings” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which reflect our current views with respect to certain events that may affect our future performance. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “assumes,” “may,” “should,” “will,” or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed in these forward-looking statements. These forward-looking statements are based on our current beliefs, intentions and expectations. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described below and in more detail in Part I, Item 1A. “Risk Factors” and in our other filings with the Securities and Exchange Commission, or the SEC.

In particular (but not by way of limitation), the following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in the forward-looking statements:

3

Table of Contents

All of the above factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for our management to predict all such factors or to assess the effect of each such new factor on our business.

4

Table of Contents

Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements included herein may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as otherwise required under the federal securities laws. If we were in any particular instance to update or correct a forward-looking statement, investors and others should not conclude that we would make additional updates or corrections thereafter except as otherwise required under the federal securities laws.

5

Table of Contents

PART I

Our Company

We are a fee-based services provider to the residential mortgage industry focused on providing servicing for reverse mortgage loans and credit- sensitive forward mortgage loans. The terms “Walter Investment,” the “Company,” “we,” “us” and “our” as used throughout this report refer to Walter Investment Management Corp. and its consolidated subsidiaries. We are a Maryland corporation incorporated in 1997. Our business was established in 1958 and previously operated as the financing business of Walter Energy, originating and purchasing residential loans and servicing these loans to maturity. In April 2009, we were spun off from Walter Energy, merged with Hanover Capital Mortgage Holdings, Inc., or Hanover, a real estate investment trust, or REIT, qualified as a REIT, and began to operate our business as an independent, publicly traded company. Since the spin-off, we have significantly grown our servicing and originations businesses through a number of significant acquisitions, including the acquisitions of Reverse Mortgage Solutions, Inc., or RMS, and Security One Lending, or S1L, in 2012, and the Residential Capital LLC, or ResCap, and Bank of America, National Association, or BOA, portfolio acquisitions in early 2013, each of which is described in greater detail below under “Recent and Other Developments.” In addition, we acquired Marix Servicing, LLC, or Marix, a high-touch specialty mortgage servicer, in 2010, and GTCS Holdings LLC, or Green Tree, a leading independent, fee-based business services company providing high-touch, third-party servicing of credit-sensitive consumer loans, in 2011. As a result of the Green Tree acquisition, we no longer qualified as a REIT. We operate throughout the United States, or U.S.

Throughout this Annual Report on Form 10-K, references to “residential loans” refer to residential mortgage loans, including forward mortgage loans, reverse mortgage loans and participations, and residential retail installment agreements, which include manufactured housing loans, and references to “borrowers” refer to borrowers under residential mortgage loans and installment obligors under residential retail installment agreements. Forward mortgage loans and residential retail installment agreements are collectively referred to as “forward loans” or “forward mortgages.” Reverse mortgage loans and participations are collectively referred to as “reverse loans” or “reverse mortgages.”

Our business provides servicing to the forward residential loan market for several product types including agency or non-agency and first and second lien and manufactured housing loans. Our specialty servicing business focuses on credit-sensitive residential mortgages (i.e. loans that are delinquent or more operationally intensive to support). We also service reverse mortgage loans and higher credit-quality performing forward mortgage loans. We operate several other related businesses which include managing a mortgage portfolio of credit-challenged, non-conforming residential loans; an insurance agency serving residential loan customers; a post charge-off collection agency; and a fully integrated loan originations platform. The originations platform currently focuses on retention and recapture activities for our servicing portfolio through our consumer retention channel, but it also enables us to maintain sizable operations in the consumer retail and correspondent lending channels. We expect to operate the originations business under the name Ditech in 2014. These supplemental businesses will continue to allow us to leverage our core servicing capabilities and customer base to generate ancillary revenue streams.

As of December 31, 2013, we serviced approximately 2.1 million mortgage loans with approximately $218.0 billion in unpaid principal balance making us one of the top four non-bank mortgage servicers in the U.S. Our servicing portfolio significantly expanded throughout 2013 as a result of our servicing asset acquisitions, the most significant of which were our $126.7 billion of bulk portfolio acquisitions from ResCap and BOA in early 2013, and our other bulk and flow servicing asset acquisitions, which contributed an additional $17.4 billion to our servicing portfolio. In 2013, we also materially expanded our originations of forward mortgages concurrent with the servicing portfolio acquisition from ResCap as we also purchased its capital markets platform and its national originations platform. Our originations capabilities serve as a means both to replenish run-off in our servicing portfolio arising from prepayments and repayments and to grow our business. We added $5.9 billion to our servicing portfolio through forward loans originated by our consumer retail and correspondent lending channels. The consumer lending channel is comprised of both our consumer retail channel and our consumer retention channel.

6

Table of Contents

We also have a reverse mortgage business that primarily focuses on the origination, securitization and servicing of reverse mortgage loans and also provides other ancillary services for the reverse mortgage market. Our reverse mortgage platform was launched in the fourth quarter of 2012 following the acquisitions of RMS and S1L.

Our businesses employ market leading technology by leveraging third party systems where standardization is key and proprietary systems where superior functionality, flexibility and time to market are critical to provide best in class regulatory compliance, customer experience and credit performance. The majority of our proprietary systems have been built over the past several years by a large team of Information Technology professionals using the latest development techniques and technologies to ensure our systems are effective and secure. In-house developed proprietary systems are leveraged for customer service, default management, data modeling and reverse mortgage originations and servicing.

We manage our Company in six reportable segments: Servicing, Originations, Reverse Mortgage, Assets Receivables Management, Insurance, and Loans and Residuals. A description of the business conducted by each of these segments and key financial highlights are provided below:

Servicing — Our Servicing segment services loans where we own the servicing right and on behalf of other servicing right or mortgage loan owners, which we refer to as “sub-servicing.” These servicing activities are performed on a fee-for-service basis and involve the management (e.g., calculation, collection, remittance) of mortgage payments, escrow accounts, and insurance claims, as well as the administration of foreclosure procedures, preservation and disposal of real estate owned, and the management and collection of associated servicing advance receivables. We also manage loan modification programs for borrowers experiencing temporary hardships by providing short-term interest rate reductions and/or payment deferrals. We perform servicing operations for various clients, the most significant of which is the Federal National Mortgage Association, or Fannie Mae. Our servicing agreements, including those with GSEs and government entities (e.g. Fannie Mae, Federal Home Loan Mortgage Corporation, or Freddie Mac, and the Government National Mortgage Association, or Ginnie Mae) can be terminated at any time without cause by our counterparties. For substantially all of our servicing agreements, termination without cause is subject to a termination fee payable to us upon termination and transferring of servicing. The types of loans we service include forward residential mortgages, manufactured housing and consumer installment loans and contracts. In 2013, our servicing revenues from Fannie Mae constituted approximately 27% of our total revenues.

The owner of servicing rights acts on behalf of loan owners and has the contractual right to receive a stream of cash flows (expressed as a percentage of unpaid principal balance) in exchange for performing specified servicing functions and temporarily advancing funds to cover payments on delinquent or defaulted mortgages. As a sub-servicer we earn a contractual fee on a per-loan basis and the right to any ancillary fees, and we are reimbursed for any servicing advances we make on delinquent or defaulted mortgages generally in the following month. We also earn incentives for exceeding pre-defined performance hurdles in servicing various loan portfolios as well as modification fees and other program specific incentives such as HAMP. We sub-service for money center banks that do not have the infrastructure or personnel to perform high-touch specialty servicing.

We generally perform specialty servicing activities utilizing a “high-touch” model to establish and maintain borrower contact and facilitate loss-mitigation strategies in an attempt to keep defaulted borrowers in their homes. Under certain circumstances, we offer loss-mitigation options that include loan modification through the use of federally-sponsored loan modification programs such as the Home Affordable Modification Program, or HAMP. When loan modification and other efforts are unable to cure a default, we seek to avoid foreclosure and timely acquire and/or liquidate the property securing the mortgage loan, where possible. We also pursue alternative property resolutions such as short sales, in which the borrower agrees to sell the property for less than the loan balance and the difference is forgiven, and deeds-in-lieu of foreclosure, in which the borrower agrees to convey the property deed outside of foreclosure proceedings. Our specialty servicing fees typically include a base servicing fee and activity-based fees for the successful completion of default-related services.

We have grown our servicing portfolio through our servicing rights acquisitions supplemented by the organic mortgage loan production in our consumer lending and correspondent lending businesses.

7

Table of Contents

The value of our servicing right asset is based on the expected present value of the stream of servicing-related cash flows from a loan and is dependent on market interest rates and prepayment speeds. Operating results for our servicing business depend in part on our ability to effectively manage interest rate and prepayment risks. Generally, a rising interest rate environment drives a decline in prepayment speeds and thus increases the value of servicing rights, while a declining interest rate environment drives increases in prepayment speeds and thus reduces the value of servicing rights.

Originations — Our Originations segment originates and purchases forward mortgage loans, which we generally sell to third parties while retaining the servicing rights. Due to our consumer direct originations capabilities, we believe we are well-positioned to “recapture” loans within our existing servicing portfolio where borrowers are pursuing a refinancing. Without our originations platform, these loans would likely be refinanced through a new lender, reducing the size of our servicing portfolio and depriving us of the continued stream of servicing fees from these loans. The ability to manufacture high quality, low cost servicing rights for our core servicing business, in addition to the ongoing diversified revenue stream for this business, represents a key element of our strategic plan. Our originations capabilities serve as a means to replenish run-off in our servicing portfolio from prepayments and repayments. Our originations platform has focused on retention and recapture opportunities created by the government-sponsored HARP program, however our intent is to ramp up consumer retail lending and correspondent lending in the future. The extension of HARP to December 31, 2015 is expected to provide attractive originations opportunities by enabling a significant number of customers in our portfolio that are currently ineligible due to their delinquency history over the last 12 months to potentially become eligible during the extension period.

The originations business gained significant breadth, depth and scale through our acquisition of ResCap’s originations platform in early 2013, which is expected to operate under the name Ditech. The Ditech platform provides us with immediate access to a national originations business and positions us well to compete as a top non-bank lender. We experienced strong growth in our originations volumes during the year ended December 31, 2013. At December 31, 2013, our locked originations pipeline stood at $2.2 billion.

The loans we originate are primarily sourced through our consumer retention channel, however, we also maintain the ability to aggregate loans through correspondent lending and consumer retail channels. The loans we fund are generally eligible for sale to one of the government agencies (e.g., Fannie Mae, Freddie Mac), providing an immediate source of liquidity. During the year ended December 31, 2013, substantially all of the forward mortgages sold by our originations segment were purchased by Fannie Mae.

Reverse Mortgage — Our Reverse Mortgage segment primarily focuses on the origination, securitization and servicing of reverse mortgage loans and also includes a mortgage portfolio of federally-insured HECMs. Reverse mortgage originations are generally conducted through our consumer retail and correspondent lending origination channels.

During 2013, we originated and purchased $2.7 billion in unpaid principal balance of new loans. Our Reverse Mortgage segment receives cash proceeds at the time reverse loans are securitized. All of our reverse loans are securitized through the Ginnie Mae II MBS program into Home Equity Conversion Mortgage-Backed Securities, or HMBS. Subsequently, the segment earns net revenue on the net fair value gains on reverse loans and the related HMBS obligations. This segment also performs servicing for third-party investors in reverse loans and provides other ancillary services for the reverse mortgage market.

Asset Receivables Management — Our Asset Receivables Management, or ARM, business performs collections of post charge-off or foreclosure deficiency balances. The fee we earn is based on a percentage of our collections. We are retained by securitization trusts and other third-party asset owners to pursue deficient loan balances when the amount due exceeds the proceeds received from liquidating the collateral.

We view the ARM business as a hedge to our third-party loan servicing segment as revenue opportunities generally increase as the quality and performance of third-party servicing deteriorates. Additionally, we believe the abundance of foreclosures arising from the recent downturn in the U.S. housing market provides an attractive environment for our ARM business to continue to expand.

8

Table of Contents

Insurance — Our Insurance business segment provides voluntary and lender-placed hazard insurance for residential loans, as well as other ancillary products, through our insurance agency for a commission. Loan owners and securitization trusts require borrowers to maintain insurance coverage to protect the collateral securing the loan. To the extent a borrower fails to maintain the necessary coverage, we are required to ensure insurance is purchased on the owner’s behalf. Though we are licensed nationwide to sell insurance products on behalf of third-party insurance carriers, we neither underwrite insurance policies nor adjudicate claims.

Revenues earned by our Insurance business have historically been aligned with the size of our servicing portfolio. As such, we expect incremental revenue opportunities for the Insurance business as the portfolio increases through organic and inorganic growth. However, recently issued regulations affecting the ability of servicers to earn commissions and fees on lender-placed insurance policies will eliminate a portion of this revenue stream beginning in June 2014.

Loans and Residuals — Our Loans and Residuals business segment consists of residual interests in securitization trusts that are consolidated on our balance sheet as the Residual Trusts, as well as unencumbered residential mortgage loans held in our portfolio. We seek to earn a spread from the interest income we earn on the residential loans less the credit losses we incur on these loans and the interest expense we pay on the mortgage-backed debt issued to finance the loans.

We actively manage the credit risk associated with our Loans and Residuals business through early identification and timely resolution of problem loans, loan loss reserves and charge-off policies. Our capabilities as a high-touch servicer have helped improve asset performance.

Other — Our Other segment primarily consists of securitization trusts which are consolidated variable interest entities, or VIEs, and for which we do not own any residual interests, or the Non-Residual Trusts, corporate debt, an investment management business and intercompany eliminations.

Laws and Regulations

Our business is subject to extensive regulation by federal, state and local authorities. We are required to comply with numerous federal consumer protection and other laws, including, but not limited to:

9

Table of Contents

The CFPB directly influences the regulation of residential mortgage loan originations and servicing in a number of ways. First, the CFPB has rulemaking authority with respect to many of the federal consumer protection laws applicable to mortgage servicers, including TILA, RESPA and the FDCPA. Second, the CFPB has supervision, examination and enforcement authority over consumer financial products and services offered by certain non-depository institutions and large insured depository institutions. The CFPB’s jurisdiction includes those persons originating, brokering or servicing residential mortgage loans and those persons performing loan modification or foreclosure relief services in connection with such loans.

Title XIV of the Dodd-Frank Act imposes a number of additional requirements on servicers of residential mortgage loans by amending certain existing provisions and adding new sections to TILA and RESPA. The penalties for noncompliance with TILA and RESPA are also significantly increased by the Dodd-Frank Act and could lead to an increase in lawsuits against mortgage servicers. On January 17, 2013, the CFPB issued final rules amending TILA and RESPA to implement certain mortgage servicing standards set forth by the Dodd-Frank Act and to address other issues identified by the CFPB and later in 2013 amended these rules, which took effect on January 10, 2014. Title XIV prevents or limits servicers of residential mortgage loans from taking certain actions (e.g. the charging of certain fees) and imposes new requirements, in each case either increasing costs and risks related to servicing or reducing revenues currently generated.

The Dodd-Frank Act establishes new standards and practices for mortgage originators, another potential growth area for our business, including requirements for determining prospective borrower’s abilities to repay their mortgages, removing incentives for higher cost mortgages, prohibiting prepayment penalties for non-qualified mortgages, prohibiting mandatory arbitration clauses, requiring additional disclosures to potential borrowers and restricting the fees that mortgage originators may collect. Final regulations regarding such “ability to repay” and other standards and practices were adopted by the CFPB and took effect in January 2014. Before originating a mortgage loan, lenders must determine on the basis of certain information and according to specified criteria that the prospective borrower has the ability to repay the loan. Lenders that issue loans meeting certain heightened underwriting requirements will be presumed to comply with the new rule with respect to these loans. In addition, our ability to enter into asset-backed securities transactions in the future may be impacted by the Dodd-Frank Act and other proposed reforms related thereto, the effect of which on the asset-backed securities market is currently uncertain.

Regulatory Developments

The tumult and subsequent fall-out from the financial crisis in general, and the residential mortgage market in particular, have placed our industry under increased scrutiny by federal and state regulators over the past few years. We expect this scrutiny to continue. Rules, regulations and practices that have been in place for many years may be changed in a relatively short period of time in order to address real and perceived problems in our industry.

Reverse Mortgage Segment

The Reverse Mortgage Stabilization Act of 2013, or RMSA, which was signed into law on August 9, 2013, allows the Secretary of Housing and Urban Development to establish requirements to improve the fiscal safety and soundness of the HECM Program. Two regulatory changes that will affect our reverse mortgage originations business have already been made or proposed pursuant to the new law.

The first, effective September 30, 2013, collapses the two types of reverse mortgages previously available — the “standard” and the “saver” — into one, which can be either fixed or adjustable rate. While the maximum amount of cash available to HECM borrowers will still largely depend on the age of the youngest borrower, the home value

10

Table of Contents

and the prevailing interest rate, under the new rules many prospective HECM borrowers will have access to less home equity, on average, than the maximum amount previously available. As a result, reverse mortgages are expected to become more of a financial planning tool as opposed to an immediate source of cash. We expect there to be a negative overall impact on the volume and unpaid principal balance of HECMs for the near term.

The second change, once finalized and effective, will impose new financial assessment requirements on originators. Previously, the amount a borrower could borrow was based primarily on the value of the borrower’s collateral. The new regulation will provide underwriting guidelines to ensure that HECM borrowers will be able to afford ongoing financial obligations such as payment of property taxes, insurance, and property maintenance. Our RMS business has undertaken financial assessments of its customers for several years.

While the foregoing changes will continue to impact our reverse mortgage originations business, it is expected that these changes will ultimately benefit and strengthen the industry as a whole. Specifically, we believe that HECM borrowers will opt to receive their money through a line of credit carrying a variable rate, instead of a lump sum using a fixed rate loan, which will enable them to access more money over time. In addition, we believe that both the reduced borrowing capacity as well as the stricter underwriting criteria will ensure that borrowers are better positioned to meet their obligations resulting in fewer defaults over time. The full impact of these regulatory developments remains uncertain and any resulting adverse business trends could negatively impact the assumptions used in assessing the Reverse Mortgage segment goodwill for impairment. Sensitive accounting estimates related to goodwill are discussed within the Critical Accounting Estimates section of management’s discussion and analysis below.

Insurance Segment

On December 18, 2013, Fannie Mae and Freddie Mac announced that effective June 1, 2014 mortgage servicers and their affiliates may not receive commissions or other forms of compensation in connection with lender-placed insurance on GSE loans.

On October 7, 2013, American Security Insurance Company, or ASIC, the insurer that provides lender-placed hazard insurance coverage on Florida mortgage loans serviced by us, entered into a Consent Order with the Florida Office of Insurance Regulation. ASIC agreed in the Consent Order that it will not pay commissions to any mortgage loan servicer, or any person or entity affiliated with a servicer, on lender-placed insurance policies obtained by the servicer. This prohibition is expected to have a negative effect on the future cash flows of our Insurance segment beginning on its anticipated effective date of October 7, 2014.

On September 19, 2013, the New York State Department of Financial Services, or the NY DFS, released proposed regulations that, among other things, would prohibit insurers from: issuing force-placed insurance on mortgaged property serviced by a servicer affiliated with the insurer; paying commissions to a bank or servicer or other parties affiliated with a bank or servicer on force-placed insurance policies obtained by the servicer; paying contingent commissions based on underwriting profitability or loss ratios; making payments, including but not limited to the payment of expenses, to a servicer or other parties affiliated with a servicer in connection with securing force-placed insurance business; and providing free or below-cost, outsourced services to banks, servicers or their affiliates.

In addition, the proposed regulations would impose additional notification requirements, prohibit force-placed insurers from issuing forced-placed insurance in excess of the borrower’s last known hazard insurance limits (or if such borrower’s last known hazard insurance limits did not comply with mortgage loan requirements, the replacement cost of improvements on the mortgaged property), require such insurers to refund all force-placed insurance premiums for any period when there is overlapping voluntary insurance coverage, and require such insurers to regularly inform the NY DFS of loss ratios actually experienced. The NY DFS’s proposed regulations follow a number of settlements between the NY DFS and force-placed insurers, including a consent order entered into on March 21, 2013, between Assurant, Inc., a third-party insurance carrier for which Green Tree’s insurance agency acts as an agent, and the NY DFS, concerning lender-placed policies issued by Assurant in New York. Among other things, Assurant agreed not to pay compensation to servicers and their affiliates on forced-placed insurance policies obtained by the servicer. Should the NY DFS’s regulations be adopted and should other states impose restrictions, the revenues from our insurance businesses could be significantly reduced or eliminated.

11

Table of Contents

Due to these recent regulatory developments surrounding lender-placed insurance policies, we expect our sales commissions related to lender-placed insurance policies to decrease significantly beginning in the second quarter of 2014. We have considered this commission reduction in our quantitative goodwill impairment test, however, if the reduction is larger than anticipated, goodwill allocated to the Insurance segment could be impaired at a future date. The Insurance segment had $4.4 million of goodwill at December 31, 2013. We are actively looking at alternatives to preserve or replace the value of the revenue streams in our Insurance business. However there is no assurance that our efforts will be successful.

Servicing Segment

On February 6, 2014, a competitor of ours agreed to indefinitely halt an announced acquisition of mortgage servicing rights, or MSRs, at the request of the NY DFS which reportedly expressed concern about the competitor’s ability to adequately service acquired MSRs. We could receive a similar request from the NY DFS or other state or federal authorities in connection with a material acquisition of MSRs, particularly if enforcement actions by the NY DFS, CFPB, or other state or federal authorities are pending against us. If we were to become subject to similar requests, we would have difficulty growing our business through MSR acquisitions.

We expect to incur ongoing operational and system costs in order to comply with these new laws and regulations. Furthermore, there may be additional federal or state laws enacted that place additional obligations on servicers of residential loans.

We are also subject to state licensing and regulation as a mortgage service provider and debt collector, insurance agency, and loan originator throughout the U.S. We are subject to audits and examinations conducted by the states. From time to time, we receive requests from state and other agencies for records, documents and information regarding our policies, procedures and practices regarding our loan servicing, debt collection, loan origination and insurance agency business activities. We incur significant ongoing costs to comply with these governmental regulations.

Competition

We compete with several third-party providers for servicing opportunities, including large financial institutions, as well as non-bank servicers. Walter Investment along with Nationstar Mortgage Holdings Incorporated, Ocwen Financial Corporation, and PHH Corporation, represent the current top four non-bank servicers. Our competitive position in the consumer loan servicing business is largely determined by our ability to differentiate ourselves from those companies and other third-party servicers through our high-touch servicing model, our technology, our significant expertise in the consumer loan servicing business, our ability to seamlessly board and transfer portfolios of loans, our continued compliance with a complex matrix of local, state and federal regulatory requirements, and our responsiveness to the ever changing demands of industry regulators and their focus on our financial strength.

We view the key competitive strengths that contribute to our market-leading position and underscore our value differentiation as the following:

National Mortgage Platform

As described above, we are a national mortgage servicer and originator. At December 31, 2013, we maintained a servicing portfolio which primarily includes forward and reverse loans of approximately $218.0 billion by unpaid principal balance. Further, our servicing portfolio has grown by $131.9 billion, or 153% since the end of 2011, when our portfolio was comprised primarily of only forward loans.

Our acquisition of select assets from ResCap provided us a scaled, national mortgage originations platform. The acquired business enabled us to offer a wide array of loan products through a diverse set of originations channels. We believe the capabilities acquired are highly complementary to our existing businesses and substantially expedited the development of our originations business.

We significantly expanded our capabilities in the reverse mortgage sector in late 2012 through the acquisitions of RMS and S1L. Refer to “— Recent and Other Developments” below. The addition of these platforms

12

Table of Contents

and assets to our existing business lines demonstrates significant progress in our efforts to diversify the business and position ourselves for long-term, sustainable growth. According to an industry source, at December 31, 2013, we were the top reverse mortgage lender, accounting for 12.3% of reverse mortgage origination volume during the year ended December 31, 2013. In addition, according to New View Advisors, we were the top HMBS issuer accounting for 30% of all issuances in 2013.

Increasingly Diversified Business to Support Sustainable Growth

Our management team has focused on developing a mortgage banking platform that is not only a leading provider in the current market, but also one that is well positioned for sustainable growth. The strategic acquisitions we completed over the past year are expected to support our long-term objective of developing a consistent flow of future servicing business.

We expect our core servicing (forward and reverse mortgages) business to continue to benefit from access to new servicing assets from a variety of sources, including:

Top Performing Servicer with a High-Touch Approach

We apply a “high-touch” servicing model to maximize the value of our servicing portfolio. Our servicing platform employs an extensive network of well-trained service professionals who work closely with borrowers to reduce delinquencies. Borrower interactions rely on loss mitigation strategies that apply predictive analytics to identify risk factors and severity grades to determine appropriate work-out / collections strategies. Our customer-focused services and data-driven processes drive the superior performance of our servicing portfolio. The strength of our “high-touch” servicing platform is a key part of our value proposition and a differentiator from other third-party servicers.

Well-Positioned to Capture the Shift from Bank Servicers to Non-Bank Servicers

We believe we are well-positioned to benefit from the shift of mortgage servicing from money center banks to specialty servicers which has been underway in recent years. According to Inside Mortgage Finance, at the end of the fourth quarter of 2013, the top four specialty servicers accounted for approximately 13% of all residential mortgage assets as compared to 7% at the end of December 2012. There are significant barriers to entry in mortgage servicing that we believe will allow us to remain one of the independent specialty servicers best able to compete for assignments and bulk purchases from money center banks. The licensing, rating, financial, and compliance requirements to become a national servicer make it challenging for new entrants to compete.

The servicing shift is the result of a variety of factors, including the increasing operational burden associated with servicing delinquent asset pools, and regulatory changes. Post-credit crisis, the U.S. residential mortgage market experienced elevated levels of delinquencies and foreclosures. Some large banks, historically the primary servicers of mortgage assets, have realized they are unwilling or unable to perform the operational duties and meet the rising regulatory and compliance requirements necessary to effectively service such assets. As a result, these banks have looked to specialty servicers, like us, to sub-service the credit-sensitive / delinquent loans or purchase the MSRs outright.

Revised regulatory capital rules stipulated in Basel III have made holding MSRs less attractive for banks given their restrictive treatment towards Tier 1 Capital.

Over the past year, we added $156.4 billion in forward loans to our third-party servicing portfolio which included $150.0 billion in servicing right assets (by unpaid principal balance). Our strong servicing performance has been a key driver to our success in winning servicing transfers and sales.

13

Table of Contents

Subsidiaries

For a listing of our subsidiaries, refer to Exhibit 21 of this Annual Report on Form 10-K.

Employees

As of December 31, 2013, we employed approximately 6,400 full-time equivalent employees, all of whom were in the U.S. We believe we have been successful in our efforts to recruit and retain qualified employees, but there is no assurance that we will continue to be successful. None of our employees is a party to any collective bargaining agreements. We consider our relationship with our employees to be good.

Recent and Other Developments

Recent Events

Acquisitions

Acquisition of Certain Net Assets of ResCap

On October 19, 2012, we entered into a Joint Bidding Agreement, or JBA, with Ocwen Loan Servicing LLC to jointly bid to acquire certain mortgage-related net assets held by ResCap in an auction sponsored by the U.S. Bankruptcy Court. Pursuant to the JBA, we agreed to acquire the rights and assume certain liabilities relating to (a) all of ResCap’s Fannie Mae MSRs and related servicer advances, and (b) ResCap’s mortgage originations and capital markets platforms, or collectively, the ResCap net assets. The Company closed on the acquisition of the ResCap net assets on January 31, 2013 and acquired the ResCap net assets for an adjusted purchase price of $479.2 million. At closing, the ResCap Fannie Mae MSRs were associated with loans totaling $42.3 billion in unpaid principal balance. The Company made cash payments of $15.0 million in the fourth quarter of 2012 and $477.0 million on January 31, 2013, which were partially funded with the net proceeds from an October 2012 common stock offering and borrowings under the Company’s then existing 2012 credit facilities, which have subsequently been refinanced as described below. The total cash paid of $492.0 million is subject to purchase price adjustments, which are currently under discussion by the parties to the agreement. The total cash paid in excess of the adjusted purchase price is refundable to the Company at the end of the adjustment period. We have accounted for this transaction as a business combination in accordance with authoritative accounting guidance.

BOA Asset Purchase

On January 6, 2013, we entered into a Mortgage Servicing Rights Purchase and Sale Agreement to acquire from BOA the mortgage servicing rights and related assets relating to a portfolio of residential mortgage loans owned by Fannie Mae, or the BOA assets. The BOA asset acquisition closed on January 31, 2013 for total consideration of $495.7 million. At closing, the Fannie Mae MSRs were associated with loans totaling $84.4 billion in unpaid principal balance. As part of the asset purchase agreement, BOA agreed to provide sub-servicing on an interim basis while the loan servicing was transferred in tranches to our servicing systems. As each tranche was transferred to our servicing systems, we were also obligated to purchase the related servicer advances associated therewith. From the date of the closing through December 31, 2013, we purchased $740.7 million of servicer advances as part of the asset purchase agreement. All servicing transfers were completed by December 2013 and BOA no longer provides sub-servicing.

The acquisition of the BOA assets leverages our high-touch servicing platform to maximize collateral value and generate stable revenues through servicing, incentive, performance-based and ancillary fees. Additionally, the acquisition of the BOA assets leverages the ResCap originations platform to generate revenues through the retention and recapture of refinanced loans within the portfolio, extending the duration of our servicing portfolio.

Acquisition of Certain Net Assets of Ally Bank

In February 2013, we entered into an agreement to acquire the correspondent lending and wholesale broker businesses of Ally Bank for total consideration of $0.1 million. The acquisition of these assets, or the Ally Bank net assets, closed on March 1, 2013. This acquisition allows us to pursue correspondent lending opportunities using the capabilities resident in the ResCap originations platform. In February 2014, we decided to exit the

14

Table of Contents

wholesale broker portion of this business. Originations associated with this wholesale channel represented 8% of total forward loan originations during the year ended December 31, 2013.

Acquisition of Certain Net Assets of MetLife Bank, N.A.

On January 7, 2013, we entered into a definitive agreement to acquire the residential mortgage servicing platform, including certain servicing related technology assets, of MetLife Bank, N.A., or MetLife Bank, located in Irving, Texas, for a purchase price of $1.0 million in cash. The acquisition of these assets, or the MetLife Bank net assets, closed on March 1, 2013. This acquisition serves to support our development of a robust dual-track residential mortgage servicing platform.

Urban

On December 2, 2013, we closed on our investment in UFG Holdings LLC, or UFG, a company controlled by an investor group led by Brian Libman, our former Chief Strategy Officer. Concurrently and effective as of November 30, 2013, UFG closed its acquisition of 100% of the membership interests of Urban Financial of America, LLC, formerly Urban Financial Group, Inc., or Urban, from a subsidiary of KCG Holdings, Inc. We invested $15.2 million in UFG in the form of an unsecured loan and received warrants entitling us to purchase up to 19% of the common units of UFG. However, notwithstanding our investment in Urban through this transaction, Urban currently is and will remain our competitor in the reverse mortgage industry.

Other Significant Purchase Agreements

We have entered into agreements to purchase servicing rights and other assets from EverBank Financial Corp and from an affiliate of a national bank. These agreements have an estimated total purchase price of $85.4 million and $330.0 million, respectively. The closing of these agreements are subject to third party approvals of the servicing transfers.

Financing Transactions

On December 17, 2013, we issued $575.0 million aggregate principal amount of 7.875% Senior Notes due 2021, or the Senior Notes. The Senior Notes mature on December 15, 2021. Interest on the Senior Notes accrues from December 17, 2013 and will be payable on June 15 and December 15 of each year, commencing on June 15, 2014. The Senior Notes were offered and sold in a transaction exempt from the registration requirements under the Securities Act, and resold to qualified institutional buyers in reliance on Rule 144A and Regulation S under the Securities Act, or the 2013 Note Offering. The Senior Notes were issued pursuant to an indenture, or the Senior Notes Indenture, dated as of December 17, 2013, among the Company, the guarantor parties thereto and Wells Fargo Bank, National Association, as trustee.

On December 17, 2013, the Company also entered into a registration rights agreement, or the Registration Rights Agreement, with the guarantors and Barclays Capital Inc., as representative of the several initial purchasers name therein. Under the Registration Rights Agreement, the Company and the guarantors agreed to use the commercially reasonable efforts to file with the SEC a registration statement under the Securities Act so as to allow holders of the Senior Notes to exchange their Senior Notes for the same principal amount of a new issue of notes, or the Exchange Notes, with identical terms, except that the Exchange Notes will not be subject to certain restrictions on transfer or to any increase in an annual interest rate. If the exchange offer is not completed on or before the date that is 365 days after December 17, 2013, the Company will be required to pay additional interest to the holders of the Senior Notes.

On December 19, 2013, we entered into an Amended and Restated Credit Agreement, or the 2013 Credit Agreement, which provides for a seven-year secured term loan in an amount of $1.5 billion, or the 2013 Term Loan (which was borrowed in full on December 19, 2013), and a five-year secured revolving credit facility in an amount of $125.0 million, or the 2013 Revolver, collectively, the 2013 Secured Credit Facilities.

15

Table of Contents

We used a majority of the proceeds from the 2013 Term Loan, together with the proceeds from the 2013 Note Offering, to repay all amounts outstanding under our then existing senior term loan including incremental borrowings, or the 2012 Term Loan.

During the year ended December 31, 2013, we entered into five master repurchase agreements with an aggregate capacity amount of $2.1 billion. The master repurchase agreements have been used to fund the origination of forward and reverse loans for our originations and reverse mortgage businesses. During 2013, we also entered into a new servicing advance facility that provides borrowings up to $85.0 million and amended an existing facility to increase the reimbursement amount to $950.0 million, to accommodate the growth in our servicing portfolio.

For a more detailed discussion of the 2013 Note Offering, the 2013 Secured Credit Facilities, and the use of amounts borrowed thereunder to repay all amounts and termination of all commitments outstanding under our 2012 Term Loan, as well as a description of our master repurchase agreements, refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Other Events

Acquisitions

Acquisition of RMS

On November 1, 2012, we acquired all of the stock of RMS pursuant to a Purchase Agreement dated August 31, 2012. We paid aggregate consideration of $136 million in the form of $95 million in cash and 891,265 shares of our common stock.

RMS, based in Spring, Texas, provides a full suite of services to the reverse mortgage sector, including servicing, loan origination and securitization, and other ancillary services. The acquisition of RMS positions the Company as a full service provider in the reverse mortgage servicing sector with new growth opportunities and represents an extension of the Company’s fee-for-service business model.

Acquisition of S1L

On December 31, 2012, we entered into a Stock Purchase Agreement, or the S1L Purchase Agreement whereby we agreed to acquire all of the outstanding shares of S1L for consideration of $30.9 million.

S1L, based in San Diego, California, is a retail and wholesale reverse mortgage loan originator. S1L has a long-standing relationship with RMS, as S1L has been delivering loans using RMS’ technology and RMS has acquired a significant amount of S1L’s reverse origination production during recent years. The acquisition of S1L enhances RMS’ position as an issuer of reverse mortgage products, while also significantly increasing RMS’ retail origination presence.

Acquisition of Green Tree

On July 1, 2011, we acquired Green Tree. Headquartered in St. Paul, Minnesota, Green Tree is a fee-based business services company that provides high-touch third-party servicing for credit-sensitive consumer loans in diverse asset classes primarily including residential mortgages and manufactured housing loans. Through the acquisition of Green Tree, we increased our ability to provide specialty servicing and generate recurring fee-for-services revenues from a capital-efficient platform and have diversified our revenue streams with Green Tree’s complimentary businesses. As a result of the acquisition of Green Tree, we added 1,955 employees and 27 offices in 22 states, significantly expanding our footprint across the U.S. Upon closing, the assets acquired and the liabilities assumed of Green Tree were recorded at their respective fair values.

Company Website and Availability of SEC Filings

Our website can be found at www.walterinvestment.com. We make available free of charge on our website or provide a link on our website to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a)

16

Table of Contents

or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC. To access these filings, go to our website, click on “Investor Relations” and then click on “SEC Filings”. We also make available through our website other reports filed with or furnished to the SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as our Code of Conduct and Ethics, our Corporate Governance Guidelines, and charters for our Audit Committee, Compensation and Human Resources Committee, and Nominating and Corporate Governance Committee. In addition, our website includes disclosure relating to certain non-GAAP financial measures (as defined by SEC Regulation G) that we may make public orally, telephonically, by webcast, by broadcast, or by similar means from time to time.

From time to time, we may use our website as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on and accessible at http://investor.walterinvestment.com.

The information on our website or obtained through our website is not part of this Annual Report on Form 10-K.

Our Investor Relations Department can be contacted at 3000 Bayport Drive, Suite 1100, Tampa, Florida 33607, Attn: Investor Relations, telephone (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 pay dividends to our stockholders could be materially and adversely affected. In that case, the trading price of our common stock could decline and you may lose some or all of your investment in our common stock. The risks and uncertainties described below are not the only risks that may have a material adverse effect on us. Additional risks and uncertainties of which we are currently unaware, or that we currently deem to be immaterial, also may become important factors that adversely impact us. Further, to the extent that any of the information contained in this Annual Report on Form 10-K constitutes forward-looking information, the risk factors set forth below are cautionary statements identifying important factors that could cause our actual results for various financial reporting periods to differ materially from those expressed in any forward-looking statements made by or on behalf of us.

Risks Related to Our Industry

The business in which we engage is complex and heavily regulated, and changes in the regulatory environment affecting our business could have a material adverse effect on our business, financial position, results of operations or cash flows.

Our business is subject to numerous federal, state and local laws and regulations, and may be subject to judicial and administrative decisions imposing various requirements and restrictions. See Item 1. “Business — Laws and Regulations” above for further information. These laws, regulations and judicial and administrative decisions include those pertaining to: real estate settlement procedures; fair lending; fair credit reporting; truth in lending; fair debt collection; compliance with net worth and financial statement delivery requirements; compliance with federal and state disclosure and licensing requirements; the establishment of maximum interest rates, finance charges, fees and other charges; secured transactions; collection, foreclosure, repossession and claims-handling procedures; unfair and deceptive acts and practices; escrow administration; lender-placed insurance; bankruptcy; loss mitigation and loan modifications; deficiency collections; other trade practices and privacy regulations providing for the use and safeguarding of non-public personal financial information of borrowers and guidance on non-traditional mortgage loans issued by the federal financial regulatory agencies. By agreement with some of our customers, we also are subject to additional requirements that our customers may impose.

Federal or state regulation and oversight of our business activities may result in increased costs and potential penalties and litigation and could limit or prevent us from operating our business in some or all of the states in which we currently operate, reduce the revenues that we receive from our business and limit our ability to add to our MSR portfolio.

17

Table of Contents

The enactment of the Dodd-Frank Act may impact our business in ways that we cannot predict until rules and regulations related thereto are enacted.

On July 21, 2010, the Dodd-Frank Act was signed into law for the express purpose of further regulating the financial services industry, including mortgage origination, sales, servicing and securitization. Certain provisions of the Dodd-Frank Act may adversely impact the operation and practices of Fannie Mae and the Federal Home Loan Mortgage Corporation, or Freddie Mac. We believe that Fannie Mae and Freddie Mac hold potential for growth opportunities for our business but we are unable to determine what impact the applicable provisions of the Dodd-Frank Act may have on that potential. In addition, our ability to enter into asset-backed securities transactions in the future may be impacted by the Dodd-Frank Act and the other proposed reforms related thereto, the effect of which on the asset-backed securities market is currently uncertain.

The CFPB is becoming more active in its monitoring of the mortgage origination and servicing sectors. New rules and regulations and/or more stringent enforcement of existing rules and regulations by the CFPB could result in enforcement actions, fines, penalties and the inherent reputational risk that results from such actions.

The CFPB, a federal agency established pursuant to the Dodd-Frank Act, officially began operation on July 21, 2011. The CFPB is charged, in part, with enforcing laws involving consumer financial products and services, including mortgage finance and servicing and reverse mortgages, and is empowered with examination, enforcement and rulemaking authority. While the full scope of the CFPB’s rulemaking and regulatory agenda relating to the mortgage servicing industry is unclear, it is apparent that the CFPB has taken a very active role. For example, the CFPB has issued a Supervision and Examination Manual and other guidelines indicating that it will send examiners to banks and other institutions that service and/or originate mortgages to assess whether consumers’ interests are protected.

The Dodd-Frank Act establishes new standards and practices for mortgage originators, another potential growth area for our business, including determining prospective borrower’s abilities to repay their mortgages, removing incentives for higher cost mortgages, prohibiting prepayment penalties for non-qualified mortgages, prohibiting mandatory arbitration clauses, requiring additional disclosures to potential borrowers and restricting the fees that mortgage originators may collect. Final regulations regarding such “ability to repay” and other standards and practices were adopted by the CFPB and took effect in January 2014. Before originating a mortgage loan, lenders must determine on the basis of certain information and according to specified criteria that the prospective borrower has the ability to repay the loan. Lenders that issue loans meeting certain heightened underwriting requirements will be presumed to comply with the new rule with respect to these loans. In addition, our ability to enter into asset-backed securities transactions in the future may be impacted by the Dodd-Frank Act and other proposed reforms related thereto, the effect of which on the asset-backed securities market is currently uncertain.

The CFPB issued final rules on January 17, 2013 and amendments since such date amending Regulation X, which implements the Real Estate Settlement Procedures Act, and Regulation Z, which implements the Truth in Lending Act. These final rules implement provisions of the Dodd-Frank Act regarding mortgage loan servicing including periodic billing statements, certain notices and acknowledgements, prompt crediting of borrowers’ accounts for payments received, additional notice, review and timing requirements with respect to delinquent borrowers, prompt investigation of complaints by borrowers and required additional steps to be taken before purchasing insurance to protect the lender’s interest in the property. The new servicing rules also require servicers to meet certain benchmarks for customer service. In addition, this final rule addresses servicers’ obligations to, among other things, establish reasonable policies and procedures and provide information about mortgage loss mitigation options to delinquent borrowers. The final rule pertaining to Regulation Z, among other things, amends current rules governing the scope, timing, content and format of disclosures to consumers regarding the interest rate adjustments of their variable-rate transactions and establishes certain requirements relating to billing statements, payment crediting and the provision of payoff statements. These rules took effect on January 10, 2014.

On February 11, 2013, the CFPB issued guidance to mortgage servicers to address potential risks to customers that may arise in connection with transfers of servicing. The CFPB notes that there are a number of

18

Table of Contents

laws applicable to such transfers, including, without limitation, the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and prohibitions on unfair, deceptive, or abusive acts or practices. According to the CFPB, if a servicer is determined to have engaged in any acts or practices that are unfair, deceptive, or abusive, or that otherwise violate federal consumer financial laws and regulations, the CFPB will take appropriate supervisory and enforcement actions to address violations and seek all appropriate corrective measures, including remediation of harm to consumers. In light of the significant amount of transfers that the Company has undertaken and seeks to undertake, we may receive additional scrutiny from the CFPB and such scrutiny may result in some or all of the types of actions described above being imposed upon our business.

In response to a Civil Investigative Demand, or CID, from the Federal Trade Commission, or FTC, issued in November 2010, and a CID from the CFPB, in September 2012, Green Tree has produced documents and other information concerning a wide range of its operations. On October 7, 2013, the CFPB notified Green Tree, that the CFPB’s staff was considering recommending that the CFPB take action against Green Tree for alleged violations of various federal consumer financial laws. On February 20, 2014, the FTC and CFPB staff advised Green Tree that it has sought authority to bring an enforcement action and negotiate a resolution related to alleged violations of various federal consumer financial laws. The Company anticipates meeting with the staff to understand the staff’s concerns and to see if the matter can be resolved. At this time, the Company does not have sufficient information to evaluate the merits of the potential enforcement action or to make an assessment of the cost or likelihood of any such resolution.

Regulations promulgated under the Dodd-Frank Act or by the CFPB and actions by the CFPB could materially and adversely affect the manner in which we conduct our businesses, result in heightened federal regulation and oversight of our business activities, and in increased costs and potential litigation associated with our business activities.

Our failure to comply with the laws, rules or regulations to which we are subject, whether actual or alleged, would expose us to fines, penalties or potential litigation liabilities, including costs, settlements and judgments, any of which could have a material adverse effect on our business, financial position, results of operations or cash flows.

We are highly dependent on U.S. government-sponsored entities, and any changes in these entities or their current roles could materially and adversely affect our business, liquidity, financial position and results of operations.

The U.S. residential mortgage industry in general and our business in particular is highly dependent on government sponsored entities, or GSEs, particularly Fannie Mae. We receive compensation for servicing loans on behalf of the GSEs and Ginnie Mae. In addition, on a regular basis, we sell residential mortgage loans to GSEs, which include mortgage loans in GSE guaranteed securitizations. In connection with the acquisition of RMS, we are an approved issuer of HMBS, which are guaranteed by Ginnie Mae and collateralized by participation interests in HECMs, insured by the Federal Housing Administration, or FHA. We derive material benefits from our relationships with GSEs and Ginnie Mae, as our ability to originate and sell mortgage loans under their programs reduces our credit exposure and mortgage inventory financing costs.

There is significant uncertainty regarding the future of Fannie Mae and Freddie Mac including with respect to how long they will continue to be in existence, the extent of their roles in the market and what forms they will have. There are several pending bills and proposals to revamp both Fannie Mae and Freddie Mac. The roles of Fannie Mae and Freddie Mac could be significantly reduced or eliminated and the nature of the guarantees could be considerably limited relative to historical measurements. The elimination of the traditional roles of Fannie Mae, Freddie Mac or the FHA could adversely affect our business and results of operations.

Any discontinuation of, or significant reduction in, the operation of these GSEs or any significant adverse change in the level of activity of these GSEs in the primary or secondary mortgage markets or in the underwriting criteria of these GSEs could materially and adversely affect our business, liquidity, financial position and results of operations.

19

Table of Contents

In addition, some of our contracts contain periodic performance payments that are determined by formulas and/or are tied to the performance of our competitors. Inasmuch as we have little or no insight into the performance of our competitors in order that we might predict the ultimate payout of these incentives, it is difficult, if not impossible in some instances to predict with any certainty what the payout (if any) of the incentive payments will be.

Changes in existing U.S. government-sponsored mortgage programs or servicing eligibility standards could materially and adversely affect our business, financial position, results of operations or cash flows.

In September 2011, Fannie Mae and Freddie Mac, in a joint initiative at the direction of the FHFA, set forth potential alternatives for future mortgage servicing structures and compensation. Under their proposal, the GSEs are considering potential structures in which the minimum service fee would be reduced or eliminated altogether. This would provide mortgage bankers with the ability to either sell all or a portion of the retained servicing fee for cash up front, or retain an excess servicing fee. While the proposal provides additional flexibility in managing liquidity and capital requirements, it is unclear how the various options might impact mortgage-backed security pricing and the related pricing of excess servicing fees. The GSEs are also considering different pricing options for non-performing loans, such as tying servicing fees to the number of loans being serviced rather than the size of the mortgages, to better align servicer incentives with mortgage-backed securities investors and provide the loan guarantor the ability to transfer non-performing servicing. The Federal Housing Finance Agency has indicated that any change in the servicing compensation structure would be prospective and the changes, if implemented, could have a significant impact on the entire mortgage industry and on the results of operations and cash flows of our mortgage business.

The enforcement of consent orders by certain federal banking agencies against the largest servicers related to foreclosure practices could impose additional compliance costs on our servicing business.

On April 13, 2011, the federal banking agencies overseeing certain aspects of the mortgage market entered into consent orders with 14 of the largest mortgage servicers in the United States regarding foreclosure practices. The enforcement actions require the servicers, among other things, to: (i) correct deficiencies in residential mortgage loan servicing and foreclosure practices; (ii) make significant modifications in practices for residential mortgage loan servicing and foreclosure processing, including communications with borrowers and limitations on dual-tracking, which occurs when servicers continue to pursue foreclosure during the loan modification process; (iii) ensure that foreclosures are not pursued once a mortgage has been approved for modification and to establish a single point of contact for borrowers throughout the loan modification and foreclosure processes; and (iv) establish robust oversight and controls pertaining to their third-party vendors, including outside legal counsel, that provide default management or foreclosure services. While these enforcement consent orders are considered as not preemptive to state actions, it remains to be seen how state actions and proceedings will be affected by the consent orders.

On February 28, 2013, the consent orders for 13 of the 14 servicers were amended to memorialize an agreement that had been reached in January 2013 with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, or Federal Reserve Board, to pay more than $9.3 billion in payments and other assistance to borrowers. The amount includes $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers such as loan modifications and forgiveness of deficiency judgments. Borrowers covered by the amendment include 4.2 million people whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the servicers subject to the amended consent orders. Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error. These borrowers are not required to take any additional steps to receive the payments, nor are they required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. In providing the $5.7 billion in assistance, the 13 servicers are expected to undertake well-structured loss mitigation efforts focused on foreclosure prevention, with preference given to activities designed to keep borrowers in their homes.

Although we are neither a direct party to these consent orders nor a banking organization, we have become subject to certain aspects of the consent orders to the extent (i) we sub-service loans for the servicers that are

20

Table of Contents

parties to the consent orders; (ii) our investors require that we comply with certain aspects of the consent orders; or (iii) we otherwise find it prudent to comply with certain aspects of the consent orders. In addition, the practices set forth in such enforcement consent orders may be adopted by the industry as a whole, requiring us to comply with them in order to follow standard industry practices as required by our servicing agreements. The settlement also adds new requirements for loss mitigation programs, including restrictions on the imposition of force-placed lender insurance. In addition, in connection with certain of our recent acquisitions, we agreed to certain monitoring of our servicing of these assets which is required under the consent orders. Changes to our servicing practices could increase compliance costs for our servicing business, which could materially and adversely affect our financial condition or results of operations.

Federal Government/State Attorneys General foreclosure settlement could have unforeseen effects on our business.

On February 9, 2012, the U.S. Department of Justice, certain federal regulatory agencies, and 49 state attorneys general (Oklahoma is excluded) entered into a $25 billion settlement with the five largest mortgage servicers — Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo Company, Citigroup, Inc. and Ally Financial, Inc. The settlement, which was approved by the U.S. District Court for the District of Columbia by consent judgments entered on April 5, 2012, provides for, among other things, payments to certain individuals whose homes have been foreclosed upon, the reduction of principal for certain other mortgagors, and the establishment of a broad array of new requirements and restrictions related to the servicing of residential mortgage loans, or the Servicing Standards. While we are not a party to the settlement, the acquisition of the MSRs from ResCap and certain of our clients each require us to implement some or most of the Servicing Standards when we service loans for them, and we expect current and future clients may require us to do so as well. Should this occur, our cost to service mortgage loans could be increased and our servicing income could be reduced. However, at this time we do not believe such costs will be material.

One of our strategies is to increase our originations and servicing of GSE mortgages (including through acquisitions or third party relationships), which could expose us to additional risks.

One of our strategies is to increase originations of mortgages, as well as servicing of mortgages, that are GSE-backed mortgages. There are a number of risks that we could be exposed to as we effectuate this strategy:

21

Table of Contents

22

Table of Contents

Lender-placed insurance is under increased scrutiny by regulators and as a result of recent regulatory changes, we expect reduced income from commissions for the Green Tree insurance business.

Under certain circumstances, when borrowers fail to provide hazard insurance on their residences, the owner or servicer of the loan may place such insurance to protect the collateral and passes on the premium to the borrower. Walter Investment’s historical practice had been to place the coverage with a third-party carrier, which, in turn, reinsured some of the exposure with Walter Investment Reinsurance Co., Ltd., our wholly-owned subsidiary. This practice ended effective December 31, 2011, and Green Tree’s insurance agency has acted as an agent for this purpose, placing the insurance coverage with a third-party carrier for which the agency earns a commission. Both practices have come under the scrutiny of regulators.

On December 18, 2013, Fannie Mae and Freddie Mac announced that effective June 1, 2014, mortgage servicers and their affiliates may not receive commissions or other forms of compensation with lender-placed insurance on GSE loans or ceding premiums to a reinsurer affiliated with the servicers. These changes will restrict Green Tree’s insurance agency from receiving future sales commissions when placing insurance on GSE loans serviced by Green Tree on and after June 1, 2014. As a result, Green Tree’s insurance agency’s receipts of such sales commissions will be significantly reduced.

State regulators have also taken action to restrict insurance practices. In New York, for example, the NY DFS on September 19, 2013, released proposed regulations that, among other things, would prohibit insurers from: issuing force-placed insurance on mortgaged property serviced by a servicer affiliated with the insurer; paying commissions to a bank or servicer or other parties affiliated with a bank or servicer on force-placed insurance policies obtained by the servicer; paying contingent commissions based on underwriting profitability or loss ratios; making payments, including but not limited to the payment of expenses, to a servicer or other parties affiliated with a servicer in connection with securing force-placed insurance business; and providing free or below-cost, outsourced services to banks, servicers or their affiliates.

In addition, the proposed regulations would impose additional notification requirements, prohibit force-placed insurers from issuing forced-placed insurance in excess of the borrower’s last known hazard insurance limits (or if such borrower’s last known hazard insurance limits did not comply with mortgage loan requirements, the replacement cost of improvements on the mortgaged property), require such insurers to refund all force-placed insurance premiums for any period when there is overlapping voluntary insurance coverage, and require such insurers to regularly inform the NY DFS of loss ratios actually experienced. The NY DFS’s proposed regulations follow a number of settlements between the NY DFS and force-placed insurers, including a consent order entered into on March 21, 2013, between Assurant, Inc., a third-party insurance carrier for which Green Tree’s insurance agency acts as an agent, and the NY DFS, concerning lender-placed policies issued by Assurant in New York. Among other things, Assurant agreed not to pay compensation to servicers and their affiliates on forced-placed insurance policies obtained by the servicer.

23

Table of Contents

On October 7, 2013, the ASIC, the insurer that provides lender-placed hazard insurance coverage on Florida mortgage loans serviced by us, entered into a Consent Order with the Florida Office of Insurance Regulation. ASIC agreed in the Consent Order that it will not pay commissions to any mortgage loan servicer, or any person or entity affiliated with a servicer, on lender-placed insurance policies obtained by the servicer. This prohibition is expected to have a negative effect on the future cash flows of our Insurance segment beginning on its anticipated effective date of October 7, 2014.

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.

Various federal, state and local laws have been enacted that are designed to discourage predatory lending and servicing practices. The Home Ownership and Equity Protection Act of 1994, or HOEPA, prohibits inclusion of certain provisions in residential loans that have mortgage rates or origination costs in excess of prescribed levels and requires that borrowers be given certain disclosures prior to origination. Some states have enacted, or may enact, similar laws or regulations, which in some cases impose restrictions and requirements greater than those in HOEPA. In addition, under the anti-predatory lending laws of some states, the origination of certain residential loans, including loans that are not classified as “high cost” loans under applicable law, must satisfy a net tangible benefits test with respect to the related borrower. This test may be highly subjective and open to interpretation. As a result, a court may determine that a residential loan, for example, does not meet the test even if the related originator reasonably believed that the test was satisfied. Failure of residential loan originators or servicers to comply with these laws, to the extent any of their residential loans are or become part of our mortgaged-related assets, could subject us, as a servicer or as an assignee or purchaser, in the case of acquired loans, to monetary penalties and could result in the borrowers rescinding the affected residential loans. Lawsuits have been brought in various states making claims against originators, servicers, assignees and purchasers of high cost loans for violations of state law. Named defendants in these cases have included numerous participants within the secondary mortgage market. If our loans are found to have been originated in violation of predatory or abusive lending laws, we could incur losses, which could materially and adversely impact our results of operations, financial condition and business.

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, and may be difficult for us to satisfy in a timely manner.

Our business is subject to extensive regulation by federal, state and local governmental authorities and is subject to various laws and judicial and administrative decisions imposing requirements and restrictions on a substantial portion of our operations. The volume of new or modified laws and regulations has increased in recent years. Some individual municipalities have begun to enact laws that restrict loan servicing activities, including delaying or preventing foreclosures or forcing the modification of certain mortgages. Further, federal legislation recently has been proposed which, among other things, also could hinder the ability of a servicer to foreclose promptly on defaulted residential loans or would permit limited assignee liability for certain violations in the residential loan origination process, and which could result in our being held responsible for violations in the residential loan origination process.

Furthermore, if regulators impose new or more restrictive requirements, we may have difficulty satisfying these requirements in a timely manner and/or incur additional significant costs to comply with such requirements, which could further adversely affect our results of operations or financial condition. Our failure to comply with these laws and regulations could possibly lead to civil and criminal liability; loss of licensure; termination of our servicing and sub-servicing agreements; damage to our reputation in the industry; fines, penalties and litigation, including class action lawsuits; or administrative enforcement actions. Any of these outcomes could harm our results of operations or financial condition. We are unable to predict whether federal, state or local authorities will enact laws, rules or regulations that will require changes in our practices in the future and whether any such changes could adversely affect our cost of doing business and profitability.

24

Table of Contents

The expiration of, or changes to, government mortgage modification programs could adversely affect future revenues.

Under HAMP, HARP and similar government programs, a participating servicer may be entitled to receive financial incentives in connection with any modification plans it enters into with eligible borrowers and subsequent success fees to the extent that a borrower remains current in any agreed upon loan modification. While we participate in and dedicate numerous resources to HAMP and HARP, we may not continue to participate in or realize future revenues from HAMP, HARP or any other government mortgage modification program. Changes in legislation or regulation regarding such programs that result in the modification of outstanding mortgage loans and changes in the requirements necessary to qualify for refinancing mortgage loans may impact the extent to which we participate in and receive financial benefits from such programs, or may increase the expense of our participation in such programs. Changes to the terms or requirements of government loan modification programs, as well as the currently scheduled termination of HAMP and HARP on December 31, 2015, could also result in an increase to our costs. We expect refinancing volumes and margins to moderate in 2014 as peak HARP refinancings will likely already have occurred in 2013.

Difficult conditions in the mortgage and real estate markets, financial markets and the economy generally may cause us to incur losses on our portfolio or otherwise to be unsuccessful in our business strategies. A prolonged economic slowdown, recession, period of declining real estate values or sustained high unemployment could materially and adversely affect us.

The implementation of our business strategies may be materially affected by conditions in the mortgage and housing markets, the financial markets, and the economy generally. The risks associated with our servicing business and any investments we may make will be more acute during periods of economic slowdown or recession, especially if these periods are accompanied by declining real estate values or sustained unemployment. A weakening economy, high unemployment and declining real estate values significantly increase the likelihood that borrowers will default on their debt service obligations. In this event we may incur losses on our investment portfolio because the value of any collateral we foreclose upon may be insufficient to cover the full amount of our investment or may take a significant amount of time to realize. In addition, the aforementioned circumstances may adversely affect our Servicing segment, including our receipt of servicing incentive fee compensation and the timing, amount and reimbursement of servicing advances made by us.

A continued deterioration or a delay in any recovery in the residential mortgage market may also reduce the number of new mortgages that we originate, reduce the profitability of residential loans currently serviced by us or adversely affect our ability to sell mortgage loans originated by us or increase delinquency rates. Any of the foregoing could adversely affect our business, financial condition or results of operations. In addition, the cost of servicing an increasingly delinquent residential loan portfolio may rise without a corresponding increase in servicing compensation.

Material changes to the laws, regulations, rules or practices applicable to reverse mortgage programs operated by FHA, HUD, Fannie Mae or Ginnie Mae could adversely affect our reverse mortgage segment.

The reverse mortgage industry is largely dependent upon GSEs as well as the FHA, HUD and government entities like Ginnie Mae. There can be no guarantee that any or all of the GSEs will continue to participate in the reverse mortgage industry or that they will not make material changes to the laws, regulations, rules or practices applicable to reverse mortgage programs. The FHA, for example, on January 30, 2013, consolidated its standard fixed rate reverse mortgage program with its fixed-rate saver program, which may limit the amounts borrowers can draw. On September 3, 2013, the FHA announced changes to the HECM program, pursuant to authority under the Reverse Mortgage Stabilization Act, signed into law on August 9, 2013. The changes impact initial mortgage insurance premiums and principal limit factors, impose restrictions on the amount of funds that senior borrowers may draw down at closing and during the first 12 months after closing, and will require a financial assessment for all HECM borrowers to ensure that they have the capacity and willingness to meet their financial obligations and the terms of the reverse mortgage. In addition, the new changes will require borrowers to set aside a portion of the loan proceeds they receive at closing (or withhold a portion of monthly loan disbursements) for the payment of property taxes and homeowners insurance based on the results of the financial assessment.

25

Table of Contents

With the exception of new financial assessment requirements and funding requirements for the payment of property charges (for which HUD, on December 20, 2013, announced a delay of effectiveness), the new HECM requirements became effective on September 30, 2013. These changes have adversely affected the volumes and margins of new reverse mortgage originations, and we expect to continue to experience such effects in 2014. GSEs’ participation in the reverse mortgage industry also may be subject to economic and political changes that cannot be predicted. Any of the aforementioned circumstances could materially and adversely affect the performance of our Reverse Mortgage segment and the value of our common stock.

Risks Related to Our Business

Our growth may subject us to greater scrutiny by state and federal regulators.

The mortgage servicing industry has been under increased scrutiny from state and federal regulators and other authorities. This scrutiny is likely to target larger and fast-growing servicing organizations, such as Walter. We cannot guarantee that any such scrutiny and investigations will not reveal violations of law or regulation that may adversely affect our business.

While increasing our servicing portfolio is a key part of our strategy, this strategy carries certain risks and we may not be able to achieve our goals.

A key component of our strategy is to increase our servicing business. We have grown this business rapidly over the past several years, due to additions of sub-servicing contracts, acquisitions of servicing portfolios and our acquisition of Green Tree, and we intend to continue to grow our portfolio through similar actions. This strategy creates a number of risks for us:

We might not be able to maintain or grow our business if we cannot identify and acquire MSRs or enter into additional sub-servicing agreements on favorable terms.

Our servicing portfolio is subject to “run-off,” meaning that mortgage loans serviced by us may be repaid at maturity, prepaid prior to maturity, refinanced with a mortgage not serviced by us or liquidated through foreclosure,

26

Table of Contents

deed-in-lieu of foreclosure or other liquidation process or repaid through standard amortization of principal. As a result, our ability to maintain the size of our servicing portfolio depends on our ability to acquire the rights to service additional residential loans. We believe there are significant business opportunities in our business development “pipeline” of potential transactions. However, we may not be able to acquire servicing rights or enter into additional sub-servicing agreements on terms favorable to us nor do we control the decision to transfer servicing to us. In determining the purchase price for both servicing rights and sub-servicing, management makes certain assumptions, many of which are beyond our control, including, among other things:

As a result, we may not be successful in completing acquisitions or may overpay or not realize anticipated benefits of acquisitions in our business development pipeline.

The owners of certain loans we service or sub-service, may, under certain circumstances, terminate our MSRs or sub-servicing contracts, respectively.

As is standard in our industry, under the terms of our master servicing agreements with GSEs and other customers, our customers have the right to terminate us as the servicer of the loans we service on their behalf if we default pursuant to the terms and conditions of the servicing agreement; and in some agreements the servicing can be transferred without cause (although in this case the servicer typically receives the fair value of the servicing rights). Under our sub-servicing contracts, the primary servicers for whom we conduct sub-servicing activities have the right to terminate our sub-servicing rights with or without cause, with generally 60 to 90 days’ notice. In some instances, the sub-servicing contracts require payment of a deboarding fee upon transfer while in other instances there is little to no compensation. We expect to continue to acquire sub-servicing rights under terms and conditions which could exacerbate these risks.

If we were to have our servicing or sub-servicing rights terminated on a material portion of our servicing portfolio, this could adversely affect our business, financial condition and results of operations.

We use estimates in determining the fair value of certain assets. If our estimates prove to be incorrect, we may be required to write down the value of these assets which could adversely affect our earnings.

We estimate the fair value for certain assets and liabilities by calculating the present value of expected future cash flows utilizing assumptions that we believe are used by market participants. The methodology used to estimate these values is complex and uses asset-specific collateral data and market inputs for interest and discount rates and liquidity dates.

Valuations are highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of our valuation methodologies. If prepayment speeds increase more than estimated, delinquency and default levels are higher than anticipated or financial market illiquidity continues beyond our estimate, we may be required to write down the value of certain assets which could adversely affect our earnings.

27

Table of Contents

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.

Accounting rules for our business, such as the rules for determining the fair value measurement and disclosure of financial instruments, are highly complex and involve significant judgment and assumptions. These complexities could lead to a delay in the preparation of financial information and the delivery of this information to our stockholders. Changes in accounting interpretations or assumptions related to fair value could impact our financial statements and our ability to timely prepare our financial statements.

If we do not maintain effective internal controls over financial reporting, we could fail to accurately report our financial results, which may materially adversely affect our business and financial condition.

Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley” or “SOX”) requires us to evaluate and report on our internal controls over financial reporting and have our independent auditors issue their own opinion on our internal controls over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. A material weakness is defined by the standards issued by the Public Company Accounting Oversight Board as a deficiency or a combination of deficiencies in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As previously reported, during management’s assessment of the effectiveness of our internal controls over financial reporting as of December 31, 2012, management determined that there was a material weakness in our controls related to the accounting for significant and unusual transactions as a result of the significant increase in acquisitions and a related increase in the volume of complex accounting and transactional activity we experienced during late 2012 and early 2013. As a result of this material weakness, management concluded that, as of December 31, 2012, our internal control over financial reporting was not effective. As of December 31, 2013, management concluded that the 2012 material weakness had been remediated.

It is possible that other material weaknesses and/or control deficiencies could be identified by our management or by our independent auditing firm in the future, or may occur without being identified. The existence of any material weakness or significant deficiency could require management to devote significant time and incur significant expense to remediate such weakness or deficiency and management may not be able to remediate the same in a timely manner. Any such weakness or deficiency, even if remediated quickly, could result in regulatory scrutiny, cause investors to lose confidence in our reported financial condition, lead to a default under our indebtedness, materially affect the market price and trading liquidity of our debt instruments, reduce the market value of our common stock and otherwise materially adversely affect our business and financial condition.

Certain aspects of our business are subject to factors that are beyond our control and/or not predictable with any degree of certainty. This unpredictability may adversely affect our projections, business plans, cash flows and business strategies in material ways.

We believe that there is a secular shift in mortgage servicing that is underway pursuant to which mortgage servicing currently performed by the largest banks is or will be shifted to specialized servicers like the Company. Such a shift for existing servicing business, however, is largely dependent upon the willingness and ability of the parties to transfer servicing rights and in some cases on consents for such transfers from GSEs and government authorities. We cannot be certain that this shift will continue, nor do we have any control over the scope and/or timing of the parties’ efforts to transfer servicing. As a result, while we might receive assurances from our customers that new business may be coming to us, unless and until our customers secure the corresponding servicing rights and transfer the business, we cannot be certain that the new business will be consummated or that the volumes will correspond to previous assurances.

Our ability to sustain and grow our servicing business depends on our ability to acquire servicing portfolios from third parties. In February 2014, a competitor of ours agreed to indefinitely halt an announced acquisition of MSRs at the request of the NY DFS, which reportedly expressed concern about the competitor’s ability to

28

Table of Contents

adequately service acquired MSRs. We may be subject to a similar request by the NY DFS or other state or federal authorities in the event of a material acquisition of MSRs, particularly if we face enforcement actions from the NY DFS, CFPB, or other state or federal authorities. If we were subject to similar requests, we would have difficulty growing our business through MSR acquisitions.

We service reverse mortgages, which subjects us to additional risks and could have a material adverse effect on our business, liquidity, financial condition and results of operations.

As a result of the RMS and S1L acquisitions, we originate, securitize and service reverse mortgages. The reverse mortgage business is subject to substantial risks, including market, credit, interest rate, liquidity, operational, reputational and legal risks. A reverse mortgage is a loan available to seniors aged 62 or older that allows homeowners to borrow money against the value of their home. No repayment of the mortgage is required until the last borrower leaves the home. We depend on our ability to securitize reverse mortgages, subsequent draws, mortgage insurance premiums and servicing fees, and would be adversely affected if our ability to access the securitization market were to be limited. Defaults on reverse mortgages leading to foreclosures may occur if borrowers fail to meet maintenance obligations, such as payment of taxes or home insurance premiums. An increase in foreclosure rates may increase our cost of servicing. As a reverse mortgage servicer, we will also be responsible for funding any payments due to borrowers in a timely manner, remitting to investors interest accrued, paying for interest shortfalls, and funding advances such as taxes and home insurance premiums. Advances are typically recovered upon weekly or monthly reimbursement or from sale in the market. In the event we receive requests for advances in excess of amounts we are able to fund, we may not be able to fund these advance requests, which could materially and adversely affect our liquidity. Finally, as a result of the RMS and S1L acquisitions, we may become subject to negative publicity in the event that loan defaults on reverse mortgages lead to foreclosures or even evictions of senior homeowners. All of the above factors could have a material adverse effect on our business, liquidity, financial condition and results of operations.

Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations.

We have substantial levels of indebtedness. As of December 31, 2013, we had approximately $4.4 billion of total indebtedness outstanding, the majority of which was secured. On December 17, 2013, we issued $575.0 million aggregate principal amount of our Senior Notes. On December 19, 2013, we borrowed $1.5 billion under the 2013 Term Loan and entered into a five-year secured revolving credit facility in an amount of $125.0 million under our 2013 Revolver. We used a majority of the proceeds from the 2013 Term Loan, together with the proceeds from the Senior Notes, to repay all amounts outstanding under our then existing 2012 Term Loan. Our obligations under the 2013 Secured Credit Facilities are guaranteed by substantially all of our domestic subsidiaries and are secured by substantially all of our and the guarantors’ assets, subject to certain exceptions. As of December 31, 2013, we also had outstanding $290 million aggregate principal amount under our 4.50% convertible senior subordinated notes due 2019, or Convertible Notes. In addition, as of December 31, 2013, we and our subsidiaries had $971.3 million of secured indebtedness outstanding under a Servicer Advance Reimbursement Agreement and a Receivables Loan Agreement and $1.1 billion outstanding under master repurchase agreements.

All of these amounts of indebtedness exclude (i) intercompany indebtedness, (ii) guarantees under our 2013 Secured Credit Facilities and (iii) mortgage-backed and asset-backed notes and variable funding loan facilities, all of which are non-recourse to us and our subsidiaries.

Our high level of indebtedness could have important consequences, including:

29

Table of Contents

We and our subsidiaries have the ability to incur additional indebtedness in the future, subject to the restrictions contained in the agreements governing our indebtedness, including our 2013 Secured Credit Facilities and the Senior Notes Indenture. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

We may not be able to generate sufficient cash to meet all of our obligations or service all of our indebtedness and may not be able to refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced to take other actions to satisfy our obligations, which may not be successful.

Our ability to make required payments on our debt and other obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control, including the risk factors as set forth herein. We cannot assure you we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness or to meet our other obligations such as our mandatory clean-up call obligations related to our Non-Residual Trusts.

In addition, we conduct some of our operations through our subsidiaries. Accordingly, repayment of our indebtedness is also dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.

We may find it prudent or necessary to refinance our existing indebtedness. Our ability to refinance our indebtedness on favorable terms, or at all, is directly affected by global economic and financial conditions. In addition, optional prepayment of certain of our existing indebtedness is subject to the payment of prepayment premiums. In addition, our ability to incur secured indebtedness (which would generally enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on the value of our assets, which depends, in turn, on the strength of our cash flows and results of operations, and on economic and market conditions and other factors.

If our cash flows and capital resources are insufficient to fund our debt service obligations or we are unable to refinance our indebtedness, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions, or the proceeds from the dispositions may not be adequate to meet any debt service obligations then due.

Despite our current debt levels, we may still incur substantially more debt or take other actions which would intensify the risks discussed above.

Despite our current consolidated debt levels, we and our subsidiaries are able to and may incur substantial additional debt in the future (including in connection with additional acquisitions or pipeline transactions), some of which may be secured, subject to the restrictions contained in our debt instruments. In addition, our 2013

30

Table of Contents

Revolver provides for $125 million of borrowings, subject to customary borrowing conditions. Although the 2013 Secured Credit Facilities and the Senior Notes Indenture contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. Any such indebtedness could increase our leverage and the risks we face from indebtedness described above. We may also be permitted to take a number of other actions that could have the effect of diminishing our ability to make payments on our indebtedness when due.

Our debt agreements contain covenants that restrict our operations and may inhibit flexibility in operating our business and increasing revenues.

Our 2013 Secured Credit Facilities and the Senior Notes Indenture contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and certain of our subsidiaries’ ability to, among other things:

A breach of any of these covenants could result in a default and our lenders could elect to declare all amounts outstanding to be immediately due and payable and to terminate all commitments to extend further credit. If we were unable to repay those amounts, the secured lenders could proceed against the collateral granted to them to secure such indebtedness. There can be no assurance that we will have sufficient assets to repay amounts due under our 2013 Secured Credit Facilities and our other indebtedness.

We may also use warehouse facilities, structured financing arrangements, securitizations and other forms of term debt, in addition to transaction or asset-specific financing arrangements, to finance investment purchases. Such financing facilities may contain restrictions, covenants, and representations and warranties that, among other conditions, require us to satisfy specified financial and asset quality tests and may restrict our ability to, among other actions, incur or guarantee additional debt, make certain investments or acquisitions, make distributions on or repurchase or redeem capital stock, engage in mergers or consolidations, grant liens or such other conditions as the lenders may require. If we fail to meet or satisfy any of these covenants or representations and warranties, we would be in default under these agreements and our lenders could elect to declare any and all amounts outstanding under the agreements immediately due and payable, enforce their respective interests against collateral pledged under such agreements, and restrict our ability to make additional borrowings. These financing agreements also may contain cross-default provisions, such that if a default occurs under any one agreement, the lenders under our other agreements also could declare a default.

Failure to hedge effectively against interest rate changes may adversely affect results of operations.

The Company has from time to time used various derivative financial instruments to provide a level of protection against interest rate risks. In the future we may seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements, such as interest cap agreements and interest rate swap agreements. No hedging strategy can protect us completely. The derivative financial instruments that we select may not have the effect of reducing our interest rate risks. In addition, the nature and timing of hedging transactions may influence the effectiveness of these strategies. Poorly designed strategies, improperly executed and documented transactions or inaccurate assumptions could actually increase our risks and losses. In addition, hedging strategies

31

Table of Contents

involve transaction and other costs. Our hedging strategies and the derivatives that we use may not be able to adequately offset the risks of interest rate volatility and our hedging transactions may result in or magnify losses. Furthermore, interest rate derivatives may not be available at all, or at favorable terms, particularly during economic downturns. Any of the foregoing risks could adversely affect our business, financial condition or results of operations. Additional risks related to hedging include:

Our investment management business may be subject to liability arising out of the performance of its duties providing investment management and other related services to an investment fund, and our reputation, business and operations could be adversely affected by regulatory compliance failures related to investment adviser activities.

One of Green Tree’s subsidiaries, Green Tree Investment Management LLC, or GTIM, jointly manages an investment fund focused on distressed mortgage-related assets. Under the relevant sub-advisory agreement for the fund, GTIM is exempted from liability for any claim, loss or cost arising out of, or in connection with, the performance of its duties, except GTIM is not exculpated from liability arising from losses caused by its gross negligence or willful misconduct or as otherwise provided under applicable federal securities laws. In addition, GTIM expects to expand its activities in this area and, depending on the terms of any future advisory agreements they may enter into, this liability could be increased. GTIM became a registered investment adviser under the federal Investment Advisers Act of 1940, or IAA, on March 30, 2012. A failure by GTIM to comply with the obligations imposed by the IAA on investment advisers, including record-keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, could result in investigations, sanctions and reputational damage.

Unlike competitors that are banks, we are subject to state licensing requirements and substantial compliance costs.

Because we are not a depository institution, we do not benefit from a federal exemption to state mortgage banking, loan servicing or debt collection licensing and regulatory requirements. We must comply with state licensing requirements in all 50 states and the District of Columbia, and we are sensitive to regulatory changes that may increase our costs through stricter licensing laws, disclosure laws or increased fees or that may impose conditions to licensing that we or our personnel are unable to meet. Future state legislation and changes in regulation may significantly increase the compliance costs on our operations or reduce the amount of ancillary fees, including late fees that we may charge to borrowers. This could make our business cost-prohibitive in the affected state or states and could materially affect our business.

Our business would be adversely affected if we lose our licenses.

Our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations. In most states in which we operate, a regulatory agency regulates and enforces laws relating to mortgage servicing companies and mortgage origination companies such as us. These rules and regulations generally provide for licensing as a mortgage servicing company, mortgage origination company, debt collection agency or third party default specialist, as applicable, requirements as to the form and content of contracts and other documentation, licensing of our employees and employee hiring background checks, licensing of independent contractors with whom we contract, restrictions on collection practices,

32

Table of Contents

disclosure and record-keeping requirements and enforcement of borrowers’ rights. In certain states, we are subject to periodic examination by state regulatory authorities. Some states in which we operate require special licensing or provide extensive regulation of our business, and state regulators may have broad discretion to restrict our activities or to withdraw our licenses.

We may not be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could result in a default under our servicing agreements and have a material adverse effect on our operations. Those states that currently do not provide extensive regulation of our business may later choose to do so, and if such states so act, we may not be able to obtain or maintain all requisite licenses and permits. The failure to satisfy those and other regulatory requirements could result in a default under our servicing agreements and have a material adverse effect on our operations. Furthermore, the adoption of additional, or the revision of existing, rules and regulations could adversely affect our business, financial condition or results of operations.

We may incur litigation costs and related losses if the validity of a foreclosure action is challenged by a borrower or if a court overturns a foreclosure.

We may incur costs if we are required to, or if we elect to, execute or re-file documents or take other action in our capacity as a servicer in connection with pending or completed foreclosures. We may incur litigation costs if the validity of a foreclosure action is challenged by a borrower. If a court were to overturn a foreclosure because of errors or deficiencies in the foreclosure process, we may have liability to a title insurer of the property sold in foreclosure. These costs and liabilities may not be legally or otherwise reimbursable to us, particularly to the extent they relate to securitized mortgage loans. In addition, if certain documents required for a foreclosure action are missing or defective, we could be obligated to cure the defect or repurchase the loan. A significant increase in litigation costs could adversely affect our liquidity, and our inability to be reimbursed for servicing advances could adversely affect our business, financial condition or results of operations.

We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances.

During any period in which a borrower is not making payments, we are required under some of our servicing agreements to advance our own funds to meet contractual principal and interest remittance requirements for investors, and pay property taxes, insurance premiums, legal expenses and other protective advances. We also advance funds to maintain, repair and market real estate properties on behalf of investors. Our obligation to make such advances may increase in connection with any future acquisitions of servicing portfolios. As home values change, we may have to reconsider certain of the assumptions underlying our decisions to make advances and, in certain situations, our contractual obligations may require us to make certain advances for which we may not be reimbursed. In addition, in the event a mortgage loan serviced by us defaults or becomes delinquent, the repayment to us of the advance may be delayed until the mortgage loan is repaid or refinanced or a liquidation occurs. A delay in our ability to collect advances may adversely affect our liquidity, and our inability to be reimbursed for advances could adversely affect our business, financial condition or results of operations.

A downgrade in our servicer ratings could have an adverse effect on our business, financial condition or results of operations.

Standard & Poor’s, Moody’s and Fitch rate us as a residential loan servicer. Our current ratings from the rating agencies are important to the conduct of our loan servicing business. These ratings may be downgraded in the future. Any such downgrade could adversely affect our business, financial condition or results of operations.

We depend on the accuracy and completeness of information about borrowers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations.

In deciding whether to extend credit or to enter into other transactions with borrowers and counterparties, we may rely on information furnished to us by or on behalf of borrowers and counterparties, including financial statements and other financial information. We also may rely on representations of borrowers and counterparties

33

Table of Contents

as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. While we have a practice of independently verifying the borrower information that we use in deciding whether to extend credit or to agree to a loan modification, including employment, assets, income and credit score, if any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected. Whether a misrepresentation is made by the loan applicant, the mortgage broker, another third party or one of our employees, we generally bear the risk of loss associated with the misrepresentation. We have controls and processes designed to help us identify misrepresented information in our loan originations operations. We, however, may not have detected or may not detect all misrepresented information in our loan originations or from our business clients. Any such misrepresented information could adversely affect our business, financial condition and results of operations.

Technology failures or cyber-attacks against us or our vendors could damage our business operations and reputation, increase our costs, and result in significant third party liability.

The financial services industry as a whole is characterized by rapidly changing technologies. System disruptions and failures caused by fire, power loss, telecommunications failures, unauthorized intrusion (cyber-attack), computer viruses and disabling devices, natural disasters and other similar events, may interrupt or delay our ability to provide services to our borrowers. Security breaches, acts of vandalism and developments in computer intrusion capabilities could result in a compromise or breach of the technology that we use to protect our borrowers’ personal information and transaction data. Systems failures could result in reputational damage to our business and cause us to incur significant costs and third party liability, and this could adversely affect our business, financial condition or results of operations.

We may be unable to protect our technology or keep up with the technology of our competitors.

We rely on proprietary and licensed software, and other technology, proprietary information and intellectual property to operate our business and to provide us with a competitive advantage. However, we may be unable to maintain and protect, or prevent others from misappropriating or otherwise violating, our rights in such software, technology, proprietary information and intellectual property. In addition, competitors may be able to develop software and technologies that are as good as or better than our software and technology without violating our rights, which could put us at a disadvantage. Our failure to maintain, protect and continue to develop our software, technology, proprietary information and intellectual property could adversely affect our business, financial condition or results of operations.

Any failure of our internal security measures or those of our vendors, or breach of our privacy protections could cause harm to our reputation and subject us to liability.

In the ordinary course of our business, we receive and store certain confidential nonpublic information concerning borrowers including names, addresses, social security numbers and other confidential information. Additionally, we enter into third party relationships to assist with various aspects of our business, some of which require the exchange of confidential borrower information. Although we have put in place a comprehensive information security program that we monitor and update as needed, if a third party were to compromise or breach our security measures or those of the vendors, through electronic, physical or other means, and misappropriate such information, it could cause interruptions in our operations, expose us to significant liabilities, reporting obligations, remediation costs and damage to our reputation. Significant damage to our reputation or the reputation of our clients, could negatively impact our ability to attract or retain clients. Any of the foregoing risks could adversely affect our business, financial condition or results of operations.

While we have obtained insurance to cover us against certain cyber security risks and information theft, there can be no guarantee that all losses will be covered or that the insurance limits will be sufficient to cover such losses.

We have obtained insurance coverage that protects us against losses from unauthorized penetration of company technology systems, employee theft of customer and/or company private information, and company

34

Table of Contents

liability for third party vendors who mishandle company information. This insurance includes coverage for third party losses as well as costs incidental to a breach of company systems such as notification, credit monitoring and ID theft resolution services. However, there can be no guarantee that every potential loss due to cyber-attack or theft of information has been insured against, nor that the limits of the insurance we have acquired will be sufficient to cover all such losses.

Legal proceedings and related costs may increase and could adversely affect our financial results.

We are routinely involved in legal proceedings concerning matters that arise in the ordinary course of our business. Our recent acquisitions and other pending or potential future acquisitions may also increase the risk that we will be sued. The outcome of these proceedings may adversely affect our financial results. In addition, a number of participants in our industry have been the subject of class action lawsuits and regulatory actions by states’ attorneys general and federal regulators. Litigation and other proceedings may require that we pay attorneys’ fees, settlement costs, damages, penalties or other charges, which could adversely affect our financial results.

Governmental and regulatory investigations, both state and federal are increasing in all areas of our business. The costs of responding to the investigations can be substantial. In addition, government-mandated changes from investigations or otherwise, to servicing practices could lead to higher costs and additional administrative burdens, in particular regarding record retention and informational obligations.

See Item 3. “Legal Proceedings” below.

Negative public opinion could damage our reputation and adversely affect our earnings.

Reputational risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business. Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending, loan servicing, debt collection practices, and corporate governance, and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can also result from media coverage, whether accurate or not. Negative public opinion can adversely affect our ability to attract and retain customers, counterparties and employees and can expose us to litigation and regulatory action. Although we take steps to minimize reputation risk in dealing with our customers and communities, this risk will always be present in our organization.

The industry in which we operate is concentrated and highly competitive, and, to the extent we fail to meet these competitive challenges, it would have a material adverse effect on our business, financial position, results of operations or cash flows.

We operate in a concentrated and highly competitive industry that could become even more competitive as a result of economic, legislative, regulatory or technological changes. A majority of the loans we service are controlled by relatively few entities, in particular GSEs. Competition to service mortgage loans and for mortgage loan originations comes primarily from commercial banks and savings institutions. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources, typically have access to greater financial resources and lower funding costs. All of these factors place us at a competitive disadvantage. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more favorable relationships than we can. Competition to service residential loans may result in lower margins based on our servicing model. Because of the relatively limited number of customers, our failure to meet the expectations of any customer could materially impact our business. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition or results of operations.

Changes in interest rates could materially and adversely affect our volume of mortgage loan originations or reduce the value of our MSRs, either of which could have a material adverse effect on our business, financial position, results of operations or cash flows.

Historically, rising interest rates have generally been associated with a lower volume of loan originations and lower pricing margins due to a disincentive for borrowers to refinance at a higher interest rate, while falling

35

Table of Contents

interest rates have generally been associated with higher loan originations and higher pricing margins, due to an incentive for borrowers to refinance at a lower interest rate. Our ability to generate positive cash flows on mortgage loans is significantly dependent on our level of mortgage loan originations. Accordingly, increases in interest rates could materially and adversely affect our mortgage loan origination volume, which could have a material and adverse effect on our overall business, consolidated financial position, results of operations or cash flows. In addition, changes in interest rates may require us to post additional collateral under certain of our financing arrangements and derivative agreements which could impact our liquidity.

Changes in interest rates are also a key driver of the performance of our mortgage servicing business as the values of our MSRs are highly sensitive to changes in interest rates. Historically, the value of our MSRs has increased when interest rates rise, as higher interest rates lead to decreased prepayment rates, and have decreased when interest rates decline, as lower interest rates lead to increased prepayment rates. From time to time we may use various derivative financial instruments to provide a level of protection against such interest rate risk. However no hedging strategy can protect us completely, and hedging strategies may fail because they are improperly designed, improperly executed and documented or based on inaccurate assumptions and, as a result, could actually increase our risk and losses. See “ — Failure to hedge effectively against interest rate changes may adversely affect results of operations.” As a result, substantial volatility in interest rates materially affects our mortgage servicing business, as well as our consolidated financial position, results of operations and cash flows.

The lack of liquidity in our portfolio may adversely affect our business.

We have invested in residential loans that are not liquid. It may be difficult or impossible to obtain third party pricing on the residential loans that we purchase. Illiquid investments typically experience greater price volatility as a ready market does not exist. In addition, validating third party pricing for illiquid investments may be more subjective than more liquid investments. The illiquidity of our residential loans may make it difficult for us to sell such residential loans if the need or desire arises. In addition, if we are required to quickly liquidate all or a portion of our portfolio, we may realize significantly less than the value at which we have previously recorded our portfolio. As a result, our ability to assess or vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations or financial condition.

We use, and will continue to use, analytical models and data in connection with the pricing of new business and the valuation of our future investments, and any incorrect, misleading or incomplete information used in connection therewith may subject us to potential risks.

Given the complexity of our proposed future investments and strategies, we rely, and will continue to rely, on analytical models and information and data, some of which is supplied by third parties. Should our models or such data prove to be incorrect or misleading, any decision made in reliance thereon exposes us to potential risks. Some of the analytical models that we use or will be used by us are predictive in nature. The use of predictive models has inherent risks and may incorrectly forecast future behavior, leading to potential losses. We also use and will continue to use valuation models that rely on market data inputs. If incorrect market data is input into a valuation model, even a tested and well-respected valuation model, it may provide incorrect valuations and, as a result, could provide adverse actual results as compared to the predictive results.

If our estimated liability with respect to interest curtailment obligations arising out of servicing errors by RMS is inaccurate, or additional errors are found, and we are required to record additional material amounts, there may be an adverse impact on our results of operations or financial condition.

Subsequent to the completion of the acquisition of RMS, we discovered a failure to record certain estimated liabilities to investors relating to servicing errors by RMS. FHA regulations provide that servicers meet a series of event-specific timeframes during the default, foreclosure, conveyance, and mortgage insurance claim cycles. Failure to timely meet any processing deadline may stop the accrual of debenture interest otherwise payable in satisfaction of a claim under the FHA mortgage insurance contract and the servicer may be responsible for making the investor whole for any interest curtailment due to not meeting the required event-specific timeframes. On September 24, 2013, as a result of these matters, restatements of certain previously filed historical financial

36

Table of Contents

information of RMS were filed. As of December 31, 2013, the Company had a curtailment obligation liability of $53.9 million related to the foregoing which reflects management’s best estimate of the probable lifetime claim. The curtailment liability is recorded in payables and accrued liabilities in the consolidated balance sheet. The Company assumed $46.0 million of this liability through the acquisition of RMS, which resulted in a corresponding offset to goodwill and deferred tax assets. The Company also recorded a provision related to the curtailment liability of $6.3 million during the year ended December 31, 2013, which is included in general and administrative expense in the consolidated statements of comprehensive income. The Company has potential financial statement exposure for an additional $119.1 million related to similar claims, which are reasonably possible, but which the Company believes are the responsibility of third parties (e.g., prior servicers and/or investors). The Company’s potential exposure to this additional risk relates to the possibility that such third parties may claim that the Company is responsible for the servicing liability or that the Company exacerbated an existing failure by the third party. The actual amount, if any, of this exposure is difficult to estimate and requires significant management judgment as curtailment obligations are an emerging industry issue. Because of the uncertainty in the ultimate resolution of these matters as well as uncertainty in regards to the estimate underlying the curtailment obligation liability, there are potential financial statement exposures in excess of the recorded liability that are considered reasonably possible. In addition, we cannot assure you that we will not discover additional errors, that this will not recur in the future, that future financial reports will not contain material misstatements or omissions, or that future restatements will not be required. Likewise, these matters might continue to cause a diversion of our management’s time and attention. In addition, errors made by prior servicers resulting in curtailment liabilities are generally indemnified or directly retained by the prior servicer. Although somewhat insulated from exposure to prior servicer errors, there is potential risk of loss in certain circumstances. Given uncertainty surrounding the likelihood of this exposure, a range of possible loss cannot be estimated at this time. To the extent we are required to record additional amounts as liabilities, there may be an adverse impact on our results of operations or financial condition. In addition, in September 2013, HUD announced certain changes to the HECM reverse mortgage program that have impacted the reverse mortgage products available to borrowers and have created new regulatory requirements. Most of these changes became effective on September 30, 2013. The full impact of these regulatory developments remains uncertain and any resulting adverse business trends could negatively impact the assumptions used in assessing the Reverse Mortgage segment goodwill for impairment. In December 2013, HUD announced a delay of effectiveness for the requirement that every prospective borrower undergo a financial assessment and the requirement that set-aside accounts be established to pay mandatory property charges for borrowers who pose a future risk of defaulting on their reverse mortgages.

On October 2, 2013, the Company received a subpoena from the HUD Office of Inspector General requesting documents and other information concerning (i) the curtailment of interest payments on HECM loans serviced or sub-serviced by RMS and (ii) RMS’ contractual arrangements with a third party vendor for the management and disposition of real estate owned properties. The Company is responding to the subpoena and at this stage does not have sufficient information to make an assessment of the outcome or impact of HUD’s investigation.

The circumstances which gave rise to the review of interest curtailment obligations and the announced restatement relating thereto continue to create the risk of litigation against us, which could be expensive and could damage our business.

As described in more detail below under Item 3. “Legal Proceedings,” the Company and certain of our officers and directors were named as defendants in a putative shareholder class action lawsuit. Although this case was dismissed, there is risk that other actions and claims could be filed against us and certain current or former officers and directors based on allegations relating to the failure to record certain estimated liabilities relating to interest curtailment obligations at RMS and the associated restatement adjustments, or based on the alleged failure to self-curtail under federal regulations. We may incur substantial defense costs with respect to existing and potential future claims, regardless of their outcome.

No assurance can be given regarding the outcomes of any litigation, investigation, claim or other disputes. The resolution of any such matters may be time consuming, expensive, and may distract management from the conduct of our business. Furthermore, if we are subject to adverse findings in litigation, we could be required to pay damages or penalties or have other remedies imposed, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

37

Table of Contents

We have historically invested in less-than-prime, non-conforming and other credit-challenged residential loans, which are subject to increased risks relative to prime loans.

Our portfolio includes less-than-prime residential loans and sub-performing and non-performing residential loans, which are subject to increased risks of loss. Loans may be, or may become, sub-performing or non-performing for a variety of reasons, including because the underlying property is too highly leveraged or the borrower falls upon financial distress, in either case, resulting in the borrower being unable to meet debt service obligations to us. Such sub-performing or non-performing loans may require a substantial amount of workout negotiations and/or restructuring, which may divert the attention of our senior management team from other activities and entail, among other things, a substantial reduction in the interest rate, capitalization of interest payments and a substantial write-down of the principal of our owned loans. However, even if such restructuring were successfully accomplished, a risk exists that the borrowers will not be able or willing to maintain the restructured payments or refinance the restructured loan upon maturity.

In addition, certain loans that we have acquired may have been originated by financial institutions that are or may become insolvent, suffer from serious financial stress or are no longer in existence. As a result, the standards by which such loans were originated, the recourse to the selling institution, and/or the standards by which such loans are being serviced or operated may be adversely affected. Further, loans on properties operating under the close supervision of a mortgage lender are, in certain circumstances, subject to certain additional potential liabilities that may exceed the value of our investment.

In the future, it is possible that we may find it necessary or desirable to foreclose on some of the residential loans that we have acquired, and the foreclosure process may be lengthy and expensive. Borrowers may resist mortgage foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including numerous lender liability claims and defenses, even when such assertions may have no basis in fact, in an effort to prolong the foreclosure action and force the lender into a modification of the loan or a favorable buy-out of the borrower’s position. In some states, foreclosure actions can take several years to litigate. At any time prior to or during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure actions and further delaying the foreclosure process. Foreclosure may create a negative public perception of the related mortgaged property, resulting in a diminution of its value. Even if we are successful in foreclosing on a loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Furthermore, costs or delays involved in the effectuation of a foreclosure or a liquidation of the underlying property further reduce the proceeds and thus increase costs and potential loss.

Whether or not we have participated in the negotiation of the terms of any such mortgages, there can be no assurance as to the adequacy of the protection of the terms of the loan, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests. Furthermore, claims may be asserted that might interfere with enforcement of our rights. In the event of a foreclosure, we may assume direct ownership of the underlying real estate. The liquidation proceeds upon sale of such real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Any costs or delays involved in the effectuation of a foreclosure of the loan or a liquidation of the underlying property will further reduce the proceeds and thus increase the loss.

Whole loan mortgages are also subject to “special hazard” risk (property damage caused by hazards, such as earthquakes or environmental hazards, not covered by standard property insurance policies), and to bankruptcy risk (reduction in a borrower’s mortgage debt by a bankruptcy court). In addition, claims may be assessed against us on account of our position as mortgage holder or property owner, including responsibility for tax payments, environmental hazards and other liabilities, which could have a material adverse effect on our results of operations and financial condition.

38

Table of Contents

Changes in prepayment rates due to changes in interest rates, government mortgage programs or other factors could result in reduced earnings or losses.

Changes in prepayment rates due to changes in interest rates, government mortgage programs or other factors could result in reduced earnings or losses. Any increase in prepayments could have a significant impact on our servicing fee revenues, our expenses and on the valuation of our MSRs as follows:

The residential loans we service and/or have invested in are subject to delinquency, foreclosure and loss, which could result in reduced earnings.

Residential loans are typically secured by single-family residential property and are subject to risks of delinquency, foreclosure, and risks of loss. The ability of a borrower to repay a loan secured by a residential property is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair borrowers’ abilities to repay their loans. In the event of the bankruptcy of a residential loan borrower, the residential loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the residential loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a residential loan can be an expensive and lengthy process which could have a substantial negative effect on our anticipated return on the foreclosed residential loan.

We may not realize all of the anticipated benefits of past, pending or potential acquisitions or potential future acquisitions or joint venture investments, which could adversely affect our business, financial condition and results of operations.

We periodically explore opportunities to grow our business through the acquisition of MSRs and other businesses and assets. Our ability to realize the anticipated benefits of past, pending or potential future acquisitions will depend, in part, on our ability to integrate these acquisitions into our business and is subject to certain risks, including:

39

Table of Contents

These risks are increased by the fact that we have acquired several disparate businesses, located across the country in a relatively short period of time. If we are not able to successfully combine the businesses and assets with those of the Company within the anticipated time frame, or at all, the anticipated benefits and cost savings of the acquisitions may not be realized fully, or at all, or may take longer to realize than expected, the combined businesses and assets may not perform as expected, and the value of our common stock may be adversely affected. It is possible that the integration of the businesses could result in the loss of key employees, both from our business and the acquired businesses, the disruption of each company’s ongoing businesses, unexpected integration issues, higher than expected integration costs and an overall post-closing integration process that takes longer than originally anticipated. Specifically, issues that must be addressed in the integration of our operations and to realize the anticipated benefits of the acquisition so the combined business performs as expected, include, among other things:

Further, prices at which acquisitions can be made fluctuate with market conditions. We have experienced times during which acquisitions could not be made in specific markets at prices we considered acceptable, and we expect that we will experience this condition in the future. In addition, in order to finance an acquisition we

40

Table of Contents

may borrow funds, thereby increasing our leverage and diminishing our liquidity, or raise additional capital, which could dilute the interests of our existing shareholders. Also, it is possible that we will expend considerable resources in the pursuit of an acquisition that, ultimately, either does not close or is terminated. If we incur additional indebtedness to finance an acquisition, the acquired business may not be able to generate sufficient cash flow to service that additional indebtedness.

We cannot assure you that future acquisitions or joint ventures will not adversely affect our results of operations and financial condition, or that we realize all of the anticipated benefits of any future acquisitions or joint ventures.

We may not be successful in retaining employees of any business we acquire or in conveying the knowledge of our long-serving personnel to newly hired personnel and retaining our internal culture.

We regularly explore opportunities to grow our business, including through acquiring companies. Uncertainty about the effect of any such acquisition on the acquired company’s employees may impair our ability to retain management and key personnel of the acquired business. If key employees of the acquired business depart because of issues relating to the uncertainty and difficulty of integration, financial incentives or a desire not to continue as employees of the combined business, we may have to incur significant costs in identifying, hiring and retaining replacements for departing employees, which could reduce our ability to realize the anticipated benefits of the acquisition.

In addition, much of our success can be attributed to the knowledge, experience, and loyalty of our key management and other personnel who have served us for many years. As we grow and expand our operations, we will need to incorporate employees from acquired businesses and hire new employees to implement our business strategies. It is important that the knowledge and experience of our senior management and our overall philosophies, business model, and operational standards, including our differentiated “high-touch” approach to servicing, are adequately conveyed to, and shared by, these new members of our team. At the same time, we must ensure that our hiring and retention practices serve to maintain our internal culture. If we are unable to achieve these integration objectives, our growth could come at a risk to our business model, which has been a major underlying component of our success.

Risks Related To Our Common Stock

Market interest rates may have an effect on the trading value of our shares.

One of the factors that investors may consider in deciding whether to buy or sell our common stock is our dividend rate as a percentage of our share price relative to market interest rates. If market interest rates increase, prospective investors may demand a higher dividend rate or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and capital market conditions can affect the market value of our shares. For instance, if interest rates rise, it is likely that the market price of our shares will decrease as market rates on interest-bearing securities, such as bonds, increase.

Additionally, with the consummation of our acquisition of Green Tree, the Company no longer qualifies as a REIT. Consequently, we will no longer distribute a minimum of 90% of our taxable income each year as was required to maintain our REIT status. Instead, all future distributions, if any, will be made at the discretion of our Board of Directors and will depend on, among other things, our earnings, financial condition and liquidity, and such other factors as the Board of Directors deems relevant, as well as any contractual restrictions, including the covenants in our credit agreement and Senior Notes Indenture that limit our ability to pay dividends.

We may issue shares of preferred stock with greater rights than our common stock.

Our charter authorizes our Board of Directors to issue one or more classes of preferred stock and set the terms of the preferred stock without seeking any further approval from our stockholders. Any preferred stock that is issued may rank ahead of our common stock in terms of dividends, liquidation rights, or voting rights. If we issue preferred stock, it may adversely affect the market price of our common stock, decrease the amount of earnings and assets available for distribution to holders of our common stock or adversely affect the rights and powers, including voting rights, of the holders of our common stock.

41

Table of Contents

Risks Related to Our Organization and Structure

Certain provisions of Maryland law could inhibit a change in our control.

Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then prevailing market price of such shares. We are subject to the “business combination’ provisions of the MGCL that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of our then outstanding stock or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and, thereafter, imposes special appraisal rights and supermajority stockholder voting requirements on these combinations. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the Board of Directors of a corporation prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our Board of Directors has by resolution exempted business combinations between us and any other person, provided that the business combination is first approved by our Board of Directors. This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution is repealed, or our Board of Directors does not otherwise approve a business combination, this statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

The “control share” provisions of the MGCL provide that “control shares” of a Maryland corporation (defined as shares which, when aggregated with all other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in the election of directors) acquired in a “control share acquisition” (defined as the acquisition of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our employees who are also our directors. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

The “unsolicited takeover” provisions of the MGCL permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain provisions if we have a class of equity securities registered under the Exchange Act and at least three independent directors. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then current market price.

Our Board of Directors is divided into three classes of directors. Directors of each class are elected for three-year terms upon the expiration of their current terms, and each year one class of directors will be elected by our stockholders. The staggered terms of our directors may reduce the possibility of a tender offer or an attempt at a change in control, even though a tender offer or change in control might be in the best interests of our stockholders.

Our authorized but unissued shares of common and preferred stock may prevent a change in our control.

Our charter authorizes us to issue additional authorized but unissued shares of common or preferred stock. In addition, our Board of Directors may, without stockholder approval, classify or reclassify any unissued shares of common or preferred stock into other classes or series of shares and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our Board of Directors may establish a class or series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.

42

Table of Contents

Restrictions on transfer and ownership related to our former status as a REIT are no longer applicable leaving us susceptible to takeover. Provisions in our charter that limited beneficial or constructive ownership of our stock by any one person to 9.8% in value of our outstanding common stock, or 9.8% in value or in number of shares, whichever was more restrictive, are no longer applicable as a result of our decision to no longer to qualify as a REIT. This means that individuals or entities, or groups of individuals or entities could acquire a controlling interest in our company and thereafter, adversely change our operations and/or strategies.

Tax Risks

We no longer qualify for taxation as a REIT for United States federal income tax purposes, and there can be no assurance that the IRS will not challenge our previous REIT status.

Although we elected for United States federal income tax purposes to be treated as REIT through December 31, 2010, as a result of the acquisition of Green Tree we did not qualify as a REIT in 2011, 2012 or 2013, and we will not qualify as a REIT for our current taxable year or any year in the foreseeable future, and, as a result, we will be unable to claim the United States federal income tax benefits associated with REIT status. There can be no assurance that the Internal Revenue Service will not challenge our qualification as a REIT for previous years in which we elected REIT status. Although we believe we did qualify as a REIT in each such year, if the Internal Revenue Service were to successfully challenge our previous REIT status, we would suffer adverse United States federal income tax consequences.

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.

The Company was part of Walter Energy, consolidated group prior to the spin-off from Walter Energy on April 17, 2009. As such, the Company is jointly and severally liable with Walter Energy for any final taxes, interest and/or penalties owed by the Walter Energy consolidated group during the time that the Company was a part of the Walter Energy consolidated group. However, in connection with the spin-off of the Company’s business from Walter Energy, the Company and Walter Energy entered into a Tax Separation Agreement dated April 17, 2009, or Tax Separation Agreement, pursuant to which Walter Energy is responsible for the payment of all federal income taxes (including any interest or penalties applicable thereto) of the consolidated group. Nonetheless, to the extent that Walter Energy is unable to pay any amounts owed, the Company could be responsible for any unpaid amounts including, according to Walter Energy’s Form 10-K filed with the SEC on February 26, 2014, those related to the following:

43

Table of Contents

Walter Energy reports that it believes that all of its current and prior tax filing positions have substantial merit and intends to defend vigorously any tax claims asserted and that it believes that they have sufficient accruals to address any claims, including interest and penalties. Walter Energy reports that it anticipates a final order will be issued in 2014 settling the issues in the bankruptcy court for the tax years being considered by the appeals (2000 — 2008).

The Tax Separation Agreement also provides that Walter Energy is responsible for the preparation and filing of any tax returns for the consolidated group for the periods when the Company was part of the Walter Energy consolidated group. This arrangement may result in conflicts between Walter Energy and the Company. In addition, the spin-off of the Company from Walter Energy was intended to qualify as a tax-free spin-off under Section 355 of the Code. The Tax Separation Agreement provides generally that if the spin-off is determined not to be tax-free pursuant to Section 355 of the Code, any taxes imposed on Walter Energy or a Walter Energy shareholder as a result of such determination, or Distribution Taxes, which are the result of the acts or omissions of Walter Energy or its affiliates, will be the responsibility of Walter Energy. However, should Distribution Taxes result from the acts or omissions of the Company or its affiliates, such Distribution Taxes will be the responsibility of the Company. The Tax Separation Agreement goes on to provide that Walter Energy and the Company shall be jointly liable, pursuant to a designated allocation formula, for any Distribution Taxes that are not specifically allocated to Walter Energy or the Company. To the extent that Walter Energy is unable or unwilling to pay any Distribution Taxes for which it is responsible under the Tax Separation Agreement, the Company could be liable for those taxes as a result of being a member of the Walter Energy consolidated group for the year in which the spin-off occurred. The Tax Separation Agreement also provides for payments from Walter Energy in the event that an additional taxable dividend is required to cure a REIT disqualification from the determination of a shortfall in the distribution of non-REIT earnings and profits made immediately following the spin-off. As with Distribution Taxes, the Company will be responsible for this dividend if Walter Energy is unable or unwilling to pay.

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.

Walter Energy effectively controlled all of our tax decisions for periods during which we were a member of the Walter Energy consolidated U.S. federal income tax group and certain combined, consolidated, or unitary state and local income tax groups. Under the terms of the Tax Separation Agreement between Walter Energy and Walter Investment Management LLC, or WIM, dated April 17, 2009, WIM generally computes WIM’s tax liability for purposes of its taxable years ended December 31, 2008 and April 16, 2009, on a stand-alone basis, but Walter Energy has sole authority to respond to and conduct all tax proceedings (including tax audits) relating to WIM’s U.S. federal income and combined state returns, to file all such returns on WIM’s behalf and to determine the amount of WIM’s liability to (or entitlement to payment from) Walter Energy for such periods. This arrangement may result in conflicts of interests between us and Walter Energy. In addition, the Tax Separation Agreement provides that if the spin-off is determined not to be tax-free pursuant to Section 355 of the Code, WIM (and therefore we) generally will be responsible for any taxes incurred by Walter Energy or its stockholders if such taxes result from certain of our actions or omissions or for a percentage of any such taxes that are not a direct result of either our or Walter Energy’s actions or omissions based upon a designated allocation formula.

44

Table of Contents

Additionally, to the extent that Walter Energy was unable to pay taxes, if any, attributable to the spin-off and for which it is responsible under the Tax Separation Agreement, we could be liable for those taxes as a result of WIM being a member of the Walter Energy consolidated group for the year in which the spin-off occurred. Moreover, the Tax Separation Agreement obligates WIM to take certain tax positions that are consistent with those taken historically by Walter Energy. In the event we do not take such positions, we could be liable to Walter Energy to the extent our failure to do so results in an increased tax liability or the reduction of any tax asset of Walter Energy.

We may have liability for losses resulting from Walter Energy’s failure to properly construct homes on which we held and/or serviced mortgages.

In connection with the spin-off of our business from Walter Energy, we entered into a Joint Litigation Agreement with Walter Energy pursuant to which each party agreed to be responsible for any claims or litigation arising out of our respective historical businesses, Walter Energy remained responsible for claims related to homebuilding and we agreed to be responsible for claims related to mortgage servicing and insurance. From time to time, owners of homes constructed by Walter Energy subsidiaries refuse to make payments on their mortgages based on claims that their homes were improperly constructed. To the extent this results in a loss, it is our position that, pursuant to the Joint Litigation Agreement, Walter Energy is responsible for such loss. In light of the current economic conditions in the U.S., homeowners in increasing numbers are seeking to avoid paying their mortgages and may make claims of faulty construction in order to avoid such payments. To the extent that Walter Energy is unwilling to pay these claims, we may be forced to pursue these claims against Walter Energy under the Joint Litigation Agreement. Should we be unsuccessful in our pursuit of such claims, or should Walter Energy be unable to pay the claims, the losses would be our responsibility; and should the number of such claims increase materially in number, there could be a material adverse effect on our business.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

Our executive offices and principal administrative offices are located in Tampa, Florida and Saint Paul, Minnesota and are leased. Our Tampa office accommodates our Other segment and a portion of our Servicing, ARM, and Insurance segments reside at our Saint Paul location. Administrative and corporate operations conducted at our Tampa and Saint Paul location are likewise recorded within our Other segment. Additionally our Servicing, ARM and Insurance segments have centralized servicing operations located in leased office spaces in Tempe, Arizona; Rapid City, South Dakota; and Fort Worth, Texas. Leased office space located in Spring, Texas is occupied by our Reverse Mortgage segment operations and our Originations segment is housed in leased office space in Fort Washington, Pennsylvania. In addition, our field servicing and regional operations lease approximately 230 smaller offices located throughout the U.S. We believe that our leased facilities are adequate for our current requirements, although growth in our business may require us to lease additional facilities or modify existing leases.

ITEM 3.    LEGAL PROCEEDINGS

We are involved in litigation, investigations and claims arising out of the normal conduct of our business. We estimate and accrue liabilities resulting from such matters based on a variety of factors, including outstanding legal claims and proposed settlements and assessments by internal counsel of pending or threatened litigation. These accruals are recorded when the costs are determined to be probable and are reasonably estimable. We believe we have adequately accrued for these potential liabilities; however, facts and circumstances may change that could cause the actual liabilities to exceed the estimates, or that may require adjustments to the recorded liability balances in the future.

45

Table of Contents

Not applicable.

46

Table of Contents

PART II

On January 23, 2013, our common stock began trading on the New York Stock Exchange, or NYSE, under the symbol “WAC”. Prior to January 23, 2013, our common stock traded on the NYSE MKT (formerly known as the NYSE Amex) also under the symbol “WAC”. As of February 18, 2014, there were 37,388,547 shares of common stock outstanding and 154 record holders.

The following table sets forth the high and low closing sales prices for our common stock. There were no cash dividends declared on our common stock for the periods indicated:

We have not declared or paid a dividend since November 2011, when we paid a special dividend to shareholders to satisfy REIT distribution requirements. As a result of our acquisition of Green Tree in 2011, we no longer qualify as a REIT, and are not currently subject to REIT distribution requirements. We have no current plans to pay any cash dividends on our common stock and instead may retain earnings, if any, for future operation and expansion or debt repayment, among other things. Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant. In addition, our ability to pay dividends is limited by covenants in our 2013 Credit Agreement and Senior Notes Indenture. These restrictions on dividends are described in greater detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Item 7. Refer to Note 23 to our Consolidated Financial Statements included in Item 8 of this report for additional information regarding dividend restrictions.

The following table sets forth certain selected consolidated financial data of the Company and its predecessors. As a result of our merger with Hanover on April 17, 2009, which was treated as a reverse acquisition for accounting purposes, the historical operations of Walter Investment Management LLC, or WIM, have been presented as the historical financial statements of the Company for the period prior to April 17, 2009.

We derived the summary historical consolidated financial information as of and for the years ended December 31 for the years indicated from Walter Investment and its predecessors’ audited consolidated financial statements. Our business has changed substantially during the past several years. As a result of the spin-off from Walter Energy; the merger with Hanover; qualifying as a REIT; and beginning to operate our business as an independent, publicly traded company in 2009; the acquisition of Marix in 2010; the acquisition of Green Tree and no longer qualifying as a REIT in 2011; the acquisitions of RMS, and S1L in 2012; and the acquisitions of the ResCap net assets and the BOA assets in 2013; our historical annual consolidated financial results presented herein are not necessarily indicative of the results that may be expected for any future period. Refer to Part I,

47

Table of Contents

Item 1. “Business — Laws and Regulations” and “— Liquidity and Capital Resources” in under Item 7 for a description of our recent financing transactions. In addition, we made certain reclassifications to prior year balances to conform to the current year presentation. Refer to Note 1 to our Consolidated Financial Statements included in Item 8 of this report for further information on reclassifications.

48

Table of Contents

The following discussion should be read in conjunction with our Consolidated Financial Statements and notes thereto included in Item 8 of this report and the information set forth under Item 6. “Selected Financial Data”. This discussion contains a number of forward-looking statements, all of which are based on our current expectations and all of which could be affected by uncertainties and risks. Our actual results may differ materially from the results contemplated in these forward-looking statements as a result of many factors including, but not limited to, those described in “Risk Factors” under Item 1A. Historical results and trends which might appear should not be taken as indicative of future operations, particularly in light of our recent acquisitions as discussed below.

Executive Summary

The Company

We are a fee-based services provider to the residential mortgage industry focused on providing servicing for reverse mortgage loans and credit-sensitive forward mortgage loans. At December 31, 2013, we serviced approximately 2.1 million mortgage loans with approximately $218.0 billion in unpaid principal balance making us one of the top four non-bank mortgage servicers in the U.S. Our servicing portfolio significantly expanded throughout 2013 as a result of our servicing asset acquisitions, the most significant of which were our $126.7 billion of bulk portfolio acquisitions from ResCap and BOA in early 2013, and our other bulk and flow servicing asset acquisitions, which contributed an additional $17.4 billion to our servicing portfolio. Our business provides servicing to the forward residential loan market for several product types including agency or non-agency and first and second lien and manufactured housing loans. Our specialty servicing business focuses on credit-sensitive residential mortgages (i.e. loans that are delinquent or more operationally intensive to support). We also service reverse mortgage loans and higher credit-quality performing forward mortgage loans.

In 2013, we also materially expanded our originations of forward mortgages concurrent with the servicing portfolio acquisition from ResCap as we also purchased its capital markets platform and its national originations platform. We added $5.9 billion to our servicing portfolio through forward loans originated by our consumer retail and correspondent lending channels. The originations platform currently focuses on retention and recapture activities for our servicing portfolio through our consumer retention channel, but it also enables us to maintain sizable operations in the consumer retail and correspondent lending channels. We expect to operate the originations business under the name Ditech in 2014.

We operate several other related businesses which include managing a mortgage portfolio of credit-challenged, non-conforming residential loans; an insurance agency serving residential loan customers; and a post charge-off collection agency.

The recent growth of our forward and reverse mortgage originations businesses has diversified our revenue base and offers various sources for sustainable growth in servicing assets for the Company. For the year ended December 31, 2013, we originated $15.9 billion of forward mortgage volume through our consumer lending and correspondent lending channels. The consumer lending channel is comprised of both our retail lending channel and retention channel. Separately, we originated and purchased $2.7 billion in unpaid principal balance of reverse mortgage volume during 2013 and issued approximately $2.9 billion of HMBS to finance our reverse mortgage originations business.

Financial Highlights

We recognized net income of $253.5 million, or $6.63 per diluted share, for the year ended December 31, 2013 as compared to net loss of $22.1 million, or $0.73 per diluted share, for 2012. The increase in net income of $275.6 million for the year ended December 31, 2013 as compared to 2012 was primarily due to the favorable change in fair value of servicing rights carried at fair value, the growth of our servicing portfolio as a result of the

49

Table of Contents

bulk MSR acquisitions from ResCap and BOA, and the growth of our originations business as a result of the purchase of the ResCap originations platform. Refer to Part I, Item 1. “Business – Recent and Other Developments” for a description of our acquisition activity during 2012 and 2013.

We recognized core earnings (loss) before income taxes, or Core Earnings, of $595.4 million for the year ended December 31, 2013 in comparison to $134.1 million for 2012. The increase in Core Earnings of $461.3 million was primarily attributable to the favorable change in fair value of servicing rights carried at fair value, the growth of our Servicing and Origination businesses as discussed above, and our new reverse mortgage business resulting from the acquisitions of RMS and S1L partially offset by higher interest expense recorded by our Other segment resulting from higher average corporate debt during the year ended December 31, 2013. These acquisitions gave rise to increased revenues and expenses. Our overall cost structure increased to support our new originations and reverse mortgage businesses and the substantial growth of our servicing business. Higher corporate debt during the year ended December 31, 2013 was primarily due to current year debt transactions which amongst other things, was for the purpose of purchasing the ResCap net assets and the BOA assets and for general corporate purposes. For a description of Core Earnings, as used by management to evaluate our business and its performance, and a reconciliation of our consolidated income before income taxes under accounting principles generally accepted in the U.S., or GAAP, to our Core Earnings, refer to the Business Segment Results section below.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, or Adjusted EBITDA, was $691.7 million for the year ended December 31, 2013 in comparison to $241.7 million for 2012. The increase in Adjusted EBITDA of $450.0 million was primarily attributable to the growth of our servicing and originations businesses and our new reverse mortgage business as discussed above. For a description of Adjusted EBITDA, as used by management to evaluate our business and its performance, and a reconciliation of our consolidated income before income taxes under GAAP to our Adjusted EBITDA, refer to the Non-GAAP Financial Measurements and Business Segment Results sections below.

Our cash flows used in operating activities were $1.8 billion during the year ended December 31, 2013. We finished the year with $491.9 million in cash and cash equivalents. Our operating cash flows decreased by $1.9 billion during the year ended December 31, 2013 as compared to 2012 primarily as a result of the growth of our originations business, which resulted in $16.1 billion used in the purchase and origination of residential loans held for sale, partially offset by $15.5 billion in proceeds from sales of and payments on residential loans held for sale, and the growth of our servicing portfolio which required $1.1 billion of cash to fund servicer and protective advances. We also had $124.7 million in funds available under our 2013 Revolver at December 31, 2013.

We manage our Company in six reportable segments: Servicing; Originations; Reverse Mortgage; Assets Receivables Management, Insurance; and Loans and Residuals. Refer to the Business Segment Results section for a presentation and discussion of our financial results by business segment. A description of the business conducted by each of these segments and related key financial highlights are provided below:

Servicing — Our Servicing segment consists of operations that perform servicing for third-party investors in forward loans, as well as our own forward loan portfolio for a fee-for-service basis. Beginning in the first quarter of 2013, the Servicing segment began servicing forward loans that have been originated or purchased by the Originations segment and sold to third party investors with servicing rights retained. For the year ended December 31, 2013, our Servicing segment recognized $224.2 million in income before taxes, an increase of $178.4 million as compared to 2012, due primarily to the bulk servicing right acquisitions from ResCap and BOA as well as positive fair value adjustments recognized during 2013 relating to servicing rights carried at fair value. The average servicing fee for the year ended December 31, 2013 for the Servicing segment decreased by 5 basis points from 2012 due mainly to a change in the composition of the servicing portfolio. At December 31, 2013, the servicing portfolio included significantly more first lien mortgages as a result of our servicing right acquisitions which typically provide for a lower fee as compared to other servicing assets within our portfolio. The total third-party servicing portfolio serviced by our Servicing segment grew by 110% or 992,041 million accounts since December 31, 2012 to 1,894,446 million accounts at December 31, 2013.

50

Table of Contents

The portfolio disappearance rate, consisting of contractual payments, voluntary prepayments, and defaults, was 15.56% for the year ended December 31, 2013. During the year ended December 31, 2013, we added $156.4 billion in forward loans to our third-party servicing portfolio which included $150.0 billion in servicing right assets (by unpaid principal balance).

Originations — Our Originations segment consists of operations that purchase and originate forward loans that are sold to third parties with servicing rights generally retained. The originations business was included in the Other segment prior to 2013, but became a reportable operating segment because of growth in the business resulting from the acquisition of the ResCap originations platform. Activity prior to the acquisition of the ResCap origination platform primarily consisted of brokerage operations whereby the Originations segment received origination commissions. For the year ended December 31, 2013, the Originations segment recognized $263.0 million in income before taxes. During the year ended December 31, 2013, the Originations segment funded $15.9 billion in originations and purchases of loans and recognized $594.3 million in net gains on sales of loans. Locked applications were $2.2 billion at December 31, 2013.

Reverse Mortgage — Our Reverse Mortgage segment, which was formed in the fourth quarter of 2012 as a result of the acquisitions of RMS and S1L, consists of operations that purchase and originate HECMs that are securitized, but remain on the consolidated balance sheet as collateral for secured borrowings referred to as HMBS related obligations. This segment also performs servicing for third-party investors in reverse loans and provides other ancillary services for the reverse mortgage market. During the year ended December 31, 2013, the Reverse Mortgage segment recognized $167.7 million in revenues, which included $120.4 million in net fair value gains on reverse loans and related HMBS obligations, and $167.3 million in expenses resulting in $0.4 million in income before taxes. Net fair value gains included the contractual interest income earned on reverse loans, net of interest expense on HMBS related obligations of $25.7 million and a favorable change in fair value of $94.7 million. Expenses included salaries and benefits of $74.1 million, loan portfolio expenses of $12.1 million, loan servicing expenses of $11.1 million, which includes a $6.3 million provision for curtailment, legal and professional fees of $10.4 million and advertising expense of $8.4 million. Legal and professional fees primarily include contractor-related expenses to support our efforts in the implementation of operational process improvements. During the year ended December 31, 2012, the Reverse Mortgage segment recognized $13.5 million in revenues, which included $7.3 million in net fair value gains on reverse loans and related HMBS obligations, and $10.4 million in expenses resulting in $3.1 million in income before taxes.

The total servicing portfolio serviced by our Reverse Mortgage segment grew by 24.3% or 18,920 accounts since December 31, 2012 to 96,859 accounts at December 31, 2013.

Asset Receivables Management — Our ARM segment performs collections of post charge-off deficiency balances on behalf of securitization trusts and third-party asset owners. Our ARM segment recognized income before taxes of $11.8 million and $8.5 million for the years ended December 31, 2013 and 2012, respectively.

Insurance — Our Insurance business segment provides voluntary and lender-placed hazard insurance for residential loan customers, as well as other ancillary products, through our insurance agency for a commission. Our Insurance business segment recognized income before taxes of $46.0 million and $33.4 million for the years ended December 31, 2013 and 2012, respectively.

Loans and Residuals — Our Loans and Residuals segment consists of the assets and liabilities of the Residual Trusts, as well as our unencumbered residential loan portfolio and real estate owned, all of which are associated with forward loans. The Residual Trusts are consolidated VIEs. Our Loans and Residuals business segment recognized income before taxes of $32.5 million and $15.9 million for the years ended December 31, 2013 and 2012, respectively.

Other — Our Other segment primarily consists of the assets and liabilities of the Non-Residual Trusts, which are consolidated VIEs, corporate debt, our investment management business and intercompany eliminations.

51

Table of Contents

Our Industry and Operating Environment

According to Inside Mortgage Finance, there was nearly $9.9 trillion in U.S. residential mortgage debt outstanding at the end of the fourth quarter of 2013. The majority of this debt has historically been serviced by large money-center banks, which generally focus on conventional mortgages with low delinquency rates. This has allowed for low-cost, routine payment processing and required minimal customer interaction. Following the credit crisis, the need for “high-touch” specialty servicers, such as Walter Investment, increased as loan performance declined, delinquencies rose and servicing complexities broadened. Specialty servicers have proven more willing and better equipped to perform the operationally intensive activities (e.g., collections, foreclosure avoidance and loan workouts) required to service credit-sensitive loans.

To date, the industry has seen a significant shift in the servicing landscape, as specialty servicers acquired portfolios that money-center banks, and others, have sought to divest. While the five largest bank servicers once commanded a nearly 60% market share of the servicing sector, their share had declined to approximately 41% at the end of the fourth quarter of 2013. We expect banking organizations will continue to seek to transfer servicing assets to high-touch servicers to shed responsibilities for credit-sensitive loans and comply with pending changes in banking organization capital rules. However, at some point bulk transfers of MSRs and sub-servicing are likely to slow for commercial, regulatory or other reasons. When that occurs, the ability of servicers to replenish portfolio run-off will be of critical importance. Servicers with an ability to cost-effectively source new MSRs (e.g., from third-party flow arrangements or through captive originations capabilities) will be best positioned to sustain and grow their servicing portfolios.

Since mortgage originations hit their lows amid the housing downturn in 2008 with national originations volume of $1.5 trillion, mortgage originations have increased to $1.9 trillion in 2013, representing a compound annual growth rate of approximately 5%. Several macroeconomic trends have supported mortgage originations volumes including: low interest rates, which drive refinancing activity; home price appreciation, which supports growth in purchase activity; the extension of HARP through 2015; and an improving U.S. economy, with declining unemployment, among others. Non-bank originators have capitalized on the favorable originations environment and the retreat of money-center banks, and experienced originations growth rates that have generally outpaced that of the banks and resulted in growing market shares.

Low mortgage rates have been driven by the Federal Reserve’s accommodative monetary policy and helped fuel increased mortgage originations. However, the Federal Reserve’s curtailment of its purchase of mortgage-backed securities has begun to push mortgage rates higher, which puts a weight on future mortgage originations volumes. Since May 2013, when the Federal Reserve first signaled future tapering of its asset purchases, the 30-year conventional mortgage rate rose to as high as 4.6% in early September 2013, from its low of 3.3% but decreased to 4.5% in late December 2013. The rise in mortgage rates has already contributed to a decline in refinance mortgage lending, with refinancing originations moving to their lowest level in two years. According to an industry source, refinance production likely fell 42% from the second quarter of 2013 to the third quarter of 2013, with an estimated $206 billion in new production for that period. In addition, the Federal Open Market Committee in its January 2014 meeting announced a tapering of its monthly purchases of agency mortgage-backed securities. This tapering could lead to higher mortgage interest rates during 2014 which in turn would likely have a negative impact on our originations activity.

Regulatory Developments

For a summary of recent regulatory developments, refer to the Regulatory Developments section of Part I, Item 1. “Business — Laws and Regulations.”

Market Opportunity and Strategy

Favorable macroeconomic trends, changes to the regulatory environment, and supportive industry dynamics have created attractive opportunities for our business. We are actively pursuing these opportunities through various channels such as adding sub-servicing contracts to our portfolios through one-time transfers and flow agreements, the acquisition of MSRs and servicing platforms, and acquisitions of businesses that are complementary to our historical platform. We are also seeking to expand our correspondent lending and consumer retail originations businesses as a source of additional growth for our servicing business.

52

Table of Contents

Management estimates that there is the potential for over $1 trillion of mortgage servicing assets or sub-servicing mandates to migrate to specialty servicers over the next several years. Of that amount, as of February 27, 2014 we have identified a pipeline of potential opportunities in excess of $345 billion by unpaid principal balance. Our “pipeline” refers to potential opportunities for us to add to our servicing portfolio through the acquisition of MSRs, sub-servicing contracts, asset and stock purchases, and joint venture agreements. In each case we have contacted the seller or its representative to register our interest, or are currently engaged in discussions or negotiations directly with the seller or its representative. The status of “pipeline opportunities” varies from early stage contact through exclusive negotiations. There can be no guarantee that any of the opportunities in our pipeline will result in purchases or contracts added by the Company. In connection with acquisitions of MSRs or sub-servicing contracts, we may acquire other platforms or assets, some of which may constitute businesses.

In order to grow our core servicing business by expanding our servicing portfolio and providing other related fee-based services, we are currently exploring establishing a separate external capital vehicle that would be managed by our registered investment advisor subsidiary, and partly funded by York Capital Management, which has executed a non-binding letter of intent for $200 million in capital commitments. This vehicle, which we expect would ultimately become a publicly traded REIT, is expected to invest in proprietary MSRs, excess servicing spread, and whole loan arrangements (both forward and reverse) with Walter Investment, as well as through secondary market transactions with third-party MSR and whole loan sellers. We expect that our servicing portfolio may benefit from the establishment of this vehicle. Although we have been working toward establishing this vehicle, definitive documentation has not yet been completed. Any definitive documentation would be subject to the approval of both parties’ boards of directors.

If successful in our pursuit of these opportunities, we intend to use unrestricted available cash, future debt and/or equity financings, sales of excess servicing spread in MSRs acquired, and/or other capital/ownership structures designed to diversify our capital sources and attract a competitive cost of capital, all of which may change our leverage profile. There are a number of factors that impact our ability to succeed in bringing on this new business including competition, sometimes from larger competitors, fluctuations in the market price for the acquisitions, and our ability to demonstrate to regulators our financial strength and compliance with servicing standards. The value of MSRs acquired can vary widely based on origination vintage, expected prepayment speeds, servicing fee structure, stratification of Fair Isaac Corporation, or FICO, scores, geography, loan-to-value ratios, and expected delinquency and default rates. As a result, our success in completing these acquisitions, and when successful the purchase price and expected servicing margins for these acquisitions, may vary significantly. If actual experience with respect to these factors differs from our assumptions, we could overpay for one or more of the potential transactions. Our expectation is that, to the extent we are successful, any acquisitions and sub-servicing contracts will be additive to our business and meet our return and investment hurdles, taking into account potential synergies. However, these new business additions and acquisitions involve a number of risks and may not achieve our expectations; and therefore we could be adversely affected by any such new business additions or acquisitions. Outside of those already announced, we are not party to any definitive agreements in respect of such proposed purchases as of December 31, 2013, and we cannot assure you that we will become a party to such definitive agreements, or that if we do become a party to such agreements that we will be able to close on the transactions and acquire the target assets or platforms. Refer to “Risk Factors” under Item 1A.

Over the past year, we have demonstrated an ability to effectively compete for sizable servicing transfers and have capitalized on opportunities within our pipeline. Our size, scale, operational efficiency, and access to capital have enabled us to successfully prevail in competitive auctions for $126.7 billion of servicing assets by unpaid principal balance. We believe that our differentiated platform will enable us to continue capitalizing on pipeline opportunities and that the recent steps taken to enhance the Company’s franchise and operations will facilitate our sustained growth over the long-term. Consistent with our strategy, we are in active discussions to add to our portfolio through pipeline acquisitions, some of which could be material. Refer to Part I, Item 1. “Business — Recent and Other Developments” for a description of our acquisition activity during 2012 and 2013.

We are currently awaiting GSE approval for our acquisition of servicing rights and other assets from EverBank and for another acquisition of servicing rights from an affiliate of a national bank. We cannot be

53

Table of Contents

certain whether or when either such approval will be received or what conditions might attach to such approval. In our planning for 2014, we have assumed these acquisitions would be approved, and if we do not receive both approvals and we are unable to restructure the transactions in a way that is acceptable to all parties concerned in the matter, our financial performance could be materially adversely affected.

In addition to seeking growth opportunities for our servicing operations through investments and acquisitions, we are focused on adapting our other segments to changes in the business environment. In 2013 we took advantage of favorable economic conditions to build our originations business which we acquired from ResCap and Ally Bank, focusing on the retention channel and the opportunity to provide HARP refinancing of loans within our servicing portfolio and on the build-out of the correspondent and retail channels. In 2014, we anticipate that the HARP opportunity will remain a significant focus for us but volume will taper over time. We plan to expand our correspondent and retail channels opportunistically in order to establish a purchase money originations business to meet the demand in that part of the mortgage market and provide replenishment to our servicing portfolio. The reverse mortgage business has been affected by regulatory developments on both the Originations and Servicing segments of the business. Mandated changes to the HECM product have slowed originations volume as the new products are adopted and we have invested to meet upgraded servicing standards. We believe the announced regulatory changes will ultimately be beneficial in establishing a sound reverse mortgage industry, and during 2014 we plan to continue to invest in the business in order to grow both our Originations and Servicing segments. The Insurance segment is also being affected by new rules issued by the GSEs and other regulatory developments, and we expect that at least from June 1, 2014 we will no longer be able to earn commissions or other revenue on lender-placed insurance for GSE loans and in certain states in the manner in which we have conducted our business in the past. We are actively exploring alternatives in order to preserve or replace the value of these insurance activities for our shareholders.

We also maintain a strategic focus on the management of our costs, and we regularly evaluate whether outsourcing portions of our activities to qualified vendors would enable us to reduce our expense base while sustaining the quality, effectiveness and compliance levels that have been important contributors to our success.

Financing Transactions

Refer to Part I, Item 1. “Business — Recent Developments — Financing Transactions” and “Liquidity and Capital Resources” in this section below for a description of our recent financing transactions.

54

Table of Contents

Results of Operations — Comparison of Consolidated Results of Operations for the Years Ended December 31, 2013, 2012 and 2011

Our consolidated results of operations are provided below (in thousands):

55

Table of Contents

Net Servicing Revenue and Fees

A summary of net servicing revenue and fees is provided below (in thousands):

We recognize servicing revenue and fees on servicing performed for third parties in which we either own the servicing rights or act as sub-servicer. This revenue includes contractual fees earned on the serviced loans, incentive and performance fees earned based on the performance of certain loans or loan portfolios serviced by us, and loan modification fees. Servicing revenue and fees also includes asset recovery income, which is included in incentive and performance fees, and ancillary fees such as late fees and prepayment fees. Servicing revenue earned on loans held by consolidated VIEs, for which the related residential loans and real estate owned have been recognized on our consolidated balance sheets, which consists of both the Residual and Non-Residual Trusts, is eliminated in consolidation. Servicing revenue and fees are adjusted for the amortization of servicing rights carried at amortized cost and the changes in fair value of servicing rights carried at fair value.

Servicing revenue and fees increased $358.9 million for the year ended December 31, 2013 as compared to 2012 due to growth in the average third-party servicing portfolio of 105% or 993,849 accounts for 2013, resulting primarily from bulk MSR portfolio acquisitions and servicing rights capitalized as a result of our loan origination activities partially offset by normal run-off of the servicing portfolio. In addition, there was a full year of reverse mortgage-related servicing revenues during the year ended December 31, 2013 as compared to only two months in 2012. The change in fair value of servicing rights of $48.1 million for the year ended December 31, 2013 related to the newly established risk-managed class of servicing rights that includes servicing rights acquired from ResCap and BOA and servicing rights capitalized as a result of our loan origination activities. Refer to additional information on this change in fair value in the Servicing segment section of our Business Segment Results discussed below.

Servicing revenue and fees increased $232.8 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree operations for the entire year of 2012 as compared to six months of 2011 and a full year of servicing fees associated with the boarding of 159,000 loans into our servicing systems in November and December 2011.

56

Table of Contents

Included in incentive and performance fees are incentive fees for exceeding pre-defined performance hurdles in servicing various loan portfolios. These fees may not recur on a regular basis, as they are earned based on the performance of underlying loan pools as compared to similar pools serviced by others, as well as the achievement of certain performance hurdles over time, which may not be achieved on a regular schedule. Incentive and performance fees also include modification fees, and other program specific incentives such as HAMP fees.

A summary of third party net servicing revenue and fees by segment is provided below: (in thousands).

Refer to additional information on net servicing revenue and fees by segment in Business Segment Results section below.

Net Gains on Sales of Loans

Net gains on sales of loans consists of gains on sales of forward mortgage loans held for sale, fair value adjustments on loans held for sale and related derivatives, and a provision for the repurchase of loans. For the year ended December 31, 2013, net gains on sales of loans increased $598.3 million as compared to 2012 due to the acquisition of the ResCap originations platform, which gave rise to the growth of our originations business.

Interest Income on Loans

We earn interest income on the residential loans held in the Residual Trusts and on our unencumbered forward loans, both of which are accounted for at amortized cost. For the year ended December 31, 2013, interest income decreased $9.7 million as compared to 2012 primarily due to a decrease in the related average residential loan balance partially offset by a decrease in delinquencies.

For the year ended December 31, 2012, interest income decreased $10.4 million as compared to 2011 primarily due to a decline in the residential loan balance and a lower average yield on loans due to an increase in delinquencies that are 90 days or more past due.

Provided below is a summary of the average balances of residential loans carried at amortized cost and the related interest income and average yields (dollars in thousands):

Net Fair Value Gains on Reverse Loans and Related HMBS Obligations

Net fair value gains on reverse loans and related HMBS obligations includes the contractual interest income earned on reverse loans, including those not yet securitized or bought out of securitization pools, net of interest expense on HMBS related obligations and the change in fair value of these assets and liabilities. The net contractual interest approximates our servicing fees. Included in the change in fair value are gains due to loan originations, which include draws on reverse loans where the borrower has additional borrowing capacity. These gains result from bulk market pricing exceeding the cost of the origination or acquisition of the loan as well as changes in fair value resulting from changes to market pricing on newly originated HECMs and HMBS. No gain

57

Table of Contents

or loss is recognized upon securitization of reverse loans as these transactions are accounted for as secured borrowings. Refer to the “Business Segment Results” below for a detailed breakout of the components of net fair value gains on reverse loans and related HMBS obligations.

During the years ended December 31, 2013 and 2012, we recognized $120.4 million and $7.3 million in net fair value gains on reverse loans and related HMBS obligations which includes contractual interest income earned on reverse loans, net of interest expense on HMBS related obligations of $25.7 million and $3.2 million, respectively, and favorable changes in fair value of $94.7 million and $4.1 million, respectively.

The growth in net contractual interest of $22.5 million during the year ended December 31, 2013 as compared to 2012 was due primarily to having a full year of related activity during 2013 rather than two months in 2012 as well as growth in the portfolio. The unpaid principal balance of reverse loans increased by $2.7 billion to $8.1 billion at December 31, 2013 while the balance outstanding on HMBS related obligations increased by $2.8 billion to $8.0 billion at December 31, 2013. The favorable change in fair value recorded during the year ended December 31, 2013 of $94.7 million resulting from the gain on HMBS related obligations partially offset by the loss on reverse loans was due to growth of the portfolio as well as the change in market pricing for newly originated HECMs and HMBS. Similarly, the favorable change in fair value recorded during the year ended December 31, 2012 of $4.1 million resulting from the gain on reverse loans partially offset by the loss on HMBS related obligations was due to the change in market pricing since the acquisition of RMS in the fourth quarter of 2012.

Insurance Revenue

Insurance revenue consists of commission income and fees earned on voluntary and lender-placed insurance policies issued and other products sold to customers, net of estimated future policy cancellations, as well as premium revenue from captive reinsurers. Commission income is based on a percentage of the premium of the insurance policy issued, which varies based on the type of policy. Insurance revenue increased $11.2 million for the year ended December 31, 2013 as compared to 2012 due primarily to the increase in insurance policies issued during 2013 as a result of the growth of the first lien residential loan servicing portfolio, partially offset by run-off of policies previously in-force and lower commission rates that were effective on January 1, 2013.

Insurance revenue increased $31.6 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree operations for the entire year of 2012 as compared to six months of 2011.

Due to recent regulatory developments surrounding lender-placed insurance policies as mentioned in Part I, Item 1A. “Risk Factors” and the Regulatory Developments section above, we expect our sales commissions related to lender-placed insurance policies to decrease significantly beginning in the second quarter of 2014. We are actively looking at alternatives to preserve or replace the value of the revenue streams in our Insurance business. However there is no assurance that our efforts will be successful in preserving or replacing any affected revenue streams or otherwise preserving for our shareholders all or any part of our Insurance business.

Other Revenues

Other revenues consist primarily of origination fee income, management fee income, and accretion of certain acquisition-related fair value adjustments. Other revenues increased $50.9 million for the year ended December 31, 2013 as compared to 2012 due primarily to origination fee income resulting from the growth in our originations business. Other revenues increased $9.9 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree operations for the entire year of 2012 as compared to six months of 2011 and an increase in origination income. Origination fee income was $45.5 million, $5.6 million and $0.8 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Salaries and Benefits

Salaries and benefits expense increased $319.7 million for the year ended December 31, 2013 as compared to 2012 primarily due to employees acquired in connection with our recent acquisitions and hiring to support the

58

Table of Contents

growth of our business. Headcount increased by approximately 2,500 full-time employees from approximately 3,900 at December 31, 2012 to approximately 6,400 at December 31, 2013. Salaries and benefits expense increased $112.4 million for the year ended December 31, 2012 as compared to 2011 due to the inclusion of Green Tree related salaries and benefits for the entire year of 2012 as compared to only six months in 2011, the addition of employees to support the growth of our business, and the addition of 330 full-time equivalent employees for two months in 2012 in connection with the acquisition of RMS.

General and Administrative

General and administrative expenses increased $344.1 million for the year ended December 31, 2013 as compared to 2012 due primarily to additional operating and overhead costs associated with growth in the servicing portfolio and the acquisition and expansion of other businesses. This year-over-year change includes a $63.6 million increase in legal, due diligence, and other costs associated with escalated corporate and business development activities for the year. In addition, there was a $45.6 million increase related to higher costs for compensating interest, a larger provision for uncollectible advances of $19.4 million, and a $35.3 million increase in loan servicing expenses, all of which can be attributed to the growth in our third-party servicing portfolio. Further, general and administrative expenses had a $55.0 million increase in loan originations expense for the year ended December 31, 2013 as compared to 2012 due to increased originations activities as a result of the acquisition of the ResCap originations platform during the first quarter of 2013.

General and administrative expenses increased $57.6 million for the year ended December 31, 2012 as compared to 2011 due primarily to $54.1 million in general and administrative expenses incurred by Green Tree during the first two quarters of 2012 that were not incurred during the comparable 2011 year period, transaction expenses of $8.6 million related to financing transactions and the acquisitions of RMS and S1L, and higher servicing-related legal expenses and due diligence expenses to support corporate business development activities, partially offset by transaction costs of $12.9 million incurred in 2011 related to the acquisition of Green Tree.

Interest Expense

We incur interest expense on our corporate debt, mortgage-backed debt issued by the Residual Trusts, and servicing advance liabilities, all of which are accounted for at amortized cost. Interest expense increased $93.0 million for the year ended December 31, 2013 as compared to 2012 due to corporate debt transactions, which included incremental borrowings on our 2012 Term Loan and refinancing activities during 2013. The increase in average balances of our corporate debt was partially offset by a decrease in the average rate during 2013 as compared to 2012 as a result of the corporate debt activity discussed above as well as the termination of our $265 million second lien senior secured term loan, or the 2011 Second Lien Term Loan, in 2012. These financing transactions resulted in a lower cost of debt. In addition, interest expense increased as a result of higher average balances of servicing advance liabilities and master repurchase agreements due to our growing servicing and originations businesses. Refer to additional information on our corporate debt activity within the Liquidity and Capital Resources section below. Interest expense increased $43.4 million for the year ended December 31, 2012 as compared to 2011 as a result of having interest expense on corporate debt for the entire year of 2012 as compared to only six months of 2011.

59

Table of Contents

Provided below is a summary of the average balances of our debt, mortgage-backed debt of the Residual Trusts, and servicing advance liabilities, as well as the related interest expense and average rates (dollars in thousands):