WALTER INVESTMENT MANAGEMENT CORP (Form: 10-K, Received: 03/18/2013 17:30:44)

Green Tree Servicing LLC

1100 Landmark Towers, 345 St. Peter Street

St. Paul, MN 55102

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-13417

Walter Investment Management Corp.

(Exact name of registrant as specified in its charter)


Maryland		13-3950486
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

3000 Bayport Drive, Suite 1100 Tampa, FL		33607 (Zip Code)
(Address of principal executive offices)

(813) 421-7600

(Registrant’s telephone number, including area code)

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


Title of Class		Name of Exchange on Which Registered
Common Stock, $0.01 Par Value per Share		NYSE

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 þ

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):


Large accelerated filer ¨	Accelerated filer þ	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a smaller reporting company)

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, 2012, was $675.8 million.

The registrant had 36,887,287 shares of common stock outstanding as of March 8, 2013.

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.

WALTER INVESTMENT

MANAGEMENT CORP.

FORM 10-K

ANNUAL REPORT

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012

INDEX


PART I
Item 1.	Business	6
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	45
Item 2.	Properties	45
Item 3.	Legal Proceedings	45
Item 4.	Mine Safety Disclosures	46

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	47
Item 6.	Selected Financial Data	47
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk	92
Item 8.	Financial Statements and Supplementary Data	95
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	95
Item 9A.	Controls and Procedures	95
Item 9B.	Other Information	100

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	102
Item 11.	Executive Compensation	102
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	102
Item 13.	Certain Relationships and Related Transactions, and Director Independence	102
Item 14.	Principal Accountant Fees and Services	102

PART IV
Item 15.	Exhibits and Financial Statement Schedules	103
Signatures		104

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

Certain statements in this report, including matters discussed under Item 1, “Business,” Item 2A, “Risk Factors,” Item 3, “Legal Proceedings,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report constitute “forward-looking statements.” We are including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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. 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 this Annual Report on Form 10-K under the caption “Risk Factors” and in our other filings with the Securities and Exchange Commission.

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:

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local, regional, national and global economic trends and developments in general, and local, regional and national real estate and residential mortgage market trends in particular;

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continued uncertainty in the U.S. home sale market, including both the volume and pricing of sales, due to adverse economic conditions or otherwise;

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fluctuations in interest rates and levels of mortgage originations and prepayments;

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risks related to our acquisitions, including our ability to successfully integrate the large volume of assets and businesses and platforms we have recently acquired into our business;

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risks related to the financing incurred in connection with our acquisitions, including our ability to achieve cash flows sufficient to service our debt and otherwise comply with the covenants of our debt;

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delay or failure to realize the anticipated benefits we expect to realize from our acquisitions;

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our ability to successfully operate the loans originations platforms that we recently acquired, which are significantly larger than our prior originations business;

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the occurrence of anticipated growth of the specialty servicing sector and the reverse mortgage sector;

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the effects of competition on our existing and potential future business, including the impact of competitors with greater financial resources and broader scopes of operation;

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our ability to raise capital to make suitable investments to offset run-off in a number of the portfolios we service and to grow our business;

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our ability to implement strategic initiatives, particularly as they relate to our ability to develop new business, including the development of our originations business, implementation of delinquency flow programs and the receipt of new business, which are both subject to customer demand and approval;

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our ability to earn anticipated levels of performance and incentive fees on serviced business;

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the availability of suitable investments for any capital that we are able to raise and risks associated with any such investments we may pursue;

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changes in federal, state and local policies, laws and regulations affecting our business, including mortgage and reverse mortgage financing or servicing, and changes to our licensing requirements;

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changes caused by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, including regulations required by the Dodd-Frank Act that have been promulgated or have yet to be finalized;

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increased scrutiny and potential enforcement actions by the Consumer Financial Protection Bureau, or the CFPB;

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risks related to the transfer of large volumes of loans;

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uncertainties related to regulatory pressures on large banks related to their mortgage servicing, as well as regulatory pressure on the rest of the mortgage servicing sector, including increased performance standards and reporting obligations and increase to the cost of doing business as a result thereof;

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changes in regard to the rights and obligations of property owners, mortgagors and tenants;

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our ability to remain qualified as a government-sponsored entity, or GSE, approved servicer or component servicer, including the ability to continue to comply with the GSEs’ respective servicing guidelines;

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changes to the Home Affordable Modification Program, or HAMP, the Home Affordable Refinance Program, or HARP, or other similar government programs;

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loss of our loan servicing, loan origination and collection agency licenses;

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uncertainty relating to the status of GSEs;

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uncertainty related to inquiries from government agencies into past servicing, foreclosure, loss mitigation, and lender-placed insurance practices;

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uncertainties related to the processes for judicial and non-judicial foreclosure proceedings, including potential additional costs, delays or moratoria in the future or claims pertaining to past practices;

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unexpected losses resulting from pending, threatened or unforeseen litigation or other third-party claims against the Company;

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the effects of any changes to the servicing compensation structure for mortgage servicers pursuant to programs of GSEs or various regulatory authorities;

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changes to our insurance agency business, including increased scrutiny by government regulators and GSEs on lender-placed insurance practices;

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the effect of our risk management strategies, including the management and protection of the personal and private information of our customers and mortgage holders and the protection of our information systems from third-party interference (cyber security);

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changes in accounting standards;

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the review of our periodic reports (including, but not limited to, this Annual Report and other periodic reports filed with the SEC) by the staff of the SEC could result in amendment to our financial information or other disclosures;

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the ineffectiveness of our disclosure controls and procedures due to a material weakness in internal control over financial reporting, described in this Annual Report, included in Item 9A, “Controls and Procedures,” and the potential that the Company may be unable to effectively implement appropriate remedial measures in a timely manner;

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the continuation of a material weakness or the discovery of additional material weaknesses in our internal control over financial reporting and any delay in the implementation of remedial measures;

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our continued listing on the New York Stock Exchange, or the NYSE;

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the ability or willingness of Walter Energy, Inc. and other counterparties to satisfy material obligations under agreements with us; and

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other presently unidentified factors.

All forward-looking statements set forth herein are qualified by these cautionary statements and are made only as of the date hereof. We undertake no obligation to update or revise the information contained herein, including any forward-looking statements whether as a result of new information, subsequent events or circumstances, or otherwise, unless otherwise required by law.

PART I

ITEM 1.

BUSINESS

Our Company

Walter Investment Management Corp. and its subsidiaries, which may also be referred to as Walter Investment, the Company, we, our and us, is a fee-based business services provider to the residential mortgage industry. We are a specialty servicer providing residential loan servicing that focuses on credit-sensitive residential mortgages and reverse mortgages. We also provide a full suite of services to the reverse mortgage sector, including servicing, sub-servicing, loan origination, asset management and related technology. In addition, we originate residential mortgage loans, we are a mortgage portfolio owner of credit-challenged, non-conforming residential loans and reverse mortgage loans and we operate an insurance agency serving residential loan customers. We operate throughout the United States, or U.S.

The Company previously operated as the financing business of Walter Energy, Inc., or Walter Energy, originating and purchasing residential loans and servicing these loans to maturity. In April 2009, Walter Energy spun off this financing business via a newly created subsidiary, Walter Investment Management, LLC, or WIM, which included Walter Mortgage Company, or WMC, and two insurance subsidiaries, Best Insurers, Inc., or Best, and Walter Investment Reinsurance Co., Ltd., or WIRC.

Following the decision to separate from Walter Energy via the spin-off, we believed that the best way to optimize our results was for us to operate as a Real Estate Investment Trust, or REIT. As a REIT, net taxable income distributed to stockholders is generally not subject to U.S. federal income tax. We determined that the most expedient way to become a REIT was to merge with an existing REIT and in furtherance of this strategy, WIM merged with Hanover Capital Mortgage Holdings, Inc., or Hanover. The merger with Hanover, or Merger, occurred immediately following the spin-off.

Although Hanover was the surviving legal and tax entity in the Merger, for accounting purposes the Merger was treated as a reverse acquisition of the operations of Hanover and was accounted for pursuant to the applicable business combinations guidance, with WIM as the accounting acquirer. As such, the pre-acquisition financial statements of WIM are treated as the historical financial statements of Walter Investment. The combined financial statements of WMC, Best and WIRC (collectively representing substantially all of Walter Energy’s financing business prior to the Merger) are considered the predecessor to WIM for accounting purposes. Thus, the combined financial statements of WMC, Best and WIRC became WIM’s historical financial statements for the periods prior to the Merger. The assets acquired and the liabilities assumed of Hanover were recorded at the date of acquisition, April 17, 2009, at their respective fair values. The results of operations of Hanover were included in our consolidated statements of comprehensive income (loss) for periods subsequent to the Merger.

Since the spin-off and Merger, we have continued servicing our originated and acquired portfolio of residential loans and have expanded our expertise in servicing credit-challenged accounts through a differentiated high-touch approach. With the objective of pursuing opportunities that optimize the value of our high-touch servicing model, on November 1, 2010, we acquired Marix Servicing, LLC, or Marix, a high-touch specialty mortgage servicer based in Phoenix, Arizona. Upon closing, the assets acquired and the liabilities assumed of Marix were recorded at their respective fair values. The results of operations of Marix have been included in our consolidated statements of comprehensive income (loss) for periods subsequent to the acquisition.

On July 1, 2011, we acquired GTCS Holdings LLC, or 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 including residential mortgage, manufactured housing and consumer installment loans. Through the acquisition of Green Tree, we have 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. The results of operations of Green Tree have been included in our consolidated statements of comprehensive income (loss) for the period subsequent to the acquisition.

At the date of acquisition of Green Tree, we were required to consolidate ten securitization trusts for which Green Tree performs the servicing pursuant to the accounting guidance for variable interest entities, or VIEs. We do not currently own any residual interests in these trusts, and thus, we refer to these trusts herein as the Non-Residual Trusts. We own the residual interests in VIEs that were previously consolidated by us prior to the acquisition of Green Tree. We refer to these trusts herein as the Residual Trusts.

The Green Tree acquisition caused us to no longer qualify as a REIT and, accordingly, effective January 1, 2011, we became taxed as a C corporation subject to U.S. federal income tax.

On October 19, 2012, we entered into a joint bidding arrangement with Ocwen Loan Servicing LLC, or Ocwen, to jointly bid on the mortgage servicing rights, or MSR, and the loan originations and capital market platforms of Residential Capital LLC, or ResCap. On October 24, 2012, Walter Investment and Ocwen were determined at an auction sponsored by the U.S. Bankruptcy Court to have submitted the highest and best bid to acquire the ResCap assets; and on November 2, 2012, a definitive agreement was entered into pursuant to which we would purchase all of ResCap’s Federal National Mortgage Association, or Fannie Mae, MSRs, along with ResCap’s originations and capital markets platforms. On January 31, 2013, we closed on the ResCap acquisition.

On November 1, 2012, we acquired Reverse Mortgage Solutions, Inc., or RMS. Based in Spring, Texas, RMS provides a full suite of services to the reverse mortgage sector, including servicing, sub-servicing, loan origination and securitization, and related technology. As a result of the RMS acquisition, we added 330 employees and four offices in three states. Upon closing, the assets acquired and the liabilities assumed of RMS were recorded at their respective fair values. The results of operations of RMS have been included in our consolidated statements of comprehensive income (loss) for the period subsequent to the acquisition.

On December 31, 2012, we agreed to acquire all of the outstanding shares of Security One Lending, or S1L. Based in San Diego, California, S1L is a retail and wholesale reverse mortgage loan originator that has a long-standing relationship with RMS. An economic closing occurred on December 31, 2012. An economic closing is defined as the date that we obtained effective control over S1L. We anticipate the legal closing to occur no later than April 30, 2013. As a result of the S1L acquisition, we will add approximately 500 employees and 60 offices in 25 states. Upon the economic closing, the assets acquired and the liabilities assumed of S1L were recorded at their respective fair values. The results of operations of S1L will be included in our consolidated statements of comprehensive income (loss) for the period subsequent to the economic closing.

The Green Tree and RMS acquisitions significantly increased the size and scope of our business in 2011 and 2012. At December 31, 2012, we employed approximately 3,900 full-time equivalent employees and serviced a portfolio of approximately 1.0 million accounts with an unpaid principal balance of $90.1 billion. This compares to approximately 2,600 full-time equivalent employees and approximately 1.0 million accounts with an unpaid principal balance of $86.0 billion at December 31, 2011 and 350 full-time equivalent employees and approximately 40,000 accounts with $3.2 billion in unpaid principal at December 31, 2010.

We now manage our Company in five primary reportable segments: Servicing; Asset Receivables Management, or ARM; Insurance; Loans and Residuals; and Reverse Mortgage. Refer to the Business Segment Results section under Item 7. “Management’s Discussion and Analysis of Financial Condition” for a presentation and discussion of our financial results by business segment. A description of the business conducted by each of these segments is provided below:

Servicing — Our Servicing business segment consists of operations that perform servicing for third-party investors in forward residential mortgages, manufactured housing and consumer installment loans and contracts, as well as for the Loans and Residuals segment and for the Non-Residual Trusts, which is reported in the Other segment. We perform servicing operations for various clients, the most significant of which are institutions such as Fannie Mae and Bank of America. Our servicing agreements, including those with government-sponsored entities (e.g. Fannie Mae, Federal Home Loan Mortgage Corporation, or Freddie Mac) and government entities (e.g. the Government National Mortgage Association, or GNMA) can be terminated without cause. A material portion of our servicing business is conducted with GSEs. 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.

ARM — Our ARM business segment performs collections of post charge-off deficiency balances on behalf of securitization trusts and third-party asset owners.

Loans and Residuals — Our Loans and Residuals business segment consists of the assets and liabilities of the Residual Trusts, as well as our unencumbered residential mortgage loan portfolio and real estate owned, all of which are associated with forward loans.

Reverse Mortgage — Our Reverse Mortgage business segment includes originations, aggregation and securitization activities and operations that perform servicing for third-party investors in reverse mortgage loans and other ancillary services for the reverse mortgage market. The Reverse Mortgage business also includes the assets and liabilities related to a portfolio of Home Equity Conversion Mortgages, or HECM, reverse mortgages.

Throughout this Annual Report on Form 10-K, references to “residential loans” refer to residential mortgage loans, including forward and reverse mortgage loans, 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.

Additional business segment disclosures required by Item 1 are incorporated by reference to Note 22 in the Notes to Consolidated Financial Statements located in Item 8 of this Annual Report on Form 10-K.

Market Opportunity and Strategy

Due to increased delinquencies and foreclosures during the recent recession, traditional large owners and servicers of residential mortgage assets, such as the GSEs, large banks and securitization trusts experienced increased servicing volume and complexity, often exceeding in-house capacity or capabilities. These traditional servicers have been unable to effectively service increased balances of delinquent loans, resulting in the need to service troubled first and second lien mortgage assets through third-party specialized servicers offering high-touch servicing strategies. We believe that lessons learned in the economic downturn are leading to a secular shift in the market as credit risk owners and other key constituents, such as monoline insurers, regulators and rating agencies, demand permanent, specialized servicing for higher risk loans. Our businesses have a long history of providing borrower-centric, high-touch servicing and are well positioned to continue to benefit from this secular shift.

As important as providing best-in-class service, however, is the ability to meet and quickly adapt to the ever changing landscape of regulatory requirements imposed by numerous federal, state and local authorities that oversee our business. We have a demonstrated history of being compliant with these regulations, which we believe provides us with an advantage over our competitors.

In addition, we seek to leverage our core servicing business and customer base to provide complementary services. These complementary business lines include:

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Asset Receivables Management: performs collections of delinquent balances on loans serviced for third parties after they have been charged off.

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Insurance Agency: acts as a nationwide agent of primarily property and casualty insurance products for both lender-placed and voluntary insurance coverage.

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Loan Originations: facilitates refinancings as a retention and recapture solution for loans we service.

We are currently actively pursuing a number of opportunities to grow our business through multiple channels such as adding subservicing 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 (e.g., reverse mortgages). We are also pursuing opportunities to grow our originations business. We regularly explore such opportunities in the ordinary course of our business, both alone and with potential joint venture partners, and believe there are significant opportunities to acquire such assets. We refer to opportunities or potential opportunities in the market for products, platforms and businesses within our strategic

profile that we have identified as targets as our “pipeline”. Our pipeline of potential transactions includes MSR acquisitions, subservicing contracts, assets and stock purchases, and joint venture arrangements, including those that involve assets and platforms that are originating new loans and MSRs. In the event we are successful in any such activities, it is likely that we will assume certain liabilities in connection with the acquisitions which could reduce the purchase price based on our valuation of such liabilities (which valuation is subject to our judgment and could differ from actual experience).

The following is a summary of our recent activities to expand and grow our business:

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In October 2012, we closed on a registered underwritten public offering of $290.0 million aggregate principal amount of 4.50% convertible senior subordinated notes, or the Convertible Notes, and with the funds, repaid and terminated our existing higher-cost $265.0 million second lien term loan.

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In October 2012, we closed on a registered underwritten public offering of 6,900,000 shares of our common stock at a price of $42.00 per share, raising net proceeds of $276.1 million.

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In November 2012, we refinanced our $500.0 million first lien term loan facility with a $700.0 million senior secured term loan, or the Secured Term Loan, and refinanced our $90.0 million revolving credit facility with a $125.0 million senior secured revolving credit facility, or the Secured Revolving Facility.

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In November 2012, we purchased RMS for cash of $95.0 million and common stock for total consideration of $136.3 million.

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In the fourth quarter of 2012, we began originating Fannie Mae loans. Initially, the focus was on recapturing loans that were prepaying and refinancing borrowers into lower cost loans as a loss mitigation technique. This helps reduce runoff on our existing mortgage servicing portfolio to the extent we are successful.

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In December 2012, we agreed to purchase S1L for cash of $20.0 million and a contingent payout of up to $11.0 million. We obtained effective control over S1L through an economic closing on December 31, 2012, with the legal closing to occur no later than April 30, 2013.

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In January 2013, we closed on our acquisition of ResCap for total preliminary consideration of $492.0 million. At closing, the Fannie Mae MSRs related to a portfolio of residential mortgage loans with an unpaid principal balance of approximately $44.0 billion. In conjunction with our acquisition of the ResCap loan originations and capital market platforms, we have significantly grown our originations business, including the addition of other products and channels, providing another source of revenues and servicing volume.

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In January 2013, we completed the arrangement of an incremental $825 million facility, or the Incremental Secured Credit Facility, to our existing $700 million Secured Term Loan maturing on November 28, 2017.

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In January 2013, we purchased the residential mortgage servicing platform, including certain servicing related technology assets, of MetLife Bank, N.A. located in Irving, Texas for total consideration of $1.0 million.

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In January 2013, we purchased Fannie Mae MSRs, including related servicer advances, from Bank of America, N.A. for total consideration of $495.7 million. At closing, the Fannie Mae MSRs related to a portfolio of residential mortgage loans with an unpaid principal balance of approximately $84.4 billion.

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In February 2013, we entered into an agreement to acquire the correspondent lending and wholesale broker businesses of Ally Bank. Upon the March 1, 2013 closing of the transaction, we employed approximately 300 of the correspondent lending and wholesale broker businesses’ employees.

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:

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the Gramm-Leach-Bliley Act, which requires periodic communication with consumers on privacy matters and the maintenance of privacy regarding certain consumer data in our possession;

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the Fair Debt Collection Practices Act, or FDCPA, which regulates the timing and content of communications on debt collections;

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the Truth in Lending Act, or TILA, and Regulation Z, which regulated mortgage loan origination activities, require certain disclosures be made to mortgagors regarding terms of mortgage financing and regulate certain mortgage servicing activities;

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the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, which collectively regulate the use and reporting of information related to the credit history of consumers;

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the Equal Credit Opportunity Act and Regulation B, which prohibit discrimination on the basis of age, race and certain other characteristics in the extension of credit;

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the Homeowners Protection Act, which requires the cancellation of mortgage insurance once certain equity levels are reached;

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the Home Mortgage Disclosure Act and Regulation C, which require reporting of certain public loan data;

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the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics;

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the Soldiers and Sailors Civil Relief Act, as amended, which provides certain legal protections and relief to members of the military;

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the Real Estate Settlement Procedures Act, or RESPA, which governs certain mortgage loan origination activities and practices and the actions of servicers related to escrow accounts, transfers, lender-placed insurance, loss mitigation, error resolution, and other customer communications;

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Regulation AB under the Securities Act, which requires registration, reporting and disclosure for mortgage-backed securities; and

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the Dodd-Frank Act, which, among other things, created the CFPB.

The CFPB directly impacts 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. Like other parts of the Dodd-Frank Act, Title XIV generally requires that implementing regulations be issued before many of its provisions become effective. Therefore, several of these provisions in the Title XIV will not be effective until 2013 or early 2014. 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. When fully implemented, the Title XIV will prevent or limit servicers of residential mortgage loans from taking certain actions that are typically taken today (e.g. the charging of certain fees) and will impose new requirements that are not currently required, in each case either increasing costs and risks related to servicing or reducing revenues currently generated.

We expect to incur ongoing operational and system costs in order to prepare for compliance with these new laws and regulations. Furthermore, there may be additional federal or states laws enacted during this period that place additional obligations on servicers of residential loans.

We are also subject to 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. Our competitive position in the consumer loan servicing business is largely determined by our ability to differentiate ourselves from other third-party servicers through our high-touch servicing model, our significant expertise in the consumer loan servicing business, our continued compliance with a complex matrix of local, state and federal regulatory requirements, and our demonstrated history of responsiveness to the ever changing demands of industry regulators.

The reverse mortgage market today is dominated primarily by independent non-bank originators and servicers. We compete with several third-party providers for origination and servicing opportunities including other independent non-bank originators and servicers. Our competitive position in the reverse mortgage sector is largely determined by our ability to differentiate ourselves from other third-party originators and servicers through our technology, compliance and responsiveness to the demands of the industry regulators. Additional discussion of competition as it relates to our primary businesses appears in Item 1A. Risk Factors.

Subsidiaries

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

Employees

As of December 31, 2012, we employed approximately 3,900 full-time equivalent employees, all of which 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.

Available Information, Code of Conduct and Ethics

Our website can be found at www.walterinvestment.com . We make available, free of charge, access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, through the investor relations section of our website, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. We also make available, free of charge, access to our Corporate Governance Guidelines, charters for our Audit Committee, Compensation and Human Resources Committee, and Nominating and Corporate Governance Committee, and our Code of Conduct and Ethics governing our directors, officers, and employees. Within the time period required by the SEC and the New York Stock Exchange, we intend to disclose on our website any amendment to, or waiver from, the Code of Conduct as required by law. In addition, our website includes information concerning certain purchases and sales of our equity securities by our executive officers and directors, as well as 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. The information on 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. 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 or may reduce the revenues that we receive from our business.

The enactment of the Dodd-Frank Act has impacted our business and may continue to do so in ways that we cannot predict until such time as rules and regulations related thereto are enacted.

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 the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). We believe that Fannie Mae and Freddie Mac hold potential for growth opportunities for our business and 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 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

and rulemaking authority. While the full scope of 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.

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 nonqualified 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 on January 10, 2013 and take effect on January 10, 2014. 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.

On January 17, 2013, the CFPB issued final rules 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. Specifically, the final rule pertaining to Regulation X addresses servicers’ obligations to correct errors asserted by mortgage loan borrowers and to provide certain information requested by such borrowers and to provide protections to such borrowers in connection with force-placed insurance. 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 take 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. Walter Investment has acquired significant servicing and subservicing rights from other servicers during 2012 and the first quarter of 2013 and additional acquisitions of varying sizes are likely to continue. It is the transfer of these acquired servicing rights from the former owner/servicer to the new servicer that is the subject of the CFPB’s bulletin. The CFPB notes that there are a number of 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 recently, 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.

While we continue to evaluate all aspects of the Dodd-Frank Act, the CFPB and regulations promulgated under the Dodd-Frank Act or 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 and the value of our common stock.

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 January 2011, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to develop a joint initiative to consider alternatives for future mortgage servicing structures and compensation. Under this 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 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 Federal Reserve Board to provide $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 amendments 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 subservice loans for the servicers that are 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. 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 forty-nine 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 (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:

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In February 2012, the Federal Housing Finance Agency issued a report to Congress outlining various options for long-term reform of Fannie Mae and Freddie Mac. These options involve gradually reducing the role of Fannie Mae and Freddie Mac in the mortgage market and ultimately winding down both institutions such that the private sector provides the majority of mortgage credit. We believe, these options are likely to result in higher mortgage rates in the future, which could have a negative impact on the mortgage origination business and on mortgage servicing.

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There are federal and state legislative and agency initiatives that could, once fully implemented, adversely affect this business. For instance, the risk retention requirement under the Dodd-Frank Act requires securitizers to generally retain a minimum beneficial interest in mortgage-backed securities they sell through a securitization. Once implemented, the risk retention requirement may result in higher costs of certain originations operations and impose additional compliance requirements to meet servicing and originations criteria for qualified residential mortgages. Lastly, certain proposed federal legislation would permit borrowers in bankruptcy to restructure mortgage loans secured by primary residences. Bankruptcy courts could, if this legislation is enacted, reduce the principal balance of a mortgage loan that is secured by a lien on mortgaged property, reduce the mortgage interest rate, extend the term to maturity or otherwise modify the terms of a bankrupt borrower’s mortgage loan. Any of the foregoing could also 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 and, as a result, 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.

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Delinquency rates can have a significant impact on our revenues and our expenses and the value of our MSRs. For example, an increase in delinquencies may result in lower revenues because, for some GSE business, we may only collect servicing fees for performing loans. Additionally, while increased delinquencies generate higher ancillary fees, including late fees, these fees are not likely to be recoverable in the event that the related loan is liquidated. In addition, an increase in delinquencies lowers the interest income we receive on cash held in collection and other accounts. Delinquencies can also increase our liability for servicing advances, as we may be required to advance certain payments early in a delinquency, and impact our liquidity. An increase in delinquencies will result in a higher cost to service due to the increased time and effort required to collect payments from delinquent borrowers. If we acquire portfolios of MSRs, the price we pay will depend on, among other things, our projections of the cash flows from the related pool of mortgage loans. Our expectation of delinquencies is a significant assumption underlying those cash flow projections. If delinquencies were significantly greater than expected, the estimated fair value of MSRs we acquire could be diminished. If the estimated fair value of MSRs is reduced, we could suffer a loss, which has a negative impact on our financial results and the benefits we would get from acquisitions.

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Loans that are GSE backed tend to be issued to higher quality borrowers with lower loan-to-value ratios. Accordingly, these borrowers can usually prepay such loans with ease through refinancings when mortgage rates decrease. Such prepayments will reduce the size of our MSR portfolio and our future servicing revenue. We make assumptions about prepayment rates, but such assumptions could be incorrect, or could be rendered incorrect through changes in interest rates. We may seek to hedge such risk but may be unsuccessful.

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In connection with loans that we originate, we expect to generally sell or securitize such loans to finance our future operations. In connection with the sale of mortgage loans, originators must make various representations and warranties concerning such loans that, if breached, require the originator to repurchase such loans or indemnify the purchaser of such loans for actual losses incurred in respect of such loans. These representations and warranties vary based on the nature of the transaction and the purchaser’s or insurer’s requirements but generally pertain to the ownership of the mortgage loan, the real property securing the loan and compliance with applicable laws and applicable lender and GSEs underwriting guidelines in connection with the origination of the loan. The aggregate unpaid principal balance of loans sold or serviced by us (or the UPB of certain portfolios that we may buy in future acquisitions) represents the maximum potential exposure related to loan repurchase and indemnification claims, including claims for breach of representation and warranty provisions. Due, in part, to elevated mortgage payment delinquency rates and declining housing prices, originators have experienced, and may in the future continue to experience, an increase in loan repurchase and indemnification claims due to actual or alleged breaches of representations and warranties in connection with the sale or servicing of mortgage loans. The estimation of our loan repurchase and indemnification liability is subjective and based upon our projections of the future incidence of loan repurchase and indemnification claims, as well as loss severities. Given these trends, losses incurred in connection with such actual or projected loan repurchase and indemnification claims may be in excess of our estimates (including our estimate of liabilities we will assume in an acquisition and factor into our purchase price), and we may be required to increase such reserves and may sustain additional losses associated with such loan repurchase and indemnification claims in the future. Accordingly, increases to our reserves and losses incurred by us in connection with actual loan repurchases and indemnification payments in excess of our reserves could have a material adverse effect on our business, financial position, results of operations or cash flows.

Lender-placed insurance is under increased scrutiny by regulators and, in the event changes are made to current practices, it could result in damages and/or reduced income from commissions for the Green Tree insurance business and/or material changes to the revenues derived from our historical 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 the premium onto 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 WIRC, our wholly-owned subsidiary. This practice ended effective December 31, 2011. Green Tree’s insurance agency acts as an agent for this purpose by placing the insurance coverage with a third-party carrier and for which the agency earns a commission. Both practices have come under the scrutiny of regulators. On January 17, 2013, the CFPB issued final rules relating to mortgage servicing which include certain requirements related to lender-placed insurance. The rules do not restrict or prohibit a servicer from using an insurance agency affiliate to place insurance coverage or the earning of commission income by the insurance agency. On February 11, 2013, the Federal Housing Finance Agency announced a decision to block Fannie Mae’s previously announced lender-placed insurance rules. We cannot be certain that Green Tree’s practice will not be restricted or even prohibited by state regulators. Should this occur, the revenues from our insurance businesses could be significantly reduced or eliminated.

On March 14, 2012, Fannie Mae, a GSE for which Green Tree services mortgage loans, issued a servicing guide announcement related to lender-placed insurance, that, if not revised before its implementation date, would exclude from reimbursement by Fannie Mae any lender-placed insurance commission earned by an entity related to the servicer, such as Green Tree’s insurance agency. The original June 1, 2012 implementation date has been postponed indefinitely by Fannie Mae.

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 (“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.

In addition, the U.S. government, through the Federal Housing Administration (“FHA”), the Federal Deposit Insurance Corporation, and the U.S. Department of the Treasury (“Treasury”), has commenced or proposed implementation of programs designed to provide homeowners with assistance in avoiding residential mortgage foreclosures, such as the Hope for Homeowners program (permitting certain distressed borrowers to refinance their mortgages into FHA insured loans), and the Secured Lien Program (involving, among other things, the modification of first-lien and second-lien mortgages to reduce the principal amount or the interest rate of loans or to extend the payment terms). Green Tree and Marix are HAMP-approved servicers and would be affected by any changes to HAMP rules. Moreover, certain mortgage lenders and servicers have voluntarily, or as part of settlements with law enforcement authorities, established loan-modification programs relating to loans they hold or service. Moreover, state and federal regulators are believed to be considering new regulations relating to lender-placed insurance which could reduce the amount of insurance commission earned by the Green Tree insurance agency, or adversely impact our self insurance of our legacy insurance program. These loan-modification programs, future federal, state and local legislative or regulatory actions that result in modification of outstanding loans acquired by us, changes imposed on our insurance businesses as well as changes in the requirements to qualify for refinancing with or selling to Fannie Mae, GNMA, or Freddie Mac may adversely affect the value of, and the returns on, such residential mortgage loans, insurance businesses and the potential growth of our business.

Furthermore, if regulators impose new or more restrictive requirements, as has been indicated by, amongst others, the CFPB, 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.

Changes to government mortgage modification programs could adversely affect future incremental 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 in government loan modification programs could also result in an increase to our costs.

HAMP and HARP are scheduled to expire on December 31, 2013. A bill was introduced in the U.S. Senate on February 7, 2013 to extend HARP through 2014, although the bill also removes barriers to competition, which will open HARP availability on loans we service to our competitors. If these programs are not extended, or they are extended but competition is increased, this could decrease our revenues, which would adversely affect our business, financial condition and results of operations.

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 originations companies such as us. These rules and regulations generally provide for licensing as a mortgage servicing company, mortgage originations company or third party debt collector, 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 which we contract, restrictions on collection practices, 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.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable federal, state and local regulations. 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. The 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 and results of operations.

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. Continuing concerns over unemployment, inflation, energy and health care costs, geopolitical issues, including political unrest in the Middle East and the possibility of credit defaults by several European countries, the availability and cost of credit, the mortgage market and the real estate market, and other factors have contributed to increased volatility and diminished expectations for the economy and markets going forward. 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 circumstance may adversely affect the third-party servicing performed by Green Tree and any businesses or platforms that we have acquired or we may acquire, including our receipt of servicing incentive fee compensation and the timing, amount and reimbursement of servicing advances made by us, and may further adversely affect or prolong our ability to successfully integrate Green Tree or to bring Marix into profitability.

Continued weakness in the mortgage and residential real estate markets could negatively affect our results of operations and financial condition, including causing credit and market value losses related to our holdings that could cause us to take charges and/or add to our allowance for loan losses in amounts that may be material.

The residential mortgage market in the United States has experienced significant levels of defaults, credit losses, and liquidity instability in recent years. These factors have impacted investor perception of the risks associated with the residential loans that we own. Continued or increased deterioration in the residential loan market may adversely affect the performance and market value of our current investments. Deterioration in home prices or the value of our portfolio could require us to take charges, or add to our allowance for loan losses, either or both of which may be material. The residential loan market also has been severely affected by changes in the lending landscape and there is no assurance that these conditions have stabilized or will not worsen.

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.

While limitations on financing initially were felt in the less-than-prime mortgage market, it appears that liquidity issues now also affect prime and Alt-A lending, with the curtailment of many product types. This has an adverse impact on new demand for homes, which continues to compress home ownership rates and has a negative impact on future home price performance. There is a strong correlation between home price growth rates and residential loan delinquencies. Market deterioration has caused us to expect increased credit losses related to our holdings and to sell some foreclosed real estate assets at a loss.

Risks Related to Our Business

As the Company continues to grow in size, we may be subject to greater scrutiny by state and federal regulators than previously experienced by our Company.

As described under “Risks Related to Our Industry” above, as a result of the high residential mortgage foreclosure rate in general and reports of improper servicing practices by some mortgage servicers in particular,

the mortgage servicing industry has been under increased scrutiny from state and federal regulators and other authorities. This scrutiny is more likely to target larger servicing organizations. See for example the risk factor related to the Federal Government/State Attorneys General of all 50 states having targeted five of the largest banks in the U.S. for review and reform of their servicing practices. Similarly, in November 2010 the Federal Trade Commission (“FTC”) issued subpoenas to an unknown number of mortgage servicers, including Green Tree, requesting information on a broad range of subjects relating to the companies’ operations. In January 2012, Green Tree and a number of banks and mortgage servicers received subpoenas from the New York State Department of Financial Services relating to their lender-placed insurance practices. And in September 2012, the CFPB issued civil investigative demands to a number of mortgage servicers, including Green Tree, requesting information on a broad range of subjects relating to the companies’ operations. Previously, the Company would not likely have received such requests for information. Also, as noted previously in this section, due to the large number of transfers of loans that we have undertaken, we will likely be subject to greater scrutiny by the CFPB. We cannot guarantee that any such investigations will not reveal violations of law or regulation that may adversely affect our business. Moreover, as a significantly larger company, the combined business is more likely to be investigated and we cannot assure you that such investigations would not reveal any improprieties in our past or present operations or those of the acquired businesses.

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. 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. 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. On December 18, 2012, the FHA announced a moratorium on its HECM Standard fixed rate product. At the time this was the most popular form of reverse mortgage for customers. In addition, the FHA has stated that it intends to establish guidelines for conducting financial assessments of borrowers, and create escrow to pay for taxes and insurance. When these changes will go into effect and how they and the moratorium on HECM Standard fixed rate loans will affect our business is not clear at this time. This unpredictability of revenues may adversely affect our projections, business plans, cash flows and business strategies in material ways.

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. On July 1, 2011, we entered into a $500 million first lien senior secured term loan (the “First Lien Senior Secured Term Loan”) and a $265 million second lien senior secured term loan (the “Second Lien Senior Secured Term Loan”) to partially fund the acquisition of Green Tree. Also on July 1, 2011, we entered into a $45 million senior secured revolving credit facility (the “Revolver” and together with the First Lien Senior Secured Term Loan, the “First Lien Facility”), which was amended on July 17, 2012 to increase the commitment amount thereunder to $90 million and to permit additional incremental revolving commitments of $10 million. On October 23, 2012, we repaid in full the Second Lien Senior Secured Term Loan with proceeds from the Convertible Notes offering. On November 28, 2012, we refinanced the First Lien Senior Secured Term Loan with our Secured Credit Facility, consisting of a $700.0 million Secured Term Loan and the $125 million Secured Revolving Facility. Our obligations under the Secured Credit Facility are guaranteed by

substantially all of our domestic subsidiaries and are secured by substantially all of our and the guarantors’ assets. On January 31, 2013, we entered into an Incremental Amendment to our Secured Credit Agreement and drew the full amount under our $825.0 million Incremental Secured Credit Facility.

As of December 31, 2012, we had approximately $1.3 billion of indebtedness outstanding, most of which was secured, including total outstanding indebtedness under the Secured Credit Facility and 4.5% convertible senior subordinated notes of $691.3 million and $290.0 million, respectively.

As of December 31, 2012, after giving effect to the incurrence of indebtedness under the Incremental Secured Facility, our total indebtedness would have been approximately $2.2 billion, most of which was secured.

All of these amounts of indebtedness exclude (i) intercompany indebtedness, (ii) guarantees under our Secured Credit Facility and the Incremental Secured Credit Facility and (iii) mortgage-backed and asset-backed notes and a variable funding loan facility, both of which are non-recourse to us and our subsidiaries.

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

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increasing our vulnerability to downturns or adverse changes in general economic, industry or competitive conditions and adverse changes in government regulations;

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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

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exposing us to the risk of increased interest rates as certain of our unhedged obligations are at a variable rate of interest;

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limiting our ability to make strategic acquisitions or causing us to make nonstrategic divestitures;

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limiting our ability to obtain additional financing for working capital, capital expenditures, product or service line development, debt service requirements, acquisitions and general corporate or other purposes; and

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limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors with lower debt levels.

We and our subsidiaries have the ability to incur additional indebtedness in the future, subject to the restrictions contained in our Secured Credit Agreement which restrictions may change if we repay or refinance the indebtedness under the Secured Credit Agreement and the Incremental Secured Facility. 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 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 under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt 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.

In addition, we conduct some of our operations through our subsidiaries and may conduct some activities through joint ventures. Accordingly, repayment of our indebtedness is also dependent on the generation of cash flow by our subsidiaries and could depend on the generation of cash flow by joint venture partners and their ability to make such cash available to us by dividend, debt repayment or otherwise. Our subsidiaries or other ventures 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 and each joint venture would be a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries and such entities. As an equity investor in our subsidiaries and any future joint ventures, our right to receive assets upon their liquidation or reorganization will be effectively subordinated to the claims of their creditors. To

the extent that we are recognized as a creditor of such subsidiaries or any future joint ventures, our claims may still be subordinate to any security interest in or other lien on the assets and to any of their debt or other obligations that are senior to our claims.

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 the current global economic and financial conditions. In addition optional prepayment of our existing indebtedness is subject to the payment of substantial 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.

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

Our Secured Credit Agreement, including our Incremental Secured Credit Facility, contains 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:

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incur additional indebtedness or issue certain preferred shares;

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pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;

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make certain investments;

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sell or transfer assets;

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create liens;

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consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and

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enter into certain transactions with our affiliates.

Under our Secured Credit Agreement, we are required to satisfy and maintain specified financial covenants. Our ability to meet those financial covenants can be affected by events beyond our control, and there can be no assurance we will continue to meet those covenants. A breach of any of these covenants could result in a default under our Secured Credit Agreement. Upon the occurrence of an event of default under these agreements, the lenders thereunder could elect to declare all amounts outstanding under the Secured Credit Agreement to be immediately due and payable and to terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the Secured Credit Agreement could proceed against the collateral granted to them to secure such indebtedness. If the lenders under the Secured Credit Agreement were to demand immediate repayment of the amounts outstanding thereunder, there can be no assurance there we will have sufficient assets to repay amounts due under the Secured Credit Agreement and our other indebtedness.

We may incur additional debt in connection with pending or future potential acquisitions and other pipeline transactions which would increase the risks described above.

We recently refinanced our First Lien Facility through new debt financing that reduces our interest costs and also permits us to incur additional incremental debt and warehouse debt and purchase additional MSRs and related assets. On January 31, 2013, we incurred additional incremental debt under our Incremental Secured

Credit Facility in an amount of $825.0 million. We may incur more additional indebtedness or assume additional indebtedness in connection with pending or future potential acquisitions and other pipeline transactions. Any such indebtedness could increase our leverage and the risks we face from indebtedness described above.

Changes in interest rates could lead to increased prepayment rates, which could materially and adversely affect the value of our mortgage servicing rights and could have a material adverse effect on our business, financial position, results of operations or cash flows.

Changes in interest rates are a key driver of the performance of our servicing segment, particularly with respect to portfolios consisting primarily of MSRs related to prime loans, as the values of our MSRs are highly sensitive to changes in interest rates. Historically, the value of MSRs have 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 risks 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 servicing segment, as well as our consolidated financial position, results of operations and cash flows.

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 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:

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interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates;

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available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought;

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the duration of the hedge may not match the duration of the related liability;

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the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction;

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the party owing money in the hedging transaction may default on its obligation to pay; and

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a court could rule that such an agreement is not legally enforceable.

We would expect to enter into contracts with major financial institutions only based on their credit rating and other factors, but our Board of Directors may choose to change this policy in the future. Failure to hedge effectively against interest rate changes may materially adversely affect our results of operations.

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 subservicing 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:

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Other mortgage servicers have suffered operational deficiencies and, in rare instances company failures, due to the operational risks associated with servicing mortgages and/or a rapid expansion. Deficiencies in other servicers have included deterioration in operating margins due to increased costs, deterioration in servicing metrics (e.g., delinquency rates, call center metrics, account reconciliations or investor reporting), which, if they were to occur to us, could adversely affect our results of operations, and could also lead to potential violations of governmental regulations followed by enforcement penalties and fines.

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Our existing servicing portfolio will decline over time, as mortgages are repaid, prepaid or discharged. While we will seek to replenish our servicing portfolio through the addition of subservicing contracts, MSR purchases, originations or acquisitions, we cannot assure you that we will be successful in developing this business. There is significant competition existing in the sector and the supply of servicing portfolios may decline over the next few years as the opportunity created by the financial crisis ebbs. The competition for new portfolios could increase the prices we may need to pay for such portfolios or reduce subservicing margins. If we are unable to grow our portfolios, our future growth and operating results will be adversely affected, which will adversely affect our stock price.

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 of our 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.

We might not be able to maintain or grow our business if we cannot identify and acquire MSRs or enter into additional subservicing 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, 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 subservicing 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 subservicing, management makes certain assumptions, many of which are beyond our control, including, among other things:

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origination vintage and geography;

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loan to value ratio;

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stratification of Fair Isaac Corporation, (“FICO”) scores;

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the rates of prepayment and repayment within the underlying pools of mortgage loans;

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projected rates of delinquencies, defaults and liquidations;

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future interest rates;

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our cost to service the loans;

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incentive and ancillary fee income; and

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amounts of future servicing advances.

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

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 (“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 may 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 (the “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.

The owners of certain loans we service or subservice, may, under certain circumstances, terminate our MSRs or subservicing 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 subservicing contracts, the primary servicers for whom we conduct subservicing activities have the right to terminate our subservicing rights with or without cause, with generally 60 to 90 days’ notice. In some instances, the subservicing 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 subservicing rights under terms and conditions which could exacerbate these risks.

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

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 fifty 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, 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.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable federal, state and local regulations. 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 pending or potential 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 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 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.

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.

Changes in and the level of interest rates are key drivers of our mortgage loan originations and mortgage loan refinancing activity, in particular. The level of interest rates is significantly affected by monetary and related policies of the federal government, its agencies and GSEs, which are particularly affected by the policies of the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) that regulates the supply of money and credit in the United States. The Federal Reserve Board’s policies, including initiatives to stabilize the U.S. housing market and to stimulate overall economic growth, affect the size of the mortgage loan origination market, the pricing of our interest-earning assets and the cost of our interest-bearing liabilities. Changes in any of these policies are beyond our control, difficult to predict, particularly in the current economic environment, and 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 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 have increased when interest rates rise and have decreased when interest rates decline due to the effect those changes in interest rates have on prepayment estimates, with changes in fair value of our MSRs being included in our consolidated results of operations. Substantial volatility in interest rates materially affects our mortgage servicing business, as well as our consolidated financial position, results of operations and cash flows.

Credit facilities (including term loans and revolving facilities), warehouse facilities, structured financing arrangements, securitizations and other forms of term debt, in addition to transaction or asset-specific financing arrangements that we may use to finance our investments, may contain restrictions, covenants and representations and warranties that restrict our operations or may require us to provide additional collateral and may restrict us from leveraging our assets as fully as desired.

We may use credit facilities (including term loans and revolving facilities), 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.

Our current and possible future use of securitization financings with over-collateralization requirements may have a negative impact on our cash flow.

The terms of our current securitizations generally provide, and those that we may sponsor in the future typically will provide, that the principal amount of assets must exceed the principal balance of the related bonds by a certain amount, commonly referred to as over-collateralization. Our securitization terms now provide, and

we anticipate that future securitization terms will provide, that, if certain delinquencies or losses exceed specified levels based on the analysis by the lenders or the rating agencies (or any financial guaranty insurer) of the characteristics of the assets collateralizing the bonds, the required level of over-collateralization may be increased, or may be prevented from decreasing as would otherwise be permitted, if losses or delinquencies did not exceed those levels. Other tests (based on delinquency levels or other criteria) may restrict our ability to receive net income from assets collateralizing the obligations. We cannot assure you that the performance tests will be satisfied. Given recent volatility in the securitization market, rating agencies may depart from historic practices for securitization financings, which would make such financings more costly. Failure to obtain favorable terms with regard to these matters may materially and adversely affect our net income. If our assets fail to perform as anticipated, our over-collateralization or other credit enhancement expense associated with our securitization financings will increase.

Our existing securitization trusts contain servicer triggers that, if exceeded, could result in a significant reduction in cash flows to us.

Some of our existing securitization trusts contain delinquency and loss triggers that, if exceeded, allocate any excess over-collateralization to paying down the bonds for the securitization at an accelerated pace rather than releasing the excess cash to us. Two of our existing securitizations have exceeded delinquency and cumulative loss rate triggers. Mid-State Capital Corporation 2006-1 Trust (“Trust 2006-1”) exceeded the delinquency and cumulative loss rate triggers and has not provided any excess cash flow to us since January 2008 while Mid-State Capital Corporation 2005-1 Trust (“Trust 2005-1”), exceeded the delinquency rate trigger beginning in September 2012. At December 31, 2012, Trust 2006-1 held mortgage loans with an outstanding principal balance of $160.9 million and a book value of $154.2 million, with collateralized bonds issued by Trust 2006-1 having an outstanding principal balance of $153.1 million. At December 31, 2012, Trust 2005-1 held mortgage loans with an outstanding principal balance of $156.6 million and a book value of $151.2 million, with collateralized bonds issued by Trust 2005-1 having an outstanding principal balance of $138.3 million.

All of our other securitization trusts have experienced some level of delinquencies and losses, and, if any of these trusts were to exceed their respective triggers or if we are unable to cure the triggers already exceeded, any excess cash flow from such trusts would not be available to us and, as a result, we may not have sufficient sources of cash to meet our operating needs.

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

During the time that we hold residential loans we are subject to risks on the underlying loans from borrower defaults and bankruptcies and from special hazard losses, such as those occurring from earthquakes, hurricanes or floods that are not covered by standard hazard insurance. If a default occurs on any residential loan we hold, we may bear the risk of loss of principal to the extent of any deficiency between the value of the mortgaged property plus any payments from any insurer or guarantor, and the amount owing on the loan. Defaults on residential loans historically coincide with declines in real estate values, which are difficult to anticipate and may be dependent on local economic conditions. Increased exposure to losses on residential loans can reduce the value of our portfolio.

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.

If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial results, which could harm our business and the market value of our common stock.

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 control over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Several of our acquisitions, including Green Tree, S1L and RMS were at the time of acquisition private companies and not subject to the requirements of Sarbanes-Oxley as part of the integration process they must be brought into compliance with SOX reporting standards. We may in the future discover areas of internal controls at acquired entities that do not exist or that need improvement. We cannot be certain that we will be successful in establishing or maintaining adequate control over our financial reporting and financial processes. Furthermore, as we grow our business, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective.

We have identified a material weakness in our internal controls over financial reporting. 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, as well as the market price of our stock.

We have identified a material weakness in our internal controls over financial reporting. 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 control 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. We have determined that there is a material weakness in our controls related to the accounting for significant and unusual transactions as a result of a recent significant increase in acquisitions and a related increase in the volume of complex accounting and transactional activity (for additional discussion of this material weakness see Item 9A).

We have initiated steps to remediate the material weakness described above (see Item 9A). While we believe these steps will improve the effectiveness of our internal control over financial reporting and remediate the material weakness, if our remediation efforts are insufficient to address the material weakness, or if additional material weaknesses in our internal controls are discovered in the future, they may adversely affect our ability to record, process, summarize and report financial information timely and accurately and, as a result, our financial statements may contain material misstatements or omissions.

It is possible that other 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.

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.

Following pending or potential future acquisitions or as a result of the acquisitions already completed, we may not be successful in retaining employees of any business, 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 have an adverse effect on us, and consequently the combined business. This uncertainty may impair our ability to retain management and key personnel of the acquired business. Employee retention may be particularly challenging as employees may experience uncertainty about their future roles with the combined 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.

We may change our investment and operational policies without stockholder consent, which may adversely affect the market value of our common stock.

Our Board of Directors determines our operational policies and may amend or revise such policies, including our policies with respect to acquisitions, dispositions, growth, operations, indebtedness, or approve transactions that deviate from these policies, without a vote of, or notice to, our stockholders. Operational policy changes could adversely affect the market value of our common stock.

Risks Related to our Acquisitions

We may not realize the anticipated benefits of past, pending 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.

The process of acquiring assets or companies may disrupt our business and may not result in the full benefits expected. The risks associated with acquisitions and joint venture investments and agreements include, among others:

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our ability to successfully combine the businesses with those of the Company;

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whether the combined businesses will perform as expected;

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the possibility that we paid more than the value we will derive from the acquisitions;

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the reduction of our cash available for operations and other uses;

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the disruption to our operations inherent in making numerous acquisitions over a relatively short period of time;

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the incurrence of significant indebtedness to finance our acquisitions;

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the assumption of certain known and unknown liabilities of the acquired businesses.

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uncoordinated market functions;

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unanticipated issues in integrating information, communications and other systems;

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unanticipated incompatibility of purchasing, logistics, marketing and administration methods;

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unanticipated liabilities associated with the acquired business, assets or joint venture;

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additional costs or capital requirements beyond forecasted amounts;

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lack of expected synergies or failure to realize the anticipated benefits we expect to realize from the acquisition or joint venture;

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not retaining key employees; and

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the diversion of management’s attention from ongoing business concerns.

The acquisition of businesses also requires integration of systems, procedures and personnel of the acquired entity into our company to make the transaction economically successful. The creation of a joint venture similarly requires integration of systems, procedures and personnel from the participating joint venture partners. These integration processes are complicated and time consuming and can be disruptive to the borrowers of the loans serviced by the acquired business. If the integration process is not conducted successfully and with minimal effect on the subject business and its borrowers, we may not realize the anticipated economic benefits of particular acquisitions within our expected timeframe, and we may lose subservicing business or employees of the acquired business. We may also experience a greater than anticipated loss of business even if the integration process is successful.

If we inappropriately value the assets we acquire or the value of the assets or businesses we acquire declines after we acquire them, the resulting charges may negatively affect the carrying value of the assets on our balance sheet and our earnings. In particular, in connection with such acquisition opportunities, we may be exposed to unknown or contingent liabilities of the businesses, assets and liabilities we acquire, and if these issues or liabilities exceed our estimates, our results of operations and financial condition may be materially negatively affected.

In addition, the performance of any assets or businesses we acquire may not match the historical performance of our other assets. We cannot guarantee you that the assets we acquire will perform at levels meeting our expectations. We may find that we overpaid for the acquired assets or that the economic conditions underlying our acquisition decision have changed. It may also take several quarters for us to fully integrate the newly acquired assets into our business, during which period our results of operations and financial condition may be negatively affected. Further, certain one-time expenses associated with such acquisitions may have a negative impact on our results of operations and financial condition.

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:

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combining the companies’ business development and operations;

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integrating the companies’ technologies and services;

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harmonizing the companies’ operating practices, employee development and compensation programs, technology platforms, internal controls and other policies, procedures and processes;

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consolidating the companies’ corporate, administrative and information technology infrastructure;

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maintaining existing agreements with customers and avoiding delays in entering into new agreements with prospective customers and suppliers;

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coordinating geographically dispersed organizations; and

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successfully transferring large volumes of assets.

In addition, at times, the attention of certain members of the companies’ management and resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt each of the companies’ ongoing business and the business of the combined company.

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 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.

With respect to joint ventures, we may enter into business arrangements or contractual agreements with the expectation of producing certain benefits or results. We cannot be certain that such arrangements will produce the anticipated results, and as a result, we cannot be certain that such joint ventures will perform as expected. If a joint venture or asset or any arrangements we enter into in connection with a joint venture do not perform as expected, we may be required to commit more capital, resources or management time, which may cause us to forgo other business opportunities or impact our financial results.

If we incur additional indebtedness to finance an acquisition or joint venture, the subject 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.

Any joint venture investment could be adversely affected by a lack of sole decision-making authority, our reliance on our joint venture partners’ financial condition or any disputes that may arise between us and our joint venture partners.

Any joint venture investment may involve risks not present in wholly owned investments, including the following:

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we may not have exclusive control over the financing, management and other aspects of a joint venture investment, which may prevent us from taking actions that are opposed by our joint venture partners;

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we may be required to obtain prior consent from our joint venture partners for a sale or transfer to a third party of our interests in a joint venture investment, which could restrict our ability to dispose of our interest in a joint venture investment;

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our joint venture partners might have interests or goals that are inconsistent with our interests or goals, and may be in a position to take actions contrary to our interests or otherwise impede our objectives;

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our joint venture partners might become insolvent or bankrupt, which may increase our financial commitment to the joint venture;

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any disputes that may arise between us and our joint venture partners could result in litigation that could increase our expenses and distract management from focusing their time and effort on our business; and

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we may assume liabilities related to a joint venture investment that could exceed the percentage of our investment in such joint venture investment.

We may fail to realize the anticipated benefits of our acquisitions and joint venture investments, which could adversely affect the value of our common stock.

The success of our acquisitions and joint venture investments will depend, in part, on our ability to realize the anticipated benefits from our recent acquisitions. Our ability to realize these anticipated benefits is subject to certain risks including:

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whether the acquired assets or businesses or joint ventures will perform as expected;

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the possibility that we paid more than the value we will derive from the acquisitions;

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with respect to the completed RMS acquisition and the S1L acquisition specifically, the possibility that the market for reverse mortgages does not meet our expectations;

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the reduction of our cash available for operations and other uses;

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the incurrence of indebtedness to finance our acquisitions; and

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the assumption of certain known and unknown liabilities.

If we are delayed in achieving or are unable to successfully achieve the anticipated benefits of our acquisitions or if the respective and/or collective businesses do not perform as expected, 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, the disruption of 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 our acquisitions so the respective and/or collective business performs as expected, include, among other things:

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harmonizing the companies’ operating practices, employee development and compensation programs, technology platforms, internal controls and other policies, procedures and processes;

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maintaining existing agreements with customers and avoiding delays in entering into new agreements with prospective customers and suppliers; and

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coordinating geographically dispersed organizations.

There may be material changes to the laws, regulations, rules or practices applicable to reverse mortgage programs operated by FHA, HUD, Fannie Mae or GNMA which could materially adversely affect the reverse mortgage industry as a whole.

The reverse mortgage industry is largely dependent upon GSEs as well as the FHA, the Department of Housing and Urban Development, or HUD, and government entities like GNMA. 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, stated in its annual report to Congress on November 16, 2012 and in recent correspondence to U.S. Senator Corker, member of the Senate Committee on Banking, Housing, and Urban Affairs, that it plans to eliminate the use of FHA’s standard fixed rate reverse mortgage program. In addition, GSEs’ participation in the reverse mortgage industry 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 the RMS business and the value of our common stock.

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 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 borrower dies or the home is sold. A deterioration of the market for reverse mortgages may reduce the number of reverse mortgages we service, reduce the profitability of reverse mortgages currently serviced by us and adversely affect our ability to sell reverse mortgages in the market. Although foreclosures involving reverse mortgages generally occur less frequently than forward mortgages, loan 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, and paying for interest shortfalls. Advances on reverse mortgages are typically greater than advances on forward residential mortgages. They 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 will become subject to negative headline risk in the event that loan defaults on reverse mortgages lead to foreclosures or even evictions of elderly homeowners. All of the above factors could have a material adverse effect on our business, liquidity, financial condition and results of operations.

Risks Related To Our Investments

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 existing 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 sub-performing or non-performing 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.

We may not realize expected income from our portfolio.

Historically, we invested to generate current income. To the extent the borrowers default on interest or principal payments on the residential loans in which we have invested, we may not be able to realize income from our portfolio. Any income that we realize may not be sufficient to offset our expenses. Our inability to realize income from our portfolio would have a material adverse effect on our financial condition and results of operations and the trading price of our common stock.

Increases in interest rates could negatively affect the value of our Walter legacy portfolio, which could result in reduced earnings or losses.

We have historically invested directly in residential loans. Under a normal yield curve, an investment in these loans will decline in value if long-term interest rates increase. Declines in market value ultimately may reduce earnings or result in losses to us. A significant risk associated with our portfolio is the risk that long-term interest rates will increase significantly. If long-term rates were to increase significantly, the market value of our portfolio would decline, and the duration and weighted-average life of our portfolio would increase. While we plan to hold our portfolio to maturity, we could realize a loss if our portfolio were to be sold. Market values of our portfolio may decline without any general increase in interest rates for a number of reasons, such as increases in defaults, increases in voluntary prepayments for those residential loans that are subject to prepayment risk and widening of credit spreads.

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 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 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.

Borrowers with adjustable rate mortgage loans are especially exposed to increases in monthly payments and they may not be able to refinance their loans, which could cause delinquency, default and foreclosure and therefore adversely affect our business.

Borrowers with adjustable rate mortgage loans are exposed to increased monthly payments when the related mortgage loan’s interest rate adjusts upward from an initial fixed rate or a low introductory rate, as applicable, to the rate computed in accordance with the applicable index and margin. Borrowers with adjustable rate mortgage loans seeking to refinance their mortgage loans to avoid increased monthly payments as a result of an upwards adjustment of the mortgage loan’s interest rate may no longer be able to find available replacement loans at comparably low interest rates. This increase in borrowers’ monthly payments, together with any increase in prevailing market interest rates, may result in significantly increased monthly payments for borrowers with adjustable rate mortgage loans, which may cause delinquency, default and foreclosure. Increased mortgage defaults and foreclosures may adversely affect our business as they reduce the number of mortgages we service.

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

There are seldom any restrictions on borrowers’ abilities to prepay their residential loans. Homeowners tend to prepay residential loans faster when interest rates decline, in particular in the case of prime loans. Consequently, owners of the loans must reinvest prepayment proceeds at the lower prevailing interest rates. Conversely, homeowners tend not to prepay residential loans when interest rates increase. Consequently, owners of the loans are unable to reinvest prepayment proceeds at the higher prevailing interest rates.

In addition, changes to government mortgage programs could result in increased prepayment rates. For example, the Home Affordable Refinance Program is a federal government program designed to help eligible homeowners refinance their existing mortgage loans. The mortgage must be owned or guaranteed by a GSE, and applicants must be up-to-date on their mortgage payments but unable to obtain refinancing because the value of their homes has declined.

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:

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Revenue. If prepayment speeds increase, our servicing fees will decline more rapidly than anticipated because of the greater than expected decrease in the number of loans or unpaid balance on which those fees are based. The reduction in servicing fees would be somewhat offset by increased float earnings because the faster repayment of loans will result in higher balances in the custodial accounts that generate the float earnings. Conversely, decreases in prepayment speeds drive increased servicing fees and lead to lower float balances and float earnings.

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Expenses. Amortization of MSRs is one of our largest operating expenses. Since we amortize servicing rights in proportion to total expected income over the life of a portfolio, an increase in prepayment speeds leads to increased amortization expense as we revise downward our estimate of total expected income. Faster prepayment speeds will also result in higher compensating interest expense. Decreases in prepayment speeds lead to decreased amortization expense as the period over which we amortize MSRs is extended. Slower prepayment speeds also lead to lower compensating interest expense.

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Valuation of MSRs. We base the price we pay for MSRs and the rate of amortization of those rights on, among other things, our projection of the cash flows from the related pool of mortgage loans. Our expectation of prepayment speeds is a significant assumption underlying those cash flow projections. If prepayment speeds were significantly greater than expected, the carrying value of our MSRs could exceed their estimated fair value. When the carrying value of MSRs exceeds their fair value, we are required to record an impairment charge which has a negative impact on our financial results.

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.

Our real estate investments are subject to risks particular to real property.

We own assets secured by real estate and may own real estate in the future upon a default of residential loans. Real estate investments are subject to various risks, including:

•

acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses;

•

acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;

•

adverse changes in national and local economic and market conditions;

•

changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

•

costs of remediation and liabilities associated with environmental conditions such as indoor mold;

•

condemnation; and

•

the potential for uninsured or under-insured property losses.

If any of these or similar events occurs, it may reduce our return from an affected property or investment and adversely affect our results of operations.

Insurance on residential loan collateral may not cover all losses.

There are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes, terrorism or acts of war that may be uninsurable or not economically insurable. Inflation, changes in building codes and ordinances, environmental considerations and other factors, including terrorism or acts of war, also might make the insurance proceeds insufficient to repair or replace a property if it is damaged or destroyed. Under these circumstances, the insurance proceeds received might not be adequate to restore our economic position with respect to the affected real property. Any uninsured loss could result in the loss of cash flow from, and the asset value of, the affected property.

We may be exposed to environmental liabilities with respect to properties to which we take title, which may in turn decrease the value of the underlying properties.

In the course of our business, we may take title to real estate, and, if we do take title, we could be subject to environmental liabilities with respect to these properties. In such a circumstance, we may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination, or we may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity or results of operations could be materially and adversely affected. In addition, an owner or operator of real property may become liable under various federal, state and local laws, for the costs of remediation of certain hazardous substances released on its property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances may adversely affect an owner’s ability to sell real estate or borrow using real estate as collateral. To the extent that an owner of an underlying property becomes liable for remediation or other costs, the ability of the owner to make debt payments may be reduced, which in turn may adversely affect the value of the relevant mortgage-related assets held by us.

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 the Green Tree Acquisition, 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 that limit our ability to pay dividends.

Investing in our shares may involve a high degree of risk.

The investments we make in accordance with our investment objectives may result in a high amount of risk when compared to alternative investment options and volatility or loss of principal. Our investments may be highly speculative and aggressive, are subject to credit risk, interest rate, and market value risks, among others and therefore an investment in our shares may not be suitable for someone with lower risk tolerance.

The market price of our common stock may be volatile and you could lose all or part of your investment.

Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for your shares. During the period from January 1, 2012 to March 8, 2013, our common stock ranged between a high of $49.99 per share to a low of $17.87 per share. The market price of our common stock has fluctuated significantly in the recent past and could fluctuate significantly in the future for various reasons, which include:

•

actual or anticipated fluctuations in our quarterly or annual earnings or those of other companies in our industry;

•

strategic actions by us or our competitors, such as acquisitions, restructurings, dispositions or financings;

•

changes in market valuations or operating performance of our competitors or companies similar to ours;

•

additions and departures of key personnel;

•

variance in our operating results and prospects from the expectations of public market analysts and investors, including changes in earnings estimates or recommendations by research analysts who track our common stock or the stocks of other companies in our industry;

•

changes in accounting standards, policies, guidance, interpretations or principles applicable to our business;

•

changes in federal and state laws and regulations applicable to our business;

•

general global macroeconomic conditions;

•

economic, financial, geopolitical, regulatory or judicial events that affect us or financial markets generally; and

•

risks enumerated elsewhere in this section.

The stock market has over the past several years experienced extreme price and volume fluctuations that have affected the market price of the shares of many companies in industries similar or related to ours and that have been unrelated to these companies’ operating performances. These broad market fluctuations could reduce the market price of our common stock or cause the market price for our common stock to fluctuate significantly in response to factors beyond our control and unrelated to our business. These fluctuations could materially reduce our stock price and the ability to sell shares of common stock.

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. While we are currently

limited by our credit agreements from issuing preferred stock should those restrictions be released, 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.

Our common stock will rank junior to all of our and our subsidiaries’ liabilities in the event of a bankruptcy, liquidation or winding up.

In the event of a bankruptcy, liquidation or winding up, our assets will be available to pay obligations on our common stock only after all of our existing liabilities have been paid. In addition, upon our voluntary or involuntary liquidation, dissolution or winding up, holders of common stock will share ratably in the assets remaining after payments to creditors senior to them in our capital structure. In the event of a bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying our and our subsidiaries’ liabilities that rank senior to obligations owed to equity holders, to pay any amounts with respect to our common stock then outstanding.

Additional issuances of equity securities by us would dilute the ownership of our existing stockholders and could reduce our earnings per share, and may cause our common stock price to decline, which may negatively impact your investment.

We may issue equity in the future in connection with capital raisings, acquisitions, strategic transactions, or for other purposes. In particular, we issued 891,265 shares of our common stock as the stock consideration for the RMS acquisition and we have filed a shelf registration statement to cover the resales of such shares, which has not yet become effective. In addition, additional shares of our common stock were recently issued in our October 2012 common stock offering and may be issued upon conversion of the Convertible Notes issued in the Convertible Notes offering. To the extent we issue substantial additional equity securities, the ownership of our existing stockholders would be diluted and our earnings per share could be reduced.

Issuance of substantial numbers of additional shares of our common stock, including in connection with future acquisitions, if any, or the perception that such issuance could occur, may cause prevailing market prices for our common stock to decline, which may negatively impact your investment.

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 (the “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 current terms of the three classes of directors expire in 2013, 2014 and 2015, respectively. 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.

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

Summary of U.S. federal income tax risks.

This summary of certain tax risks is limited to the U.S. federal income tax risks addressed below. Additional risks or issues may exist that are not addressed herein and that could affect the U.S. federal tax treatment of us or our stockholders. Investors are advised to consult with tax experts to fully assess their 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 a real estate investment trust, or REIT, through December 31, 2010, as a result of the Green Tree Acquisition, we did not qualify as a REIT for 2011 or 2012, 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.

We may be required to report taxable income from certain investments earlier than and possibly in excess of our realization of the economic income ultimately provided from them.

We are subject to U.S federal tax provisions that do not fully match reportable taxable income with the timing of our receipt of economic income.

Most of our installment and mortgage notes receivable have a tax basis considerably less than their principal balances as we were treated, for tax purposes only, as purchasing the assets we acquired at the spin-off at amounts less than outstanding principal. In addition, we have acquired debt instruments in the secondary market at prices less than their outstanding principal balances. This has resulted in a “market discount” under tax laws that provide for complicated and sometimes non-economic income recognition schemes.

We are required to periodically recognize as taxable interest a portion of this market discount. Our method of calculating these amounts is based on a determination of our effective yield on each applicable individual obligation as if we expect to collect the outstanding principal balance in full over its stated term. No adjustment is made to take into account expected prepayments, delinquencies or foreclosures; these events are given effect as they occur. If we ultimately collect less on the debt instrument than our purchase price plus the market discount we had previously reported as income, we may not be able to benefit from any offsetting loss deductions in a later taxable year.

Our loss mitigation activities have and will include negotiated modifications to debt obligations as alternatives to foreclosure. Under the tax law, “significant modifications” to debt having a tax basis lower than outstanding principal can and do result in taxable income in excess of realized economic income. Many of our modifications will be “significant.” We are taking steps to minimize the unfavorable effects of these tax rules; as with market discount, we may not be able to benefit from any offsetting loss deductions in a later taxable year.

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, 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 most recent public filing on Form 10-K filed with the SEC on March 1, 2013, those related to the following:

•

The Internal Revenue Service, or IRS, has filed a proof of claim for a substantial amount of taxes, interest and penalties with respect to fiscal years ended August 31, 1983 through May 31, 1994. The public filing goes on to disclose that the issues have been litigated in bankruptcy court and that an opinion was issued by the court in June 2010 as to the remaining disputed issues. The court instructed the parties to submit a final order addressing all issues that have been litigated. The deadline for such an order is now May 10, 2013. The filing further states that the amounts initially asserted by the IRS do not reflect the subsequent resolution of various issues through settlements or concessions by the parties. Walter Energy believes that those portions of the claim which remain in dispute or are subject to appeal substantially overstate the amount of taxes allegedly owed. However, because of the complexity of the issues presented and the uncertainties associated with litigation, Walter Energy is unable to predict the outcome of the adversary proceeding.

•

The IRS completed an audit of Walter Energy’s federal income tax returns for the years ended May 31, 2000 through December 31, 2005. The IRS issued 30-Day Letters to Walter Energy proposing changes for these tax years which Walter Energy has protested. Walter Energy filed a formal protest and the case was heard before the Appeals Division on March 8, 2011. As of December 31, 2012, no final resolution had been reached. Walter Energy’s filing states that the disputed issues in this audit period are similar to the issues remaining in the above-referenced dispute and therefore Walter Energy believes that its financial exposure for these years is limited to interest and possible penalties.

•

Walter Energy reports that the IRS has completed an audit of Walter Energy’s tax returns filed for 2006 through 2008 and has proposed adjustments to these periods. Thereafter, Walter Energy received notice that the audit of the 2006 through 2008 tax years had been reopened for further development. Because the examination is ongoing, Walter Energy cannot estimate the amount of any resulting tax deficiency, if any. Walter Energy expects the IRS exam to conclude during 2012.

•

Walter Energy reports that the IRS has begun an audit of Walter Energy’s tax returns filed for 2009 and 2010, however, because the examination is ongoing, Walter Energy cannot estimate the amount of any resulting tax deficiency, if any. Our business was spun off from that of Walter Energy in April 2009 and would not be responsible for taxes incurred by Walter Energy after that time.

Walter Energy 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 they believe 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 2013 settling the issues in the bankruptcy court for the tax years being considered by the appeals (2000—2005) and the exams (2006—2010).

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 (“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. 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; i.e., 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.

ITEM 2.

PROPERTIES

Our executive offices and principal administrative offices are located in leased office spaces in Tampa, Florida and Saint Paul, Minnesota. Our centralized servicing operations are located in leased office spaces in Phoenix, Arizona; Tempe, Arizona; Saint Paul, Minnesota; Rapid City, South Dakota; Fort Worth, Texas; and Spring, Texas. In addition, our field servicing and regional operations lease 130 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 acquire additional facilities or modify existing facilities.

ITEM 3.

LEGAL PROCEEDINGS

We are not currently a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on our business, financial condition, or results of operations.

Notwithstanding the above:

•

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.

•

As discussed in previous filings, WMC had been a party to a lawsuit entitled Casa Linda Homes, et al. v. Walter Mortgage Company, et al. , Cause No. C-2918-08-H, 389th Judicial District Court of Hidalgo County, Texas, claiming breach of contract, fraud, negligent misrepresentation, promissory estoppel and unjust enrichment. The plaintiffs were seeking actual and exemplary damages, the amount of which were not specified, but if proven could have been material. WMC maintained counterclaim actions against the plaintiffs for breach of fiduciary duty and conversion related to the defendants’ alleged misappropriation of escrow funds. The plaintiffs’ allegations arose from a claim that we breached a contract with the plaintiffs by failing to purchase a certain amount of loan pool packages from the corporate plaintiff, a Texas real estate developer. Alternatively, the plaintiffs claimed that we promised to purchase a certain amount of loan pool packages from the corporate plaintiff, plaintiffs relied on that promise, and we failed to perform. The case was tried before a jury, and on December 13, 2012 the jury found that we have no liability for these claims and consequently the plaintiffs were entitled to $0 in damages. As to our counterclaim, the jury returned a verdict in our favor awarding us $282,357 in compensatory damages and $282,357 in punitive damages (plus attorneys fees, court costs, and post-judgment interest) due and owing from the plaintiffs Casa Linda Homes and Mark Dizdar. The appeal period has run, however, the plaintiffs have ninety (90) days from the date of the verdict to file a motion for a new trial should they choose to do so.

•

In November 2010, the Federal Trade Commission, or FTC, issued a Civil Investigation Demand, or CID, to an unknown number of mortgage servicers, including Green Tree, requesting information on a broad range of subjects relating to the companies’ operations. In November 2011, Green Tree received a Supplementary Discovery Request from the FTC seeking additional information. The Company has, and will continue to cooperate with the FTC and does not believe that it has violated in any material respect any laws or regulations. The CFPB began participating in the FTC’s investigation in April 2012. In September 2012, the CFPB issued civil investigative demands to a number of mortgage servicers, including Green Tree, requesting information on a broad range of subjects relating to the companies’ mortgage servicing operations.

•

In January 2012, the New York State Department of Financial Services issued subpoenas to an unknown number of mortgage servicers and banks, including Green Tree, requesting information concerning lender-placed insurance practices. The Company is complying with the request for information and does not believe that it has violated in any material respect any laws or regulations.

•

As various federal and state regulators continue to investigate perceived causes of the financial crisis, we expect that we may receive general requests from other agencies similar to those received from the FTC and the New York State Department of Financial Services. We would intend to cooperate in any such investigation.

•

As discussed in Notes 19 and 23 in the Notes to Consolidated Financial Statements, Walter Energy is in disputes with the IRS on a number of federal income tax issues. Walter Energy has stated in its public filings that it believes that all of its current and prior tax filing positions have substantial merit and that Walter Energy intends to defend vigorously any tax claims asserted. Under the terms of the tax separation agreement between us and Walter Energy dated April 17, 2009, Walter Energy is responsible for the payment of all federal income taxes (including any interest or penalties applicable thereto) of the consolidated group, which includes the aforementioned claims of the IRS. However, to the extent that Walter Energy is unable to pay any amounts owed, we could be responsible for any unpaid amounts.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of January 23, 2013, our common stock is traded on the New York Stock Exchange, or NYSE, under the symbol “WAC”. Prior to January 23, 2013, our common stock was traded on the NYSE MKT (formerly known as the NYSE Amex) also under the symbol “WAC”. As of March 8, 2013, there were 36,887,287 shares of common stock outstanding and 161 record holders.

The following table sets forth the high and low closing sales prices for our common stock and the cash dividends declared on each share of our common stock for the periods indicated:


	Stock Prices				Cash Dividends Declared Per Share
	High		Low		Cash Dividends Declared Per Share
2012
First Quarter ended March 31	$	24.33	$	17.88	$	—
Second Quarter ended June 30		23.59		17.87		—
Third Quarter ended September 30		39.95		21.56		—
Fourth Quarter ended December 31		48.54		36.88		—

2011
First Quarter ended March 31	$	20.22	$	14.78	$	—
Second Quarter ended June 30		22.22		15.87		—
Third Quarter ended September 30		27.91		18.50		0.02
Fourth Quarter ended December 31		26.97		20.08		—

Notice of capital gains paid to stockholders:

A portion of the dividends paid during (or attributed to) calendar year 2011 are properly treated as capital gains as set forth below:

Declaration

Date

Ex-Dividend
Date

Record

Date

Payment

Date

Total
Distribution

Per Share

Ordinary

Income

Long-Term
Capital Gain

9/12/2011

9/20/2011

9/22/2011

11/15/2011

$0.22

$0.152

$0.072

Upon the consummation of the GTCS Holdings LLC, or Green Tree, acquisition, the Company no longer qualified as a Real Estate Investment Trust, or REIT. Consequently, effective January 1, 2011, we are no longer required to distribute a minimum of 90% of our taxable income each year in order to maintain our REIT status. All future dividend distributions will be made at the discretion of our Board of Directors and will depend upon, 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, which we are now, or may in the future be subject to, including certain covenants in our credit agreements that limit our ability to pay dividends. See Note 20 in the Notes to Consolidated Financial Statements for further information regarding dividend restrictions.

ITEM 6.

SELECTED FINANCIAL DATA

The following table sets forth certain selected consolidated financial data of Walter Investment Management Corp. and its subsidiaries, which may also be referred to as Walter Investment, the Company, we, our and us, and its predecessors. As a result of the merger with Hanover Capital Mortgage Holdings, Inc., or the Merger, on April 17, 2009, which for accounting purposes was treated as a reverse acquisition, the historical operations of Walter Investment Management LLC, or WIM, have been presented as the historical financial statements of Walter Investment.

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 five years. As a result of the spin-off from Walter Energy, Inc., or Walter Energy, the Merger; qualifying as a REIT and beginning to operate our business as an independent, publicly traded company in 2009; the acquisition of Marix Servicing, LLC, or Marix, in 2010; the acquisition of Green Tree and no longer qualifying as a REIT in 2011; and the acquisition of Reverse Mortgage Solutions, Inc., or RMS, and Security One Lending, or S1L, in 2012; our historical annual consolidated financial results presented herein are not necessarily indicative of the results that may be expected for any future period. In addition, we made certain reclassifications to prior year balances to conform to current year presentation. Refer to Note 1 in the Notes to Consolidated Financial Statements for further information on reclassifications.


	2012 ⁽¹⁾			2011 ⁽²⁾			2010		2009 ⁽³⁾			2008 ⁽⁴⁾
	(in thousands except per share data)
Revenues	$	666,989		$	402,474		$	180,494	$	188,342		$	200,716
Expenses		668,361			409,746			146,830		150,724			195,180
Other gains (losses)		(34,079	)		1,139			4,681		—			—

Income (loss) before income taxes		(35,451	)		(6,133	)		38,345		37,618			5,536
Income tax expense (benefit)		(13,317	)		60,264			1,277		(76,161	)		3,099

Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068	$	113,779		$	2,437

Basic earnings (loss) per common and common equivalent share ⁽⁵⁾	$	(0.73	)	$	(2.41	)	$	1.38	$	5.26		$	0.12
Diluted earnings (loss) per common and common equivalent share ⁽⁵⁾		(0.73	)		(2.41	)		1.38		5.25			0.12
Total dividends declared per common and common equivalent share		—			0.22			2.00		1.50			—
Total assets	$	10,978,177		$	4,113,542		$	1,895,490	$	1,887,674		$	1,898,841
Residential loans, net		8,200,532			2,264,578			1,621,485		1,644,346			1,771,675
Long-term obligations:
Debt		1,146,249			742,626			—		—			—
Mortgage-backed debt		2,072,728			2,224,754			1,281,555		1,267,454			1,372,821
HMBS related obligations		5,874,552			—			—		—			—

Total long-term obligations		9,093,529			2,967,380			1,281,555		1,267,454			1,372,821
Total equity		894,928			533,532			555,488		568,184			411,477

⁽¹⁾

During the year ended December 31, 2012, we recorded $48.6 million of losses on extinguishment of debt in connection with the repayment and termination of our second lien term loan and the refinancing of our first lien term loan and revolver. We also recorded $8.6 million in transaction costs related to our acquisitions of RMS and S1L and financing transactions. In addition, we recorded $5.6 billion in total assets, which includes $5.3 billion in residential loans, and assumed $5.3 billion in Home Equity Conversion Mortgage-Backed Securities, or HMBS, related obligations in connection with the acquisition of RMS and recorded $128.4 million in total assets in connection with the acquisition of S1L.

⁽²⁾

During the year ended December 31, 2011, we recorded $12.9 million of Green Tree transaction-related costs and a $62.7 million charge to income tax expense for the impact of the loss of our REIT status and being taxed as a C corporation. The loss of our REIT status was the direct result of the acquisition of Green Tree and is retroactive to January 1, 2011. In addition, we recorded $2.3 billion in total assets, which includes $729.2 million in residential loans and $861.7 million in mortgage-backed debt in connection with the acquisition of Green Tree.

⁽³⁾

During the year ended December 31, 2009, we recorded $2.1 million of spin-off and Merger-related charges, as well as a $77.1 million tax benefit largely due to the reversal of $82.1 million in mortgage-related deferred tax liabilities that were no longer applicable as a result of our REIT qualification during the period.

⁽⁴⁾	During the year ended December 31, 2008, we recorded a $17.0 million interest rate hedge ineffectiveness charge, a $12.3 million goodwill impairment charge and a $3.9 million provision for estimated hurricane insurance losses.

⁽⁵⁾

In accordance with applicable accounting standards on earnings per share, the basic and diluted earnings per share amounts have been adjusted for the years ended December 31, 2012, 2011, 2010 and 2009 to include outstanding dividend participating restricted stock and restricted stock units considered to be participating securities in the basic and diluted weighted-average shares calculations. The basic and diluted earnings per share amounts for the year ended December 31, 2008 were not adjusted retrospectively as these amounts reflect the shares issued on April 17, 2009, the date of the spin-off from Walter Energy.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K 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 of the ResCap assets and originations and capital markets groups in January 2013, RMS in November 2012 and Green Tree in July 2011 as discussed below.

The Company

Walter Investment Management Corp. and its subsidiaries, which may also be referred to as Walter Investment, the Company, we, our and us, is a full-service, fee-based provider to the residential mortgage industry. Our primary business provides value-added specialty servicing to the forward residential loan market across several product types including agency, non-agency, first and second lien and manufactured housing loans. Our specialty servicing business focuses on credit-sensitive residential mortgages. In addition to the forward loan servicing business, we have a leading franchise in the reverse mortgage sector which provides a full suite of services including loan servicing, loan origination, asset management and related technology. We operate several other related businesses which include a mortgage portfolio of credit-challenged, non-conforming residential loans, an insurance agency serving residential loan customers, and with the acquisition of the ResCap originations business in 2013, a fully integrated loan origination platform that primarily focuses on retention and recapture activities (Consumer Direct channel) for our servicing portfolio but also maintains sizable operations in the Retail and Correspondent lending channels. We operate throughout the United States, or U.S.

Executive Summary

For the years ended December 31, 2012 and 2011, we reported net loss of $22.1 million, or $0.73 per diluted share, and $66.4 million, or $2.41 per diluted share, respectively. The decline in net loss of $44.3 million during the year ended December 31, 2012 as compared to the prior year was due primarily to a $62.7 million charge to income tax expense in 2011 for the impact of our loss of REIT qualification. In addition, we recorded a $30.1 million loss on extinguishment of debt, net of tax, in connection with the repayment and termination of our second lien term loan and the refinancing of our first lien term loan facility and revolver during 2012. This amount was partially offset by fair value gains of $14.5 million primarily relating to assets and liabilities of Green Tree and RMS which are accounted for under the fair value option.

We recognized core earnings before income taxes of $134.1 million for the year ended December 31, 2012 in comparison to $67.0 million for the year ended December 31, 2011. The increase in core earnings before income taxes of $67.1 million was primarily attributable to an increase in total revenues from our Servicing, Insurance and ARM reporting segments of $198.4 million, $28.9 million and $24.7 million, respectively, offset by increases in total salaries and benefits and general and administrative expenses, excluding share-based compensation expense of $119.8 million, $4.2 million and $13.0 million, respectively, due to the acquisition of Green Tree on July 1, 2011 as a full twelve months of operations were included in the year ended December 31, 2012 compared to six months of operations for the year ended December 31, 2011. This net increase of $115.1 million was partially offset by an increase in interest expense on corporate debt of $35.1 million due to the debt

financing used to partially fund the acquisition of Green Tree and the inclusion of twelve months of interest expense on corporate debt in the year ended December 31, 2012 compared to six months for the year ended December 31, 2011, as well as increases in depreciation and amortization expense and the provision for loan losses of $8.8 million and $7.3 million, respectively. The increase in depreciation and amortization expense was due primarily to the inclusion of twelve months of depreciation and amortization expense for the year ended December 31, 2012 compared to six months for the year ended December 31, 2011 as a result of the acquisition of Green Tree. The increase in the provision for loan losses was due to unfavorable trends in severity rates and increasing delinquencies. Core earnings before income taxes when compared to our net loss before income taxes reflects the following key adjustments: (1) step-up depreciation and amortization, or depreciation and amortization expense related to the increase in basis recognized on assets acquired with Green Tree and RMS, (2) losses on extinguishment of debt, (3) share-based compensation expense, (4) transaction and integration-related costs, (5) non-cash interest expense and, (6) the net non-cash fair value adjustments related to the reverse mortgage business and the Non-Residual Trusts. For a reconciliation of our consolidated income (loss) before income taxes under accounting principles generally accepted in the U.S., or GAAP, to our core earnings before income taxes, refer to the Business Segment Results section.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, or Adjusted EBITDA, was $241.7 million for the year ended December 31, 2012 in comparison to $123.5 million for the year ended December 31, 2011. The increase in Adjusted EBITDA of $118.2 million is primarily attributable to the increases in revenues less salaries and benefits and general and administrative expenses above of $115.1 million. Adjusted EBITDA when compared to our consolidated loss before income taxes reflects the adjustments noted above for core earnings before income taxes as well as the following key adjustments: (1) total depreciation and amortization expense including step-up depreciation and amortization noted as a core earnings adjustment above, (2) interest expense on our corporate debt, and (3) non-cash interest income. For a reconciliation of our consolidated income before income taxes under GAAP to our Adjusted EBIDTA, refer to the Business Segment Results section.

We generated $69.6 million in cash flow from operating activities during the year ended December 31, 2012 and finished the year with $442.1 million in cash and cash equivalents. We also had $124.7 million in funds available under our secured revolving credit facility at December 31, 2012.

We manage our Company in five primary reportable segments: Servicing; Asset Receivables Management, or ARM; Insurance; Loans and Residuals; and Reverse Mortgage. 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:

ARM — Our ARM business segment performs collections of post charge-off deficiency balances on behalf of securitization trusts and third-party asset owners. Asset recovery revenue was $38.9 million for the year ended December 31, 2012.

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. Net written premiums were $168.7 million for the year ended December 31, 2012, which included lender-placed activity of $87.1 million and voluntary activity of $81.6 million for the year ended December 31, 2012. Total insurance revenue was $73.2 million for the year ended December 31, 2012.

Loans and Residuals — Our Loans and Residuals business 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. Our net interest margin was 3.72% for the year ended December 31, 2012, down 83 basis points from the year ended December 31, 2011 due primarily to the

decline in yield in the loan portfolio resulting from an increase in delinquent loans as well as the monetization of assets completed during the second quarter in 2011 in order to fund the acquisition of Green Tree. Total delinquent loans have increased to 7.01% at December 31, 2012 from 5.73% at December 31, 2011. The number of real estate owned properties has declined to 842 units at December 31, 2012, a reduction of 25 units from December 31, 2011.

Reverse Mortgage — Our Reverse Mortgage business segment, which was formed as a result of the acquisition of RMS, includes originations, aggregation and securitization activities and operations that perform servicing for third-party investors in reverse mortgage loans and other ancillary services for the reverse mortgage market. The Reverse Mortgage business also includes a mortgage portfolio of Home Equity Conversion Mortgages, or HECM, reverse mortgages. Our Reverse Mortgage business segment serviced 78,000 accounts with an unpaid principal balance of $12.9 billion at December 31, 2012 and recognized $5.1 million in servicing revenue, as well as $7.3 million in net fair value gains on HECM reverse mortgage loans and the HMBS related obligations, since the acquisition of RMS through the end of 2012.

Acquisitions

RMS

On November 1, 2012, we acquired 100% of the outstanding stock of RMS. Based in Spring, Texas, RMS provides a full suite of services to the reverse mortgage sector, including servicing, sub-servicing, loan origination and securitization, and related technology. The purchase price of $136.3 million for the acquisition included cash of $95.0 million and common stock with a fair value of $41.3 million. The cash portion of the acquisition was partially funded by our recent common stock offering in October of 2012. The acquisition was accounted for under the acquisition method and accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values. We acquired net assets with an estimated fair value of $136.3 million, which included the recognition of estimates of goodwill of $101.2 million and identifiable intangible assets of $20.8 million. The estimated fair values of the assets acquired and liabilities assumed from the RMS acquisition are presented in the table below:


	Amount
Assets
Cash	$	19,683
Restricted cash		1,401
Residential loans		5,331,989
Receivables		11,832
Servicer and protective advances		17,615
Servicing rights		15,916
Goodwill		101,199
Intangible assets		20,800
Premises and equipment		15,633
Deferred tax asset		19,052
Other assets		13,245

Total assets acquired		5,568,365

Liabilities
Payables and accrued liabilities		29,357
Debt		148,431
HMBS related obligations		5,254,231

Total liabilities assumed		5,432,019

Fair value of net assets acquired	$	136,346

We have recently revised our fair value methodology for the HMBS related obligations (formerly known as Liability to GNMA Trusts) from what has been previously reported in public filings. We had defined the fair value unit of account as the obligation to pass through Federal Housing Administration, or FHA, cash flows under chapter 35 of the Government National Mortgage Association, or GNMA, guide. We previously estimated that obligation to be the fair value of the cash flows that a market participant would expect to pay out associated with the defined unit of account which consists of an obligation to pass through cash flows on a non-recourse basis from FHA insured HECM loans to the GNMA pools, as well as any cash flows from ongoing issuer obligations. We recently changed the fair value unit of account to a GNMA HMBS bond security. As a result of this recent change, the fair value of HMBS related obligations is the fair value of similar HMBS bond securities. The result of this recent change is to increase the fair value of the HMBS related obligations with an offsetting increase to goodwill in the preliminary purchase price allocation. The increase to the fair value of the HMBS related obligations and the resulting increase to goodwill over previously reported amounts primarily represents, among other things, the fair value of the market liquidity as a result of the GNMA HECM Mortgage-Backed Securities Program, lower yield requirements as a result of the GNMA guarantee, as well as the profit margin associated with converting the HECM loans to securities. For further information refer to the Transfer of Financial Assets section of Note 2 in the Notes to Consolidated Financial Statements.

In connection with the RMS acquisition, we transfer HECM reverse mortgage loans to the GNMA securitization pools. We account for the transfer of the HECM reverse mortgage loans to the GNMA securitization pools as a secured borrowing. As such, the HECM reverse mortgage loans are recognized as an asset and classified as residential loans with an offsetting HMBS related obligation included in the consolidated balance sheet. We have elected the fair value option for HECM reverse mortgage loans and the HMBS related obligations.

As an approved issuer of GNMA HMBS we assume certain obligations related to each security we issue. The most significant obligation is the requirement to purchase loans out of the HMBS pools once they reach certain limits as established by the FHA. Performing repurchased loans are defined as those repurchased loans that do not have any event of default and are able to be conveyed to the Department of Housing and Urban Development, or HUD. Nonperforming repurchased loans are generally liquidated in accordance with program requirements.

S1L

On December 31, 2012, in connection with the execution of a stock purchase agreement, we agreed to acquire all of the outstanding shares of S1L. Based in San Diego, California, S1L is a retail and wholesale reverse loan originator. S1L has a long-standing relationship with RMS, as S1L has been delivering loans using RMS’s technology and RMS has acquired a significant amount of S1L’s reverse origination production during recent years. We obtained effective control over S1L through an economic closing on December 31, 2012, with the legal closing to occur no later than April 30, 2013. The purchase price of $31.0 million consists of cash of $20.0 million that was paid on December 31, 2012 and up to an additional $11.0 million in contingent earn out to be paid upon the achievement by S1L of certain designated performance targets over the next twelve months. The cash payment made on December 31, 2012 was funded by cash on hand. The economic closing required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values on December 31, 2012. We recorded net assets with an estimated fair value of $26.1 million, including the recognition of estimates of goodwill of $8.8 million and identifiable intangible assets of $11.0 million. The estimated fair values of the assets acquired and liabilities assumed from the S1L acquisition are presented in Note 3 in the Notes to Consolidated Financial Statements. S1L is included in the Reverse Mortgage segment.

Green Tree

On July 1, 2011, we acquired 100% of the outstanding membership interests of Green Tree. Based in St. Paul, Minnesota, Green Tree is a fee-based, business services company providing high-touch, third-party servicing of credit-sensitive loans. The purchase price of the acquisition consisted of cash of approximately $1.0 billion and issuance of common stock with a fair value of $40.2 million. The cash portion of the purchase

price was funded by monetizing certain existing assets and by the issuance of corporate debt totaling $765 million. The acquisition was accounted for under the acquisition method and accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values. We acquired net assets with an estimated fair value of $1.1 billion, which included the recognition of estimates of goodwill of $471.3 million and identifiable intangible assets of $150.1 million. Refer to Note 3 in the Notes to Consolidated Financial Statements for further information.

Pursuant to the accounting guidance for variable interest entities, or VIEs, we were required to consolidate, at the acquisition date, ten securitization trusts for which Green Tree performs the servicing. We do not currently own any residual interests in these trusts, and thus, we refer to these trusts as the Non-Residual Trusts. We have elected to account for certain of the assets acquired and liabilities assumed of the Non-Residual Trusts, which consist of forward residential loans, certain receivables and the mortgage-backed debt, at fair value. We own the residual interests in VIEs that were previously consolidated by us prior to the Green Tree acquisition. We refer to these trusts as the Residual Trusts.

Marix

On November 1, 2010, we acquired 100% of the outstanding membership interests of Marix Servicing, LLC, or Marix, a high-touch specialty mortgage servicer based in Phoenix, Arizona. The purchase price for the acquisition was a cash payment due at closing of less than $0.1 million plus contingent earn-out payments. The earn-out payments are driven by net servicing revenue in Marix’s existing business in excess of a base of $3.8 million per quarter. During 2011 and 2012, no earn-out payments were earned or paid as the servicing revenue targets specified in the purchase agreement were not met in any of the four quarters in 2011 or 2012. In addition, management estimates that the revenue targets for 2013, the remaining year of the earn-out period, will not be met. Refer to Note 3 in the Notes to Consolidated Financial Statements for further information.

Residential Capital, LLC

We previously announced a joint bid with Ocwen Loan Servicing LLC to acquire certain mortgage-related net assets held by Residential Capital LLC, or ResCap, in an auction sponsored by the U.S. Bankruptcy Court. Pursuant to this agreement, we agreed to acquire the rights and assume the liabilities relating to ResCap’s entire Fannie Mae mortgage servicing rights and related servicer advances, and ResCap’s mortgage originations and capital markets platforms, or the ResCap net assets. The Company subsequently closed on its acquisition of the ResCap net assets on January 31, 2013. Refer to Note 3 for further information regarding the acquisition of the ResCap net assets.

Financing Transactions

Term Loans and Revolver

In July 2011, we entered into a $500 million first lien senior secured term loan and a $265 million second lien senior secured term loan, or 2011 Term Loans, to partially fund the acquisition of Green Tree. Also in July 2011, we entered into a $45 million senior secured revolving credit facility, or 2011 Revolver, which was subsequently increased in July 2012 to $90 million.

In October 2012, we repaid and terminated the second lien senior secured term loan with funds obtained through the issuance of convertible notes. See further discussion in the Convertible Notes section below. In November 2012, we refinanced our first lien senior secured term loan with a $700 million first lien senior secured term loan, or 2012 Term Loan, and refinanced our 2011 Revolver with a $125 million senior secured revolving credit facility, or 2012 Revolver. Our obligations under the 2012 Term Loan and 2012 Revolver are guaranteed by substantially all of our subsidiaries and secured by substantially all of our assets and substantially all assets of the guarantor subsidiaries subject to certain exceptions, the most significant of which include the assets of the consolidated Residual and Non-Residual Trusts and the residential loans of the GNMA securitization pools that have been recorded in our consolidated balance sheets.

Convertible Notes

In October 2012, we closed on a registered underwritten public offering of $290.0 million aggregate principal amount of 4.50% convertible senior subordinated notes, or the Convertible Notes. The Convertible Notes will pay interest semi-annually on May 1 and November 1, commencing on May 1, 2013, at a rate of 4.50% per year, and will mature on November 1, 2019.

Prior to May 1, 2019, the Convertible Notes will be convertible only upon specified events and during specified periods, and, on or after May 1, 2019, at any time. The Convertible Notes will initially be convertible at a conversion rate of 17.0068 shares of our common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $58.80 per share. Upon conversion, we may pay or deliver, at our option, cash, shares of our common stock, or a combination of cash and shares of common stock. It is our intent to settle all conversions through combination settlement, which involves repayment of an amount of cash equal to the principal amount and any excess of conversion value over the principal amount in shares of common stock.

We generated net proceeds of approximately $280.4 million from the Convertible Notes after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from the Convertible Notes, together with cash on hand, to repay and terminate $265.0 million outstanding under our second lien senior secured term loan and pay certain fees, expenses and premiums in connection therewith.

Common Stock Offering

In October 2012, we closed on a registered underwritten public offering of 6,900,000 shares of our common stock, or the 2012 Common Stock Offering. The shares were sold at a price to the public of $42.00 per share. We generated net proceeds of approximately $276.1 million from the 2012 Common Stock Offering after deducting underwriting discounts and commissions and offering expenses. Subsequently, we used the net proceeds to partially fund our acquisitions of RMS and ResCap. See further discussion in Note 3 in the Notes to Consolidated Financial Statements.

Results of Operations — Comparison of Consolidated Results of Operations for the Years Ended December 31, 2012, 2011 and 2010

We recognized net income (loss) of $(22.1) million, $(66.4) million and $37.1 million for the years ended December 31, 2012, 2011 and 2010, respectively. A summary of our consolidated results of operations is provided below (in thousands):


	For the Years Ended December 31,								Variance
	2012			2011			2010		2012 vs. 2011			2011 vs. 2010
Revenues
Servicing revenue and fees	$	418,970		$	186,177		$	2,267	$	232,793		$	183,910
Interest income on loans		154,351			164,794			166,188		(10,443	)		(1,394	)
Insurance revenue		73,249			41,651			9,163		31,598			32,488
Other revenues		20,419			9,852			2,876		10,567			6,976

Total revenues		666,989			402,474			180,494		264,515			221,980

Expenses
Salaries and benefits		230,107			117,736			27,495		112,371			90,241
Interest expense		179,671			136,246			81,729		43,425			54,517
General and administrative		136,236			78,597			21,289		57,639			57,308
Depreciation and amortization		99,728			53,078			383		46,650			52,695
Provision for loan losses		13,352			6,016			6,526		7,336			(510	)
Other expenses, net		9,267			18,073			9,408		(8,806	)		8,665

Total expenses		668,361			409,746			146,830		258,615			262,916

Other gains (losses)
Net fair value gains (losses)		14,500			(1,052	)		—		15,552			(1,052	)
Gains (losses) on extinguishment		(48,579	)		95			4,258		(48,674	)		(4,163	)
Other		—			2,096			423		(2,096	)		1,673

Total other gains (losses)		(34,079	)		1,139			4,681		(35,218	)		(3,542	)
Income (loss) before income taxes		(35,451	)		(6,133	)		38,345		(29,318	)		(44,478	)
Income tax expense (benefit)		(13,317	)		60,264			1,277		(73,581	)		58,987

Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068	$	44,263		$	(103,465	)

Servicing Revenue and Fees

We recognize servicing revenue and fees on servicing performed for third parties. 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, which consists of both the Residual and Non-Residual Trusts, is eliminated in consolidation. 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 for the entire current year as opposed to six months of 2011 and a full year of servicing fees associated with the November and December 2011 boards of approximately 159,000 loans. Servicing revenue and

fees increased $183.9 million for the year ended December 31, 2011 as compared to 2010 due primarily to the inclusion of Green Tree for six months of 2011. A summary of servicing revenue and fees is provided below (in thousands):


	For the Years Ended December 31,
	2012		2011		2010
Servicing fees	$	274,713	$	126,610	$	582
Incentive and performance fees		105,073		45,596		1,055
Ancillary and other fees		39,184		13,971		630

Servicing revenue and fees	$	418,970	$	186,177	$	2,267

Included in incentive and performance fees for the years ended December 31, 2012 and 2011, are incentive fees of $30.5 million and $18.5 million, respectively, which Green Tree received 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 comparable pools serviced by others, as well as achievement of certain performance hurdles over time, which may not be achieved on a regular schedule.

Third-Party Servicing Portfolio

Forward Mortgage Servicing

Provided below is a summary of the activity in our third-party servicing portfolio for our forward mortgage business, which includes accounts serviced for third parties for which we earn servicing revenue and, thus, excludes residential loans and real estate owned that have been recognized on our consolidated balance sheets (in thousands, except number of accounts):


	For the Year Ended December 31, 2012
	Number of Accounts			Servicing Rights Capitalized			Sub-Servicing Rights Capitalized			Sub-Servicing Rights Not Capitalized			Total
Unpaid principal balance of accounts associated with forward mortgages serviced for third parties
Beginning balance		979,530		$	18,717,559		$	16,302,306		$	48,264,295		$	83,284,160
New business added		89,266			4,721,056			—			7,199,196			11,920,252
Payoffs, sales and curtailments		(166,391	)		(3,001,564	)		(2,992,391	)		(14,551,241	)		(20,545,196	)

Ending balance		902,405		$	20,437,051		$	13,309,915		$	40,912,250		$	74,659,216


				December 31, 2012
Ending number of accounts associated with forward mortgages serviced for third parties					395,697			270,471			236,237			902,405



	For the Year Ended December 31, 2011
	Number of Accounts			Servicing Rights Capitalized			Sub-Servicing Rights Capitalized			Sub-Servicing Rights Not Capitalized ⁽¹⁾			Total
Unpaid principal balance of accounts associated with forward mortgages serviced for third parties
Beginning balance		5,539		$	—		$	—		$	1,348,329		$	1,348,329
Acquisition of Green Tree		769,108			20,141,602			17,860,799			—			38,002,401
New business added		258,932			—			—			48,300,086			48,300,086
Payoffs, sales and curtailments		(54,049	)		(1,424,043	)		(1,558,493	)		(1,384,120	)		(4,366,656	)

Ending balance		979,530		$	18,717,559		$	16,302,306		$	48,264,295		$	83,284,160


				December 31, 2011
Ending number of accounts associated with forward mortgages serviced for third parties					402,067			318,363			259,100			979,530

⁽¹⁾	The beginning balance of sub-servicing rights not capitalized of $1.3 billion consists of accounts acquired through the acquisition of Marix in November 2010.

Reverse Mortgage Servicing

Provided below is a summary of the activity in our third-party servicing portfolio for our reverse mortgage business, which includes accounts serviced for third parties for which we earn servicing revenue and, thus, excludes residential loans and real estate owned that have been recognized on our consolidated balance sheets (in thousands, except number of accounts):


	For the Year Ended December 31, 2012
	Number of Accounts			Servicing Rights Capitalized			Sub-Servicing Rights Capitalized			Sub-Servicing Rights Not Capitalized			Total
Unpaid principal balance of accounts associated with reverse mortgages serviced for third parties
Beginning balance		—		$	—		$	—		$	—		$	—
Acquisition of RMS		49,291			3,037,081			4,588,482			—			7,625,563
Acquisition of S1L		35			8,515			—			—			8,515
New business added		4,021			—			—			1,413,522			1,413,522
Other additions		—			22,454			32,844			—			55,298
Payoffs, sales and curtailments		(10,492	)		(35,481	)		(1,597,712	)		(15,399	)		(1,648,592	)

Ending balance		42,855		$	3,032,569		$	3,023,614		$	1,398,123		$	7,454,306


				December 31, 2012
Ending number of accounts associated with reverse mortgages serviced for third parties					19,920			18,946			3,989			42,855

Interest Income on Loans

We earn interest income on the residential loans held in the Residual Trusts and on our unencumbered forward residential loans, both of which are accounted for at amortized cost. 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. The portfolio disappearance rate, consisting of contractual payments, voluntary prepayments and defaults, was 6.61% for the year ended December 31, 2012. For the year ended December 31, 2011, interest income decreased $1.4 million as compared to 2010 due to the run-off of the portfolio offset in part by a higher average yield on residential loans acquired at the end of 2010 and during the first half of 2011. Provided below is a summary of the average balances of residential loans carried at amortized cost and the related interest income and average yields (in thousands, except average yield data):


	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Residential loans at amortized cost
Interest income	$	154,351		$	164,794		$	166,188		$	(10,443	)	$	(1,394	)
Average balance		1,560,423			1,621,540			1,649,700			(61,117	)		(28,160	)
Average yield		9.89	%		10.16	%		10.07	%		-0.27	%		0.09	%

Insurance Revenue

Insurance revenue consists of commission income and fees earned on voluntary and lender-placed insurance policies 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 price of the insurance policy sold, which varies based on the type of product. 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 for the entire current year as opposed to six months of 2011. Insurance revenue increased $32.5 million for the year ended December 31, 2011 as compared to 2010 due primarily to the inclusion of Green Tree for six months of 2011.

Other Revenues

Other revenues consist primarily of management fee income, origination fee income and accretion of certain Green Tree and RMS acquisition-related fair value adjustments. Other revenues increased $10.6 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree for the entire year as opposed to six months of 2011 and an increase in origination income. Other revenues increased $7.0 million for the year ended December 31, 2011 as compared to 2010 due to management fee income and accretion of certain acquisition-related fair value adjustments recognized by Green Tree.

Salaries and Benefits

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 as opposed to six months in 2011, the addition of employees to support the growth of our business, and the addition of 330 full-time equivalent employees in connection with the acquisition of RMS. Salaries and benefits expense increased $90.2 million for the year ended December 31, 2011 as compared to 2010 due primarily to the addition of 2,200 full-time-equivalent employees in connection with the Green Tree acquisition.

Interest Expense

We incur interest expense on our corporate debt, including convertible notes and master repurchase agreements, on the mortgage-backed debt issued by the Residual Trusts, and on our servicing advance liabilities, all of which are accounted for at amortized cost. 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 current year as opposed to six months of 2011. Interest expense increased $54.5 million for the year ended December 31, 2011 as compared to 2010 due largely to the issuance of $765 million in corporate debt and $223.1 million in mortgage-backed debt in 2011 to fund the acquisition of Green Tree. Provided below is a summary of the average balances of our corporate debt, the mortgage-backed debt of the Residual Trusts, and our servicing advance liabilities, as well as the related interest expense and average rates (in thousands, except average rate data):


	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Debt
Interest expense	$	78,582		$	42,260		$	—		$	36,322		$	42,260
Average balance		760,041			386,290			—			373,751			386,290
Average rate		10.34	%		10.94	%		—			-0.60	%		10.94	%
Mortgage-backed debt at amortized cost
Interest expense	$	96,337		$	91,075		$	81,729		$	5,262		$	9,346
Average balance		1,364,200			1,347,532			1,274,505			16,668			73,027
Average rate		7.06	%		6.76	%		6.41	%		0.30	%		0.35	%
Servicing advance liabilities
Interest expense	$	4,752		$	2,911		$	—		$	1,841		$	2,911
Average balance		105,337			55,287			—			50,050			55,287
Average rate		4.51	%		5.27	%		—			-0.76	%		5.27	%

General and Administrative

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 the current year that were not incurred during the comparable prior year period; transaction expenses of $8.6 million related to the acquisitions of RMS and S1L and financing transactions; 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. General and administrative expenses increased $57.3 million during the year ended December 31, 2011 as compared to 2010 due to the recognition of transaction-related expenses of $12.9 million as well as general and administrative expenses of $40.7 million associated with Green Tree for the period from acquisition through December 31, 2011.

Depreciation and Amortization

Depreciation and amortization expense consists of amortization of capitalized servicing rights and intangible assets other than goodwill, as well as depreciation and amortization recognized on premises and equipment, which includes amortization of internally-developed software acquired as part of the acquisitions of Green Tree and RMS. Depreciation and amortization increased $46.7 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree for the entire current year as opposed to six months of 2011. Depreciation and amortization increased $52.7 million for the year ended December 31, 2011 as compared to 2010, due primarily to the acquisition of Green Tree. A summary of depreciation and amortization expense is provided below (in thousands):


	For the Years Ended December 31,						Variance
	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Depreciation and amortization of:
Servicing rights	$	50,461	$	28,623	$	—	$	21,838	$	28,623
Intangible assets		24,791		12,585		—		12,206		12,585
Premises and equipment		24,476		11,870		383		12,606		11,487

Total depreciation and amortization	$	99,728	$	53,078	$	383	$	46,650	$	52,695

Provision for Loan Losses

We recognize a provision for loan losses for our residential loan portfolio accounted for at amortized cost. The provision for loan losses increased $7.3 million for the year ended December 31, 2012 as compared to 2011 due to unfavorable trends in severity rates and increasing delinquencies. Higher loss severities were impacted by the sale of aged real estate owned inventory and continued pricing challenges in the rural southeastern U.S. real estate market. The provision for loan losses decreased $0.5 million for the year ended December 31, 2011 as compared to 2010 due to a lower number of foreclosures, particularly during the first six months of 2011, which reduced the level required for the allowance for loan losses.

Other Expenses, Net

Other expenses, net consist primarily of real estate owned expenses, net, which includes lower of cost or fair value adjustments and holding costs, and claims expense. Other expenses, net decreased $8.8 million for the year ended December 31, 2012 as compared to 2011 due primarily to lower real estate owned expenses, net of $5.1 million and lower claims expense of $3.2 million. The decline in real estate owned expense, net resulted from lower real estate owned holding costs due to fewer number of average real estate owned units during a majority of the current year as compared to the prior year and favorable trends in fair value adjustments required for real estate owned properties that have shorter holding periods. The decline in claims expense was due primarily to our withdrawal from property reinsurance operations and to severe wind storm damage claims during 2011. In conjunction with the acquisition of Green Tree, we decided to wind down our property reinsurance business. Existing property reinsurance policies were terminated and no new property reinsurance policies have been entered into beginning January 1, 2012 thereby eliminating claims costs and exposure subsequent to this date. Other expenses, net increased $8.7 million for the year ended December 31, 2011 as compared to 2010 due primarily to higher charges for the decline in the fair value of real estate owned of $4.0 million and higher claims expense related to severe wind storm damage claims of $3.1 million.

Other Gains (Losses)

We recognized net fair value gains on assets and liabilities accounted for at fair value of $14.5 million for the year ended December 31, 2012, which included a net gain of $7.3 million on HECM reverse mortgage loans and the HMBS related obligations, a net gain of $9.6 million on the assets and liabilities of the Non-Residual Trusts and a loss of $1.2 million on derivatives associated with our corporate debt. Improved market pricing on HECM loans contributed to the net gain on HECM reverse mortgages and the HMBS related obligations of $7.3 million. Lower discount rates resulting from changes in market rates, higher than expected cash flows and

a favorable spread on contractual interest income net of contractual interest expense contributed to the net fair value gain on the assets and liabilities of the Non-Residual Trusts. During 2012 we also recognized a loss on extinguishment of debt of $48.6 million related to the refinancing of our first lien term loan facility and extinguishment of our second lien term loan.

We recognized net fair value losses on assets and liabilities accounted for at fair value of $1.1 million for the year ended December 31, 2011, which included a net fair value loss of $0.9 million on the assets and liabilities of the Non-Residual Trusts due primarily to a decline in the forward London Interbank Offered Rate, or LIBOR, partially offset by a favorable spread on contractual interest income net of contractual interest expense. We also recognized other gains of $2.1 million from the reversal of the estimated contingent earn-out liability for Marix and $0.1 million on the extinguishment of mortgage-backed debt during 2011. Refer to Note 3 in the Notes to Consolidated Financial Statements for further information regarding the Marix earn-out contingency.

We recognized other gains of $4.7 million for the year ended December 31, 2010, which included a gain of $4.3 million on the extinguishment of $40.5 million in mortgage-backed debt and a gain of $0.4 million in the bargain purchase of Marix.

Income Tax Expense

Income tax expense decreased $73.6 million for the year ended December 31, 2012 as compared to 2011 and increased $59.0 million for the year ended December 31, 2011 as compared to 2010. These fluctuations result primarily from the recognition of a $62.7 million charge to income tax expense in 2011 for the impact of our loss of REIT qualification in connection with the acquisition of Green Tree and an increase in loss before income taxes for the year ended December 31, 2012 as compared to the year ended December 31, 2011.

Financial Condition — Comparison of Consolidated Financial Condition at December 31, 2012 to December 31, 2011

The acquisitions of RMS and S1L, in addition to certain financing transactions discussed below, had a significant impact on our consolidated balance sheet during the current year. Our total assets and liabilities increased $6.9 billion and $6.5 billion during the year to $11.0 billion and $10.1 billion, respectively, at December 31, 2012. Provided below is a summary of the consolidated balance sheet at December 31, 2012 as compared to December 31, 2011 (in thousands) and a discussion of the most significant variances in our assets, liabilities and stockholders’ equity at December 31, 2012 as compared to December 31, 2011.


	December 31,				Variance
	2012		2011		Variance
Assets
Cash and cash equivalents	$	442,054	$	18,739	$	423,315
Restricted cash and cash equivalents		653,338		353,216		300,122
Residential loans, net		8,200,532		2,264,578		5,935,954
Receivables, net		259,009		229,779		29,230
Servicer and protective advances, net		173,047		140,690		32,357
Servicing rights, net		225,278		250,329		(25,051	)
Goodwill		580,378		470,291		110,087
Intangible assets, net		161,926		137,482		24,444
Premises and equipment, net		137,785		130,410		7,375
Other assets		144,830		118,028		26,802

Total assets	$	10,978,177	$	4,113,542	$	6,864,635

Liabilities and stockholders’ equity
Payables and accrued liabilities		260,610		217,929		42,681
Servicer payables		587,929		244,302		343,627
Servicing advance liabilities		100,164		107,039		(6,875	)
Debt		1,146,249		742,626		403,623
Mortgage-backed debt		2,072,728		2,224,754		(152,026	)
HMBS related obligations		5,874,552		—		5,874,552
Other liabilities		41,017		43,360		(2,343	)

Total liabilities	$	10,083,249	$	3,580,010	$	6,503,239

Stockholders’ equity		894,928		533,532		361,396

Total liabilities and stockholders’ equity	$	10,978,177	$	4,113,542	$	6,864,635

Cash and cash equivalents increased $423.3 million during the current year. Cash increased primarily as a result of net proceeds generated from our registered underwritten public offerings of our common stock and convertible notes of $276.1 million and $280.4 million, respectively, and $251.6 million from refinancing our $500.0 million first lien term loan with a $700.0 million senior secured term loan facility. The total increase of $808.1 million was partially offset by a payment of $95.0 million used to partially fund our acquisition of RMS, $20.0 million used to fund our acquisition of S1L, and $294.4 million used to repay and terminate $265.0 million in outstanding borrowings under our second lien term loan and pay certain fees, expenses and premiums in connection therewith.

Restricted cash and cash equivalents consist largely of cash collected as a result of our servicing activities that are owed to third parties, or servicer payables. Restricted cash increased $300.1 million primarily as a result of $340.7 million in servicing activities and $9.0 million being held in escrow pending release to the sellers of RMS. This increase was primarily offset by a $40.0 million payout to the sellers of Green Tree and $4.9 million released from our insurance trust account due to our withdrawal from property reinsurance operations.

Residential loans, net increased $5.9 billion primarily as a result of reverse mortgage loans of $5.3 billion and $98.4 million acquired in connection with the acquisitions of RMS and S1L, respectively, and reverse mortgage loans of $565.2 million acquired subsequent to the acquisition of RMS, partially offset by payments of $33.2 million received from reverse mortgage loan borrowers. The RMS loans are offset by $5.9 billion in HMBS related obligations, which represent the proceeds from the transfer of HMBS securities that are accounted for as a secured borrowing.

Servicer payables consist of cash collected as a result of our servicing activities that are owed to third parties. The increase in servicer payables of $343.6 million was primarily due to collections of payoffs associated with government-sponsored refinancing programs that have not been remitted to third parties.

Debt increased $403.6 million as a result of the issuance of $290.0 million in convertible notes, the repayment and termination of our second lien term loan of $265.0 million with funds obtained through the issuance of the convertible notes, the refinancing of our $500.0 million first lien term loan for $700.0 million, and the recognition of $237.5 million in master repurchase agreements assumed in connection with the acquisitions of RMS and S1L.

Stockholders’ equity increased $361.4 million as a result of our offering of common stock, net of issuance costs of $276.1 million, the issuance of $41.3 million in common stock to partly fund the acquisition of RMS, and $48.7 million in value attributable to the beneficial conversion option of the convertible notes that we issued, partially offset by our net loss of $22.1 million.

Business Segment Results

We manage our Company in five primary reportable segments: Servicing, ARM, Insurance, Loans and Residuals and Reverse Mortgage. We measure the performance of our business segments through the following measures: income (loss) before income taxes, core earnings (loss) before income taxes and Adjusted EBITDA. Management considers core earnings (loss) before income taxes and Adjusted EBITDA, both non-GAAP financial measures, to be important in the evaluation of the Company as a whole and of our business segments and for allocating capital resources to our segments. Core earnings (loss) before income taxes and Adjusted EBITDA are utilized to assess the underlying operational performance of the continuing operations of the business. In addition, analysts, investors, and creditors may use these measures when analyzing our operating performance.

In calculating income (loss) before income taxes, we allocate indirect expenses to our business segments and include these expenses in other expenses, net. During the first quarter of 2012, we revised the method of allocating costs to business segments and have recast the segment measures of the prior periods to reflect the new cost allocation method on a consistent basis for all periods presented. In segment reporting prior to the first quarter of 2012, the allocation of indirect expenses was based on segment profit or loss. The new method allocates indirect expenses to our Insurance segment based on the ratio of the number of policies to the number of accounts serviced and to our ARM, Reverse Mortgage and certain non-reportable segments based on headcount. All remaining indirect expenses are allocated to our Servicing segment. We do not allocate indirect expenses to our Loans and Residuals segment.

We reconcile our income (loss) before income taxes for our business segments to our GAAP consolidated income (loss) before taxes and report the financial results of our Non-Residual Trusts, other non-reportable operating segments and certain corporate expenses and amounts to eliminate intercompany transactions between segments as other activity. For a reconciliation of our income (loss) before income taxes for our business segments to our GAAP consolidated income (loss) before income taxes, refer to Note 22 in the Notes to Consolidated Financial Statements.

Core earnings before income taxes consists of income before income taxes adjusted primarily for depreciation and amortization of the increased basis in assets acquired with Green Tree and RMS, or step-up depreciation and amortization; losses on extinguishment of debt; non-cash expenses including share-based compensation and amortization of debt issue costs; certain transaction charges and/or integration expenses to acquire Green Tree, RMS and S1L and combine our businesses and overhead functions; and the net non-cash fair value adjustments related to RMS and the Non-Residual Trusts. For a description of Adjusted EBITDA, refer to the Liquidity and Capital Resources section.

Reconciliation of GAAP Consolidated Income (Loss) Before Taxes to Core Earnings (Loss) Before Income Taxes and Adjusted EBITDA

Provided below is a reconciliation of our consolidated income (loss) before income taxes under GAAP to our core earnings (loss) before income taxes and Adjusted EBITDA (in thousands):


	For the Year Ended December 31, 2012
	Servicing			Asset Receivables Management		Insurance			Loans and Residuals			Reverse Mortgage			Other			Total Consolidated
Income (loss) before income taxes	$	45,759		$	8,528	$	33,356		$	15,928		$	3,121		$	(142,143	)	$	(35,451	)
Core Earnings adjustments
Step-up depreciation and amortization		65,768			7,774		5,377			—			1,101			161			80,181
Losses on extinguishment of debt		—			—		—			—			—			48,579			48,579
Share-based compensation expense		10,171			868		2,167			—			153			847			14,206
Transaction and integration costs		2,722			—		—			—			—			13,060			15,782
Non-cash fair value adjustments		—			—		—			—			2,554			—			2,554
Non-cash interest expense		919			—		214			4,943			—			—			6,076
Net impact of Non-Residual Trusts		—			—		—			—			—			945			945
Other		—			—		—			—			—			1,269			1,269

Total adjustments		79,580			8,642		7,758			4,943			3,808			64,861			169,592

Core earnings (loss) before income taxes		125,339			17,170		41,114			20,871			6,929			(77,282	)		134,141
Adjusted EBITDA adjustments
Interest expense on debt		129			—		—			—			—			77,216			77,345
Depreciation and amortization		18,706			—		—			—			841			—			19,547
Non-cash interest income		(2,725	)		—		(655	)		(14,501	)		(119	)		—			(18,000	)
Provision for loan losses		—			—		—			13,352			—			—			13,352
Residual Trusts cash flows		—			—		—			9,342			—			—			9,342
Pro forma synergies		2,651			—		—			—			—			1,118			3,769
Other		1,489			39		77			(221	)		22			819			2,225

Total adjustments		20,250			39		(578	)		7,972			744			79,153			107,580

Adjusted EBITDA	$	145,589		$	17,209	$	40,536		$	28,843		$	7,673		$	1,871		$	241,721


	For the Year Ended December 31, 2011
	Servicing			Asset Receivables Management		Insurance			Loans and Residuals			Other			Total Consolidated
Income (loss) before income taxes	$	14,123		$	1,374	$	12,301		$	31,540		$	(65,471	)	$	(6,133	)
Core Earnings adjustments
Step-up depreciation and amortization		35,729			3,906		2,674			—			15			42,324
Transaction and integration costs		—			—		—			—			19,179			19,179
Net impact of Non-Residual Trusts		—			—		—			—			6,855			6,855
Share-based compensation expense		3,427			192		1,183			—			195			4,997
Non-cash interest expense		607			—		513			1,901			—			3,021
Other		—			—		—			(1,646	)		(1,624	)		(3,270	)

Total adjustments		39,763			4,098		4,370			255			24,620			73,106

Core earnings (loss) before income taxes		53,886			5,472		16,671			31,795			(40,851	)		66,973
Adjusted EBITDA adjustments
Interest expense on debt		185			—		—			—			42,075			42,260
Non-cash interest income		(2,339	)		—		(1,241	)		(13,725	)		—			(17,305	)
Pro forma synergies		8,862			—		596			—			7,370			16,828
Pro forma monetized assets		—			—		—			(13,305	)		—			(13,305	)
Depreciation and amortization		10,709			—		32			—			13			10,754
Residual Trusts cash flows		—			—		—			9,108			—			9,108
Provision for loan losses		—			—		—			6,016			—			6,016
Other		872			43		295			1,872			(918	)		2,164

Total adjustments		18,289			43		(318	)		(10,034	)		48,540			56,520

Adjusted EBITDA	$	72,175		$	5,515	$	16,353		$	21,761		$	7,689		$	123,493


	For the Year Ended December 31, 2010
	Servicing			Insurance			Loans and Residuals			Other		Total Consolidated
Income (loss) before income taxes	$	(11,171	)	$	(4,975	)	$	53,579		$	912	$	38,345
Core Earnings adjustments
Share-based compensation expense		2,046			1,351			—			366		3,763
Non-cash interest expense		—			—			1,284			—		1,284
Other		—			—			—			244		244

Total adjustments		2,046			1,351			1,284			610		5,291

Core earnings (loss) before income taxes		(9,125	)		(3,624	)		54,863			1,522		43,636
Adjusted EBITDA adjustments
Residual Trusts cash flows		—			—			24,323			—		24,323
Non-cash interest income		—			—			(13,493	)		—		(13,493	)
Provision for loan losses		—			—			6,526			—		6,526
Depreciation and amortization		311			64			—			8		383
Other		362			511			(768	)		51		156

Total adjustments		673			575			16,588			59		17,895

Adjusted EBITDA	$	(8,452	)	$	(3,049	)	$	71,451		$	1,581	$	61,531

Provided below is a discussion of our financial results for our five primary reportable segments.

Servicing

As the nature and size of our Servicing business has changed significantly over the past two years due to the acquisition of Green Tree, the financial results may not be comparable across years. Provided below is a summary statement of operations for our Servicing segment, which also includes core earnings (loss) before income taxes and Adjusted EBITDA (in thousands):


	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Servicing revenue and fees
Third parties	$	375,485		$	171,902		$	2,267		$	203,583		$	169,635
Intercompany		20,428			25,363			19,971			(4,935	)		5,392

Total servicing revenue and fees		395,913			197,265			22,238			198,648			175,027
Other income		2,773			2,993			280			(220	)		2,713

Total revenues		398,686			200,258			22,518			198,428			177,740
Interest expense		4,882			3,096			—			1,786			3,096
Depreciation and amortization		84,474			46,438			311			38,036			46,127
Other expenses, net		262,515			135,994			33,378			126,521			102,616

Total expenses		351,871			185,528			33,689			166,343			151,839
Net fair value losses		(1,056	)		(607	)		—			(449	)		(607	)

Income (loss) before income taxes		45,759			14,123			(11,171	)		31,636			25,294
Core Earnings adjustments
Step-up depreciation and amortization		65,768			35,729			—			30,039			35,729
Share-based compensation expense		10,171			3,427			2,046			6,744			1,381
Transaction and integration costs		2,722			—			—			2,722			—
Non-cash interest expense		919			607			—			312			607

Total adjustments		79,580			39,763			2,046			39,817			37,717

Core earnings (loss) before income taxes		125,339			53,886			(9,125	)		71,453			63,011
Adjusted EBITDA adjustments
Depreciation and amortization		18,706			10,709			311			7,997			10,398
Non-cash interest income		(2,725	)		(2,339	)		—			(386	)		(2,339	)
Pro forma synergies		2,651			8,862			—			(6,211	)		8,862
Interest expense on debt		129			185			—			(56	)		185
Other		1,489			872			362			617			510

Total adjustments		20,250			18,289			673			1,961			17,616

Adjusted EBITDA	$	145,589		$	72,175		$	(8,452	)	$	73,414		$	80,627

Our Servicing segment recognized core earnings (loss) before income taxes of $125.3 million, $53.9 million and $(9.1) million for the years ended December 31, 2012, 2011 and 2010, respectively. Provided below is a summary of the key components of earnings for this segment.

Servicing Revenues and Fees

Servicing revenue and fees was $395.9 million and $197.3 million for the years ended December 31, 2012 and 2011, respectively, resulting in an increase of $198.6 million, which was due primarily to the increase in third party servicing revenues and fees. Third party servicing revenue and fees increased by $203.5 million primarily due to the inclusion of Green Tree for the entire current year as compared to six months of 2011 and a full year of servicing fees associated with the November and December 2011 boards of approximately 159,000

loans. The increase in third party servicing revenues and fees was offset by a decrease of $4.9 million in intercompany servicing revenue and fees due to a decrease in the rate of the fees charged to the Loans and Residuals segment. Servicing revenue and fees increased $175.0 million for the year ended December 31, 2011 as compared to 2010 due to the acquisition of Green Tree.

A summary of servicing revenue and fees for our Servicing segment is provided below (in thousands):


	For the Years Ended December 31,						Variance
	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Servicing fees	$	292,908	$	151,973	$	20,553	$	140,935	$	131,420
Incentive and performance fees		64,417		31,321		1,055		33,096		30,266
Ancillary and other fees		38,588		13,971		630		24,617		13,341

Servicing revenue and fees	$	395,913	$	197,265	$	22,238	$	198,648	$	175,027

Provided below is a summary of the unpaid principal balance of our third-party servicing portfolio and on-balance sheet residential loans and real estate owned all of which are associated with forward mortgages and for which the Servicing segment receives intercompany servicing fees (in thousands):


	December 31,						Variance
	2012		2011		2010		2012 vs. 2011			2011 vs. 2010
Servicing portfolio composition associated with forward mortgages
Third parties
First lien mortgages	$	54,814,557	$	60,267,669	$	1,342,111	$	(5,453,112	)	$	58,925,558
Second lien mortgages		10,008,324		11,857,226		6,218		(1,848,902	)		11,851,008
Manufactured housing		9,818,686		11,130,515		—		(1,311,829	)		11,130,515
Other		17,649		28,750		—		(11,101	)		28,750

Total third parties		74,659,216		83,284,160		1,348,329		(8,624,944	)		81,935,831
On-balance sheet residential loans and real estate owned associated with forward mortgages		2,549,050		2,749,894		1,882,675		(200,844	)		867,219

Total servicing portfolio associated with forward mortgages	$	77,208,266	$	86,034,054	$	3,231,004	$	(8,825,788	)	$	82,803,050

Provided below is a summary of the number of accounts, unpaid principal balance, contractual servicing fee rate and past due status of our third-party servicing portfolio and on-balance sheet residential loans and real estate owned all of which are associated with forward mortgages and for which the Servicing segment receives intercompany servicing fees (dollars in thousands):


	December 31, 2012
	Number of Accounts		Unpaid Principal Balance		Weighted Average Contractual Servicing Fee			30 Days or More Past Due ⁽¹⁾
Third-party servicing portfolio composition of accounts serviced associated with forward mortgages
First lien mortgages		338,854	$	54,814,557		0.22	%		15.68	%
Second lien mortgages		238,690		10,008,324		0.44	%		3.60	%
Manufactured housing		323,481		9,818,686		1.08	%		4.12	%
Other		1,380		17,649		0.94	%		4.01	%

Total accounts serviced for third parties		902,405		74,659,216		0.36	%		12.54	%
On-balance sheet residential loans and real estate owned associated with forward mortgages		58,637		2,549,050					8.25	%

Total servicing portfolio associated with forward mortgages		961,042	$	77,208,266					12.39	%


	December 31, 2011
	Number of Accounts		Unpaid Principal Balance		Weighted Average Contractual Servicing Fee			30 Days or More Past Due ⁽¹⁾
Third-party servicing portfolio composition of accounts serviced associated with forward mortgages
First lien mortgages		341,514	$	60,267,669		0.21	%		11.63	%
Second lien mortgages		274,912		11,857,226		0.44	%		4.63	%
Manufactured housing		360,528		11,130,515		1.08	%		4.36	%
Other		2,576		28,750		1.00	%		2.89	%

Total accounts serviced for third parties		979,530		83,284,160		0.36	%		9.66	%
On-balance sheet residential loans and real estate owned associated with forward mortgages		62,027		2,749,894					7.36	%

Total servicing portfolio associated with forward mortgages		1,041,557	$	86,034,054					9.40	%

⁽¹⁾

Past due status is measured based on either the MBA method or the OTS method as specified in the servicing agreement. Under the MBA method, a loan is considered past due if its monthly payment is not received by the end of the day immediately preceding the loan’s next due date. Under the OTS method, a loan is considered past due if its monthly payment is not received by the loan’s due date in the following month.

Depreciation and Amortization

Depreciation and amortization expense includes amortization of certain intangible assets capitalized in connection with the acquisition of Green Tree including servicing rights related to servicing and sub-servicing agreements, customer and institutional relationship intangibles of the Servicing business, and capitalized software development costs. Depreciation and amortization increased $38.0 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree for the entire current year as compared to six months of 2011. Depreciation and amortization increased $46.1 million for the year ended December 31, 2011 as compared to 2010, due primarily to the acquisition of Green Tree.

Other Expenses, Net

Other expense, net consists primarily of costs related to salaries and benefits, technology and communications, occupancy and general and administrative expenses as well as allocated indirect expenses. Other expense, net increased $126.5 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree for the entire current year as compared to six months of 2011. Other expense, net increased $102.6 million for the year ended December 31, 2011 as compared to 2010 due to $69.7 million in direct costs of Green Tree incurred since the acquisition date, which included expenses for additional staffing and technology to support the new business added; $9.9 million in additional costs related to having a full year of costs for Marix in 2011 as opposed to two months of costs in 2010; as well as a higher amount of allocated corporate expenses.

Assets Receivables Management

Our ARM business, which was acquired as part of the Green Tree acquisition, performs collections of delinquent balances on loans serviced by us for third parties after they have been charged off. Provided below is a summary statement of operations for our ARM segment, which also includes core earnings before income taxes and Adjusted EBITDA (in thousands):


	For the Years Ended December 31,
	2012		2011		Variance
Servicing revenue and fees
Third parties	$	38,351	$	14,275	$	24,076
Intercompany		525		—		525

Total servicing revenue and fees		38,876		14,275		24,601
Other income		49		—		49

Total revenues		38,925		14,275		24,650
Depreciation and amortization		7,774		3,906		3,868
Other expenses, net		22,623		8,995		13,628

Total expenses		30,397		12,901		17,496
Income before income taxes		8,528		1,374		7,154
Core Earnings adjustments
Step-up depreciation and amortization		7,774		3,906		3,868
Share-based compensation expense		868		192		676

Total adjustments		8,642		4,098		4,544

Core earnings before income taxes		17,170		5,472		11,698
Adjusted EBITDA adjustments
Other		39		43		(4	)

Total adjustments		39		43		(4	)

Adjusted EBITDA	$	17,209	$	5,515	$	11,694

Gross collections	$	137,240	$	51,898	$	85,342

Our ARM segment recognized core earnings before income taxes of $17.2 million and $5.5 million for the years ended December 31, 2012 and 2011, respectively. Provided below is a summary of the key components of earnings for this segment.

Servicing Revenues and Fees

Servicing revenue and fees consists of asset recovery revenue. Servicing revenue and fees was $38.9 million and $14.3 million for the years ended December 31, 2012 and 2011, respectively, resulting in an increase of $24.6 million which is due to having a full year of revenue in the current year compared to having six months of revenue in 2011 and an overall growth in collections.

Depreciation and Amortization

Depreciation and amortization expense consists primarily of amortization of the customer-relationship intangible asset recognized for our ARM business in connection with the acquisition of Green Tree. Depreciation and amortization increased $3.9 million for the year ended December 31, 2012 as compared to 2011 as a result of having a full year of depreciation and amortization in the current year compared to having six months of depreciation and amortization in 2011.

Other Expenses, Net

Insurance

Our Insurance segment consists of our agency business and our reinsurance business. The agency business recognizes commission income net of estimated future policy cancellations at the time policies are effective. The reinsurance business earns premium revenue over the life of an insurance contract and incurs actual costs of property damage claims. With the acquisition of Green Tree, we significantly increased the size of our agency business and we decided to wind down our property reinsurance business. Existing property reinsurance policies were terminated and no new property reinsurance policies have been entered into beginning January 1, 2012.

Provided below is a summary statement of operations for our Insurance segment, which also includes core earnings (loss) before income taxes and Adjusted EBITDA (in thousands):


	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Insurance revenue
Third parties	$	73,249		$	41,651		$	9,163		$	31,598		$	32,488
Intercompany		—			2,101			2,350			(2,101	)		(249	)

Total insurance revenue		73,249			43,752			11,513			29,497			32,239
Other income		659			1,245			322			(586	)		923

Total revenues		73,908			44,997			11,835			28,911			33,162
Depreciation and amortization		5,377			2,706			64			2,671			2,642
Other expenses, net		35,175			29,990			16,746			5,185			13,244

Total expenses		40,552			32,696			16,810			7,856			15,886

Income (loss) before income taxes		33,356			12,301			(4,975	)		21,055			17,276
Core Earnings adjustments
Step-up depreciation and amortization		5,377			2,674			—			2,703			2,674
Share-based compensation expense		2,167			1,183			1,351			984			(168	)
Non-cash interest expense		214			513			—			(299	)		513

Total adjustments		7,758			4,370			1,351			3,388			3,019

Core earnings (loss) before income taxes		41,114			16,671			(3,624	)		24,443			20,295
Adjusted EBITDA adjustments
Non-cash interest income		(655	)		(1,241	)		—			586			(1,241	)
Pro forma synergies		—			596			—			(596	)		596
Depreciation and amortization		—			32			64			(32	)		(32	)
Other		77			295			511			(218	)		(216	)

Total adjustments		(578	)		(318	)		575			(260	)		(893	)

Adjusted EBITDA	$	40,536		$	16,353		$	(3,049	)	$	24,183		$	19,402

Provided below is a summary of net written premiums (in thousands) and a summary of outstanding policies written:


	For the Years Ended December 31,						Variance
	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Net written premiums
Lender placed	$	87,094	$	45,063	$	6,036	$	42,031	$	39,027
Voluntary		81,611		40,833		5,376		40,778		35,457

Total net written premiums	$	168,705	$	85,896	$	11,412	$	82,809	$	74,484


	For the Years Ended December 31,						Variance
	2012		2011		2010		2012 vs. 2011			2011 vs. 2010
Number of outstanding policies written
Lender placed		108,800		108,766		6,188		34			102,578
Voluntary		85,040		98,475		7,448		(13,435	)		91,027

Total outstanding policies written		193,840		207,241		13,636		(13,401	)		193,605

Our Insurance segment recognized core earnings (loss) before income taxes of $41.1 million, $16.7 million and $(3.6) million for the years ended December 31, 2012, 2011 and 2010, respectively. Provided below is a summary of the key components of earnings for this segment.

Insurance Revenue

Insurance revenue primarily includes commission and reinsurance income as well as ancillary and other income. Insurance revenue was $73.2 million and $43.8 million for the years ended December 31, 2012 and 2011, respectively, resulting in an increase of $29.4 million, which was due primarily to having a full year of Green Tree insurance revenue in the current year as compared to six months in 2011. Net written premiums for the year ended December 31, 2012 increased to almost twice the number written for the year ended December 31, 2011. Insurance revenue increased $32.2 million for the year ended December 31, 2011 as compared to 2010 due to the recognition of $22.9 million in commission revenue by Green Tree. This reflects an increase in the number of net written premiums of 74,484 in 2011, or over six times the number written in 2010 as a result of the acquisition of Green Tree and new business from the loans added to our servicing portfolio.

Depreciation and Amortization

Depreciation and amortization, which includes amortization relating to intangible assets associated with our Insurance business, increased $2.7 million for the year ended December 31, 2012 as compared to 2011 due primarily to the inclusion of Green Tree for the entire current year as compared to six months of 2011. Depreciation and amortization increased $2.6 million for the year ended December 31, 2011 as compared to 2010, as a result of amortization of intangible assets acquired in conjunction with the acquisition of Green Tree.

Other Expenses, Net

Other expenses, net consists primarily of salaries and benefits, technology and communications, occupancy, general and administrative, claims expense and allocated indirect expenses. Other expenses, net increased $5.2 million for the year ended December 31, 2012 as compared to 2011 due to having a full year of Green Tree expenses in the current year compared to having six months of Green Tree expenses in 2011 partially offset by a reduction in claims expense of $3.2 million. Other expenses, net increased $13.2 million for the year ended December 31, 2011 as compared to 2010 due to having six months of Green Tree expenses and an increase in claims expense of $3.1 million due to severe wind storm damage claims.

Loans and Residuals

Our Loans and Residuals segment consists of the residential loans, real estate owned and mortgage-backed debt of the Residual Trusts, as well as unencumbered residential loans and real estate owned. The entire portfolio of residential loans and real estate owned of the Loans and Residuals segment is comprised of forward-related mortgages. Through this business, 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.

Provided below is a summary statement of operations for our Loans and Residuals segment, which also includes core earnings before income taxes and Adjusted EBITDA (in thousands):


	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Interest income	$	154,351		$	164,794		$	166,188		$	(10,443	)	$	(1,394	)
Interest expense		(96,337	)		(91,075	)		(81,729	)		(5,262	)		(9,346	)

Net interest income		58,014			73,719			84,459			(15,705	)		(10,740	)
Provision for loan losses		(13,352	)		(6,016	)		(6,526	)		(7,336	)		510

Net interest income after provision for loan losses		44,662			67,703			77,933			(23,041	)		(10,230	)
Other gains (losses)		(116	)		1,060			4,258			(1,176	)		(3,198	)
Other income		5			—			269			5			(269	)
Intercompany expense		(11,776	)		(22,546	)		(22,321	)		10,770			(225	)
Other expenses, net		(16,847	)		(14,677	)		(6,560	)		(2,170	)		(8,117	)

Total other expenses, net		(28,734	)		(36,163	)		(24,354	)		7,429			(11,809	)

Income before income taxes		15,928			31,540			53,579			(15,612	)		(22,039	)
Core Earnings adjustments
Non-cash interest expense		4,943			1,901			1,284			3,042			617
Other		—			(1,646	)		—			1,646			(1,646	)

Total adjustments		4,943			255			1,284			4,688			(1,029	)

Core earnings before income taxes		20,871			31,795			54,863			(10,924	)		(23,068	)
Adjusted EBITDA adjustments
Non-cash interest income		(14,501	)		(13,725	)		(13,493	)		(776	)		(232	)
Provision for loan losses		13,352			6,016			6,526			7,336			(510	)
Residual Trusts cash flows		9,342			9,108			24,323			234			(15,215	)
Pro forma monetized assets		—			(13,305	)		—			13,305			(13,305	)
Other		(221	)		1,872			(768	)		(2,093	)		2,640

Total adjustments		7,972			(10,034	)		16,588			18,006			(26,622	)

Adjusted EBITDA	$	28,843		$	21,761		$	71,451		$	7,082		$	(49,690	)

Provided below is a summary of the residential loan portfolio, the mortgage-backed debt and real estate owned of the Loans and Residuals Segment as well as certain ratios (dollars in thousands):


	December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Residential loans, net of cost basis adjustments	$	1,510,756		$	1,605,688		$	1,637,392		$	(94,932	)	$	(31,704	)
Allowance for loan losses		(20,435	)		(13,824	)		(15,907	)		(6,611	)		2,083

Residential loans, net		1,490,321			1,591,864			1,621,485			(101,543	)		(29,621	)
Mortgage-backed debt, net of discounts		1,315,442			1,413,509			1,281,555			(98,043	)		131,954
Real estate owned
Carrying value	$	49,089		$	53,651		$	67,629		$	(4,562	)	$	(13,978	)
Number of units		842			867			1,041			(25	)		(174	)
Delinquencies ⁽¹⁾
30 days or more past due		7.01	%		5.73	%		4.68	%		1.28	%		1.05	%
90 days or more past due		4.63	%		3.99	%		2.65	%		0.64	%		1.34	%
Allowance as % of residential loans ⁽²⁾		1.35	%		0.86	%		0.97	%		0.49	%		-0.11	%

	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Net charge-offs	$	6,741		$	8,099		$	8,280		$	(1,358	)	$	(181	)
Charge-off ratio ⁽³⁾		0.43	%		0.50	%		0.50	%		-0.07	%		0.00	%
Coverage ratio ⁽⁴⁾		303.14	%		170.69	%		192.11	%		132.45	%		-21.42	%

⁽¹⁾	Delinquency rates are calculated based on unpaid principal balance.

⁽²⁾	The allowance for loan loss ratio is calculated as period end allowance for loan losses divided by period end residential loans before the allowance for loan losses.

⁽ ³ ⁾

The charge-off ratio is calculated as charge-offs, net of recoveries divided by average residential loans before the allowance for loan losses. Net charge-offs includes charge-offs recognized upon acquisition of real estate in satisfaction of residential loans.

⁽ ⁴ ⁾

The coverage ratio is calculated as period end allowance for loan losses divided by charge-offs, net of recoveries.

Our Loans and Residuals segment recognized core earnings before income taxes of $20.9 million, $31.8 million and $54.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. These earnings primarily reflect the positive spread we earn on the residuals we hold in the Residual Trusts. Provided below is a summary of the key components of earnings for this segment.

Net Interest Income

Net interest income was $58.0 million, $73.7 million and $84.5 million for the years ended December 31, 2012, 2011 and 2010, respectively. Net interest income, net interest margin and net interest spread decreased $15.7 million, 83 basis points and 57 basis points, respectively, in 2012 as compared to 2011 primarily due to the decline in residential loans at amortized cost balance and a lower related yield of 27 basis points resulting from an increase in delinquencies that are 90 days or more past due.

Net interest income and net interest margin decreased $10.7 million and 57 basis points, respectively, in 2011 as compared to 2010 as we securitized unencumbered residential loans in order to partly fund the acquisition of Green Tree. In June 2011, we securitized unencumbered residential loans which resulted in the issuance of $102.0 million in mortgage-backed debt by a consolidated securitization trust. In addition, in May and June of 2011, we also monetized $85.1 million in mortgage-backed debt that had been held by us and reissued $36.0 million in mortgage-backed debt that had previously been extinguished. Our net interest spread for 2011

decreased 26 basis points due to the higher average rate on our mortgage-backed debt of 35 basis points offset in part by higher yielding residential loans acquired at the end of 2010 and in the first half of 2011.

Provided below is a summary of our average yields and rates and the net interest spread and margin on our portfolio (in thousands, except data in percentages):


	For the Years Ended December 31,									Variance
	2012			2011			2010			2012 vs. 2011			2011 vs. 2010
Residential loans at amortized cost
Interest income	$	154,351		$	164,794		$	166,188		$	(10,443	)	$	(1,394	)
Average balance		1,560,423			1,621,540			1,649,700			(61,117	)		(28,160	)
Average yield		9.89	%		10.16	%		10.07	%		-0.27	%		0.09	%
Mortgage-backed debt at amortized cost
Interest expense	$	96,337		$	91,075		$	81,729		$	5,262		$	9,346
Average balance		1,364,200			1,347,532			1,274,505			16,668			73,027
Average rate		7.06	%		6.76	%		6.41	%		0.30	%		0.35	%
Net interest income	$	58,014		$	73,719		$	84,459		$	(15,705	)	$	(10,740	)
Net interest spread ⁽¹⁾		2.83	%		3.40	%		3.66	%		-0.57	%		-0.26	%
Net interest margin ⁽²⁾		3.72	%		4.55	%		5.12	%		-0.83	%		-0.57	%

⁽¹⁾	Net interest spread is calculated by subtracting the average rate on mortgage-backed debt at amortized cost from the average yield on residential loans at amortized cost.

⁽²⁾	Net interest margin is calculated by dividing net interest income by the average balance of the residential loans at amortized cost.

Provision for Loan Losses

The provision for loan losses reflects the recognition of incurred credit losses on the residential loans held by the Residual Trusts and our unencumbered forward residential loan portfolio. The provision for loan losses increased by $7.3 million for 2012 as compared to 2011 due to unfavorable trends in severity rates and delinquencies in 2012. Higher loss severities were impacted by the sale of aged real estate owned inventory and continued pricing challenges in the rural southeastern United States real estate market.

Our provision for loan losses decreased by $0.5 million for 2011 as compared to 2010, which reflects a lower level of foreclosures in 2011, particularly during the first six months of the year, as compared to 2010. This favorable trend in the number of foreclosures reduced the level required for the allowance for loan losses. For further information regarding the credit quality of our residential loan portfolio and related trends, refer to the Credit Risk Management section.

Intercompany Expenses

Our Loans and Residuals segment is charged a fee from the Servicing segment for performing servicing activities for the residential loans and real estate owned of the Loans and Residuals segment. In addition, during 2011 this segment was charged a commission from the Insurance segment for insurance policies written on real estate owned held by the Loans and Residuals segment. Intercompany expenses decreased by $10.8 million for 2012 as compared to 2011 due to a decrease in the rate of the fees charged from the Servicing segment.

Other Expenses, Net

Other expenses, net consists primarily of real estate owned expenses, net and expenses incurred to protect the collateral underlying the residential loans held by the Loans and Residuals segment. Other expenses, net increased by $2.2 million for the year ended December 31, 2012 as compared to 2011 due to an increase of $7.4 million resulting from operational changes in protection of the collateral offset by a decrease in real estate owned expenses of $5.3 million, primarily due to lower real estate owned holding costs and favorable trends in fair value adjustments required on real estate owned. Other expenses, net increased $8.1 million for the year

ended December 31, 2011 as compared to 2010 due to higher charges for the declines in the fair value of real estate owned of $4.0 million.

Reverse Mortgage

Our Reverse Mortgage business segment includes operations that perform servicing for third-party investors in reverse mortgage loans and other ancillary services for the reverse mortgage market. Our Reverse Mortgage business also holds a mortgage portfolio of HECM reverse mortgages. Provided below is a summary statement of operations for our Reverse Mortgage segment, which also includes core earnings before income taxes and Adjusted EBITDA (in thousands):


	For the Year Ended December 31, 2012
Servicing revenue and fees	$	5,134
Other income		1,858

Total revenues		6,992
Interest expense		1,217
Depreciation and amortization		1,942
Other expenses, net		7,991

Total expenses		11,150
Net fair value gains		7,279

Income before income taxes		3,121
Core Earnings adjustments
Non-cash fair value adjustments		2,554
Step-up depreciation and amortization		1,101
Share-based compensation expense		153

Total adjustments		3,808

Core earnings before income taxes		6,929
Adjusted EBITDA adjustments
Depreciation and amortization		841
Non-cash interest income		(119	)
Other		22

Total adjustments		744

Adjusted EBITDA	$	7,673

Our Reverse Mortgage segment recognized core earnings before income taxes of $6.9 million for the two months since the acquisition of RMS on November 1, 2012. Provided below is a summary of the key components of earnings for this segment.

Servicing Revenue and Fees

Servicing revenue and fees for the Reverse Mortgage business includes contractual servicing fees and ancillary and other fees on our third-party reverse mortgage portfolio. Provided below is summary of our servicing portfolio associated with reverse mortgages (dollars in thousands):


	December 31, 2012
	Number of Accounts		Unpaid Principal Balance		Contractual Servicing Fee
Servicing portfolio associated with reverse mortgages		42,855	$	7,454,306		17.50	%
On-balance sheet residential loans and real estate owned associated with reverse mortgages		35,084		5,431,617

Total servicing portfolio associated with reverse mortgages		77,939	$	12,885,923

Expenses

Interest expense for the Reverse Mortgage business consists of the cost of debt for the RMS origination funding facilities. Depreciation and amortization expense for the Reverse Mortgage business includes depreciation and amortization, including step-up depreciation and amortization, for premises and equipment, intangible assets and servicing rights acquired in connection with the acquisition of RMS.

Net Fair Value Gains

Net fair value gains includes the impact on income resulting from our election to account for on-balance sheet reverse mortgage loans and the HMBS related obligations at fair value. Improved market pricing on HECM loans contributed to the net gain on HECM reverse mortgages and the HMBS related obligations of $7.3 million.

Liquidity and Capital Resources

Overview

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay debt and meet the financial obligations of our operations including funding acquisitions, servicing advances, origination of mortgage loans and other general business needs. We recognize the need to have liquid funds available to operate and grow our business and it is our policy to have adequate liquidity at all times. Our liquidity, measured as cash and cash equivalents plus borrowing capacity available on our Revolver, was $566.8 million at December 31, 2012.

Our principal sources of liquidity are the cash flows generated from our Servicing, Reverse Mortgage, ARM and Insurance businesses, funds obtained from our revolver, master repurchase agreements, servicing advance facilities, issuance of HMBS securities, cash releases from the Residual Trusts, as well as cash proceeds from the issuance of equity and debt, and other available financing activities.

We believe that, based on current forecasts and anticipated market conditions, our current liquidity of $566.8 million plus the January 2013 expansion of our first lien senior secured term loan discussed below, along with the funds generated from our operating cash flows, loan portfolio, revolver, servicing advance facilities, master repurchase agreements, issuance of HMBS securities, and other available sources of liquidity will allow for financial flexibility to meet anticipated cash requirements to fund operating needs and expenses, servicing advances, mortgage-backed originations, planned capital expenditures, current committed business and asset acquisitions, and all required debt service obligations for the next twelve months. We expect to generate adequate cash flows to fund our operations on both a short and long term basis principally from our servicing and origination operations and expect to fund future growth opportunities with capital obtained from external sources. Our operating cash flows and liquidity are significantly influenced by numerous factors, including changes in the mortgage servicing markets, interest rates, continued availability of financing including the renewal of existing servicing advance facilities and master repurchase agreements, access to equity markets, and conditions in the debt markets. We continually monitor our cash flows and liquidity in order to be responsive to these changing conditions.

We used a portion of the net proceeds from our public offering of common stock and the refinancing and expansion of our first lien credit facility of $276.1 million and $1.1 billion, respectively, to fund current acquisitions including the recently announced acquisitions of certain servicing and originations operations of ResCap for a total consideration of approximately $492.0 million and Fannie Mae mortgage servicing rights, or MSR, for a total consideration of approximately $495.7 million, of which $247.8 million was paid at closing. The Fannie Mae MSR acquisition and the ResCap acquisition include related servicer advances that will be partially funded through existing advance financing facilities. We intend to use a portion of the remaining net proceeds from our public offering of equity and refinancing of debt to make a payment on the remaining consideration of approximately $247.9 million due on the acquisition of Fannie Mae MSRs. We anticipate that future acquisitions of MSRs could be financed with debt and/or obtaining capital provided by a financing partner, similar to the other MSR structures in the market today.

Servicing Business

Our servicing agreements impose on us various rights and obligations that affect our liquidity. Among the most significant of these obligations is the requirement that we advance our own funds to meet contractual payment requirements for certain investors and to pay taxes, insurance and foreclosure costs and various other items that are required to preserve the assets being serviced. In the normal course of business, we borrow money to fund certain of these servicing advances. We rely upon various counterparties to provide us with financing to fund a portion of our servicing advances on a short-term basis or provide for reimbursement within an agreed-upon period. Our ability to fund servicing advances is a significant factor that affects our liquidity and we depend upon our ability to secure these types of arrangements on acceptable terms and to renew or replace existing financing facilities as they expire. The servicing advance financing agreements that support our servicing operations consist of the following:

Servicer Advance Reimbursement Agreement

In July 2012, we renewed our Servicer Advance Reimbursement Agreement, which provides for the reimbursement of certain principal and interest and protective advances that are our responsibility under certain servicing agreements. The agreement provides for a reimbursement amount of up to $150.0 million. The agreement was subsequently amended in January 2013 to revise the reimbursement amount to $585.0 million during February and March 2013 and $370.0 million thereafter. The cost of this agreement is LIBOR plus 2.50% on certain amounts that are reimbursed as of December 31, 2012 and LIBOR plus 2.50% or 3.50% on certain amounts that are reimbursed effective January 2013. The early reimbursement period expires in June 2013 or upon 120 days after written notice. Collections of advances that have been reimbursed under the agreement require remittance upon collection to settle the outstanding balance under the agreement. We had $35.6 million outstanding under this agreement at December 31, 2012.

Receivables Loan Agreement

In May 2012, we renewed our three-year Receivables Loan Agreement that provides borrowings up to $75.0 million and is collateralized by certain principal and interest, taxes and insurance and other corporate advances reimbursable from securitization trusts serviced by us. The principal payments on the note are paid from the recoveries or repayment of underlying advances. Accordingly, the timing of the principal payments are dependent on the recoveries or repayment of underlying advances that collateralize the note. The interest cost under the renewed agreement, which matures in July 2015, is LIBOR plus 3.25%. We had $64.6 million outstanding under this agreement at December 31, 2012.

Forward Mortgage Originations Business

Historically our forward mortgage originations business has been insignificant to our overall operations; however, we anticipate significant future growth of this business with our acquisition of the ResCap loan originations platform. We utilize master repurchase agreements to support our originations of forward mortgage loans. The facilities had an aggregate capacity of $85.1 million at December 31, 2012 and outstanding balances were insignificant. The interest rates on the facilities are primarily based on LIBOR plus 3.25% and in some cases are subject to a LIBOR floor or other minimum rates and have various expiration dates through December 2013. These facilities are secured by certain mortgage loans and provide creditors a collateralized interest in mortgage loans that meet the eligibility requirements under the terms of the particular facility. The source of repayment of these facilities is typically from the sale or securitization of the underlying loans into the secondary mortgage market. We evaluate our needs under these facilities based on forecasted mortgage loan origination production volume.

In February and March 2013, to support the ResCap loan origination platform, we entered into two master repurchase agreements with an aggregate capacity amount of $1.0 billion and we continue to negotiate additional origination funding facilities, however, there can be no assurance that these facilities will be available to us in the future. Any additional capital needed to fund the growth and ramp-up of the forward mortgage originations business will be funded through excess cash on hand, if any, or other external sources, if available.

Reverse Mortgage Origination Business

In connection with the acquisition of RMS, we finance the capital required to originate or purchase HECM reverse mortgage loans through master repurchase agreements; however there can be no assurance that these origination funding facilities will be available to us in the future. These agreements were entered into in conjunction with our acquisitions of RMS and S1L in November and December 2012, respectively. The facilities have an aggregate capacity amount of $317.0 million. The interest rates on the facilities are primarily based on LIBOR plus between 2.75% and 3.50%, in some cases are subject to a LIBOR floor or other minimum rates and have various expiration dates through November 2013. We had $249.3 million outstanding under these master repurchase agreements secured by $253.5 million in residential loans at December 31, 2012. In February 2013, we entered into an additional master repurchase agreement with an aggregate capacity of $100.0 million and we expanded two existing facilities by an additional $75.0 million.

All of our master repurchase agreements contain customary events of default and covenants, the most significant of which are financial covenants. Financial covenants that are most sensitive to the operating results and resulting financial position are minimum tangible net worth requirements, indebtedness to tangible net worth ratio requirements, and minimum liquidity and profitability requirements. At December 31, 2012, RMS would not have been in compliance with certain financial covenants contained in its master repurchase agreements due to the amount of goodwill associated with the accounting treatment of the securitization of reverse mortgage loans and related issuance of HMBS obligations. As a result, RMS obtained waivers from each respective counterparty waiving the requirement to comply with these financial covenants at December 31, 2012.

We permanently fund HECM reverse mortgage loans through the GNMA issuance process. The proceeds from the transfer of the HMBS securities are accounted for as a secured borrowing under the fair value option and classified on the consolidated balance sheet as a HMBS related obligation. At December 31, 2012, the total balance outstanding on the HMBS related obligations was $5.9 billion. At December 31, 2012, $5.2 billion of HECM reverse mortgage loans and real estate owned were pledged as collateral to the mortgage-backed debt of the GNMA securitization pools and are not available to satisfy the claims of creditors of the Company. In addition, the holders of the HMBS beneficial interests have recourse to the extent of their participation in the HMBS loans but not to the general net assets of the Company.

Borrower remittances received on the HECM reverse mortgage loans, if any, and proceeds received from the sale of real estate owned collateralizing the related mortgage-backed debt and our funds used to repurchase HECM reverse mortgage loans are used to reduce the HMBS related obligations by making payments to the pool which will then remit the payment to the beneficial interest holders of the mortgage-backed debt. The maturity of the HMBS related obligations is directly affected by the rate of payments on the collateral and events of default as stipulated in the HECM reverse mortgage loan agreements with borrowers. As an HMBS issuer, the Company assumes certain obligations related to each security it issues. The most significant obligation is the requirement to purchase loans out of the HMBS pools once they reach certain limits. Performing repurchased loans are conveyed to HUD and nonperforming repurchased loans are generally liquidated in accordance with program requirements.

RMS’s status as a qualified issuer of mortgage-backed securities as well as take other actions permitted by law that could impact the operations of RMS, including the termination or suspension of RMS’s servicing rights associated with reverse mortgage loans backed by GNMA guaranteed mortgage-backed securities. GNMA has affirmed RMS’ current commitment authority to issue HMBS securities.

Corporate Debt

Term Loans and Revolver

In October 2012, we repaid and terminated the second lien term loan with funds obtained through the issuance of convertible notes. See further discussion in the Convertible Notes section below. In November 2012, we refinanced our first lien term loan with a $700 million secured term loan, or 2012 Term Loan, and refinanced our 2011 Revolver with a $125 million secured revolving credit facility, or 2012 Revolver. Our obligations under the 2012 Term Loan and 2012 Revolver are guaranteed by substantially all of our subsidiaries and secured by substantially all of our assets and substantially all assets of the guarantor subsidiaries, subject to certain exceptions the most significant of which are the assets of the consolidated Residual and Non-Residual Trusts and the residential loans of the GNMA securitization pools. See additional information at Note 4 in the Notes to Consolidated Financial Statements. The terms of the 2012 Term Loan and 2012 Revolver are summarized in the table below.


Debt Agreement	Interest Rate	Amortization	Maturity/Expiration
$700 million term loan ⁽¹⁾	LIBOR plus 4.50%, LIBOR floor of 1.25%	5.00% per annum beginning 4 ^th quarter of 2012; remainder at final maturity	November 28, 2017
$125 million revolver	LIBOR plus 4.50%	Bullet payment at maturity	November 28, 2017

⁽¹⁾	In January 2013, we completed an $825 million incremental amendment to our existing 2012 Term Loan.

In addition to the required amortization payments noted in the table above, the 2012 Term Loan requires us to prepay outstanding principal with 50% of excess cash flows as defined by the credit agreement when our Total Leverage Ratio is greater than 2.5, 25% of excess cash flows when our Total Leverage Ratio is less than or equal to 2.5 but greater than 2.0, and does not require a prepayment when our Total Leverage Ratio is less than or equal to 2.0. These excess cash flow payments, if required, will be made during the first quarter of each fiscal year beginning in 2014. Additional mandatory payments are required from all net proceeds associated with certain new indebtedness and net proceeds relating to certain sales of assets or recovery events, all subject to certain exceptions.

The capacity under the 2012 Revolver allows requests for the issuance of LOCs of up to $25 million or total cash borrowings of up to $125 million less any amounts outstanding in issued LOCs. During the year ended December 31, 2012, there were no borrowings or repayments under the 2011 Revolver and the 2012 Revolver. At December 31, 2012, we had outstanding $0.3 million in an issued LOC with remaining availability under the 2012 Revolver of $124.7 million. The commitment fee on the unused portion of the 2012 Revolver is 0.50% per year. We incurred $14.3 million in deferred debt issuance costs and original issue discount associated with the issuance of the 2012 Term Loan and 2012 Revolver. At December 31, 2012, we had interest rate caps and a swaption with notional amounts of $391.0 million and $175.0 million, respectively. We use the interest rate caps and swaption as a hedge to the cash flow risk related to the variability in interest rate payments.

The 2012 Term Loan and 2012 Revolver contain customary events of default and covenants, including among other things, financial covenants, covenants that restrict our and our subsidiaries’ ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends and repurchase stock, engage in mergers or consolidations, and make investments. Financial covenants that must be maintained include an Interest Coverage Ratio and a Total Leverage Ratio as defined in the credit agreement. Non-compliance with the Interest Coverage Ratio or the Total Leverage Ratio could result in the requirement to immediately repay all amounts outstanding under the 2012 Term Loan and 2012 Revolver and the termination of all commitments under the 2012 Revolver. These ratios are based on EBITDA, adjusted to conform to requirements of the credit agreement, or Pro Forma Adjusted EBITDA. Pro Forma Adjusted EBITDA is defined for purposes of the 2012 Term Loan and 2012 Revolver covenants as net income (loss) plus interest, provision for income taxes and depreciation and amortization, and adjustments for certain specified items as defined in the credit agreement, including pro forma adjustments as specified by the agreement.

The Interest Expense Coverage Ratio is calculated by dividing Pro Forma Adjusted EBITDA by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing four-quarter basis preceding the measurement date. The Total Leverage Ratio is calculated by dividing consolidated total indebtedness as of the measurement date by Pro Forma Adjusted EBITDA as measured on a trailing four-quarter basis preceding the measurement date. Beginning on March 31, 2013, the 2012 Term Loan and Revolver require a minimum Interest Expense Coverage Ratio of 2.25:1.00 increasing to 2.50:1.00 by the end of 2015, and allows for a maximum Total Leverage Ratio of 5.00:1.00 being reduced over time to 4.00:1.00 by the end of 2015.

Pro Forma Adjusted EBITDA is a material component of these covenants. Pro Forma Adjusted EBITDA is not a presentation made in accordance with GAAP and should not be considered as an alternative to (1) net income (loss) or any other performance measures determined in accordance with GAAP or (2) operating cash flows determined in accordance with GAAP. Additionally, Pro Forma Adjusted EBITDA is not intended to be a measure of free cash flow for our discretionary use, as it does not consider certain cash payments required for interest, taxes and debt service. Our presentation of Pro Forma Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of Pro Forma Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. We believe that the presentation of Pro Forma Adjusted EBITDA is appropriate to provide additional information about the calculation of the financial covenants in the debt agreement.

Provided below is a reconciliation of our loss before income taxes, which is a GAAP measure of our operating results, to Pro Forma Adjusted EBITDA, which has been calculated in accordance with the definitions in the 2012 Term Loan and 2012 Revolver, as applicable (in thousands).


	For the Year Ended December 31, 2012
Loss before income taxes	$	(35,451	)
Add:
Deprecation and amortization		99,728
Interest expense on debt		77,345

EBITDA		141,622
Add:
Losses on extinguishment of debt		48,579
Non-cash share-based compensation expense		14,206
Provision for loan losses		13,352
Transaction and integration-related costs		15,782
Residual Trusts cash flows ⁽¹⁾		9,342
Pro forma synergies ⁽²⁾		3,769
Non-cash interest expense		6,076
Non-cash fair value adjustments		2,554
Net impact of Non-Residual Trusts ⁽³⁾		945
Other ⁽⁴⁾		3,494

Sub-total		118,099
Less:
Non-cash interest income		(18,000	)

Sub-total		(18,000	)

Adjusted EBITDA		241,721
Pro forma acquisition adjustments ⁽⁵⁾		70,500

Pro Forma Adjusted EBITDA	$	312,221

⁽¹⁾	Represents cash flows in excess of overcollateralization requirements that have been released to us from the Residual Trusts.

⁽²⁾	Represents the remaining pro-forma transaction-related synergies adjustment for 2012 made in accordance with our 2012 Term Loan and 2012 Revolver agreement.

⁽³⁾	Represents the non-cash fair value adjustments related to the Non-Residual Trusts net of the cash servicing fee earned on the underlying residential loans included in our income before income taxes.

⁽⁴⁾	Represents other cash and non-cash non-recurring adjustments included in our income before income taxes.

⁽⁵⁾	Represents pro forma adjustments associated with permitted acquisitions as if they occurred as of January 1, 2012. These pro forma adjustments have been made in accordance with our 2012 Term Loan and 2012 Revolver agreement.

Convertible Notes

In October 2012, we closed on a registered underwritten public offering of $290.0 million aggregate principal amount of 4.50% convertible senior subordinated notes, or the Convertible Notes. The Convertible Notes will pay interest semi-annually on May 1 and November 1, commencing on May 1, 2013, at a rate of 4.50% per year, and will mature on November 1, 2019.

Residual and Non-Residual Trusts

The cash proceeds from the repayment of the collateral held in the Residual and Non-Residual Trusts are owned by the trusts and serve to only repay the obligations of the trusts unless, for the Residual Trusts, certain overcollateralization or other similar targets are satisfied, in which case, the excess cash is released to us assuming no trigger event has occurred.

The Residual Trusts, with the exception of WIMC Capital Trust 2011-1, or Trust 2011-1, contain delinquency and loss triggers, that, if exceeded, allocate any excess cash flows to paying down the outstanding mortgage-backed notes for that particular trust at an accelerated pace. Assuming no servicer trigger events have occurred and the overcollateralization targets have been met, any excess cash from these trusts is released to us. For Trust 2011-1, principal and interest payments are not paid on the subordinate note or residual interests, which are held by us, until all amounts due on the senior notes are fully paid.

Since January 2008, Mid-State Capital Corporation 2006-1 Trust has exceeded its delinquency and cumulative loss rate triggers and has not provided any excess cash flow to us. Beginning in September 2012, Mid-State Capital Corporation 2005-1 Trust exceeded its delinquency rate trigger. Provided below is a table summarizing the actual delinquency and cumulative loss rates in comparison to the trigger rates for our Residual Trusts:


	Delinquency Trigger			Delinquency Rate						Cummulative Loss Trigger			Cumulative Loss Rate
	Delinquency Trigger			December 31, 2012			December 31, 2011			Cummulative Loss Trigger			December 31, 2012			December 31, 2011
Mid-State Trust IV		⁽¹	⁾		—			—			10.00	%		4.34	%		4.29	%
Mid-State Trust VI		8.00	%		2.74	%		2.36	%		8.00	%		5.33	%		5.14	%
Mid-State Trust VII		8.50	%		3.07	%		1.89	%		1.50	%		0.60	%		0.04	%
Mid-State Trust VIII		8.50	%		2.69	%		2.07	%		1.50	%		0.48	%		-0.20	%
Mid-State Trust X		8.00	%		3.77	%		3.05	%		8.00	%		7.32	%		7.19	%
Mid-State Trust XI		8.75	%		4.08	%		3.42	%		8.75	%		6.05	%		5.41	%
Mid-State Capital Corporation 2004-1 Trust		8.00	%		6.13	%		5.30	%		7.00	%		3.24	%		2.85	%
Mid-State Capital Corporation 2005-1 Trust		8.00	%		8.21	%		7.44	%		6.50	%		3.82	%		3.00	%
Mid-State Capital Corporation 2006-1 Trust		8.00	%		10.52	%		10.58	%		6.00	%		6.95	%		5.31	%
Mid-State Capital Trust 2010-1		10.50	%		9.92	%		8.35	%		5.50	%		1.32	%		0.31	%
WIMC Capital Trust 2011-1		⁽¹	⁾		—			—			⁽¹	⁾		—			—

⁽¹⁾	Relevant trigger is not applicable per the underlying trust agreements.

Mortgage-Backed Debt

We have historically funded the residential loan portfolio through the securitization market. The mortgage-backed debt issued by the Residual Trusts is accounted for at amortized cost. The mortgage-backed debt of the Non-Residual Trusts is accounted for at fair value. At December 31, 2012, the total unpaid principal balance of mortgage-backed debt was $2.1 billion as compared to $2.3 billion at December 31, 2011.

At December 31, 2012, mortgage-backed debt was collateralized by $2.6 billion of assets including residential loans, receivables related to the Non-Residual Trusts, real estate owned and restricted cash and cash equivalents. All of the mortgage-backed debt is non-recourse and not cross-collateralized and, therefore, must be

satisfied exclusively with the proceeds from the residential loans and real estate owned held in each securitization trust and also from draws on the letters of credit, or LOCs, of certain Non-Residual Trusts.

Borrower remittances received on the residential loans collateralizing this debt and draws under LOCs issued by a third party and serving as credit enhancements to certain of the Non-Residual Trusts are used to make payments on the mortgage-backed debt. The maturity of the mortgage-backed debt is directly affected by the rate of principal prepayments on the collateral. As a result, the actual maturity of the mortgage-backed debt is likely to occur earlier than the stated maturity. Certain of our mortgage-backed debt issued by the Residual Trusts is also subject to voluntary redemption according to specific terms of the respective indenture agreements, including an option by us to exercise a clean-up call. The mortgage-backed debt issued by the Non-Residual Trusts is subject to mandatory clean-up call provisions, which we are obligated to exercise at the earliest possible call dates. We expect to exercise these mandatory call obligations beginning in 2016 and continuing through 2019. The total outstanding balance of the residential loans expected to be called at the respective call dates is $418.1 million. We would expect to finance the capital required to exercise the mandatory clean-up call primarily through asset-backed financing alone or in combination with additional issuances of equity and/or corporate indebtedness; however, there can be no assurance that we will be able to obtain financing through the capital markets when needed.

Contractual Obligations

The following table summarizes, by remaining maturity, our future cash obligations related to our long-term debt, operating lease obligations, mandatory call obligation, acquisitions, unfunded commitments and uncertain tax positions at December 31, 2012 (in thousands):


	2013		2014		2015		2016		2017		Thereafter		Indeterminate Maturity		Total
Debt ⁽¹⁾
2012 Term Loan	$	35,000	$	35,000	$	35,000	$	35,000	$	551,250	$	—	$	—	$	691,250
Convertible Notes		—		—		—		—		—		290,000		—		290,000
Master Repurchase Agreements		255,385		—		—		—		—		—		—		255,385
Other		1,781		1,329		946		75		—		—		—		4,131

Total debt		292,166		36,329		35,946		35,075		551,250		290,000		—		1,240,766
Operating leases		12,911		12,180		10,545		6,779		4,436		—		—		46,851
Mandatory call obligation		—		—		—		18,775		96,331		302,963		—		418,069
Acquisitions ⁽²⁾		993,730		—		—		—		—		—		—		993,730
Unfunded commitments ⁽³⁾		269,007		—		—		—		—		—		182,846		451,853
Uncertain tax positions		—		—		—		—		—		—		26,301		26,301
Other		2,500		—		—		—		—		—		—		2,500

Total	$	1,570,314	$	48,509	$	46,491	$	60,629	$	652,017	$	592,963	$	209,147	$	3,180,070

⁽¹⁾	Amounts exclude future cash payments related to interest expense. The Company made interest payments on debt of $65.5 million and $37.7 million during the years ended December 31, 2012 and 2011, respectively.

⁽²⁾	Contractual obligations associated with acquisitions relate to the ResCap and MSR acquisitions which we closed on January 31, 2013.

⁽³⁾	Refer to Note 23 in the Notes to Consolidated Financial Statements for further information regarding unfunded commitments.

See Note 15 in the Notes to Consolidated Financial Statements for further information regarding our debt. We exclude mortgage-backed debt from the contractual obligations disclosed in the table above as this debt is non-recourse and not cross-collateralized and, therefore, must be satisfied exclusively from the proceeds of the residential loans and real estate owned held in the securitization trusts and by the LOC draws for certain Non-Residual Trusts. See Note 16 in the Notes to Consolidated Financial Statements for further information regarding

our mortgage-backed debt. We also exclude the servicing advance facilities and HMBS related obligations from the contractual obligations disclosed in the table above. Similar to the mortgage-backed debt, the Receivables Loan Agreement is non-recourse to us. Payments under servicing advance facilities are required upon collection of the underlying advances that have been reimbursed under the agreement. See Note 14 in the Notes to Consolidated Financial Statements for further information regarding our servicing advance facilities. The HMBS related obligations have been excluded from the contractual obligations table above as there is no stated maturity. The maturity of the liability is directly affected by the rate of payments on the HECM reverse mortgages and events of default as stipulated in the HECM reverse mortgage loan agreements with borrowers. The holders of the HMBS beneficial interests have recourse to the Company to the extent of their participation in the HECM loans, but do not have recourse to the general assets of the Company. See Note 17 in the Notes to Consolidated Financial Statements for further information regarding our HMBS related obligations.

Operating lease obligations include (i) leases for our principal operating locations in Tampa, Florida and Saint Paul, Minnesota (ii) leases for our centralized servicing operations in Phoenix, Arizona; Tempe, Arizona; Rapid City, South Dakota; Fort Worth, Texas; and Spring, Texas; and (iii) other regional servicing operations.

Common Stock Offering

Common Stock Issuances for Acquisitions

In November 2012, we issued 891,265 shares to partially fund the acquisition of RMS. In July 2011, we issued 1,812,532 shares to partially fund the acquisition of Green Tree. See Note 3 in the Notes to Consolidated Financial Statements for further information.

Dividends

Prior to the acquisition of Green Tree, we operated as a REIT. A REIT generally passes through substantially all of its earnings to stockholders without paying U.S. federal income tax at the corporate level. As long as we elected to maintain REIT status, we were required to declare dividends amounting to at least 90% of our net taxable income (excluding net capital gains) for each year by the time our U.S. federal tax return was filed. On November 15, 2011, we paid a dividend of $6.2 million to shareholders of which $0.6 million was settled in cash and $5.6 million in shares of our common stock. The special dividend represents an additional payment associated with taxable income for the year ended December 31, 2010 in order to satisfy REIT distribution requirements. The number of shares issued in the special dividend was calculated based on the closing price per share of our common stock on October 27, 2011.

Upon the acquisition of Green Tree on July 1, 2011, we no longer qualified as a REIT. The change to our REIT status was retroactive to January 1, 2011. All future distributions will be made at the discretion of our Board of Directors and will depend upon, among other things, our earnings, financial condition and liquidity, and such other factors as the Board of Directors deems relevant, as well as contractual restrictions, which we are now, or may in the future be subject to, including certain covenants in our credit agreements that limit our ability to pay dividends.

Sources and Uses of Cash

The following table sets forth selected consolidated cash flow information for the periods indicated (in thousands):


	For the Years Ended December 31,
	2012			2011			2010
Cash flows provided by operating activities	$	69,620		$	104,906		$	21,891
Cash flows provided by (used in) investing activities		(451,353	)		(957,527	)		32,566
Cash flows provided by (used in) financing activities		805,048			757,008			(39,391	)

	$	423,315		$	(95,613	)	$	15,066

Operating Activities

Net cash provided by operating activities was $69.6 million for the year ended December 31, 2012 as compared to $104.9 million and $21.9 million for the same periods in 2011 and 2010, respectively. For the years ended December 31, 2012 and 2011, the primary sources of cash from operating activities were the income generated from our servicing operations, our insurance business and the net interest spread from our forward residential loan portfolio carried at amortized cost. Cash flows from operating activities for the year ended December 31, 2010 were primarily generated from our forward residential loan portfolio carried at amortized cost.

Investing Activities

Our cash flows from investing activities include payments received on our residential loans and the receivables related to the Non-Residual Trusts, as well as cash proceeds from the sale of real estate owned offset by cash paid to acquire businesses, net of cash acquired, purchases of residential loans, changes in the required level of restricted cash and purchases of premises and equipment. Net cash provided by (used in) investing activities was $(451.4) million for the year ended December 31, 2012 as compared to $(957.5) million and $32.6 million for the same periods in 2011 and 2010, respectively. For the year ended December 31, 2012, the primary sources of cash provided by investing activities were the principal payments received from borrowers on our residential loans of $190.1 million, cash received from the receivables related to the Non-Residual Trusts of $16.1 million and cash proceeds from the sale of real estate owned, net of $19.2 million. The increase in principal payments received from borrowers and cash proceeds from the sale of real estate owned, net is due to the inclusion of Green Tree for the entire current year as opposed to six months of 2011. Also contributing to cash flows provided by investing activities was $40.0 million in escrow funds that were paid to the sellers of Green Tree with restricted cash thus increasing the change in restricted cash for the settlement of the payable. The primary uses of cash for investing activities were the payment for the acquisition of RMS and S1L, net of cash acquired of $88.6 million, cash used to purchase residential loans of $568.7 million and cash used for originations of residential loans of $29.1 million. The increase in 2012 cash outflows to purchase residential loans was due to originations of reverse mortgage loans to support our RMS business. We had previously discontinued our loan origination program in 2011 in conjunction with the acquisition of Green Tree.

For the year ended December 31, 2011, the primary sources of cash provided by investing activities were the principal payments received from borrowers on our residential loans of $126.7 million, cash received from the receivables related to the Non-Residual Trusts of $9.1 million and cash proceeds from the sale of real estate owned, net of $8.2 million. The primary uses of cash for investing activities were the payment for the acquisition of Green Tree, net of cash acquired, of $1.0 billion, cash used to purchase residential loans of $46.5 million and cash used for purchases of premises and equipment of $6.3 million. Also contributing to cash flows used in investing activities was $47.9 million escrow funds transferred to restricted cash to establish a liability owed to the sellers of Green Tree.

For the year ended December 31, 2010, the primary sources of cash provided by investing activities were the principal payments received from borrowers on our residential loans of $99.2 million and cash proceeds from

the sale of real estate owned, net of $4.8 million. The primary use of cash for investing activities was cash used to purchase residential loans of $73.7 million.

Financing Activities

Our cash flows from financing activities include proceeds from the secondary offering of our common stock, dividend payments, payments of debt issuance costs, and proceeds from and payments on borrowings under our corporate debt, including the Convertible Notes, origination funding facilities, HMBS related obligations, mortgage-backed debt and servicing advance liabilities. Net cash provided by (used in) financing activities was $805.0 million for the year ended December 31, 2012 as compared to $757.0 million and $(39.4) million for the same periods in 2011 and 2010, respectively. For the year ended December 31, 2012, the primary sources of cash provided by financing activities were proceeds from securitizations of reverse mortgage loans of $583.9 million and $276.0 million from the common stock offering and $280.4 million from the issuance of the Convertible Notes, both net of issuance costs. Cash provided by financing was subsequently used to fund the acquisitions of RMS and S1L and the repay our second lien term loan. The primary uses of cash for financing activities were $190.8 million for principal payments on mortgage-backed debt, $75.3 million for principal payments on corporate debt, $33.5 million for payments on HMBS related obligations and $6.9 million in payments, net of borrowings, on our servicing advance liabilities.

For the year ended December 31, 2011, the primary sources of cash provided by financing activities, which was subsequently used to fund the acquisition of Green Tree, were $720.7 million from the issuance of debt and $220.0 million from the issuance of mortgage-backed debt, both net of issuance costs. The primary uses of cash for financing activities were $137.5 million in payments on mortgage-backed debt, $24.3 million in payments on corporate debt and $14.1 million in dividend payments.

For the year ended December 31, 2010, the primary uses of cash for financing activities were $79.7 million in payments on mortgage-backed debt, $36.2 million in extinguishments of mortgage-backed debt and $53.5 million in dividend payments.

Impact of Inflation and Changing Prices

Our consolidated financial statements and notes thereto presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike most industrial companies, nearly all of our assets and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflations. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Credit Risk Management

Residential Loan Credit Risk

We are subject to credit risk associated with the residual interests that we own in the consolidated Residual Trusts as well as with the unencumbered forward loans held in our portfolio, both of which are recognized as residential loans on our consolidated balance sheets. Credit risk is the risk that we will not fully collect the principal we have invested due to borrower defaults. We manage the credit risk associated with our residential loan portfolio through sound loan underwriting, monitoring of existing loans, early identification of problem loans, timely resolution of problems, establishment of an appropriate allowance for loan losses and sound nonaccrual and charge-off policies.

We do not currently own residual interests in the Non-Residual Trusts and we consider our credit risk with regard to these trusts to be insignificant. However, we have assumed mandatory call obligations related to the Non-Residual Trusts and will be subject to a certain amount of credit risk associated with the purchased residential loans when the calls are exercised. We expect to call these securitizations beginning in 2016 and continuing through 2019. The total outstanding balance of the residential loans expected to be called at the respective call dates is $418.1 million.

We are subject to credit risk associated with reverse mortgage loans that we purchase and originate during the period of time prior to the securitization of these loans. We consider our credit risk associated with these loans to be insignificant.

We also assume credit risk as issuer of GNMA HMBS securities. Our credit risk relates to our obligation to repurchase reverse mortgage loans out of HMBS securitization pools once they reach certain limits as established by the FHA. Performing repurchased loans are conveyed to HUD and nonperforming repurchased loans are generally liquidated in accordance with program requirements. Although these loans are covered by FHA insurance, we may incur expenses and losses in the process of repurchasing and liquidating these loans that are not reimbursable by FHA in accordance with program guidelines. However, we consider these amounts to be insignificant. As a result of minimal severity, credit risk associated with Non-Residual Trusts, forward and reverse mortgage loans prior to securitization, and repurchased reverse mortgage loans are not discussed further in this section.

At December 31, 2012, the principal balance of our residential loan portfolio that exposes us to credit risk was $1.7 billion. These residential loans, which are accounted for at amortized cost, consist of forward loans held by the consolidated Residual Trusts and unencumbered forward loans. The principal balance of residential loans and the carrying value of other collateral of the Residual Trusts total $1.7 billion and is permanently financed with $1.3 billion of mortgage-backed debt leaving us with a net credit exposure of $412.2 million, which approximates our residual interests in the consolidated Residual Trusts.

The residential loans that expose us to credit risk are predominantly credit-challenged, non-conforming loans with an average loan-to-value, or LTV, ratio at origination of approximately 90.4% and an average refreshed borrower credit score, or FICO score, of 595. While we feel that our underwriting and due diligence with regard to these loans will help to mitigate the risk of significant borrower default on these loans, we cannot assure you that all borrowers will continue to satisfy their payment obligations under these loans, thereby avoiding default.

The information provided below consists of data for the residential loan portfolio for which we are subject to credit risk as explained above.


	December 31,
	2012			2011			2010
Total number of residential loans outstanding ⁽¹⁾		31,512			32,921			33,801
Principal balance of residential loans outstanding (in thousands)	$	1,662,183		$	1,776,063		$	1,803,758
Delinquencies as a percent of amounts outstanding:
30-59 days		1.53	%		1.09	%		1.54	%
60-89 days		0.85	%		0.65	%		0.49	%
90 days or more		4.63	%		3.99	%		2.65	%

Total		7.01	%		5.73	%		4.68	%

Number of residential loans in non-accrual status ⁽²⁾		1,130			954			672
Principal balance of residential loans outstanding in non-accrual status (in thousands)	$	76,990		$	70,756		$	47,800
Allowance for loan losses (in thousands)	$	20,435		$	13,824		$	15,907
Weighted average loan to value (LTV) ratio		90.44	%		90.00	%		89.00	%
Weighted average refreshed FICO score		595			588			584

⁽¹⁾	The majority of the residential loans to which the Company is exposed to credit risk were originated prior to 2005 and are collateralized by property located primarily in the south and southeastern United States, with the largest concentration in Texas.

⁽²⁾	Loans are placed in non-accrual status due to contractual principal and interest payments being past due 90 days or more.

The increase in total delinquencies at December 31, 2012 as compared to the level of total delinquencies at December 31, 2011 was primarily due to operational and procedural changes over the monitoring and administration of delinquent accounts. The increase in total delinquencies at December 31, 2011 as compared to the level of total delinquencies at December 31, 2010 largely reflected the fact that beginning in the second quarter of 2011, the Company discontinued its loan acquisition program. The lack of new loan acquisitions under this program since the first quarter of 2011 has had an adverse affect on the delinquency measurement and, therefore, is a factor when comparing the measures for 2011 to prior periods.

Off-Balance Sheet Arrangements

As a result of the acquisition of Green Tree, we have interests in VIEs that we do not consolidate as we have determined that we are not the primary beneficiary of the VIEs. The nature of our involvement with these VIEs is described below. Refer to Notes 2 and 4 in the Notes to Consolidated Financial Statements for further information.

We service loans for eleven securitization trusts for which we also have an obligation to reimburse a third party for the final $165.0 million in LOCs if drawn. The LOCs were provided as credit enhancements to these securitizations and, accordingly, the securitization trusts will draw on these LOCs if there are not enough cash flows from the underlying collateral to pay the debt holders. For seven of these securitization trusts, we also have a $418.1 million mandatory clean-up call obligation and have consolidated these seven trusts on our consolidated balance sheet. For the remaining four of the eleven trusts, we do not have a mandatory clean-up call obligation. For these four trusts, our only involvement is that of servicer and the LOC reimbursement obligation. Based on our estimates of the underlying performance of the collateral in these securitizations, we do not expect that the final $165.0 million will be drawn, and therefore, we have not recorded a liability for the fair value of this obligation on our consolidated balance sheet; however, actual performance may differ from this estimate in the future. As our only involvement with these four securitization trusts is that of servicer and the LOC reimbursement obligation, which we do not expect to be drawn, we have concluded that we are not the primary beneficiary of these four trusts and, therefore, we have not consolidated these trusts on our consolidated balance sheet. We do not hold any residual or other interests in these four trusts. As the servicer of the loans in these trusts, we collect servicing fees.

Our maximum exposure to loss related to these four unconsolidated VIEs equals the carrying value of servicing rights, net and servicer and protective advances, net recognized on our consolidated balance sheet totaling $5.0 million at December 31, 2012 plus an obligation to reimburse a third party for the final $165.0 million drawn on LOCs as discussed above. Revenues, expenses and cash flows arising from our involvement with these unconsolidated VIEs are included in the Servicing segment.

As a result of the acquisition of RMS, we have interests in GNMA securitization pools. The nature of our involvement with these securitization pools is described below. Refer to Notes 2 in the Notes to Consolidated Financial Statements for further information.

We transfer HECM reverse mortgage loans to GNMA securitization pools. Based upon the structure of the GNMA securitization program, we have determined that we have not met all of the requirements for sale accounting, and therefore account for these transfers as secured borrowings, with a HMBS related obligations shown separately on the consolidated balance sheet. As a HMBS issuer, we assume certain obligations related to each security we issue, the most significant of which is the requirement to purchase loans out of the securization pools once they reach certain limits, which are established by the FHA. Performing repurchased loans are conveyed to HUD and nonperforming repurchased loans are generally liquidated in accordance with program requirements.

Revenues, expenses and cash flows arising from our involvement with these GNMA securitization pools are included in the Reverse Mortgage segment.

Other than the arrangements described above, we do not have any other relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance, special purpose or VIEs, which would have been established for the purpose of facilitating off-balance sheet arrangements or other

contractually narrow or limited purposes. In addition, we do not have any undisclosed borrowings or debt, and have not entered into any synthetic leases. We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships other than those described above.

Critical Accounting Estimates

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, we have identified certain policies that, due to judgment, estimates and assumptions inherent in those policies are critical to an understanding of our consolidated financial statements. These policies are described below.

Allowance for Loan Losses on Residential Loans Carried at Amortized Cost

The allowance for loan losses represents our estimate of probable incurred credit losses inherent in the residential loan portfolio accounted for at amortized cost as of the balance sheet date. This portfolio is made up of one segment and class that consists primarily of less-than prime, credit challenged residential loans. The risk characteristics of the portfolio segment and class relate to credit exposure. The method for monitoring and assessing credit risk is the same throughout the portfolio.

Residential loans accounted for at amortized cost are homogeneous and are collectively evaluated for impairment. The determination of the level of the allowance for loan losses and, correspondingly, the provision for loan losses, is based on, but not limited to, delinquency levels and trends, default frequency experience, prior loan loss severity experience, and our judgment and assumptions regarding various matters, including the composition of the residential loan portfolio, known and inherent risks in the portfolio, the estimated value of the underlying real estate collateral, the level of the allowance in relation to total loans and to historical loss levels, current economic and market conditions within the applicable geographic areas surrounding the underlying real estate, changes in unemployment levels and the impact that changes in interest rates have on a borrower’s ability to refinance its loan and to meet its repayment obligations. We evaluate these assumptions and various other relevant factors impacting credit quality and inherent losses when quantifying our exposure to credit losses and assessing the adequacy of our allowance for loan losses as of each reporting date. The level of the allowance is adjusted based on the results of our analysis. Generally, as residential loans season, the credit exposure is reduced, resulting in decreasing provisions. Given the same information, others may reach different, reasonable estimates.

While there has been some stabilization in residential property values, there has not been significant improvement in property values particularly in more rural areas of the southeastern U.S. market. Additionally, there are continued high unemployment levels and a generally uncertain economic backdrop. As a result, we expect the allowance for loan losses to continue to remain elevated until such time as we experience a sustained improvement in the credit quality of the residential loan portfolio. The future growth of the allowance is highly correlated to unemployment levels and changes in home prices within our markets.

While we consider the allowance for loan losses to be adequate based on information currently available, future adjustments to the allowance may be necessary if circumstances differ substantially from the assumptions we used in determining the allowance for loan losses. If different assumptions were used in estimated incurred credit losses, the impact to the allowance for loan losses could have a material effect on our consolidated financial condition and results of operations. For example, a 10% change in management’s estimate for prior loan loss severity could have resulted in a change of approximately $1.7 million in the allowance for loan losses at December 31, 2012 with a corresponding change in the provision for loan losses. Refer to Note 2 in the Notes to Consolidated Financial Statements for further information about our allowance for loan losses.

Fair Value Measurements

We have an established and documented process for determining fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-tier fair value hierarchy is used to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities and the lowest priority to

unobservable inputs. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Refer to Note 5 in the Notes to Consolidated Financial Statements for a description of valuation methodologies used to measure assets and liabilities at fair value and details on the valuation models, key inputs to those models and significant assumptions utilized. The three levels of the fair value hierarchy are as follows:

Basis or Measurement

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

As of December 31, 2012 all of our assets and liabilities measured at fair value on a recurring and non-recurring basis were valued using significant unobservable (Level 3) inputs, and comprised 62% and 66% of total assets and liabilities recorded on the consolidated balance sheet, respectively.

We determine fair value based upon quoted broker prices, when available, or through the use of alternative approaches, such as the discounting of expected cash flows at market rates commensurate with an instrument’s credit quality and duration. Level 3 unobservable assumptions reflect our own estimates for assumptions that market participants would use in pricing the asset or liability. Valuation techniques typically include option pricing models, discounted cash flow models and similar techniques, but may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability.

We elected the fair value option for certain assets and liabilities, including residential loans, receivables and mortgage-backed debt, of the Non-Residual Trusts as well as reverse mortgage loans and HMBS related obligations. The fair value option was elected for these assets and liabilities as we believe fair value best reflects the expected future economic performance of these assets and liabilities. See Note 5 in the Notes to Consolidated Financial Statements.

Considerable judgment is used in forming conclusions in estimating inputs to our internal valuation models used to estimate our Level 3 fair value measurements. Level 3 inputs such as, but not limited to, conditional prepayment rate, loss severity and average life assumptions are inherently difficult to estimate. Changes to these inputs can have a significant effect on fair value measurements. Accordingly, our estimates of fair value are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Goodwill

As a result of our various acquisitions, we have acquired goodwill which represents the excess of the consideration paid for an acquired entity over the fair value of the identifiable net assets acquired. We test goodwill for impairment at the reporting unit level at least annually or whenever events or circumstances indicate potential impairment.

We have the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. If we elect to bypass the qualitative assessment or if we determine, based on qualitative factors, that it is more likely than not that the fair value a reporting unit is less than its carrying amount, a two-step quantitative test is required. In performing the two-step quantitative assessment, we derive the fair value of our reporting units based on valuation techniques that we believe market participants would use, including estimated future discounted cash flows, market multiples and/or appraised values. If the carrying amount of a reporting unit exceeds its fair value, we compare the implied fair value of the reporting unit’s goodwill to its carrying value. To compute the implied fair value of goodwill, we assign the fair value of the reporting unit to all of the tangible and intangible assets and liabilities of that unit in a manner similar to a purchase price allocation, with any residual fair value being allocated to goodwill (implied fair value of goodwill). If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of that reporting unit’s goodwill, we recognize an impairment loss to write down such goodwill to its implied fair value.

We completed a qualitative assessment of goodwill impairment on our Servicing, ARM, and Reverse Mortgage reporting units during the fourth quarter of the year ended December 31, 2012 and based on that evaluation, we believe it is more likely than not that the fair values of each reporting unit substantially exceed their respective carrying values. We bypassed the qualitative assessment for the Insurance reporting unit as we believed it was more likely than not that the fair value of the Insurance reporting unit was less than its carrying amount. Based upon our subsequent valuation of the Insurance reporting unit utilizing a discounted cash flow and market multiple analysis, we determined that the fair value of the Insurance reporting unit was less than its carrying amount. We assigned the estimated fair value of the reporting unit to the net assets (including any unrecognized intangible assets) of the reporting unit in a manner similar to a purchase price allocation. The implied fair value of goodwill as a result of the excess of fair value of the Insurance reporting unit over the amounts assigned to its assets and liabilities exceeded the carrying value of the goodwill allocated to the Insurance reporting unit. Based on this evaluation, no impairment of the Insurance reporting unit’s goodwill was recorded.

We use significant judgment and estimates in assessing goodwill for impairment. Estimates of fair value based on discounted cash flows utilize sensitive estimates including, projections of revenues and operating costs of each reporting unit considering historical and anticipated future results, general economic and market conditions, discount rates, as well as the impact of planned business or operational strategies. The valuations employ a combination of present value techniques to measure fair value and take into consideration relevant market factors. Changes in judgments and projections could result in a significantly different estimate of the fair value of the reporting units and could result in an impairment of goodwill. A decrease in fair value of the Insurance reporting unit of 2% would result in the implied fair value of goodwill allocated to the reporting unit being equal to its carrying amount. A decrease in fair value of the Insurance reporting unit of 25% and 50% would result in impairment of goodwill allocated to the reporting unit of $1.0 million and $2.2 million, respectively.

Servicing Rights

Servicing rights are an intangible asset representing the right to service a portfolio of loans. Capitalized servicing rights relate to servicing and sub-servicing contracts we acquired through business combinations. Additionally, we have acquired the rights to service loans through the purchase of such rights from third parties.

We account for our capitalized servicing rights using the amortization method. All newly acquired servicing rights are initially measured at fair value and subsequently amortized based on expected cash flows in proportion to and over the life of net servicing income. The determination of fair value of newly acquired servicing rights requires significant judgment because they are not actively traded. We determine estimated net servicing income using the estimated future balance of the underlying residential loan portfolio. We adjust amortization prospectively in response to changes in estimated projections of future cash flows.

We estimate the fair value of our servicing rights by calculating the present value of expected future cash flows utilizing assumptions that we believe a market participant would consider in valuing our servicing rights. The significant components of the estimated future cash inflows for servicing rights include estimates and assumptions related to the prepayments of principal, defaults, ancillary fees, discount rates that we believe approximate yields required by investors for these assets, and the expected cost of servicing.

Changes in these assumptions are generally expected to affect our results of operations as follows:

•

Increases in prepayments of principal generally reduce the value of our servicing rights as the underlying loans prepay faster which causes accelerated servicing right amortization,

•

Increases in defaults generally reduce the value of our servicing rights as the cost of servicing increases during the delinquency period due primarily to increases in servicing advances and related interest expense, which is partially offset by increases in ancillary fees,

•

Increases in discount rate reduce the value of our servicing rights due to the lower overall net present value of the cash flows.

We assess servicing rights for impairment based on fair value by strata at each reporting date. We group the loans that we service into strata based on one or more of the predominant risk characteristics of the underlying loans. Our primary strata represent type of loan products and consist of manufactured housing loans, first lien mortgage loans, second lien mortgage loans and reverse mortgage loans. To the extent the estimated fair value is less than the carrying amount for any strata, we recognize an impairment loss in earnings. No servicing right impairment losses were recorded during the years ended December 31, 2012 or 2011.

Real Estate Owned

Real estate owned, net, which is included in other assets in the consolidated balance sheets, represents properties acquired in satisfaction of residential loans. Upon foreclosure or when we otherwise take possession of the property, real estate owned is recorded at the lower of cost or estimated fair value less estimated costs to sell. The excess of cost over the fair value of the property acquired less estimated costs to sell is charged to the allowance for loans losses for residential loans accounted for at amortized cost and to net fair value gains and losses for loans accounted for at fair value. The fair value of the property is generally based upon historical resale recovery rates and current market conditions. Subsequent declines in the value of real estate owned are recorded as adjustments to the carrying amount through a valuation allowance and are recorded in other expenses, net in the consolidated statements of operations. Costs relating to the improvement of the property are capitalized to the extent the balance does not exceed its fair value, whereas those costs relating to maintaining the property are charged to other expenses, net in the consolidated statements of comprehensive income (loss) when incurred.

New Accounting Pronouncements

Refer to Note 2 in the Notes to Consolidated Financial Statements for a summary of recently adopted and recently issued accounting standards and their related effects or anticipated effects on our consolidated results of operations and financial condition.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We seek to manage the risks inherent in our business including but not limited to credit risk, liquidity risk, real estate risk, interest rate risk and prepayment risk in a prudent manner designed to enhance our earnings and preserve our capital. In general, we seek to assume risks that can be quantified from historical experience, to actively manage such risks, and to maintain capital levels consistent with these risks. For information regarding our credit risk, refer to Credit Risk Management in Item 7. For information regarding our liquidity risk, refer to Liquidity and Capital Resources in Item 7.

Real Estate Market Risk

We include on our consolidated balance sheets assets secured by real property and property obtained directly as a result of foreclosures. Residential property values are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions (such as an oversupply of housing); changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay our loans, which could also cause us to suffer losses.

The following table presents activity related to foreclosed property (in thousands, except units):


	For the Year Ended December 31, 2012
	Loans and Residuals						Non-Residual Trusts ⁽¹⁾						Reverse Mortgage
	Units			Amount			Units			Amount			Units			Amount
Balance at beginning of year		867		$	53,651			193		$	2,496			—		$	—
Foreclosures and other additions, at fair value		1,118			61,492			822			9,091			129			16,053
Cost basis of financed sales		(950	)		(56,509	)		—			—			—			—
Cost basis of cash sales to third parties and other dispositions		(193	)		(7,757	)		(868	)		(8,662	)		(24	)		(2,197	)
Lower of cost or fair value adjustments		—			(1,788	)		—			(911	)		—			—

Balance at end of year		842		$	49,089			147		$	2,014			105		$	13,856


	For the Year Ended December 31, 2011
	Loans and Residuals						Non-Residual Trusts ⁽¹⁾
	Units			Amount			Units			Amount
Balance at beginning of year		1,041		$	67,629			—		$	—
Foreclosures and other additions, at fair value		1,126			64,958			705			8,183
Cost basis of financed sales		(1,153	)		(68,123	)		—			—
Cost basis of cash sales to third parties and other dispositions		(147	)		(5,989	)		(512	)		(5,134	)
Lower of cost or fair value adjustments		—			(4,824	)		—			(553	)

Balance at end of year		867		$	53,651			193		$	2,496


	For the Year Ended December 31, 2010
	Loans and Residuals
	Units			Amount
Balance at beginning of year		1,031		$	63,124
Foreclosures and other additions, at fair value		1,329			80,675
Cost basis of financed sales		(1,210	)		(68,334	)
Cost basis of cash sales to third parties and other dispositions		(109	)		(7,007	)
Lower of cost or fair value adjustments		—			(829	)

Balance at end of year		1,041		$	67,629

⁽¹⁾	Foreclosed property held by the Non-Residual Trusts is included in Other in Note 22 in the Notes to Consolidated Financial Statements.

Interest Rate Risk

Interest rate risk is the risk of changing interest rates in the market place. Our primary interest rate risk exposure relates to the variable rate associated with our LIBOR-based financing facilities as well as servicing advance facilities and repurchase agreements. Rising interest rates increase our cost to service our outstanding debt. Changing interest rates also may impact prepayment rates which generally impact the value of our servicing rights.

We use derivative instruments as part of an overall strategy to manage exposure to interest rate risk. At December 31, 2012, we had interest rate caps and a swaption with notional amounts of $391.0 million and $175.0 million, respectively, for use as economic hedges to protect against changes in the interest rates of our long-term debt. All of our instruments are entered into for non-trading purposes.

We assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on fair values based on hypothetical changes (increases and decreases) in interest rates. The following summarizes the estimated changes in the fair value at December 31, 2012 of our financing facilities and servicing rights sensitive to interest rates given a hypothetical and instant parallel shift in the yield curve of 25 basis points.

A significant portion of our debt is LIBOR-based with floors in place. Based on the current forward LIBOR curve, and the termination dates of our debt, an increase or decrease of LIBOR of 25 basis points would have little impact on the fair value of our debt and servicing advance facilities. We exclude residential loans and mortgage-backed debt of the Residual and Non-Residual Trusts and residential loans relating to GNMA securitization pools and the HMBS related obligations from the analysis of rate-sensitive assets and liabilities. These assets as well as liabilities generally do not represent interest rate risk to us. While we hold residual interests in the Residual Trust, the residential loans and mortgage-backed debt in these trusts are at fixed rates of interest. In addition, we have no obligation to provide financial support to the Residual Trusts. Non-Residual Trusts do not expose us to interest rate risk. However, we are obligated to exercise mandatory clean-up call obligations related to the Non-Residual Trusts, which we expect to exercise beginning in 2016 through 2019. Upon exercise of the clean-up calls, we will be exposed to interest rate risk with regard to the purchased residential loans. Reverse mortgage loans associated with GNMA securitization pools do not expose us to interest rate risk. However, we are subject to interest rate risk with regard to reverse mortgage loans we have originated or purchased prior to securitization, although this risk is minimal because of the limited time these loans are held. Any interest rate risk associated with these loans is mostly offset by the commitment to deliver these loans to GNMA securitization pools at defined yields. The creditors of the Residual and Non-Residual trusts and the GNMA securitization pools can look only to the assets of the trusts or pools for satisfaction of the mortgage-backed debt and have no recourse against the assets of the Company. Similarly, the Company’s general creditors have no claim to the assets of the trusts or pools.

For servicing rights, we utilize a discounted cash flow analysis to determine fair value. The primary assumptions in this valuation are prepayment speeds, market discount rates and costs to service. There is little to no impact on prepayment speeds or cost to service due to an increase or decrease in interest rates of 25 basis points due to the inelasticity of prepayment rates with interest rate movements. This is primarily a result of limited refinance options available to the majority of the borrowers in the existing portfolio. Government-sponsored refinancing programs impact prepayment speeds but the level of refinancing would not necessarily be impacted by 25 basis point movement in market interest rates.

Our total market risk is influenced by a wide variety of factors including market volatility and the liquidity of the markets. There are certain limitations inherent in any sensitivity analysis, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

Prepayment Risk

Prepayment risk is the risk that borrowers will pay more than their required monthly mortgage payment including payoffs of residential loans. When borrowers repay the principal on their residential loans before

maturity, or faster than their scheduled amortization, the effect is to shorten the period over which interest is earned, and therefore, increases the yield for residential loans purchased at a discount to their then current balance, as with the majority of our portfolio. Conversely, residential loans purchased at a premium to their then current balance exhibit lower yields due to faster prepayments. In addition, as a servicer, prepayments subject the servicing portfolio to run-off thereby shortening the life over which we earn a servicing fee and amortize our servicing rights. Historically, when market interest rates declined, borrowers had a tendency to refinance their residential loans, thereby increasing prepayments. Although, as a result of tightened credit standards, the current low interest rate environment has not yet resulted in higher prepayments. However, government-sponsored refinancing programs are creating opportunities for borrowers to refinance their mortgages even though they do not meet current credit standards, which will likely increase prepayments throughout 2013. Increases in residential loan prepayment rates could result in net income volatility including substantial variation from quarter to quarter. We monitor prepayment risk through periodic reviews of the impact of a variety of prepayment scenarios on revenues, net income, and cash flow.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements and related notes, together with the Report of Independent Registered Certified Public Accounting Firm thereon, are included in Item 15 of this report and begin on page F-1 of this Annual Report on Form 10-K.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, has identified a material weakness in our internal control over financial reporting. As a result of this material weakness, management has concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our internal control over financial reporting was not effective.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in the Internal Control-Integrated Framework. Based on our assessment and those criteria, management has identified the following material weakness in our internal control over financial reporting:

•

We have determined that there is a material weakness in our controls. This material weakness resulted in one material adjustment related to the improper capitalization of certain third party costs paid to our investment bankers as arrangement fees associated with the Company’s fourth-quarter 2012 debt modification, which was corrected prior to the issuance of the Company’s consolidated financial statements and several individually immaterial adjustments.

As a result of this material weakness, management has concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our internal control over financial reporting was not effective.

The effectiveness of our internal control over financial reporting as of December 31, 2012, has been audited by Ernst & Young LLP, an independent registered certified public accounting firm, as stated in their attestation report included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

The Company acquired RMS on November 1, 2012 and S1L for accounting purposes on December 31, 2012. As allowed under SEC guidance, management’s assessment of and conclusion regarding the design and effectiveness of internal control over financial reporting excluded the internal control over financial reporting of RMS and S1L, which is relevant to the Company’s 2012 consolidated financial statements as of and for the year ended December 31, 2012. RMS represents 56% and 15% of total and net assets, respectively, and 1% of total revenues and S1L represents 1% and 3% of total and net assets, respectively, of the Company as of and for the year ended December 31, 2012. The financial reporting systems of RMS and S1L have not yet been integrated into the Company’s financial reporting systems and, as such, the Company did not have the practical ability to perform an assessment of RMS’ and S1L’s internal control over financial reporting in time for this current year-end. Management expects to complete the process of integrating RMS’ and S1L’s internal control over financial reporting over the course of 2013. The RMS and S1L acquisitions represent a change to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

During the fourth quarter of 2012 the Company began a process of significantly upgrading the accounting and finance staff by hiring professionals with industry knowledge and experience in designing, implementing and managing accounting and finance organizations with effective policies, procedures and processes including those related to acquisitions and related complex accounting and transactional activity. The Company intends that this process will continue throughout 2013.

During the fourth quarter of 2012 the Company also augmented and enhanced controls in several higher risk areas such as acquisition accounting treatment, stock compensation, and accounting and financial close processes. There were no other changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Remediation of the Material Weakness in Internal Control over Financial Reporting

To remediate the material weakness, management with the oversight of our Audit Committee will formally implement a remediation program in 2013, which will include the following:

•

Consistently applying the Company’s process to seek third party guidance for accounting transactions and related financial statement reporting treatment for significant and unusual transactions where the Company may not have in-house experience or expertise with those matters.

•

Expansion of the Company’s complement of qualified accounting staff and implementation of system and process improvements that permit more effective and efficient management of the accounting and financial reporting processes, including those related to acquisitions and related complex accounting and transactional activity.

Notwithstanding the identified material weakness, management believes that the consolidated financial statements included in this Form 10-K fairly represent, in all material respects, our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Report of Independent Registered Certified Public Accounting Firm

The Board of Directors and Stockholders of

Walter Investment Management Corp.

We have audited Walter Investment Management Corp. and subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Walter Investment Management Corp. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Reverse Mortgage Solutions, Inc. or Security One Lending which are included in the 2012 consolidated financial statements of Walter Investment Management Corporation and subsidiaries and constituted 57% and 18% of total and net assets, respectively, as of December 31, 2012, and 1% of revenues for the year then ended. Our audit of internal control over financial reporting of Walter Investment Management Corporation also did not include an evaluation of the internal control over financial reporting of Reverse Mortgage Solutions, Inc. or Security One Lending.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management has identified a material weakness in controls related to the accounting for significant and unusual transactions as a result of a recent significant increase in acquisitions and a related increase in the volume of complex accounting and transactional activity. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Walter Investment Management Corp. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of comprehensive income (loss), stock-

holders’ equity and cash flows for each of the three years in the period ended December 31, 2012. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2012 financial statements, and this report does not affect our report dated March 18, 2013 which expressed an unqualified opinion on those financial statements.

In our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, Walter Investment Management Corp. and subsidiaries has not maintained effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

/s/ Ernst & Young LLP

Tampa, Florida

March 18, 2013

ITEM 9B.

OTHER INFORMATION

On January 3, 2013, and effective January 3, 2013, Green Tree Servicing LLC, or Green Tree, an indirect subsidiary of the Company entered into a First Amendment, or the First Amendment, to Addendum to Mortgage Selling and Services Contract, with Fannie Mae.

Green Tree services certain residential mortgage loans owned or securitized by Fannie Mae in accordance with the terms and conditions of various servicing agreements between Green Tree, or its affiliates, and Fannie Mae, or Servicing Agreements.

As previously disclosed, Green Tree entered into the Addendum to Mortgage Selling and Servicing Contract, or the Servicer Advance Reimbursement Agreement effective July 1, 2012, with Fannie Mae. Pursuant to the agreement, Fannie Mae agreed to, among other things, provide Green Tree with early reimbursement of certain eligible advances made by Green Tree in the course of its servicing for Fannie Mae.

The First Amendment provides that a group of eligible advances subject to early reimbursement under the agreement is expanded to include servicing advances relating to mortgage loans and servicing rights to be acquired from Bank of America, National Association, or BANA, GMAC Mortgage, LLC, or GMAC, and another third party. In addition, the First Amendment provides that the maximum aggregate early reimbursement amount payable by Fannie Mae would be increased to an amount, to be agreed to by the parties in a separate agreement, as it applies to the portfolios to be acquired from BANA and GMAC. Finally, the First Amendment establishes the early reimbursement rate for all of the mortgage portfolios to be acquired, and the compensation rates for the mortgage portfolios to be acquired from BANA and GMAC. The compensation rate described in the agreement apply, unmodified, to the mortgage portfolios to be acquired from the third party.

On January 31, 2013, and effective January 31, 2013, Green Tree and Fannie Mae entered into a Second Amendment to the Addendum to Mortgage Selling and Services Contract, or the Second Amendment. The Second Amendment raises the maximum aggregate early reimbursement amount payable by Fannie Mae to $585,000,000 effective January 31, 2013 and through and until April 1, 2013, when the maximum aggregate early reimbursement amount payable drops to $370,000,000.

The foregoing descriptions of the First Amendment and the Second Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the First Amendment and the Second Agreement, which are attached as Exhibit 10.48 and Exhibit 10.49 hereto and incorporated herein by reference.

Credit Facility Amendment

On March 14, 2013, the Company entered into Amendment No. 2, or the Credit Agreement Amendment, to the Credit Agreement, dated as of November 28, 2012, as amended prior to the date thereof, or the Credit Agreement, among the Company, each lender from time to time party thereto, and Credit Suisse AG, as Administrative Agent. The Credit Agreement Amendment changes certain financial definitions in the Credit Agreement to clarify that net cash receipts in connection with the issuance of reverse mortgage securities and the servicing of reverse mortgages count towards EBITDA and excess cash flow for purposes of the Credit Agreement.

The foregoing description of the Credit Agreement Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement Amendment, which is attached hereto as Exhibit 10.42.3 and is incorporated herein by reference.

Texas Capital Warehouse Facility

On November 1, 2012, Reverse Mortgage Solutions, Inc., or RMS, a wholly owned indirect subsidiary of the Company, entered into an Amended and Restated Mortgage Warehouse Agreement, or the Texas Capital Warehouse Agreement, between Texas Capital Bank, National Association, or Texas Capital, and RMS.

The Texas Capital Warehouse Agreement is structured as a repurchase agreement, the Warehouse Facility, and provides for a maximum participation balance of $75,000,000. The Warehouse Facility is provided on an uncommitted basis and matures on November 1, 2014. The Warehouse Facility will be used to support RMS’s funding obligations in connection with its reverse mortgage loan origination business.

100

On December 28, 2012, Texas Capital and RMS agreed to a temporary increase in the amount of the Warehouse Facility under the Texas Capital Increase Letter. The temporary increase provides for a maximum overline amount of $25,000,000 (increasing the availability under the facility to $100,000,000) until May 21, 2013.

On February 25, 2013, pursuant to that certain change in terms agreement, or the Texas Capital Terms Agreement, Texas Capital and RMS amended certain defined terms relating to the computation of the financial covenants set forth in the Texas Capital Warehouse Agreement.

The Texas Capital Warehouse Agreement contains affirmative and negative covenants and representations and warranties customary for financings of this type and requires RMS to comply with certain financial covenants relating to liquidity, adjusted tangible net worth and leverage.

RMS and Texas Capital intend that the transactions under the Texas Capital Warehouse Facility be sales to Texas Capital of the participation interests in mortgage loans and not loans from Texas Capital to RMS secured by the participation interests and/or mortgage loans. However, in order to preserve Texas Capital’s rights under the Texas Capital Warehouse Facility in the event a court or other forum recharacterizes the transactions as other than sales, as security for its obligations under the Texas Capital Warehouse Facility, RMS has also granted Texas Capital a fully perfected first priority security interest in the mortgage loans in which Texas Capital has purchased a participation interest, as well as all ancillary collateral relating to the related mortgage loans.

The foregoing description of the Texas Capital Warehouse Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Texas Capital Warehouse Agreement, Texas Capital Increase Letter and Texas Capital Terms Agreement, which are filed as Exhibits 10.53.1, 10.53.2 and 10.53.3, respectively, to this Annual Report on Form 10-K and are incorporated herein by reference.

UBS Warehouse Facility

On November 1, 2012, RMS entered into an (i)Amended and Restated Master Repurchase Agreement between UBS Real Estate Securities Inc., or UBS, and RMS, or the UBS Warehouse Agreement, and an (ii) Amended and Restated Pricing Side Letter between UBS and RMS, or the PSL.

The UBS Warehouse Agreement is structured as a master repurchase agreement, the UBS Warehouse Facility, and initially provided for a maximum aggregate purchase price of $50,000,000. The UBS Warehouse Facility is provided by UBS on an uncommitted basis and matures on May 1, 2013. The Warehouse Facility will be used to support RMS’s funding obligations in connection with its reverse mortgage loan origination business.

On December 12, 2012, UBS and RMS amended the PSL under UBS Amendment No. 1 to, among other things, temporarily increase the maximum aggregate purchase price from $50,000,000 to $75,000,000, or the Temporary Increase, until February 12, 2013.

On February 11, 2013, UBS and RMS amended the PSL under UBS Amendment No. 2 to, among other things, extended the Temporary Increase until February 19, 2013.

On February 19, 2013, UBS and RMS amended the PSL and UBS Warehouse Agreement under UBS Amendment Nos. 3 and 1 to, among other things, temporarily increase the maximum aggregate purchase price from $75,000,000 to $125,000,000 until May 1, 2013. The amendment also provides that the maximum aggregate purchase price to be reduced to $50,000,000 as of May 1, 2013. In addition, pursuant to the terms of UBS Amendment Nos. 3 and 1, the Company provided UBS with a guaranty, or the Guaranty, in order to support RMS’s obligations under the UBS Warehouse Agreement.

The UBS Warehouse Agreement contains affirmative and negative covenants and representations and warranties customary for financings of this type and requires RMS to comply with certain financial covenants relating to profitability, liquidity, adjusted tangible net worth and leverage.

The PSL, UBS Amendment No. 1, UBS Amendment No. 2 and UBS Amendment Nos. 3 and 1 contain economic terms relating to the UBS Warehouse Facility, or the UBS Confidential Terms, that the Company and UBS believe are proprietary to their business relationship and that, if disclosed, could adversely affect the Company’s and/or UBS’s competitive position within the repurchase facility marketplace. As a result of the proprietary nature of the UBS Confidential Terms, the Company has made a request to the Securities and

101

Exchange Commission to treat the UBS Confidential Terms as confidential information. As a result of such request, the Company is filing redacted versions of the PLS, UBS Amendment No. 1, UBS Amendment No. 2 and UBS Amendment Nos. 3 and 1 as Exhibits 10.52.1, 10.52.2, 10.52.3 and 10.52.4, respectively, to this Annual Report on Form 10-K.

RMS and UBS intend that the transactions under the UBS Warehouse Facility be sales to UBS of the mortgage loans and not loans from UBS to RMS secured by the mortgage loans. However, in order to preserve UBS’s rights under the UBS Warehouse Facility in the event a court or other forum recharacterizes the transactions as other than sales, as security for its obligations under the UBS Warehouse Facility, RMS has also granted UBS a fully perfected first priority security interest in the mortgage loans purchased by UBS under the Warehouse Agreement, as well as all ancillary collateral relating to the purchased mortgage loans.

The foregoing description of the UBS Warehouse Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the UBS Warehouse Agreement, and redacted versions of the PSL, UBS Amendment No. 1, UBS Amendment No. 2 and UBS Amendment Nos. 3 and 1, which are filed as Exhibits 10.52.1, 10.52.2, 10.52.3 and 10.52.4, respectively, to this Annual Report on Form 10-K and are incorporated herein by reference.

RMS Waiver of Financial Covenant Compliance

RMS obtained waivers from UBS, Texas Capital and The Royal Bank of Scotland plc from compliance with certain financial covenants contained in its master repurchase agreements with the aforementioned counterparties as a result of a change in the accounting treatment of the securitization of reverse mortgage loans and the related issuance of HMBS obligations. As a result, RMS obtained waivers from each respective counterparty waiving the requirement to comply with these financial covenants at December 31, 2012. Waivers from UBS, Texas Capital and The Royal Bank of Scotland plc, the Waivers, are filed as Exhibits 10.52.6, 10.53.4 and 10.46.2 to this Annual Report on From 10-K and are incorporated herein by reference.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

ITEM 11.

EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

102

The information required by Item 14 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report

(1) Financial Statements .

The consolidated financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements on page F-1.

(2) Financial Statement Schedules .

All financial statement schedules have been omitted here because they are not applicable, not required, or the information is shown in the consolidated financial statements or notes thereto.

(b) Exhibits.

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 18, 2013.


WALTER INVESTMENT MANAGEMENT CORP.

By:		/s/ Mark J. O’Brien
		Mark J. O’Brien
		Chief Executive Officer
		(Principal Executive Officer)

In accordance with the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons in the capacities and on the date(s) indicated.


Signature	Title	Date

/s/ Mark J. O’Brien Mark J. O’Brien	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	March 18, 2013

/s/ Steven R. Berrard Steven R. Berrard	Director	March 18, 2013

/s/ Ellyn L. Brown Ellyn L. Brown	Director	March 18, 2013

/s/ Denmar J. Dixon Denmar J. Dixon	Director	March 18, 2013

/s/ William J. Meurer William J. Meurer	Director	March 18, 2013

/s/ Alvaro G. de Molina Alvaro G. de Molina	Director	March 18, 2013

/s/ James L. Pappas James L. Pappas	Director	March 18, 2013

/s/ Shannon E. Smith Shannon E. Smith	Director	March 18, 2013

/s/ Michael T. Tokarz Michael T. Tokarz	Director	March 18, 2013

/s/ Charles E. Cauthen Charles E. Cauthen	Chief Operating Officer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	March 18, 2013

/s/ Kimberly A. Perez Kimberly A. Perez	Senior Vice President and Chief Accounting Officer	March 18, 2013

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INDEX TO EXHIBITS


Exhibit No.		Notes		Description

	2.1.1		(1)	Second Amended and Restated Agreement and Plan of Merger dated February 6, 2009 among Walter Industries, Inc., JWH Holding Company, LLC, Walter Investment Management LLC and Hanover Capital Mortgage Holdings, Inc.

	2.1.2		(1)	Amendment to the Second Amended and Restated Agreement and Plan of Merger entered into as of February 17, 2009 between Registrant, Walter Industries, Inc., JWH Holding Company, LLC, Walter Investment Management LLC and Hanover Capital Mortgage Holdings, Inc.

	2.2.1		(27)	Stock Purchase Agreement dated as of August 31, 2012 by and among Reverse Mortgage Solutions, Inc., Walter Investment Management Corp., JAM Special Opportunities Fund, L.P. and the Other Sellers listed on the Signature Pages thereto.

	2.2.2		(30)	Letter of Understanding dated November 1, 2012 relating to the RMS Stock Purchase Agreement.

	2.2.3		(30)	Waiver of Closing Conditions and Obligations dated November 1, 2012 relating to the RMS Purchase Agreement.

	2.2.4		(30)	Letter Agreement between the Registrant and Robert D. Yeary and the Yeary Family Trust – D dated October 31, 2012 relating to the RMS Purchase Agreement.

	2.3.1		(29)	Asset Purchase Agreement between Ocwen Loan Servicing, LLC and Residential Capital, LLC, Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services, LLC, ETS of Washington, Inc., EPRE LLC, GMACM Borrower LLC and RFC Borrower LLC dated November 2, 2012.*

	2.3.2		(31)	Amendment No. 1, dated November 20, 2012, to Asset Purchase Agreement dated November 2, 2012.

	2.4		(38)	Stock Purchase Agreement (the “Purchase Agreement”) dated December 31, 2012 by and among Walter Investment Management Corp., Security One Lending, JAM Special Opportunities Fund II, L.P., as a stockholder seller (“JAM”) and as the sellers’ representative, and the other sellers listed on the signature pages thereto.*

	3.1		(4)	Articles of Amendment and Restatement of Registrant effective April 17, 2009.

	3.2		(3)	By-Laws of Registrant, effective February 28, 2012.

	4.1		(6)	Specimen Common Stock Certificate of Registrant.

	10.1		(2)	1999 Equity Incentive Plan.†

	10.2		(8)	Amendment No. 1 to the Walter Investment Management Corp. 1999 Equity Incentive Plan.†

	10.3		(8)	Amendment No. 2 to the Walter Investment Management Corp. 1999 Equity Incentive Plan.†

	10.4		(4)	Trademark License Agreement between Walter Industries, Inc. and Walter Investment Management LLC dated April 17, 2009.

	10.5		(4)	Transition Services Agreement between Walter Industries, Inc. and Walter Investment Management LLC dated April 17, 2009.

	10.6		(4)	Tax Separation Agreement between Walter Industries, Inc. and Walter Investment Management LLC dated April 17, 2009.

	10.7		(4)	Joint Litigation Agreement between Walter Industries, Inc. and Walter Investment Management LLC dated April 17, 2009.

	10.8		(18)	Form of Executive RSU Award Agreements of Mark J. O’Brien and Charles Cauthen dated April 20, 2009.†

105


Exhibit No.		Notes		Description

	10.9		(9)	Executive RSU Award Agreements of Mark J. O’Brien, Charles Cauthen and Kimberly Perez dated January 4, 2010.†

	10.10		(9)	Form of Non-Qualified Option Award Agreements of Mark J. O’Brien, Charles Cauthen and Kimberly Perez dated January 4, 2010.†

	10.11		(18)	Form of Director Award Agreement.†

	10.12		(7)	Form of Indemnity Agreements dated April 17, 2009 between the Registrant and the following officers and directors: Mark O’Brien, Ellyn Brown, John Burchett, Denmar Dixon, William J. Meurer, Shannon Smith, Michael T. Tokarz, Charles E. Cauthen, Irma Tavares, Del Pulido, William Atkins, William Batik, Joseph Kelly, Jr. and Stuart Boyd.†

	10.13		(10)	Employment Agreement between the Registrant and Denmar Dixon dated January 22, 2010.†

	10.14		(12)	Office Lease by and between NBS Pinnacle 1925/2001 LLC and Marix Servicing. LLC dated June 13, 2007.

	10.15		(20)	Form of Executive RSU Award Agreements dated January 4, 2010 between the Registrant and Stuart D. Boyd and Delio Pulido, respectively.†

	10.16		(20)	Non-Qualified Option Award Agreements dated January 4, 2010 between the Registrant and Stuart D. Boyd and Delio Pulido, respectively.†

	10.17		(19)	Restricted Stock Unit Agreement between the Registrant and Denmar Dixon dated January 22, 2010.†

	10.18		(19)	Nonqualified Option Award Agreement of Denmar Dixon dated January 22, 2010.†

	10.19		(20)	Amended and Restated Employment Agreements dated March 15, 2010 between the Registrant and Mark O’Brien, Charles Cauthen and Kimberly Perez, respectively.†

	10.20		(12)	Employment Agreement between the Registrant and Stuart D. Boyd dated April 28, 2010.†

	10.21		(7)	Form of Indemnity Agreement dated March 3, 2010 between the Registrant and Steven R. Berrard.†

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

	10.23		(5)	Membership Interest Purchase Agreement dated March 25, 2011 by and among GTH LLC, GTCS Holdings LLC and the Company.

	10.24		(5)	Debt Commitment Letter with Credit Suisse Securities (USA) LLC, Credit Suisse AG, RBS Securities Inc. and Royal Bank of Scotland PLC.

	10.25		(11)	Amended and Restated Debt Commitment Letter dated as of April 25, 2011 with Credit Suisse Securities (USA) LLC, Credit Suisse AG, RBS Securities Inc., Royal Bank of Scotland PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America N.A. and Morgan Stanley Senior Funding, Inc.

	10.26		(13)	Walter Investment Management Corp. 2011 Omnibus Incentive Plan.†

	10.27		(14)	Form of Award Agreement dated May 10, 2011 under the Walter Investment Management Corp. 2011 Omnibus Incentive Plan awarding options to purchase Company stock to Mark O’Brien, Charles Cauthen, Denmar Dixon, Kimberly Perez, Stuart Boyd and Delio Pulido.†

	10.28		(16)	Employment Agreements between the Registrant and Brian Libman, Keith Anderson and Brian Corey.†

106


Exhibit No.		Notes		Description

	10.29		(17)	Form of Lease Agreement for office space for the corporate headquarters of the Company’s Green Tree subsidiary in St. Paul, Minnesota effective September 30, 2011.

	10.30		(17)	Form of Green Tree Executive Severance Plan for Senior Executives entered into by the Company’s Green Tree subsidiary.†

	10.31		(17)	Form of Amendment to Employment Agreements dated November 4, 2011 between the Company and Kimberly A. Perez and Stuart D. Boyd, respectively.†

	10.32		(15)	First Lien Credit Agreement among the Company, the lenders, Credit Suisse AG and the other parties party thereto dated July 1, 2011.

	10.33		(15)	Second Lien Credit Agreement among the Company, the lenders, Credit Suisse AG and the other parties party thereto dated July 1, 2011.

	10.34		(22)	Securities Purchase Agreement by and between Marathon Asset Management, L.P., Michael O’Hanlon, Marix Servicing LLC, and the Registrant dated August 25, 2010.

	10.35		(23)	Mark O’Brien Contract Amendment dated March 29, 2012.†

	10.36		(24)	Amended and Restated Receivables Loan Agreement dated May 2, 2012 among Green Tree Advance Receivables II, LLC, as Borrower, Green Tree Servicing LLC, as Administrator, The Financial Institutions From Time to Time Party Hereto, as Lenders, Wells Fargo Bank, National Association as Calculation Agent, Verification Agent, Account Bank and Securities Intermediary and Wells Fargo Capital Finance, LLC, as Agent.

	10.37		(38)	Mortgage Selling and Servicing Contract (Early Advance Funding Agreement) and Addendum to Mortgage Selling and Servicing Contract effective March 8, 2005.

	10.38		(25)	Addendum to Mortgage Selling and Servicing Contract (Early Advance Funding Agreement) effective July 1, 2012.

	10.39		(26)	Amendment and Joinder Agreement, dated July 17, 2012, to the First Lien Credit Agreement dated July 1, 2011 among the Company, the lenders party thereto, Credit Suisse AG and the other parties party thereto.

	10.40		(30)	Joint Bidding Agreement between the Registrant and Ocwen Loan Servicing LLC dated October 19, 2012.*

	10.41		(28)	First Supplemental Indenture dated as of October 23, 2012 to the Indenture dated January 13, 2012 between the Company and Wells Fargo Bank, National Association, as trustee, and Form of 4.50% Convertible Senior Subordinated Notes due 2019.

	10.42.1		(32)	Credit Agreement among the Company, the lenders party thereto, Credit Suisse AG, as administrative agent and collateral agent, and the other parties party thereto dated November 28, 2012.

	10.42.2		(34)	Amendment No. 1, Incremental Amendment and Joinder Agreement, dated January 31, 2013 relating to the Credit Agreement, dated November 28, 2012, among Walter Investment Management Corp., the lenders from time to time party thereto, and Credit Suisse AG, as administrative agent and collateral agent.

	10.42.3		(38)	Form of Amendment No. 2 to Credit Agreement dated March 14, 2013 relating to the Credit Agreement dated as of November 28, 2012, among Walter Investment Management Corp., the lenders from time to time party thereto, and Credit Suisse AG, as administrative agent and collateral agent.

	10.43		(38)	Mortgage Servicing Rights Purchase and Sale Agreement dated January 6, 2013 by and between Green Tree Servicing LLC, as purchaser, and Bank of America, National Association, as seller.**

107


Exhibit No.		Notes		Description

	10.44		(35)	Master Repurchase Agreement dated February 1, 2013 between the Royal Bank of Scotland Plc, as Buyer and Green Tree Servicing LLC as seller.

	10.45		(35)	Pricing Letter**

	10.46.1		(36)	Master Repurchase Agreement dated February 27, 2013 between the Royal Bank of Scotland Plc, as Buyer and Reverse Mortgage Solutions, Inc., as seller.

	10.46.2		(38)	Waiver letter dated March 14, 2013 related to Master Repurchase Agreement dated February 27, 2013 between the Royal Bank of Scotland Plc, as Buyer and Reverse Mortgage Solutions, Inc., as seller.

	10.47		(36)	Pricing Letter**

	10.48		(38)	First Amendment to Addendum to Mortgage Selling and Services Contract, effective January 3, 2013, by and between Fannie Mae and Green Tree Servicing LLC. **

	10.49		(38)	Second Amendment to Addendum to Mortgage Selling and Services Contract, effective January 31, 2013, by and between Fannie Mae and Green Tree Servicing LLC. **

	10.50.1		(37)	Master Repurchase Agreement dated March 11, 2013 by and between Green Tree Servicing LLC and Barclays Bank LLC.

	10.50.2		(37)	“Pricing Letter”**

	10.52.1		(38)	Amended and Restated Master Repurchase Agreement dated November 1, 2012 between UBS Real Estate Securities, Inc. and Reverse Mortgage Solutions, Inc.

	10.52.2		(38)	Amended and Restated Pricing Letter dated November 1, 2012 between UBS Real Estate Securities, Inc. and Reverse Mortgage Solutions, Inc. **

	10.52.3		(38)	Amendment No. 1 to Pricing Letter dated December 12, 2012 between UBS Real Estate Securities, Inc. and Reverse Mortgage Solutions, Inc.**

	10.52.4		(38)	Amendment No. 2 to Pricing Letter dated February 11, 2013 between UBS Real Estate Securities, Inc. and Reverse Mortgage Solutions, Inc.**

	10.52.5		(38)	Amendment No. 3 and 1 to Pricing Letter dated February 19, 2013 between UBS Real Estate Securities, Inc. and Reverse Mortgage Solutions, Inc.**

	10.52.6		(38)	Waiver letter dated March 14, 2013 between UBS Real Estate Securities, Inc. and Reverse Mortgage Solutions, Inc.

	10.53.1		(38)	Amended and Restated Mortgage Warehouse Agreement dated November 1, 2012 between Texas Capital Bank, National Association, and Reverse Mortgage Solutions, Inc.

	10.53.2		(38)	Texas Capital Increase Letter dated December 28, 2012 between Texas Capital Bank, National Association, and Reverse Mortgage Solutions, Inc.

	10.53.3		(38)	Texas Capital Terms Agreement dated February 25, 2012 between Texas Capital Bank, National Association, and Reverse Mortgage Solutions, Inc.

	10.53.4		(38)	Waiver letter dated March 14, 2013 between Texas Capital Bank, National Association, and Reverse Mortgage Solutions, Inc.

	14		(3)	Code of Conduct and Ethics dated January 27, 2012.

	21		(38)	Subsidiaries of the Registrant.

	22		(33)	Published report regarding matters submitted to vote of security holders.

	23.1		(38)	Consent of Ernst & Young LLP.

	31.1		(38)	Certification by Mark J. O’Brien pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

108


Exhibit No.		Notes		Description

	31.2		(38)	Certification by Charles E. Cauthen pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32		(38)	Certification by Mark J. O’Brien and Charles E. Cauthen pursuant to 18 U.S.C. Section 1352, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	101		(38)	XBRL (Extensible Business Reporting Language) — The following materials from Walter Investment Management Corp.’s Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL (Extensible Business Reporting Language); (i) Consolidated Balance Sheets as of December 31, 2012 abd 2011, (ii) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010, (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2011 and 2010; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010; and (v) Notes to Consolidated Financial Statements.

				Exhibit 101 to this Annual Report on Form 10-K is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
	*		The Company hereby undertakes to furnish supplementally a copy of any omitted schedule, annex or exhibit to the U.S. Securities and Exchange Commission upon request.
	**		Pursuant to a request for confidential treatment, portions of this Exhibit have been redacted from the publicly filed document and have been furnished separately to the Securities and Exchange Commission as required by Rule 24b-2 under the Securities Exchange Act of 1934.
	†		Constitutes a management contract or compensatory plan or arrangement.

109


Note		Notes to Exhibit Index

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

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

(3)		Incorporated herein by reference to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on March 5, 2012.

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

(5)		Incorporated herein by reference to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on March 30, 2011.

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

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

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

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

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

(11)		Incorporated herein by reference to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 5, 2011.

(12)		Incorporated herein by reference to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on March 8, 2011.

(13)		Incorporated herein by reference to Registrant’s 2011 Definitive Proxy Statement as filed with the Securities and Exchange Commission on May 12, 2011.

(14)		Incorporated herein by reference to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 16, 2011.

(15)		Incorporated herein by reference to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 8, 2011.

(16)		Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on August 8, 2011.

(17)		Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 as filed with the Securities and Exchange Commission on November 8, 2011.

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

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

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

110


Note		Notes to Exhibit Index

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

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

(23)		Incorporated herein by reference to Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on April 3, 2012.

(24)		Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on May 9, 2012.

(25)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 6, 2012.

(26)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 20, 2012.

(27)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on September 6, 2012.

(28)		Incorporated herein by reference to the Registrant’s CurrentReport on Form 8-K as filed with the Securities and Exchange Commission on October 23, 2012.

(29)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 8, 2012.

(30)		Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on November 8, 2012.

(31)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 27, 2012.

(32)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on December 4, 2012.

(33)		Incorporated herein by reference to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 8, 2012.

(34)		Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013.

(35)		Incorporated herein by reference to Exhibits 10.1 and 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2013.

(36)		Incorporated herein by reference to Exhibits 99.1 and 99.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2013.

(37)		Incorporated herein by reference to Exhibits 10.10 and 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 15, 2013.

(38)		Filed herewith.

111

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
Report of Independent Registered Certified Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2012 and 2011		F-3
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2012, 2011 and 2010		F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010		F-6
Notes to Consolidated Financial Statements		F-7
1. Business and Basis of Presentation		F-7
2. Summary of Significant Accounting Policies		F-9
3. Acquisitions		F-20
4. Variable Interest Entities		F-27
5. Fair Value		F-31
6. Residential Loans, Net		F-40
7. Receivables, Net		F-45
8. Servicer and Protective Advances, Net		F-46
9. Servicing of Residential Loans		F-46
10. Goodwill and Intangible Assets, Net		F-48
11. Premises and Equipment, Net		F-50
12. Other Assets		F-51
13. Payables and Accrued Liabilities		F-51
14. Servicing Advance Liabilities		F-51
15. Debt		F-52
16. Mortgage-Backed Debt and Related Collateral		F-55
17. HMBS Related Obligations		F-58
18. Share-Based Compensation		F-58
19. Income Taxes		F-61
20. Common Stock and Earnings (Loss) Per Share		F-65
21. Supplemental Disclosures of Cash Flow Information		F-67
22. Segment Reporting		F-67
23. Commitments and Contingencies		F-70
24. Quarterly Results of Operations (Unaudited)		F-73
25. Subsequent Events		F-74

F-1

Report of Independent Registered Certified Public Accounting Firm

The Board of Directors and Stockholders of

Walter Investment Management Corp.

We have audited the accompanying consolidated balance sheets of Walter Investment Management Corp. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Walter Investment Management Corp. and subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Walter Investment Management Corp.’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 18, 2013 expressed an adverse opinion thereon.

/s/ Ernst & Young LLP

Tampa, Florida

March 18, 2013

F-2

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	December 31,
	2012			2011
ASSETS
Cash and cash equivalents	$	442,054		$	18,739
Restricted cash and cash equivalents		653,338			353,216
Residential loans (includes $6,710,211 and $672,714 at fair value at December 31, 2012 and 2011, respectively)		8,220,967			2,278,402
Allowance for loan losses		(20,435	)		(13,824	)

Residential loans, net		8,200,532			2,264,578
Receivables, net (includes $53,975 and $81,782 at fair value at December 31, 2012 and 2011, respectively)		259,009			229,779
Servicer and protective advances, net		173,047			140,690
Servicing rights, net		225,278			250,329
Goodwill		580,378			470,291
Intangible assets, net		161,926			137,482
Premises and equipment, net		137,785			130,410
Other assets		144,830			118,028

Total assets	$	10,978,177		$	4,113,542

LIABILITIES AND STOCKHOLDERS’ EQUITY
Payables and accrued liabilities (includes $24,246 and $21,515 at fair value at December 31, 2012 and 2011, respectively)	$	260,610		$	217,929
Servicer payables		587,929			244,302
Servicing advance liabilities		100,164			107,039
Debt		1,146,249			742,626
Mortgage-backed debt (includes $757,286 and $811,245 at fair value at December 31, 2012 and 2011, respectively)		2,072,728			2,224,754
HMBS related obligations at fair value		5,874,552			—
Deferred tax liability, net		41,017			43,360

Total liabilities		10,083,249			3,580,010
Commitments and contingencies (Note 23)
Stockholders’ equity:
Preferred stock, $0.01 par value per share:
Authorized — 10,000,000 shares Issued and outstanding — 0 shares at December 31, 2012 and 2011		—			—
Common stock, $0.01 par value per share:
Authorized — 90,000,000 shares Issued and outstanding — 36,687,785 and 27,875,158 shares at December 31, 2012 and 2011, respectively		367			279
Additional paid-in capital		561,963			178,598
Retained earnings		332,105			354,239
Accumulated other comprehensive income		493			416

Total stockholders’ equity		894,928			533,532

Total liabilities and stockholders’ equity	$	10,978,177		$	4,113,542

The following table presents the assets and liabilities of the Company’s consolidated variable interest entities, which are included in the consolidated balance sheets above. The assets in the table below include those assets that can only be used to settle obligations of the consolidated variable interest entities. The liabilities in the table below include third-party liabilities of the consolidated variable interest entities only, and for which creditors or beneficial interest holders do not have recourse to the Company, and exclude intercompany balances that eliminate in consolidation.


	December 31,
	2012			2011
ASSETS OF CONSOLIDATED VARIABLE INTEREST ENTITIES THAT CAN ONLY BE USED TO SETTLE THE OBLIGATIONS OF CONSOLIDATED VARIABLE INTEREST ENTITIES:
Restricted cash and cash equivalents	$	58,253		$	59,685
Residential loans (includes $646,498 and $672,714 at fair value at December 31, 2012 and 2011, respectively)		2,142,418			2,266,965
Allowance for loan losses		(20,138	)		(13,604	)

Residential loans, net		2,122,280			2,253,361
Receivables, net (includes $53,975 and $81,782 at fair value at December 31, 2012 and 2011, respectively)		53,975			81,782
Servicer and protective advances, net		77,082			59,921
Other assets		62,683			63,498

Total assets	$	2,374,273		$	2,518,247

LIABILITIES OF THE CONSOLIDATED VARIABLE INTEREST ENTITIES FOR WHICH CREDITORS OR BENEFICIAL INTEREST HOLDERS DO NOT HAVE RECOURSE TO THE COMPANY:
Payables and accrued liabilities	$	9,007		$	10,163
Servicing advance liabilities		64,552			48,736
Mortgage-backed debt (includes $757,286 and $811,245 at fair value at December 31, 2012 and 2011, respectively)		2,072,728			2,224,754

Total liabilities	$	2,146,287		$	2,283,653

The accompanying notes are an integral part of the consolidated financial statements.

F-3

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)


	Years Ended December 31,
	2012			2011			2010
REVENUES
Servicing revenue and fees	$	418,970		$	186,177		$	2,267
Interest income on loans		154,351			164,794			166,188
Insurance revenue		73,249			41,651			9,163
Other revenues		20,419			9,852			2,876

Total revenues		666,989			402,474			180,494
EXPENSES
Salaries and benefits		230,107			117,736			27,495
Interest expense		179,671			136,246			81,729
General and administrative		136,236			78,597			21,289
Depreciation and amortization		99,728			53,078			383
Provision for loan losses		13,352			6,016			6,526
Other expenses, net		9,267			18,073			9,408

Total expenses		668,361			409,746			146,830
OTHER GAINS (LOSSES)
Net fair value gains (losses)		14,500			(1,052	)		—
Gains (losses) on extinguishments		(48,579	)		95			4,258
Other		—			2,096			423

Total other gains (losses)		(34,079	)		1,139			4,681
Income (loss) before income taxes		(35,451	)		(6,133	)		38,345
Income tax expense (benefit)		(13,317	)		60,264			1,277

Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068

OTHER COMPREHENSIVE INCOME (LOSS) BEFORE TAXES
Change in postretirement benefits liability		19			(1,248	)		(483	)
Amortization of realized gain on closed hedges		68			(154	)		(280	)
Unrealized gain on available-for-sale security in other assets		24			36			19

Other comprehensive income (loss) before taxes		111			(1,366	)		(744	)
Income tax expense (benefit) for items of other comprehensive loss		34			(531	)		(52	)

Other comprehensive income (loss)		77			(835	)		(692	)

Total comprehensive income (loss)	$	(22,057	)	$	(67,232	)	$	36,376

Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068
Basic earnings (loss) per common and common equivalent share	$	(0.73	)	$	(2.41	)	$	1.38
Diluted earnings (loss) per common and common equivalent share		(0.73	)		(2.41	)		1.38
Total dividends declared per common and common equivalent share		—			0.22			2.00
Weighted-average common and common equivalent shares outstanding — basic		30,397			27,593			26,432
Weighted-average common and common equivalent shares outstanding — diluted		30,397			27,593			26,521

The accompanying notes are an integral part of the consolidated financial statements.

F-4

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 and 2010

(in thousands, except share data)


	Common Stock					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	Shares			Amount		Additional Paid-In Capital			Retained Earnings						Total
Balance at January 1, 2010		25,642,889		$	256	$	122,552		$	443,433		$	1,943		$	568,184
Net income										37,068						37,068
Other comprehensive loss, net of tax													(692	)		(692	)
Dividends and dividend equivalents declared										(53,665	)					(53,665	)
Share-based compensation							3,763									3,763
Issuance of shares under incentive plans		161,800			2		1,092									1,094
Repurchase and cancellation of common stock		(18,996	)		—		(264	)								(264	)

Balance at December 31, 2010		25,785,693			258		127,143			426,836			1,251			555,488
Net loss										(66,397	)					(66,397	)
Other comprehensive loss, net of tax													(835	)		(835	)
Shares issued for Green Tree acquisition		1,812,532			18		40,202									40,220
Dividends and dividend equivalents declared		219,361			2		5,578			(6,200	)					(620	)
Share-based compensation							5,179									5,179
Excess tax benefit on share-based compensation							316									316
Issuance of shares under incentive plans		57,572			1		180									181

Balance at December 31, 2011		27,875,158			279		178,598			354,239			416			533,532
Net loss										(22,134	)					(22,134	)
Other comprehensive loss, net of tax													77			77
Secondary offering, net of issuance costs		6,900,000			69		275,944									276,013
Equity portion of Convertible Notes, net of issuance costs							48,697									48,697
Shares issued for RMS acquisition		891,265			9		41,337									41,346
Share-based compensation							14,206									14,206
Excess tax benefit on share-based compensation							2,376									2,376
Issuance of shares under incentive plans net of shares repurchased and cancelled		1,021,362			10		805									815

Balance at December 31, 2012		36,687,785		$	367	$	561,963		$	332,105		$	493		$	894,928

The accompanying notes are an integral part of the consolidated financial statements.

F-5

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Years Ended December 31,
	2012			2011			2010
Operating activities
Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Amortization of servicing rights		50,461			28,623			—
Net fair value (gains) losses		(173	)		8,266			—
Accretion of residential loan discounts		(14,776	)		(13,712	)		(13,493	)
Accretion of discounts on debt and amortization of deferred debt issuance costs		15,769			6,150			1,084
Provision for loan losses		13,352			3,555			4,410
Depreciation and amortization of premises and equipment and intangibles		49,267			24,455			383
Losses (gains) on extinguishments		48,579			(95	)		(4,258	)
Losses (gains) on real estate owned, net		698			3,067			(3,490	)
Provision (benefit) for deferred income taxes		(22,373	)		38,742			(374	)
Share-based compensation		14,206			5,179			3,763
Other		(4,448	)		(2,159	)		(2,473	)
Decrease (increase) in assets
Receivables		(27,183	)		(16,588	)		(928	)
Servicer and protective advances		(12,722	)		10,289			(1,052	)
Other		(754	)		(2,911	)		1,940
Increase (decrease) in liabilities
Payables and accrued liabilities		(22,911	)		72,826			(689	)
Servicer payables		4,762			5,616			—

Cash flows provided by operating activities		69,620			104,906			21,891

Investing activities
Purchases of residential loans		(568,744	)		(46,462	)		(73,650	)
Originations of residential loans		(29,143	)		—			—
Principal payments received on residential loans		190,105			126,720			99,235
Payments on receivables related to Non-Residual Trusts		16,096			9,126			—
Cash proceeds from sales of real estate owned, net		19,244			8,201			4,758
Purchases of premises and equipment		(11,408	)		(6,287	)		(135	)
Decrease (increase) in restricted cash and cash equivalents		41,332			(47,918	)		198
Payment for acquisitions of businesses, net of cash acquired		(88,592	)		(1,000,529	)		1,685
Deposit for business acquisition		(15,000	)		—			—
Acquisitions of servicing rights		(5,539	)		—			—
Other		296			(378	)		475

Cash flows provided by (used in) investing activities		(451,353	)		(957,527	)		32,566

Financing activities
Issuance of debt		980,256			748,150			—
Payments on debt		(75,292	)		(24,277	)		—
Debt issuance costs paid		(30,411	)		(30,475	)		(2,512	)
Debt pre-payment penalty		(29,440	)		—			—
Proceeds from securitizations of reverse mortgage loans		583,925			—			—
Payments on HMBS related obligations		(33,496	)		—			—
Payments on servicing advance liabilities		(270,708	)		(164,882	)		(2,760	)
Issuances of servicing advance liabilities		263,833			157,806			—
Net change in master repurchase agreements		17,887			—			—
Issuance of mortgage-backed debt		—			223,065			134,355
Payments on mortgage-backed debt		(190,821	)		(137,487	)		(79,670	)
Extinguishments and settlement of debt and mortgage-backed debt		(690,000	)		(1,338	)		(36,152	)
Secondary equity offering, net of issuance costs		276,013			—			—
Dividends and dividend equivalents paid		—			(14,051	)		(53,482	)
Excess tax benefits on share-based compensation		2,376			316			—
Proceeds from the exercise of stock options		1,238			181			1,094
Repurchase and cancellation of common stock		(423	)		—			(264	)
Other		111			—			—

Cash flows provided by (used in) financing activities		805,048			757,008			(39,391	)

Net increase (decrease) in cash and cash equivalents		423,315			(95,613	)		15,066
Cash and cash equivalents at the beginning of the year		18,739			114,352			99,286

Cash and cash equivalents at the end of the year	$	442,054		$	18,739		$	114,352

The accompanying notes are an integral part of the consolidated financial statements.

F-6

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Basis of Presentation

Walter Investment Management Corp., or the Company or Walter Investment, is a fee-based business services provider to the residential mortgage industry. The Company is also a specialty servicer providing residential loan servicing for reverse mortgages and credit-sensitive residential mortgages. In addition, the Company is a mortgage portfolio owner of credit-challenged, non-conforming residential loans and reverse mortgage loans and operates an insurance agency serving residential loan customers. The Company operates throughout the United States, or U.S.

The Company serviced approximately 1.0 million accounts at December 31, 2012 and 2011.

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.

Acquisition of Marix Servicing, LLC

On November 1, 2010, the Company acquired 100% of the outstanding membership interests of Marix Servicing, LLC, or Marix, a high-touch specialty mortgage servicer based in Phoenix, Arizona. As a wholly-owned subsidiary of the Company, the financial results for Marix have been included in the Company’s consolidated financial statements beginning on November 1, 2010. Refer to Note 3 for further information regarding the acquisition of Marix. The acquisition of Marix allowed the Company to begin establishing its high-touch asset management and servicing platform.

Acquisition of GTCS Holdings, LLC

On July 1, 2011, the Company acquired 100% of the outstanding membership interests of GTCS Holdings, LLC, or Green Tree. Based in St. Paul, Minnesota, Green Tree is a fee-based business services company providing high-touch, third-party servicing of credit-sensitive consumer loans, primarily including residential mortgages and manufactured housing loans. A substantial portion of its servicing portfolio consists of residential mortgage loans serviced for a government-sponsored enterprise, a large commercial bank and various securitization trusts. Green Tree also acts as a nationwide agent primarily of property and casualty homeowners’ insurance products for both lender-placed and voluntary insurance coverage. Through the acquisition of Green Tree, the Company has increased its ability to provide specialty servicing and generate recurring fee-for-services revenues from a capital-light platform and has diversified its revenue streams from complementary businesses. As a result of the acquisition, the Company lost its qualification for Real Estate Investment Trust, or REIT, status. As a wholly-owned subsidiary of the Company, the financial results for Green Tree have been included in the Company’s consolidated financial statements beginning on July 1, 2011. Refer to Note 3 for further information regarding the acquisition of Green Tree.

Acquisition of Reverse Mortgage Solutions, Inc.

On November 1, 2012, the Company acquired 100% of the outstanding shares of Reverse Mortgage Solutions, Inc., or RMS. Based in Spring, Texas, RMS provides a full suite of services to the reverse mortgage sector, including servicing, sub-servicing, loan origination and securitization, and related technology. The acquisition of RMS positions the Company as a full service provider in the reverse mortgage servicing sector with new growth opportunities. The acquisition of RMS represents an attractive extension of the Company’s fee-for-service business model. As a wholly-owned subsidiary of the Company, the financial results for RMS have been included in the Company’s consolidated financial statements beginning on November 1, 2012. Refer to Note 3 for further information regarding the acquisition of RMS.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisition of Security One Lending

On December 31, 2012, in connection with the execution of a stock purchase agreement, the Company agreed to acquire all of the outstanding shares of Security One Lending, or S1L. Based in San Diego, California, S1L 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’s technology and RMS has acquired a significant amount of S1L’s reverse origination production during recent years. The acquisition of S1L will enhance RMS’s position as an issuer of reverse mortgage product, while also significantly increasing RMS’s retail origination presence. The Company obtained effective control over S1L through an economic closing on December 31, 2012, with the legal closing to occur no later than April 30, 2013. The economic closing required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. Accordingly, the assets acquired and liabilities assumed for S1L have been included in the Company’s consolidated balance sheets as of December 31, 2012. Refer to Note 3 for further information regarding the acquisition of S1L.

Acquisition of Certain Net Assets of Residential Capital LLC

The Company previously announced its joint bid with Ocwen Loan Servicing LLC to acquire certain mortgage-related net assets held by Residential Capital LLC, or ResCap, in an auction sponsored by the U.S. Bankruptcy Court. Pursuant to this agreement, the Company agreed to acquire the rights and assume the liabilities relating to ResCap’s entire Federal National Mortgage Association, Fannie Mae, mortgage servicing rights and related servicer advances, and ResCap’s mortgage originations and capital markets platforms, or the ResCap net assets. The Company subsequently closed on its acquisition of the ResCap net assets on January 31, 2013. Refer to Note 3 for further information regarding the acquisition of the ResCap net assets.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The consolidated financial statements include the accounts of Walter Investment, its wholly-owned subsidiaries and variable interest entities, or VIEs, of which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated. The results of operations for acquired companies are included from their respective dates of acquisition.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company’s material estimates and assumptions primarily arise from risks and uncertainties associated with interest rate volatility, prepayment volatility, credit exposure and borrower mortality rates and relate, but are not limited to, the allowance for loan losses as well as the valuation of residential loans, receivables, servicing rights, goodwill and intangibles, real estate owned, mortgage-backed debt and the HMBS related obligations. Although management is not currently aware of any factors that would significantly change its estimates and assumptions in the near term, actual results may differ from these estimates.

Reclassifications and Error Corrections

During the second and fourth quarters of 2012, the Company made immaterial corrections of errors in certain amounts in its consolidated balance sheet at December 31, 2011 as well as to acquisition date fair values at July 1, 2011 of the assets acquired and liabilities assumed resulting from the acquisition of Green Tree. Amounts received by the Company and required to be legally segregated in separate bank accounts have been

F-8

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

corrected by adjusting balances from cash and cash equivalents to restricted cash and cash equivalents. In addition, amounts for which the Company does not meet the right of offset criteria have been corrected by adjusting balances from servicer and protective advances to servicer payables. Lastly, cash balances that were overdrawn at period end have been corrected by adjusting balances from payables and accrued liabilities to cash and cash equivalents as the legal right of offset exists within the same banking institution. These revisions had no impact on the Company’s net income. The impact of correcting these errors was a decrease of $4.0 million to cash flows from operating activities and an increase of $9.9 million to cash flows used in investing activities for the year ended December 31, 2011 to $104.9 million and $957.5 million, respectively.

Also, during the fourth quarter ended December 31, 2012, the Company made an immaterial correction of an error to the purchase price allocation for Green Tree that was outside of the measurement period, which resulted in a decrease to payables and accrued liabilities, goodwill and insurance revenue of $1.0 million, $0.9 million and $0.4 million, respectively, and an increase to deferred tax liabilities, net of $0.5 million.

In addition, during the fourth quarter ended December 31, 2012, the Company made an immaterial correction of an error to income tax expense relating to the accounting for the impact of loss of its REIT status on July 1, 2011 for the third quarter ended September 30, 2011. The impact of this correction as of and for the year ended December 31, 2011 was to decrease payables and accrued liabilities, income tax expense and net loss by $2.9 million and decrease basic and diluted loss per share by $0.10.

Finally, the Company reclassified gains on extinguishments of mortgage-backed debt from other to gains (losses) on extinguishments in the consolidated statements of comprehensive income (loss) for the years ended December 31, 2011 and 2010.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Company’s consolidated financial statements include the accounts and transactions of Walter Investment and other entities in which the Company has a controlling financial interest. A controlling financial interest may exist in a form of ownership of a majority of the voting interests of an entity or through other arrangements with entities such as with a VIE.

The Company has historically funded its residential loan portfolio through securitizations and, accordingly, evaluates each securitization trust to determine if the Company has a variable interest in the trust, if the trust meets the definition of a VIE and whether or not the Company has a controlling financial interest in the VIE. If the Company determines that it does have a variable interest in the trust, that the trust is a VIE and that it is the primary beneficiary of the VIE, it consolidates the VIE. The evaluation considers all of the Company’s involvement with the VIE, identifying both the implicit and explicit variable interests that either individually or in the aggregate could be significant enough to warrant its designation as the primary beneficiary. This designation is evidenced by both the power to direct the activities of the VIE that most significantly impact its economic performance and the obligation to absorb the losses of, or the rights to receive the benefits from, the VIE that could potentially be significant to the VIE.

When the Company’s only involvement with a securitization trust is that of servicer, the Company evaluates whether its servicing fee is deemed a variable interest. When the Company’s servicing fee meets all of the criteria in the accounting guidance for VIEs regarding fees paid to service providers, the Company concludes that it is acting in the capacity of a fiduciary and that it does not have a variable interest in the securitization trust. Accordingly, the Company does not consolidate the trust.

When the Company has involvement with other entities that are not securitization trusts, it evaluates whether its involvement is deemed a variable interest, whether the entity is a VIE and whether the Company is the primary beneficiary, in which case, the Company consolidates the VIE.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company reevaluates whether an entity in which it has a variable interest is a VIE when certain significant events occur. Throughout the duration of its involvement with an entity that is deemed a VIE, the Company reassesses whether it is the primary beneficiary and, accordingly, whether it must consolidate the VIE. Certain events that may change whether or not the Company is the primary beneficiary of a VIE include, but are not limited to, a change in the Company’s ownership of the residual interests, a change in the Company’s role as servicer or a change in the Company’s contractual obligations to a VIE.

Securitization trusts that the Company consolidates and in which it holds residual interests are referred to as the Residual Trusts. Securitization trusts that have been consolidated and in which the Company does not hold residual interests are referred to as the Non-Residual Trusts. The Non-Residual Trusts were acquired as part of the acquisition of Green Tree.

Transfer of Financial Assets

In connection with the acquisition of RMS, the Company is an approved issuer of the Government National Mortgage Association, or GNMA, Home Equity Conversion Mortgage-Backed Securities, or HMBS, securities that are guaranteed by GNMA and collateralized by participation interests in Home Equity Conversion Mortgages, or HECMs, insured by the Federal Housing Administration, or FHA. The Company both originates and acquires HECM reverse mortgage loans. The loans are then pooled into HMBS securities which are sold into the secondary market with servicing rights retained. Based upon the structure of the GNMA securitization program, the Company has determined that it has not met all of the requirements for sale accounting and therefore accounts for these transfers as secured borrowings. Under this accounting treatment, the HECM reverse mortgage loans remain on the consolidated balance sheet as residential loans. The proceeds from the transfer of assets are recorded as an HMBS related obligation with no gain or loss recognized on the transfer. The holders of the HMBS beneficial interests have recourse to the Company to the extent of their participation in the HECM loans, but do not have recourse to the general assets of the Company.

Cash and Cash Equivalents

Cash and cash equivalents include short-term deposits and highly liquid investments that have original maturities of three months or less when purchased and are stated at cost, which approximates fair value. The Company maintains cash and cash equivalents with federally insured financial institutions and these balances typically exceed insurable amounts. Cash equivalents also include amounts due from third party financial institutions in process of settlement. These transactions typically settle in three days and were $39.0 million and $48.0 million at December 31, 2012 and 2011, respectively.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents includes cash and cash equivalents that are legally restricted as to use or withdrawal. Restricted cash and cash equivalents primarily includes (1) principal and interest payments collected by the Company as servicer on behalf of third-party investors and unconsolidated securitization trusts that have not yet been remitted to the investors or trusts; (2) principal and interest payments collected by consolidated securitization trusts that have not yet been remitted to the bondholders; and (3) cash held in escrow pending release to the sellers of Green Tree and RMS. Restricted cash equivalents include investments in money market mutual funds.

Residential Loans Carried at Amortized Cost and Revenue Recognition

Residential Loans Carried at Amortized Cost

A majority of the Company’s residential loans carried at amortized cost consist of forward residential mortgage loans and residential retail installment agreements originated by the Company and acquired from other

F-10

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

originators, principally Jim Walter Homes, Inc., or JWH, an affiliate of Walter Energy Inc., or Walter Energy, the Company’s prior parent, or more recently, acquired as part of a pool. In addition, the Company also carries at amortized cost certain forward loans repurchased at par under a mandatory repurchase obligation. Residential loans acquired from JWH as well as originated residential loans were initially recorded at the discounted value of the future payments using an imputed interest rate, net of cost basis adjustments such as deferred loan origination fees and associated direct costs, premiums and discounts and are stated at amortized cost. The imputed interest rate used represented the estimated prevailing market rate of interest for loans of similar terms issued to borrowers with similar credit risk. The Company has had minimal origination activity subsequent to May 1, 2008, when the Company ceased purchasing new originations from JWH or providing financing to new customers of JWH. New originations of forward loans subsequent to May 1, 2008 relate primarily to the financing of sales of real estate owned. The imputed interest rate on these financings is based on observable market mortgage rates, adjusted for variations in expected credit losses where market data is unavailable. Residential loans acquired in a pool are generally purchased at a discount to their unpaid principal balance, are recorded at their purchase price, and stated at amortized cost.

Interest Income and Amortization

Interest income on the Company’s residential loans carried at amortized cost consists of the interest earned on the outstanding principal balance of the underlying loan based on the contractual terms of the mortgage loan and retail installment agreement and the amortization of cost basis adjustments, principally premiums and discounts. The retail installment agreements state the maximum amount to be charged to borrowers, and ultimately recognized as interest income, based on the contractual number of payments and dollar amount of monthly payments. Cost basis adjustments are deferred and recognized over the contractual life of the loan as an adjustment to yield using the level yield method. Residential loan pay-offs received in advance of scheduled maturity (voluntary prepayments) affect the amount of interest income due to the recognition at that time of any remaining unamortized premiums, discounts or other cost basis adjustments arising from the loan’s inception.

Non-accrual Loans

Residential loans carried at amortized cost are placed on non-accrual status when any portion of the principal or interest is 90 days past due. When placed on non-accrual status, the related interest receivable is reversed against interest income of the current period. Interest income on non-accrual loans, if received, is recorded using the cash basis method of accounting. Residential loans are removed from non-accrual status when there is no longer significant uncertainty regarding collection of the principal and the associated interest. If a non-accrual loan is returned to accruing status, the accrued interest, at the date the residential loan is placed on non-accrual status, and forgone interest during the non-accrual period, are recorded as interest income as of the date the loan no longer meets the non-accrual criteria. The past due or delinquency status of residential loans is generally determined based on the contractual payment terms. The calculation of delinquencies excludes from delinquent amounts those accounts that are in bankruptcy proceedings that are paying their mortgage payments in contractual compliance with the bankruptcy court approved mortgage payment obligations. Loan balances are charged off when it becomes evident that balances are not collectible.

Acquired Credit-Impaired Loans

At acquisition, the Company reviews each loan or pool of loans to determine whether there is evidence of deterioration in credit quality since origination and if it is probable that the Company will be unable to collect all amounts due according to the loan’s contractual terms. The Company considers expected prepayments and estimates the amount and timing of undiscounted expected principal, interest and other cash flows for each loan or pool of loans meeting the criteria above, and determines the excess of the scheduled contractual principal and contractual interest payments of the loan or pool of loans assuming prepayments over all cash flows expected at

F-11

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquisition as an amount that should not be accreted (the non-accretable difference). The remaining amount, representing the excess or deficit of the cash flows expected to be collected for the loan or pool of loans over the amount paid, is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). These loans are reflected in the consolidated balance sheets net of these discounts. The Company ceased its acquisitions of forward loan pools in the second quarter of 2011.

At each reporting date, the Company evaluates the expected cash flows for each loan or pool of loans. An additional allowance for loan losses is recognized if it is probable the Company will not collect all of the cash flows expected to be collected as of the acquisition date. If the re-evaluation indicates the expected cash flows for a loan or pool of loans has significantly increased when compared to previous estimates, the yield is increased to recognize the additional income over the life of the asset prospectively.

Allowance for Loan Losses

The allowance for loan losses represents management’s estimate of probable incurred credit losses inherent in the residential loan portfolio accounted for at amortized cost as of the balance sheet date. This portfolio is made up of one segment and class that consists primarily of less-than prime, credit challenged residential loans. The risk characteristics of the portfolio segment and class relate to credit exposure. The method for monitoring and assessing credit risk is the same throughout the portfolio.

Residential loans accounted for at amortized cost are homogeneous and are collectively evaluated for impairment. The determination of the level of the allowance for loan losses and, correspondingly, the provision for loan losses, is based on, but not limited to, delinquency levels and trends, default frequency experience, prior loan loss severity experience, and management’s judgment and assumptions regarding various matters, including the composition of the residential loan portfolio, known and inherent risks in the portfolio, the estimated value of the underlying real estate collateral, the level of the allowance in relation to total loans and to historical loss levels, current economic and market conditions within the applicable geographic areas surrounding the underlying real estate, changes in unemployment levels and the impact that changes in interest rates have on a borrower’s ability to refinance its loan and to meet its repayment obligations. Management evaluates these assumptions and various other relevant factors impacting credit quality and inherent losses when quantifying the Company’s exposure to credit losses and assessing the adequacy of its allowance for loan losses as of each reporting date. The level of the allowance is adjusted based on the results of management’s analysis. Generally, as residential loans season, the credit exposure is reduced, resulting in decreasing provisions.

While there has been some stabilization in residential property values, there has not been significant improvement in property values particularly in more rural areas of the southeastern U.S. market. Additionally, there are continued high unemployment levels and a generally uncertain economic backdrop. As a result, the Company expects the allowance for loan losses to continue to remain elevated until such time as it experiences a sustained improvement in the credit quality of the residential loan portfolio. The future growth of the allowance is highly correlated to unemployment levels and changes in home prices within the Company’s markets.

While the Company considers the allowance for loan losses to be adequate based on information currently available, future adjustments to the allowance may be necessary if circumstances differ substantially from the assumptions used by management in determining the allowance for loan losses.

Residential Loans Carried at Fair Value

Residential loans carried at fair value include forward residential loans associated with Non-Residual Trusts, which consist of ten consolidated securitization trusts serviced by the Company, as well as reverse mortgage loans serviced by the Company through our acquisitions of RMS and S1L. These reverse mortgage loans consist of HECM reverse mortgage loans that have been transferred to GNMA securitization pools as well as those that

F-12

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

are held by the Company but have not yet been transferred to GNMA securitization pools. Residential loans associated with the Non-Residual Trusts serve as collateral for the related mortgage-backed debt recorded on the Company’s consolidated balance sheet while HECM reverse mortgage loans transferred to GNMA securitization pools serve as collateral for the mortgage-backed debt of the GNMA securitization pools. The Company has elected to carry all of these residential loans at fair value. The yield on the loans along with any changes in fair value are recorded in net fair value gains (losses) in the consolidated statements of comprehensive income (loss). The yield on the loans includes recognition of interest income based on the stated interest rates of the loans that is expected to be collected, as well as any fair value adjustments. Acquisitions of and payments on residential loans are included in investing activities in the consolidated statements of cash flows.

In connection with the acquisition of RMS, the Company acquired reverse mortgage loans that have been repurchased from GNMA securitization pools. RMS, as a GNMA security issuer, is required to repurchase reverse mortgage loans out of the GNMA securitization pools once the loans reach certain limits as established by the FHA. The yield on the loans includes recognition of interest income based on the stated interest rates of the loans that is expected to be collected, as well as any fair value adjustments. Performing repurchased loans are defined as those repurchased loans that do not have any event of default and are able to be conveyed to the Department of Housing and Urban Development, or HUD. Generally, nonperforming repurchased loans are foreclosed upon and the underlying collateral is liquidated in accordance with program requirements. In addition to the cost of financing these repurchases, the Company may sustain losses during the process of liquidating the loans.

Receivables Related to Non-Residual Trusts

Receivables related to Non-Residual Trusts, which are recorded in receivables, net, consist of the estimated fair value of expected future draws on letters of credit, or LOCs, from a third party. The LOCs are credit enhancements to the Non-Residual Trusts. The cash flows received from the LOC draws will be paid directly to the underlying securitization trusts and will be used to pay debt holders of these securitizations for shortfalls in principal and interest collections on the loans in the securitizations. The Company elected to carry these receivables at fair value. Changes in fair value are recorded in net fair value gains (losses) in the consolidated statements of comprehensive income (loss).

Servicing Operations

Servicing Rights

Servicing rights are an intangible asset representing the right to service a portfolio of loans. Capitalized servicing rights primarily relate to servicing and sub-servicing contracts acquired in connection with business combinations. Additionally, the Company has acquired the rights to service loans through the purchase of such rights from third parties. Residential loans represent two classes of servicing rights which consist of a forward loan class and a reverse loan class. All newly acquired servicing rights are initially measured at fair value and subsequently amortized based on expected cash flows in proportion to and over the life of net servicing income. Amortization is recorded in depreciation and amortization in the consolidated statements of comprehensive income (loss). Servicing rights are stratified by product type and compared to the estimated fair value on a quarterly basis. To the extent that the carrying value for a strata exceeds its estimated fair value, a valuation allowance is established with an impairment loss recognized in other expenses, net in the consolidated statements of comprehensive income (loss).

Servicing Revenue and Fees

Servicing revenue and fees includes contractual servicing fees, incentive and performance fees, and ancillary income. Contractual servicing fees are based on a percentage of the unpaid principal balance of the related

F-13

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

collateral and are accrued in the period the services have been performed. Incentive and performance fees include fees based on the performance of specific portfolios or loans, asset recovery income and modification fees. Fees based on the performance of specific portfolios or loans are recognized when earned based on the terms of the various servicing and incentive agreements. Asset recovery income is generally recognized upon collection. Certain other incentive fees are recognized when determinable, which is when the Company is officially notified of the amount of such fees. Ancillary income includes late fees, prepayment fees and collection fees and is generally recognized upon collection.

Servicer and Protective Advances

In the ordinary course of servicing residential loans and pursuant to certain servicing agreements, the Company may advance the principal and interest portion of delinquent mortgage payments to investors prior to the collection of such amounts from borrowers, provided that the Company determines these advances are recoverable from either the borrower or the liquidation of collateral. In addition, the Company is required under certain servicing contracts to ensure that property taxes, insurance premiums, foreclosure costs and various other items are paid in order to preserve the assets being serviced. Generally, the Company recovers such advances from borrowers for reinstated or performing loans, from proceeds of liquidation of collateral or ultimate disposition of the loan, or from investors. Certain of the Company’s servicing agreements provide that repayment of servicing advances made under the respective agreements have a priority over all other cash payments to be made from the proceeds of the residential loan, and in certain cases the proceeds of the pool of residential loans, which are the subject of that servicing agreement. As a result, the Company is entitled to repayment from loan proceeds before any interest or principal is paid to the bondholders, and in certain cases, advances in excess of loan proceeds may be recovered from pool level proceeds. These assets are carried at cost, net of estimated losses. The Company establishes an allowance for uncollectible advances based on an analysis of the underlying loans, their historical loss experience and recoverability pursuant to the terms of underlying servicing agreements. Generally, estimated losses related to advances are recorded in general and administrative expenses in the consolidated statements of comprehensive income (loss).

Custodial Accounts

In connection with its servicing activities, the Company has a fiduciary responsibility for amounts related to borrower escrow funds and other custodial funds due to investors aggregating $252.4 million and $276.7 million at December 31, 2012 and 2011, respectively. These funds are maintained in segregated bank accounts, which do not represent assets and liabilities of the Company, and accordingly, are not reflected in the consolidated balance sheets.

Goodwill

Goodwill represents the excess of the consideration paid for an acquired entity over the fair value of the identifiable net assets acquired. The Company tests goodwill for impairment at the reporting unit level at least annually or whenever events or circumstances indicate that the carrying value of goodwill may not be recoverable from future cash flows. The Company has the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. If the Company elects to bypass the qualitative assessment or if it determines, based on qualitative factors, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a two-step quantitative test is required. In Step 1, the Company compares the fair value of the reporting unit with its net carrying value, including goodwill. If the net carrying value of the reporting unit exceeds its fair value, the Company then performs Step 2 of the impairment test to measure the amount of impairment loss, if any. Step 2 requires allocation of the reporting unit’s fair value to all of its assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value being allocated to goodwill (implied fair value of goodwill). If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, the Company recognizes an impairment loss in an amount equal to that excess up to the

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

carrying value of goodwill. In performing the two-step quantitative assessment, fair value of the reporting units is based on discounted cash flows, market multiples and/or appraised values, as appropriate.

The Company completed its annual goodwill impairment test effective October 1, 2012, which included the consideration of certain economic factors. Based on the impairment test, the Company determined that its insurance agency reporting unit failed the Step 1impairment test. As a result of the Step 1 test, this reporting unit’s adjusted net book value exceeded its fair value by approximately $7.2 million, or 8%. The Company calculated the reporting unit’s fair value and determined that no goodwill impairment charges were necessary in 2012, as these Step 1 shortfalls were offset by the implied fair value adjustments of this reporting unit’s assets and liabilities determined in the Step 2 fair value procedures. The goodwill allocated to the insurance agency reporting unit was $4.4 million at December 31, 2012.The Company opted to use the qualitative method for the Company’s remaining reporting units and all passed, resulting in no goodwill impairment charges in 2012.

Intangible Assets

Intangible assets include customer relationships, institutional relationships, licenses, trademarks and trade names, and non-compete agreements. Certain customer relationships are being amortized using an economic consumption method over their related expected useful lives. Intangible assets related to institutional relationships, licenses, trademarks and trade names, non-compete agreements and the remaining customer relationships are being amortized on a straight-line basis over their respective estimated useful lives. Intangible assets subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its fair value.

Premises and Equipment, Net

Premises and equipment, net is stated at cost less accumulated depreciation and amortization. Depreciation and amortization, which includes amortization of assets recorded under capital leases, is recorded on a straight-line basis over the lesser of the remaining term of the lease or the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of the remaining term of the lease or the useful life of the leased asset. Costs to internally develop computer software are capitalized during the application development stage and include external direct costs of materials and services as well as employee costs related to time spent on the project during the capitalization period. Premises and equipment are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its fair value.

Real Estate Owned, Net

Real estate owned, net, which is included in other assets in the consolidated balance sheets, represents properties acquired in satisfaction of residential loans. Upon foreclosure or when the Company otherwise takes possession of the property, real estate owned is recorded at the lower of cost or estimated fair value less estimated costs to sell. The excess of cost over the fair value of the property acquired less estimated costs to sell is charged to the allowance for loans losses for residential loans accounted for at amortized cost and to net fair value gains and losses for loans accounted for at fair value. The fair value of the property is generally based upon historical resale recovery rates and current market conditions or appraisals. Subsequent declines in the value of real estate owned are recorded as adjustments to the carrying amount through a valuation allowance and are

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recorded in other expenses, net in the consolidated statements of comprehensive income (loss). Costs relating to the improvement of the property are capitalized to the extent the balance does not exceed its fair value, whereas those costs relating to maintaining the property are charged to other expenses, net in the consolidated statements of comprehensive income (loss) when incurred.

The Company will often finance the sale of its real estate owned. Revenue from the sale of real estate owned is recognized by the full accrual method when the specific criteria for use of this method are met. However, frequently, the requirement for a minimum 5% initial cash investment for primary residences is not met. When this is the case, losses are recognized immediately while gains are deferred and recognized by the installment method until the borrower’s initial investment reaches the minimum 5% requirement. Once the borrower’s initial investment reaches the minimum required amount, revenue is recognized by the full accrual method. Gains and losses on the sale of real estate owned are recorded in other expenses, net in the consolidated statements of comprehensive income (loss).

Insurance Operations

Agency Business

Commission revenue is recognized when the earnings process has been completed, which is the effective date of the insurance policy. As customers generally pay their premiums in installments over the life of the policies, the Company records an insurance premium receivable and corresponding payable to insurance carrier, net of commission, which are included in the consolidated balance sheets in receivables, net and payables and accrued liabilities, respectively. At the time commission revenue is recognized, the Company can reliably estimate expected policy cancellations and records a reserve for cancellations, which is estimated based on historical experience adjusted for known events or circumstances. The reserve for policy cancellations is evaluated on a quarterly basis and adjusted to reflect current estimates.

Reinsurance Business

Premium revenue is recognized and recorded in insurance revenue ratably over the life of the insurance contract. Accruals for property liability claims and claims expense are recognized when probable and reasonably estimable at amounts necessary to settle both reported and estimated incurred but not yet reported claims of insured property liability losses, based upon the facts in each case and the Company’s experience with similar matters. The establishment of appropriate accruals, including accruals for catastrophes such as hurricanes, is an inherently uncertain process. Accrual estimates are regularly reviewed and updated, using the most current information available.

At December 31, 2012 and 2011, the gross liability for unpaid claims was $0.1 million and $0.7 million, respectively, and is included in payables and accrued liabilities in the consolidated balance sheets. Total incurred claims expense was $2.2 million, $5.4 million and $2.3 million for the years ended December 31, 2012, 2011 and 2010, respectively, which was recorded in other expenses, net in the consolidated statements of comprehensive income (loss).

Servicer Payables

Servicer payables represent amounts collected, primarily from residential borrowers whose loans the Company services, which will be remitted to third-party trusts, investors or others.

Debt

Debt is carried net of discounts at amortized cost. Associated deferred debt issuance costs are recorded in other assets in the consolidated balance sheets. These costs and original issue discounts, if any, are amortized to interest expense over the term of the debt using the interest method.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Derivatives

Freestanding derivative instruments are used as part of an overall strategy to economically manage exposure to market risks primarily associated with fluctuations in interest rates. These derivative instruments are measured at fair value and included in other assets and payables and accrued liabilities in the consolidated balance sheets. Changes in fair value are recorded in net fair value gains (losses) in the consolidated statements of comprehensive income (loss).

Mortgage-Backed Debt

The Company’s mortgage-backed debt associated with the Residual Trusts is carried net of discounts at amortized cost. Associated deferred debt issuance costs are recorded in other assets in the consolidated balance sheets. These costs and original issue discounts, if any, are amortized to interest expense over the lives of the securitization trusts using the interest method. The Company elected to carry mortgage-backed debt related to the Non-Residual Trusts at fair value.The yield on the mortgage-backed debt along with any changes in fair value are recorded in net fair value gains (losses) in the consolidated statements of comprehensive income (loss).The yield on the mortgage-backed debt includes recognition of interest expense based on the stated interest rates of the mortgage-backed debt, as well as any fair value adjustments.

HMBS related obligations

As a result of the acquisition of RMS, the Company recognizes the proceeds from the sale of HMBS securities as a secured borrowing. The Company elected to record the secured borrowing, or the HMBS related obligations, at fair value. The yield on the HMBS obligations along with any changes in fair value are recorded in net fair value gains (losses) in the consolidated statements of comprehensive income (loss).The yield on the HMBS obligations includes recognition of interest expense based on the stated interest rates of the HMBS obligations, as well as any fair value adjustments. Proceeds from securitizations of reverse mortgage loans and payments on HMBS related obligations are included in financing activities in the consolidated statements of cash flows.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates for the periods in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the change.

Periodic reviews of the carrying amount of deferred tax assets are made to determine if the establishment of a valuation allowance is necessary. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. All evidence, both positive and negative, is evaluated when making this determination. Items considered in this analysis include the ability to carry back losses to recoup taxes previously paid, the reversal of temporary differences, tax planning strategies, historical financial performance, expectations of future earnings and the length of statutory carryforward periods. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences.

The Company assesses its tax positions for all open tax years and determines whether it has any material unrecognized liabilities in accordance with the guidance on accounting for uncertain tax positions. The Company records interest and penalties on uncertain tax positions in income tax expense and general and administrative expense, respectively, in the consolidated statements of comprehensive income (loss).

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Share-Based Compensation

The Company has in effect stock incentive plans under which restricted stock, restricted stock units, or RSUs, and non-qualified stock options have been granted to employees and non-employee members of the Board of Directors. The Company estimates the fair value of share-based awards on the date of grant. The value of the award is generally recognized as expense using the graded method over the requisite service periods. The fair value of the Company’s restricted stock and RSUs is generally based on the average of the high and low market prices of its common stock on the date of grant. The Company has estimated the fair value of non-qualified stock options as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes model considers, among other factors, the expected life of the award, the expected volatility of the Company’s stock price and expected dividends. The Company records share-based compensation expense in salaries and benefits expense in the consolidated statements of comprehensive income (loss).

Basic and Diluted Earnings (Loss) Per Share

Outstanding share-based payment awards that include non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are considered participating securities and are included in the calculation of basic earnings per common share pursuant to the two-class method. For the Company, participating securities are comprised of certain outstanding restricted stock and RSUs. Under the two-class method, net income is reduced by the amount of dividends declared in the period for common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. Basic earnings per share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income allocable to common shares by the weighted-average number of common shares for the period, as adjusted for the potential dilutive effect of non-participating share-based awards and convertible debt, based on the treasury method. The Company uses the treasury method to compute the dilutive effect of convertible debt based on its intention to settle all conversions through combination settlement, which involves repayment of an amount of cash equal to the principal amount of convertible debt and any excess of conversion value over the principal amount of convertible debt in shares of common stock. See Note 15 for additional information regarding convertible debt. During periods of net loss, diluted loss per share is equal to basic loss per share as the antidilutive effect of non-participating share-based awards and convertible debt is disregarded. No effect is given to participating securities in the computation of basic and diluted loss per share as these securities do not share in the losses of the Company.

Litigation

The Company is involved in litigation, investigations and claims arising out of the normal conduct of its business. The Company estimates and accrues 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. The Company believes it has 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.

Recent Accounting Guidance

In May 2011, the Financial Accounting Standards Board, or FASB, issued an accounting standards update on fair value measurements and disclosures that was the result of work completed by them and the International Accounting Standards Board to develop common requirements for measuring fair value and for disclosing of information about fair value measurements. The amendments in this standard are effective for interim and annual

F-18

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

periods beginning January 1, 2012. The updates related to fair value measurements had no impact on the Company’s consolidated financial statements. The additional disclosures required by the new standard include quantitative information about the significant unobservable inputs used in Level 3 recurring and non-recurring fair value measurements, a description of the valuation processes used for recurring and non-recurring fair value measurements, and qualitative information about the sensitivity of recurring fair value measurements to changes in unobservable inputs. These additional disclosures have been included in Note 5.

In June 2011, the FASB issued an accounting standards update that eliminates the option to present the components of other comprehensive income (loss) as part of the statement of changes in stockholders’ equity. Under the new standard, the components of net income (loss) and other comprehensive income (loss) can be presented in either a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements. The accounting standard is effective for interim and annual periods beginning January 1, 2012. The change in presentation required by this standard, which had an insignificant impact on the Company’s consolidated financial statements, is reflected in the consolidated statements of comprehensive income (loss).

In September 2011, the FASB issued an accounting standards update in order to simplify how goodwill is tested for impairment. Prior to the issuance of this update, goodwill was required to be tested for impairment on at least an annual basis by comparing the fair value of a reporting unit with its carrying amount including goodwill. If the fair value of the reporting unit was less than its carrying amount, then measurement of the amount of impairment was required. Under the new standard, the Company is not required to calculate the fair value of a reporting unit unless it determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this standard are effective for interim and annual periods beginning January 1, 2012 with early adoption permitted. The Company has adopted this accounting standards update effective January 1, 2012 and applied the guidance to its annual goodwill impairment test as of October 1, 2012. Adoption of this standard had no impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued an accounting standards update to require disclosure of information about the effect of rights of setoff with certain financial instruments on an entity’s financial position. In January 2013, the FASB issued an accounting standards update that clarifies the aforementioned offsetting disclosure requirements. The disclosure requirements are only applicable to rights of setoff of certain derivative instruments, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with standards set forth by the FASB Codification or master netting arrangements or similar agreements. The Company has adopted the amendments in these standards effective in the first quarter of 2013. Adoption of this standard had no impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued an accounting standards update that requires presentation for reclassification adjustments from accumulated other comprehensive income into net income in a single note or on the face of the financial statements. The Company has adopted the amendments in this standard effective in the first quarter of 2013. Adoption of this standard did not have a significant effect on the Company’s financial statement reporting.

F-19

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Acquisitions

Reverse Mortgage Solutions, Inc.

On November 1, 2012, the Company acquired all of the outstanding shares of RMS, or the RMS Acquisition. The table below details the estimated fair value of the consideration transferred in connection with the RMS Acquisition (in thousands, except shares and per share data):


	Amount
Cash to owners of RMS ⁽¹⁾	$	95,000
Company common stock (891,265 shares at $46.39 per share) ⁽²⁾		41,346

Total consideration	$	136,346

⁽¹⁾

The cash portion of the RMS Acquisition was funded through the issuance of common stock. See Note 20 for additional information. This amount included $9.0 million at December 31, 2012, in restricted cash that was payable to the owners of RMS and is recognized in payables and accrued liabilities as presented in Note 13.

⁽²⁾	The fair value of $46.39 per share for the 891,265 common shares issued was based on an average of the high and low prices of the Company’s shares on November 1, 2012.

The purchase consideration of $136.3 million was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. A preliminary allocation of the purchase price has been made to major categories of assets and liabilities based on management’s estimates. The table below presents the preliminary purchase price allocation of the estimated acquisition date fair values of the assets acquired and the liabilities assumed (in thousands):


	Amount
Assets
Cash	$	19,683
Restricted cash		1,401
Residential loans		5,331,989
Receivables		11,832
Servicer and protective advances		17,615
Servicing rights		15,916
Goodwill		101,199
Intangible assets		20,800
Premises and equipment		15,633
Deferred tax asset		19,052
Other assets		13,245

Total assets acquired		5,568,365

Liabilities
Payables and accrued liabilities		29,357
Debt		148,431
HMBS related obligations		5,254,231

Total liabilities assumed		5,432,019
Fair value of net assets acquired	$	136,346

F-20

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The residential loans acquired in connection with the RMS Acquisition consist of reverse mortgage loans with a fair value of $5.3 billion and gross contractual amounts receivable of $4.8 billion, all of which is expected to be collected.

The RMS Acquisition resulted in a new reportable segment for the Company, the Reverse Mortgage segment. Refer to Note 22 for further information regarding segments. Goodwill is calculated as the excess of the purchase consideration transferred over the fair value of the identifiable assets acquired less the liabilities assumed. The primary factors that contributed to the recognition of goodwill are the expected future earnings and projections of growth. At acquisition, the Company’s estimate of goodwill allocated to the Reverse Mortgage segment was $101.2 million, of which none is expected to be tax deductible.

The following table presents the estimate of identifiable intangible assets and software development costs recognized at acquisition of RMS with the corresponding weighted-average amortization periods (in years) at the acquisition date (in thousands):


	Estimated Fair Value		Weighted- Average Amortization Period
Intangible assets:
Institutional relationships	$	11,900		10.0
Customer relationships		6,700		1.8
Trade name		1,200		4.7
Non-compete agreement		1,000		1.5

Total intangible assets		20,800		6.6
Software development costs ⁽¹⁾		13,100		4.0

Total intangible assets and software development costs	$	33,900		5.6

⁽¹⁾	Software development costs are included in premises and equipment in the consolidated balance sheet. See Note 11 for additional information.

The amount of RMS’s revenues and net income included in the Company’s consolidated statement of comprehensive income (loss) for the period from the date of acquisition through December 31, 2012 were $7.0 million and $1.9 million, respectively. The Company incurred transaction-related expenses to acquire RMS of $2.8 million during the year ended December 31, 2012, which were primarily included in general and administrative expenses in the consolidated statement of comprehensive income (loss).

Security One Lending

On December 31, 2012, in connection with the execution of a stock purchase agreement, the Company agreed to acquire all of the outstanding shares of S1L. The Company obtained effective control over S1L through an economic closing on December 31, 2012, with the legal closing to occur no later than April 30, 2013. The economic closing required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. Accordingly, the assets acquired and liabilities assumed were recorded at their fair values on December 31, 2012. The purchase price consists of $20.0 million in cash paid on December 31, 2012 and up to an additional $11.0 million in contingent earn-out payments dependent upon the achievement of certain designated performance targets over the next twelve months. The Company recorded an estimated liability for the contingent earn-out payments of $6.1 million on December 31, 2012, which is included in payables and accrued liabilities as presented in Note 13.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The purchase consideration of $26.1 million was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. A preliminary allocation of the purchase price has been made to major categories of assets and liabilities based on management’s estimates. The table below presents the purchase price allocation of the estimated acquisition date fair values of the assets acquired and the liabilities assumed (in thousands):


	Amount
Assets
Cash	$	6,725
Restricted cash		822
Residential loans		98,441
Receivables		1,179
Servicing rights		378
Goodwill		8,809
Intangible assets		11,000
Premises and equipment		530
Other assets		500

Total assets acquired		128,384

Liabilities
Payables and accrued liabilities		8,252
Debt		89,434
Deferred tax liability		4,598

Total liabilities assumed		102,284

Fair value of net assets acquired	$	26,100

Residential loans acquired in connection with the acquisition of S1L, which consist primarily of reverse mortgage loans, have a fair value of $98.4 million and gross contractual amounts receivable of $89.2 million, all of which is expected to be collected.

S1L is included in the Company’s Reverse Mortgage segment. Refer to Note 22 for further information regarding segments. Goodwill is calculated as the excess of the purchase consideration transferred over the fair value of the identifiable assets acquired less the liabilities assumed. The primary factors that contributed to the recognition of goodwill are the expected future cash flows and projections of growth. At acquisition, the Company’s estimate of goodwill allocated to S1L was $8.8 million, of which none is expected to be tax deductible. The Company incurred transaction-related expenses to acquire S1L of $0.3 million during the year ended December 31, 2012, which are primarily included in general and administrative expenses in the consolidated statement of comprehensive income (loss).

F-22

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the estimate of identifiable intangible assets recognized at acquisition of S1L with the corresponding weighted-average amortization periods (in years) at the acquisition date (in thousands):


	Estimated Fair Value		Weighted- Average Amortization Period
Intangible assets:
Licenses	$	5,000		25.0
Institutional relationships		4,700		1.6
Trademarks and trade name		800		4.4
Non-compete agreement		500		1.8

Total intangible assets	$	11,000		12.4

ResCap Net Assets

On January 31, 2013, or the ResCap Closing Date, the Company acquired the assets and assumed the liabilities relating to all of ResCap’s Fannie Mae mortgage servicing rights and related servicer advances, and ResCap’s mortgage originations and capital markets platforms, or the ResCap assets, for a preliminary purchase price of $492.0 million, which was partially funded with net proceeds from a common stock offering and borrowings from the Company’s incremental secured credit facility. The total estimated cash consideration, net of a $15.0 million earnest money cash deposit paid in the fourth quarter of 2012, was partially paid on January 31, 2013, with a final payment to be made upon final reconciliation of the ResCap assets as of January 31, 2013, which is when the final purchase price can be determined. The earnest money cash deposit is recorded in other assets in the consolidated balance sheet as presented in Note 12. The Company is accounting for this transaction as a business combination in accordance with authoritative accounting guidance.

Due to the limited time since the ResCap Closing Date, the Company is unable to provide actual amounts recognized related to the ResCap assets as the accounting for the purchase price allocation has not yet been completed. As a result, certain required disclosures relative to the ResCap assets acquired, including those related to any goodwill or bargain purchase amounts to be recognized have not been made.

Green Tree

On July 1, 2011, the Company acquired all of the outstanding membership interests of Green Tree, or the Green Tree Acquisition. The table below details the fair value of the consideration transferred in connection with the Green Tree Acquisition (in thousands, except shares and per share data):


	Amount
Cash to owners of Green Tree ⁽¹⁾	$	737,846
Cash to settle Green Tree senior secured credit facility ^{(1) (2)}		274,794
Company common stock (1,812,532 shares at $22.19 per share) ⁽³⁾		40,220

Total consideration	$	1,052,860

⁽¹⁾

The cash portion of the Green Tree Acquisition was funded through cash on hand and debt issuances as discussed in Note 15. Cash on hand was largely generated by monetizing existing corporate assets as discussed in Note 16. This amount included $5.0 million and $45.0 million, at December 31, 2012 and 2011, respectively, in restricted cash that was payable to the owners of Green Tree and is recognized in payables and accrued liabilities as presented in Note 13.

F-23

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

⁽²⁾	Simultaneously with the closing of the Green Tree Acquisition, $274.8 million of previously outstanding Green Tree secured debt was retired.

⁽³⁾	The fair value of $22.19 per share for the 1.8 million common shares issued was based on an average of the high and low prices of the Company’s shares on July 1, 2011.

The purchase consideration of $1.1 billion was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. An allocation of the purchase price was made to major categories of assets and liabilities based on management’s estimates. Provided below is a table summarizing the originally reported estimated acquisition date fair values of the assets acquired and liabilities assumed, measurement period adjustments recorded, and the final adjusted purchase price allocation (in thousands):


			Measurement Period Adjustments
	Originally Reported		2011			2012			Adjusted
Assets
Cash and cash equivalents	$	22,046	$	—		$	—		$	22,046
Restricted cash		110,040		(3,631	)		—			106,409
Residential loans		729,195		—			—			729,195
Receivables		225,530		(14,367	)		—			211,163
Servicer and protective advances		134,689		—			(991	)		133,698
Servicing rights		278,952		—			—			278,952
Goodwill		468,163		2,128			991			471,282
Intangible assets		142,303		7,764			—			150,067
Premises and equipment		132,814		—			—			132,814
Other assets		13,161		—			—			13,161

Total assets acquired		2,256,893		(8,106	)		—			2,248,787

Liabilities
Payables and accrued liabilities		121,114		(6,603	)		—			114,511
Servicing advance liabilities		110,861		—			—			110,861
Debt		14,834		—			—			14,834
Mortgage-backed debt		861,674		—			—			861,674
Deferred tax liability, net		4,343		967			—			5,310
Servicer payables		91,207		(2,470	)		—			88,737

Total liabilities assumed		1,204,033		(8,106	)		—			1,195,927

Fair value of net assets acquired	$	1,052,860	$	—		$	—		$	1,052,860

The estimated fair values of the assets acquired and liabilities assumed as originally reported were based on information that was available as of the acquisition date. The 2011 measurement period adjustments include changes to the estimated fair values primarily related to accrued receivables and payables associated with the Company’s insurance agency business, along with the related effects on intangible assets and deferred taxes. The 2012 measurement period adjustments include an adjustment to the estimated fair value of servicer and protective advances. This adjustment resulted in an increase to the goodwill assigned to the Servicing segment and a decrease to servicer and protective advances of $1.0 million.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill is calculated as the excess of the purchase consideration transferred over the fair value of the identifiable assets acquired less the liabilities assumed. The primary factors that contributed to the recognition of goodwill are the expected future cash flows and projections of growth. The Company also expects to achieve synergies, as the Green Tree Acquisition results in overlapping staff and administrative functions, duplicate servicing platforms and allows for cross deployment of proprietary technology to avoid certain other planned future expenditures. At acquisition, the Company’s estimate of goodwill allocated to the Servicing, Asset and Receivables Management, or ARM, and Insurance segments was $430.5 million, $34.5 million and $5.3 million, respectively. The amount allocated to goodwill that is expected to be tax deductible is $456.0 million.

The following table presents the estimate of identifiable intangible assets and software development costs recognized at the acquisition of Green Tree with the corresponding weighted-average amortization periods (in years) at the acquisition date (in thousands):


	Estimated Fair Value		Weighted- Average Amortization Period
Intangible assets:
Customer relationships
Servicing	$	69,362		7.0
Insurance		34,564		7.0
Asset receivables management		29,141		3.2
Institutional relationships		17,000		1.3

Total intangible assets		150,067		5.6
Software development costs ⁽¹⁾		123,349		3.4

Total intangible assets and software development costs	$	273,416		4.6

⁽¹⁾	Software development costs are included in premises and equipment in the consolidated balance sheet. See Note 11 for additional information.

In connection with the Green Tree Acquisition, the Company recognized a contingent liability related to Green Tree’s mandatory obligation to repurchase loans at par from an investor when loans become 90 days past due. The Company estimated the fair value of this contingent liability at the acquisition date at $13.6 million, which was included in payables and accrued liabilities. The fair value was estimated based on prepayment, default and severity rate assumptions related to the historical and projected performance of the underlying loans. The Company estimated that the undiscounted losses to be incurred under this obligation over the remaining lives of the loans at the acquisition date were $21.1 million. Refer to Note 23 for further information regarding the mandatory repurchase obligation.

In addition, the Company recognized a contingent liability related to payments for certain professional fees that it will be required to make over the remaining life of various securitizations. The fees are based in part on the outstanding principal balance of the debt issued by these trusts. The Company estimated the fair value of this contingent liability at the acquisition date at $10.4 million, which was included in payables and accrued liabilities. The fair value was estimated based on prepayment and default assumptions related to the historical and projected performance of the underlying loans. The Company estimated that the undiscounted payments over the remaining lives of the securitizations at the acquisition date were $15.7 million. Refer to Note 23 for further information regarding the professional fees liability.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The residential loans acquired in connection with the Green Tree Acquisition consisted primarily of loans related to the Non-Residual Trusts. The Company recorded residential loans at the acquisition date that had a fair value of $729.2 million and a gross contractual amount receivable of $1.8 billion, of which $423.8 million was not expected to be collected.

The amount of Green Tree’s revenues and net income included in the Company’s consolidated statement of comprehensive loss for the period from the date of acquisition through December 31, 2011 were $216.8 million and $24.2 million, respectively. The Company incurred $12.9 million of transaction-related expenses to acquire Green Tree during the year ended December 31, 2011, most of which are included in general and administrative expenses in the consolidated statement of comprehensive loss.

The following table presents the unaudited pro forma combined revenues and net loss as if RMS and S1L had been acquired on January 1, 2011 and Green Tree on January 1, 2010 (in thousands, except per share data):


	For the Years Ended December 31,
	2012			2011
Revenues	$	705,897		$	624,071
Net loss		(33,668	)		(24,236	)
Net loss per share — basic		(0.88	)		(0.66	)
Net loss per share — diluted		(0.88	)		(0.66	)

The unaudited pro forma financial information is not indicative of the results of operations that would have been achieved if the acquisitions of Green Tree, RMS, and S1L, or the Acquisitions, had taken place on the dates indicated above. The amounts have been calculated to reflect additional fair value adjustments, depreciation and amortization that would have been incurred assuming the Acquisitions had occurred on the dates indicated above together with the consequential tax effects. The pro forma adjustments for Green Tree also include interest expense on debt issued to consummate the acquisition of Green Tree together with the consequential tax effects. The unaudited pro forma financial information excludes costs incurred which were directly attributable to the acquisitions and which do not have a continuing impact on the combined operating results.

Marix

On November 1, 2010, the Company completed its acquisition of Marix. The purchase price for the acquisition was a cash payment due at closing of less than $0.1 million plus estimated contingent earn-out payments of $2.1 million. The contingent earn-out payments were based on net servicing revenue in Marix’s existing business in excess of a base of $3.8 million per quarter. The payments were due after the end of each fiscal quarter for a three year period ending December 31, 2013. The estimated liability for future earn-out payments was recorded in the consolidated balance sheet at the acquisition date. In accordance with the accounting guidance on business combinations, any subsequent adjustments to the estimated liability for contingent earn-out payments are to be recognized in the earnings of the period in which the change in the estimated payment occurs. At December 31, 2011, the estimated liability for contingent earn-our payments was reduced to $0 as the servicing revenue targets specified in the purchase agreement were not met in any of the four quarters in 2011. No earn-out payments were earned or paid in 2011 or 2012 and management estimates that the revenue targets for 2013, the remaining year of the earn-out period, will not be met. As a result of management’s change in estimate, a gain of $2.1 million was recorded in other gains (losses) in the consolidated statement of comprehensive loss for the year ended December 31, 2011.

Costs Associated with Exit Activities

As a result of the acquisition of Green Tree, the Company took steps in 2011 to manage and optimize the combined operations of the consolidated company. The major costs incurred as a result of these actions are

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

severance and other-related costs, which are recorded in salaries and benefits in the consolidated statements of comprehensive income (loss). Charges associated with these exit activities have not been allocated to business segments and are included in Other in Note 22. The Company completed these exit activities at the end of October 2012; final payments or other settlements are expected to be completed by the fourth quarter of 2013.

The following table summarizes the accrued liability, which is included in payables and accrued liabilities in the consolidated balance sheets, and the related charges and cash payments and other settlements associated with these activities (in thousands):


	Severance and Other-Related Costs			Other			Total
Balance at January 1, 2011	$	—		$	—		$	—
Charges		3,222			278			3,500
Cash payments or other settlements		(1,266	)		(63	)		(1,329	)

Balance at December 31, 2011		1,956			215			2,171
Charges		2,155			122			2,277
Cash payments or other settlements		(2,714	)		(76	)		(2,790	)

Balance at December 31, 2012	$	1,397		$	261		$	1,658

Total expected charges	$	5,377		$	400		$	5,777

4. Variable Interest Entities

Consolidated VIEs

Residual Trusts

The Company has historically funded its residential loan portfolio through securitizations and evaluates each securitization trust to determine if it meets the definition of a VIE and whether or not the Company is required to consolidate the trust. The Company determined that it was the primary beneficiary of twelve securitization trusts for which it owns residual interests, and as a result, has consolidated these VIEs. As a holder of the residual securities issued by the trusts, the Company has both the obligation to absorb losses to the extent of its investment and the right to receive benefits from the trusts, both of which could potentially be significant. In addition, as the servicer for these trusts, the Company concluded it has the power to direct the activities that most significantly impact the economic performance of the trusts through its ability to manage the delinquent assets of the trusts. Specifically, the Company has discretion, subject to applicable contractual provisions and consistent with prudent mortgage-servicing practices, to decide whether to sell or work out any loans that become troubled.

The Company is not contractually required to provide any financial support to the Residual Trusts. The Company may, from time to time at its sole discretion, purchase certain assets from the trusts to cure delinquency or loss triggers for the sole purpose of releasing excess overcollateralization to the Company. Based on current performance trends, the Company does not expect to provide financial support to the Residual Trusts.

Non-Residual Trusts

The Company determined that it is the primary beneficiary of ten securitization trusts for which it does not own any residual interests. These trusts were consolidated on the Company’s consolidated balance sheet at July 1, 2011 in connection with the acquisition of Green Tree. The Company does not receive economic benefit from the residential loans while the loans are held by the Non-Residual Trusts other than the servicing fees paid to the Company to service the loans. However, as part of a prior agreement to acquire the rights to service the

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

loans in these securitization trusts, the Company has certain obligations to exercise mandatory clean-up calls for each of these trusts at their earliest exercisable dates, which is the date each loan pool falls to 10% of the original principal amount. The Company will take control of the remaining collateral in the trusts when these calls are exercised, thus the clean-up call is deemed a variable interest, as the Company will be required under this obligation to absorb any losses of the VIEs subsequent to these calls, which could potentially be significant to each VIE. Additionally, as servicer of the VIEs, the Company has concluded that it has the power to direct the activities that most significantly impact the economic performance of the VIEs.

The Company is not contractually required to provide any financial support to the Non-Residual Trusts. However, as described above, the Company is obligated to exercise the mandatory clean-up call obligations it assumed as part of the agreement to acquire the rights to service the loans in these trusts. The Company expects to call these securitizations beginning in 2016 and continuing through 2019. The total outstanding balance of the residential loans expected to be called at the various respective call dates is $418.1 million.

For seven of the ten Non-Residual Trusts and four securitization trusts that have not been consolidated, the Company, as part of an agreement to service the loans in all eleven trusts, also has an obligation to reimburse a third party for the final $165.0 million in LOCs, if drawn, which were issued to the eleven trusts by a third party as credit enhancements to these trusts. As the LOCs were provided as credit enhancements to these securitizations, the trusts will draw on these LOCs if there are insufficient cash flows from the underlying collateral to pay the debt holders. The total amount available on these LOCs for all eleven securitization trusts was $285.4 million and $298.5 million at December 31, 2012 and 2011, respectively. Based on the Company’s estimates of the underlying performance of the collateral in these securitizations, the Company does not expect that the final $165.0 million will be drawn, and therefore, no liability for the fair value of this obligation has been recorded on the Company’s consolidated balance sheets; however, actual performance may differ from this estimate in the future. For further information on the four securitization trusts that have not been consolidated by the Company, refer to the Unconsolidated VIEs section of this Note.

Servicer and Protective Advance Financing Facility

A wholly-owned subsidiary of the Company, or the Subsidiary, engages in operating activities that are restricted to the purchase of servicer and protective advances from certain of the Company’s affiliates and assignment of those advance receivables to various lenders under a financing agreement with a third-party agent, or the Agent. Due to these restrictions, the Subsidiary is deemed to be a VIE as the Company is deemed both to have the power to direct the activities most significant to the economic performance of the Subsidiary, as well as the obligation to absorb losses or receive residual returns which could be potentially significant.

The assets and liabilities of the Subsidiary represent servicer and protective advances purchased from affiliates and obligations to lenders under a financing agreement, or Receivables Loan Agreement. The amount of purchased advances under the Receivables Loan Agreement are classified as servicer and protective advances, net in the consolidated balance sheets, while the amount of obligations to lenders under the Receivables Loan Agreement are recorded in the consolidated balance sheets in servicing advance liabilities. The assets of the Subsidiary are pledged as collateral to satisfy the obligations of lenders under the Receivables Loan Agreement, and those obligations are not cross-collateralized and the lenders do not have recourse to the Company. Refer to Note 14 for additional information regarding the Receivables Loan Agreement.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Included in the table below is a summary of the carrying amounts of the assets and liabilities of consolidated VIEs (in thousands):


	Carrying Amount of Assets and Liablities of Consolidated VIEs
	December 31, 2012										December 31, 2011
	Residual Trusts			Non-Residual Trusts		Servicer and Protective Advance Financing Facility		Total			Residual Trusts			Non-Residual Trusts		Servicer and Protective Advance Financing Facility		Total
Assets
Restricted cash and cash equivalents	$	43,856		$	14,397	$	—	$	58,253		$	43,452		$	16,233	$	—	$	59,685
Residential loans		1,495,920			646,498		—		2,142,418			1,594,251			672,714		—		2,266,965
Allowance for loan losses		(20,138	)		—		—		(20,138	)		(13,604	)		—		—		(13,604	)

Residential loans, net		1,475,782			646,498		—		2,122,280			1,580,647			672,714		—		2,253,361
Receivables, net		—			53,975		—		53,975			—			81,782		—		81,782
Servicer and protective advances, net		—			—		77,082		77,082			—			—		59,921		59,921
Other assets		60,669			2,014		—		62,683			61,002			2,496		—		63,498

Total assets	$	1,580,307		$	716,884	$	77,082	$	2,374,273		$	1,685,101		$	773,225	$	59,921	$	2,518,247

Liabilities
Payables and accrued liabilities	$	9,007		$	—	$	—	$	9,007		$	10,163		$	—	$	—	$	10,163
Servicing advance liabilities		—			—		64,552		64,552			—			—		48,736		48,736
Mortgage-backed debt		1,315,442			757,286		—		2,072,728			1,413,509			811,245		—		2,224,754

Total liabilities	$	1,324,449		$	757,286	$	64,552	$	2,146,287		$	1,423,672		$	811,245	$	48,736	$	2,283,653

The assets of the consolidated VIEs are pledged as collateral to the servicing advance liabilities and mortgage-backed debt and are not available to satisfy claims of general creditors of the Company. The mortgage-backed debt issued by each consolidated securitization trust is to be satisfied solely from the proceeds of the residential loans and other collateral held in the trusts while the servicing advance liabilities are to be satisfied from the recoveries or repayments from the underlying advances. The consolidated VIEs are not cross-collateralized and the holders of the mortgage-backed debt issued by the trusts and lenders under the Receivables Loan Agreement do not have recourse to the Company. Refer to Note 16 for additional information regarding the mortgage-backed debt and related collateral and Note 14 for additional information regarding servicing advance liabilities.

For the Residual Trusts, interest income earned on the residential loans and interest expense incurred on the mortgage-backed debt, both of which are carried at amortized cost, are recorded in the consolidated statements of comprehensive income (loss) in interest income on loans and interest expense, respectively. Additionally, the Company records its estimate of probable incurred credit losses associated with the residential loans in provision

F-29

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for loan losses in the consolidated statements of comprehensive income (loss). Interest receipts on residential loans and interest payments on mortgage-backed debt are included in operating activities, while principal payments on residential loans are included in investing activities, and issuances of and payments on mortgage-backed debt are included in financing activities in the consolidated statements of cash flows.

For the Non-Residual Trusts, the change in fair value of residential loans, receivables, net and mortgage-backed debt, all of which are carried at fair value, are included in net fair value gains (losses) in the consolidated statements of comprehensive income (loss). Also included in net fair value gains (losses) is the interest income that is expected to be collected on the residential loans and the interest expense that is expected to be paid on the mortgage-backed debt as well as the accretion of the fair value adjustments. Accordingly, the servicing fee that the Company earns for servicing the assets of the Non-Residual Trusts is recognized in net fair value gains (losses) as a component of the recognition of the interest income on the loans. The non-cash component of net fair value gains (losses) is recognized as an adjustment in reconciling net income (loss) to the net cash provided by or used in operating activities in the consolidated statements of cash flows. Principal payments on residential loans and draws on receivables, net are included in investing activities while payments on mortgage-backed debt are included in financing activities in the consolidated statements of cash flows.

Interest expense associated with the Receivables Loan Agreement is included in interest expense in the consolidated statements of comprehensive income (loss). Changes in servicer and protective advances are included in operating activities while the issuances of and payments on servicing advance liabilities are included in financing activities in the consolidated statements of cash flows.

Unconsolidated VIEs

The Company has variable interests in VIEs that it does not consolidate as it has determined that it is not the primary beneficiary of the VIEs.

Servicing Arrangements with Letter of Credit Reimbursement Obligation

As described in the Consolidated VIEs section above, as part of an agreement to service the loans in eleven securitization trusts, the Company has an obligation to reimburse a third party for the final $165.0 million in LOCs if drawn. The LOCs were issued by a third party as credit enhancements to these eleven securitizations and, accordingly, the securitization trusts will draw on these LOCs if there are insufficient cash flows from the underlying collateral to pay the debt holders.

As noted above, the Company has determined that for seven of these securitization trusts, the Company is the primary beneficiary due to a mandatory clean-up call obligation related to these trusts and, accordingly, the Company has consolidated the seven trusts on the consolidated balance sheets. However, for the four remaining securitization trusts for which the Company does not have a mandatory clean-up call obligation, the Company’s involvement consists only of servicer and the LOC reimbursement obligation. As explained in the Consolidated VIEs section above, the Company does not expect that the final $165.0 million in LOCs will be drawn. As the Company’s only involvement is that of servicer and the LOC reimbursement obligation, which is not expected to be drawn, the Company has concluded that it is not the primary beneficiary of the trusts as it does not have a variable interest that could potentially be significant to the VIEs. Accordingly, the four securitization trusts have not been consolidated on the Company’s consolidated balance sheets. The Company serviced $223.3 million and $250.4 million of loans related to the four unconsolidated securitization trusts at December 31, 2012 and 2011, respectively.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the carrying amounts of the Company’s assets that relate to its variable interests in the VIEs associated with letter of credit reimbursement obligations that are not consolidated, as well as its maximum exposure to loss and the unpaid principal balance of the total assets of these unconsolidated VIEs (in thousands):


	Carrying Value of Assets Recorded on the Consolidated Balance Sheets								Unpaid Principal Balance of Total Assets of Unconsolidated VIEs
	Servicing Rights, Net		Servicer and Protective Advances, Net		Total		Maximum Exposure to Loss ⁽¹⁾
Type of Involvement	Servicing Rights, Net		Servicer and Protective Advances, Net		Total		Maximum Exposure to Loss ⁽¹⁾
Servicing arrangements with letter of credit reimbursement obligation
December 31, 2012	$	2,319	$	2,691	$	5,010	$	170,010	$	223,251
December 31, 2011		2,909		2,832		5,741		170,741		250,426

⁽¹⁾

The Company’s maximum exposure to loss related to these unconsolidated VIEs equals the carrying value of servicing rights, net and servicing and protective advances, net recognized on the Company’s consolidated balance sheets plus an obligation to reimburse a third party for the final $165.0 million drawn on LOCs discussed above.

5. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is used to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

Basis or Measurement

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The accounting guidance concerning fair value allows the Company to elect to measure financial instruments at fair value and report the changes in fair value through net income or loss. This election can only be made at certain specified dates and is irrevocable once made. The Company has elected to measure all reverse mortgage assets and liabilities at fair value. For all other assets and liabilities, the Company does not have a fair value election policy, but rather makes the election on an instrument-by-instrument basis as they are acquired or incurred. The Company elected to measure at fair value residential loans, receivables and mortgage-backed debt associated with the Non-Residual Trusts. In addition, with the acquisitions of Green Tree and S1L, the Company recognized contingent liabilities for a mandatory repurchase obligation, a professional fees liability related to certain securitizations, and contingent earn-out payments that it measures at fair value on a recurring basis in accordance with the accounting guidance for business combinations.

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Transfers into and out of the fair value hierarchy levels are assumed to be as of the end of the quarter in which the transfer occurred. There were no transfers into or out of Level 3, and there were also no transfers between Level 1 and Level 2 during the years ended December 31, 2012 and 2011.

Items Measured at Fair Value on a Recurring Basis

The following assets and liabilities are measured in the consolidated financial statements at fair value on a recurring basis, all of which utilize significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation of the beginning and ending balances of these assets and liabilities (in thousands):


	For the Year Ended December 31, 2012
	Fair Value January 1, 2012			RMS Acquisition			S1L Acquisition			Total Gains (Losses) Included in Net Loss			Purchases		Issuances			Settlements			Fair Value December 31, 2012
Assets
Residential loans related to Non-Residual Trusts	$	672,714		$	—		$	—		$	107,493		$	—	$	—		$	(133,709	)	$	646,498
Reverse mortgage loans		—			5,331,989			88,929			65,030			565,171		29,143			(33,154	)		6,047,108
Other loans held for sale		—			—			9,512			281			22,226		—			(15,414	)		16,605
Receivables related to Non-Residual Trusts		81,782			—			—			(11,711	)		—		—			(16,096	)		53,975

Total assets	$	754,496		$	5,331,989		$	98,441		$	161,093		$	587,397	$	29,143		$	(198,373	)	$	6,764,186

Liabilities
Mandatory repurchase obligation		(11,849	)		—			—			(116	)		—		—			1,966			(9,999	)
Professional fees liability related to certain securitizations		(9,666	)		—			—			(1,091	)		—		—			2,610			(8,147	)
Contingent earn-out payments		—			—			(6,100	)		—			—		—			—			(6,100	)
Mortgage-backed debt related to Non-Residual Trusts		(811,245	)		—			—			(86,163	)		—		—			140,122			(757,286	)
HMBS related obligations		—			(5,254,231	)		—			(57,750	)		—		(596,067	)		33,496			(5,874,552	)

Total liabilities	$	(832,760	)	$	(5,254,231	)	$	(6,100	)	$	(145,120	)	$	—	$	(596,067	)	$	178,194		$	(6,656,084	)


	For the Year Ended December 31, 2011
	Fair Value January 1, 2011		GreenTree Acquisition			Total Gains (Losses) Included in Net Loss			Settlements			Fair Value December 31, 2011
Assets
Residential loans related to Non-Residual Trusts	$	—	$	726,475		$	15,274		$	(69,035	)	$	672,714
Receivables related to Non-Residual Trusts		—		84,921			5,987			(9,126	)		81,782

Total assets	$	—	$	811,396		$	21,261		$	(78,161	)	$	754,496

Liabilities
Mandatory repurchase obligation		—		(13,638	)		981			808			(11,849	)
Professional fees liability related to certain securitizations		—		(10,440	)		(607	)		1,381			(9,666	)
Mortgage-backed debt related to Non-Residual Trusts		—		(861,674	)		(22,197	)		72,626			(811,245	)

Total liabilities	$	—	$	(885,752	)	$	(21,823	)	$	74,815		$	(832,760	)

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total gains and losses for assets and liabilities measured at fair value on a recurring basis are recognized in net fair value gains (losses) in the consolidated statements of comprehensive income (loss). Total gains and losses included in net income (loss) include interest income and expense at the stated rate for interest bearing assets and liabilities, respectively, accretion and amortization, as well as the impact of changes in valuation inputs and assumptions.

A servicing sub-set of management determines and approves all valuation policies and unobservable inputs used to estimate the fair value of residential loans related to Non-Residual Trusts, receivables related to Non-Residual Trusts, the mandatory repurchase obligation and the professional fees related to certain securitizations. This group, consisting of certain members of the management team responsible for accounting, treasury, servicing operations and credit risk, meets on a quarterly basis to review the financial assets and liabilities that require fair value measurement, including how each financial asset and liability has actually performed in comparison to the unobservable inputs and the projected performance provided by the Company’s credit risk group. The valuation committee also reviews discount rate assumptions and related available market data. Similar procedures are followed by the Company’s accounting department responsible for reverse mortgages to determine the fair value of reverse mortgage loans, the liability for contingent earn-out payments and the HMBS related obligations. These fair values are approved by senior management.

The following is a description of the methods and assumptions used to estimate the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis, as well as the basis for classifying these assets and liabilities as Level 3 of the fair value hierarchy.

Residential loans

Residential loans related to Non-Residual Trusts — These loans are not traded in an active, open market with readily observable prices. Accordingly, the Company estimates fair value using Level 3 unobservable market inputs. The estimated fair value is based on the net present value of projected cash flows over the estimated life of the loans. The Company’s valuation considers assumptions that it believes a market participant would consider in valuing the loans including, but not limited to, assumptions for prepayment, default, loss severity and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation for recent historical experience, as well as for current and expected relevant market conditions. Collateral performance assumptions are primarily based on analyses of historical and projected performance trends, as well as the Company’s assessment of current and future economic conditions. The discount rate assumption for these assets is primarily based on the collateral and credit risk characteristics of these loans, combined with an assessment of market interest rates. Residential loans related to Non-Residual Trusts are recorded in residential loans, net in the consolidated balance sheets.

Residential loans related to reverse mortgage loans — These loans are not traded in an active, open market with readily observable prices. Accordingly, the Company estimates fair value using Level 3 unobservable market inputs. The estimated fair value is based on the net present value of projected cash flows over the estimated life of the loans. The Company’s valuation considers assumptions that it believes a market participant would consider in valuing the loans including, but not limited to, assumptions for prepayment, default, mortality, and discount rates. Collateral performance assumptions are primarily based on analyses of historical and projected performance trends, as well as the Company’s assessment of current and future economic conditions. The discount rate assumption for these assets is primarily based on an assessment of current market yields on newly originated HECM loans, expected duration of the asset, and current market interest rates.

Receivables related to Non-Residual Trusts — The Company estimates the fair value of these receivables using Level 3 unobservable market inputs at the net present value of expected cash flows from the LOCs to be used to pay debt holders over the remaining life of the securitization trusts. The estimate of the cash to be collected from the LOCs is based on expected shortfalls of cash flows from the loans in the securitization trusts,

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

compared to the required debt payments of the securitization trusts. The cash flows from the loans and thus the cash to be provided by the LOCs is determined by analyzing the credit assumptions for the underlying collateral in each of the securitizations. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation for recent historical experience, as well as for current and expected relevant market conditions. The discount rate assumption for these assets is based on the risk-free market rate given the credit risk characteristics of the collateral supporting the LOCs. Receivables related to Non-Residual Trusts are recorded in receivables, net in the consolidated balance sheets.

Mandatory repurchase obligation — This contingent liability relates to a mandatory obligation in which the Company is required to repurchase loans from an investor when the loans become 90 days delinquent. The Company estimates the fair value of this obligation based on the expected net present value of expected future cash flows using Level 3 assumptions that it believes a market participant would consider in valuing these liabilities including, but not limited to, assumptions for prepayment, default and loss severity rates applicable to the historical and projected performance of the underlying loans. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation for recent historical experience, as well as for current and expected relevant market conditions. Collateral performance assumptions are primarily based on analyses of historical and projected performance trends, as well as the Company’s assessment of current and future economic conditions. The discount rate assumption for this liability is primarily based on collateral characteristics combined with an assessment of market interest rates. The mandatory repurchase obligation is included in payables and accrued liabilities in the consolidated balance sheets.

Professional fees liability related to certain securitizations — This contingent liability primarily relates to payments for surety and auction agent fees that the Company will be required to make over the remaining life of certain consolidated and unconsolidated securitization trusts. The Company estimates the fair value using Level 3 unobservable market inputs. The estimated fair value is based on the net present value of the expected cash flows of the professional fees required to be paid related to the securitization trusts. The Company’s valuation considers assumptions that it believes a market participant would consider in valuing these liabilities including, but not limited to, estimates of collateral repayment, default and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation for recent historical experience, as well as for current and expected relevant market conditions. Collateral performance assumptions are primarily based on analyses of historical and projected performance trends, as well as the Company’s assessment of current and future economic conditions. The discount rate assumption for this liability is primarily based on collateral characteristics combined with an assessment of market interest rates. Professional fees liability related to certain securitizations are included in payables and accrued liabilities in the consolidated balance sheets.

Contingent earn-out payments — The estimated fair value of this contingent liability is based on the average earn-out payment under multiple outcomes as determined by a Monte-Carlo simulation, discounted to present value using credit-adjusted discount rates. The average payment outcomes calculated by the Monte-Carlo simulation were derived utilizing Level 3 unobservable inputs, the most significant of which include the assumptions for forecasted financial performance of S1L and financial performance volatility.

Mortgage-backed debt related to Non-Residual Trusts — This debt is not traded in an active, open market with readily observable prices. Accordingly, the Company estimates the fair value using Level 3 unobservable market inputs. The estimated fair value of the debt is based on the net present value of the projected principal and interest payments owed for the remaining life of the securitization trusts. The Company’s valuation considers assumptions and estimates for principal and interest payments on the debt. An analysis of the credit assumptions for the underlying collateral in each of the securitization trusts is performed to determine the required payments to debt holders. The assumptions that it believes a market participant would consider in valuing debt include, but are not limited to, prepayment, default, loss severity and discount rates, as well as the balance of LOCs provided as credit enhancement. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation for recent historical experience, as well as for current and expected relevant market

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WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

conditions. Credit performance assumptions are primarily based on analyses of historical and projected performance trends, as well as the Company’s assessment of current and future economic conditions. The discount rate assumption for this liability is primarily based on credit characteristics combined with an assessment of market interest rates. Mortgage-backed debt related to Non-Residual Trusts is recorded in mortgage-backed debt in the consolidated balance sheets.

HMBS related obligations — The Company recognizes the proceeds from the sale of HMBS securities as a secured borrowing, which is accounted for at fair value. This liability is not traded in an active, open market with readily observable prices. Accordingly, the Company estimates fair value using Level 3 unobservable market inputs. The estimated fair value is based on the net present value of projected cash flows over the estimated life of the liability. The Company’s valuation considers assumptions that it believes a market participant would consider in valuing the liability including, but not limited to, assumptions for prepayments, discount rate and borrower mortality rates for reverse mortgages. The discount rate assumption for these liabilities is based on an assessment of current market yields for newly issued HMBS, expected duration, and current market interest rates. The yield on seasoned HMBS is adjusted based on the duration of each HMBS and assuming a constant spread to the swap curve.

The Company utilizes a discounted cash flow method in the fair value measurement of Level 3 assets and liabilities included in the consolidated financial statements at fair value on a recurring basis. The following table presents the significant unobservable inputs used in the fair value measurement of these assets and liabilities at December 31, 2012. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement.


	Significant Unobservable Input	Range	Weighted Average
Assets
Residential loans related to Non-Residual Trusts	Conditional prepayment rate	4.55% - 6.36%		5.54%
	Loss severity	75.96% - 89.39%		85.07%
Reverse mortgage loans	Average life ⁽¹⁾	1.4 -11.0 years		4.6 years
	Cumulative mortality rate	0.9% - 38.1%		13.00%
	Cumulative default rate	0.19% - 13.94%		8.75%
	Discount rate	1.99% - 3.72%		2.40%
Receivables related to Non-Residual Trusts	Conditional prepayment rate	4.59% - 6.27%		5.58%
	Loss severity	73.56% - 87.16%		82.71%
Liabilities
Mandatory repurchase obligation	Conditional prepayment rate	5.99%		5.99%
	Loss severity	71.32%		71.32%
Professional fees liability related to certain securitizations	Conditional prepayment rate	4.52% - 7.36%		5.67%
Contingent earn-out payments	Financial performance volatility	39.00%		39.00%
Mortgage-backed debt related to Non-Residual Trusts	Conditional prepayment rate	4.59% - 6.27%		5.58%
	Loss severity	73.56% - 87.16%		82.71%
HMBS related obligations	Average life ⁽¹⁾	2.4 - 9.1 years		4.4 years
	Cumulative mortality rate	6.8% - 38.1%		12.86%
	Cumulative default rate	5.16% - 13.94%		8.69%
	Discount rate	1.48% - 2.86%		1.82%

⁽¹⁾	Average life considers assumptions relating to prepayment, default and mortality.

F-35

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Items Measured at Fair Value on a Non-Recurring Basis

The following assets are measured in the consolidated financial statements at fair value on a non-recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation (in thousands):


	December 31,
	2012		2011
Real estate owned, net	$	64,959	$	56,147

The following table presents the significant unobservable inputs used in the fair value measurement of Level 3 assets at December 31, 2012 measured in the consolidated financial statements at fair value on a non-recurring basis:


	Significant Unobservable Input	Range	Weighted Average
Real estate owned, net	Loss severity	0% - 79.80%		11.50%

Real Estate Owned

At the time a residential loan becomes real estate owned, the Company records the property at the lower of its carrying amount or estimated fair value less estimated costs to sell. Upon foreclosure and through liquidation, the Company evaluates the property’s fair value as compared to its carrying amount and records a valuation adjustment when the carrying amount exceeds fair value, which is recorded in other expenses, net in the consolidated statements of comprehensive income (loss). At December 31, 2012, the Company reported $49.1 million, $13.9 million and $2.0 million, in real estate owned, net in the Loans and Residuals, Reverse Mortgage and Other segments, respectively. At December 31, 2011, the Company reported $53.6 million and $2.5 million in real estate owned, net in the Loans and Residuals and Other segments, respectively. These real estate owned properties are generally located in rural areas and are primarily concentrated in Texas, Alabama, Mississippi, Georgia, Florida and South Carolina. In determining the fair value, the Company’s accounting department either obtains appraisals or performs a review of historical severity rates of real estate owned previously sold by the Company. When utilizing historical severity rates, the properties are stratified by acquisition type and length held. The severity rates are reviewed for reasonableness by comparison to third-party market trends and fair value is determined by applying severity rates to the stratified population. Management approves valuations that have been determined using the historical severity rate method. The real estate owned properties have a weighted-average holding period of 10 months.

For the years ended December 31, 2012, 2011 and 2010, real estate owned expenses, net, which are recorded in other expenses, net in the consolidated statements of comprehensive income (loss) were $6.8 million, $11.9 million and $6.5 million, respectively. Included in real estate owned expenses, net are lower of cost or fair value adjustments of $2.7 million, $5.4 million and $0.8 million for the years ended December 31, 2012, 2011 and 2010, respectively.

F-36

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of financial assets and liabilities that are required to be recorded or disclosed at fair value (in thousands):


	December 31, 2012						December 31, 2011
	Carrying Amount		Estimated Fair Value		Fair Value Hierarchy		Carrying Amount		Estimated Fair Value
Financial assets
Cash and cash equivalents	$	442,054	$	442,054		Level 1	$	18,739	$	18,739
Restricted cash and cash equivalents		653,338		653,338		Level 1		353,216		353,216
Residential loans, net
Residential loans carried at amortized cost		1,490,321		1,436,592		Level 3		1,591,864		1,587,258
Residential loans carried at fair value		6,710,211		6,710,211		Level 3		672,714		672,714
Receivables, net
Insurance premium receivables		107,824		101,238		Level 3		110,787		106,918
Receivables related to Non-Residual Trusts		53,975		53,975		Level 3		81,782		81,782
Other		97,210		97,210		Level 1		37,210		37,210
Servicer and protective advances, net		173,047		160,632		Level 3		140,690		131,790
Financial liabilities
Payables and accrued liabilities
Payables to insurance carriers		51,377		50,614		Level 3		49,246		48,812
Mandatory repurchase obligation		9,999		9,999		Level 3		11,849		11,849
Professional fees liability related to certain securitizations		8,147		8,147		Level 3		9,666		9,666
Contingent earn-out payments		6,100		6,100		Level 3		—		—
Other		184,987		184,987		Level 1		147,168		147,168
Servicer payables		587,929		587,929		Level 1		244,302		244,302
Servicing advance liabilities ⁽¹⁾		99,508		99,915		Level 3		107,039		107,060
Debt ⁽²⁾		1,115,804		1,165,811		Level 2		718,247		765,201
Mortgage-backed debt
Mortgage-backed debt carried at amortized cost ⁽³⁾		1,298,999		1,300,979		Level 3		1,392,393		1,401,400
Mortgage-backed debt carried at fair value		757,286		757,286		Level 3		811,245		811,245
HMBS related obligations		5,874,552		5,874,552		Level 3		—		—

⁽¹⁾	The carrying amount of servicing advance liabilities is net of deferred issuance costs of $0.7 million at December 31, 2012.

⁽²⁾	The carrying amount of debt is net of deferred issuance costs of $30.4 million and $24.4 million at December 31, 2012 and 2011, respectively.

⁽³⁾	The carrying amount of mortgage-backed debt carried at amortized cost is net of deferred issuance costs of $16.4 million and $21.1 million at December 31, 2012 and 2011, respectively.

F-37

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following provides a description of the methods and significant assumptions used in estimating the fair value of the Company’s financial instruments that are not measured at fair value on a recurring basis. A description of the methods and significant assumptions used in estimating the fair values of financial assets and liabilities measured on a recurring basis has been provided under the Items Measured at Fair Value on a Recurring Basis section of this note.

Cash and cash equivalents, restricted cash and cash equivalents, other receivables, other payables and accrued liabilities and servicer payables — The estimated fair value of these financial instruments approximates their carrying amounts due to their highly liquid or short-term nature.

Residential loans at amortized cost — The methods and assumptions used to estimate the fair value of residential loans carried at amortized cost are the same as those described for residential loans carried at fair value on a recurring basis.

Insurance premium receivables — The estimated fair value of these receivables is based on the net present value of the expected cash flows. The determination of fair value includes assumptions related to the underlying collateral serviced by the Company, such as delinquency and default rates, as the insurance premiums are collected as part of the customers’ loan payments or from the related trusts.

Servicer and protective advances, net — The estimated fair value of these advances is based on the net present value of expected cash flows. The determination of expected cash flows includes consideration of recoverability clauses in the Company’s servicing agreements, as well as assumptions related to the underlying collateral, when proceeds may be used to recover these receivables.

Payables to insurance carriers — The estimated fair value of these liabilities is based on the net present value of the expected carrier payments over the life of the payables.

Servicing advance liabilities — The estimated fair value of these liabilities is based on the net present value of projected cash flows over the expected life of the liabilities at estimated market rates.

Debt — The Company’s term loans and convertible debt are not traded in an active, open market with readily observable prices. The estimated fair value of this debt is based on an average of broker quotes. The estimated fair value of the Company’s other debt, including origination funding facilities, approximates their carrying amounts due to their highly liquid or short-term nature.

Mortgage-backed debt at amortized cost — The methods and assumptions used to estimate the fair value of mortgage-backed debt carried at amortized cost are the same as those described for mortgage-backed debt related to Non-Residual Trusts carried at fair value on a recurring basis.

Fair Value Option

The Company elected the fair value option for certain assets and liabilities, including residential loans, receivables and mortgage-backed debt, of the Non-Residual Trusts as well as reverse mortgage loans and the HMBS related obligations. The fair value option was elected for these assets and liabilities as the Company believes fair value best reflects the expected future economic performance of these assets and liabilities. The yield on the loans along with any changes in fair value are recorded in net fair value gains (losses) in the consolidated statements of comprehensive income (loss). The yield on the loans includes recognition of interest income based on the stated interest rates of the loans that is expected to be collected as well as accretion of the fair value adjustments.

F-38

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Presented in the table below is the fair value and unpaid principal balance of the assets and liabilities for which the Company has elected the fair value option (in thousands):


	December 31, 2012				December 31, 2011
	Estimated Fair Value		Unpaid Principal Balance ⁽¹⁾		Estimated Fair Value		Unpaid Principal Balance ⁽¹⁾
Assets at fair value under the fair value option
Residential loans related to Non-Residual Trusts	$	646,498	$	814,481	$	672,714	$	907,207
Reverse mortgage loans		6,047,108		5,400,876		—		—
Other loans held for sale		16,605		16,325		—		—
Receivables related to Non-Residual Trusts		53,975		54,604		81,782		87,802

Total	$	6,764,186	$	6,286,286	$	754,496	$	995,009

Liabilities at fair value under the fair value option
Mortgage-backed debt related to Non-Residual Trusts	$	757,286	$	825,200	$	811,245	$	920,761
HMBS related obligations		5,874,552		5,169,135		—		—

Total	$	6,631,838	$	5,994,335	$	811,245	$	920,761

⁽¹⁾	For the receivables related to Non-Residual Trusts, the unpaid principal balance represents the notional amount of expected draws under the LOCs. For the HMBS related obligations, the unpaid principal balance represents the balance outstanding.

Presented in the table below are the fair value gains and losses from the instrument-specific credit risk and other factors associated with the assets and liabilities for which the Company has elected the fair value option (in thousands):


	For the Years Ended December 31,
	2012									2011
	Instrument- Specific Credit Risk ⁽¹⁾			Other ⁽²⁾			Fair Value Gain (Loss) ⁽³⁾			Instrument- Specific Credit Risk ⁽¹⁾			Other ⁽²⁾			Fair Value Gain (Loss) ⁽³⁾
Assets at fair value under the fair value option
Residential loans related to Non-Residual Trusts	$	17,845		$	89,648		$	107,493		$	(2,624	)	$	17,898		$	15,274
Reverse mortgage loans		(1,385	)		66,415			65,030			—			—			—
Other loans held for sale ⁽⁴⁾		—			281			281			—			—			—
Receivables related to Non-Residual Trusts		(11,986	)		275			(11,711	)		3,210			2,777			5,987

Total	$	4,474		$	156,619		$	161,093		$	586		$	20,675		$	21,261

Liabilities at fair value under the fair value option
Mortgage-backed debt related to Non-Residual Trusts		(5,416	)		(80,747	)		(86,163	)		(814	)		(21,383	)		(22,197	)
HMBS related obligations		—			(57,750	)		(57,750	)		—			—			—

Total	$	(5,416	)	$	(138,497	)	$	(143,913	)	$	(814	)	$	(21,383	)	$	(22,197	)

F-39

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

⁽¹⁾	Consists of changes in fair value due to changes in assumptions related to prepayments, defaults and severity.

⁽²⁾

Includes interest income and expense at the stated rate for interest-bearing assets and liabilities, respectively, accretion, and changes in fair value due to changes in the London Interbank Offered Rate, or LIBOR, for assets and liabilities associated with the Non-Residual Trusts and changes in market pricing of HECM loans and HMBS securities for reverse loans and HMBS related obligations, as well as actual cash flows differing than expected.

⁽³⁾	Fair value gains and losses are recognized in net fair value gains (losses) in the consolidated statements of comprehensive income (loss).

⁽⁴⁾	Fair value gains associated with other loans held for sale are recognized in other revenues in the consolidated statements of comprehensive income (loss).

Included in residential loans accounted for under the fair value option are forward loans that are 90 days or more past due that have a fair value of $1.9 million and $2.2 million and an unpaid principal balance of $10.0 million and $11.9 million at December 31, 2012 and 2011, respectively.

Fair Value Gains (Losses)

Provided in the table below is a summary of net fair value gains (losses) (in thousands):


	For the Years Ended December 31,
	2012			2011
Net fair value gains (losses)
Assets of Non-Residual Trusts	$	95,782		$	21,261
Reverse mortgage loans		65,030			—
Liabilities of Non-Residual Trusts		(86,163	)		(22,197	)
HMBS related obligations		(57,750	)		—
Mandatory repurchase obligation		(116	)		981
Professional fees liability related to certain securitizations		(1,091	)		(607	)
Other		(1,192	)		(490	)

Net fair value gains (losses)	$	14,500		$	(1,052	)

6. Residential Loans, Net

Residential loans include loans that are both held for investment and held for sale and consist of residential mortgages, including reverse mortgages, manufactured housing loans and retail installment agreements. The majority of residential loans are held in securitization trusts or pools that have been either consolidated or not consolidated but are recorded in the consolidated balance sheets as the assets serve as collateral for secured borrowings. Loans accounted for at amortized cost consist of forward loans and include residential loans that are held in the Residual Trusts and unencumbered loans. The forward residential loans that are held in the Non-Residual Trusts and reverse mortgage loans that have been transferred to GNMA securitization pools as well as those that have yet to be transferred to GNMA securitization pools are accounted for at fair value. Reverse mortgage loans that have been repurchased from GNMA securitization pools and other loans held for sale are also accounted for at fair value. Refer to Note 4 for further information regarding VIEs.

F-40

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Residential loans, net are comprised of the following (in thousands):


	December 31,
	2012		2011
Forward loans in Residual Trusts carried at amortized cost	$	1,475,782	$	1,580,647
Forward loans in Non-Residual Trusts carried at fair value		646,498		672,714
Reverse mortgage loans in GNMA securitization trusts carried at fair value		5,779,851		—
Reverse mortgage loans to be transferred to GNMA securitization trusts carried at fair value		224,335		—
Unencumbered forward loans carried at amortized cost		14,539		11,217
Repurchased reverse mortgage loans carried at fair value		42,922		—
Other loans held for sale at fair value		16,605		—

Residential loans, net	$	8,200,532	$	2,264,578

Residential loans, net are summarized in the table below (in thousands):


	December 31, 2012								December 31, 2011
	Carried at Amortized Cost ⁽¹⁾			Carried at Fair Value		Total			Carried at Amortized Cost ⁽¹⁾			Carried at Fair Value			Total
Residential loans, principal balance	$	1,662,183		$	6,231,682	$	7,893,865		$	1,776,063		$	907,207		$	2,683,270
Unamortized premiums (discounts) and other cost basis adjustments, net		(151,427	)		—		(151,427	)		(170,375	)		—			(170,375	)
Fair value adjustment		—			478,529		478,529			—			(234,493	)		(234,493	)
Allowance for loan losses		(20,435	)		—		(20,435	)		(13,824	)		—			(13,824	)

Residential loans, net	$	1,490,321		$	6,710,211	$	8,200,532		$	1,591,864		$	672,714		$	2,264,578

⁽¹⁾	Included in unamortized premiums (discounts) and other cost basis adjustments, net for residential loans carried at amortized cost is $13.5 million and $15.3 million in accrued interest receivable at December 31, 2012 and 2011, respectively.

Residential Loan Acquisitions

At acquisition, the fair value of residential loans acquired outside of a business combination is the purchase price of the residential loans, which is determined primarily based on the outstanding principal balance, the probability of future default and the estimated amount of loss from default. The Company acquired residential loans to be held for investment in the amount of $568.7 million, $46.5 million and $73.7 million, adding $506.1 million, $64.6 million and $99.8 million of unpaid principal to the residential loan portfolio, in the years ended December 31, 2012, 2011 and 2010, respectively. The acquisitions during the years ended December 31, 2012, 2011 and 2010, respectively, included $3.3 million, $28.0 million and $14.3 million of unpaid principal balance associated with credit-impaired loans.

F-41

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Purchased Credit-Impaired Residential Loans

The following table provides acquisition date details of residential loans acquired with evidence of credit deterioration (in thousands).


	For the Years Ended December 31,
	2012			2011
Contractually required cash flows for acquired loans at acquisition	$	6,593		$	59,339
Nonaccretable difference		(4,921	)		(30,366	)

Expected cash flows for acquired loans at acquisition		1,672			28,973
Accretable yield		—			(9,006	)

Fair value at acquisition	$	1,672		$	19,967

The table below sets forth the activity in the accretable yield for purchased credit-impaired residential loans (in thousands).


	For the Years Ended December 31,
	2012			2011
Balance at beginning of year	$	15,294		$	4,174
Additions		—			9,006
Accretion		(3,004	)		(2,729	)
Reclassifications from nonaccretable difference		725			4,843

Balance at end of year	$	13,015		$	15,294

The table below provides additional information about purchased credit-impaired residential loans (in thousands):


	December 31,
	2012		2011
Outstanding balance ⁽¹⁾	$	41,941	$	45,827
Carrying amount		27,367		28,622

⁽¹⁾	Consists of principal and accrued interest owed to the Company as of the reporting date.

Disclosures About the Credit Quality of Residential Loans at Amortized Cost and the Allowance for Loan Losses

F-42

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

levels, current economic and market conditions within the applicable geographic areas surrounding the underlying real estate, changes in unemployment levels and the impact that changes in interest rates have on a borrower’s ability to refinance their loan and to meet their repayment obligations. Management evaluates these assumptions and various other relevant factors impacting credit quality and inherent losses when quantifying the Company’s exposure to credit losses and assessing the adequacy of its allowance for loan losses as of each reporting date. The level of the allowance is adjusted based on the results of management’s analysis. Generally, as residential loans season, the credit exposure is reduced, resulting in decreasing provisions.

While there has been some stabilization in residential property values, there has not been significant improvement in property values particularly in more rural areas of the southeastern U.S. market. Additionally, there are continued high unemployment levels and a generally uncertain economic backdrop. As a result, the Company expects the allowance for loan losses to continue to remain elevated until such time as it experiences a sustained improvement in the credit quality of the residential loan portfolio. The future growth of the allowance is highly correlated to unemployment levels and changes in home prices within the Company’s markets.

Loan Modifications

Occasionally, the Company will modify a loan agreement at the request of the borrower. The Company’s current modification program offered to borrowers is limited and is used to assist borrowers experiencing temporary hardships and is intended to minimize the economic loss to the Company and to avoid foreclosure. Generally, the Company’s modifications are short-term interest rate reductions and/or payment deferrals with forgiveness of principal rarely granted. A modification of a loan constitutes a troubled debt restructuring when a borrower is experiencing financial difficulty and the modification constitutes a concession. Loans modified in a troubled debt restructuring are typically already on non-accrual status and have an allowance recorded. At times, loans modified in a troubled debt restructuring by the Company may have the financial effect of increasing the allowance associated with the loan. The allowance for an impaired loan that has been modified in a troubled debt restructuring is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the estimated fair value of the collateral, less any selling costs. Troubled debt restructurings have historically been insignificant to the Company and are expected to continue to be insignificant in the future as the Company’s business model continues to shift from being a mortgage portfolio owner to a fee-based business services provider.

Allowance for Loan Losses

The following table summarizes the activity in the allowance for loan losses on residential loans, net (in thousands):


	For the Years Ended December 31,
	2012			2011			2010
Balance at beginning of year	$	13,824		$	15,907		$	17,661
Provision for loan losses		13,352			6,016			6,526
Charge-offs, net of recoveries ⁽¹⁾		(6,741	)		(8,099	)		(8,280	)

Balance at end of year	$	20,435		$	13,824		$	15,907

⁽¹⁾	Includes charge-offs recognized upon acquisition of real estate in satisfaction of residential loans of $5.9 million, $4.7 million and $5.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

F-43

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the ending balance of the allowance for loan losses and the recorded investment in residential loans carried at amortized cost (in thousands):


	December 31,
	2012		2011
Allowance for loan losses
Loans collectively evaluated for impairment	$	19,408	$	13,652
Loans collectively evaluated for impairment and acquired with deteriorated credit quality		1,027		172

Total	$	20,435	$	13,824

Recorded investment in residential loans carried at amortized cost
Loans collectively evaluated for impairment	$	1,483,389	$	1,577,066
Loans collectively evaluated for impairment and acquired with deteriorated credit quality		27,367		28,622

Total	$	1,510,756	$	1,605,688

Aging of Past Due Residential Loans

The past due or delinquency status of residential loans is generally determined based on the contractual payment terms. The calculation of delinquencies excludes from delinquent amounts those accounts that are in bankruptcy proceedings that are paying their mortgage payments in contractual compliance with the bankruptcy court approved mortgage payment obligations.

The following table presents the aging of the residential loan portfolio accounted for at amortized cost (in thousands):


	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Residential Loans		Non- Accrual Loans
Recorded investment in residential loans carried at amortized cost
December 31, 2012	$	23,543	$	13,215	$	66,623	$	103,381	$	1,407,375	$	1,510,756	$	66,623
December 31, 2011		17,544		10,396		61,107		89,047		1,516,641		1,605,688		61,107

Credit Risk Profile Based on Delinquencies

Factors that are important to managing overall credit quality and minimizing loan losses are sound loan underwriting, monitoring of existing loans, early identification of problem loans, timely resolution of problems, an appropriate allowance for loan losses, and sound nonaccrual and charge-off policies. The Company primarily utilizes delinquency status to monitor the credit quality of the portfolio. Monitoring of residential loans increases when the loan is delinquent. The Company considers all loans 30 days or more past due to be non-performing. The classification of delinquencies, and thus the non-performing calculation, excludes from delinquent amounts those accounts that are in bankruptcy proceedings that are paying their mortgage payments in contractual compliance with the bankruptcy court approved mortgage payment obligations.

F-44

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the recorded investment in residential loans accounted for at amortized cost by credit quality indicator (in thousands):


	December 31,
	2012		2011
Performing	$	1,407,375	$	1,516,641
Non-performing		103,381		89,047

Total	$	1,510,756	$	1,605,688

Concentrations of Credit Risk

Concentrations of credit risk associated with the residential loan portfolio are limited due to the large number of customers and their dispersion across many geographic areas. The table below provides the percentage of residential loans on the Company’s consolidated balance sheets by the state in which the home securing the loan is located and is based on their unpaid principal balances. Other consists of loans in states in which concentration individually represents less than 5% of total unpaid principal balance.


	December 31,
	2012			2011
California		15	%		0	%
Texas		14	%		26	%
Florida		8	%		6	%
New York		5	%		1	%
Georgia		4	%		7	%
Alabama		4	%		8	%
North Carolina		3	%		6	%
Louisiana		3	%		5	%
South Carolina		2	%		5	%
Mississippi		1	%		11	%
Other		41	%		25	%

Total		100	%		100	%

7. Receivables, Net

Receivables, net consist of the following (in thousands):


	December 31,
	2012			2011
Insurance premium receivables	$	107,824		$	110,787
Receivables related to Non-Residual Trusts at fair value		53,975			81,782
Servicing fee receivables		44,657			30,530
Income tax receivables		20,825			—
Other receivables		31,751			6,703

Receivables		259,032			229,802
Less:Allowance for uncollectible servicing fee and other receivables		(23	)		(23	)

Receivables, net	$	259,009		$	229,779

F-45

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Servicer and Protective Advances, Net

Servicer advances consist of principal and interest advances to certain unconsolidated securitization trusts to meet contractual payment requirements to investors. Protective advances consist of advances to protect the collateral being serviced by the Company and primarily include payments made for foreclosure costs, property taxes and insurance. The following table presents servicer and protective advances, net (in thousands):


	December 31,
	2012			2011
Servicer advances	$	48,120		$	44,079
Protective advances		149,041			114,019

Servicer and protective advances		197,161			158,098
Less: Allowance for uncollectible advances		(24,114	)		(17,408	)

Servicer and protective advances, net	$	173,047		$	140,690

9. Servicing of Residential Loans

The Company provides servicing for credit-sensitive consumer loans including residential mortgages, manufactured housing and consumer installment loans, and reverse mortgage loans for third parties, as well as for loans recognized on the consolidated balance sheets. The Company’s total servicing portfolio consists of accounts serviced for others for which servicing rights have been capitalized, accounts sub-serviced for others, as well as loans held for investment, loans held for sale and real estate owned held for sale recognized on the consolidated balance sheets. As a result of the acquisitions of Green Tree, RMS and S1L, the Company capitalized the servicing rights associated with servicing and sub-servicing agreements in existence at the dates of acquisition.

Provided below is a summary of the Company’s total servicing portfolio (in thousands, except for number of accounts):


	December 31, 2012				December 31, 2011
	Number of Accounts		Unpaid Principal Balance		Number of Accounts		Unpaid Principal Balance
Third-party investors ⁽¹⁾
Capitalized servicing rights		415,617	$	23,469,620		402,067	$	18,717,559
Capitalized sub-servicing ⁽²⁾		289,417		16,333,529		318,363		16,302,306
Sub-servicing		240,226		42,310,373		259,100		48,264,295

Total third-party servicing portfolio		945,260		82,113,522		979,530		83,284,160
On-balance sheet
Residential loans and real estate owned ⁽³⁾		93,721		7,980,667		62,027		2,749,894

Total on-balance sheet serviced assets		93,721		7,980,667		62,027		2,749,894

Total servicing portfolio		1,038,981	$	90,094,189		1,041,557	$	86,034,054

⁽¹⁾	Includes real estate owned serviced for third parties.

⁽²⁾	Consists of sub-servicing contracts held by Green Tree and RMS at their respective dates of acquisition.

⁽³⁾	Consists of residential loans and real estate owned which are serviced by the Company and recognized on the consolidated balance sheets.

F-46

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company services residential mortgage loans, including reverse mortgage loans, manufactured housing and consumer installment loans for itself and third parties. The Company earns servicing income from its third-party servicing portfolio. The following table presents servicing revenue and fees (in thousands):


	For the Years Ended December 31,
	2012 ⁽³⁾		2011		2010
Servicing fees	$	274,713	$	126,610	$	582
Incentive and performance fees ⁽¹⁾		105,073		45,596		1,055
Ancillary and other fees ⁽²⁾		39,184		13,971		630

Servicing revenue and fees	$	418,970	$	186,177	$	2,267

⁽¹⁾	Includes revenue for the Servicing, Asset Receivables Management and Reverse Mortgage segments.

⁽²⁾	Includes late fees of $16.2 million, $4.7 million and $0.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

⁽³⁾	Servicing fees, incentive and performance fees, and ancillary and other fees include revenue for the Reverse Mortgage segment.

For the year ended December 31, 2012, servicing revenue and fees include $199.8 million in revenues from the Company’s two largest customers. This amount includes revenues for the Servicing, Asset Receivables Management and Reverse Mortgage segments. For the year ended December 31, 2011, servicing revenue and fees include $40.3 million in revenues from the largest customer of the Company’s Servicing segment.

Servicing Rights

Residential loans represent two classes of servicing rights which consist of a forward loan class and a reverse loan class. The amortization of servicing rights is recorded in depreciation and amortization in the consolidated statements of comprehensive income (loss). The following table summarizes the activity in the carrying value of servicing rights by class (in thousands):


	For the Years Ended December 31,
	2012						2011
	Forward Loans			Reverse Loans			Forward Loans
Balance at beginning of year	$	250,329		$	—		$	—
Acquisition of Green Tree		—			—			278,952
Acquisition of RMS		—			15,916			—
Acquisition of S1L		—			378			—
Additions ⁽¹⁾		9,116			—			—
Amortization		(49,755	)		(706	)		(28,623	)
Impairment		—			—			—

Balance at end of year	$	209,690		$	15,588		$	250,329

⁽¹⁾	Additions of servicing rights related to forward loans includes $8.9 million in servicing rights related to the purchase of a mortgage servicing rights, or MSR, pool. See Note 10 for further information.

At December 31, 2011, servicing rights included $30.0 million pledged as collateral under the Mortgage Servicing Rights Credit Agreement. This agreement expired in November 2012.

F-47

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Servicing rights are accounted for at amortized cost and evaluated for impairment by strata based on their estimated fair value. The risk characteristics used to stratify servicing rights for purposes of measuring impairment are the type of loan products, which consist of manufactured housing loans, first lien residential mortgages and second lien residential mortgages for the forward loan class and reverse mortgages for the reverse loans class. At December 31, 2012, the fair value of servicing rights for the forward loans class and reverse loan class was $238.8 million and $15.7 million, respectively, and $262.7 million at December 31, 2011 for the forward loans class. The fair value was estimated using the present value of projected cash flows over the estimated period of net servicing income. The estimation of fair value requires significant judgment and uses key economic assumptions which are provided in the table below (in thousands, except assumption data):


	December 31, 2012
	Forward Loans			Reverse Loans
Carrying amount of servicing rights	$	209,690		$	15,588
Assumptions:
Weighted-average remaining life in years		5.1			3.6
Weighted-average stated customer interest rate on underlying collateral		7.56	%		3.12	%
Weighted-average discount rate		11.52	%		18.00	%
Expected conditional prepayment rate as a percentage of principal balance of serviced loans		12.83	%		13.62	%

The valuation of servicing rights is affected by the underlying assumptions including prepayments of principal and discount rate. Should the actual performance and timing differ materially from the Company’s projected assumptions, the estimate of fair value of the servicing rights could be materially different.

The Company’s geographic diversification of its third-party servicing portfolio, based on outstanding unpaid principal balance, is as follows (in thousands, except number of loans and percentage data):


	December 31, 2012							December 31, 2011
	Number of Accounts		Unpaid Principal Balance		Percentage of Total			Number of Accounts		Unpaid Principal Balance		Percentage of Total
California		81,547	$	16,073,080		19.6	%		101,418	$	16,840,740		20.2	%
Florida		91,318		10,476,321		12.8	%		90,419		10,800,177		13.0	%
Arizona		35,822		4,076,826		5.0	%		41,724		5,207,939		6.3	%
Other < 5%		736,573		51,487,295		62.6	%		745,969		50,435,304		60.5	%

Total		945,260	$	82,113,522		100.0	%		979,530	$	83,284,160		100.0	%

10. Goodwill and Intangible Assets, Net

Goodwill and intangible assets were recorded in connection with business acquisitions and the purchase of an MSR pool. For the years ended December 31, 2012 and 2011, amortization expense of intangible assets was $24.8 million and $12.6 million, respectively.

During the year ended December 31, 2012, the Company purchased an MSR pool for $26.4 million. The Company recorded servicing rights of $8.9 million at fair value on the date of purchase, which are included in servicing rights in the consolidated balance sheet. In connection with the purchase, the Company also recognized intangible assets of $17.5 million that represent value expected to be derived from the Company’s relationship with the mortgage customers. These intangible assets are included in customer relationships below and are being amortized over a weighted-average estimated useful life of 2.7 years.

F-48

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible assets consist of the following (in thousands):


	December 31, 2012							December 31, 2011
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
Intangible assets:
Customer relationships	$	157,201	$	(26,838	)	$	130,363	$	133,067	$	(9,185	)	$	123,882
Institutional relationships		33,600		(10,398	)		23,202		17,000		(3,400	)		13,600
Licenses		5,000		—			5,000		—		—			—
Trademarks and trade names		2,000		(28	)		1,972		—		—			—
Non-compete agreements		1,500		(111	)		1,389		—		—			—

Total intangible assets	$	199,301	$	(37,375	)	$	161,926	$	150,067	$	(12,585	)	$	137,482

The table below sets forth the activity in goodwill by reportable segment (in thousands):


	Reportable Segment
	Servicing		ARM		Insurance			Reverse Mortgage		Total
Balance at January 1, 2011	$	—	$	—	$	—		$	—	$	—
Acquisition of Green Tree		430,464		34,518		5,309			—		470,291

Balance at December 31, 2011		430,464		34,518		5,309			—		470,291
Acquisition of RMS		—		—		—			101,199		101,199
Acquisition of S1L		—		—		—			8,809		8,809
Adjustments ⁽¹⁾⁽²⁾		991		—		(912	)		—		79

Balance at December 31, 2012	$	431,455	$	34,518	$	4,397		$	110,008	$	580,378

⁽¹⁾	During the year ended December 31, 2012, the Company recorded an adjustment to the goodwill allocated to the Servicing segment in connection with the acquisition of Green Tree. See additional information at Note 3.

⁽²⁾	During the year ended December 31, 2012, the Company made an immaterial correction of an error to the purchase price allocation for Green Tree that was outside the measurement period, which resulted in an adjustment to the goodwill allocated to the Insurance segment.

Based on the balance of intangible assets, net at December 31, 2012, the following is an estimate of amortization expected to be expensed for each of the next five years and thereafter (in thousands):


	Amortization Expense
2013	$	39,020
2014		20,120
2015		15,627
2016		11,983
2017		10,523
Thereafter		64,653

Total	$	161,926

F-49

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11. Premises and Equipment, Net

Premises and equipment, net consists of the following (in thousands):


	December 31,						Useful Lives
	2012			2011			(in years)
Computer software	$	151,632		$	134,523			7
Computer hardware		14,702			10,005			3
Furniture and fixtures		6,859			3,616			3
Office equipment and other		5,666			1,112			3

Total premises and equipment		178,859			149,256
Less: Accumulated depreciation and amortization		(41,074	)		(18,846	)

Premises and equipment, net	$	137,785		$	130,410

The Company recorded depreciation and amortization expense for premises and equipment, net of $24.5 million, $11.9 million and $0.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Included in computer software are capitalized software development costs that have been internally-developed as well as obtained in connection with acquisitions. For the years ended December 31, 2012 and 2011, amortization expense for capitalized software development costs was $19.5 million and $9.0 million, respectively. Capitalized software development costs consist of the following (in thousands):


	December 31,
	2012			2011
Capitalized software development costs	$	143,740		$	127,297
Accumulated amortization		(28,470	)		(8,960	)

Net carrying amount	$	115,270		$	118,337

Based on the balance of capitalized software development costs at December 31, 2012, the following is an estimate of amortization expected to be expensed for each of the next five years and thereafter (in thousands):


	Amortization Expense
2013	$	21,734
2014		21,568
2015		20,085
2016		19,225
2017		19,225
Thereafter		13,433

Total	$	115,270

F-50

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. Other Assets

Other assets consist of the following (in thousands):


	December 31,
	2012		2011
Real estate owned, net	$	64,959	$	56,147
Deferred debt issuance costs on:
Debt		30,445		24,379
Mortgage-backed debt		16,443		21,116
Servicing advance liabilities		656		—
ResCap acquisition deposit		15,000		—
Prepaid expenses		8,188		7,145
Other		9,139		9,241

Total other assets	$	144,830	$	118,028

13. Payables and Accrued Liabilities

Payables and accrued liabilities consist of the following (in thousands):


	December 31,
	2012		2011
Payables to insurance carriers	$	51,377	$	49,246
Employee related liabilities		37,124		36,079
Uncertain tax positions		26,301		16,790
MSR pool deferred purchase price		21,011		—
Acquisition related escrow funds payable to sellers		14,000		45,000
Accrued interest payable		10,764		9,398
Loan acquisitions liability		8,558		—
Mandatory repurchase obligation		9,999		11,849
Professional fees liability related to certain securitizations		8,147		9,666
Contingent earn-out payments		6,100		—
Insurance premium cancellation reserve		4,768		3,576
Income taxes payable		—		2,694
Other		62,461		33,631

Total payables and accrued liabilities	$	260,610	$	217,929

14. Servicing Advance Liabilities

Servicer Advance Reimbursement Agreement

In July 2012, the Company renewed its Servicer Advance Reimbursement Agreement which provides for the reimbursement of certain principal and interest and protective advances that are the responsibility of the Company under certain servicing agreements. The agreement provides for a reimbursement amount of up to $150.0 million, but was subsequently amended in January 2013 to revise the reimbursement amount to $585.0 million during February and March 2013 and $370.0 million thereafter. The cost of this agreement is LIBOR plus 2.50% (2.71% at December 31, 2012) on the amounts that are reimbursed. The early reimbursement period

F-51

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

expires in June 2013 or upon 120 days after written notice. Collections of advances that have been reimbursed under the agreement require remittance upon collection to settle the outstanding balance under the agreement. The balance outstanding under this agreement at December 31, 2012 and 2011 was $35.6 million and $58.3 million, respectively. Future collections of servicer and protective advances in the amount of $35.6 million are required to be remitted to a third party to settle the balance outstanding under the agreement at December 31, 2012.

Receivables Loan Agreement

In May 2012, the Company renewed its three-year Receivables Loan Agreement that provides borrowings up to $75.0 million and is collateralized by certain principal and interest, taxes and insurance and other corporate advances reimbursable from securitization trusts serviced by the Company. The principal payments on the note are paid from the recoveries or repayment of underlying advances. Accordingly, the timing of the principal payments is dependent on the recoveries or repayments received on the underlying advances that collateralize the note. The interest rate under the agreement, which matures in July 2015, is LIBOR plus 3.25% (3.46% at December 31, 2012). The balance outstanding under this agreement at December 31, 2012 and 2011 was $64.6 million and $48.7 million, respectively. Servicer and protective advances of $77.1 million are pledged as collateral under the agreement at December 31, 2012.

15. Debt

The following table summarizes the components of debt (in thousands, except interest rate data):


	December 31, 2012						December 31, 2011
	Amortized Cost			Weighted- Average Stated Interest Rate ⁽¹⁾			Amortized Cost			Weighted- Average Stated Interest Rate ⁽¹⁾
Debt
Unpaid principal balance
2012 Term loan	$	691,250			5.75	%	$	—			—
4.5% Convertible senior subordinated notes due 2019		290,000			4.50	%		—			—
Master repurchase agreements		255,385			4.26	%		—			—
2011 First lien term loan		—			—			481,250			7.75	%
2011 Second lien term loan		—			—			265,000			12.50	%
Mortgage servicing rights credit agreement		—			—			9,599			2.77	%
Other		4,131			—			1,768			—

Total debt unpaid principal balance		1,240,766						757,617
Discount		(94,517	)					(14,991	)

Total debt	$	1,146,249			5.15	%	$	742,626			9.35	%

⁽¹⁾	Represents the weighted-average stated interest rate, which may be different from the effective rate due to the amortization of discounts and issuance costs.

For the years ended December 31, 2012 and 2011, the effective interest rate on debt, which includes the amortization of discounts and debt issuance costs, was 10.34% and 10.93%, respectively.

F-52

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides the contractual maturities of debt at December 31, 2012 (in thousands):


	Debt
2013	$	292,166
2014		36,329
2015		35,946
2016		35,075
2017		551,250
Thereafter		290,000

Total	$	1,240,766

Term Loans and Revolver

In July 2011, the Company entered into a $500 million first lien senior secured term loan and a $265 million second lien senior secured term loan, or 2011 Term Loans, to partially fund the acquisition of Green Tree. Also in July 2011, the Company entered into a $45 million senior secured revolving credit facility, or 2011 Revolver. The Company subsequently completed an amendment to increase availability under the 2011 Revolver to $90 million.

In October 2012, the Company repaid and terminated the second lien term loan with funds obtained through the issuance of the Convertible Notes. See further discussion in the Convertible Notes section below. In November 2012, the Company refinanced its first lien term loan with a $700 million senior term loan facility, or the 2012 Term Loan, and refinanced its 2011 Revolver with a $125 million senior secured revolving credit facility, or 2012 Revolver. The Company completed an analysis to determine whether the refinancing of its first lien term loan met the criteria to be accounted for as a modification or an extinguishment under current accounting guidance. The first lien term loan is comprised of a syndicate of lenders, and the analysis required a comparison of debt cash flows on a lender by lender basis under the first lien term loan prior to and subsequent to the refinancing. The cash flow comparison was completed only for those lenders participating in the syndication both prior and subsequent to the refinancing. The cash flow comparison analysis resulted in treatment of the refinancing partially as a modification, and partially as an extinguishment. Those lenders participating in the syndication prior to but not subsequent to the refinancing were treated as extinguished debt. Those lenders participating in the syndication subsequent to but not prior to the refinancing were treated as new borrowings.

The Company recorded $14.3 million in deferred debt issuance costs and an original issue discount associated with the issuance of the 2012 Term Loan and 2012 Revolver. In addition, the Company recognized a loss on extinguishment of the first lien term loan of $5.2 million. The Company’s obligations under the 2012 Term Loan and 2012 Revolver are guaranteed by substantially all of the Company’s subsidiaries and secured by substantially all of the Company’s assets and substantially all assets of the guarantor subsidiaries subject to certain exceptions, the most significant of which are the assets of the consolidated Residual and Non-Residual Trusts and the residential loans of the GNMA securitization pools. See additional information at Note 4. The terms of the 2012 Term Loan and 2012 Revolver are summarized in the table below.


Debt Agreement	Interest Rate	Amortization	Maturity/Expiration
$700 million term loan	LIBOR plus 4.50%, LIBOR floor of 1.25%	5.00% per annum beginning 4th quarter of 2012; remainder at final maturity	November 28, 2017
$125 million revolver	LIBOR plus 4.50%	Bullet payment at maturity	November 28, 2017

F-53

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition to the required amortization payments noted in the table above, the 2012 Term Loan agreement requires the Company to prepay outstanding principal with 50% of excess cash flows as defined by the credit agreement when the Total Leverage Ratio is greater than 2.5, 25% of excess cash flows when the Total Leverage Ratio is less than or equal to 2.5 but greater than 2.0 and does not require a prepayment when the Total Leverage Ratio is less than or equal to 2.0. These excess cash flow payments, if required, will be made during the first quarter of each fiscal year beginning in 2014. Additional mandatory payments are required from net proceeds associated with new indebtedness and net proceeds relating to certain sales of assets or recovery events, all subject to certain exceptions.

At December 31, 2012, the Company has interest rate caps and a swaption with notional amounts of $391 million and $175 million, respectively. The Company purchased these interest rate caps and the swaption as economic hedges to protect against changes in the interest rates on the term loans. The interest rate caps have a rate of 2.50% through December 2013 and 3.25% in calendar year 2014. The swaption has no current rate and can be exercised in March 2015 at a 7.00% fixed payer rate. The fair value of the interest rate caps and swaption is nominal at December 31, 2012 and $0.8 million and $0.5 million, respectively, at December 31, 2011, and is included in other assets in the consolidated balance sheets. The change in fair value of these derivatives reflecting a net loss of $1.2 million and $0.3 million for the years ended December 31, 2012 and 2011, respectively, is included in net fair value gains (losses) in the consolidated statements of comprehensive income (loss).

Convertible Notes

In October 2012, the Company completed the sale of $290 million aggregate principal amount of 4.50% convertible senior subordinated notes, or the Convertible Notes. The Convertible Notes pay interest semi-annually on May 1 and November 1, commencing on May 1, 2013, at a rate of 4.50% per year, and mature on November 1, 2019.

Prior to May 1, 2019, the Convertible Notes will be convertible only upon specified events including the satisfaction of a sales price condition, satisfaction of a trading price condition or specified corporate events and during specified periods, and, on or after May 1, 2019, at any time. The Convertible Notes will initially be convertible at a conversion rate of 17.0068 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $58.80 per share, which is a 40% premium to the principal value of the Convertible Notes. Upon conversion, the Company may pay or deliver, at its option, cash, shares of the Company’s common stock, or a combination of cash and shares of common stock. It is the Company’s intent to settle all conversions through combination settlement, which involves repayment of an amount of cash equal to the principal amount and any excess of conversion value over the principal amount in shares of common stock.

The Company generated net proceeds of approximately $280.4 million from the Convertible Notes after deducting underwriting discounts and commissions and offering expenses. The Company used the net proceeds from the Convertible Notes, together with cash on hand, to repay and terminate $265.0 million outstanding under the Company’s second lien senior secured term loan and pay certain fees, expenses and premiums in connection therewith. The Company recognized a loss on extinguishment of the second lien senior secured term loan of $43.4 million for the year ended December 31, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recognized the portion of the value of the Convertible Notes attributable to the embedded conversion option as equity. Upon issuance of the Convertible Notes, the Company recorded $290.0 million in debt with a discount of $84.5 million, a deferred tax liability of $33.0 million, and $48.7 million in additional paid-in capital, net of issuance costs of $2.7 million. In addition, the Company recognized debt issuance costs of $6.8 million. During the year ended December 31, 2012, the Company recorded $4.2 million in interest expense related to its Convertible Notes, which included $1.6 million in amortization of discount. At December 31, 2012, the unamortized discount was $82.9 million, which will be recognized over its remaining life of 6.8 years.

Master Repurchase Agreements

During 2012, the Company entered into several master repurchase agreements, primarily in conjunction with its acquisitions of RMS and S1L, which are used to fund the origination of mortgage loans. The facilities have an aggregate capacity amount of $402.1 million and are secured by certain residential loans. The interest rates on the facilities are primarily based on LIBOR plus between 2.75% and 3.50%, in some cases are subject to a LIBOR floor or other minimum rates and have various expiration dates through December 2013. The facilities are secured by $260.3 million in residential loans at December 31, 2012.

All of the Company’s master repurchase agreements contain customary events of default and covenants, the most significant of which are financial covenants. Financial covenants that are most sensitive to the operating results and resulting financial position are minimum tangible net worth requirements, indebtedness to tangible net worth ratio requirements, and minimum liquidity and profitability requirements. At December 31, 2012, RMS would not have been in compliance with certain financial covenants contained in its master repurchase agreements due to the amount of goodwill associated with the accounting treatment of the securitization of reverse mortgage loans and related issuance of HMBS obligations. As a result, RMS obtained waivers from each respective counterparty waiving the requirement to comply with these financial covenants at December 31, 2012.

Mortgage Servicing Rights Credit Agreement

In November 2009, Green Tree entered into a Mortgage Servicing Rights Credit Agreement to finance the purchase of certain servicing rights. The note was secured by the servicing rights purchased and required equal monthly payments for 36 months. The interest rate on this agreement was based on LIBOR plus 2.50%. The facility expired in November 2012.

16. Mortgage-Backed Debt and Related Collateral

Mortgage-Backed Debt

Mortgage-backed debt consists of debt issued by the Residual and Non-Residual Trusts that have been consolidated by the Company. The mortgage-backed debt of the Residual Trusts is carried at amortized cost while the mortgage-backed debt of the Non-Residual Trusts is carried at fair value. Refer to Note 4 for further information regarding the consolidated Residual and Non-Residual Trusts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Provided in the table below is information regarding the mortgage-backed debt issued by the consolidated Residual and Non-Residual Trusts (in thousands, except interest rate data):


	December 31, 2012			Weighted- Average Stated Interest Rate ⁽¹⁾			December 31, 2011			Weighted- Average Stated Interest Rate ⁽¹⁾
Residual Trusts
Unpaid principal balance	$	1,316,988					$	1,415,093
Discount		(1,546	)					(1,584	)

Total Residual Trusts at amortized cost		1,315,442			6.72	%		1,413,509			6.74	%
Non-Residual Trusts
Unpaid principal balance		825,200						920,761
Fair value adjustment		(67,914	)					(109,516	)

Total Non-Residual Trusts at fair value		757,286			5.72	%		811,245			5.63	%

Total mortgage-backed debt	$	2,072,728			6.33	%	$	2,224,754			6.30	%

⁽¹⁾	Represents the weighted-average stated interest rate, which may be different from the effective rate due to the amortization of discounts and issuance costs.

Borrower remittances received on the residential loans collateralizing this debt and draws under LOCs serving as credit enhancements to certain Non-Residual Trusts are used to make the principal and interest payments due on the mortgage-backed debt. The maturity of the mortgage-backed debt is directly affected by principal prepayments on the collateral. As a result, the actual maturity of the mortgage-backed debt is likely to occur earlier than the stated maturity. Certain of the Company’s mortgage-backed debt issued by the Residual Trusts is also subject to redemption according to specific terms of the respective indenture agreements, including the option to exercise a clean-up call. The mortgage-backed debt issued by the Non-Residual Trusts is subject to mandatory clean-up calls for which the Company is obligated to exercise at the earliest possible call dates, which is the date the principal amount of each loan pool falls to 10% of the original principal amount. The total outstanding balance of the residential loans expected to be called at the various respective call dates is $418.1 million.

Residual Trusts

The Residual Trusts consist of the consolidated securitization trusts that are beneficially owned by the Company. These trusts have issued mortgage-backed and asset-backed notes, or the Trust Notes, consisting of both public debt offerings and private offerings with final maturities ranging from 2029 to 2050.

In November 2010, the Company sponsored a $134.4 million residential subprime mortgage securitization and consolidated the Mid-State Capital Trust 2010-1, or Trust 2010-1, on its consolidated balance sheet. The Company determined it is the primary beneficiary of the trust as its ongoing loss mitigation and resolution responsibilities provide the Company with the power to direct the activities that most significantly impact its economic performance. In addition, the Company’s investment in the subordinate debt and residual interests issued by the trust provide it with the obligation to absorb losses or the right to receive benefits, both of which could potentially be significant. Accordingly, the loans in the trust remain on the consolidated balance sheet as residential loans and the mortgage-backed debt issued by the trust has been recognized as a liability. In May 2011, the Company sold its Class B secured notes that had been issued by Trust 2010-1, and held by the Company, increasing mortgage-backed debt by $85.1 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In June 2011, the Company sponsored a $102.0 million residential subprime mortgage securitization and consolidated the WIMC Capital Trust 2011-1, or Trust 2011-1. The Company determined it is the primary beneficiary of the trust for reasons consistent with the consolidation of Trust 2010-1.

During the year ended December 31, 2010, the Company purchased $36.2 million of the Company’s outstanding mortgage-backed debt through brokerage transactions. The purchases, which were accounted for as a retirement of debt, resulted in a gain on the extinguishment of mortgage-backed debt of $4.3 million. In June 2011, the Company reissued $36.0 million in mortgage-backed debt that had previously been extinguished.

The Residual Trusts, with the exception of Trust 2011-1, contain provisions that require the cash payments received from the underlying residential loans be applied to reduce the principal balance of the Trust Notes unless certain overcollateralization or other similar targets are satisfied. These trusts contain delinquency and loss triggers, that, if exceeded, allocate any excess cash flows to paying down the outstanding principal balance of the Trust Notes for that particular securitization at an accelerated pace. Assuming no servicer trigger events have occurred and the overcollateralization targets have been met, any excess cash is released to the Company either monthly or quarterly, in accordance with the terms of the respective underlying trust agreements. For Trust 2011-1, principal and interest payments are not paid on the subordinate note or residual interests, which are held by the Company, until all amounts due on the senior notes are fully paid.

Since January 2008, Mid-State Capital Corporation 2006-1 Trust has exceeded certain triggers and has not provided any excess cash flow to the Company. The delinquency rate for the trigger calculations, which includes real estate owned, was 10.52% at December 31, 2012 compared to a trigger level of 8.00% and the cumulative loss rate for trigger calculations was 6.95% at December 31, 2012 compared to a trigger level of 6.00%. In addition, beginning in September 2012, Mid-State Capital Corporation 2005-1 Trust, or Trust 2005-1, exceeded the delinquency rate trigger of 8.00%, with a delinquency rate of 8.21% at December 31, 2012. At December 31, 2012, Trust 2005-1 has not exceeded the cumulative loss rate trigger. Certain triggers for Trust 2005-1 and Mid-State Trust X were exceeded in November 2009 and October 2006, respectively, and cured in 2010.

Non-Residual Trusts

The Company has consolidated ten trusts for which it is the servicer, but does not hold any residual interests. The Company is obligated to exercise mandatory clean-up call obligations for these trusts and expects to call these securitizations beginning in 2016 and continuing through 2019. The total outstanding balance of the residential loans expected to be called at the various respective call dates is $418.1 million.

Collateral for Mortgage-Backed Debt

At December 31, 2012, the Residual and Non-Residual Trusts have an aggregate of $2.1 billion of principal in outstanding debt, which is collateralized by $2.6 billion of assets, including residential loans, receivables related to the Non-Residual Trusts, real estate owned, net and restricted cash and cash equivalents. For seven of the ten Non-Residual Trusts, LOCs were issued by a third party as credit enhancements to these securitizations and, accordingly, the securitization trusts will draw on these LOCs if there are not enough cash flows from the underlying collateral to pay the debt holders. The notional amount of expected draws under the LOCs at December 31, 2012 was $54.6 million. The fair value of the expected draws of $54.0 million at December 31, 2012 has been recognized as receivables related to Non-Residual Trusts on the consolidated balance sheet. All of the Company’s mortgage-backed debt is non-recourse and not cross-collateralized and, therefore, must be satisfied exclusively from the proceeds of the residential loans and real estate owned held in each securitization trust and from the draws on the LOCs for certain Non-Residual Trusts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the collateral for the mortgage-backed debt (in thousands):


	December 31,
	2012		2011
Residential loans of securitization trusts, principal balance	$	2,458,678	$	2,668,487
Receivables related to Non-Residual Trusts		53,975		81,782
Real estate owned, net		43,115		42,382
Restricted cash and cash equivalents		58,253		59,685

Total mortgage-backed debt collateral	$	2,614,021	$	2,852,336

17. HMBS Related Obligations

As a result of the acquisition of RMS, the Company recognizes the proceeds from the sale of HMBS securities as a secured borrowing, which is accounted for at fair value. At December 31, 2012, the HMBS related obligations was $5.9 billion and the average remaining life of the liability was 4.4 years. The weighted-average stated interest rate on the liability to HMBS related obligations was 4.83% at December 31, 2012. The Company has $5.2 billion in residential loans and real estate owned pledged as collateral to the trusts at December 31, 2012. For further information refer to the Transfers of Financial Assets section of Note 2.

18. Share-Based Compensation

The Company has established the 2011 Omnibus Incentive Plan, or the 2011 Plan, which permits the grant of stock options, restricted stock, and restricted stock units, or RSUs, to the Company’s officers, directors, employees and consultants through May 10, 2021. A total of 6,550,000 shares are authorized to be granted under the 2011 Plan, some of which were previously granted under incentive plans that were in effect prior to the 2011 Plan. The 2011 Plan is administered by the Compensation Committee, which is comprised of two or more independent Board of Director members. Under the 2011 Plan, no participant may receive options, restricted stock or other awards that exceeds 2,000,000 shares in any calendar year. Each contractual term of an option granted is fixed by the Compensation Committee but, except in limited circumstances, the term cannot exceed ten years from the grant date. Restricted stock awards have a vesting period as defined by the award agreement.

As of December 31, 2012, there were 2,762,925 shares underlying the 2011 Plan that are authorized, but not yet granted. The Company issues new shares of stock upon the exercise of stock options and the vesting of restricted stock and RSUs. Stock options, restricted stock and RSUs generally vest over a three to four year period and are based on service.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options

The grant date fair value of the stock options granted during the years ended December 31, 2012, 2011 and 2010 was $7.1 million, $6.0 million and $0.7 million, respectively.

The following table summarizes the activity for stock options granted by the Company:


	Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in $000s)
Outstanding at December 31, 2009		428,224		$	13.89		8.86	$	937
Granted		234,518			14.71
Exercised		(92,963	)		11.78			$	500
Forfeited or expired		(8,356	)		14.39

Outstanding at December 31, 2010		561,423			14.57		8.38	$	2,588
Granted		735,886			17.61
Exercised		(14,136	)		12.69			$	100
Forfeited or expired		(57	)		10.14

Outstanding at December 31, 2011		1,283,116			16.34		8.51	$	6,042
Granted		800,820			20.56
Exercised		(87,598	)		14.13			$	1,410
Forfeited or expired		(40,539	)		28.33

Outstanding at December 31, 2012		1,955,799		$	17.92		7.02	$	49,458

Exercisable at December 31, 2012		577,375		$	15.47		7.02	$	16,266

The weighted-average grant-date fair values of stock options granted to employees and directors of the Company during the years ended December 31, 2012, 2011, and 2010 were $8.87, $8.09 and $3.07, respectively. The total amount of cash received by the Company from the exercise of stock options was $1.2 million, $0.2 million and $1.1 million for the years ended December 31, 2012, 2011, and 2010, respectively. The total fair value of options that vested during the years ended December 31, 2012, 2011, and 2010 were $2.3 million, $0.5 million and $0.4 million, respectively.

Method and Assumptions Used to Estimate Fair Value of Options

The fair value of each stock option grant was estimated at the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions the Company used for these awards are shown below.


	2012			2011			2010
Risk-free interest rate		0.73	%		1.91	%		2.52	%
Dividend yield		0.05	%		0.22	%		10.69	%
Expected life (years)		4.50			5.00			5.00
Volatility		52.66	%		52.28	%		56.58	%
Forfeiture rate		1.40	%		0.00	%		0.00	%

The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant with a term equal to the expected life of the option. The expected dividend yield is based on the Company’s estimated annual dividend payout at grant date. The expected life of the options represents the period of time the options are expected to be

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

outstanding. Expected volatility is based on the Company’s historical data and that of a peer group of companies due to a lack of stock price history. The forfeiture rate is based on historical termination experience.

Non-vested Share Activity

The Company’s non-vested share-based awards consist of restricted stock and RSUs. The grant date fair value of share-based awards granted during the years ended December 31, 2012, 2011 and 2010 was $2.3 million, $17.6 million and $3.4 million, respectively.

The following table summarizes the activity for non-vested awards granted by the Company:


	Shares			Weighted-Average Grant Date Fair Value Per Share		Weighted-Average Contractual Term (in years)		Aggregate Intrinsic Value (in 000s)
Outstanding at December 31, 2009		942,187					9.14	$	13,502
Granted		236,104		$	14.33
Vested and settled		(68,814	)					$	1,000
Cancelled		(7,081	)

Outstanding at December 31, 2010		1,102,396		$	9.87		7.86	$	19,777
Granted		708,000		$	24.93
Vested and settled		(43,436	)					$	900

Outstanding at December 31, 2011		1,766,960		$	15.84		5.65	$	36,240
Granted		110,783		$	20.72
Vested and settled		(969,815	)					$	20,189
Forfeited		(92,000	)	$	24.93

Outstanding at December 31, 2012 ⁽¹⁾		815,928		$	22.32		3.09	$	35,101

⁽¹⁾	Restricted stock and RSUs outstanding as of December 31, 2012, include 0.1 million of vested but not yet settled RSUs.

The total fair value of shares that vested and settled during the years ended December 31, 2012, 2011, and 2010 were $9.8 million, $0.6 million and $0.5, respectively.

Share-Based Compensation Expense

Share-based compensation expense recognized by the Company is net of estimated forfeitures, which are estimated based on historical termination behavior, as well as an analysis of actual option forfeitures. Share-based compensation expense of $14.2 million, $5.2 million and $3.8 million for the years ended December 31, 2012, 2011, and 2010, respectively, is included in salaries and benefits in the consolidated statements of comprehensive income (loss). Tax benefits recognized related to share-based compensation expense for the years ended December 31, 2012, 2011, and 2010 was $5.4 million, $1.9 million and $0, respectively. For unvested stock options, the Company had $4.6 million of total unrecognized compensation cost at December 31, 2012, which is expected to be recognized over a weighted-average period of 1.0 years. For RSUs, the Company had $8.7 million of total unrecognized compensation cost at December 31, 2012, which is expected to vest over a weighted-average period of 1.6 years.

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MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

19. Income Taxes

From 2009 through June 30, 2011, the Company operated as a REIT. During this period, the Company was generally not subject to federal income tax at the REIT level on the net taxable income distributed to stockholders, but the Company was subject to federal corporate-level tax on the net taxable income of taxable REIT subsidiaries, and was subject to taxation in various state and local jurisdictions. In addition, the Company was required to distribute at least 90% of the Company’s REIT taxable income to stockholders and to meet various other requirements imposed by the Internal Revenue Code. As a result of the acquisition of Green Tree, the Company lost its REIT status retroactive to January 1, 2011 and is now subject to U.S. federal income and applicable state and local taxes at regular corporate rates.

For the years ended December 31, 2012, 2011 and 2010, the Company recorded income tax expense (benefit) of $(13.3) million, $60.3 million and $1.3 million, respectively. The significant fluctuation in income tax expense during these years was largely due to the loss of REIT status as a result of the acquisition of Green Tree in 2011, which resulted in an increase to deferred tax assets and liabilities.

Income tax expense (benefit) consists of the following components (in thousands):


	For the Years Ended December 31,
	2012			2011		2010
Current
Federal	$	8,376		$	18,996	$	1,535
State and local		680			2,526		116

Current income tax expense		9,056			21,522		1,651
Deferred
Federal		(20,695	)		32,432		(323	)
State and local		(1,678	)		6,310		(51	)

Deferred income tax expense (benefit)		(22,373	)		38,742		(374	)

Total income tax expense (benefit)	$	(13,317	)	$	60,264	$	1,277

Income tax expense (benefit) at the Company’s effective tax rate differed from the statutory tax rate as follows (in thousands):


	For the Years Ended December 31,
	2012			2011			2010
Income (loss) before income taxes	$	(35,451	)	$	(6,133	)	$	38,345

Tax provision at statutory tax rate of 35%		(12,408	)		(2,147	)		13,420
Effect of:
Impact of loss of REIT qualification		—			62,660			—
REIT income not subject to federal income tax		—			—			(12,198	)
State and local income tax		(1,266	)		(1,311	)		42
Permanent acquisition costs		610			—			—
Other		(253	)		1,062			13

Total income tax expense (benefit)	$	(13,317	)	$	60,264		$	1,277

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MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred tax assets and liabilities represent the basis differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The following table summarizes the significant components of deferred tax assets and liabilities (in thousands):


	December 31,
	2012			2011
Deferred tax assets
GNMA reverse mortgage loans	$	28,424		$	—
Capital loss carryforwards		22,922			23,244
Mandatory call obligation		20,919			20,276
Accrued expenses		15,282			15,242
Intangible assets		9,308			5,996
Unrecognized tax benefits		8,753			5,114
Share-based compensation		7,546			3,608
Deferred revenue		5,540			534
Mandatory repurchase obligation		4,077			4,681
Net operating loss carryforwards		3,503			3,477
Other		12,639			6,647

Total deferred tax assets		138,913			88,819
Valuation allowance		(30,712	)		(29,899	)

Total deferred tax assets, net of valuation allowance		108,201			58,920
Deferred tax liabilites
Net investment in residential loans		(54,231	)		(51,146	)
Discount on convertible notes		(32,384	)		—
Goodwill		(20,434	)		(9,048	)
Intangible assets		(17,083	)		(7,566	)
Deferred debt issuance costs		(8,635	)		(9,690	)
Servicing rights		(8,003	)		(16,931	)
Other		(8,448	)		(7,899	)

Total deferred tax liabilities		(149,218	)		(102,280	)

Net deferred tax assets (liabilities)	$	(41,017	)	$	(43,360	)

The Company is required to establish a valuation allowance for deferred tax assets and record a charge to income if it is determined, based on available evidence at the time the determination is made, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. If the Company did conclude that a valuation allowance was required, the resulting loss could have a material adverse effect on its financial condition and results of operations. The analysis of the need for a valuation allowance recognizes that the Company is in a cumulative loss before tax position as of the three-year period ended December 31, 2012, due to the loss on extinguishment of debt recorded during the year ended December 31, 2012, which is considered significant and objective evidence that it may not be able to realize some portion of the deferred tax assets in the future.

The Company’s evaluation focused on identifying significant, objective evidence that it will be able to realize its deferred tax assets in the future. Approximately three-fourths of the Company’s existing federal deferred tax assets are not related to net operating losses or other deductions that are subject to expiration. At December 31, 2012, the Company has $23.0 million of carryback potential and a net deferred tax liability of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$41.0 million. The Company has concluded that the combination of future reversals of existing taxable temporary differences and taxable income in prior carryback years are sufficient objective evidence to conclude that a valuation allowance on all of the deferred tax assets is not required. The valuation allowance recorded at December 31, 2012 and 2011 relates primarily to certain capital loss carryforwards for which the Company has concluded it is more likely than not that these items will not be realized in the ordinary course of operations before they expire.

At December 31, 2012, the Company has capital loss carryforwards of $56.7 million that will expire in 2013 through 2016 and net operating loss carryforwards of $14.2 million that will expire in 2028 through 2031.

Income Tax Exposure

The Company was part of the 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, 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 most recent public filing on Form 10-K, those related to the following:

•

The Internal Revenue Service, or IRS, has filed a proof of claim for a substantial amount of taxes, interest and penalties with respect to fiscal years ended August 31, 1983 through May 31, 1994. The public filing goes on to disclose that issues have been litigated in bankruptcy court and that an opinion was issued by the court in June 2010 as to the remaining disputed issues. The filing further states that the amounts initially asserted by the IRS do not reflect the subsequent resolution of various issues through settlements or concessions by the parties. Walter Energy believes that any financial exposure with respect to those issues that have not been resolved or settled by the Proof of Claim is limited to interest and possible penalties and the amount of tax assessed has been offset by tax reduction in future years. All of the issues in the Proof of Claim, which have not been settled or conceded, have been litigated before the Bankruptcy Court and are subject to appeal but only at the conclusion of the entire adversary proceedings.

•

The IRS completed its audit of Walter Energy’s federal income tax returns for the years ended May 31, 2000 through December 31, 2005. The IRS issued 30-Day Letters to Walter Energy proposing changes to tax for these tax years which Walter Energy has protested. Walter Energy’s filing states that the disputed issues in this audit period are similar to the issues remaining in the above-referenced dispute and therefore Walter Energy believes that its financial exposure for these years is limited to interest and possible penalties.

•

Walter Energy reports that the IRS is conducting an audit of Walter Energy’s tax returns filed for 2009 and 2010. Since examination is ongoing, Walter Energy cannot estimate the amount of any resulting tax deficiency or overpayment, if any.

Walter Energy believes that all of its current and prior tax filing positions have substantial merit and intends to defend vigorously any tax claims asserted and they believe that they have sufficient accruals to address any claims, including interest and penalties, and as a result, believes that any potential difference between actual losses and costs incurred and the amounts accrued would be immaterial.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Other Tax Exposure

On June 28, 2010, the Alabama Department of Revenue, or ADOR, preliminarily assessed financial institution excise tax of approximately $4.2 million, which includes interest and penalties, on a predecessor entity for the years 2004 through 2008. This tax is imposed on financial institutions doing business in the State of Alabama. The Company was informed that the ADOR had requested legal advice with regard to the application of certain provisions of the Alabama Constitution in response to issues the Company had previously raised in its protests to the initial assessments. In November 2012, the Company received communication from the State of Alabama that they anticipate issuing a final assessment if payment is not made. The Company has contested the assessment and believes that it did not meet the definition of a financial institution doing business in the State of Alabama as defined by the Alabama Tax Code.

Uncertain Tax Positions

The Company recognizes tax benefits in accordance with the accounting guidance concerning uncertainty in income taxes. This guidance establishes a more-likely-than-not recognition threshold that must be met before a tax benefit can be recognized in the financial statements.

A reconciliation of the beginning and ending balances of the total liability for unrecognized tax benefits is as follows (in thousands):


	For the Years Ended December 31,
	2012			2011			2010
Gross unrecognized tax benefits at the beginning of the year	$	9,026		$	7,671		$	7,671
Increases related to prior year tax positions		8,602			1,335			—
Increases related to current year tax positions		1,255			166			—
Reductions as a result of a lapse of the statute of limitations		(1,346	)		(146	)		—

Gross unrecognized tax benefits at the end of the year	$	17,537		$	9,026		$	7,671

The total amount of unrecognized tax benefits that would affect the effective tax rate if recognized is $7.0 million and $5.9 million at December 31, 2012 and 2011, respectively. For the years ended December 31, 2012,

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MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2011 and 2010, income tax expense includes $1.0 million, $0.3 million and $0.5 million, respectively for interest and penalties accrued on the liability for unrecognized tax benefits. At December 31, 2012 and 2011, accrued interest and penalties were $8.8 million and $7.8 million, respectively, which are included in payables and accrued liabilities in the consolidated balance sheets.

The Company’s tax years that remain subject to examination by the IRS are 2009 through 2011 and by various states are 1998 through 2011.

20. Common Stock and Earnings (Loss) Per Share

Common Stock Issuance

In July 2011, the Company issued 1,812,532 shares to partially fund the acquisition of Green Tree. See Note 3 for further information.

In October 2012, the Company issued 6,900,000 shares as part of an offering, which generated net proceeds of $276.1 million after deducting underwriting discounts and commissions and offering expenses. The Company used $95.0 million of these net proceeds to partially fund its acquisition of RMS.

In November 2012, the Company issued 891,265 shares to partially fund the acquisition of RMS. See Note 3 for further information.

Dividends on Common Stock

The Company’s dividend restriction covenant related to the 2012 Term Loan and the 2012 Revolver limits the sum of cash dividends and similar payments in any fiscal year to $15 million conditioned on the absence of a default or event of default at or resulting from the payment. Additional dividends could be paid upon meeting certain criteria, including, but not limited to, dividends made from an available amount basket which will grow based on, among other things, the amount of excess cash flow that is not required to be used to prepay the 2012 Term Loan, subject to a Total Leverage Ratio no greater than 2.50 to 1.00, determined on a pro-forma basis, and the absence of a default or event of default at or resulting from the payment.

In November 2011, the Company paid a special dividend of $6.2 million to shareholders of which $0.6 million was settled in cash and $5.6 million in shares of the Company’s common stock. The special dividend represents an additional payment associated with taxable income for the year ended December 31, 2010 in order to satisfy REIT distribution requirements. The number of shares issued in the special dividend was calculated based on the closing price per share of the Company’s common stock on October 27, 2011.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Earnings (Loss) Per Share (EPS)

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations shown on the face of the consolidated statements of comprehensive income (loss) (in thousands, except per share data):


	For the Years Ended December 31,
	2012			2011			2010
Basic earnings (loss) per share
Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068
Less: net income allocated to unvested participating securities		—			—			(505	)

Net income (loss) available to common stockholders (numerator)		(22,134	)		(66,397	)		36,563
Weighted-average common shares outstanding (denominator)		30,397			27,593			26,432

Basic earnings (loss) per share	$	(0.73	)	$	(2.41	)	$	1.38

Diluted earnings (loss) per share
Net income (loss)	$	(22,134	)	$	(66,397	)	$	37,068
Less: net income allocated to unvested participating securities		—			—			(503	)

Net income (loss) available to common stockholders (numerator)		(22,134	)		(66,397	)		36,565
Weighted-average common shares outstanding		30,397			27,593			26,432
Add: effect of dilutive stock options and convertible notes		—			—			89

Diluted weighted-average common shares outstanding (denominator)		30,397			27,593			26,521

Diluted earnings (loss) per share	$	(0.73	)	$	(2.41	)	$	1.38

The Company’s unvested restricted stock and RSUs are considered participating securities. During periods of net income, the calculation of earnings per share for common stock is adjusted to exclude the income attributable to the unvested restricted stock and RSUs from the numerator and exclude the dilutive impact of those shares from the denominator. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. Due to the net loss recognized during the years ended December 31, 2012 and 2011, approximately 0.7 million and 0.3 million participating securities, respectively, were excluded from the calculation of basic and diluted loss per share because the effect would be antidilutive.

The calculation of diluted earnings (loss) per share for the years ended December 31, 2012, 2011 and 2010, does not include 6.9 million, 0.7 million and 0.2 million shares, respectively, because their effect would have been antidilutive. The convertible notes are antidilutive when calculating diluted earnings per share when the Company’s average stock price is less than $58.80.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

21. Supplemental Disclosures of Cash Flow Information

The Company’s supplemental disclosures of cash flow information are summarized as follows:


	For the Years Ended December 31,
	2012		2011		2010
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	209,943	$	154,815	$	81,587
Cash paid for income taxes		33,319		18,752		1,291
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Real estate owned acquired through foreclosure		73,513		68,011		78,653
Residential loans originated to finance the sale of real estate owned		58,376		71,242		73,038
Acquisition of MSR pool and related intangible assets		21,011		—		—
Issuance of common stock for acquisitions		41,346		40,220		—
Dividends and dividend equivalents declared, not yet paid		—		—		13,431
Stock dividend		—		5,580		—

22. Segment Reporting

Management has organized the Company into five reportable segments based primarily on its services as follows:

•

Servicing — consists of operations that perform servicing for third-party investors of residential mortgages, manufactured housing and consumer installment loans and contracts, as well as for the Loans and Residuals segment and for the Non-Residual Trusts.

•

Asset Receivables Management — performs collections of post charge-off deficiency balances on behalf of third-party securitization trusts and other asset owners.

•

Insurance — provides voluntary and lender-placed hazard insurance for residential loans, as well as other ancillary products, through the Company’s insurance agency for a commission and a reinsurer to third parties as well as to the Loans and Residuals segment.

•

Loans and Residuals — consists of the assets and mortgage-backed debt of the Residual Trusts and the unencumbered forward residential loan portfolio and real estate owned.

•

Reverse Mortgage — consists of operations that perform servicing for third-party investors of reverse mortgages and on-balance sheet reverse mortgages. The Reverse Mortgage segment is a new segment in 2012, which resulted from the acquisitions of RMS and S1L.

During the first quarter of 2012, the Company revised its method of allocating costs to business segments. As a result, the Company has recast the segment measures of the prior periods to reflect the new cost allocation method on a consistent basis for all periods presented. The previous method allocated indirect costs to segments based on segment profit or loss. The new method allocates indirect costs to the Insurance segment based on the ratio of the number of policies to the number of accounts serviced and to the ARM, Reverse Mortgage and certain non-reportable segments based on headcount. All remaining indirect costs are allocated to the Servicing segment. The Loans and Residuals segment does not receive an allocation for indirect costs. For the year ended December 31, 2011, the change in method increased costs allocated to the Servicing and ARM segments by $4.4 million and $0.4 million, respectively, and decreased costs allocated to the Insurance and Other segments by $3.5 million and $1.3 million, respectively. For the year ended December 31, 2010, the change in method increased costs allocated to the Servicing segment by $2.1 million and decreased costs allocated to the Insurance and Other segments by $1.0 million and $1.1 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, the Company revised its method of allocating assets to business segments during the fourth quarter of 2012. As a result, the Company has recast segment assets of the prior periods to reflect the new allocation method on a consistent basis for all periods presented. The revised asset allocation includes intersegment receivables and deferred tax assets in the calculation of total segment assets whereas they previously were not included. For the year ended December 31, 2011, the change in method increased assets allocated to the Servicing, Insurance and Other segments by $109.3 million, $7.3 million and $36.9 million, respectively, and decreased assets allocated to the Loans and Residuals segment and eliminations by $0.2 million and $153.3 million, respectively. For the year ended December 31, 2010, the change in method increased assets allocated to the Servicing, Insurance and Other segments by $61.7 million, $1.9 million and $47.9 million, respectively, and decreased assets allocated to the Loans and Residuals segment and eliminations by $23.8 million and $87.7 million, respectively.

In order to reconcile the financial results for the Company’s reportable segments to the consolidated results, the Company has presented the revenue and expenses and total assets of the Non-Residual Trusts and other non-reportable operating segments, as well as certain corporate expenses, which have not been allocated to the business segments, in Other. Intersegment servicing and insurance revenues and expenses have been eliminated. Intersegment revenues are recognized on the same basis of accounting as such revenue is recognized in the consolidated statements of comprehensive income (loss).

Presented in the tables below are the Company’s financial results by reportable segment reconciled to the consolidated income (loss) before income taxes and total assets by reportable segment reconciled to consolidated total assets (in thousands):


	For the Year Ended December 31, 2012
	Servicing			Asset Receivables Management		Insurance		Loans and Residuals			Reverse Mortgage		Other			Eliminations			Total Consolidated
REVENUES
Servicing revenue and fees	$	395,913		$	38,876	$	—	$	—		$	5,134	$	—		$	(20,953	)	$	418,970
Interest income on loans		—			—		—		154,351			—		—			—			154,351
Insurance revenue		—			—		73,249		—			—		—			—			73,249
Other revenues		2,773			49		659		5			1,858		15,123			(48	)		20,419

Total revenues		398,686			38,925		73,908		154,356			6,992		15,123			(21,001	)		666,989
EXPENSES
Interest expense		4,882			—		—		96,337			1,217		77,235			—			179,671
Depreciation and amortization		84,474			7,774		5,377		—			1,942		161			—			99,728
Provision for loan losses		—			—		—		13,352			—		—			—			13,352
Other expenses, net		262,515			22,623		35,175		28,623			7,991		39,684			(21,001	)		375,610

Total expenses		351,871			30,397		40,552		138,312			11,150		117,080			(21,001	)		668,361
OTHER GAINS (LOSSES)
Net fair value gains (losses)		(1,056	)		—		—		(116	)		7,279		8,393			—			14,500
Losses on extinguishments		—			—		—		—			—		(48,579	)		—			(48,579	)

Total other gains (losses)		(1,056	)		—		—		(116	)		7,279		(40,186	)		—			(34,079	)

Income (loss) before income taxes	$	45,759		$	8,528	$	33,356	$	15,928		$	3,121	$	(142,143	)	$	—		$	(35,451	)


	At December 31, 2012
Total assets	$	1,684,855		$	55,287	$	183,877	$	1,599,742		$	6,340,693	$	1,468,018		$	(354,295	)	$	10,978,177

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	For the Year Ended December 31, 2011
	Servicing			Asset Receivables Management		Insurance		Loans and Residuals		Other			Eliminations			Total Consolidated
REVENUES
Servicing revenue and fees	$	197,265		$	14,275	$	—	$	—	$	—		$	(25,363	)	$	186,177
Interest income on loans		—			—		—		164,794		—			—			164,794
Insurance revenue		—			—		43,752		—		—			(2,101	)		41,651
Other revenues		2,993			—		1,245		—		5,614			—			9,852

Total revenues		200,258			14,275		44,997		164,794		5,614			(27,464	)		402,474
EXPENSES
Interest expense		3,096			—		—		91,075		42,075			—			136,246
Depreciation and amortization		46,438			3,906		2,706		—		28			—			53,078
Provision for loan losses		—			—		—		6,016		—			—			6,016
Other expenses, net		135,994			8,995		29,990		37,223		29,668			(27,464	)		214,406

Total expenses		185,528			12,901		32,696		134,314		71,771			(27,464	)		409,746
OTHER GAINS (LOSSES)
Net fair value gains (losses)		(607	)		—		—		965		(1,410	)		—			(1,052	)
Gain on extinguishments		—			—		—		95		—			—			95
Other		—			—		—		—		2,096			—			2,096

Total other gains (losses)		(607	)		—		—		1,060		686			—			1,139

Income (loss) before income taxes	$	14,123		$	1,374	$	12,301	$	31,540	$	(65,471	)	$	—		$	(6,133	)


	At December 31, 2011
Total assets	$	1,428,243		$	62,919	$	170,276	$	1,705,378	$	925,191		$	(178,465	)	$	4,113,542

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	For the Year Ended December 31, 2010
	Servicing			Insurance			Loans and Residuals		Other		Eliminations			Total Consolidated
REVENUES
Servicing revenue and fees	$	22,238		$	—		$	—	$	—	$	(19,971	)	$	2,267
Interest income on loans		—			—			166,188		—		—			166,188
Insurance revenue		—			11,513			—		—		(2,350	)		9,163
Other revenues		280			322			269		2,005		—			2,876

Total revenues		22,518			11,835			166,457		2,005		(22,321	)		180,494
EXPENSES
Interest expense		—			—			81,729		—		—			81,729
Depreciation and amortization		311			64			—		8		—			383
Provision for loan losses		—			—			6,526		—		—			6,526
Other expenses, net		33,378			16,746			28,881		1,508		(22,321	)		58,192

Total expenses		33,689			16,810			117,136		1,516		(22,321	)		146,830
OTHER GAINS (LOSSES)
Gain on extinguishments		—			—			4,258		—		—			4,258
Other		—			—			—		423		—			423

Total other gains (losses)		—			—			4,258		423		—			4,681

Income (loss) before income taxes	$	(11,171	)	$	(4,975	)	$	53,579	$	912	$	—		$	38,345


	At December 31, 2010
Total assets	$	82,243		$	16,325		$	1,724,461	$	160,186	$	(87,725	)	$	1,895,490

23. Commitments and Contingencies

Mandatory Repurchase Obligation

The Company has a mandatory obligation to repurchase loans at par from an investor when loans become 90 days past due. The total loans outstanding and subject to being repurchased were $85.9 million at December 31, 2012. The Company has estimated the fair value of this contingent liability at December 31, 2012 as $10.0 million, which is included in payables and accrued liabilities on the consolidated balance sheet. The Company estimates that the undiscounted losses to be incurred from the mandatory repurchase obligation over the remaining lives of the loans are $13.1 million at December 31, 2012.

Professional Fees Liability Related to Certain Securitizations

The Company has a contingent liability related to payments for certain professional fees that it will be required to make over the remaining life of various securitization trusts, which are based in part on the outstanding principal balance of the debt issued by these trusts. At December 31, 2012, the Company estimated the fair value of this contingent liability at $8.1 million, which is included in payables and accrued liabilities on the consolidated balance sheet. The Company estimates that the gross amount of payments it expects to pay over the remaining lives of the securitizations is $10.9 million at December 31, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Letter of Credit Reimbursement Obligation

The Company has an obligation to reimburse a third party for the final $165.0 million in LOCs if drawn for an aggregate of eleven securitization trusts on the LOCs issued to these trusts by a third party. Seven of these securitization trusts were consolidated on the Company’s consolidated balance sheets due to the Company’s mandatory clean-up call obligation related to these trusts. The LOCs were issued by a third party as credit enhancements to these eleven securitizations and, accordingly, the securitization trusts will draw on these LOCs if there are insufficient cash flows from the underlying collateral to pay the debt holders. The total amount available on these LOCs for all eleven securitization trusts was $285.4 million at December 31, 2012. Based on the Company’s estimates of the underlying performance of the collateral in these securitizations, the Company does not expect that the final $165.0 million will be drawn, and therefore, no liability for the fair value of this obligation has been recorded on the Company’s consolidated balance sheets, although actual performance may differ from this estimate in the future.

Mandatory Clean-Up Call Obligation

The Company is obligated to exercise the mandatory clean-up call obligations Green Tree assumed as part of an agreement to acquire the rights to service the loans in the Non-Residual Trusts. The Company expects to call these securitizations beginning in 2016 and continuing through 2019. The total outstanding balance of the residential loans expected to be called at the respective call dates is $418.1 million.

Unfunded Commitments

The Company has floating rate reverse mortgage loans in which the borrowers have additional borrowing capacity of $178.3 million, and similar commitments on fixed rate loans of $4.5 million at December 31, 2012. This additional borrowing capacity is primarily in the form of undrawn lines of credit, with the balance available on a scheduled or unscheduled payment basis. Additionally, the Company has short-term commitments to lend $19.2 million and commitments to purchase loans totaling $249.8 million at December 31, 2012.

Transactions with Walter Energy

Following the spin-off in 2009 from Walter Energy, the Company and Walter Energy have operated independently, and neither has any ownership interest in the other. In order to allocate responsibility for overlapping or related aspects of their businesses, the Company and Walter Energy entered into certain agreements pursuant to which the Company and Walter Energy assume responsibility for various aspects of their businesses and agree to indemnify one another against certain liabilities that may arise from their respective businesses, including liabilities relating to certain tax and litigation exposure.

GNMA Corporate Guaranty

RMS is required to maintain regulatory compliance with HUD, GNMA and Fannie Mae program requirements, some of which are financial covenants related to minimum levels of net worth and other financial ratios. Due to the accounting treatment for reverse mortgage loan securitizations and the related issuance of HMBS obligations, RMS has obtained an indefinite waiver for certain of these requirements from GNMA and through June 30, 2013 from Fannie Mae. In addition, the Company has provided a guarantee beginning on the date of acquisition, November 1, 2012, whereby the Company guarantees RMS’ performance and obligations under the GNMA Mortgage-Backed Securities Program. In the event that the Company fails to honor this guaranty, GNMA could terminate RMS’s status as a qualified issuer of mortgage-backed securities as well as take other actions permitted by law that could impact the operations of RMS, including the termination or suspension of RMS’s servicing rights associated with reverse mortgage loans backed by GNMA guaranteed mortgage-backed securities. GNMA has affirmed RMS’ current commitment authority to issue HMBS securities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Litigation

As discussed in Note 19, Walter Energy is in dispute with the IRS on a number of federal income tax issues. Walter Energy has stated in its public filings that it believes that all of its current and prior tax filing positions have substantial merit and that Walter Energy intends to defend vigorously any tax claims asserted. Under the terms of the tax separation agreement between the Company and Walter Energy dated April 17, 2009, Walter Energy is responsible for the payment of all federal income taxes (including any interest or penalties applicable thereto) of the consolidated group, which includes the aforementioned claims of the IRS. However, to the extent that Walter Energy is unable to pay any amounts owed, the Company could be responsible for any unpaid amounts.

As disclosed in prior filings, one of the Company’s subsidiaries, Walter Mortgage Company, or WMC, had been a party to a lawsuit entitled Casa Linda Homes, et al. v. Walter Mortgage Company, et al. , Cause No. C-2918-08-H, 389th Judicial District Court of Hidalgo County, Texas, claiming breach of contract, fraud, negligent misrepresentation, promissory estoppel and unjust enrichment. The plaintiffs were seeking actual and exemplary damages, the amount of which were not specified, but if proven could have been material. WMC maintained counterclaim actions against the plaintiffs for breach of fiduciary duty and conversion related to the defendants’ alleged misappropriation of escrow funds. The plaintiffs’ allegations arose from a claim that the WMC breached a contract with the plaintiffs by failing to purchase a certain amount of loan pool packages from the corporate plaintiff, a Texas real estate developer. Alternatively, the plaintiffs claimed that WMC promised to purchase a certain amount of loan pool packages from the corporate plaintiff, plaintiffs relied on that promise, and WMC failed to perform. The case was tried before a jury, and on December 13, 2012 the jury found that we have no liability for these claims and consequently the plaintiffs were entitled to no damages. As to our counterclaim, the jury returned a verdict in our favor awarding us $282,357 in compensatory damages and $282,357 in punitive damages (plus attorneys fees, court costs, and post-judgment interest) due and owing from the plaintiffs Casa Linda Homes and Mark Dizdar. The plaintiffs have ninety (90) days from the date of the verdict to file a motion for a new trial should they choose to do so.

The Company is a party to a number of other lawsuits arising in the ordinary course of its business. While the results of such litigation cannot be predicted with certainty, the Company believes that the final outcome of such litigation will not have a materially adverse effect on the Company’s financial condition, results of operations or cash flows.

Lease Obligations

The Company leases office space and office equipment under various operating lease agreements with terms expiring through 2017, exclusive of renewal option periods. Rent expense was $12.3 million, $6.5 million and $2.0 million for the years ended December 31, 2012, 2011 and 2010, respectively. Future minimum rental payments under operating leases at December 31, 2012 are as follows (in thousands):


2013	$	12,911
2014		12,180
2015		10,545
2016		6,779
2017		4,436

Total	$	46,851

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MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

24. Quarterly Results of Operations (Unaudited)

The following tables summarize the Company’s unaudited consolidated results of operations on a quarterly basis for the years ended December 31, 2012 and 2011. The sum of the quarterly earnings per share amounts do not equal the amount reported for the full year since per share amounts are computed independently for each quarter and for the full year based on respective weighted-average shares outstanding and other dilutive potential shares.

Quarterly results of operations are summarized as follows (in thousands, except per share data):


	For the 2012 Quarters Ended
	December 31 ⁽¹⁾			September 30			June 30			March 31
Total revenues	$	176,377		$	160,756		$	164,100		$	165,756
Total expenses		188,685			153,304			164,113			162,259
Other gains (losses)		(42,753	)		3,123			788			4,763

Income (loss) before income taxes		(55,061	)		10,575			775			8,260
Income tax expense (benefit)		(20,953	)		4,164			347			3,125

Net income (loss)	$	(34,108	)	$	6,411		$	428		$	5,135

Basic earnings (loss) per common and common equivalent share	$	(0.98	)	$	0.22		$	0.01		$	0.17
Diluted earnings (loss) per common and common equivalent share		(0.98	)		0.21			0.01			0.17

	For the 2011 Quarters Ended
	December 31 ⁽²⁾			September 30 ⁽³⁾			June 30			March 31
Total revenues	$	155,900		$	151,924		$	47,965		$	46,685
Total expenses		161,342			153,484			51,530			43,390
Other gains (losses)		2,110			(1,404	)		95			338

Income (loss) before income taxes		(3,332	)		(2,964	)		(3,470	)		3,633
Income tax expense (benefit)		600			59,596			(75	)		143

Net income (loss)	$	(3,932	)	$	(62,560	)	$	(3,395	)	$	3,490

Basic earnings (loss) per common and common equivalent share	$	(0.14	)	$	(2.20	)	$	(0.13	)	$	0.13
Diluted earnings (loss) per common and common equivalent share		(0.14	)		(2.20	)		(0.13	)		0.13

⁽¹⁾	The amounts for the fourth quarter 2012 include losses on extinguishment of debt of $48.6 million.

⁽²⁾	The amounts for the fourth quarter 2011 include the reversal of the estimated liability for contingent earn-out payments of $2.1 million for Marix.

⁽³⁾

In the fourth quarter of 2012, the Company made an immaterial correction of an error to income tax expense relating to the accounting for the impact of loss of REIT status recorded in the third quarter ended September 30, 2011. The impact of this correction for the third quarter ended September 30, 2011 was to decrease income tax expense and net loss by $2.9 million and decrease basic and diluted loss per share by $0.10.

F-73

WALTER INVESTMENT

MANAGEMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

25. Subsequent Events

The Company previously announced its joint bid with Ocwen Loan Servicing LLC to buy certain mortgage-related net assets held by ResCap, in an auction sponsored by the U.S. Bankruptcy Court. Pursuant to this agreement, the Company agreed to acquire the rights and assume the liabilities relating to ResCap’s entire Fannie Mae mortgage servicing rights and related servicer advances, and ResCap’s mortgage originations and capital markets platforms, or the ResCap net assets. On January 31, 2013, the Company closed on the acquisition of the ResCap net assets for a total preliminary purchase price of $492.0 million. Refer to Note 3 for additional information.

On January 31, 2013, the Company purchased Fannie Mae mortgage servicing rights, including related servicer advances, from Bank of America, N.A. for total consideration of $495.7 million. At closing, the Fannie Mae mortgage servicing rights were associated with loans and other intangibles totaling $84.4 billion in unpaid principal balance.

On January 31, 2013, the Company entered into the Amendment No. 1, Incremental Amendment and Joinder Agreement, or the Incremental Amendment, to its 2012 Term Loan. The Incremental Amendment, among other things, increases certain financial ratios which govern the Company’s ability to incur additional indebtedness and provides for a secured term loan, or the Incremental Loan, in an amount of $825.0 million, which was borrowed in its entirety on January 31, 2013.

In January 2013, the Company purchased the residential mortgage servicing platform, including certain servicing related technology assets, of MetLife Bank, N.A. located in Irving, Texas for total consideration of $1.0 million.

In February and March 2013, we entered into three additional master repurchase agreements with an aggregate capacity amount of $1.1 billion. These facilities will also be used to fund the origination of mortgage loans primarily for the recently acquired ResCap originations business.

In February 2013, the Company entered into an agreement to acquire the correspondent lending and wholesale broker businesses of Ally Bank for total consideration of $1.5 million.

On March 14, 2013, the Company entered into Amendment No. 2, or the Credit Agreement Amendment, to its 2012 Term Loan. The Credit Agreement Amendment changes certain financial definitions in the 2012 Term Loan to clarify that net cash receipts in connection with the issuance of reverse mortgage securities and the servicing of reverse mortgages count towards pro-forma adjusted EBITDA and excess cash flow for purposes of the 2012 Term Loan.

F-74

Exhibit 2.4

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and among

SECURITY ONE LENDING,

as the Corporation,

WALTER INVESTMENT MANAGEMENT CORP.,

as Buyer,

JAM SPECIAL OPPORTUNITIES FUND II, L.P.,

as Principal Seller and Sellers’ Representative,

and the

OTHER SELLERS LISTED ON THE SIGNATURE PAGES HERETO,

as the Other Stockholder Sellers

Dated as of December 31, 2012

TABLE OF CONTENTS


	Page
ARTICLE 1 DEFINITIONS AND INTERPRETATION		1
1.1 Definitions		1
1.2 Construction		11

ARTICLE 2 PURCHASE AND SALE; PURCHASE PRICE; ESCROW; CONTINGENT PAYMENTS		12
2.1 Purchase and Sale		12
2.2 Consideration; Deliveries		12
2.3 Economic and Administrative Closings		12
2.4 Conditions to Administrative Closing		13
2.5 Escrow Amount		13
2.6 Contingent Payments		14
2.7 Delay of Administrative Closing		15
2.8 Withholding		15
2.9 Seller Elections		15

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE CORPORATION		15
3.1 Authorization		16
3.2 Organization		16
3.3 Capitalization		16
3.4 Subsidiaries		17
3.5 Governmental Approvals; Noncontravention		18
3.6 Financial Statements; No Undisclosed Liabilities		19
3.7 Accounting Controls		19
3.8 Absence of Changes		19
3.9 Sufficiency of Assets		20
3.10 Real Property		20
3.11 Material Contracts		21
3.12 Servicing and Originations Matters		23
3.13 Compliance with Laws		26
3.14 Litigation		27
3.15 Insurance		27
3.16 Tax Matters		28
3.17 Intellectual Property		30
3.18 Employee and Labor Matters		31
3.19 ERISA		31
3.20 Environmental Matters		34
3.21 Related Party Transactions		34
3.22 Customers		34
3.23 Brokers		34
3.24 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES		35


ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS			35
4.1 Authorization of Transaction			35
4.2 Governmental Approvals; Noncontravention			36
4.3 Shares			36
4.4 Litigation			36
4.5 Brokers			36
4.6 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES			37

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER			37
5.1 Organization; Corporate Power			37
5.2 Authorization of Transaction			37
5.3 Governmental Approvals; Noncontravention			38
5.4 Brokers’ Fees			38
5.5 Compliance with Laws			38
5.6 Litigation			38
5.7 Capital Resources			39
5.8 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES			39

ARTICLE 6 COVENANTS			39
6.1 Conduct of the Business			39
6.2 Commercially Reasonable Efforts			42
6.3 Access to Information			43
6.4 Notices of Certain Events			43
6.5 Affiliate Transactions			44
6.6 Public Announcements			44
6.7 Further Assurances			44
6.8 Confidentiality			44
6.9 Employee Benefits			45
6.10 Release			46
6.11 Non-Compete; Non-Solicit			46
6.12 Indemnification; Directors’ and Officers’ Insurance			48
6.13 Employment Agreements			49
6.14 Termination of Guarantees			49
6.15 Tax Elections			49
6.16 Assignment to Ginnie Mae			49

ARTICLE 7 INDEMNIFICATION			49
7.1 General Indemnification			49
7.2 Survival			52
7.3 Limitation on Liability			53
7.4 Tax Indemnity			54
7.5 Tax Claims			55
7.6 Payment			56
7.7 Escrow			57
7.8 No Recourse			57
7.9 Effect of Knowledge on Indemnification			57
7.10 Exclusive Remedy			58


ARTICLE 8 TAX MATTERS			58
8.1 Responsibility for Filing Tax Returns			58
8.2 Cooperation			59
8.3 Refunds			59
8.4 Purchase Price Adjustment			59
8.5 Tax Sharing Agreements			59
8.6 Transfer Taxes			59

ARTICLE 9 MISCELLANEOUS			60
9.1 Notices			60
9.2 Amendments; No Waivers			61
9.3 Expenses			61
9.4 Sellers’ Representative			61
9.5 Successors and Assigns; Benefit			63
9.6 Governing Law			63
9.7 Resolution of Disputes			63
9.8 Severability			63
9.9 Table of Contents; Headings			64
9.10 Counterparts; Effectiveness			64
9.11 Entire Agreement			64
9.12 Specific Performance			64

iii

DEFINED TERMS


AAA		Section 9.7
Action		Section 1.1
Adjustment Time		Section 1.1
Administrative Closing		Section 2.3(b)
Administrative Closing Date		Section 2.3(b)
Affiliate		Section 1.1
Affiliate Contract		Section 6.1
Agency		Section 1.1
Agreement		Preamble
Applicable Requirements		Section 1.1
Benefit Plan		Section 3.19(a)
Business		Section 1.1
Business Day		Section 1.1
Buyer		Preamble
Buyer Fundamental Representations		Section 7.2
Buyer Indemnified Parties		Section 7.1(a)
Buyer Indemnified Party		Section 7.1(a)
Buyer Waiver		Section 7.1(a)(iii)
Capitalized Lease Obligations		Section 1.1
Class A Preferred Stock		Section 3.3(a)
Class B Preferred Stock		Section 3.3(a)
Class C Preferred Stock		Section 3.3(a)
Class C-1 Preferred Stock		Section 3.3(a)
Code		Section 1.1
Common Stock		Section 3.3(a)
Confidentiality Agreement		Section 1.1
Consulting Agreement		Section 1.1
Contemplated Transactions		Section 1.1
Contingent Obligation		Section 1.1
Continuing Employees		Section 6.5(a)
Contract		Section 1.1
Controlled Group		Section 3.19(c)
Corporate Options		Section 1.1
Corporation		Preamble
D&O Indemnification Obligations		Section 6.6
Disclosure Schedules		Section 1.1
DOL		Section 1.1
Economic Closing		Section 2.3(a)
Effective Date		Preamble
Employees		Section 3.19(a)
Employment Agreement		Section 6.14
Environmental Laws		Section 1.1
Equity Interests		Section 1.1
ERISA		Section 3.19(a)
Escrow Account		Section 2.5(a)
Escrow Agent		Section 2.5(b)
Escrow Agreement		Section 2.5(a)
Escrow Amount		Section 2.5(a)
Escrow Expiration Date		Section 2.5(b)
Existing Financing Facilities		Section 3.11(a)(x)


Fair Market Value		Section 1.1
Fannie Mae		Section 1.1
FHA		Section 1.1
FHA Insurance		Section 1.1
FHA Regulations		Section 1.1
Financial Statements		Section 3.6(a)
Freddie Mac		Section 1.1
GAAP		Section 1.1
Ginnie Mae		Section 1.1
Ginnie Mae Guide		Section 1.1
Ginnie Mae II Custom MBS Program		Section 1.1
Governing Documents		Section 1.1
Governmental Entity		Section 1.1
Guarantees		Section 1.1
Guarantors		Section 1.1
HECM Loan		Section 1.1
HECM Loan Repurchase Obligations		Section 3.12(k)
HUD		Section 1.1
HUD Handbook		Section 1.1
Indebtedness		Section 1.1
Indemnified Party		Section 7.1(c)
Indemnifying Party		Section 7.1(c)
Indemnity Cap		Section 7.3(a)
Insurance Policies		Section 3.15(a)
Insurer		Section 1.1
Intellectual Property		Section 1.1
Interest Rate Protection Agreement		Section 1.1
Investor		Section 1.1
Investor Mortgage Loan		Section 1.1
IRS		Section 1.1
JAM Restricted Business		Section 6.7(a)
JAM Sellers		Section 1.1
JEP		Section 1.1
Jurisdictions		Section 3.16(a)
Knowledge of Buyer		Section 1.1
Knowledge of the Corporation		Section 1.1
Latest Balance Sheet		Section 3.6(a)
Law		Section 1.1
Leased Real Property		Section 3.10(b)
Leases		Section 3.10(b)
Liabilities		Section 1.1
Lien		Section 1.1
Losses		Section 1.1
Management Employee		Section 6.14
Management Employees		Section 6.14
Material Adverse Effect		Section 1.1
Material Contracts		Section 3.11(a)
Material Interest		Section 1.1
Monitoring Agreement		Section 1.1
Mortgage		Section 1.1


Mortgage Loan		Section 1.1
Mortgage Loan Repurchase Obligations		Section 3.12(l)
Multiemployer Plan		Section 3.19(e)
New Plans		Section 7.3(a)
Non-Compete Period		Section 6.7(a)
Notice of Loss		Section 7.1(c)
Option Cancellation Agreement		Section 1.1
Order		Section 1.1
Other Hedging Agreements		Section 1.1
Other Parties		Section 3.11(b)
Other Stockholder Sellers		Preamble
Permits		Section 1.1
Permitted Investments		Section 6.7(b)
Permitted Liens		Section 1.1
Person		Section 1.1
PMI		Section 1.1
Post-Closing Period		Section 8.3(a)
Pre-Closing Period		Section 7.4(a)(i)
Preferred Stock		Section 3.3(a)
Pre-Tax Net Income		Section 1.1
Principal Seller		Preamble
Proceeding		Section 1.1
Purchase Price		Section 2.2(a)
Related Person		Section 1.1
Release Notice		Section 1.1
Released Parties		Section 6.6
Released Party		Section 6.6
Restricted Business		Section 6.7(a)
Schedules		Section 1.1
SEC		Section 1.1
Securities Exchange Act		Section 1.1
Seller Fundamental Representations		Section 7.2


Seller Indemnified Parties		Section 7.1(b)
Seller Indemnified Party		Section 7.1(b)
Sellers		Preamble
Sellers’ Representative		Section 9.4(a)
Sellers’ Representative Reserves		Section 1.1
Serviced Loans		Section 1.1
Servicing Advances		Section 1.1
Servicing Agreement		Section 1.1
Servicing Compensation		Section 1.1
Servicing Rights		Section 1.1
Shares		Preamble
Software		Section 1.1
Sold Mortgage Loan		Section 1.1
State Agency		Section 1.1
Straddle Period		Section 7.4(c)
Subsidiary		Section 1.1
System		Section 1.1
Tax		Section 1.1
Tax Claim		Section 7.5(a)
Tax Return		Section 1.1
Third Party Claim		Section 7.1(d)
Threshold Amount		Section 7.3(a)
Transaction Documents		Section 1.1
Transaction Expenses		Section 1.1
Transfer Taxes		Section 8.6
USDA Rural Development		Section 1.1
Wage and Benefits Continuation Period		Section 6.5(a)
Warehouse Facility		Section 1.1
Warehouse Loan		Section 1.1
WIMC		Preamble

EXHIBITS AND SCHEDULES


Exhibit A		Pre-Tax Net Income Calculation Methodology
Exhibit B		Form of FIRPTA Certificate
Exhibit C		Form of Escrow Agreement

Schedule 2.2(b)		Seller’s Allocations
Schedule 2.4(a)		Required Consents
Schedule 2.4(b)		Third-Party Consents
Schedule 6.5		Affiliate Transactions
Schedule 6.11		JAM Restricted Businesses
Schedule 6.14		Guarantees
Schedule 7.1(a)(iii)		Transaction Expenses

Disclosure Schedules

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of December 31, 2012 (the “ Effective Date ”), by and among WALTER INVESTMENT MANAGEMENT CORP., a Maryland corporation (“ WIMC ”), SECURITY ONE LENDING, a California corporation (the “ Corporation ”), JAM SPECIAL OPPORTUNITIES FUND II, L.P., a Delaware limited partnership (“ Principal Seller ”), and the stockholders listed on the signature pages hereto (the “ Other Stockholder Sellers ”, and together with Principal Seller, the “ Sellers ”).

WHEREAS , as of the Effective Date, the Sellers collectively own all of the outstanding shares of Common Stock (as defined below) and Preferred Stock (as defined below), in such amounts as are set forth opposite such Seller’s name on Schedule 2.2(b) (the “ Shares ”);

WHEREAS , as of the Effective Date, the Shares constitute one hundred percent (100%) of the outstanding Equity Interests in the Corporation; and

WHEREAS , WIMC and its permitted assignees under Section 9.5 (“ Buyer ”) desires to acquire the Shares from the Sellers, and the Sellers desire to sell the Shares to Buyer, all subject to and in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE , in consideration of the foregoing and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions . Capitalized terms used herein without definition have the respective meanings assigned in this Article 1 .

“ Action ” means any lawsuit, claim, complaint, action, formal investigation or proceeding before or by any Governmental Entity.

“ Adjustment Time ” means the opening of business on the Effective Date.

“ Affiliate ” means, with respect to any Person, any other Person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including, with correlative meanings, the terms “under common control with” and “controlled by”), as used in the preceding sentence, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agency ” means any of Fannie Mae, Freddie Mac, Ginnie Mae, FHA, HUD, USDA Rural Development, the United States Department of Veterans Affairs (VA) or any applicable state agency.

“ Applicable Requirements ” means and includes, as of the time of reference, with respect to the Corporation’s or any of its Subsidiaries’ origination, servicing, insuring, purchase, sale or filing of claims in connection with Mortgage Loans, all contractual obligations of the Corporation or any of its Subsidiaries (including any contained in a Mortgage Loan document, any Servicing Agreement or any Agency guides, rules or procedures, including, without limitation, guides, rules and procedures relating to the origination, purchase, sale, securitization and servicing of Mortgage Loans).

“ Business ” means the business of the Corporation and its Subsidiaries as conducted and expected to be conducted by the Corporation and its Subsidiaries.

“ Business Day ” means any day except Saturday, Sunday and any legal holiday or a day on which banking institutions in New York City, New York, generally are authorized or required by law or other governmental actions to close.

“ Capitalized Lease Obligations ” means, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof and accounted for as indebtedness in accordance with such principles.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Confidentiality Agreement ” means that certain Confidentiality Agreement dated as of November 26, 2012 between Buyer and the Corporation.

“ Consulting Agreement ” means that certain Consulting Agreement, originally dated as of November 4, 2009 and amended on December 27, 2012, between the Corporation and JEP.

“ Contemplated Transactions ” means the transactions contemplated under this Agreement and the other Transaction Documents.

“ Contingent Obligation ” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing, having the economic effect of guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or any property constituting direct or indirect security therefor or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth, solvency or other financial statement condition of the primary obligor, (iii) to purchase or lease property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided , however , that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business consistent with past practice. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

“ Contract ” means any contract, license, lease, arrangement, indenture, mortgage, note, bond, warrant, commitment, understanding or agreement (whether oral or written).

“ Corporate Options ” means those options, whether vested or unvested, that, prior to the Effective Date and execution of the Option Cancellation Agreements, had represented rights of certain Persons to acquire shares of Common Stock of the Corporation.

“ Disclosure Schedules ” means the disclosure schedules referenced in connection with this Agreement.

“ DOL ” means the United States Department of Labor.

“ Environmental Laws ” means any Laws regulating, relating to or imposing standards of conduct concerning protection of the environment or human health and safety.

“ Equity Interests ” means any capital stock, other equity interest, other ownership interest or any securities or other interests convertible into or exchangeable or exercisable for capital stock, other equity interests, or other ownership interests, or any other rights, warrants or options to acquire any of the foregoing securities or interests of or in any Person.

“ Fair Market Value ” means the fair market value of such asset(s) as reasonably determined in good faith by the board of directors of Buyer; provided , that if the fair market value determined by the board of directors of Buyer is less than 90% of the value determined by Sellers’ Representative in good faith and Buyer and Sellers’ Representative cannot agree on the fair market value, such dispute shall be resolved by arbitration conducted by a nationally recognized accounting firm serving as a single arbitrator. In no event will the arbitrator be an accounting firm or a partner which has performed tax, audit, consulting or any other services for Buyer, the Sellers or any of their Affiliates. The arbitration shall be conducted as a “baseball-style” arbitration, in which Buyer, on the one hand, and Sellers’ Representative, on the other hand, present to the arbitrator each of their calculations of the disputed fair market value and the arbitrator is only permitted to select between one of the two presented fair market values in rendering its decision, shall be utilized in any arbitration between the parties. The arbitrator shall be jointly selected by Buyer and Sellers’ Representative and if they cannot agree on an arbitrator within 30 days of the dispute, the arbitrator shall be selected by the American Arbitration Association. The parties intend that the arbitrator will render its decision within 60 days following selection. The determination of the arbitrator shall be final and binding on the parties. Each party shall bear its own expenses in connection with any arbitration. The expenses of the arbitrator shall be borne by the party who the arbitrator determines has not prevailed.

“ Fannie Mae ” means Fannie Mae, f/k/a the Federal National Mortgage Association, or any successor organization.

“ FHA ” means the Federal Housing Administration, an agency within the United States Department of Housing and Urban Development, or any successor thereto including the Federal Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA regulations.

“ FHA Insurance ” means an insurance policy issued by the FHA with respect to a loan under the applicable section of the National Housing Act, as amended.

“ FHA Regulations ” means regulations promulgated by HUD under the National Housing Act of 1934, as amended, codified in 24 Code of Federal Regulations, and other HUD issuances relating to Mortgage Loans insured by the FHA, including, without limitation, related handbooks, circulars, notices and mortgagee letters.

“ Freddie Mac ” means the Federal Home Loan Mortgage Corporation.

“ GAAP ” means United States generally accepted accounting principles and practices as in effect from time to time.

“ Ginnie Mae ” means the Government National Mortgage Association, a wholly owned corporate instrumentality of the United States within HUD, or any successor thereto.

“ Ginnie Mae Guide ” means the Ginnie Mae Mortgage-Backed Securities Guide and all amendments or additions thereto.

“ Ginnie Mae II Custom MBS Program ” as defined in the Ginnie Mae Mortgage-Backed Securities Guide and all amendments or additions thereto.

“ Governing Documents ” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and bylaws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation.

“ Governmental Entity ” means any (i) federal, state, municipal, local, foreign or other government, (ii) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), whether foreign or domestic, or (iii) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, whether foreign or domestic, including any arbitral tribunal.

“ Guarantees ” means those guaranty agreements set forth on Schedule 6.14 .

“ Guarantors ” means those Guarantors under the Guarantees set forth on Schedule 6.14 .

“ HECM Loan ” means a home equity conversion mortgage loan, commonly referred to as a “reverse mortgage,” including without limitation, reverse mortgages subject to FHA Insurance under the FHA’s Home Equity Conversion Program.

“ HUD ” means the United States Department of Housing and Urban Development, or any federal agency or official thereof which may from time to time succeed to the functions thereof with regard to FHA Insurance. The term “HUD,” for purposes of this Agreement, is also deemed to include subdivisions thereof such as the FHA and Ginnie Mae.

“ HUD Handbook ” means the Regulations promulgated by HUD under the National Housing Act, codified in Title 24 of the Code of Federal Regulations, and other HUD issuances relating to HECM Loans, including, but not limited to, the HUD Home Equity Conversion Mortgage Handbook 4235.1 REV-1, HUD Handbook 4330.1 REV-5 and any subsequent revisions thereto and any other handbook or mortgagee letters, circulars, notices or other issuances issued by HUD applicable to the Mortgage Loans, as amended, modified, updated or supplemented from time to time.

“ Indebtedness ” means, as to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services and all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (ii) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (iii) all indebtedness of the types described in clause (i), (ii) or (iv)-(ix) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person ( provided , that if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the Fair Market Value of the property to which such Lien relates), (iv) all Capitalized Lease Obligations of such Person, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person in respect of indebtedness and other obligations described in another clause of this definition, (vii) all obligations under any Interest Rate Protection Agreement, any Other Hedging Agreement or under any similar type of agreement, (viii) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person and (ix) all accrued and unpaid interest on any of the foregoing. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“ Insurer ” means a Person who insures or guarantees all or any portion of the risk of loss on any Mortgage Loan, including any provider of PMI, standard hazard insurance, flood insurance, earthquake insurance or title insurance, with respect to any Mortgage Loan or related Mortgaged Property.

“ Intellectual Property ” means all worldwide intellectual property rights of any kind, including (a) all inventions, patents and patent disclosures, (b) all trademarks, service marks, trade dress, logos, trade names, internet domain names, and corporate names, including all goodwill associated therewith, (c) all copyrights and copyrighted works, and works of authorship including Software, (e) all trade secrets, know-how and confidential business information (including ideas, research and development), and (f) all applications, registrations, renewals, reissuances, continuations, continuations-in-part, divisions, extensions, reexaminations, and foreign counterparts of any of the foregoing.

“ Interest Rate Protection Agreement ” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or other similar agreement or arrangement.

“ Investor ” means any Person who owns or holds (a) Sold Mortgage Loans, or servicing rights related thereto, sold by the Corporation or any of its Subsidiaries or (b) Investor Mortgage Loans serviced by the Corporation or any of its Subsidiaries.

“ Investor Mortgage Loan ” means any Mortgage Loan, including a HECM Loan, serviced by the Corporation or any of its Subsidiaries pursuant to a Servicing Agreement that was not originated or purchased by the Corporation or any of its Subsidiaries, and that has not been repaid or refinanced.

“ IRS ” means the United States Internal Revenue Service.

“ JAM Sellers ” means JAM Special Opportunities Fund II, L.P.

“ JEP ” means JAM Equity Partners, LLC, the general partner of the JAM Sellers.

“ Knowledge of Buyer ” means the actual knowledge of Mark J. O’Brien, Charles E. Cauthen, Denmar J. Dixon, Kimberly A. Perez and Stuart D. Boyd.

“ Knowledge of the Corporation ” means the actual knowledge of Torrey Larsen, Tyler Larsen, William Trask, Anthony Gaglione, Rhiannon Behnke, Alexander Pistone, Robert Savorie and John Nease.

“ Law ” means any applicable foreign, federal, state, municipal or local law (including common law), statute, treaty, rule, directive, regulation, injunction, decree, ordinances and similar provisions having the force or effect of law or an Order of any Governmental Entity.

“ Liabilities ” means liabilities, obligations or responsibilities of any nature whatsoever, whether direct or indirect, matured or unmatured, fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured, absolute, contingent or otherwise, including any direct or indirect Indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost or expense.

“ Lien ” means, with respect to any property or asset, any lien, security interest, mortgage, pledge, charge, claim, lease, agreement, right of first refusal, option, limitation on transfer or use or assignment or licensing, restrictive easement, charge or any other restriction of any kind, including any restriction on the ownership, use, voting, transfer, possession, receipt of income or other exercise of any attributes of ownership, in respect of such property or asset, but shall not include any non-exclusive Intellectual Property licenses in the ordinary course of business consistent with past practice which are listed on Section 3.11(a)(xiii) of the Disclosure Schedules.

“ Losses ” means any actual losses, damages, deficiencies, Liabilities, assessments, fines, penalties, judgments, actions, claims, costs, disbursements, fees, expenses or settlements of any kind or nature, including reasonable legal, accounting and other professional fees and expenses.

“ Material Adverse Effect ” shall mean any event, condition, development, circumstances, fact, change, occurrence or effect that, individually or in the aggregate with other events, conditions, developments, circumstances, facts, changes, occurrences or effects, has (i) had or is reasonably likely to give rise to a material impact on the condition (financial or otherwise), earnings, operations, assets or Liabilities of the Corporation and its Subsidiaries (taken as a whole) or (ii) a material adverse effect on the ability of the Corporation to consummate the Contemplated Transactions or perform its obligations under this Agreement, except in each case to the extent such events, conditions, developments, circumstances, facts, changes, occurrences or effects result from (a) changes in general economic conditions in the United States or the securities or banking markets in the United States, (b) changes in GAAP, (c) changes that are generally applicable to the industries or markets in which the Corporation or any of its Subsidiaries operate, excluding such changes that result from changes to the laws, regulations, rules or practices applicable to reverse mortgage programs operated by FHA, HUD, Fannie Mae, VA or Ginnie Mae in effect, and (d) national or international political conditions, including the commencement, continuation or escalation of war or material armed hostilities, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States; provided , however , that the exceptions in clauses (a) and (b) shall not apply to the extent such events, conditions, developments, circumstances, facts, changes, occurrences or effects have a disproportionate effect on the Corporation and its Subsidiaries, taken as a whole, relative to other companies operating in the businesses in which the Corporation and its Subsidiaries (taken as a whole) operate. The term “Material Adverse Effect” shall not include any failure to meet a forecast (whether internal or published) of revenue, earnings, cash flow, or other data for any period or any change in such a forecast.

“ Material Interest ” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act) of voting securities or other voting interests representing at least five percent (5%) of the outstanding voting power of a Person or Equity Interests representing at least five percent (5%) of the outstanding Equity Interests in a Person.

“ Monitoring Agreement ” means that certain Monitoring Agreement, originally dated as of November 4, 2009 and amended on December 27, 2012, between the Corporation and JEP.

“ Mortgage ” means a mortgage, deed of trust or other similar security instrument that creates a lien on real property.

“ Mortgage Loan ” means any U.S. individual residential (one-to-four family) mortgage loan or other extension of credit secured by a Lien on U.S. real property of a borrower originated, purchased or serviced by the Corporation (which, for avoidance of doubt, may be a charged-off Mortgage Loan), Warehouse Loan, Sold Mortgage Loan, HECM Loan or Investor Mortgage Loan, as applicable.

“ Option Cancellation Agreement ” means each agreement between the Corporation and those Persons who held Corporate Options, which provides for the full cancellation of all of the Corporate Options held by such Person.

“ Order ” means any judgment, writ, decree, determination, award, compliance agreement, settlement agreement, injunction, ruling, judicial or administrative order, determination or other restriction of any Governmental Entity or arbitrator.

“ Other Hedging Agreements ” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values or commodity prices.

“ Permitted Liens ” means (i) mechanics’, materialmen’s, carriers’, repairers’ and similar statutory Liens imposed by applicable Law arising or incurred in the ordinary course of business for amounts that (a) are not delinquent or (b) which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the Financial Statements in accordance with GAAP, (ii) Liens for Taxes, assessments or other governmental charges not yet due and payable as of the Effective Date or which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the Financial Statements in accordance with GAAP, (iii) encumbrances and restrictions on real property (including easements, covenants, conditions, rights of way and similar restrictions) incurred in the ordinary course of business that do not materially interfere with the Corporation’s or any of its Subsidiaries’ present use, occupancy or operation of such real property and (iv) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property which are not violated by, and do not adversely affect the Corporation’s or any of its Subsidiaries’ present use, occupancy or operations of such real property.

“ Permits ” means, collectively, all licenses, certificates, registrations, consents, Orders, franchises, permits, approvals or other similar authorizations issued, granted or approved by any Agency or Governmental Entity in connection with the operation of the Corporation and each of its subsidiaries, together with all renewals or modifications thereof.

“ Person ” means a natural person, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof.

“ PMI ” means the default insurance provided by private mortgage insurance companies.

“ Pre-Tax Net Income ” means the pre-tax net income of the Corporation and its Subsidiaries calculated in accordance with the methodology set forth in Exhibit A .

“ Proceeding ” means any action, suit, proceeding, complaint, claim, charge, demand, hearing, inquiry, audit or investigation by or before any Governmental Entity or arbitral tribunal.

“ Related Person ” means, with respect to an entity, (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person; (ii) any Person that holds a Material Interest in such specified Person; (iii) each Person that serves as a director, officer, partner, member, manager, executor, or trustee of such specified Person (or in a similar capacity); (iv) any Person in which such specified Person holds a Material Interest; (v) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity); and (vi) any Related Person of any individual described in clause (ii) or (iii).

“ Release Notice ” has the meaning set forth in any applicable Escrow Agreement.

“ Required Consents ” means those consents and approvals set forth on Schedule 2.4(a) .

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Schedules ” means all schedules, including the Disclosure Schedules, referenced in connection with this Agreement.

“ Sellers’ Representative Reserves ” means $100,000, which shall be used by Sellers’ Representative to pay expenses incurred by it in carrying out its duties under this Agreement.

“ Serviced Loan ” means any Mortgage Loan, chattel loan or other loan for which the Corporation or any of its Subsidiaries is acting as a servicer under a Servicing Agreement.

“ Servicing Advances ” means servicing advances for delinquent principal, interest, tax or insurance payments or for property protection expenses or other servicing advances of any type.

“ Servicing Agreement ” means, any Contract and any amendments thereto pursuant to which the Corporation or any of its Subsidiaries is obligated to a third party to administer, collect and remit payments of principal and interest, to collect and forward payments of Taxes and insurance, to administer escrow accounts, and to foreclose, repossess or liquidate collateral after default, or serve as a subservicer to perform any of the foregoing activities, for any Mortgage Loan.

“ Servicing Compensation ” shall mean all compensation paid to the Corporation or any of its Subsidiaries under the Servicing Agreements, or other applicable documents for servicing and administrative duties relating to Sold Mortgage Loans or Investor Mortgage Loans, including, without limitation, all late fees, loss mitigation and modification fees, non-sufficient funds fees, investment income and other similar payments relating to the foregoing, all required reimbursements of Servicing Advances and other ancillary income.

“ Servicing Rights ” shall mean, with respect to each Serviced Loan, any and all of the following: (a) any and all rights and obligations to service such Serviced Loans; (b) all Servicing Compensation or moneys payable to the Corporation or any of its Subsidiaries; (c) all Contracts or documents creating, defining or evidencing any such rights of the Corporation or any of its Subsidiaries to the extent they relate to such rights; (d) all escrow payments or other similar payments with respect to such Serviced Loans and any amounts actually collected and held by the Corporation or any of its Subsidiaries with respect thereto (to the extent not the property of the related borrower); (e) all accounts and other rights to payments related to any of the property described in this paragraph; and (f) any and all documents, files, records, servicing files, servicing documents, servicing records, data tapes, computer records, or other information pertaining to such Serviced Loan or pertaining to the past, present or prospective servicing of such Serviced Loan and all rights to reimbursement for Servicing Advances.

“ Software ” means any and all computer programs, software (in object and source code), firmware, middleware, applications, API’s, websites, web widgets, code and related algorithms, file documentation and all other tangible embodiments thereof.

“ Sold Mortgage Loan ” means any Mortgage Loan, including a HECM Loan, serviced by the Corporation or any of its Subsidiaries pursuant to a Servicing Agreement, other than a Warehouse Loan, that was originated or purchased and subsequently sold in a whole loan sale or securitization (whether treated as a sale or not under GAAP) by the Corporation or any of its Subsidiaries and that has not been repaid or refinanced.

“ State Agency ” means any state agency or other Governmental Entity with authority to regulate the activities of the Corporation or any of its Subsidiaries relating to the origination or servicing of Mortgage Loans or to determine the investment or servicing requirements with regard to Mortgage Loan origination, purchasing, servicing, master servicing or certificate administration performed by the Corporation or any of its Subsidiaries.

“ Subsidiary ” means, with respect to any Person, any other Person of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more other Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). For the purposes hereof, the term Subsidiary shall include all Subsidiaries of such Subsidiary.

“ Systems ” means computer hardware, computer networks, systems and other computer, information technology, and telecommunications assets and equipment.

“ Tax ” means all United States federal, state, local or foreign taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real and personal property, profits, estimated, severance, occupation, production, capital gains, capital stock, goods and services, environmental, employment, withholding, stamp, value added, alternative or add-on minimum, sales, transfer, use, license, payroll and franchise taxes or any other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever, imposed by the United States, or any state, county, local or foreign government or subdivision or agency thereof, and such term shall include any interest, penalties , fines, related liabilities or additions to tax attributable to such taxes, charges, fees, levies or other assessments.

“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Third-Party Consents ” means those consents and approvals set forth on Schedule 2.4(b) .

“ Transaction Documents ” means this Agreement, any Escrow Agreement and any other agreement, certificate or writing delivered in connection with this Agreement.

“ Transaction Expenses ” means those fees, expenses, payments and other charges incurred or otherwise payable by the Corporation or its Subsidiaries in connection with the Contemplated Transactions. Schedule 7.1(a)(iii) sets forth the Transaction Expenses as of immediately prior to the Effective Date.

“ USDA Rural Development ” means the United States Department of Agricultural Rural Development.

“ Warehouse Facility ” means a revolving credit facility used to finance Warehouse Loans.

“ Warehouse Loan ” means a Mortgage Loan, including a HECM Loan, secured by a Mortgage that, as of the Adjustment Time, is owned or was financed under a Warehouse Facility by the Corporation or any of its Subsidiaries and is not a Sold Mortgage Loan.

1.2 Construction . The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. In the event of a conflict between language or amounts contained in the body of this Agreement and language or amounts contained in the Exhibits or Annexes attached hereto, the language or amounts in the body of the Agreement shall control. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively. Reference to any Person includes such Person’s predecessors, successors and assigns to the extent, in the case of successors and assigns, such successors and assigns are permitted by the terms of any applicable agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Reference to any Law means such Law as amended, modified, codified, replaced or re-enacted, in whole or in part, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder. Underscored references to Articles, Sections or Schedules shall refer to those portions of this Agreement. The use of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section or clause of or Exhibit, Annex or Schedule to this Agreement.

ARTICLE 2

PURCHASE AND SALE; PURCHASE PRICE; ESCROW; CONTINGENT PAYMENTS

2.1 Purchase and Sale . Subject to the terms and conditions of this Agreement, each Seller shall sell and transfer to Buyer, and Buyer shall purchase and acquire from each Seller, all Shares held by such Seller, free and clear of all Liens.

2.2 Consideration; Deliveries. (a) Subject to the terms and conditions of this Agreement, the aggregate consideration for the Shares (including any accrued and unpaid dividends on the Shares) shall be $20,000,000 (the “ Purchase Price ”) paid by Buyer or its assignee in accordance with this Section 2.2 .

(b) At the Economic Closing, the Buyer shall pay to the Sellers $20,000,000 in cash in accordance with each Seller’s share of the Purchase Price as set forth on Schedule 2.2(b) .

(i) the Sellers shall deliver to Buyer executed Option Cancellation Agreements with each holder of Corporate Options; and

(ii) the Corporation shall deliver to both Principal Seller and Buyer a valid certificate in the form of Exhibit B .

(d) At the Administrative Closing, the Sellers shall deliver to Buyer:

(i) the certificates representing all of the Shares, which shall be either duly endorsed or accompanied by stock powers duly executed by the Sellers in favor of Buyer;

(ii) copies of or other evidence reasonably acceptable to Buyer of all Required Consents;

(iii) copies of or other evidence reasonably acceptable to Buyer of all Third-Party Consents; and

(iv) executed resignations, effective as of the Administrative Closing Date, of each director of the Corporation and its Subsidiaries requested by Buyer at least three Business Days prior to the Administrative Closing.

(e) All cash payments to be made pursuant to this Article 2 shall be made by wire transfer of immediately available funds to such accounts as are designated by Sellers’ Representative to Buyer.

2.3 Economic and Administrative Closings. (a) On the terms and subject to the conditions of this Agreement, the sale and purchase of the Shares and delivery of all of the other closing deliveries required by Section 2.2(b) and (c) shall occur as of the Effective Date at a closing at the offices of Simpson Thacher & Bartlett LLP, located at 425 Lexington Avenue, New York, NY 10017 (the “ Economic Closing ”).

(b) On the terms and subject to the conditions of this Agreement, the delivery of all of the other closing deliveries required by Section 2.2(d) shall take place at a closing at the offices of Simpson Thacher & Bartlett LLP, located at 425 Lexington Avenue, New York, NY 10017 (the “ Administrative Closing ”). The date on which the Administrative Closing actually occurs shall be referred to herein as the “ Administrative Closing Date ”. Notwithstanding the above, the Administrative Closing Date shall be the date that is three (3) Business Days after satisfaction or waiver of the conditions set forth in Section 2.4 , or on such other date (or at such other place) as the parties may mutually agree.

2.4 Conditions to Administrative Closing. The obligation of Buyer to consummate the Administrative Closing is subject to the satisfaction, or waiver by Buyer in its sole discretion, at or prior to the Administrative Closing of the following conditions:

(a) all Required Consents shall have been received by the Sellers and the Corporation in form and substance reasonably satisfactory to Buyer, and all such Required Consents shall be in full force and effect; and

(b) all Third-Party Consents shall have been received by the Sellers and the Corporation in form and substance reasonably satisfactory to Buyer, and all such Third-Party Consents shall be in full force and effect;

provided , that, subject to Section 2.7 , if the Administrative Closing has not occurred on or prior to April 30, 2013, then the conditions set forth in Section 2.4(a) and (b) shall be deemed to have been waived by Buyer.

2.5 Escrow Amount. (a) Any amount withheld by Buyer (an “ Escrow Amount ”) pursuant to this Agreement as security for the indemnification obligations of the Sellers set forth in Article 7 shall be deposited by Buyer into an escrow account (an “ Escrow Account ”) pursuant to an escrow agreement substantially in the form of Exhibit C (an “Escrow Agreement”) or on such other terms as are mutually agreed by Buyer and Sellers’ Representative.

(b) Unless otherwise agreed by Buyer and Sellers’ Representative, any Escrow Agreement shall provide that the Escrow Account shall terminate as of the close of business on the date (the “ Escrow Expiration Date ”) twelve months after the Effective Date. The Escrow Amount will be held and released, or any funds in the Escrow Account will be held and disbursed, by the escrow agent mutually selected by Buyer and Seller’s Representative (the “ Escrow Agent ”, it being understood and agreed that JPMorgan Chase Bank, National Association, would be an acceptable Escrow Agent), pursuant to the terms and conditions of such Escrow Agreement. Any Escrow Agreement shall provide that upon the Escrow Expiration Date the remainder of the Escrow Amount (less any amounts by which the Escrow Amount has been reduced or any portion thereof reserved from distribution in accordance with the Escrow Agreement) shall be distributed to the Seller’s Representative for distribution to the Sellers pursuant to the terms of such Escrow Agreement.

(c) Unless otherwise agreed by Buyer and Sellers’ Representative, any Escrow Agreement shall provide that, promptly following December 31, 2013, Buyer and Sellers’ Representative shall execute and deliver to the Escrow Agent a Release Notice directing the Escrow Agent under any such Escrow Agreement to distribute to Sellers’ Representative (on behalf of the Sellers to be distributed in accordance with each Seller’s share of the Purchase Price as set forth on Schedule 2.2(b) ) the remaining portion of any Escrow Amount (less any amounts by which such Escrow Amount has been reduced or any portion thereof reserved from distribution in accordance with such Escrow Agreement) to such accounts as are designated by Sellers’ Representative in such notice.

2.6 Contingent Payments. In addition to the Purchase Price, each of the following amounts shall be payable to Sellers if (and only if) the applicable conditions relating to such payments are satisfied:

(a) Within 15 days after June 30, 2013, Buyer shall deliver to Sellers’ Representative a notice setting forth the Pre-Tax Net Income for the period beginning on January 1, 2013 and ending on June 30, 2013. If during such period, the Pre-Tax Net Income was at least $9,625,000, then Buyer shall, within 15 days of the delivery thereof, pay to Sellers’ Representative (on behalf of the Sellers to be distributed in accordance with each Seller’s share of the Purchase Price as set forth on Schedule 2.2(b) ) $5,000,000 in cash less $750,000, which shall be withheld by Buyer as security for the indemnification obligations of the Sellers set forth in Article 7 , which amount shall be held in an Escrow Account in accordance with Section 2.5 .

(b) Within 30 days after December 31, 2013, Buyer shall deliver to Sellers’ Representative a notice setting forth the Pre-Tax Net Income for the period beginning on January 1, 2013 and ending on December 31, 2013. If the Pre-Tax Net Income for the period beginning on January 1, 2013 and ending on December 31, 2013 exceeds $17,500,000, then Buyer shall, within 15 days of the delivery thereof, pay to Sellers’ Representative (on behalf of the Sellers to be distributed in accordance with each Seller’s share of the Purchase Price as set forth on Schedule 2.2(b) ) (i) $10,900,000 in cash if the payment contemplated by Section 2.6(a) above was not previously made, or (ii) $5,900,000 in cash if the payment contemplated by Section 2.6(a) above was previously made.

(c) In the event the Sellers dispute the calculations above of the Pre-Tax Net Income amounts by the Buyer, resolution of such dispute shall be handled pursuant to Section 9.7 below.

(d) For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, (i) Buyer shall be permitted to setoff the amount of any payments owed to Sellers pursuant to this Section 2.6 against any indemnification claims due and owing to the Buyer Indemnified Parties in accordance with Article 7 , and (ii) no more than the difference between $1,500,000 and any Escrow Amount may be withheld as a setoff and not paid to Seller’s Representative (for the benefit of all Sellers) in the event there are pending claims for indemnification by the Buyer Indemnified Parties under Article 7 .

2.7 Delay of Administrative Closing . If there is in effect any provision of any applicable Law or Order issued by a Governmental Entity or arbitrator of competent jurisdiction that prohibits or restrains the consummation of the Contemplated Transactions, the Administrative Closing shall be delayed until the earliest to occur of (i)(x) such Order is lifted and/or (y) such Law is no longer applicable to the Contemplated Transactions (in which case the parties shall proceed to consummate the Administrative Closing as soon as practicable) or (ii)(x) such Order becomes final and nonappealable and/or (y) the applicability of such Law to the Contemplated Transactions becomes final and nonappealable (in which case the parties shall negotiate in good faith such steps (which may include transfers of shares or other equity interests, formation of new entities or other restructuring activities) as may be necessary for parties to comply with such Law or Order and consummate the Administrative Closing, as nearly as possible to the economic benefits originally contemplated to be received by Buyer transaction in light of any such Order or Law that remains in effect, as soon as practicable); provided , however , that notwithstanding the foregoing, no Seller shall be required to return to the Buyer (or its assignee, as the case may be) any of the Purchase Price in connection with the foregoing.

2.8 Withholding . As of the Effective Date, assuming the Corporation provides a valid certificate in the form of Exhibit B , Buyer is not aware of any Taxes required to be withheld from any amounts payable by Buyer to any Seller under this Agreement pursuant to any applicable Tax Law. If Buyer becomes aware that any Taxes are required to be withheld from any amounts payable by Buyer to any Seller under this Agreement pursuant to any applicable Tax Law, Buyer shall promptly (but in no event later than three (3) Business Days prior to the time of such withholding) notify the applicable Seller, and Buyer and such Seller shall discuss the requirement for such withholding in good faith. Buyer shall be entitled to deduct and withhold from amounts otherwise payable to any Seller under this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under applicable Tax Law. If Buyer so withholds (or causes to be withheld) any such amounts it shall pay over such withheld amounts to the applicable Governmental Entity, and such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Seller. For the avoidance of doubt, Buyer shall have the right to withhold amounts required by Section 1445 of the Code unless the Corporation has provided a valid certificate in the form of Exhibit B .

2.9 Seller Elections . Any Seller may elect to treat; (i) amounts held by any Escrow Agent pursuant to Section 2.5 and (ii) Contingent Payments pursuant to Section 2.6 , as contingent payments eligible to be reported under the installment method pursuant to Code Section 453 and any elections available to Sellers thereunder; provided , that this Section 2.9 shall not be a representation or warranty of Buyer that any such election is available or as to any other matter of Tax Law.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

AND THE CORPORATION

Except as set forth on the Disclosure Schedules, which exceptions shall be deemed to be part of the representations and warranties made hereunder, the Sellers and the Corporation severally, and not jointly, represent and warrant to Buyer as follows; it being understood and agreed that (i) the JAM Sellers are making only the representations and warranties in Sections 3.3 and 3.21 and (ii) the Disclosure Schedules shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Article 3 , and the disclosures in any section or subsection of the Disclosure Schedules shall qualify other sections and subsections in this Article 3 to the extent it is reasonably apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

3.1 Authorization . The Corporation has the requisite power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or will be a party and to perform its obligations hereunder and thereunder. All necessary action, corporate or otherwise, has been taken by the Corporation to authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is or will be a party and the Contemplated Transactions. This Agreement and each Transaction Document to which the Corporation is or will be a party constitutes the valid and legally binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms and conditions, except to the extent enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency or moratorium laws, or other laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.

3.2 Organization.

(a) The Corporation is a corporation duly organized, validly existing, and in good standing under the laws of the State of California with the requisite corporate power and authority to own, lease and operate the Corporation’s properties, rights and assets and to carry out the Business as now conducted. The Corporation and each of its Subsidiaries is qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the properties owned, leased or operated by the Corporation or such Subsidiary or the nature and/or conduct of the Corporation’s or such Subsidiary’s, as applicable, business makes such qualification necessary, except for such jurisdictions where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b) Correct and complete copies of the charter and bylaws of the Corporation (as amended to date) have been provided to Buyer prior to the Effective Date.

3.3 Capitalization.

(a) The authorized capital stock of the Corporation consists of 1,400,000 common shares, par value $.0001 per share (the “ Common Stock ”), and 579,652 preferred shares, par value $.0001). The issued and outstanding shares of capital stock of the Corporation consists of: (i) 803,388 shares of Common Stock; (ii) 0 shares of Preferred Stock-Series A, par value $.0001 per share (the “ Class A Preferred Stock ”); (iii) 2,303.1 shares of Preferred Stock-Series B, par value $.0001 per share (the “ Class B Preferred Stock ”): (iv) 86,068 shares of Preferred Stock-Series C, par value $.0001 per share (the “ Class C Preferred Stock ”); and (v) 245,190 shares of Preferred Stock-Series C-1, par value $.0001 per share (the “ Class C-1 Preferred Stock ” and together with the Class A Preferred Stock, the Class B Preferred Stock and the Class C Preferred Stock, the “ Preferred Stock ”). The Shares are the only shares of capital stock of the Corporation that are outstanding, and as a result of the Option Cancellation Agreements having been executed, no options to purchase shares of Common Stock are outstanding. No shares of capital stock are held in treasury.

(b) All of the Shares are duly authorized, validly issued, fully paid and nonassessable, are held of record and owned beneficially by the Sellers in the amounts set forth in Section 3.3(b) of the Disclosure Schedules, and have not been issued in violation of any preemptive rights, rights of first refusal, rights of first offer or similar rights of any Person. The offer, sale and issuance of the outstanding Equity Interests of the Corporation have been made in compliance with all applicable federal securities laws and state securities or “blue sky” laws.

(c) Other than the Shares and except as set forth in Section 3.3(c) of the Disclosure Schedules, there are no outstanding voting or non-voting securities of the Corporation, stock appreciation, phantom stock, performance units or similar rights with respect to the Corporation, securities of the Corporation convertible into or changeable for voting or non-voting securities, or options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, preemptive rights or other Contracts that could require the Corporation to issue, sell, or otherwise cause to become outstanding any Equity Interest in the Corporation, and no authorization therefore has been given. There are no outstanding obligations of the Corporation to repurchase, redeem or otherwise acquire any of the Corporation’s capital stock. Except as set forth in Section 3.3(c) of the Disclosure Schedules, there are no stockholders’ agreements or voting trusts, proxies or other agreements or understandings to which the Corporation is a party or by which it is bound with respect to the voting, transfer or other disposition of Equity Interests of the Corporation or otherwise related to any Equity Interest of the Corporation or relating to the rights of any Person, whether or not an equityholder, to any proceeds, income, revenue or other economic entitlement in respect of the Corporation. No bonds, debentures or other Indebtedness of the Corporation have the right to vote (or are convertible or exchangeable into securities having the right to vote) on any matters on which the equityholders of the Corporation may vote.

(d) Except for trade payables and other current liabilities incurred in the ordinary course of business that are not more than three months past due, Section 3.3(d) of the Disclosure Schedules contains a complete and accurate list of all outstanding Indebtedness of the Corporation and its Subsidiaries as of the Effective Date, including all amounts outstanding with respect thereto.

3.4 Subsidiaries.

(a) Section 3.4(a) of the Disclosure Schedules sets forth a correct and complete list of the Corporation’s Subsidiaries. Each such Subsidiary is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation (as set forth in Section 3.4(a) of the Disclosure Schedules) and has full corporate power and authority to own, lease and operate its properties, rights and assets and to carry out its business as now conducted. Correct and complete copies of the Governing Documents of each of the Corporation’s Subsidiaries (as amended to date) have been provided to Buyer prior to the Effective Date.

(b) The authorized capital stock or other Equity Interests of each of the Corporation’s Subsidiaries is set forth in Section 3.4(b) of the Disclosure Schedules. Except as set forth in Section 3.4(b) of the Disclosure Schedules, the Corporation owns, directly or indirectly, all of the issued and outstanding shares or other Equity Interests of each of its Subsidiaries, free and clear of Liens, and has the right to exercise all voting and other rights over such Equity Interests. All of the outstanding shares or other Equity Interests of the Corporation’s Subsidiaries are duly authorized, validly issued, fully paid and non-assessable, and have not been issued in violation of any preemptive rights, rights of first refusal, rights of first offer or similar rights of any Person.

(c) Other than the Equity Interests set forth in Section 3.4(b) of the Disclosure Schedules, there are no outstanding voting or non-voting securities of the Corporation’s Subsidiaries, stock appreciation, phantom stock, performance units or similar rights with respect to the Corporation’s Subsidiaries, securities of the Corporation’s Subsidiaries convertible into or exchangeable for voting or non-voting securities, or options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, preemptive rights or other Contracts that could require any of the Corporation’s Subsidiaries to issue, sell, or otherwise cause to become outstanding any Equity Interest in the Corporation’s Subsidiaries, and no authorization therefor has been given. There are no outstanding obligations of any of the Corporation’s Subsidiaries to repurchase, redeem or otherwise acquire any capital stock or other Equity Interests of any of the Corporation’s Subsidiaries. No bonds, debentures or other Indebtedness of the Corporation’s Subsidiaries have the right to vote (or are convertible or exchangeable into securities having the right to vote) on any matters on which the equityholders of the Corporation’s Subsidiaries may vote.

(d) Neither the Corporation nor its Subsidiaries has any interest in, nor has the Corporation or any of its Subsidiaries agreed to acquire an interest (including any Equity Interests) in, provide a loan or capital contribution to, or merge or consolidate with, a corporate body or any other Person (other than any such transactions among the Corporation and its Subsidiaries).

3.5 Governmental Approvals; Noncontravention.

(a) Except as set forth in Section 3.5(a) of the Disclosure Schedules, no consents, waivers, approvals, licenses, permits, Orders, Actions or non-actions of, or filings, notifications, declarations or registrations with, any Agency or Governmental Entity are necessary for the execution, delivery or performance by the Corporation of this Agreement or any other Transaction Document to which the Corporation or any of its Subsidiaries is or will be a party or the Contemplated Transactions.

(b) Except as set forth in Section 3.5(b) of the Disclosure Schedules, the execution, delivery and performance by the Corporation of this Agreement and the other Transaction Documents to which the Corporation is a party, and the consummation by the Corporation (and to the extent applicable, its Subsidiaries) of the Contemplated Transactions, does not and shall not (i) violate or conflict with any Laws or Orders to which the Corporation may be subject, (ii) constitute a violation or breach of, be in conflict with, constitute or create (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, modification, cancellation or acceleration) of any obligation under any Contract or other agreement to which the Corporation is a party or to which the Corporation is subject or by which its properties, assets or rights are bound, (iii) result in the creation or imposition of any Lien upon the Corporation or any of its Subsidiaries, any of the Corporation’s or its Subsidiaries’ assets, rights or properties or any Shares or (iv) violate any provision of the charter and bylaws of the Corporation and the Governing Documents of the Corporation’s Subsidiaries, except, in the case of clause (ii) for such violations, breaches or defaults which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Corporation and its Subsidiaries, taken as a whole.

3.6 Financial Statements; No Undisclosed Liabilities.

(a) The Corporation has previously furnished or made available to Buyer the following financial statements (the “ Financial Statements ”) of the Corporation: (i) the audited consolidated balance sheets of the Corporation and its Subsidiaries as of (x) December 31, 2011 (the “ Latest Balance Sheet ”) and (y) December 31, 2010, and December 31, 2009; (ii) the audited consolidated statements of income, stockholders’ equity and cash flows of the Corporation and its Subsidiaries (including any related notes) for each of the years ended December 31, 2011, December 31, 2010, and December 31, 2009; and (c) the unaudited consolidated financial statements of the Corporation and its Subsidiaries for each of the months in 2012 ended prior to the Effective Date, together with, in the case of each financial statement referred to in clause (i) and (ii), the reports thereon of Cashuk, Wiseman, Goldberg, Birnbaum & Salem, LLP and Considine and Considine. The balance sheets included in the Financial Statements fairly present, in all material respects, the financial condition of the Corporation as of the date thereof, and the other related statements included in the Financial Statements fairly present, in all material respects, the results of operations and changes in financial condition of the Corporation and its Subsidiaries for the periods presented therein in accordance with GAAP, applied by the Corporation on a consistent basis during the periods involved, except as otherwise indicated in the notes thereto.

(b) Except as set forth on the Financial Statements, neither the Corporation nor any of its Subsidiaries has any Indebtedness, obligations or Liabilities of any kind (whether accrued, absolute, contingent or otherwise) which is of a nature required by GAAP to be reflected in a balance sheet and, in the case of audited balance sheets, the notes thereto, and which is not accrued or reserved against in the Latest Balance Sheet, or other than liabilities or obligations (i) otherwise specifically disclosed in this Agreement or in the Disclosure Schedules hereto or (ii) that are not, individually or in the aggregate, material to the Corporation and its Subsidiaries, taken as a whole.

3.7 Accounting Controls. The Corporation and its Subsidiaries have devised and maintained systems of internal accounting controls which are sufficient to provide reasonable assurances that (a) all material transactions are executed in accordance with its management’s general or specific authorization; (b) all material transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and any other criteria applicable to such statements and to maintain asset accountability; (c) access to its material property and material assets is permitted only in accordance with management’s general or specific authorization; and (d) the recorded accountability for items is compared with the actual levels thereof at reasonable intervals and appropriate action is taken with respect to any variances.

3.8 Absence of Changes.

(a) Since December 31, 2011, the Corporation and its Subsidiaries have conducted their business only in the ordinary course consistent with past practice, and there has not been any change, condition, circumstance, event or development that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) Since December 31, 2011, except as set forth in Section 3.8(b) of the Disclosure Schedules, neither the Corporation nor any of its Subsidiaries has made any payments or distributions in the form of (i) payments to any third parties other than in the ordinary course of business consistent with past practices, (ii) dividends or distributions, or (iii) payments to Related Persons.

(c) As of the Effective Date, the Corporation and its Subsidiaries have amounts of cash on hand (net of all accrued but unpaid expenses) and accounts receivable aggregating to an amount at least equal to $8,000,000.

3.9 Sufficiency of Assets. The assets, rights and properties of the Corporation and its Subsidiaries constitute all of the assets, rights and properties used or held for use in, or necessary to conduct, the business of the Corporation and its Subsidiaries in the same manner as such business has been conducted in all material respects prior to the Effective Date.

3.10 Real Property.

(a) Neither the Corporation nor any of its Subsidiaries owns any real property.

(b) Section 3.10(b) of the Disclosure Schedules describes in reasonable detail all real property leased or subleased to or by the Corporation or any of its Subsidiaries (collectively, the “ Leased Real Property ”). The Corporation has delivered to Buyer correct and complete copies of the leases and subleases and all amendments, modifications, assignments, extensions and agreements relating to the Leased Real Property (collectively, the “ Leases ”). With respect to each Lease listed in Section 3.10(b) of the Disclosure Schedules:

(i) Each Lease is in full force and effect and is binding and enforceable against each of the parties thereto in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws of general application affecting the rights and remedies of creditors and general principles of equity.

(ii) Except as set forth in Section 3.10(b)(ii) of the Disclosure Schedules, the Corporation and its Subsidiaries have not assigned, sublet, transferred or conveyed any interest in the leasehold, and each Lease constitutes the entire agreement to which the Corporation or its Subsidiaries, as the case may be, is a party with respect to the Leased Real Property leased thereunder.

(iii) The Corporation and/or its Subsidiaries have good and valid title to the leasehold estate in the Leased Real Property for the full terms of the Leases, free and clear of any Liens, other than Permitted Liens.

(iv) Each Lease shall continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the Contemplated Transactions.

(v) Neither the Corporation nor its Subsidiaries is in default under any Lease, and to the Knowledge of the Corporation, (A) no other party to any Lease is in default thereunder, (B) no party to any Lease has repudiated any provision thereof and (C) no event has occurred which, with notice or lapse of time, would constitute a breach or a default or permit termination, modification, or acceleration under any Lease.

(vi) The Leased Real Property constitutes all real property used or occupied by the Corporation and its Subsidiaries in connection with the operation of the Business.

(vii) There are no repair, replacement or restoration obligations owed under the Leases.

(viii) Except as set forth in Section 3.10(b)(viii) of the Disclosure Schedules, there are no change of control provisions in any of the Leases.

3.11 Material Contracts.

(a) Section 3.11(a) of the Disclosure Schedules sets forth a correct and complete list of each of the following Contracts (or a description thereof, in the case of oral Contracts) to which the Corporation or any of its Subsidiaries is a party or by which any of them or their properties, rights or assets are bound and which are in effect on the Effective Date:

(i) any Contract that is or is reasonably likely to require expenditures (including capital expenditures) or payments to or from the Corporation or any of its Subsidiaries in excess of $50,000, individually or in the aggregate, in any calendar year, other than those that can be terminated without premium or penalty by the Corporation or its Subsidiaries upon not more than one hundred and twenty (120) days’ notice;

(ii) all Contracts involving any material resolution or settlement of any actual or threatened, in writing, litigation, arbitration, claim or other dispute;

(iii) all Contracts which contain restrictions with respect to the payment of dividends or any other distribution in respect of the Equity Interests of the Corporation or any of its Subsidiaries;

(iv) all Contracts pursuant to which the Corporation or any of its Subsidiaries has an obligation to make an investment in or loan to any Person, in each case, other than in the ordinary course of the origination or loan servicing businesses of the Corporation or any of its Subsidiaries consistent with past practice;

(v) any Contract under which the Corporation or any of its Subsidiaries is obligated to sell or lease as lessor real or personal property having a value in excess of $50,000 in any single given annual period;

(vi) any Contract that contains a covenant not to compete applicable to the Corporation or any of its Subsidiaries or any of their Affiliates by virtue of such affiliation or that binds the Corporation or any of its Subsidiaries to any exclusive business arrangements or licenses;

(vii) any Contract granting a customer of the Corporation or any of its Subsidiaries “most favored nation” or similar terms (whether in respect of pricing or otherwise);

(viii) any management, distributor, consultant, representative, financial advisory, broker or similar type of Contract and any Contract with any investment or commercial bank, that is not terminable by the Corporation or any of its Subsidiaries at will and without liability;

(ix) any joint venture, partnership, strategic alliance or teaming Contract or other similar co-ownership or joint management agreements involving a sharing of profits, losses, costs or liabilities by the Corporation or any of its Subsidiaries with any Person (other than the Corporation or any of its Subsidiaries);

(x) any Contract under which the Corporation or any of its Subsidiaries has (A) created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) (x) indebtedness for borrowed money, including, without limitation Warehouse Facilities and/or any financing arrangements with respect to the Servicing Rights and Servicing Advances of the Corporation or any of its Subsidiaries (“ Existing Financing Facilities ”), or (y) other Indebtedness which, individually or in the aggregate, exceeds $50,000, (B) granted a Lien, other than Permitted Liens, on its assets, whether tangible or intangible, to secure Indebtedness or (C) extended credit to any Person;

(xi) any Affiliate Contract and any Contract between any Seller or its Related Persons, on the one hand, and any Employee, on the other hand;

(xii) any collective bargaining, labor or similar Contract and any Contract between the Corporation or any of its Subsidiaries and any Professional Employer Organization;

(xiii) any Contract related to Intellectual Property used in the operation of the Corporation’s or any Subsidiary’s business, other than unmodified, commercially available, off-the-shelf, shrink-wrap, click-wrap or non-exclusive software licenses with an aggregate value of less than $100,000;

(xiv) any Contract with any Agency or Governmental Entity (whether as prime contractor, subcontractor or otherwise), including any performance bonds or similar arrangements related thereto;

(xv) any stock purchase, asset purchase, merger, consolidation or other acquisition or divestiture agreement relating to the acquisition, lease, license, disposition or consolidation by the Corporation or any of its Subsidiaries of assets (other than in the ordinary course of business consistent with past practice), properties, rights or any capital stock or other Equity Interests of any Person (x) providing for any indemnification, guaranty or surety obligation of the Corporation or any of its Subsidiaries or (y) with a fair market value in excess of $50,000;

(xvi) any stockholders’ or similar Contract, or Contract relating to the establishment, management or control of any joint venture or strategic alliance;

(xvii) any Servicing Agreement;

(xviii) any Contract the termination of which would reasonably be expected to have a Material Adverse Effect; and

(xix) any outstanding written commitment to enter into any Contract of the type described in subsection (i) through (xviii) of this Section 3.11(a) .

All Contracts set forth in Section 3.11(a) of the Disclosure Schedules and any Contract required to be set forth therein, but omitted therefrom are referred to herein as “ Material Contracts .” The Corporation has made available to Buyer a correct and complete copy of each Material Contract (including any and all amendments and other modifications to such Contract) prior to the Effective Date.

(b) Each Material Contract is in full force and effect and is the legal, valid and binding obligation of the Corporation or its Subsidiary, as applicable, and is enforceable against the Corporation or its Subsidiary, as applicable, in accordance with its terms, and, to the Knowledge of the Corporation, is the legal, valid and binding obligation of the other parties thereto (the “ Other Parties ”), and neither the Corporation nor any of its Subsidiaries or, to the Knowledge of the Corporation, any of the Other Parties to any Material Contract is, or is alleged to be, in breach, violation or default, and, to the Knowledge of the Corporation, no event has occurred which with notice or lapse of time or both would constitute a breach, violation or default by any such party, or permit termination, modification or acceleration by the Other Parties, under such Material Contract.

(c) Neither the Corporation nor any of its Subsidiaries has waived any right it may have under any Material Contract. No party has provided any written or oral notice of any intention to terminate, modify or accelerate any Material Contract.

(d) Except as set forth in Section 3.11(d) of the Disclosure Schedules, no consent of any other party to any Material Contract is required in connection with the performance of this Agreement.

3.12 Servicing and Originations Matters.

(a) Either the Corporation or one of its Subsidiaries acts as loan servicer or subservicer under each of the Servicing Agreements set forth on Section 3.11(a)(xvii) of the Disclosure Schedules and neither the Corporation nor any of its Subsidiaries acts as a loan servicer or loan subservicer except pursuant to a Servicing Agreement set forth on Section 3.11(a)(xvii) of the Disclosure Schedules. Section 3.11(a)(xvii) of the Disclosure Schedules sets forth, for each Servicing Agreement in effect on the Effective Date, the name of the applicable securitization transaction or third party for whom the Serviced Loans are serviced. The Corporation has made available to Buyer true and complete copies of all written Servicing Agreements to which the Corporation or any of its Subsidiaries is a party as of the Effective Date. None of the Corporation or any of its Subsidiaries has engaged subservicers (other than: (i) the Corporation or one of its Subsidiaries or (ii) customary third party contractors such as property preservation filed contractors and realtors) in the servicing of any loans for which it acts as loan servicer other than third party collection agencies to collect deficiencies after foreclosure or repossession.

(b) The Corporation and its Subsidiaries have been during the last three (3) years, and are, in compliance in all material respects with all Applicable Requirements applicable to it, its assets and its conduct of business. Each of the Corporation and its Subsidiaries have timely filed in all material respects, all reports that any Investor, Insurer, Agency or Governmental Entity, or other third party requires that it file with respect to its business. To the Knowledge of the Corporation, the Corporation and its Subsidiaries have not done or caused to be done, or have not failed or omitted to do, any act, the effect of which would operate to invalidate or materially impair (1) any private mortgage insurance or commitment of any private mortgage insurer to insure, (2) any title insurance policy, (3) any hazard insurance policy, (4) any flood insurance policy, (5) any fidelity bond, direct surety bond, or errors and omissions insurance policy required by private mortgage insurers, or (6) any surety or guaranty agreement, in each case applicable to the Mortgage Loans.

(c) Except as set forth in Section 3.12(c) of the Disclosure Schedules, no Agency, Investor or Insurer has (x) claimed in writing that the Corporation or any of its Subsidiaries has violated or has not complied with the representations and warranties applicable with respect to any Sold Mortgage Loans originated or purchased and subsequently sold, in each case, since January 1, 2007, or Warehouse Loans, or with respect to any sale of mortgage servicing rights to an Investor or (y) imposed restrictions on the activities (including commitment authority) of the Corporation or any of its Subsidiaries.

(d) Since January 1, 2007, to the Knowledge of the Corporation, no Agency, Investor or Insurer has indicated to the Corporation or any of its Subsidiaries in writing that it has terminated, or intends to terminate, its relationship with the Corporation or any of its Subsidiaries for performance, loan quality or concern with respect to the Corporation’s or any of its Subsidiaries’ compliance with Laws or that the Corporation or any of its Subsidiaries is in default with respect to any Applicable Requirements.

(e) To the Knowledge of the Corporation, neither the Corporation nor any of its Subsidiaries has received any notice in writing indicating that an event has occurred or circumstance exists (or would occur or exist upon notice or the lapse of time or both) that could reasonably be expected to result in the Corporation or any of its Subsidiaries not maintaining their Servicing Rights in respect of any Servicing Agreement in all material respects.

(f) Except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the aggregate fair market value of the Servicing Rights, the Corporation or one of its Subsidiaries is the sole owner of the Servicing Rights, free and clear of any Liens, except for Liens and similar claims pursuant to the Existing Financing Facilities.

(g) Each Mortgage Loan (other than HECM Loans) was underwritten in accordance with all Applicable Requirements applicable to such Mortgage Loans and is fully insurable by the applicable Agency, which insurance is in full force and effect, and all prior transfers, if any, of the Mortgage Loan has been, and the transactions herein contemplated are, in compliance with all Applicable Requirements. No Mortgage Loan is subject to any defect that could diminish or impair the relevant Agency insurance and no circumstances exist with respect to the Mortgage Loans that could permit the relevant Agency to deny coverage, in whole or in part, under the related Agency insurance except for ordinary deductions from the mortgage insurance payments that are part of the relevant Agency regulations. Each related Agency policy calls for the assignment of the Mortgage Loan to the relevant Agency as opposed to the co-insurance option. The entire amount of the insurance premium due has been paid to the relevant Agency and no portion is shared by the Corporation. Each Mortgage note and the related Mortgage meets all Applicable Requirements.

(h) Except as set forth in Section 3.12(h) of the Disclosure Schedules, (i) each HECM Loan was underwritten in accordance with all HUD/FHA requirements and standards applicable to reverse mortgages and is fully insurable by HUD/FHA, which insurance is in full force and effect, and all prior transfers, if any, of the HECM Loan has been, and the transactions herein contemplated are, in compliance with all applicable HUD/FHA regulations (including, without limitation, the HUD Handbook); (ii) no HECM Loan is subject to any defect that could diminish or impair the HUD/FHA insurance and no circumstances exist with respect to the HECM Loans that could permit the HUD/FHA to deny coverage, in whole or in part, under the related HUD/FHA insurance except for ordinary deductions from the mortgage insurance payments that are part of the HUD/FHA Regulations; (iii) each related HUD/FHA policy calls for the assignment of the HECM Loan to HUD as opposed to the co-insurance option; (iv) the entire amount of the insurance premium due has been paid to HUD/FHA and no portion is shared by the Seller or, if the monthly premium option has been chosen for such HECM Loan, all such premiums due on or before the Effective Date have been duly and timely paid; and (v) each Mortgage note and the related Mortgage meets all applicable HUD/FHA standards.

(i) Each Mortgage Loan was originated and/or sold (and if sold, serviced) in all respects, in compliance with Applicable Requirements.

(j) For each Mortgage Loan, the related original Mortgage has been recorded or is in the process of being recorded in the appropriate jurisdictions wherein such recordation is required to perfect the lien thereof.

(k) Section 3.12(k) of the Disclosure Schedules contains a true and complete list of all (i) existing repurchase obligations of the Corporation and each of its Subsidiaries with respect to the repurchase of HECM Loans from HMBS pools and (ii) repurchases of HECM Loans from HMBS Pools since January 1, 2010 (collectively, “ HECM Loan Repurchase Obligations ”), including the number, type and amount of each such HECM Loan Repurchase Obligation and the basis for the repurchase obligation. Neither the Corporation nor any of its Subsidiaries has in the past breached, violated or defaulted under, nor is it currently in breach, violation or default of any of their HECM Loan Repurchase Obligations.

(l) There are no existing repurchase obligations of the Corporation or any of its Subsidiaries with respect to the repurchase of Mortgage Loans (other than HECM Loans), nor have there been any repurchases of Mortgage Loans since January 1, 2010 (collectively, “ Mortgage Loan Repurchase Obligations ”). Neither the Corporation nor any of its Subsidiaries has in the past breached, violated or defaulted under, nor is it currently in breach, violation or default of any of their Mortgage Loan Repurchase Obligations.

3.13 Compliance with Laws.

(a) Except as set forth in Section 3.13(a) of the Disclosure Schedules, since January 1, 2010, the Corporation and each of its Subsidiaries has complied in all material respects with, and has not violated in any material respect, any Laws applicable to it or its business, properties, rights or assets, or internal or posted policies relating to privacy or personal information. Since January 1, 2011, none of the Corporation or its Subsidiaries or, to the Knowledge of the Corporation, any of the Sellers or any of their Affiliates, has received any written threat or charge from a Governmental Entity that alleges that the Corporation or any of its Subsidiaries is not and, to the Knowledge of the Corporation, no event has occurred or circumstance exists that (with or without notice or lapse of time) constitutes or results, or will constitute or result, in a material default or material violation of, or failure on the part of the Corporation or any of its Subsidiaries to be, in compliance in any material respect with, (x) its respective Governing Documents or (y) any Law applicable to the Corporation or any of its Subsidiaries, or their respective businesses.

(b) The Corporation and each of its Subsidiaries has all Permits that are required in order to permit the Corporation and its Subsidiaries to conduct their business as currently conducted in all material respects. Section 3.13(b) of the Disclosure Schedules lists each material Permit together with the name of the Agency or Governmental Entity issuing such material Permit and holder of such material Permit. All Permits that are required in order to permit the Corporation and its Subsidiaries to conduct their business as currently conducted in all material respects are valid and in full force and effect. None of the Corporation or any of its Subsidiaries is, or since January 1, 2011, has been, in default in any material respect under, and no condition exists that with notice or lapse of time or both would constitute a default in any respect under, any material Permit. Since January 1, 2011, none of the Corporation or any of its Subsidiaries or, to the Knowledge of the Corporation, the Sellers, has received any written notice from any Agency or Governmental Entity asserting any violation of, or failure to comply with any terms of, any Permit. The Corporation and its Subsidiaries are in compliance in all material respects with all terms required for the continued effectiveness of each such Permit of the Corporation and its Subsidiaries. There is no pending or, to the Knowledge of the Corporation, threatened, revocation, limitation, amendment, suspension, termination or involuntary non-renewal of any Permit except that is not material, individually or in the aggregate, to the Corporation and its Subsidiaries taken as a whole. There is no material violation or exception by any Agency or Governmental Entity with respect to any report or registration filed by the Corporation, any of the Sellers or any of their Subsidiaries.

(c) Except as set forth in Section 3.13(c) of the Disclosure Schedules, since January 1, 2010, the Corporation and each of its Subsidiaries, in all material respects, has complied with all Laws and all FHA, Ginnie Mae and Fannie Mae programs and guides applicable to the Corporation’s and each of its Subsidiaries’ origination, purchase, securitization and servicing of Sold Mortgage Loans or Warehouse Loans.

(d) Neither the Corporation nor any of its Subsidiaries is a federal government contractor and neither the Corporation nor any of its Subsidiaries is required to have an affirmative action plan or comply with or adhere to any federal affirmative action requirements or regulations administered by the Office of Federal Contract Compliance or required by Law.

3.14 Litigation. Except as set forth in Section 3.14 of the Disclosure Schedules, (a) there are no Proceedings pending or outstanding or, to the Knowledge of the Corporation, threatened in law or in equity by or against the Corporation or any of its Subsidiaries or any Person that the Corporation or any of its Subsidiaries has agreed to defend or indemnify in respect thereof or by which any of their rights, assets or properties are bound which (x) challenges the validity or enforceability of this Agreement or any of the Transaction Documents or seeks to enjoin or prohibit the consummation of the Contemplated Transactions or (y) are reasonably likely to involve an award of injunctive relief, or, if decided adversely against the Corporation or any of its Subsidiaries, potential criminal liability or damages and (b) there are no pending or outstanding or, to the Knowledge of the Corporation, threatened Orders, stipulations or charges to which the Corporation or any of its Subsidiaries is a party or by which they or their rights, assets or properties are bound, or with any Governmental Entity, that is material, individually or in the aggregate, to the Corporation and its Subsidiaries, taken as a whole.

3.15 Insurance.

(a) Section 3.15 of the Disclosure Schedules includes a correct and complete list of all policies of insurance (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which the Corporation or any of its Subsidiaries is a party, a named insured, or otherwise the beneficiary of coverage (the “ Insurance Policies ”). With respect to each such Insurance Policy: (a) the policy is in full force and effect by its terms, (b) the Corporation, its Subsidiaries or any other party to the Insurance Policy is not in breach or default (including with respect to the payment of premiums or the giving of notices), (c) no event has occurred which, with notice or the lapse of time or both, would constitute such a breach or default, or permit termination, modification or acceleration, under the Insurance Policy and (d) the Corporation has not (and its Subsidiaries have not) received any written or oral notice from the insurer disclaiming coverage, reserving rights or terminating coverage with respect to a particular claim or such policy in general. Such Insurance Policies are of the type customarily issued in the industry for compliance by the Corporation and its Subsidiaries with all material requirements under Law or Permits of a Governmental Entity applicable to either the Corporation or its Subsidiaries, or their rights, properties or assets, or otherwise required by Contracts to which they are a party or by which any of their rights, assets or properties are bound. During the preceding five (5) years, neither the Corporation nor any of its Subsidiaries has settled any Action or claim for an amount in excess of insured limits.

(b) In the one year preceding the Effective Date, no insurance company has cancelled or non-renewed any policy of insurance for any reason.

(c) Since January 1, 2007 there have been no claims made against the Corporation’s directors and officers liability policy, its errors and omissions policy or any fiduciary policy and, to the Knowledge of the Corporation, there are no claims in writing threatened or outstanding nor are there any events, conditions, developments, circumstances, facts, or occurrences that are reasonably likely to give rise to any claims against any such policies of insurance.

3.16 Tax Matters.

(a) The Corporation and its Subsidiaries currently file, and have in the past filed, (i) U.S. federal income Tax Returns with the Internal Revenue Service and (ii) Tax Returns with the appropriate Government Entities in the states and other jurisdictions where the Corporation and its Subsidiaries are required to file or has been required to file (collectively, the “ Jurisdictions ”). All material Tax Returns required to be filed by or with respect to the Corporation and its Subsidiaries have been timely filed, and all such Tax Returns are complete and correct in all material respects. The Corporation and its Subsidiaries have paid in full all Taxes due and payable with respect to the Jurisdictions, whether or not shown on such Tax Returns.

(b) The unpaid Taxes of the Corporation and its Subsidiaries with respect to the Jurisdictions (1) did not, as of the date of the Latest Balance Sheet, materially exceed any reserve for Tax liability set forth on the face of the Latest Balance Sheet (rather than in any notes thereto) and (2) do not materially exceed that reserve as adjusted for the passage of time through the Effective Date in accordance with the past custom and practice of the Corporation and its Subsidiaries in filing the Corporation’s Tax Returns. For purposes of clause (2) of this paragraph, in determining the amount of unpaid Taxes of the Corporation and its Subsidiaries as of the Effective Date in the case of any Straddle Period (as defined in Section 7.4(c) ), the provisions of Section 7.4(c) shall apply.

(c) There are no Liens for Taxes upon any of the assets or properties of the Corporation or any of its Subsidiaries, other than Permitted Liens.

(d) No examination or audit of any Tax Return relating to any Taxes of the Corporation or any of its Subsidiaries or with respect to any Taxes due from or with respect to the Corporation or any of its Subsidiaries by any Governmental Entity is currently in progress or, to the Knowledge of the Corporation, threatened or contemplated in writing. Neither the Corporation nor any of its Subsidiaries has received written notice of any proposed assessment of Tax against the Corporation or any of its Subsidiaries or any of their assets or properties and the Corporation knows of no grounds for any such assessment. There are no outstanding agreements, waivers or arrangements extending the statutory period of limitation applicable to any claim for, or the period for the collection or assessment of, Taxes due from or with respect to the Corporation or any of its Subsidiaries for any taxable period.

(e) No power of attorney granted by or with respect to the Corporation or any of its Subsidiaries relating to Taxes is currently in force. No closing agreement pursuant to Section 7121 of the Code (or any similar provision of any state, local or foreign law) has been entered into by or with respect to the Corporation or any of its Subsidiaries.

(f) Neither the Corporation nor any of its Subsidiaries (A) is or has ever been a member of an affiliated group of corporations filing a consolidated federal income Tax Return (other than the group to which they are currently members and the common parent of which is the Corporation), or (B) has any liability for the Taxes of any Person (other than the Corporation or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of any state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

(g) All material amounts, with respect to the Jurisdictions, required by Law to be withheld from Employee salaries, wages and other compensation and paid over to the appropriate authorities have been withheld and paid over for all periods under all applicable laws and regulations.

(h) The Corporation has delivered or made available to Buyer for inspection (A) complete and correct copies of all income Tax Returns for the Corporation and its Subsidiaries for all periods not closed by the applicable statute of limitations and (B) complete and correct copies of all private letter rulings, revenue agent reports, closing agreements, settlement agreements, deficiency notices and any similar documents submitted by, received by or agreed to by or on behalf of the Corporation or its Subsidiaries and relating to material Taxes for such taxable periods.

(i) The Corporation and its Subsidiaries have collected all material sales and use Taxes required to be collected, if any, with respect to the Jurisdictions, and have remitted, or will remit on a timely basis, such amounts to the appropriate authorities, and have maintained all records and supporting documents relating to such Taxes in the manner required by all applicable statutes and regulations.

(j) Except as set forth in Section 3.16(j) of the Disclosure Schedules, neither the Corporation nor any of its Subsidiaries is a party to, or bound by, or has any obligation under, any Tax allocation or sharing agreement or similar contract or arrangement or any agreement a primary purpose of which is the sharing, allocation of, or indemnity for Tax that obligates it to make any payment computed by reference to the Taxes, taxable income or taxable losses of any other Person.

(k) Neither the Corporation nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Date as a result of any (A) change in method of accounting for a taxable period ending on or prior to the Effective Date, (B) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state or local income Tax law) executed on or prior to the Effective Date, (C) installment sale or open transaction disposition made on or prior to the Effective Date, or (D) prepaid amount received on or prior to the Effective Date.

(l) None of the Corporation or any of its Subsidiaries has been either a “distributing corporation” or a “controlled corporation” in a distribution occurring within two (2) years before the Effective Date in which the parties to such distribution treated the distribution as one to which Section 355 of the Code is applicable.

(m) Neither the Corporation nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.

(n) Neither the Corporation nor any of its Subsidiaries has engaged in any “listed transaction” as defined in the Treasury Regulations promulgated under Section 6011 of the Code.

The representations and warranties contained in this Section 3.16 are the exclusive representations and warranties relating to Tax matters.

3.17 Intellectual Property.

(a) Section 3.17(a) of the Disclosure Schedules accurately identifies and describes (i) all of the registered or applied for Intellectual Property owned by the Corporation or any of its Subsidiaries, (ii) all material proprietary Software owned by the Corporation or its Subsidiaries and (iii) all material Intellectual Property and Software utilized in the Business but not owned by the Corporation, other than unmodified, commercially available, off-the-shelf, shrink-wrap, click-wrap, or non-exclusive software licenses with an aggregate value of less than $100,000. The Corporation or one of its Subsidiaries exclusively owns the above items scheduled in (i) and (ii) above and all other proprietary Intellectual Property free and clear of all Liens or adverse interests of other persons (including current or former employees and contractors), and owns or has valid and enforceable rights to use the items scheduled in (iii) above and all other Intellectual Property used in or necessary for the operation of the Business as currently conducted, and will have the same rights after the Effective Date.

(b) All Intellectual Property registrations and applications owned by the Corporation or its Subsidiaries are subsisting and unexpired and, to the Knowledge of the Corporation, valid and enforceable, and are not subject to any Proceeding challenging the use, legality, validity, or enforceability of the same.

(c) The conduct of the Business does not infringe, misappropriate, or violate any Intellectual Property rights of third parties, and neither the Corporation nor any of its Subsidiaries has received any written communication alleging the same (including cease and desist letters or invitations to take a patent license). To the Knowledge of the Corporation, no third party is infringing, misappropriating, violating or otherwise in conflict with any Intellectual Property rights of the Corporation or its Subsidiaries.

(d) The Corporation and its Subsidiaries take all commercially reasonable steps to protect, maintain and enforce (i) the confidentiality of the Corporation’s and its Subsidiaries’ material trade secrets and other confidential information, and the Corporation and its Subsidiaries have not disclosed any of the foregoing to any third party, except pursuant to a written agreement in the ordinary course of business consistent with past practice and, to the Knowledge of the Corporation, no party to any such agreement is in breach thereof; and (ii) the security, operation and integrity of their Software and Systems (and the data stored therein); and there have been no material outages, interruptions or breaches of the same.

(e) To the Knowledge of the Corporation, all Software and Systems developed by the Corporation and/or its Subsidiaries are free from any material defect, bug, virus or error that has not already been resolved and are functional and conform in all material respects to their published documentation.

(f) All Persons (including any past or present employees or contractors or other third parties) who have invented, created, or developed any material, proprietary Intellectual Property for or on behalf of the Corporation or its Subsidiaries have signed written agreements ensuring that all such Intellectual Property is owned exclusively by the Corporation or one of its Subsidiaries, and there is no claim alleging otherwise.

(g) Neither the Corporation nor its Subsidiaries (i) has disclosed or granted to any person the current or contingent right to access, possess or use any proprietary source code, or (ii) has incorporated any “open source” or other Software having similar licensing or distribution models in any proprietary Software (or derived any proprietary Software from any open source) in a manner that (A) would subject any proprietary source code to the terms of an open source license, or (B) requires the licensing, provision or disclosure to any Person of any proprietary source code.

3.18 Employee and Labor Matters.

(a) None of the Corporation or any of its Subsidiaries is party to any collective bargaining agreement or other labor union contract applicable to Employees of the Corporation or its Subsidiaries and, to the Knowledge of the Corporation, there are not any activities or proceedings of any labor union to organize any such Employees. Except as set forth in Section 3.18(a) of the Disclosure Schedules, the Corporation and its Subsidiaries are in compliance in all material respects with all applicable laws relating to employment and employment practices, employment discrimination, wages, hours and terms and conditions of employment, including obligations under the Worker Adjustment Retraining and Notification Act of 1988, the Fair Labor Standards Act. Except as set forth on Section 3.18(a) of the Disclosure Schedules, there are no charges or complaints with respect to or relating to the Corporation or any of its Subsidiaries pending before the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other Governmental Entity responsible for the prevention of unlawful employment practices. There is no Action by or on behalf of any Employee, prospective Employee, labor organization or other representative of the Corporation’s or any of its Subsidiaries’ Employees pending or, to the Knowledge of the Corporation, threatened in writing. Neither the Corporation nor any of its Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to Employees or employment practices.

(b) The Governing Documents of the Corporation and its Subsidiaries provide the sole source of indemnification or exculpation in favor of the current or former directors, officers, employees and agents of the Corporation or any of its Subsidiaries.

3.19 ERISA.

(a) Section 3.19(a) of the Disclosure Schedules contains a true and complete list of each Benefit Plan. “ Benefit Plan ” means each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), including multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, retention, termination, fringe benefit, bonus, incentive, deferred compensation, employee loan and all other employee benefit plans, agreements, programs, policies or other arrangements, and each amendment thereto, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the Contemplated Transactions or otherwise), whether formal or informal, oral or written, under which (i) any current or former director, officer, manager, employee, or consultant of the Corporation or its Subsidiaries (collectively, the “ Employees ”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Corporation or any of its Subsidiaries or on behalf of the Employees or (ii) the Corporation or any of its Subsidiaries have had or has any present or future Liability.

(b) With respect to each Benefit Plan, the Sellers have provided to Buyer a current, accurate and complete copy thereof or, with respect to unwritten Benefit Plans, description thereof and, to the extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most recent determination letter; (iii) any summary plan description and other material written communications by the Corporation or its Subsidiaries to the Employees concerning the extent of the benefits provided under a Benefit Plan; (iv) for the most recent fiscal years, (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports, if any; and (v) all correspondence, rulings, or opinions issued by the DOL or the IRS and all correspondence from the Corporation or its Subsidiaries to the DOL or the IRS. Each of the Benefit Plans can be amended, modified or terminated within a period of thirty (30) days without payment of any additional compensation or amount or the additional vesting or acceleration of any such benefits, except to the extent that such vesting is required under the Code upon the complete or partial termination of any Benefit Plan intended to be qualified within the meaning of Code Section 401(a).

(c) No Benefit Plan is subject to Title IV of ERISA or is otherwise a Defined Benefit Plan as defined in ERISA
Section 3(35) and neither the Corporation, its Subsidiaries nor any member of the Corporation’s “ Controlled Group ” (defined as any organization which is a member of a controlled group of organizations within the meaning of Section 414(b), (c), (m) or (o) of the Code) has incurred any Liability pursuant to Title IV of ERISA that remains unsatisfied.

(d) With respect to each Benefit Plan, (i) each Benefit Plan has been established and administered substantially in accordance with its terms and is in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable Laws, (ii) each Benefit Plan which is intended to be “qualified” within the meaning of Code Section 401(a) has been determined by the IRS to be so qualified, has received a favorable determination letter as to its qualification, and nothing has occurred which reasonably could be expected to adversely affect such qualified status, (iii) no event has occurred and no condition exists with respect to any Benefit Plan subject to the requirements of Code Section 401(a) that would subject the Corporation or its Subsidiaries, either directly or by reason of the Corporation’s affiliation with any member of their Controlled Group, to any material Tax, fine, Lien, penalty or other Liability imposed by ERISA, the Code or other applicable Laws and (iv) for each Benefit Plan with respect to which a Form 5500 has been filed, no material adverse change has occurred with respect to the matters covered by the most recent Form 5500 since the date thereof.

(e) No Benefit Plan is or has been a multiemployer plan within the meaning of ERISA Section 3(37) (a “ Multiemployer Plan ”). None of the Corporation, its Subsidiaries or any member of the Corporation’s Controlled Group has completely or partially withdrawn from any Multiemployer Plan. No termination Liability to the Pension Benefit Guaranty Corporation (the “ PBGC ”) or withdrawal Liability to any Multiemployer Plan that is material in the aggregate has been or is reasonably expected to be incurred with respect to any Multiemployer Plan by the Corporation, its Subsidiaries or any member of the Corporation’s Controlled Group.

(f) Neither the Corporation, its Subsidiaries, nor any other “disqualified person” or “party in interest”, as defined in Code Section 4975 and ERISA Section 3(14), respectively, has engaged in any “prohibited transaction”, as defined in Code Section 4975 or ERISA Section 406, with respect to any Benefit Plan have there been any fiduciary violations under ERISA which could subject the Corporation or its Subsidiaries (or Employee thereof) to any penalty or tax under ERISA Section 502(i) or Code Sections 4971 and 4975.

(g) With respect to any Benefit Plan, there are (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) pending or threatened in writing, (ii) no facts or circumstances that exist that could give rise to any such actions, suits or claims and (iii) no administrative investigation, audit or other administrative proceeding by the United States Department of Labor, the PBGC, the IRS or any other Governmental Entity pending or in progress, or threatened in writing.

(h) Except as contemplated by this Agreement, no Benefit Plan exists that, as a result of the execution of this Agreement (whether alone or in connection with any subsequent event(s)), would be reasonably likely to result in (A) the payment to any Employee of any money or other property, (B) the provision of any benefits or other rights to any Employee, or (C) the increase, acceleration or provision of any payments, benefits or other rights to any Employee, or (D) any payment or benefit constituting a “parachute payment” within the meaning of Section 280G of the Code.

(i) Neither the Corporation nor any of its Subsidiaries has any Liability in respect of post-retirement health, medical or life insurance benefits for retired, former or current Employees of the Corporation or its Subsidiaries, except for coverage required under Section 4980B of the Code or otherwise required by Law.

(j) No Benefit Plan exists that is or has ever been a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code and associated Treasury Department guidance. To the Knowledge of the Corporation, each such nonqualified deferred compensation plan (i) since January 1, 2008, has been in good faith compliance with Section 409A of the Code and associated Internal Revenue Service and Treasury Department guidance and (ii) in existence prior to January 1, 2008 has not been “materially modified” within the meaning of Section 409A of the Code and associated IRS and Treasury Department guidance, including IRS Notice 2005-1. No agreement or arrangement under which the Corporation or any of its Subsidiaries has any liability provides for a “gross up” or similar payments in respect of any amount of “additional tax” that may become payable under Section 409A of the Code or any excise tax that may become payable under Section 4999 of the Code.

3.20 Environmental Matters . Except as would not, in the cases of clauses (a), (b) and (c) of this Section 3.20 , have, individually or in the aggregate, a Material Adverse Effect: (a) the Corporation and each of its Subsidiaries are in compliance with applicable Environmental Laws; (b) none of the Corporation or any of its Subsidiaries have received written notice from any Governmental Entity that any of them are a potentially responsible party for a federal or state environmental cleanup site or for corrective action under any applicable Environmental Law except for such notice for which no material obligation or liability remains outstanding; (c) as of the Effective Date, there is no Action pending or, to the Knowledge of the Corporation, threatened in writing against the Corporation or any of its Subsidiaries under any Environmental Law; (d) since January 1, 2007, neither the Corporation nor any of its Subsidiaries has agreed to assume or accept responsibility for any liability or obligation of any other Person under any Environmental Law, and (e) to the Knowledge of the Corporation, all REO Properties are in compliance with applicable Environmental Laws.

3.21 Related Party Transactions . Except as set forth in Section 3.21 of the Disclosure Schedules, no Seller, director or officer of the Corporation or its Subsidiaries, or any Related Person of any such Person (a) is a director, officer or Employee of, or consultant to, or owns, directly or indirectly, any interest in any Person which is a competitor, vendor, supplier or customer of the Corporation or its Subsidiaries, (b) owns or has any interest in, directly or indirectly, in whole or in part, any property, asset or right, whether real, personal or mixed, tangible or intangible (including any of the Intellectual Property) which is utilized by or in connection with the Business, (c) is a customer of the Corporation or any of its Subsidiaries or (d) directly or indirectly has an interest in or is a party to any Contract with the Corporation or any of its Subsidiaries.

3.22 Customers . Section 3.22 of the Disclosure Schedules sets forth the top ten (10) customers of the Corporation and its Subsidiaries (in terms of total recognized revenue) during the fiscal year ended December 31, 2011. As of the Effective Date, no customer listed in Section 3.22 of the Disclosure Schedules has canceled or otherwise terminated, or, to the Knowledge of the Corporation, threatened in writing to cancel or otherwise terminate, its relationship with the Corporation or any of its Subsidiaries. To the Knowledge of the Corporation, neither the Corporation nor any of its Subsidiaries has received any written notice that any such customer intends to cancel or otherwise materially and adversely modify its relationship with the Corporation or any of its Subsidiaries.

3.23 Brokers . Except as set forth in Section 3.23 of the Disclosure Schedules, neither the Corporation nor its Subsidiaries has engaged any investment banker, finder, broker, or sales agent or any other Person in connection with the origin or performance of this Agreement, or the Transaction Documents to which it is or will be a party, or the Contemplated Transactions.

3.24 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES . NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR BUYER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH BY THE CORPORATION AND THE SELLERS IN THIS ARTICLE 3 AND BY SELLERS IN ARTICLE 4 , AND IN ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY THE CORPORATION PURSUANT TO THIS AGREEMENT, THE CORPORATION EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING REPRESENTATIONS AND WARRANTIES AS TO THE CONDITION, VALUE OR QUALITY OF THE SHARES OR BUSINESSES OR ASSETS OF ANY OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, AND BUYER SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AS WELL AS THE REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SELLERS IN THIS ARTICLE 3 AND OF SELLERS IN ARTICLE 4 , AND, IN EACH CASE, ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY THE CORPORATION OR SELLERS PURSUANT TO THIS AGREEMENT.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth on the Disclosure Schedules, which exceptions shall be deemed to be part of the representations and warranties made hereunder, the Sellers severally, and not jointly, represent and warrant to Buyer as follows; it being understood and agreed that the Disclosure Schedules shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Article 4 , and the disclosures in any section or subsection of the Disclosure Schedules shall qualify other sections and subsections in this Article 4 to the extent it is reasonably apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

4.1 Authorization of Transaction . Each Seller has the requisite power and authority to execute and deliver this Agreement and the other Transaction Documents to which such Seller is or will be a party and to perform such Seller’s obligations hereunder and thereunder. All necessary action, corporate or otherwise, has been taken by such Seller to authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which such Seller is or will be a party and the Contemplated Transactions. This Agreement and each Transaction Document to which such Seller is or will be a party constitutes the valid and legally binding obligation of such Seller, enforceable against such Seller in accordance with its terms and conditions, except to the extent enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency or moratorium laws, or other laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.

4.2 Governmental Approvals; Noncontravention . (a) Except as set forth in Section 3.12(b) of the Disclosure Schedules, there are no consents, waivers, approvals, licenses, permits, Orders, actions or non-actions of, or filings, notifications, declarations or registrations with, any Governmental Entity that are necessary for any of the Sellers to obtain for the execution, delivery or performance by the Sellers of this Agreement or any other Transaction Document to which a Seller is or will be a party, and (b) the execution, delivery and performance by each Seller of this Agreement and the other Transaction Documents to which such Seller is or will be a party, and the consummation by such Seller of the Contemplated Transactions, do not and will not (i) violate or conflict with any Laws or Orders to which such Seller or any Shares owned beneficially or of record by such Seller may be subject, (ii) constitute a violation or breach of, be in conflict with, constitute or create (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, modification, cancellation or acceleration) of any obligation under any Contract or other agreement to which such Seller is a party or to which such Seller or any Shares owned beneficially or of record by such Seller is subject or by which its properties, assets or rights are bound or (iii) result in the creation or imposition of any Lien upon the Corporation or any of its Subsidiaries, any of the rights, properties or assets of the Corporation or any of its Subsidiaries or any Shares owned beneficially or of record by such Seller.

4.3 Shares . The Shares held of record and beneficially owned by each Seller are free and clear of all Liens. Except for as set forth on Section 4.3 of the Disclosure Schedules, there are no limitations or restrictions on such Seller’s right to transfer such Shares to Buyer pursuant to this Agreement. Such Seller has good and valid title to such Shares and the absolute right to deliver such Shares to Buyer in accordance with this Agreement, free and clear of any and all Liens. Except as set forth on Section 4.3 of the Disclosure Schedules, such Seller is not a party to any option, warrant, purchase right, proxy, power of attorney, voting trust or other Contract or commitment with respect to the voting or dividend rights or the sale, acquisition, issuance, redemption, registration, transfer or other disposition of any capital stock or other Equity Interests of the Corporation, including the Shares (other than this Agreement). Upon delivery to Buyer of the certificates representing the Shares owned by such Seller, duly endorsed by such Seller for transfer to Buyer or accompanied by a duly completed and executed stock power, good and valid title to such Shares shall pass to Buyer, free and clear of any and all Liens.

4.4 Litigation . As of the Effective Date, there is no Action or Proceeding pending, or, to the knowledge of each of the Sellers, threatened in writing against any Seller, which, if decided adversely against any Seller, would be reasonably likely to prevent any Seller from complying with the terms and provisions of this Agreement. No Seller has received written notice that it is subject to any outstanding Order which would be reasonably likely to prevent, materially delay or make illegal or otherwise interfere with any of the transactions contemplated by this Agreement.

4.5 Brokers . No Seller has engaged, or caused to be incurred any Transaction Expense or Liability or obligation to, any investment banker, finder, broker, or sales agent or any other Person in connection with the origin, negotiation, execution, delivery or performance of this Agreement, or the Transaction Documents to which it is or will be a party, or the Contemplated Transactions.

4.6 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES . NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR BUYER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH BY THE SELLERS IN THIS ARTICLE 4 AND THE CORPORATION AND THE SELLERS IN ARTICLE 3 , AND ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY THE SELLERS PURSUANT TO THIS AGREEMENT, THE SELLERS EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING REPRESENTATIONS AND WARRANTIES AS TO THE CONDITION, VALUE OR QUALITY OF THE SHARES OR BUSINESSES OR ASSETS OF ANY OF THE CORPORATION OR ANY OF ITS SUBSIDIARIES, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, AND BUYER SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AS WELL AS THE REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SELLERS IN ARTICLE 3 AND OF THE SELLERS IN THIS ARTICLE 4 AND, IN EACH CASE, IN ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY THE CORPORATION OR THE SELLERS PURSUANT TO THIS AGREEMENT.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth on the Disclosure Schedules, which exceptions shall be deemed to be part of the representations and warranties made hereunder, Buyer represents and warrants to the Sellers as follows; it being understood and agreed that the Disclosure Schedules shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Article 5 , and the disclosures in any section or subsection of the Disclosure Schedules shall qualify other sections and subsections in this Article 5 to the extent it is reasonably apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

5.1 Organization; Corporate Power . WIMC is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland with all requisite corporate power and authority to own, operate and lease WIMC’s properties and to carry out WIMC’s business as now conducted.

5.2 Authorization of Transaction . Buyer has the requisite power and authority to execute and deliver this Agreement and each of the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder. All necessary action, corporate or otherwise, has been taken by Buyer to authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is a party and to authorize the Contemplated Transactions. This Agreement and each Transaction Document to which Buyer is a party constitutes its valid and legally binding obligation, enforceable against it in accordance with its terms and conditions, except to the extent enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency or moratorium laws, or other laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.

5.3 Governmental Approvals; Noncontravention.

(a) No consents, Orders, actions or non-actions of, or filings, notifications, declarations or registrations with, any Agency or Governmental Entity are necessary for the execution, delivery or performance by Buyer of this Agreement or any other Transaction Document to which Buyer is a party.

(b) Neither the execution, delivery or performance by Buyer of this Agreement or the other Transaction Documents to which Buyer is a party, nor the consummation by Buyer of the Contemplated Transactions, shall (i) violate any Laws or Orders to which Buyer is subject or any provision of Buyer’s organizational documents or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any Contract to which Buyer is a party, except for such conflicts, breaches and defaults that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on its ability to consummate the Contemplated Transactions.

5.4 Brokers’ Fees . Buyer has not engaged, or caused to be incurred, any Liability or obligation to any investment banker, finder, broker, or sales agent or any other Person in connection with the origin or performance of this Agreement, or the Transaction Documents to which it is or will be a party, or the Contemplated Transactions, which will result in any Liability to the Sellers after the Effective Date.

5.5 Compliance with Laws . Since January 1, 2011, Buyer has not received any written threat or written charge from a Governmental Entity that alleges that Buyer is not (and, to the Knowledge of Buyer, no event has occurred or circumstance exists that (with or without notice or lapse of time) constitutes or results, or will constitute or result, in a material default or material violation of, or failure on the part of Buyer to be) in compliance in any material respect with (x) its respective Governing Documents or (y) any material Law applicable to Buyer or its business.

5.6 Litigation . (a) There are no Proceedings pending or outstanding or, to the Knowledge of Buyer, threatened in law or in equity, by or against Buyer or any Person that Buyer has agreed to defend or indemnify in respect thereof, or by which any of their rights, assets or properties are bound, that (x) challenges the validity or enforceability of this Agreement or any of the Transaction Documents or seeks to enjoin or prohibit the consummation of the Contemplated Transactions or (y) are reasonably likely to involve an award of injunctive relief, or, if decided adversely against Buyer, potential criminal liability or damages, other than any such Proceeding which, individually or in the aggregate, would not create a material adverse effect with respect to Buyer and (b) there are no pending or outstanding or, to the Knowledge of Buyer, threatened Orders, stipulations or charges (other than any Orders, stipulations or charges with which Buyer is in material compliance) to which Buyer is a party or by which they or their rights, assets or properties are bound, that is material, individually or in the aggregate, to Buyer, taken as a whole.

5.7 Capital Resources . (a) The Buyer has on the Effective Date access to immediately available funds, in cash, sufficient to pay the Purchase Price.

(b) The Buyer (or its permitted assignee) will have, on the dates set forth in Sections 2.6(a) and (b) access to immediately available funds, in cash, sufficient to pay the amounts contemplated by Sections 2.6(a) and (b) .

5.8 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES . NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE SELLERS, THE CORPORATION, OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH BY BUYER IN THIS ARTICLE 5 , AND ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY BUYER PURSUANT TO THIS AGREEMENT, BUYER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING REPRESENTATIONS AND WARRANTIES AS TO THE CONDITION, VALUE OR QUALITY OF THE BUSINESSES OR ASSETS OF BUYER, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, AND SELLERS AND THE CORPORATION SHALL EACH RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AS WELL AS THE REPRESENTATIONS AND WARRANTIES OF BUYER SET FORTH IN ARTICLE 5 AND ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY BUYER PURSUANT TO THIS AGREEMENT.

ARTICLE 6

COVENANTS

6.1 Conduct of the Business .

(a) From the Effective Date until the Administrative Closing, the Sellers and the Corporation shall, and shall cause the Corporation’s Subsidiaries to, conduct the business and the operations of the Corporation and its Subsidiaries in the ordinary course consistent with past practice and shall use commercially reasonable efforts, consistent with past practices, to preserve intact the business organization of the Corporation and its Subsidiaries and relationships with customers, suppliers, contractors and other third parties having business relations with the Corporation and/or its Subsidiaries, and to keep available the services of the Employees.

(b) Without limiting the generality of Section 6.1(a) , from the Effective Date until the Administrative Closing, except as expressly contemplated otherwise by this Agreement, as set forth in Section 6.1(b) of the Disclosure Schedules, as expressly contemplated by Exhibit A in order to calculate Pre-Tax Net Income for purposes of Sections 2.6(a) and (b) , or as otherwise consented to in writing by Buyer, which consent will not be unreasonably withheld, conditioned or delayed, the Corporation shall not, the Sellers shall cause the Corporation and its Subsidiaries not to, and the Corporation shall cause its Subsidiaries not to:

(i) adopt, modify or propose any change in the Governing Documents of the Corporation or any of its Subsidiaries;

(ii) (A) split, combine or reclassify any Equity Interests of the Corporation or any of its Subsidiaries, (B) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any Equity Interests or (C) redeem, repurchase or otherwise acquire or offer to redeem, repurchase or otherwise acquire any Equity Interests of the Corporation or any of its Subsidiaries;

(iii) issue, deliver, sell, pledge or transfer, or modify or amend the terms of, any Equity Interests or enter into any Contract with respect to the foregoing;

(iv) (A) acquire (by merger, consolidation or acquisition of Equity Interests or assets) any corporation, limited liability company, partnership or other business organization or division thereof or any assets, whether by merger, consolidation, acquisition of Equity Interests or assets or otherwise, other than acquisitions of inventory or equipment made in the ordinary course of business consistent with past practice, (B) make any investment, whether by purchase of Equity Interests, contributions to capital or any property transfer, or (C) sell, lease, license, encumber or otherwise dispose of assets, properties, securities, rights or interests, or allow any material Intellectual Property to expire or lapse, except for sales, licenses, dispositions or transfers in the ordinary course of business consistent with past practice (and, in the case of dispositions of obsolete or worn-out equipment, at a price no less than the book value thereof as reflected on the Latest Balance Sheet);

(v) merge or consolidate with any other Person, adopt a plan of complete or partial liquidation or authorize or undertake a dissolution, consolidation, restructuring, recapitalization or other reorganization;

(vi) create, incur, repay, assume or guarantee any Indebtedness or suffer or permit any Lien to arise or be granted or created against or upon any of the rights, properties or assets, real or personal, tangible or intangible, of the Corporation or any of its Subsidiaries;

(vii) make or agree to make any loans, or advances to or guarantees in respect of, any Person, or agree to guarantee any loans or advances to, or investments in, any Person, other than extensions of credit to customers in the ordinary course of business consistent with past practice;

(viii) make any capital expenditures or enter into commitments therefor, except replacements of equipment in the ordinary course of business consistent with past practice;

(ix) (A) terminate, cancel, modify or amend or take any action that would cause the termination, cancellation, modification or amendment of any Material Contract or (B) enter into, or take any actions that would cause the entry into, any Material Contract (or Contract that would be a Material Contract if in effect as of the Effective Date);

(x) (A) other than pursuant to the Material Contracts set forth in Section 3.21 of the Disclosure Schedules, engage in any transaction or make or agree to make any payment to any of the Sellers or any of their Affiliates (other than the Corporation and its Subsidiaries), or any of their respective officers, directors or Employees, or any Related Persons of the foregoing or (B) amend, waive or relinquish any rights relating to any such transaction referred to in clause (A) immediately above;

(xi) (A) increase, accelerate or provide for additional compensation, benefits (fringe or otherwise) or other rights to any Employee, (B) pay or agree to pay any Person any bonus, success fee or make any other arrangement to compensate any Person in connection with the sale of the Shares or the Contemplated Transactions, (C) grant, agree to grant, or amend or modify any grant or agreement to grant, any severance, termination, retention or similar payment to any Employee, (D) loan or advance any money or other property to any Employee, (E) establish, adopt, enter into, amend or terminate any Benefit Plan, collective bargaining agreement or other labor agreement or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Benefit Plan if it were in existence as of the Effective Date or (F) grant any equity or equity-based awards;

(xii) hire or engage, or make any offer to employ or engage, any Person whose total annual compensation exceeds or is expected to exceed $100,000, or terminate the employment of any Employee who is an officer or key Employee;

(xiii) (A) cancel, relinquish or waive any claims or rights of material value held by the Corporation or any of its Subsidiaries (including the cancellation, compromise, release or assignment of any Indebtedness owed to, or claims held by, the Corporation or any of its Subsidiaries), including any right having a value in excess of $50,000, or write-down the value of any material asset of the Corporation or any of its Subsidiaries or (B) write-off as uncollectible any accounts or notes receivable of the Corporation or any of its Subsidiaries or any portion thereof (other than, in the case of clause (B), in the ordinary course of business consistent with past practice);

(xiv) enter into any waiver, release, assignment, compromise or settlement of any pending or threatened litigation or initiate any litigation against any customer or supplier of the Corporation or any of its Subsidiaries;

(xv) make or change any material Tax election, change an annual accounting period, adopt or change any accounting method with respect to Taxes, enter into any closing agreement, settle or compromise any proceeding with respect to any Tax claim or assessment relating to the Corporation or any of its Subsidiaries, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Corporation or any of its Subsidiaries other in the ordinary course of business, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, which, in each case, could reasonably be expected to materially increase the Tax liability of the Corporation or any of its Subsidiaries for any taxable period beginning after the Closing Date;

(xvi) change any method of accounting, accounting policy or accounting practice, except for any such change required by reason of a concurrent change in GAAP as concurred with by the Corporation’s independent auditors;

(xvii) fail to maintain insurance coverage at presently existing levels;

(xviii) fail to maintain any presently existing material Permit or rights to material Intellectual Property;

(xix) knowingly take or agree or commit to take any action that would make any representation or warranty of the Sellers or the Corporation in this Agreement inaccurate in any material respect; or

(xx) authorize, agree, propose or commit to do any of the foregoing.

6.2 Commercially Reasonable Efforts .

(a) Subject to the terms and conditions of this Agreement, each of the parties hereto shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to consummate and make effective the Contemplated Transactions. The Corporation and Sellers shall use commercially reasonable efforts to, and Buyer shall reasonably cooperate to, obtain from any Agency or Governmental Entity or any other third party any authorizations, consents, orders and approvals and send any notices, in each case, which are required to be obtained, made or sent in connection with the authorization, execution and delivery of this Agreement and the other Transaction Documents and the consummation of the Contemplated Transactions; provided that in connection therewith none of the Corporation, the Sellers or Buyer (or Buyer’s Affiliates) will be required to (nor, without the prior written consent of Buyer, will the Sellers or the Corporation (or its Subsidiaries or Sellers’ Representative on behalf of any of the foregoing)) make or agree to make any payment or accept any material conditions or obligations, including amendments to existing conditions and obligations.

(b) Each of Buyer, the Sellers and the Corporation shall use such party’s commercially reasonable efforts to (i) cooperate in all respects with each other in connection with any filing or submission in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (ii) keep each other apprised of the status of any material communications with, and promptly inform the other parties of any material communication received by such party from, or given by such party to, any Governmental Entity and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the Contemplated Transactions and (iii) permit the other parties to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any such Governmental Entity or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by such Governmental Entity or other Person, give the other parties the opportunity to attend and participate in such meetings and conferences.

(c) Notwithstanding anything in this Agreement to the contrary, in no event shall WIMC (or WIMC’s Affiliates) be required to (and the Sellers and the Corporation shall not, and shall not permit any of the Corporation’s Subsidiaries to, without Buyer’s prior written consent) (i) offer to, or agree to, sell, divest, lease, license, transfer, dispose of or otherwise encumber or hold separate and agree to sell, divest, lease, license, transfer, dispose of or otherwise encumber before or after the Closing, any material assets, permits, operations, rights, businesses or interest therein of Buyer or any of its Affiliates (including, after the Closing, the Corporation and its Subsidiaries) or the Corporation, its Subsidiaries or any of their respective Affiliates or (ii) agree to any material changes or restriction on, or other impairment of the ability of Buyer and its Affiliates (including, after the Closing, the Corporation and its Subsidiaries) to own any of such material assets, permits, operations, rights, businesses or interests therein.

6.3 Access to Information .

(a) From the Effective Date until the Administrative Closing, the Corporation shall (i) give Buyer and Buyer’s Related Persons reasonable access during normal business hours to the offices, properties, and Books and Records of the Corporation and its Subsidiaries, and (ii) furnish to Buyer and the Buyer’s Related Persons such financial and operating data and other information as such Persons may reasonably request; provided , however , that nothing herein shall obligate the Corporation and its Subsidiaries or any of their Affiliates to take any actions that would (i) materially disrupt the normal course of the business of the Corporation and its Subsidiaries or (ii) result in any waiver of attorney-client privilege or violate any Laws.

(b) The Confidentiality Agreement shall remain in full force and effect until the Administrative Closing and, if this Agreement is terminated pursuant to Section 2.7 , such Confidentiality Agreement shall continue in accordance with its terms.

6.4 Notices of Certain Events. The Sellers and the Corporation shall promptly notify Buyer of:

(a) any notice or other communication received by Sellers or the Corporation in writing from any Person alleging that the consent of such Person is or may be required in connection with the Contemplated Transactions;

(b) any notice or other communication received by Sellers or the Corporation in writing from any Governmental Entity in connection with the Contemplated Transactions;

(c) any Proceedings commenced or, to the Knowledge of the Corporation, threatened in writing against, relating to or involving or otherwise affecting, the Sellers, the Corporation or any of its Subsidiaries which, if pending on the Effective Date, would have been required to have been disclosed pursuant to Section 3.14 or which relate to the consummation of the Contemplated Transactions; or

(d) the occurrence or non-occurrence of any event which will result in the failure of any condition, covenant or agreement contained in this Agreement to be complied with or satisfied; provided , that in no event shall notification of any of the foregoing affect any of a party’s rights hereunder, including any right to indemnification pursuant to Article 7 .

6.5 Affiliate Transactions . Except as set forth in Schedule 6.5 or in respect of any Transaction Document contemplated hereby, as of the Administrative Closing Date, all Contracts between any Seller, or any of their respective Related Persons, on the one hand, and the Corporation or any of its Subsidiaries, on the other hand, including the Monitoring Agreement and the Consulting Agreement (any such Contract, an “ Affiliate Contract ”), shall be deemed to have been automatically terminated and of no further force or effect, any amounts due thereunder shall be deemed to have been paid ( provided , that, in the case of the Monitoring Agreement and the Consulting Agreement, the parties acknowledge that the Transaction Expenses related thereto were paid in full by the Corporation prior to the Effective Date and that the Monitoring Agreement and the Consulting Agreement shall be deemed to have been terminated as of the Effective Date) and none of Buyer, the Corporation or its Subsidiaries shall have any further Liabilities with respect to any such Affiliate Contracts.

6.6 Public Announcements . No party hereto shall make any press release, public statement or public announcement with respect to this Agreement or the Contemplated Transactions without the prior written consent of the other parties hereto; provided , that Buyer may (a) make any press release, public statement or public announcement which Buyer determines is required by applicable Law or the rules or regulations of any stock exchange on which its securities or those of a parent company are listed or (b) engage in other communications with its stockholders, lenders, analysts, customers and other third parties which Buyer determines in its reasonable judgment are reasonable, appropriate and in the best interests of Buyer’s business; provided , further , that in the case of either (a) or (b) Buyer shall, to the extent such announcement or communication is made prior to, or immediately following, the Administrative Closing, first consult with the Sellers’ Representative, and give it a reasonable opportunity to provide comments, prior to making such announcement or communication.

6.7 Further Assurances . Each of the parties hereto shall execute and deliver such documents and other papers and take such further action as may be reasonably required to carry out the provisions of this Agreement and the other Transaction Documents.

6.8 Confidentiality . From and after the Administrative Closing Date, each Seller shall (and shall cause its Related Persons to) keep confidential and not use in any manner, any and all confidential information relating to the Corporation and its Subsidiaries or Buyer or Buyer’s Affiliates that remains in or comes into such Seller’s or such Related Person’s possession in any form. The foregoing shall not preclude a Seller from (a) disclosing such confidential information if compelled to disclose the same by judicial or administrative process or by other requirements of any applicable Law (subject to the following provisions of this Section 6.8 ), (b) discussing or using such confidential information if the same hereafter is in the public domain (other than as a result of a breach of this Agreement) or (c) discussing or using such confidential information if the same is acquired from a Person that is not known to such Seller to be under an obligation to keep such information confidential. If any Seller is requested or required (by oral questions, interrogatories, requests for information or documents in legal, administrative, arbitration or other formal proceedings, subpoena, civil investigative demand or other similar process) to disclose any such confidential information, such Seller shall promptly notify Buyer of any such request or requirement so that Buyer may seek a protective order or other appropriate remedy and waive compliance with the provisions of this Section 6.8 . If, in the absence of a protective order or other remedy or the receipt of a waiver by Buyer, any Seller is required to disclose such information, such Seller, without liability hereunder, may disclose that portion of such information which such Seller is legally required to disclose.

6.9 Employee Benefits .

(a) During the period beginning on the Administrative Closing Date and ending on the six-month anniversary of the Administrative Closing Date (the “ Wage and Benefits Continuation Period ”), Buyer shall provide employees of the Corporation and each of its Subsidiaries who continue to be employed by either the Corporation or any of its Subsidiaries following the Administrative Closing Date (the “ Continuing Employees ”) with a salary or hourly wage rate that is no less than the salary or hourly wage rate as provided to such employees immediately prior to the Administrative Closing Date. Further, during the Wage and Benefits Continuation Period, Buyer shall arrange for Continuing Employees to either continue to participate in the Benefit Plans in existence immediately prior to the Administrative Closing Date, or to participate in the employee benefit plans of Buyer or Buyer’s Affiliates that that provide benefits that are substantially comparable to those provided to Buyer’s employees (collectively, the “ New Plans ”).

(b) Buyer agrees that, from and after the Administrative Closing Date, Buyer shall and shall cause each of the Corporation and its Subsidiaries to grant Continuing Employees credit for any service with such company earned prior to the Administrative Closing Date to the same extent such service was credited under a comparable Benefit Plan (i) for eligibility and vesting purposes, and (ii) for purposes of vacation accrual and severance benefit determinations, under the New Plans, in each case, except as would result in duplication of benefits. In addition, Buyer shall use commercially reasonable efforts to cause (A) each Continuing Employee to be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent that coverage under such New Plans replace coverage under comparable Benefit Plans in which such Continuing Employee participated prior to the Administrative Closing Date, (B) for purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Continuing Employee, all pre-existing condition exclusions and actively at work requirements and similar limitations of such New Plan to be waived for such Employee and his or her covered dependents, to the extent such conditions were inapplicable or waived under the comparable Benefit Plans, and (C) cause any deductible, co-insurance and covered out-of-pocket expenses paid during the portion of the plan year of the Benefit Plan ending on the date such Employee’s participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying such deductible, co-insurance and covered out-of-pocket expenses requirements applicable to such Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan.

(c) This Section 6.9 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 6.9 , expressed or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 6.9 . Without limiting the foregoing, no provision of this Section 6.9 will create any third party beneficiary rights in any current or former employee of the Corporation or any Continuing Employees. Nothing in this Section 6.9 is intended to interfere with Buyer’s right from and after the Administrative Closing Date, subject to compliance with any applicable Contracts, Benefit Plans and Laws, to amend or terminate any Benefit Plan, New Plan or the employment of any Continuing Employee.

6.10 Release . In consideration of the premises contained herein, the consideration to be received by each Seller pursuant to this Agreement for the sale of the goodwill of the Business, and in consideration of and as an inducement to Buyer to consummate the Contemplated Transactions, each Seller on behalf of itself and its Related Persons, hereby releases and forever discharges Buyer and the Corporation, and each of their respective past, present and future officers, directors, representatives, Affiliates, stockholders, successors and assigns (in their capacities as such) (individually, a “ Released Party ” and collectively, “ Released Parties ”) from any and all claims, demands, proceedings, causes of action, Orders, obligations, Contracts, Indebtedness and Liabilities whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity, which such Seller or any of such Seller’s Related Persons now has, have ever had or may hereafter have against the respective Released Parties arising contemporaneously with or prior to the Administrative Closing Date or on account of or arising out of any matter, cause or event occurring contemporaneously with or prior to the Administrative Closing Date, including any rights to indemnification or reimbursement from any Released Party, whether pursuant to their respective constituent documents, Contract or otherwise and whether or not relating to claims pending on, or asserted after, the Administrative Closing Date; provided , that nothing contained herein shall operate to release any obligations of Buyer arising under (a) any obligation to indemnify directors or officers set forth in (i) the Governing Documents of Buyer or any of its Affiliates, or the Corporation or any of its Subsidiaries or (ii) in any other agreement (collectively the “ D&O Indemnification Obligations ”) or (b) this Agreement or the other Transaction Documents including, but not limited to, the Sellers’ rights under
Article 7 . Each Seller on behalf of itself and its Related Persons hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any Proceeding of any kind against any Released Party, based upon any matter purported to be released hereby.

6.11 Non-Compete; Non-Solicit .

(a) Except as specifically provided in this Section 6.11 , (i) for a period beginning on the Administrative Closing Date and ending with respect to the JAM Sellers, 18 months after the Administrative Closing Date, no JAM Seller shall (A) provide any financing to any existing portfolio company of any of the JAM Sellers that will be used to fund the servicing of HECM Loans in the United States, including, without limitation, the development, marketing, selling or other distribution of software processing or other technology products relating to servicing HECM Loans (a “ JAM Restricted Business ”), or (B) make a new investment in any private Person that, as of the date of such investment, engages in a JAM Restricted Business, including any entity listed on Schedule 6.11 , or has the intention of engaging in a JAM Restricted Business, and (ii) for a period beginning on the Administrative Closing Date and ending with respect to the Sellers other than a JAM Seller, on the later of (A) 18 months after the Administrative Closing Date, and (B) the end of any non-compete provision of any employment agreement between such Seller other than a JAM Seller and the Corporation (in each case the “ Non-Compete Period ”), no such Seller other than a JAM Seller shall, nor shall any of such Sellers other than a JAM Seller’s controlled Affiliates directly or indirectly, engage in, assist others in engaging in, or have an interest in any Person that engages in, or knowingly encourage or facilitate another Person to engage in the origination or servicing of HECM Loans in the United States, including, without limitation, the development, marketing, selling or other distribution of software processing or other technology products relating to HECM Loans (a “ Restricted Business ”).

(b) Notwithstanding the foregoing, this Section 6.11 shall not operate to prevent or restrict with respect to (x) any Seller, any such Seller’s or any Affiliate of any such Seller’s passive investment in capital stock or other ownership interests of any Person traded on any national securities exchange, if such Seller or Affiliate is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 10% or more of any class of securities of such Person; (y) Torrey Larsen and Tyler Larsen their equity ownership interests in: (i) ReverseFortunes.com, Inc., a California corporation; (ii) Preferred Choice Escrow, a California corporation; (iii) Alliance Group Financial Services, d/b/a Silvercrest Realty Group, a California corporation; (iv) Synergy One Lending, a California corporation; and (v) Q Capital, LLC, a California limited liability company (clauses (i) through (v), collectively, the “ Permitted Investments ”); provided , that with respect to this clause (y) (I) both Torrey Larsen and Tyler Larsen hold, and continue to hold, their equity ownership interests in the Permitted Investments solely as passive investments and do not participate in the day-to-day management of the Permitted Investments (except for participation in required board or shareholder votes) and (II) neither Torrey Larsen nor Tyler Larsen shall increase their equity ownership interests in any of the Permitted Investments (taking into account appropriate adjustments for stock splits, reverse stock splits, exercise of preemptive rights or similar events); or (z) Archimedes, LLC and each of its members, as constituted as of the Effective Date, from providing services to, and owning debt or equity in, Reverse Mortgage Funding, LLC.

(c) For a period ending on the first anniversary of the Administrative Closing Date, the Sellers agree that none of the Sellers nor any of their controlled Affiliates will, directly or indirectly, (i) induce, encourage or solicit any such officer or employee to leave his or her position with Buyer, the Corporation and/or any Subsidiary of Buyer or of the Corporation, as the case may be, or to accept any other position with any other Person or (ii) induce, encourage or solicit any such officer or employee to violate the terms of such officer or employee’s employment Contracts, or any other employment arrangement, with Buyer, the Corporation and/or any Subsidiary of Buyer or of the Corporation; provided , that the foregoing clauses (i) and (ii) shall not apply to (x) any employee who had ceased to be employed by Buyer, the Corporation and any Subsidiary of Buyer or of the Corporation at least six (6) months prior to any such action by such Seller or its Affiliate or (y) any employee who responds to general solicitations of employment not specifically directed toward Buyer, the Corporation or any Subsidiary of Buyer, of the Corporation or any of their respective Affiliates. As used in this Section 6.11(c) , the term “controlled Affiliate” when applied to the JAM Sellers shall mean an Affiliate of a JAM Seller in which the JAM Seller owns greater than 50% of the voting Equity Interest of such Affiliate or 50% or more of the board of such Affiliate is designated by, or affiliated with, the JAM Seller.

(d) The Sellers acknowledge and agree that their obligations set forth in this Section 6.11 are an essential element of this Agreement and that, but for the agreement of the Sellers in this Section 6.11 , Buyer would not have entered into this Agreement. The Sellers acknowledge and agree that the undertakings of the Sellers in this Section 6.11 constitute an independent covenant by each of the Sellers and shall not be affected by the performance or nonperformance by any party hereto of any other term or provision of this Agreement. Each Seller acknowledges that it has consulted with its own counsel with regard to this Section 6.11 and, after such consultation, agrees that the obligations set forth in this Section 6.11 are reasonable and proper, have been negotiated fully and fairly and represent an agreement based on the totality of the Contemplated Transactions. For the avoidance of doubt, the parties acknowledge and agree that the sole consideration for the obligations set forth in this Section 6.11 is the agreement to consummate the Contemplated Transactions and no portion of the Purchase Price is allocable to the obligations set forth in this Section 6.11 .

6.12 Indemnification; Directors’ and Officers’ Insurance .

(a) Subject to the accuracy or the representations made in Section 3.14 , Buyer agrees that all rights to indemnification or exculpation now existing in favor of the current or former directors, officers, employees and agents of the Corporation or any of its Subsidiaries, as provided in the Governing Documents of such entities or otherwise in effect as of the date of this Agreement, including, without limitation, the Indemnification Agreement, with respect to any matters occurring prior to the Administrative Closing Date, shall survive the transactions contemplated by this Agreement and shall continue in full force and effect and that each of the Corporation and its Subsidiaries, on its own behalf, will perform and discharge its obligations to provide such indemnity and exculpation. To the maximum extent permitted by applicable Law, such indemnification shall be mandatory rather than permissive, and each of the Corporation and its Subsidiaries shall advance expenses in connection with such indemnification as provided in such Governing Documents or its other applicable agreements. The indemnification and liability limitation or exculpation provisions of the Governing Documents of the Corporation and its Subsidiaries shall not be amended, repealed or otherwise modified after the Administrative Closing Date in any manner that would adversely affect the rights thereunder of individuals who, as of the Administrative Closing Date or at any time prior to the Administrative Closing Date, were directors, officers, employees or agents of any of the Corporation or any of its Subsidiaries, unless such modification is required by applicable Law.

(b) Buyer shall cause the Corporation to, and the Corporation shall, purchase and maintain in effect, without any lapses in coverage, a “tail” policy providing directors’ and officers’ liability insurance coverage for the benefit of those Persons who are covered by any directors’ and officers’ liability insurance policies of the Corporation or any of its Subsidiaries as of the Administrative Closing Date, for a period of four (4) years following the Administrative Closing Date with respect to matters occurring prior to the Administrative Closing Date that is at least equal to the coverage provided under the current directors’ and officers’ liability insurance policies of the Corporation or its Subsidiaries, as applicable; provided , that the Corporation may substitute therefor policies of at least the same coverage containing terms and conditions that are no less advantageous to the beneficiaries thereof so long as such substitution does not result in gaps or lapses in coverage with respect to matters occurring prior to the Administrative Closing Date.

(c) The directors, officers, employees and agents of each of the Corporation and its Subsidiaries that are entitled to the indemnification, liability limitation, exculpation and insurance set forth in this Section 6.12 are intended to be third party beneficiaries of this Section 6.12 . This Section 6.12 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of Buyer and the Corporation.

6.13 Employment Agreements . (a) As of the Effective Date, each of Torrey Larson, Tyler Larson, William Trask and Anthony Gaglione (individually, a “ Management Employee ” and collectively the “ Management Employees ”) shall have executed an employment agreement regarding continued employment with the Corporation (an “ Employment Agreement ”), each in a form reasonably acceptable to Buyer and the Management Employee.

(b) During the period beginning on the Effective Date and ending on the Administrative Closing Date, Buyer shall provide each Management Employee who continues to be employed by either the Corporation or any of its Subsidiaries following the Effective Date with the salary and other benefits that are specified in such Management Employee’s Employment Agreement.

6.14 Termination of Guarantees . Buyer shall use commercially reasonable efforts to cause the Guarantees, and any and all obligations of the Guarantors thereunder for past, present or future losses or claims to have been terminated effective prior to or at the Administrative Closing Date. Schedule 6.14 lists all Guarantees in effect as of the Effective Date.

6.15 Tax Elections . Neither the Buyer, nor its Affiliates, shall make, or cause to be made, any election under Section 338 of the Code or any similar provision of state, local or foreign law with respect to the Corporation and any of its Subsidiaries in connection with any transaction contemplated by this Agreement.

6.16 Assignment to Ginnie Mae . As promptly as practicable following the date of this Agreement, the Corporation shall assign to Buyer (or its designee) any and all uncommitted or unassigned outstanding trades involving securities that have been approved by Ginnie Mae. From the Effective Date until the Administrative Closing, the Corporation shall not, without the prior written consent of Buyer, issue or transfer any securities to Ginnie Mae.

ARTICLE 7

INDEMNIFICATION

7.1 General Indemnification.

(a) Subject to the provisions of this Article 7 , from and after the Effective Date, the Sellers, severally and not jointly, hereby agree to indemnify, defend and hold harmless Buyer and all of Buyer’s Affiliates and each of their respective directors, officers, employees, agents, equityholders, successors and assigns (each, a “ Buyer Indemnified Party ” and, collectively, the “ Buyer Indemnified Parties ”), from and against any and all Losses incurred or suffered by any Buyer Indemnified Party arising out of, based upon or resulting from any of the following:

(i) any breach of any representation or warranty, irrespective of which Seller or Sellers made such representation or warranty, contained in or referred to in Article 3 (other than the representations and warranties contained in Section 3.16 , which shall solely be addressed by Section 7.4 below) or Article 4 ;

(ii) any breach by any Seller or the Corporation of, or any failure of any Seller or the Corporation to perform, any of the covenants, agreements or obligations contained in or made pursuant to this Agreement; provided , however , that no Seller shall be liable to any Buyer Indemnified Party for any Losses related to or arising out of the failure by the Corporation or any Sellers to obtain any Required Consents or Third-Party Consents following a voluntary waiver by Buyer or automatic waiver of Sections 2.4(a) and (b) , to the extent related to a breach of Sections 2.2(d)(ii) - (iii) and 2.3(b) or, in the case of Section 6.2 , due to a failure to obtain a Required Consent or Third Party Consent (a “ Buyer Waiver ”); or

(iii) any Transaction Expenses; provided , however , that no Seller shall be liable to any Buyer Indemnified Party for any Losses related to or arising out of Transaction Expenses related to or arising out of the failure by the Corporation or any Sellers to obtain any Required Consents or Third-Party Consents following a Buyer Waiver.

(b) Subject to the provisions of this Article 7 , from and after the Effective Date, Buyer hereby agrees to indemnify, defend and hold harmless each Seller and their respective Affiliates, and each of their respective directors, officers, employees, agents, equityholders, successors and assigns (each, a “ Seller Indemnified Party ” and, collectively, the “ Seller Indemnified Parties ”), from and against any and all Losses incurred or suffered by any Seller Indemnified Party arising out of, based upon or resulting from any of the following:

(i) any breach of any representation or warranty contained in or referred to in Article 5 ;

(ii) any breach by Buyer of, or any failure of Buyer to perform, any of the covenants, agreements or obligations contained in or made pursuant to this Agreement;

(iii) any Business operations conducted after the Effective Date; or

(iv) any obligations of Guarantors under the Guarantees.

(c) If a Person entitled to indemnification under this Article 7 (the “ Indemnified Party ”) shall incur or suffer any Losses in respect of which indemnification may be sought under this Article 7 against the Person(s) required to provide indemnification under this Article 7 (collectively, the “ Indemnifying Party ”), the Indemnified Party shall assert a claim for indemnification by promptly providing a written notice (the “ Notice of Loss ”) to the Indemnifying Party (or in the case of any notice required to be given to a Seller, to Sellers’ Representative) stating, in reasonable detail, the nature and basis of such Notice of Loss. The Notice of Loss shall be provided to the Indemnifying Party as soon as practicable after the Indemnified Party becomes aware that it has incurred or suffered a Loss. Notwithstanding the foregoing but subject to Section 7.2 , any failure to provide the Indemnifying Party with a Notice of Loss, or any failure to provide a Notice of Loss in a timely manner as aforesaid, shall not relieve any Indemnifying Party from any Liability that it may have to the Indemnified Party under this Section 7.1 except to the extent that the ability of such Indemnifying Party to defend such claim is materially prejudiced by the Indemnified Party’s failure to give such Notice of Loss. If the Notice of Loss relates to a Third Party Claim, the procedures set forth in Section 7.1(d) shall be applicable. If the Notice of Loss does not relate to a Third Party Claim, the Indemnifying Party shall have thirty (30) days from the date of receipt of such Notice of Loss to object to any of the subject matter and any of the amounts of the Losses set forth in the Notice of Loss, as the case may be, by delivering written notice of objection thereof to the Indemnified Party. If the Indemnifying Party fails to send a notice of objection to the Notice of Loss within such 30 day period, the Indemnifying Party shall be deemed to have agreed to the Notice of Loss and shall be obligated to pay to the Indemnified Party the portion of the amount specified in the Notice of Loss to which the Indemnifying Party has not objected. If the Indemnifying Party sends a timely notice of objection, the Indemnifying Party and the Indemnified Party shall use their commercially reasonable efforts to settle (without an obligation to settle) such claim for indemnification. If the Indemnifying Party and the Indemnified Party do not settle such dispute within thirty (30) days after the Indemnified Party’s receipt of the Indemnifying Party’s notice of objection, the Indemnifying Party and the Indemnified Party shall be entitled to seek enforcement of their respective rights under this Article 7 .

(d) Promptly after receipt by an Indemnified Party of notice of the assertion of any claim or the commencement of any action, suit or proceeding by a third party (a “ Third Party Claim ”) in respect of which the Indemnified Party shall seek indemnification hereunder, the Indemnified Party shall so notify in writing the Indemnifying Party, but subject to Section 7.2 any failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any Liability that it may have to the Indemnified Party under this Section 7.1 except to the extent that the ability of the Indemnifying Party to defend the Third Party Claim is materially prejudiced by the Indemnified Party’s failure to give such notice. In no event shall the Indemnified Party admit any Liability with respect to such Third Party Claim or settle, compromise, pay or discharge such Third Party Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed. With respect to any such claim as to which the Indemnifying Party has acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the right to assume the defense (at the expense of the Indemnifying Party) of any such claim through counsel chosen by the Indemnifying Party by notifying the Indemnified Party within thirty (30) days after the receipt by the Indemnifying Party of such notice from the Indemnified Party; provided , that any such counsel shall be reasonably satisfactory to the Indemnified Party. If the Indemnifying Party assumes such defense, the Indemnified Party shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party; provided , that the Indemnified Party (at the expense of the Indemnifying Party) shall have the right to employ counsel to represent it at the expense of the Indemnifying Party if there are one or more legal defenses available to the Indemnified Party that are different from or additional to those available to any Indemnifying Party or if there is otherwise a potential conflict between the interests of the Indemnified Party and any Indemnifying Party, in which event the reasonable fees and expenses of such separate counsel shall be paid by the Indemnifying Party. The Indemnifying Party agrees to render to the other parties such assistance as may reasonably be requested in order to ensure the proper and adequate defense of any such claim, which assistance shall include, to the extent reasonably requested by a party, the retention, and the provision to such party, of records and information reasonably relevant to such Third Party Claim, and making employees of the other party available on a mutually convenient basis to provide additional information and explanation of any materials provided hereunder. If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party may not settle, compromise, or offer to settle or compromise, or otherwise dispose of any Third Party Claim without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, conditioned or delayed unless such settlement includes only the payment of monetary damages (which are fully paid by the Indemnifying Party), does not impose any injunctive or equitable relief upon the Indemnified Party, does not require any admission or acknowledgment of liability or fault of the Indemnified Party and contains an unconditional release of the Indemnified Party in respect of such claim. Neither the Indemnified Party nor any of its Affiliates may settle, compromise, or offer to settle or compromise, or otherwise dispose of any Third Party Claim for which the Indemnifying Party may have a Liability under this Agreement without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.

(e) With respect to any claim as to which the Indemnifying Party shall have acknowledged in writing the obligation of the Indemnifying Party to indemnify the Indemnified Party hereunder, after written notice by the Indemnifying Party to the Indemnified Party of the election by the Indemnifying Party to assume control of the defense of any such Third Party Claim, the Indemnifying Party shall not be liable to such Indemnified Party hereunder for any costs or fees subsequently incurred by such Indemnified Party in connection with the defense thereof, except if the Indemnified Party has the right to employ counsel to represent it at the expense of the Indemnifying Party as set forth in Section 7.1(d) . If the Indemnifying Party does not assume control of the defense of such Third Party Claim within thirty (30) days after the receipt by the Indemnifying Party of the notice required pursuant to Section 7.1(d) as provided above, the Indemnified Party shall have the right to defend such claim in such manner as it may deem appropriate at the reasonable cost and expense of the Indemnifying Party. The party controlling the defense of any Third Party Claim shall in any event defend any such matters vigorously and in good faith.

(f) Notwithstanding anything to the contrary contained in this Section 7.1 , to the extent there is any inconsistency between this Section 7.1(e) and Section 7.5 as to any Tax Claim, Section 7.5 shall control.

7.2 Survival . The representations and warranties in this Agreement shall survive the Effective Date for a period of twelve (12) months from the Effective Date, except that (i) the representations and warranties made in Sections 3.1 , 3.3 , 3.8(c) , 3.23 , 4.1 , 4.3 and 4.5 and the first sentence of Section 3.2(a) (collectively, the “ Seller Fundamental Representations ”) and Sections 5.1 and 5.2 (the “ Buyer Fundamental Representations ”) shall survive for a period of six (6) years from the Effective Date and (ii) the representations and warranties set forth in Section 3.16 and Section 3.19 shall survive until the date that is sixty (60) days following the expiration of the applicable statute of limitations (after giving effect to any extensions or waivers). Notwithstanding the foregoing, any representation or warranty (and the indemnification obligations of the parties hereto with respect thereto) that would otherwise terminate in accordance with this Section 7.2 will continue to survive if good faith written notice (including reasonable detail and reasonable specificity, to the extent known, as to nature and amount) for indemnification shall have been given in accordance with this Article 7 on or prior to such termination date, until such claim for indemnification has been satisfied or otherwise resolved as provided herein. Neither Buyer nor the Sellers shall have any liability with respect to claims first asserted in connection with any representation or warranty after the applicable survival period specified therefor in this Section 7.2 . All covenants and agreements in this Agreement shall survive until fully performed; provided , that nothing herein shall prevent Buyer and its permitted assignees, on the one hand, or the Sellers, on the other hand, from making any claim hereunder, or relieve Buyer or its permitted assignees, or the Sellers from any liability hereunder, after such time for any breach thereof.

7.3 Limitation on Liability .

(a) Subject to Section 7.3(c) , the Sellers shall not have any liability pursuant to Section 7.1(a)(i) or pursuant to Section 7.4 for any Losses unless and until the aggregate amount of all such Losses exceeds $500,000 (the “ Threshold Amount ”), in which event the Sellers shall be liable for indemnification pursuant to Section 7.1(a)(i) or pursuant to Section 7.4 for the aggregate amount of all such Losses exceeding $200,000 (the “ Deductible ”), including the Threshold Amount, up to but not exceeding (i) $1,500,000 with respect to indemnification pursuant to Section 7.1(a)(i) , plus (ii) $1,150,000 with respect to indemnification pursuant to Section 7.4 (the “ Indemnity Cap ”). In addition, the Sellers shall not have any liability pursuant to Section 7.1(a)(i) or Section 7.4 for any Losses with respect any individual matter in which the amount of Losses claimed is less than $10,000, and any such Losses shall not be included in any analysis of whether the Threshold Amount or the Deductible Amount has been exceeded.

(b) Subject to Section 7.3(d) , Buyer shall not have any liability pursuant to Section 7.1(b)(i) for any Losses unless and until the aggregate amount of all such Losses exceeds the Threshold Amount, in which event Buyer shall be liable for indemnification pursuant to Section 7.1(b)(i) for the aggregate amount of all such Losses exceeding the Deductible Amount, including the Threshold Amount, up to but not exceeding the Indemnity Cap. In addition, Buyer shall not have any liability pursuant to Section 7.1(a)(i) for any Losses with respect any individual matter in which the amount of Losses claimed is less than $10,000, and any such Losses shall not be included in any analysis of whether the Threshold Amount or the Deductible Amount has been exceeded.

(c) The limitations on liability set forth in Section 7.3(a) shall not apply with respect to Losses resulting from (i) any breach of any of the Seller Fundamental Representations, or (ii) fraud or willful misrepresentation with respect to any breach of any representation or warranty contained in Article 3 or Article 4 .

(d) The limitations on liability set forth in Section 7.3(b) shall not apply with respect to Losses resulting from (i) any breach of any of the Buyer Fundamental Representations or the covenant and agreement set forth in Section 7.9 or (ii) fraud or willful misrepresentation with respect to any breach of a representation or warranty contained in Article 5 .

(e) In calculating the amount of the Losses to any Indemnified Party, such Losses shall be reduced by (i) any amounts actually recovered by the Indemnified Party in respect of such Losses from any third party (including insurance proceeds) and (ii) any Tax savings or Tax benefit (for the avoidance of doubt, net of any tax detriment arising from indemnification) that is actually realized by such Indemnified Party or an Affiliate thereof as a result of the fact or circumstances giving rise to the Losses. Such Indemnified Party will provide a calculation of such Tax savings or Tax benefit in reasonable detail; provided , that no Tax Returns or other supporting information will be provided by such Indemnified Party. Notwithstanding anything to the contrary in this Agreement, (x) the Sellers shall not have any liability pursuant to Section 7.1 or Section 7.4 for Losses to the extent such Losses are attributable to any additional Liabilities, including Tax Liabilities, to the extent such Losses are due to (1) Buyer’s breach of any of its representations, warranties, covenants or agreements herein and/or (2) actions and inactions of Buyer or its Affiliates which constitute willful misconduct, bad faith or gross negligence and (y) the Sellers shall not have any liability pursuant to Section 7.1 for Losses to the extent such Losses are shown as expressly reserved on the Corporation’s financial statements prior to the Effective Date.

(f) The indemnification obligations hereunder of any Indemnifying Party shall be subject to a duty on the part of the Indemnified Party to mitigate to the extent required by Law any Loss of which the Indemnified Party has actual knowledge.

(g) For the avoidance of doubt, no Indemnified party shall be entitled to indemnification or reimbursement under any provision of this Agreement in respect of any Loss to the extent such Person (or any of its Affiliates) has been previously indemnified or reimbursed in respect of such Loss pursuant to any other provision of this Agreement or any of the other Transaction Documents.

7.4 Tax Indemnity .

(a) Subject to Section 7.2 and Section 7.3 , from and after the Effective Date, the Sellers, severally and not jointly, hereby agree to indemnify, defend and hold harmless the Buyer Indemnified Parties from and against any of the following:

(i) any liability for Taxes with respect to any taxable period of the Corporation or any of its Subsidiaries (or any predecessors) for all taxable periods ending on or before the Effective Date (the “ Pre-Closing Period ”);

(ii) any liability for Taxes with respect to the portion of any Straddle Period ending on the Effective Date;

(iii) any Losses arising out of, based upon or resulting from any breach of any representation or warranty contained in Section 3.16 (relating to Taxes); and

(iv) any and all liability (as a result of Treasury Regulation Section 1.1502-6 or otherwise) for Taxes of Seller or any other person (other than Corporation or any of its Subsidiaries) which is or has ever been affiliated with Corporation or any of its Subsidiaries or with whom Corporation or any of its Subsidiaries otherwise joins or has ever joined (or is or has ever been required to join) in filing any consolidated, combined, unitary or aggregate Tax Return, prior to the Effective Date;

provided , that in the case of clauses (i) through (iv) above, the Sellers shall be liable only to the extent that such Taxes or other liabilities exceed the amount, if any, reserved for such Taxes or liabilities (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) on the Latest Balance Sheet, as such reserved amount is adjusted for the passage of time through the Effective Date in accordance with past custom and practice of the Corporation and its Subsidiaries in filing their Tax Returns and taking into account the results of the operations of the Corporation and its Subsidiaries from the date of the Latest Balance Sheet through the Effective Date.

(b) Notwithstanding any provision in this Agreement to the contrary, the obligations of a party to indemnify and hold harmless another party pursuant to this Section 7.4 shall terminate at the close of business on the sixtieth (60 ^th ) day following the expiration of the applicable statute of limitations with respect to the Tax liabilities in question (giving effect to any waiver, mitigation or extension thereof).

(c) In the case of any taxable period that begins on or before and ends after the Effective Date (a “ Straddle Period ”), the amount of Taxes allocable to the portion of the Straddle Period ending on the Effective Date shall be deemed to be:

(i) In the case of Taxes imposed on a periodic basis (such as real or personal property Taxes), the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction, the numerator of which is the number of calendar days in the Straddle Period ending on and including the Effective Date and the denominator of which is the number of calendar days in the entire relevant Straddle Period; and

(ii) In the case of Taxes not described in (i) above (such as franchise Taxes, Taxes that are based upon or related to income or receipts, based upon occupancy or imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible)), the amount of any such Taxes shall be determined as if such taxable period ended as of the close of business on the Effective Date.

For purposes of this Section 7.4(c) , any item determined on an annual or periodic basis (including amortization and depreciation deductions) shall be allocated to the portion of the Straddle Period ending on (and including) the Effective Date based on the relative number of days in such portion of the Straddle Period as compared to the number of days in the entire Straddle Period.

7.5 Tax Claims .

(a) If a claim shall be made by any taxing authority either (i) relating to any Pre-Closing Period or (ii) which, if successful, might result in an indemnity payment to Buyer pursuant to Section 7.6 (including any Tax Claims described in Section 7.5(d) ), then Buyer shall give notice to Sellers’ Representative in writing of such claim and of any counterclaim the Indemnified Party proposes to assert (each a “ Tax Claim ”); provided , however , that the failure to give such notice shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party has been materially prejudiced as a result of such failure.

(b) With respect to any Tax Claim relating to any a Pre-Closing Period, Sellers’ Representative shall, solely at the Sellers’ cost and expense, control all proceedings and may make all decisions taken in connection with such Tax Claim (including selection of counsel) and, without limiting the foregoing, may in its sole discretion pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect thereto, and may, in its sole discretion, either pay the Tax claimed and sue for a refund where applicable law permits such refund suits or contest the Tax Claim in any permissible manner. Notwithstanding the foregoing, Sellers’ Representative shall not settle such Tax Claim without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed, and Buyer, and counsel of its own choosing, shall have the right to participate fully, at its sole cost and expense, in all aspects of the prosecution or defense of such Tax Claim if it reasonably determines that such Tax Claim could have a material adverse impact on the Taxes of the Corporation or any of its Subsidiaries in a taxable period or portion thereof beginning after the Effective Date.

(c) Sellers’ Representative and Buyer shall jointly control and participate in all proceedings taken in connection with any Tax Claim relating to Taxes of the Corporation or any of its Subsidiaries for a Straddle Period, and shall bear their own respective costs and expenses. Neither Sellers’ Representative nor Buyer shall settle any such Tax Claim without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned or delayed.

(d) Buyer shall control all proceedings with respect to any Tax Claim relating to a taxable period or portion thereof beginning after the Effective Date. Sellers’ Representative, and counsel of its own choosing, shall have the right to participate at its sole cost and expense in all aspects of the prosecution or defense of such Tax Claim if Sellers’ Representative reasonably determines that such Tax Claim could result in the Sellers having an obligation to indemnify Buyer for all or a portion of such Tax Claim pursuant to Section 7.4 , and Buyer shall not settle any such Tax Claim without the prior written consent of Sellers’ Representative, which consent shall not be unreasonably withheld, conditioned or delayed.

7.6 Payment .

(a) Upon a determination of liability under this Article 7 , the Indemnifying Party shall pay or cause to be paid to the Indemnified Party the amount so determined within fifteen (15) Business Days after the date of such determination. If there should be a dispute as to the amount or manner of determination of any indemnity obligation owed under this Agreement the Indemnifying Party shall nevertheless pay when due such portion, if any, of the obligation that is not subject to dispute. Subject to Section 7.7 , upon the payment in full of any claim, the Indemnifying Party shall be subrogated to the rights of the Indemnified Party against any Person, firm, corporation or other entity with respect to the subject matter of such claim.

(b) Any items as to which any Buyer Indemnified Party is entitled to payment under this Agreement shall be paid to such Buyer Indemnified Party first pursuant to the terms of any Escrow Agreement then in effect, to the extent that such amounts are sufficient to pay such items, then by the exercise of Buyer’s right of setoff under Section 2.6(d) , and then from the Sellers directly. The responsibility for payment of any items as to which any Buyer Indemnified Party is entitled under Sections 7.1(a) or Section 7.4 (up to the Indemnity Cap except in the case of payments covering Losses resulting from (i) any breach of any of the Seller Fundamental Representations or (ii) fraud or willful misrepresentation with respect to any breach of any representation or warranty contained in Article 3 or Article 4 ) shall be borne by the Sellers pro rata in accordance with the Sellers’ respective percentage interests as set forth in Section 3.3(b) of the Disclosure Schedules, whether or not, in the case of a breach of a representation or warranty, all Sellers made such representation or warranty.

7.7 Escrow . If any amount is to be withheld by Buyer as security for the indemnification obligations of the Sellers pursuant to this Article 7 , Buyer shall, pursuant to the provisions of Sections 2.5 and 2.6 , deliver to the Escrow Agent, as agent of Buyer, the Escrow Amount, in accordance with the terms of this Agreement and any Escrow Agreement. The Sellers acknowledge that the amounts held by the Escrow Agent shall be contingent payments eligible to be reported under the installment method pursuant to Code Section 453 and Sellers shall have the right to make any available elections thereunder. The Escrow Agent shall hold the Escrow Amount in accordance with, and subject to, the terms and conditions of any Escrow Agreement, which shall, among other things, provide that any interest that becomes due and payable on the Escrow Amount will be paid to Sellers’ Representative, and will not be held by the Escrow Agent, whether or not there are any pending claims for indemnification pursuant to this Article 7 . Promptly after the delivery to Sellers’ Representative upon the release of the Escrow Amount of any cash balance of the Escrow Amount and funds in the Escrow Account to which Sellers’ Representative is entitled under any such Escrow Agreement, Sellers’ Representative shall pay to each Seller such Seller’s share of such remaining cash balances of Sellers’ Representative Reserves that have not been used to reimburse Sellers’ Representative for costs incurred in the performance of their duties as Sellers’ Representative under this Agreement, pro rata in accordance with the Sellers’ respective percentage interests.

7.8 No Recourse . Except for any and all D&O Indemnification Obligations, each Seller hereby irrevocably waives any and all claims and right to recourse against the Corporation, its Subsidiaries or any of the Corporation’s or its Subsidiaries’ respective Employees, including such claims and right to recourse with respect to any misrepresentation or breach of any representation, warranty or indemnity, or noncompliance with any conditions, covenants or agreements, given or made by any Seller or the Corporation in this Agreement, the Transaction Documents or any other agreements and documents executed or to be executed in order to consummate the Contemplated Transactions. Except for any and all D&O Indemnification Obligations, no Sellers shall be entitled to contribution from, subrogation to or recovery against the Corporation or its Subsidiaries with respect to any Liability of the Sellers, including any such Liability that may arise under or pursuant to this Agreement, the Transaction Documents or any other agreements or documents executed or to be executed by the parties hereto in connection herewith.

7.9 Effect of Knowledge on Indemnification . The right to indemnification, reimbursement or other remedy based upon any representations, warranties, covenants and obligations set forth in this Agreement shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation. The waiver of any condition based upon the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, shall not affect the right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants or obligations.

7.10 Exclusive Remedy . Except as set forth in Section 9.12 , the rights and remedies of the parties contained in this Article 7 shall be the sole and exclusive rights and remedies of the parties with respect to claims, Actions or Losses under this Article 7 or otherwise in connection with this Agreement or the Contemplated Transactions.

ARTICLE 8

TAX MATTERS

8.1 Responsibility for Filing Tax Returns

(a) For any Pre-Closing Period of the Corporation or any of its Subsidiaries, Buyer shall prepare or cause to be prepared, and file or cause to be filed (in a manner consistent with existing procedures, practices and accounting methods) with the appropriate taxing authorities, all Tax Returns required to be filed after the Effective Date. Buyer shall provide a copy of each such Tax Return to Sellers’ Representative for its review and comment at least 30 days prior to the due date of each such Tax Return and Sellers’ Representative shall comment on each such Tax Return within 30 days of receipt. Buyer shall incorporate all reasonable comments made by Sellers’ Representative to each such Tax Return, timely file each such Tax Return, and pay all Taxes due with respect to such Tax Returns, subject to Buyer’s right to be indemnified by the Sellers pursuant to Section 7.4 ; provided , however , that no such Tax Return shall be filed without the prior written consent of Sellers’ Representative, which consent shall not be unreasonably withheld, conditioned or delayed.

(b) Buyer shall prepare or cause to be prepared and file or cause to be filed when due all Tax Returns that are required to be filed by or with respect to the Corporation or any of its Subsidiaries for taxable years or periods ending after the Effective Date and shall remit any Taxes due in respect of such Tax Returns.

(c) For any Straddle Period, Buyer shall timely prepare or cause to be prepared, and file or cause to be filed, all Tax Returns of the Corporation and its Subsidiaries required to be filed and shall pay all Taxes due with respect to such Tax Returns (subject to Buyer’s right to be indemnified by the Sellers pursuant to Section 7.4 ; with respect to the taxable periods covered by such Tax Returns. Each such Tax Return shall be prepared on a basis consistent with existing procedures, practices and accounting methods unless otherwise required by applicable law. No such Tax Return shall be filed without the prior written consent of Sellers’ Representative, which consent shall not be unreasonably withheld, conditioned or delayed.

(d) If Buyer files any amended Tax Return of the Corporation or any of its Subsidiaries, or any Tax Return relating to a jurisdiction in which neither the Corporation nor any of its Subsidiaries currently files a Tax Return, in each case, for any Pre-Closing Period, Buyer shall provide Sellers’ Representative prior written notice and an opportunity to comment on any such filing. Buyer shall not file any such Tax Return (including any such amended Tax Return) unless, in the good faith judgment of Buyer’s counsel, such filing is necessary to comply with law or for consistency with past or existing procedures, practices and accounting methods.

8.2 Cooperation . The Sellers, the Corporation, each of Corporation’s Subsidiaries and Buyer shall reasonably cooperate, and shall cause their respective Affiliates, officers, employees, agents, auditors and other representatives to reasonably cooperate, in preparing and filing all Tax Returns and in resolving all disputes and audits with respect to all taxable periods relating to Taxes, including by maintaining and making available to each other all records necessary in connection with Taxes and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim.

8.3 Refunds .

(a) Any refunds of Taxes of the Corporation, or any of its Subsidiaries (i) for any Pre-Closing Period or (ii) for which the Sellers have indemnified Buyer pursuant to Section 7.4 , in each case, shall be for the account of the Sellers. Notwithstanding the foregoing, any such refunds of Taxes shall be for the account of Buyer to the extent such refunds of Taxes are attributable (determined on a marginal basis) to the carryback of any item relating to a taxable period that begins after the Effective Date (a “ Post-Closing Period ”) of items of loss, deduction or credit, or other Tax items, of the Corporation or any of its Subsidiaries (or any of their respective Affiliates, including Buyer).

(b) Any refunds of Taxes of the Corporation or any of its Subsidiaries for any Post-Closing Period shall be for the account of Buyer. The amount of any refunds of Taxes of the Corporation or any of its Subsidiaries for any Straddle Period shall be equitably apportioned between the Sellers and Buyer. Each party shall forward, and shall cause its Affiliates to forward, to the party entitled to receive the refund, the amount of such refund (net of any costs incurred to obtain such refund and net of any income Taxes of Buyer, the Corporation, or any of their Subsidiaries attributable to the receipt of such refund or credit) within ten (10) days after such refund is received.

8.4 Purchase Price Adjustment . The Parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by applicable law.

8.5 Tax Sharing Agreements . The Sellers shall cause all tax allocation agreements or tax sharing agreements (excluding any agreement the primary purpose of which is not the sharing, allocation of, or indemnity for, any Tax and in which such provisions regarding Tax are typical of such agreements) with respect to each of the Corporation and its Subsidiaries to be terminated as of the Effective Date, and shall ensure that such agreements are of no further force or effect as to any of the Corporation and its Subsidiaries on and after the Effective Date and that there shall be no further liabilities or obligations imposed on any of the Corporation and its Subsidiaries under any such agreements.

8.6 Transfer Taxes . All transfer, documentary, excise, sales, use, stamp, filing, recordation, registration and other such Taxes and fees (including any penalties and interest with respect thereto) incurred or payable, if any, resulting directly from the transactions contemplated under the Transaction Documents (the “ Transfer Taxes ”), shall be paid one half (1/2) by the Sellers and one half (1/2) by Buyer, when due and the party primarily or customarily responsible under applicable local Law for filing such Tax Returns shall file all necessary Tax Returns and other documentation when due with respect to all such Transfer Taxes and such party shall use its reasonable efforts to provide such Tax Returns to the other party at least ten (10) calendar days prior to the due date for such Tax Returns. If required by applicable Law, the other party or parties shall join in the execution of any such Tax Returns and other documentation (the expense of which shall be paid by the Sellers).

ARTICLE 9

MISCELLANEOUS

9.1 Notices . All notices, requests and other communications to any party hereunder must be in writing (including telecopy or similar writing) and given as follows:


If to the Principal Seller, to:		JAM Special Opportunities Fund II, L.P. 2121 Rosecrans Avenue, Suite 2390 El Segundo, CA 90245 Attention: Michael Sekits Facsimile: 310-227-8601

with copies (which shall not constitute notice) to:		Dechert LLP 1095 Avenue of the Americas New York, NY 10036 Attention: Kristopher Brown, Esq. Facsimile: 212-698-3599

If to Sellers’ Representative, to:		JAM Special Opportunities Fund II, L.P. 2121 Rosecrans Avenue, Suite 2390 El Segundo, CA 90245 Attention: Michael Sekits Facsimile: 310-227-8601

with copies (which shall not constitute notice) to:		Dechert LLP 1095 Avenue of the Americas New York, NY 10036 Attention: Kristopher Brown, Esq. Facsimile: 212-698-3599

if to Buyer, to:		Walter Investment Management Corp. 3000 Bayport Drive Tampa, Florida 33607 Attention: Chief Executive Officer Facsimile: (813) 281-5653

with copies (which shall not constitute notice) to:

Walter Investment Management Corp.

3000 Bayport Drive

Tampa, Florida 33607

Attention: General Counsel

Facsimile: (813) 281-5653

Simpson Thacher & Bartlett LLP

425 Lexington Ave.

New York, NY 10017

Attention: Peter Gordon, Esq.

Facsimile: (212) 455-2502

or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 9.1 and the appropriate facsimile confirmation is received or (b) if given by any other means, when delivered at the address specified in this Section 9.1 .

9.2 Amendments; No Waivers .

(a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Sellers’ Representative (on behalf of the Sellers) and Buyer or, in the case of a waiver, by the party against whom the waiver is to be effective.

(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. No waiver will be binding unless executed in writing by the party to be bound by the waiver except, subject to the provisions of Section 9.4 , that a waiver by Sellers’ Representative constitutes a waiver by all Sellers.

9.3 Expenses . Unless and to the extent otherwise expressly provided by this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

9.4 Sellers’ Representative .

(a) Each of the Other Stockholder Sellers hereby irrevocably appoints the Principal Seller (“ Sellers’ Representative ”) as such Other Stockholder Sellers’ representative, attorney-in-fact and agent, with full power of substitution to act in the name, place and stead of such Seller with respect to this Agreement and any Escrow Agreement, and to act on behalf of such Seller in any amendment of or litigation or arbitration involving this Agreement and any Escrow Agreement and to do or refrain from doing all such further acts and things, and to execute all such documents, as such Sellers’ Representative shall deem necessary or appropriate in conjunction with any of the Contemplated Transactions, this Agreement and any Escrow Agreement, including the power:

(i) to take all action necessary or desirable in connection with the waiver of any condition to the obligations of the Sellers to consummate the transactions contemplated by this Agreement and any Escrow Agreement;

(ii) to negotiate, execute and deliver all ancillary agreements, statements, certificates, statements, notices, approvals, extensions, waivers, undertakings, consents, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement and any Escrow Agreement (it being understood that such Seller shall execute and deliver any such documents which Sellers’ Representative agrees to execute);

(iii) to give and receive all notices and communications to be given or received under this Agreement and to receive service of process in connection with the any claims under this Agreement and any Escrow Agreement, including service of process in connection with arbitration;

(iv) to take all actions which under this Agreement and any Escrow Agreement may be taken by such Seller and to do or refrain from doing any further act or deed on behalf of the such Seller which Sellers’ Representative deems necessary or appropriate in their sole discretion relating to the subject matter of this Agreement and any Escrow Agreement as fully and completely as such Seller could do if personally present; and

(v) to receive all amounts to be paid to Sellers’ Representative pursuant to any Escrow Agreement and to distribute each Seller’s share of such amounts received to each Seller as set forth on Schedule 2.2(b) .

(b) Sellers’ Representative shall not incur any liability to the Sellers with respect to any action taken or suffered by it or omitted hereunder as Sellers’ Representative while acting in good faith and in the exercise of reasonable judgment. Sellers’ Representative may, in all questions arising hereunder, rely on the advice of counsel and other professionals and for anything done, omitted or suffered in good faith by Sellers’ Representative based on such advice, and Sellers’ Representative shall not be liable to anyone.

(c) A decision, act, consent or instruction of Sellers’ Representative shall constitute a decision, act, consent or instruction from all of the Sellers, and shall be final, binding and conclusive upon each of the Sellers. The Corporation and Buyer may rely upon any such decision, act, consent or instruction of Sellers’ Representative as being the decision, act, consent or instruction of every Seller.

(d) Notwithstanding the above, Sellers’ Representative may not amend this Agreement or any Escrow Agreement to (i) create any personal liability of any Sellers hereunder or thereunder, (ii) to increase the maximum aggregate indemnification obligation of the Sellers beyond the Indemnity Cap or (iii) take any action pursuant hereto that could disproportionately affect any Seller or group of the Sellers relative to the other Sellers without the prior written consent of such affected Seller or group of the Sellers.

(e) If the Principal Seller becomes unable or no longer desires to serve as Sellers’ Representative such other Person or Persons as may be designated by a majority-in-interest of the Sellers, shall succeed as Sellers’ Representative.

9.5 Successors and Assigns; Benefit . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. No party may assign (other than by operation of law following the Administrative Closing Date), delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto; provided , that Buyer may make such an assignment to one or more direct or indirect Affiliates or third parties, but any such assignment shall not relieve Buyer of Buyer’s obligations hereunder. Except as expressly provided otherwise in Section 6.12(c) , nothing in this Agreement, expressed or implied, shall confer on any Person other than the parties hereto, and their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

9.6 Governing Law . All matters arising out of or relating to this Agreement shall be construed in accordance with and governed by the laws of the State of Delaware applicable to the contracts made and to be performed therein.

9.7 Resolution of Disputes . Any unresolved controversy or claim arising out of or relating to this Agreement shall, except as otherwise expressly provided herein, be submitted to arbitration by one arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the American Arbitration Association (the “ AAA ”), then by three arbitrators appointed as follows: one arbitrator having reasonable experience in corporate finance transactions of the type provided for in this Agreement shall be selected by each of Buyer and Sellers’ Representative within a further fifteen (15) days and those two arbitrators shall mutually agree upon a third arbitrator, who shall act as chairperson, within fifteen (15) days thereafter. The arbitration shall take place in New York, NY, in accordance with the AAA Commercial Arbitration Rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses and (c) such other depositions as may be allowed by the arbitrator(s) upon a showing of good cause. Depositions shall be conducted in accordance with New York law, the arbitrator(s) shall render a reasoned award, and a court reporter shall record all hearings, with such record constituting the official transcript of such proceedings. The prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

9.8 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any present or future rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Contemplated Transactions is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Contemplated Transactions contemplated hereby are fulfilled to the extent possible.

9.9 Table of Contents; Headings. The table of contents and the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

9.10 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

9.11 Entire Agreement. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

9.12 Specific Performance. Each of the Sellers, Buyer and the Corporation agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the other parties shall, except as set forth in Section 7.9 with respect to the rights and remedies of the parties contained in Article 7 , be entitled to specific performance of the terms hereof in addition to any other remedy at law or in equity.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.


CORPORATION:

SECURITY ONE LENDING

By:
Name:
Title:


SELLERS:

JAM SPECIAL OPPORTUNITIES FUND II, L.P.

		JAM Equity Partners, LLC, its General Partner

		By:
		Name:
		Title:


THE ENTREKIN FAMILY TRUST UTD 12/10/03

		By:
		Debra Entrekin
		Trustee


THE ENTREKIN TRUST UTD 10/26/07

		By:
		Dale Entrekin
		Trustee

[Signature Page to Stock Purchase Agreement]


THE MCCOMBE FAMILY TRUST UTD 11/21/05

		By:
		Dacia McComb
		Trustee


THE 2003 LARSEN FAMILY TRUST UTD 12/03/03

		By:
		Torrey Lee Larsen
		Trustee

		&

		By:
		Carole Louise Larsen
		Trustees

TYLER LARSON

SHANNON KEATLEY


THE OLSEN WOOD TRUST, a revocable living trust UTD 10/16/03

		By:
		Ruthann Wood
		Trustee


WILLIAM TRASK

[Signature Page to Stock Purchase Agreement]




ERIC HIATT

DIANNA GITZ

ROBERT GITZ

ANTHONY GAGLIONE

ARCHIMEDES INVESTMENTS LLC



By:
Name:
Title:


BUYER:

WALTER INVESTMENT MANAGEMENT CORP.

By:
Name:
Title:

[Signature Page to Stock Purchase Agreement]

Exhibit A

Pre-Tax Net Income Calculation Methodology

See attached.

Exhibit B

Form of FIRPTA Certificate

CERTIFICATION

THAT STOCK OF U.S. CORPORATION

IS NOT A U.S. REAL PROPERTY INTEREST

Section 1445 of the Internal Revenue Code of 1986, as amended (the “ Code ”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. In connection with the purchase of stock of Security One Lending (the “ Corporation ”) by Walter Investment Management Corp. (“ Buyer ”) pursuant to the Stock Purchase Agreement, dated as of December 31, 2012 by and among the Corporation, Buyer, JAM Special Opportunities Fund II, L.P. (“ JAM ”) and the other parties thereto (the “ Agreement ”), and to inform Buyer and JAM that it is not required to withhold tax pursuant to Code Section 1445 in connection with the transactions contemplated by the Agreement, the undersigned hereby certifies the following on behalf of the Corporation:

1. The stock of the Corporation does not constitute a “United States real property interest” as that term is defined in
section 897(c)(1)(A) of the Code;

2. The Corporation is not, as of the date of this certification, and has not been, during the five-year period ending on the date hereof, a “United States real property holding corporation” as that term is defined in section 897(c)(2) of the Code;

3. The Corporation’s U.S. employer identification number is 20-8009003; and

4. The Corporation’s office address is 3131 Camino Del Rio North, Suite 1400, San Diego, California 92108.

The Corporation is voluntarily furnishing this certification to Buyer and JAM in response to a request from Buyer and JAM in accordance with the requirements of Treasury Regulations sections 1.897-2(h) and 1.1445-2(c)(3). This certificate has been executed within 30 days of the Effective Date, as defined in the Agreement.

This certification constitutes authorization that Buyer, as agent for the Corporation, shall deliver a copy of this certification letter, along with the appropriate notification, to the Internal Revenue Service on behalf of Corporation.

Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this certification on behalf of the Corporation.


Dated: December 31, 2012						By:
						Name:
						Title:

Exhibit C

Form of Escrow Agreement

See attached.

Exhibit 10.37

LOGO

Mortgage Selling and Servicing Contract

This contract establishes your contractual relationship with Fannie Mae and states the terms and conditions of selling and servicing mortgages on our behalf. Your application package must include two signed originals of this form. Upon approval of your application, we will indicate the types of additional approval granted (see page 20) and return one of the executed originals for your permanent records.

Instructions

Once you have read this contract to ensure your understanding of its terms, you are ready to complete the “signature page” (page 21), as follows;

•

Complete all fields above the line “Fannie Mae.”

•

For “Lender,” enter your company name exactly as you entered it on the application form.

•

Have this form signed by an individual who is listed as a principal in your company on the Authorization for Verification of Credit and Business References (Form 1001).


		Contents
		Contents

Contract


I	General Information	1

II	Eligibility Requirements for Lenders	2

III	Sale of Mortgages and Participation Interests	3

IV	Sale of Mortgages and Participation Interests — Lender’s Warranties	4

V	Servicing Mortgages	8

VI	Assignment, Consideration, and Continuance	10

VII	Assigning Mortgage Servicing	11

VIII	Breaches of Contract	11

IX	Termination of Contract	13

X	Continuance of Responsibilities or Liabilities	16

XI	Participation Interests — Special Provisions	17

XII	Notice	19

XIII	Prior Agreements	19

XIV	Severability and Enforcement	20

XV	Captions	20

XVI	Scope of Contract	20

XVII	Signatures and Date	21



		General Information


		Contract

Mortgage Selling and Servicing Contract		This contract for selling and servicing mortgages (the “Contract”) is between the Mortgage Lender (the “Lender”) that signs the document and Fannie Mae (“Fannie Mae”, “we”, “our”, “us”), a corporation organized and existing under the laws of the United States.
1 General Information
		This section contains important basic information about the Contract, which we are permitted to enter into under authority of Title III of the National Housing Act (12 U.S.C. 171 6, et. seq.), which is also known as the Federal National Mortgage Association Charter Act.
A. Purpose of Contract		The purpose of this Contract is:

		• to establish the Lender as an approved seller of mortgages and participation interests to us;

		• to provide the terms and conditions of the sales;

		• to establish the Lender as an approved servicer of mortgages we have purchased or in which we have purchased a participation interest; and

		• to provide the terms and conditions of servicing.
B. Consideration		In consideration of the purpose of this Contract and of all the provisions and mutual promises contained in it, the Lender and Fannie Mae agree to all that this Contract contains.
C. Our Guides		We issue Fannie Mae’s Guides to Lenders (our “Guides”) and furnish them to the Lender. These Guides are:

		• Selling;

		• Servicing, and

		• Multifamily.
		Whenever there is a reference to the Guides in this Contract, it means the Guides as they exist now and as they may be amended or supplemented in writing. We may amend or supplement them, at our sole discretion, by furnishing amendments or supplementary matter to the Lender.

		The term “Guides” also includes anything that, in whole or in part, supersedes or is substituted for the Guides,

D. Important Definitions		Anywhere the words that appear below are used in this Contract, the following definitions apply:

		1. “Mortgage” — A loan, evidenced by a note, bond, or other instrument of indebtedness. The loan is secured by a mortgage, deed of trust, deed to secure debt, or other instrument of security that applies to property. “Mortgage” includes such instruments of indebtedness and Security, together with
		• the evidence of title;

		• the chattel mortgage or security agreement and financing statement; and

		• all other documents, instruments, and papers pertaining to the loan.


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		Eligibility Requirements for Lenders


		Contract

		2. “FHA/VA Mortgage” — A mortgage insured or guaranteed in whole or in part by the Federal Housing Administration or Veterans Administration.
		3. “Conventional Mortgage” — A mortgage other than a FHA/VA mortgage, which Fannie Mae is authorized to purchase under the Federal National Mortgage Association Charter Act.
		4. “Property” or “Mortgaged Property” —The property that is now subject to a mortgage, or was subject to such mortgage, where the mortgage has been foreclosed or possession or title to the property has been taken by Fannie Mae or on our behalf.
		5. “Participation Interest” or “Participation Interest in Mortgages” — An undivided interest in mortgages, specified in the applicable participation certificate that is evidence of such interest. A “participation interest” or “participation interest in mortgages” consists of a specified percentage of the principal (and a like percentage of all rights and benefits of the mortgagee or equivalent party under such mortgage) together with a specified yield on it.
II Eligibility Requirements for Lenders
		For us to purchase mortgages or participation interests from a Lender, the Lender must meet the eligibility requirements specified in this section.
A. General Requirements		These are the general requirements the lender must meet to be eligible to sell us mortgages or participation interests or service mortgages for us:
		1. Meet Fannie Mae Standards. The Lender must have as two of its principal business purposes:
		• making mortgages of the type that we will purchase entirely or purchase a participation interest in under this Contract; and
		• servicing such mortgages.
		In addition, the Lender, in our judgment, must have at all times the capacity to originate and sell to us mortgages and participation interests that meet our purchase standards and the standards generally imposed by private institutional mortgage investors, and must at all times have the capacity to service such mortgages for us under those standards.
		2. Have a Qualified Staff and Adequate Facilities . The Lender must, at all times, have employees who are well trained and qualified to perform the functions required of the Lender under this Contract.
		In addition, the Lender must maintain facilities that are adequate to perform its functions under this Contract.
		3. Maintain Fidelity Bonds and Errors and Omissions Coverage. The Lender must maintain, at its own expense, a fidelity bond and errors and omissions insurance, as required by our Guides.
		4. Report Basic Changes. The Lender must notify us promptly in writing of any changes that occur in its principal purpose, activities, staffing, or facilities.


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		Sale of Mortgages and Participation Interests


		Contract
B. Ownership and Status of Lender		When we approve a Lender, one of the major considerations is the information the Lender has provided about the eligibility, qualifications, and financial status of the Lender and its owners. Consequently, the Lender must give us immediate notice of a change in its status or ownership, including any: • sale or transfer of a majority interest in it; • merger; • consolidation; or • change in legal structure.

C. Finances		In order to remain an approved Lender under this Contract, the Lender must meet our current net worth requirements. These requirements are contained in our Guides. The required net worth must be maintained in the form of assets acceptable to us. The Lender must give us a copy of its annual financial statements and any other related information that we may require.

D. Access to Lender’s Records		The Lender agrees to permit our employees or designated representatives to examine or audit records or accounts relating to mortgages or participation interests sold or serviced under this Contract. All records relative to the Lender’s continued eligibility to sell or service mortgages under this Contract may also be examined or audited. Any examination or audit made on our behalf will be conducted during regular business hours unless the Lender agrees otherwise.

I Sale of Mortgages and Participation Interests


		This section contains the basic rules governing our purchase of mortgages and participation interests.

A. What Governs Purchases		Purchases of mortgages and participation interests will be governed by: • our written commitment to purchase; • our Guides, including all amendments in effect on the day we make our written commitment; and • this Contract.
What We Purchase		The mortgages or participation interests that we purchase must meet the requirements found in our Guides on the day we make our written commitment.

Lender’s Obligation Purchase Fannie Mae Stock		If our Guides require, the Lender will promptly purchase our common stock each time it delivers a mortgage or participation interest to us. The amount of stock to be purchased and the procedures for buying it are also found in our Guides.

Fannie Mae Has No Obligation to Purchase		The fact that we have signed this Contract does not mean that we must make a commitment to purchase any mortgage or participation interest from the Lender.


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		Sale of Mortgages and Participation Interests


		Contract
IV Sale of Mortgages and Participation Interests – Lender’s Warranties
		The Lender makes certain warranties to us. These warranties: • apply to each mortgage sold to us in its entirety; • apply to each mortgage in which a participation interest is sold to us; • are made as of the date transfer is made to us; • continue after the purchase of the mortgage or participation interest; • continue after payment by us of the purchase price to the Lender; and • are for our benefit as well as the benefit of our successors and assigns. Warranties may be waived, but only by us in writing. Following are the specific warranties made by the Lender.

A. Specific Warranties		1. Mortgage Meets Requirements. The mortgage conforms to all the applicable requirements in our Guides and this Contract. 2. Lender Authorized to Do Business. The Lender and any other party that held the mortgage were, at all times during which the holder held the mortgage, authorized to transact business in the jurisdiction where the property is located.
		However, if the Lender or any other party that held the mortgage was not authorized to do business in the jurisdiction where the property is located, then the warranty is made that none of the following activities of the Lender or other parties constituted doing business in that jurisdiction: • lending the mortgage funds; • acquiring the mortgage; • holding the mortgage; or • transferring the mortgage in whole or to the extent of a participation interest. 3. Lender Has Full Right to Sell and Assign. The Lender is the sole owner and holder of the mortgage and has full right and authority to sell and assign it, or a participation interest in it, to us. In addition, the Lender’s right to sell or assign is not subject to any other party’s interest or to an agreement with any other party. 4. Lender’s Lien on Property. The mortgage, whether represented by the Lender as the first lien or as the second lien, is a valid and subsisting lien on the property described in it. If the mortgage is represented by the Lender as the first lien, the property is free and clear of all encumbrances and liens having priority over it except for liens for real estate taxes, and liens for special assessments, that are not yet due and payable.


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		If the mortgage is represented by the Lender as the second lien, the property is free and clear of all encumbrances and liens having priority over it except for one properly recorded first mortgage lien, real estate taxes, and liens of special assessments not yet due and payable. Any security agreement, chattel mortgage, or equivalent document that is related to the mortgage and that is held by the Lender or delivered to us, is a valid and subsisting lien on the property described in such document, of the same priority as the mortgage. The Lender has full right and authority to sell or assign each lien to us or to an extent that is proportionate to our participation interest. 5. Documents Are Valid and Enforceable. The mortgage and any security agreements, chattel mortgages, or equivalent documents relating to it have been properly signed, are valid, and their terms may be enforced by us, our successors and assigns, subject to bankruptcy laws, Soldiers’ and Sailors’ Relief Acts, laws relating to administering decedents’ estate, and general principles of equity. 6. Property Not Subject to Liens. The Property is free and clear of all mechanics’ liens, materialmen’s liens, or similar types of liens. There are no rights outstanding that could result in any of such liens being imposed on the property. This warranty is not made if the Lender furnishes us with title insurance that gives us substantially the same protection as this warranty. 7. Title Insurance. There is a mortgage title insurance policy, or other title evidence acceptable to us, on the property. The title insurance policy is on a current ALTA form (or other generally acceptable form) issued by a generally acceptable insurance company. The title insurance insures (or the other title evidence protects) us or the Lender and its successors and assigns, as holding a lien of the priority warranted in “4. Lender’s Lien on Property.” 8. Modification or Subordination of Mortgage. The Lender has not done any of the following: • materially modified the mortgage; • satisfied or canceled the mortgage in whole or in part; • subordinated the mortgage in whole or in part, unless it is represented to us as a second mortgage; • released the property in whole or in part from the mortgage lien; or • signed any release, cancellation, modification, or satisfaction of the mortgage. This warranty is not made if any of the things just mentioned have been done but have been expressly brought to our attention in a letter before we make payment to the Lender. The letter must be acknowledged by us in writing.


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Contract

9. Mortgage in Good Standing. There are no defaults under the mortgage, and all of the following that have become due and payable have been paid or an escrow of funds sufficient to pay them has been established:

• taxes;

• government assessments;

• insurance premiums; water, sewer, and municipal charges;

• leasehold payments; or

• ground rents.

10. Advances. The Lender has not made or knowingly received from others, any direct or indirect advance of funds in connection with the loan transaction on behalf of the borrower except as provided in our Guides. This warranty does not cover payment of interest from the earlier of:

• the date of the mortgage note; or

• the date on which the mortgage proceeds were disbursed to

• the date one month before the first installment of principal and interest on the mortgage is due.

11. Property Conforms to Zoning Laws. The Lender has no knowledge that any improvement to the property is in violation of any applicable zoning law or regulation.

12. Property Intact. The property is not damaged by fire, wind, or other cause of loss. There are no proceedings pending for the partial or total condemnation of the property.

13. Improvements. Any improvements that are included in the appraised value of the property are totally within the property’s boundaries and building restriction lines. No improvements on adjoining property encroach on the mortgaged property unless FHA or VA regulations or our Guides permit such an encroachment.

14. Mortgage Not Usurious. The mortgage is not usurious and either meets or is exempt from any usury laws or regulations.

15. Compliance With Consumer Protection Laws. The Lender has complied with any applicable federal or state laws, regulations, or other requirements on consumer credit, equal credit opportunity, and truth-in-lending.

16. Property Is Insured. A casualty insurance policy on the property is in effect. It is written by a generally acceptable insurance company and provides fire and extended coverages for an amount at least equal to the amount required by our Guides.

A flood insurance policy is in effect on the property if any part of it is in an area listed in the Federal Register by the Federal Emergency Management Agency as an area with special flood hazards, and if insurance is available. The flood insurance is written by a generally acceptable insurance company, meets current guidelines of the Federal Insurance Administration, and is for an amount at least equal to the amount required by our Guides.


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		The Lender will make sure the required insurance is maintained as long as it services the mortgage. Any policy mentioned in this warranty contains a standard mortgage clause that names us or the Lender and its successors and assigns as mortgagee. 17. Mortgage Is Acceptable Investment. The Lender knows of nothing involving the mortgage, the property, the mortgagor, or the mortgagor’s credit standing that can reasonably be expected to: • cause private institutional investors to regard the mortgage as an unacceptable investment; • cause the mortgage to become delinquent; or • adversely affect the mortgage’s value or marketability. 18. Mortgage Insurance or Guaranty In Force. If the Lender represents that the mortgage is insured or guaranteed under the National Housing Act as amended, or under the Servicemen’s Readjustment Act of 1944 as amended, or by a contract with a mortgage insurance company, the insurance or guaranty is in full force. In addition, the Lender has complied with all applicable provisions and related regulations of the Act, or the insurance contract, that covers the mortgage. 19. Adjustable Mortgages. If the mortgage provides that the interest rate or the principal balance of the mortgage may be adjusted, all of the terms of the mortgage may be enforced by us, our successors, and assigns. These adjustments will not affect the priority of the lien warranted in “4. Lender’s Lien on Property.” 20. Participation Information Is Correct. All the information and statements in any participation certificate that the Lender delivers to us are complete, correct, and true.

B. Consequences of Untrue Warranties – Repurchase		We may require the Lender to repurchase a mortgage or participation interest sold to us if any warranty made by the Lender about the mortgage or participation interest is untrue (whether the warranty is in this Contract or was made at our specific request). We may require repurchase whether or not the Lender had actual knowledge of the untruth. We may also enforce any other available remedy.

Consequences of Untrue Warranties – Termination of Contract		The Lender must pay us the repurchase price within 30 days of our demand. The repurchase price, as provided in our Guides, will not be adjusted because the Lender paid us fees or charges or subscribed to our capital stock. While untrue warranties about a particular mortgage or participation interest may be the basis for requiring repurchase of the particular mortgage or participation interest, there can be additional consequences. They may also give rise to responsibilities of the Lender under “D. Indemnification for Breach of Warranty; Holding Us Harmless.” In addition, untrue warranties can, under certain circumstances, be treated as a breach of contract that could result in the withdrawal of our approval of a Lender and the termination of this Contract (details are contained in Sections VIII and IX).
Indeminification for each of Warranty; Holding Us Harmless		If there is a breach of warranty under this Contract, the Lender, at our request, will indemnify us and hold us harmless against any related losses, damages, judgments or legal expenses.


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		Servicing Mortgages


		Contract

V Servicing Mortgages

		This section contains the basic rules governing the service of mortgages that we purchase, or in which we purchase a participation interest.

A. Servicing Duties of the Lender		The servicing duties of the Lender are: 1. Scope of Duties. The Lender will diligently perform all duties that are necessary or incident to the servicing of:

		• all mortgages it is servicing for us on the date this Contract takes effect; and • all other mortgages that the Lender is required to service by the terms of this Contract or any other existing or future agreement between us and the Lender. 2. Mortgages to Be Serviced. Any mortgage we have purchased from the Lender, or in which we have purchased a participation interest from the Lender, will be serviced by the Lender for us according to the terms of this Contract, unless: • the mortgage is not within any category of those that are required by our Guide to be serviced; or • we give the Lender written notification or consent that a mortgage to be purchased by us will not be serviced by the Lender. 3. Service According to Guides. Any mortgage serviced under this Contract, which we own or in which we have purchased a participation interest, must be serviced by the Lender according to the provisions in our Guides that are in effect on the date of this Contract or as amended in the future. This is true regardless of when: • the mortgage was originated; • the mortgage or a participation interest in it was transferred to us; or • the Lender began servicing the mortgage. The Lender will also follow other reasonable instructions we give it and must strictly follow accepted industry standards when servicing a mortgage for us. 4. Service at Lender’s Own Expense. The cost of servicing will be the Lender’s unless our Guides expressly provide otherwise. 5. Special Responsibilities in Foreclosures. Among the other duties that may be assigned to the Lender through our special instruction or under the terms of our Guides is the responsibility to manage and appropriately dispose of property when a mortgage it is servicing for us has been foreclosed, or possession or title has been taken by us or on our behalf. The Lender must manage and dispose of the property according to the terms of the mortgage and our Guides. 6. Service Until Need Ends. The Lender must service each mortgage continuously from the date its servicing duties begin until:


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		Servicing Mortgages


		Contract
		• the mortgage’s principal and interest have been paid in full; • the mortgage has been liquidated and the mortgaged property properly disposed of (if the Lender is required to do these things); or • the Lender’s servicing duties are terminated according to Section IX of this Contract.
B. Compensation		The Lender’s compensation for servicing mortgages, including the management and disposal of properties, under this Contract is specified in our Guides. We may change the Lender’s compensation by modifying our Guides at any time. However, such a change will not affect mortgages that we have purchased or committed to purchase before the date of the change.
C. Ownership of Records		All mortgage records reasonably required to document or properly service any mortgage we own in its entirety are our property at all times. This is true whether or not the Lender developed or originated them. The following are considered mortgage records:
		• all mortgage documents; • tax receipts; • insurance policies; • insurance premium receipts; • ledger sheets; • payment records; • insurance claim files and correspondence; • foreclosure files and correspondence; • current and historical data files; and • all other papers and records.
		1. Lender As Custodian . The mortgage records belong to us. The Lender can have possession of the mortgage records only with our approval, and the Lender is acting as our custodian. This is true whether the Lender receives the mortgage records from an outside source or prepares them itself.
		2. Delivery . When we ask for any mortgage records in writing, the Lender will deliver them to us or someone we choose. The Lender must also send us a list that identifies each mortgage, and must give us other information we request to identify the mortgages delivered. We will not be required to sign or deliver any trust receipts before the Lender delivers the mortgage records we have requested.
		If we ask the Lender in writing for reproductions of any mortgage records the Lender microfilmed or condensed, the Lender will reproduce them promptly at no cost to us or the party to whom we want them delivered.


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		Assignment, Consideration, and Continuance


		Contract
		3. Joint Ownership. If we own a participation interest in a mortgage, the other owners and we own the mortgage records jointly. For these mortgages, the Lender possesses the mortgage records as a custodian for the joint owners. If we ask for copies of the mortgage records and servicing information about any such mortgages, the Lender will furnish them. Or, if we need any mortgage records for legal evidence or other purposes, the Lender will release them to us for a reasonable time.
D. Agreement to Indemnify and Hold Harmless		The Lender will indemnify us and hold us harmless against all losses, damages, judgments, or legal expenses that result from its failure in any way to perform its services and duties in connection with servicing mortgages or managing or disposing of property according to this Contract or our Guides. If any private entity or governmental agency sues us, makes a claim against us or starts a proceeding against us based on the Lender’s acts or omissions in servicing mortgages or managing or disposing of property, the Lender’s obligation to indemnify and hold us harmless must be met regardless of whether the suit claim or proceeding has merit or not. The Lender’s obligation does not apply, however, if during a suit, claim, or proceeding, we give the Lender express written instructions and as a result of the Lender following them we suffer losses, damages, judgments, or legal expenses.
E. Ownership of Our Stock		If our Guides require, the Lender will continuously own our common stock in connection with all mortgages it services under this Contract. The amount of stock to be owned will be established by our Guides as they were in existence on the date the Lender started servicing the applicable mortgages.
VI Assignment, Consideration, and Continuance
		This section describes our requirements covering assignment of, consideration for, and continuance of this Contract.
A. Assignment		Because the relationships created by this Contract are personal, the Lender may not, without our prior written approval, assign:
		• this Contract under any circumstances, either voluntarily or involuntarily, by operation of law, or otherwise; or • its responsibility for servicing individual mortgages we own or in which we have a participation interest. (See Section VII of this Contract for required procedures governing assignments of servicing.)
B. Limited Value of Contract to Lender		The Lender acknowledges that it has paid us no monetary consideration for making it an approved mortgage seller or servicer, except an application fee to reimburse us for the expenses of reviewing its application. The Lender also agrees that, except for the purchase of mortgages, the servicing of mortgages, or any fee for the termination of this Contract, this Contract has no value to the Lender.
C. Requirements for Continuance		The Lender’s right to continue selling and servicing mortgages under this Contract depends on, among other things, its continuing to meet the eligibility requirements in Section II of the Contract.


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		Assigning Mortgage Servicing


		Contract
VII Assigning Mortgage Servicing
		The Lender may not assign its responsibility for servicing all or any part of the mortgages that it is servicing for us without first obtaining our written consent. Any Lender to which servicing is assigned must: • be acceptable to us; and • sign a Mortgage Selling and Servicing Contract with us. We may require that the Lender and transferee lender sign documents and take other reasonable steps to perfect the assignment.
VIII Breaches of Contract
		The Lender’s taking certain actions, or failing to take certain actions, can be treated by us as a breach of contract. A breach of contract can lead to a termination of the Contract. Termination is provided for in detail in Section IX.
A. Specific Breaches of Contract		Breaches of this Contract include the following: 1. Harm, Damage, Loss, or Untrue Warranties. It is a breach if any act or omission of the Lender in connection with the origination and sale to us of any mortgage or participation interest causes us harm, damage, or loss. It is also a breach if the Lender sells us any mortgage or participation interest knowing that any of the mortgage warranties are untrue. (these warranties are listed in Section IV A). 2. Failure to Comply with This Contract or Our Guides. It is a breach if the Lender does not comply with this Contract or our Guides through any act or omission, including, without limitation, the following:
		• failure to establish and maintain accounts for our funds or mortgagors’ funds as required by our Guides; • use of our or mortgagors’ funds in any manner other than that permitted by our Guides, including the Lender’s failure to deposit all mortgage funds if, when, and to the extent required by our Guides; • failure to remit all funds due to us within the time periods required by our Guides; • failure to make or ensure, according to the provisions of each mortgage or of applicable laws or regulations, proper and timely payment of all:
		• taxes; • assessments; • leasehold payments; • ground rents;


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		Breaches of Contract

Contract

• insurance premiums (including premiums of casualty, liability, and mortgage insurance and other forms of required insurance);

• required interest on escrow funds; and

• other required payments with respect to any mortgage (including mortgaged property) serviced;

unless the Lender is relieved of these responsibilities by the express provisions of our Guides, or by our written instructions that relate to a particular mortgage or property;

• failure to renew or ensure renewal of any required insurance policy on any mortgage (including mortgaged property) serviced under this Contract;

• failure to maintain adequate and accurate accounting records and mortgage servicing records for the mortgages, or to maintain proper identification of the applicable loan files and mortgage records that prove our outstanding participation interests;

• failure to submit adequate and accurate accounting and mortgage servicing reports within the time required by our Guides; or

• failure to take prompt and diligent action under applicable law or regulation to collect past-due sums on mortgages, or to take any other diligent action described in our Guides that we reasonably require for mortgages in default.

3. Failure to Properly Foreclose or Liquidate . Where a mortgage is in default and the Lender is required or has decided to foreclose or liquidate it, it is a breach if the Lender fails to take prompt and diligent action consistent with applicable law or regulations to foreclose on or otherwise appropriately liquidate such mortgage and to perform all incident actions. It is a breach whether or not the failure results from the acts or omissions of an attorney, trustee, or other person or entity the Lender chooses to effect foreclosure or liquidation.

4. Failure to Properly Manage, Dispose of, or Effect Proper Conveyance of Title. It is a breach if any mortgage serviced under this Contract has been foreclosed or the possession or title to the property has been taken by us or on our behalf or on behalf of other owners of a participation interest in the mortgage, and the Lender:

• fails to properly manage, dispose of, or effect proper conveyance of title to the mortgaged property; or

• fails to do the above in accordance with this Contract, our Guides, and any pertinent laws, regulations, or mortgage insurance policies or contracts.

5. Lender’s Financial Ability Impaired. It is a breach if there is a change in the Lender’s financial status that, in our opinion, materially and adversely affects the Lender’s ability to satisfactorily service mortgages.

Changes of this type include:

• the Lender’s insolvency;

• adjudication of the Lender as a bankrupt;


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		Breaches of contract


		Contract
		• appointment of a receiver for the Lender; or • the Lender’s execution of a general assignment for the benefit of its creditors. If any such change does take place: • no interest in this Contract will be considered an asset or liability of the Lender or of its successors or assigns; and • no interest in this Contract will pass by operation of law without our consent. 6. Failure to Obtain Our Prior Written Consent. It is a breach if the Lender fails to obtain our prior written consent for: • a sale of the majority interest in the Lender; or • a change in its corporate status or structure. 7. Failure to Comply with This Contract or Our Guides. It is a breach if the Lender fails at any time to meet our standards for eligible mortgage sellers or servicers so that, in our opinion, the Lender’s ability to comply with this Contract or our Guides is adversely affected. 8. Court Findings Against Lender or Principal Officers. It is a breach if: • a court of competent jurisdiction finds that the Lender or any of its principal officers has committed an act of civil fraud; or
		• the Lender or any of its principal officers is convicted of any criminal act related to the Lender’s lending or mortgage selling or servicing activities or that, in our opinion, adversely affects the Lender’s reputation or our reputation or interests.
B. Actions to Correct a Breach		If there is a breach of contract by the Lender, we will have the right to take any reasonable action to have any breach corrected by the Lender before we exercise any right we have to terminate this Contract in whole or in part; however, we are not required to try to have a breach corrected before termination. Any forbearance by us in exercising our right to terminate the Contract in whole or in part will not be a waiver of any present or future right we have under this Contract to so terminate it.
IX Termination of Contract
		The reason why this Contract may be terminated and the ways in which this may be done are outlined in this section. When the Contract is terminated, the entire relationship between the Lender and us ends (with certain exceptions that are explained in this section).
A. Termination by Either Party of Mortgage Selling Arrangements		The provisions of this Contract covering the sale of mortgages or participation interests under this Contract may be terminated by the Lender or by us, with or without cause, by giving notice to the other party. Notice of termination may be given at any time but must conform to Section XII of this Contract.
		Termination is effective immediately upon notice of termination, unless the notice specifies later termination.


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		Termination of Contract


		Contract
		Termination will not affect any outstanding commitments we have made to purchase mortgages or participation interests from the Lender. However, if the Lender has breached this Contract, we may declare any or all outstanding commitments void.
B. Termination by Lender of Mortgage Servicing Arrangements for Wholly Owned Mortgages		The Lender may terminate the provisions of this Contract covering the servicing of mortgages we entirely own by giving us notice at any time. Notice must conform to Section XII of this Contract. Termination is effective the last day of the third calendar month after the calendar month in which notice is given. If the Lender terminates this Contract in whole or in part, we will not pay the Lender a termination fee.
C. Termination by Us of Servicing Arrangements for Wholly Owned Mortgages		We may terminate the provisions of this Contract covering the servicing under this Contract of any or all mortgages that we entirely own. This may be done by following the procedures outlined below. 1. Termination Without Cause. We may terminate servicing for any reason, by giving the Lender notice of the termination. If we do so, the provisions of this Contract covering the servicing of the affected mortgages will automatically terminate the thirtieth day following the day our notice is given. Whenever we do this (and the termination is not because of any breach by the Lender as described in Section IX C2) we will pay the Lender, for each mortgage on which servicing is terminated, a lump-sum termination fee as provided in a. below. However, whenever we terminate solely in order to transfer the servicing to another Lender, and there has been no sale of our interest in the affected mortgages, the provisions of b. below will apply.
		a. Termination Fee. The termination fee will be an amount equal to twice the Lender’s annualized servicing compensation, at the rate of compensation that is in effect for the mortgage as of the date of the termination, applied against the unpaid principal balance of the mortgage as of such date.
		For purposes of determining the termination fee: • The Lender’s servicing compensation consists of the servicing fee at the Applicable Servicing Rate plus any previously agreed upon excess yield that the Lender is permitted to retain on the applicable mortgage. • “Applicable Servicing Rate” means the rate of the servicing fee for the servicing of the mortgage, expressed as an annualized fractional percentage. [Refer to appropriate sections of our Guides for more detailed information regarding the computation of termination fees.]
		b. Termination to Effect Transfer. Whenever we terminate servicing solely in order to transfer servicing of the mortgages to another Lender, and there has been no sale of our interest in the mortgages, we will give the Lender notice of the required transfer. Within the 90-day period immediately following the date our notice is given, the Lender may arrange for the sale of the servicing to another Fannie Mae-approved Lender in good standing that, in our judgment, will


		Page 14 of 21
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		Termination of Contract

Contract

properly service the mortgages to be transferred. Within that 90-day period, the Lender will give notice of any proposed sale to us, together with all related information. The sale of servicing is conditioned upon our approval, which will not be unreasonably withheld. Any resulting transfer of servicing will be completed not later than 60 days after our approval of the transfer; and

• the Lender will be entitled to the proceeds of the sale of servicing, and will bear all costs and expenses related to the sale and transfer of servicing;

• the Lender will not pay us a transfer fee;

• we will not pay the Lender a termination fee;

• we may require the purchaser of the servicing to assume any or all warranties that were made to us in connection with the sale to us of the affected mortgages; and

• the purchaser of the servicing will succeed to the Lender’s obligations, rights, and servicing compensation, under the provisions of this Contract covering the servicing of the affected mortgages. For all of the affected mortgages that we purchased under a net-yield contract, the servicing compensation will include the specified minimum servicing fee, plus the Lender’s share of that portion of the yield which exceeds the stated net yield, as provided under the commitment contract.

[Refer to appropriate sections of our Guides for more detailed information regarding the computation of the Lender’s servicing compensation.]

If at the end of the 90-day period following our notice, the Lender has not arranged to sell and transfer the servicing of the affected mortgages to another Lender acceptable to us and given us the required notice, the provisions of this Contract covering the servicing of the mortgages will automatically terminate on the fifteenth day following the end of the 90-day period, and we will transfer the servicing to a Lender of our choice. In such a case, we will pay the Lender, for each mortgage on which servicing is terminated, a termination fee computed as provided under a. above. We will deduct from the termination fee paid to the Lender a transfer fee that is the greater of $500.00 or 1/100 of 1% of the aggregate unpaid principal balance of all the affected mortgages on which servicing is transferred.

c. General Criteria for Termination Fees. Notwithstanding anything to the contrary in this Contract, we may change the amount of termination fee that we pay, or other provisions of this Section IX C1, from time to time, by changing the appropriate provisions of our Guides. However, such a change will not affect mortgages that we have purchased or that we have committed to purchase before the date of the change.

Our written tender of the termination fee to the Lender, or its successors or assigns, is complete compensation for each mortgage serviced by the Lender on which servicing is terminated. Any sums we owe the Lender for servicing prior to the termination date are not included in the termination fee. When we pay a termination fee, the Lender will not be entitled to the proceeds for any sale of the servicing involved.


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		Continuance of Responsibilities or Liabilities


		Contract

D. Termination by Us of Servicing Arrangements for Mortgages in Which We Have a Participation Interest		2. Termination with Cause. We may terminate if the Lender breaches any agreement in this Contract, including, without limitation, any of those breaches listed in Section VIII A. This may be done by giving the Lender notice of termination. Notwithstanding anything in this Contract to the contrary, if we terminate for breach, we may make it effective immediately, and we will not pay the Lender a termination fee or proceeds from any sale of the servicing involved. Furthermore, we will not pay a servicing termination fee if a mortgage is repurchased by the Lender because a warranty is untrue. If the Lender breaches any agreement in this Contract, including, without limitation, any breach listed in Section VIII A, we may terminate the provisions of this Contract covering the servicing of any or all mortgages in which we own a participation interest. This may be done by giving notice of termination. Such termination may be effective immediately, and we will not pay the Lender a termination fee. 1. Transfer of Lender’s Powers. Upon termination, we will automatically succeed to all the Lender’s rights in and responsibilities for servicing of the affected mortgages. We will also have the option to exercise all the Lender’s powers relating to these mortgages, and to designate any person or firm to exercise those powers. However, exercise of the Lender’s powers must be consistent with the Lender’s and our respective participation interests.

		The mortgage instruments for these mortgages and all related mortgage records will be delivered to us or a party we designate. The Lender will also deliver necessary assignments, transfers, and documents of authority.

		2. Transfer of Servicing. If we terminate the Lender’s servicing of any such mortgages, we are authorized to transfer the servicing of the mortgages to new servicers and pay the new servicers a fee. The fee will apply to the total outstanding principal balance on each mortgage, including our participation interest in each mortgage as well as the participation interest of the Lender of any other owner.

		3. Liability for Fees. The Lender and all additional owners of a participation interest will be liable for their respective shares of the servicing fee we pay. They will also be liable for their respective shares of advances that, in our sole discretion, are required. Advances may be required for insurances, taxes, maintenance, improvements, or other necessary outlays. If the Lender or other owners fail to promptly provide their share of funds for advances, or for any other necessary expenses, during any period, we may supply the funds. The fact that we do this does not release the Lender or other owners from their liability. We may deduct any amount we advance the next time we owe money to the Lender or other owners.

E. Rights of Termination Not Impaired		The exercise of a right of termination under any provision of this Contract will not impair any further right of termination under another provision.

X Continuance of Responsibilities or Liabilities

		Responsibilities or liabilities of the Lender that exist before the termination of this Contract will continue to exist after termination unless we expressly release the Lender from any of them in writing. This is true whether the Contract was terminated by the Lender or by us.


		Page 16 of 21
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		Participation Interests —
		Special Provisions


		Contract

XI Participation Interests — Special Provisions

A. After the Sale of a Participation Interest		This section contains special provisions that govern participation interests. Listed below are the consequences of the sale of a participation interest. 1. Transfer of Undivided Interest. When the Lender sells and conveys to us a participation interest in one or more mortgages, this is a transfer of an undivided interest in each mortgage. The sale and conveyance of the participation interest will have the same force and effect as:
		• a separate assignment of each mortgage executed and delivered to us by the Lender; and • a promissory note separately endorsed or transferred to us. 2. Assurance of Our Legal Rights. If federal or state laws or regulations now, or later, provide that the purchase of participation interest is an extension of credit, the Lender will take whatever additional steps we may require to assure our legal rights as a purchaser of participation interests.
		Such steps may include: • placing legends on promissory notes; • endorsing promissory notes in blank and delivering them to us; and • executing mortgage assignment in a form acceptable to us and delivering them to us.
B. Payments to Us		3. No Partnership or Joint Venture. Neither the simultaneous ownership of interest in one or more mortgages nor any provision of this Contract will mean that a partnership or joint venture exists between the Lender and us. The Lender will make the following payments to us, according to our Guides, for mortgages in which both the Lender and we own an interest: 1. Ratable Sharing of Principal. The Lender will ratably share with us all mortgage principal payments.

		2. Participation Share of Interest. The Lender will pay us our participation share of interest payments up to: • an amount sufficient for us to earn our yield on each mortgage; plus • any amounts due us pursuant to this section.

C. Enforcement of Due-On-Sale and Call Options D. Repurchase Option		As required by our Guides, the Lender will enforce the due-on-sale provisions and call options in the mortgages it services for us. The Lender will have the option to repurchase our interest in a mortgage if: • the Lender is required by our Guides to enforce a due-on-sale clause of a mortgage in which the Lender and we own an interest; or • we elect to exercise a call option provision of such a mortgage.


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		Participation Interests — Special Provisions


		Contract
E. Note Rate Increase, Foreclosure Expenses, and Prepayment Charges		If the Lender wishes to repurchase our interest in such a mortgage, it may do so by: • giving us notice of its intention to repurchase; and • paying us an amount calculated according to the provisions of our Guides. The note rate of a mortgage is stated in the participation certificate or attached loan schedule. 1. Note Rate Increase. If, for any reason, there is an increase of the note rate of a mortgage in which we hold a participation interest, the Lender will pay us, according to our Guides, a percentage of the increase equal to the percentage represented by our participation interest in the mortgage. This amount will be in addition to our yield on the mortgage. 2. Foreclosure Expenses. The Lender will ratably share with us any reasonable foreclosure and related expenses in connection with a mortgage in which we own a participation interest.
F. Advances		3. Prepayment Charges. The Lender will ratably share with us any prepayment charges collected for mortgages in which we own a participation interest. The Lender will not make any optional or voluntary advances to the borrower under an open-end mortgage in which we own a participation interest.

G. Assignment or Sale of Participation Interests		Participation interests may be assigned either by the Lender or us, as follows: 1. By Us. Without the Lender’s consent we may assign: • our participation interest in any mortgage; and • all rights in the mortgage we own under this Contract or under any other instruments.

		2. By Lender to Transferee. The Lender may sell or transfer all or part of any participation interest that it owns in any mortgage under this Contract unless expressly prohibited from doing so by our Guides. This sale or transfer of participation interests is subject to the conditions below, as well as to our Guides as they are in effect on the date of our commitment to purchase. For every sale or transfer, the Lender must obtain and furnish us with a properly executed instrument by which the transferee:

		• agrees to be bound by the terms of this Contract; and • acknowledges our rights and interests under this Contract with respect to the mortgage. Our rights and interests that must be acknowledged include, without limitation, the right to assess a servicing fee against the owner of each participation interest if we:
		• assume the servicing of the mortgage; or • transfer the servicing to a new servicer under Section IX D of this Contract. The sale or transfer of a participation interest docs not relieve the Lender of any responsibility or liability under this Contract. For example, the Lender continues to be liable for any fees and other amounts charged under Section IX D3 of this Contract against the participation interest that is transferred. We may collect these amounts from the Lender or from the transferee.


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		Notice


		Contract
		3. By Lender to Bank. The Lender may be a member of, or be required to maintain reserves with a Federal Home Loan Bank or Federal Reserve Bank. If so, and the lender transfers its participation interests in any mortgage under this Contract to such a bank to secure one or more advances, then the bank will not be deemed to have assumed the mortgage warranties found in Section IV A. Also, such a transfer to the bank will not relieve the Lender of any responsibility or liability under this Contract.

XII Notice

A. Notice of Termination		Whenever notice is required under this Contract, it must be given as described in this section. Any notice of termination given under this Contract must be: • in writing; • delivered in person or sent by registered or certified mail, with a return receipt requested; and • addressed to the party to which notice is being given.
		Delivery and notice is given when we or the Lender mail or register the notice with any post office.

B. Our Guides and Other Documents		Our Guides, including any amendments or supplements, and any other notices, demands, or requests under this Contract or applicable law will be: • in writing; • delivered in person or mailed from any post office, substation, or letter box; • enclosed in a postage prepaid envelope; and • addressed to the Lender to which the matter is directed.
C. Address		For purposes of notice, the following rules apply: 1. Our address is the address of our regional office given in this Contract. 2. The Lender’s address is that of its principal place of business given in this Contract. Any change of address must be given in writing.
XIII Prior Agreements
		This Contract supersedes any prior agreements between the Lender and us that govern selling or servicing of mortgages and participation interests to which this Contract relates. However, this section will not release the Lender from any responsibility or liability under any prior agreements and understandings.


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		Severability and Enforcement


		Contract

XIV Severability and Enforcement

		If any provision of this Contract conflicts with applicable law, the other provisions of this Contract that can be carried out without the conflicting provision will not be affected. All rights and remedies under this Contract are distinct and cumulative not only as to each other but as to any rights or remedies afforded by law or equity. They may be exercised together, separately, or successively. These rights and remedies are for our benefit and that of our successors and assigns.

XV Captions

		This Contract’s captions and headings are for convenience only and are not part of the Contract.

XVI Scope of Contract

		The following provisions apply, whether or not they are contrary to other provisions in this Contract.

A. Restrictions of Lender		We reserve the right to restrict the Lender’s sale or servicing of mortgages or of participation interests to the type that the Lender and its employees have the experience and ability to originate, sell, or service.

B. Types of Mortgages Covered		This Contract covers only the sale of mortgages and participation interests and the servicing of mortgages, within the following categories:


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		Signatures and Date


	Contract
XVII Signatures and Date
	By executing this Contract, the Lender and we agree to all of this Contract’s terms and provisions. Both the Lender and we have signed and dated this Contract below. This Contract takes effect on the date we sign it.

	Lender:	Green Tree Servicing LLC
		1100 Landmark Towers, 345 St. Peter Street
		(Street or Mailing Address)
		St. Paul, MN 55102
		(City, State, and Zip)

	By:
		(Authorized Signature)
		Brian F. Corey, Senior Vice President & Secretary
		(Typed Name and Title)

	Date:	March 8, 2005

	Fannie Mae

		One South Wacker Drive
		(Address)
		Suite 1300
		Chicago, IL 60606

	By:	/s/ Robert W. Sanborn
		(Authorized Signature)
		Robert W. Sanborn, Vice President
		(Typed Name and Title)

	Date:	March 23, 2005


		Page 21 of 21
		12/01


		Addendum

Addendum to Mortgage Selling and Servicing Contract

This Addendum modifies the Mortgage Selling and Servicing Contract (the “Contract”) dated March 8, 2005 between the Federal National Mortgage Association (“Fannie Mae”, “we”, “our”, “us”), a corporation organized and existing under the laws of the United States and Green Tree Servicing LLC (the “Lender”).

The Addendum modifies the Contract to establish the Lender as only an approved servicer of mortgages and participation interests for us and only under certain conditions as enumerated below:

Section 1.A of Contract, “Purpose of Contract” is modified to delete the following phrases:

•

“to establish the Lender as an approved seller of mortgages and participation interests to us;

•

to provide the terms and conditions of the sales;”

Notwithstanding any other provisions of the Contract to the contrary, Lender shall not service any mortgages we purchase or in which we purchase a participation interest, unless it is in compliance with the following requirements:

(a)

Because Lender does not currently have the capacity to perform all reporting, remitting, and reconciling functions required of a Fannie Mae servicer, Lender is required to use Mortgage Dynamics, Inc. (“MDI”), or some other provider of services comparable to MDI and approved by Fannie Mae, to perform all reporting, remitting, and reconciling functions required of a Fannie Mae servicer. These services shall include, at a minimum, the type of services which MDI currently performs with respect to the Fannie Mae loan portfolio which Lender now services after acquisition from GreenPoint Credit, LLC. Lender must continue the use of MDI or a comparable, acceptable service provider until such time as Fannie Mae agrees in writing with Lender that Lender now has the capacity to perform all reporting, remitting, and reconciling functions required of a Fannie Mae servicer.

(b)

Because Lender does not currently have the capacity to perform all escrow functions and services required of a Fannie Mae servicer, Lender is required to use American Escrow, LLC, or a provider of services comparable to American Escrow, LLC, and approved by Fannie Mae, to perform their escrow functions with respect to Fannie Mae loans until Lender’s proprietary system is operational and Fannie Mae acknowledges in writing that the system can effectively perform all escrow functions and services required of a Fannie Mae servicer. Lender must continue the use of American Escrow, LLC, or a comparable, acceptable service provider, until such time as Fannie Mae agrees in writing with Lender that Lender now has the capacity to perform all escrow functions and services required of a Fannie Mae servicer.

All other terms of the Contract, including any previous modification made to it, remain in effect.

By executing this Addendum, the Lender and we agree to the modification. The modification takes effect on the date we sign this Addendum.


		By:
				(Authorized Signature)
				Brian F. Corey, Senior Vice President & Secretary
				(Type Name and Title)

		Date:		March 8, 2005
		FANNIE MAE
				One South Wacker Drive, Suite 1300
				(Address)
				Chicago, IL 60606

		By:		/s/ Robert W. Sanborn
				(Authorized Signature)
				Robert W. Sanborn, Vice President
				(Type Name and Title)

		Date:		March 23, 2005

Exhibit 10.42.3

AMENDMENT No. 2 TO CREDIT AGREEMENT

AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “ Agreement ”), dated as of March 14, 2013, to that certain Credit Agreement, dated as of November 28, 2012 (as amended by that certain Amendment No. 1, Incremental Amendment and Joinder Agreement, dated as of January 31, 2013, and as further amended, supplemented or otherwise modified through the date hereof, the “ Credit Agreement ”) among WALTER INVESTMENT MANAGEMENT CORP., a Maryland corporation (the “ Borrower ”), the lenders from time to time party thereto and CREDIT SUISSE AG, as administrative agent (in such capacity, the “ Administrative Agent ”) and collateral agent.

RECITALS:

WHEREAS, Section 9.08 of the Credit Agreement permits the Credit Agreement to be amended from time to time by the Borrower and the Required Lenders; and

WHEREAS, the Borrower, the Administrative Agent and the Lenders identified on the signature pages hereto which collectively constitute the Required Lenders have agreed to amend certain provisions of the Credit Agreement, subject to the terms and conditions set forth herein.

NOW, THEREFORE, the parties hereto agree as follows:

Section 1 . Defined Terms. Unless otherwise specifically defined herein, each term used herein (including in the recitals above) that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement.

Section 2 . Amendments to Credit Agreement.

(a) The definition of “Adjusted Consolidated Net Income” in Section 1.01 of the Credit Agreement is hereby amended by:

(i) deleting the word “and” at the end of clause (a)(iii) thereof; and

(ii) adding two new clauses (a)(v) and (a)(vi) thereto as follows:

“(v) the amount of all cash received during such period from the initial or tail issuance of reverse mortgage securities (HMBS) less any cash payments made during such period to originate, acquire or fund the related loans and subsequent additions to such loans to the extent not included in Consolidated Net Income for such period; and

(vi) any cash received for servicing of reverse mortgages to the extent not included in Consolidated Net Income for such period.”

(b) The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended by:

(i) adding the words “and gains referred to in clauses (b)(xvi) and (b)(xvii) below” at the end of the first parenthetical in paragraph (b) thereof;

(ii) deleting the word “and” at the end of clause (b)(xiv) thereof, renumbering the last existing clause in paragraph (b) as clause (xv) and replacing the full stop at the end of such clause with a comma; and

(iii) adding two new clauses (b)(xvi) and (b)(xvii) thereto as follows:

“(xvi) the amount of all cash received during such period from the initial or tail issuance of reverse mortgage securities (HMBS) less any cash payments made during such period to originate, acquire or fund the related loans and subsequent additions to such loans to the extent not included in Consolidated Net Income for such period, and

(xvii) any cash received for servicing of reverse mortgages to the extent not included in Consolidated Net Income for such period.”

Section 3 . Conditions. This Agreement shall become effective as of the first date (the “ Effective Date ”) when each of the following conditions shall have been satisfied:

(i) the Administrative Agent shall have received from the Borrower, Lenders which together constitute the Required Lenders and the Administrative Agent an executed counterpart hereof or other written confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof; and

(ii) the Borrower shall have paid a consent fee (the “ Consent Fee ”) to the Administrative Agent, for the ratable account of the Applicable Lenders (as defined below), equal to (i) 0.025% of the aggregate outstanding principal amount of the Loans of the Applicable Lenders, plus (ii) 0.025% of the aggregate amount of the unused Revolving Credit Commitments of the Applicable Lenders. “ Applicable Lender ” shall mean each Lender that has delivered an executed counterpart of this Amendment prior to 5:00 p.m., New York City time, on March 13, 2013 or such later date and time specified by the Borrower and notified in writing to the Lenders by the Administrative Agent.

Section 4. Representations of the Borrower . The Borrower represents and warrants that:

(a) each of the representations and warranties made by any Credit Party in or pursuant to the Credit Documents is true and correct in all material respects on and as of the Effective Date (except to the extent such representations and warranties are specifically made as of an earlier date, in which case such representations and warranties were true and correct in all material respects as of such date); and

(b) no Default or Event of Default has occurred and is continuing on and as of the Effective Date.

Section 5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

Section 6 . Effect of This Agreement. Except as expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any Lender or Administrative Agent under the Credit Agreement or any other Credit Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Credit Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing

herein shall be deemed to entitle any Credit Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Credit Document in similar or different circumstances.

Section 7. Counterparts . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

Section 8 . Miscellaneous. This Agreement shall constitute a Credit Document for all purposes of the Credit Agreement. In accordance with Section 9.05 of the Credit Agreement, the Borrower agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket expenses in connection with this Agreement, including the reasonable and documented fees, charges and disbursements of counsel for the Administrative Agent.

[ remainder of page intentionally left blank ]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.


WALTER INVESTMENT MANAGEMENT CORP., as Borrower

By:
	Name:	Cheryl A. Collins
	Title:	Senior Vice President and Treasurer

[Amendment No. 2 to Credit Agreement – Signature Page]


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Administrative Agent

By:
		Name:
		Title:

By:
		Name:
		Title:

[Amendment No. 2 to Credit Agreement – Signature Page]

[LENDER SIGNATURE PAGES ON

FILE WITH ADMINISTRATIVE AGENT]

[Amendment No. 2 to Credit Agreement – Signature Page]

EXHIBIT 10.43

EXECUTION COPY

MORTGAGE SERVICING RIGHTS PURCHASE AND SALE AGREEMENT

BANK OF AMERICA, NATIONAL ASSOCIATION

(Seller)

GREEN TREE SERVICING LLC

(Purchaser)

Dated and effective as of January 6, 2013

TABLE OF CONTENTS



ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES		1

Section 1.01	Definitions	1
Section 1.02	General Interpretive Principles	9

ARTICLE II SALE AND TRANSFER OF SERVICING		9

Section 2.01	Items to be Sold	9
Section 2.02	Sale Date	10
Section 2.03	Servicing Transfer Dates	10
Section 2.04	Servicing Transfer Instructions	11

ARTICLE III CONSIDERATION		11

Section 3.01	Purchase Price	11
Section 3.02	Servicing Transfer Dates and Payments for Advances	12
Section 3.03	Correction of Errors	14

ARTICLE IV REPRESENTATIONS AND WARRANTIES AS TO SELLER		14

Section 4.01	Due Organization and Good Standing	14
Section 4.02	Authority and Capacity	15
Section 4.03	Title to the Purchased Assets	15
Section 4.04	Effective Agreements	15
Section 4.05	Membership and Standing	15
Section 4.06	Consents, Approvals and Compliance	16

ARTICLE V REPRESENTATIONS AND WARRANTIES AS TO PURCHASED ASSETS		16

Section 5.01	Servicing	16
Section 5.02	Recourse Status	18
Section 5.03	Advances	18
Section 5.04	Accuracy of Information	18
Section 5.05	Delivery of Information	18
Section 5.06	Repurchase	19
Section 5.07	Servicing Fee Not Sold	19
Section 5.08	Damage, Condemnation, and Related Matters	19
Section 5.09	No Purchaser Responsibility	19
Section 5.10	Related Escrow and Custodial Accounts	19
Section 5.11	High Cost Loans	19
Section 5.12	Sole Purpose of Article V Representations and Warranties	19

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER		20

Section 6.01	Due Organization and Good Standing	20
Section 6.02	Authority and Capacity	20
Section 6.03	Effective Agreements	21
Section 6.04	Sophisticated Purchaser	21
Section 6.05	Purchaser/Servicer Standing	21
Section 6.06	MERS Membership	21


Section 6.07	Financial Ability	21
Section 6.08	No Regulatory Impediment	22
Section 6.09	Consents, Approvals and Compliance	22

ARTICLE VII COVENANTS		22

Section 7.01	Assignments	22
Section 7.02	Servicing Agreement Consent and Notices	23
Section 7.03	Transfer Notices	23
Section 7.04	Real Estate Taxing Authorities	24
Section 7.05	Hazard, Mortgage and Flood	25
Section 7.06	Delivery of Mortgage Loan Documentation and Information	25
Section 7.07	Delivery of Servicing System Information	26
Section 7.08	Related Escrow Account Balances	26
Section 7.09	Payoffs, Assumptions, Modifications, Refinancings; Short Sales and Deeds in Lieu	27
Section 7.10	Mortgage Loan Payments and Trailing Bills Received After Servicing Transfer Date	27
Section 7.11	Misapplied and Returned Payments	28
Section 7.12	Servicing Obligations	28
Section 7.13	Solicitation Rights	30
Section 7.14	Year End Tax Reporting	31
Section 7.15	Cooperation	31
Section 7.16	Supplemental Information	31
Section 7.17	Access to Information; Required Actions	31
Section 7.18	Tax, Flood and Other Set Up Costs	33
Section 7.19	Document Custodian	33
Section 7.20	Use of Name	34
Section 7.21	Conduct of Business Prior to the Closing	34
Section 7.22	No Transfer Without Consent	34
Section 7.23	Use of Vendors	35
Section 7.24	Cooperation with Financing Efforts	35
Section 7.25	Excess Yield	35
Section 7.26	Subsequent Transfer of Mortgage Servicing Rights	35
Section 7.27	Joint Marketing Agreement	35
Section 7.28	Compensatory Fee Payment	36

ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER		36

Section 8.01	Correctness of Representations and Warranties	36
Section 8.02	Compliance with Conditions	36
Section 8.03	No Actions	37
Section 8.04	Consents	37
Section 8.05	Tri-Party Agreement	37
Section 8.06	Certificate of Seller	37
Section 8.07	Delivery of Documents; Advance Financing	37

ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER		37

Section 9.01	Correctness of Representations and Warranties	37
Section 9.02	Compliance with Conditions	37


Section 9.03	Corporate Resolution	38
Section 9.04	Certificate of Purchaser	38
Section 9.05	No Actions	38
Section 9.06	Delivery of Documents	38

ARTICLE X TERMINATION		38

Section 10.01	Termination	38
Section 10.02	Effect of Termination	39

ARTICLE XI INDEMNIFICATION; CURE OR REPURCHASE		40

Section 11.01	Indemnification by Seller	40
Section 11.02	Indemnification by Purchaser	41
Section 11.03	Cure or Repurchase	42
Section 11.04	Subsequent Transfer Due to Repurchase	42
Section 11.05	Other Indemnification Provisions	43
Section 11.06	Limitations on Indemnification	44
Section 11.07	Survival	44
Section 11.08	Treatment of Indemnity Payments	45

ARTICLE XII MISCELLANEOUS		45

Section 12.01	Costs and Expenses	45
Section 12.02	Confidentiality	46
Section 12.03	Broker’s Fees	47
Section 12.04	Notices	47
Section 12.05	Waivers	48
Section 12.06	Entire Agreement; Amendment	48
Section 12.07	Binding Effect	48
Section 12.08	Headings	48
Section 12.09	Applicable Law	48
Section 12.10	Dispute Resolution	49
Section 12.11	Incorporation of Exhibits and Schedules	50
Section 12.12	Counterparts	50
Section 12.13	Severability of Provisions	50
Section 12.14	Public Announcement	50
Section 12.15	Assignment	51
Section 12.16	Conflicts between Transaction Documents	51
Section 12.17	No Third-Party Beneficiaries	51
Section 12.18	Disclosures	51


EXHIBIT A:		CONTENTS OF MORTGAGE LOAN SCHEDULE

EXHIBIT A-1:		ESTIMATED PURCHASE PRICE COMPUTATION WORKSHEET

iii


EXHIBIT A-2:		PURCHASE PRICE COMPUTATION WORKSHEET

EXHIBIT A-3:		DEPOSIT CALCULATION

EXHIBIT B:		FORM OF TRANSFER CONFIRMATION

EXHIBIT C:		DATA TRANSFER SPECIFICATIONS

EXHIBIT D:		OFFICER’S CERTIFICATE

EXHIBIT E:		SERVICING TRANSFER INSTRUCTIONS

EXHIBIT F:		PURCHASE PRICE PERCENTAGE

EXHIBIT G:		INTERIM SERVICING ADDENDUM

EXHIBIT H:		DATA FIELDS FOR SHARING OF INFORMATION

EXHIBIT I:		MORTGAGE ASSIGNMENT PROTOCOL

EXHIBIT J:		FORM OF POWER OF ATTORNEY

EXHIBIT K:		ESCROW AGREEMENT

EXHIBIT L:		MI COVENANTS

SCHEDULE 3.02(a):		Servicing Transfer Dates

MORTGAGE SERVICING RIGHTS PURCHASE AND SALE AGREEMENT

This Mortgage Servicing Rights Purchase and Sale Agreement (the “Agreement”), dated as of January 6, 2013, is by and between GREEN TREE SERVICING LLC, a Delaware limited liability company (the “Purchaser”), with offices located at 345 St. Peter Street, 1100 Landmark Towers, St. Paul, Minnesota 55102, and BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking association (the “Seller”), with offices located in 4500 Park Granada, Calabasas, California, 91302 (the Purchaser and the Seller may collectively be referred to as the “Parties,” and each as a “Party”).

W I T N E S S E T H:

WHEREAS , Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, certain Mortgage Servicing Rights to certain residential mortgage loans currently serviced by Seller; and

WHEREAS , Purchaser and Seller desire to set forth the terms and conditions pursuant to which Seller will sell, transfer and assign, to Purchaser, all of Seller’s right, title and interest in and to such Mortgage Servicing Rights, and Purchaser will purchase and assume all right, title and interest in and to those certain Mortgage Servicing Rights identified herein as related to the Mortgage Loans.

NOW, THEREFORE , in consideration of the mutual promises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions set forth herein, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES

Section 1.01

Definitions.

Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

Advances : All Corporate Advances, P & I Advances and T & I Advances, including any applicable receivables associated therewith.

Affiliate : Any individual, partnership, corporation, entity or other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified.

Agency : FNMA.

Agreement : As defined in the first paragraph hereof.

Ancillary Income : All fees and income derived from and related to the Mortgage Loans, excluding Servicing Fees attributable to the Mortgage Loans, but including and not limited to late charges, prepayment penalties, fees received with respect to checks or bank drafts returned by the related bank for non-sufficient funds, assumption fees, optional insurance administrative fees, income on escrow accounts and custodial accounts or other receipts on or with respect to such Mortgage Loans, and all other incidental fees, income and charges collected from or assessed against the Mortgagor, other than those charges payable to the Investor under the terms of the Servicing Agreement or as otherwise agreed by the Parties.

Applicable Requirements : As of the time of reference and as applicable, (i) the terms of the Mortgage Loan Documents, with respect to each Mortgage Loan, (ii) all federal, state and local laws, rules, regulations and ordinances applicable to the origination, sale, pooling or servicing of any Mortgage Loan or Mortgage Servicing Right at the relevant time, (iii) the Servicing Agreement, (iv) the judicial and administrative judgments, orders, remediation plans, stipulations, awards, writs and injunctions applicable to any Mortgage Loan or Mortgage Servicing Right, and (v) all legal and contractual obligations to or with any Insurer, Investor, or Governmental Entity applicable to any Mortgage Loan or Mortgage Servicing Right.

Arbitrator : The meaning specified in Section 12.10(a) hereof.

Assignment of Mortgage : An assignment of Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction where the related Mortgaged Property is located to reflect the transfer of the Mortgage instrument identified therein from the transferor to the transferee named therein.

Business Day : Any day other than (a) a Saturday or Sunday, or (b) a day on which banking institutions in California, Texas, Minnesota or New York are authorized or obligated by law or by executive order to be closed.

Collateral File : With respect to each Mortgage Loan, that file containing the Mortgage Loan Documents or, as permitted by Applicable Requirements, copies thereof, required by the Investor pursuant to Applicable Requirements to be held by the Custodian, but excluding any Mortgage Loan Document that is not required by such Investor pursuant to Applicable Requirements to be held by the Custodian pursuant to a waiver granted to Seller.

Corporate Advances : Advances related to a delinquent Mortgage Loan expended by Seller in accordance with the Servicing Agreement (other than P & I Advances and T & I Advances), including attorney fees and costs, property preservation, property inspection, and valuation fees, as well as other default related expenses.

Credit and Servicing File : Those documents, which may be originals, copies or electronically imaged, pertaining to each Mortgage Loan, which are delivered to the Purchaser in connection with the servicing of the Mortgage Loan, and which will include originals or copies of the Mortgage Loan Documents and all credit and servicing related documentation relating to the origination and servicing of such Mortgage Loan necessary to service the Mortgage Loan in accordance with the Applicable Requirements.

Custodian : With respect to any Mortgage Loans and the Servicing Agreement, each applicable document custodian for Seller, Purchaser and the Investor.

Custodial Accounts : The accounts in which Custodial Funds are deposited and held by or for any servicer.

Custodial Agreement : A custodial agreement, to be dated on or before the initial Servicing Transfer Date, by and between Purchaser and the Custodian.

Custodial Funds : All funds held by or for Seller with respect to the Mortgage Loans, including all principal and interest funds and any other funds due the Investor, buydown funds, funds for the payment of taxes, assessments, insurance premiums, ground rents and similar charges, funds from hazard insurance loss drafts and other mortgage escrow and impound amounts (including interest accrued thereon for the benefit of the Mortgagors under the Mortgage Loans, if required by law or contract) maintained by Seller relating to the Mortgage Loans.

Cutoff Date : The meaning set forth in the Servicing Agreement.

Deposit : An amount set forth on Exhibit A-3 hereto.

Effective Date : The date as of which this Agreement is effective, as first set forth above.

Escrow Agent : Wilmington Trust, N.A.

Escrow Agreement : The escrow agreement, dated as of the date hereof, by and between Seller, Purchaser and the Escrow Agent, which is set forth as Exhibit K hereto.

Estimated Purchase Price : As described in Section 3.01 and the Estimated Purchase Price Computation Worksheet ( Exhibit
A-1 ).

Excess Servicing Rights Agreements : Each agreement executed by FNMA, as the Investor, and Seller in connection with the delivery of certain stripped mortgage-backed securities to Seller in exchange for Seller’s “excess yield” on certain Mortgage Loans previously delivered by Seller to FNMA.

Federal Funds Rate : For any date of determination, the federal funds rate as reported in the Federal Reserve H.15(519) Statistical Release as of the first Business Day of the month in which such date of determination falls, or if such Statistical Release is no longer published, the average of the “high” and the “low” interest rate for reserves traded among commercial banks for overnight use in amounts of one million dollars ($1,000,000.00) or more, as reported by The Wall Street Journal under “Federal Funds” rates as of the first Business Day of the month in which such date of determination falls.

FNMA: The Federal National Mortgage Association or any successor thereto.

Fundamental Reps : (a) With respect to Seller, Sections 4.01 (Due Organization and Good Standing), 4.02 (Authority and Capacity), 4.03 (Title to the Purchased Assets), 5.01(b)(i) and (iii) (Servicing Rights),and (b) with respect to Purchaser, Sections 6.01 (Due Organization and Good Standing) and 6.02 (Authority and Capacity).

GLBA : The Gramm-Leach-Bliley Act of 1999, as amended.

Governmental Entity : Any federal, state or local governmental authority, agency, commission or court or self-regulatory authority or commission, including any Agency and the Regulator.

Guides : The FNMA Sellers’ and Servicers’ Guides.

HAMP : The Home Affordable Modification Program as administered by FNMA as agent for the U.S. Department of Treasury.

HARP : The Home Affordable Refinancing Program of FNMA.

Insurer : (i) A Person who insures or guarantees all or any portion of the risk of loss on any Mortgage Loan through MI, hazard insurance, flood insurance, earthquake insurance or title insurance with respect to any Mortgage Loan or Mortgaged Property, as the case may be, including any Governmental Entity or (ii) a Person who provides, with respect to the Servicing Agreement or any Applicable Requirement, any fidelity bond, direct surety bond, letter of credit, other credit enhancement instrument or errors and omissions policy.

Interim Servicing Addendum : The servicing provisions setting forth the servicing obligations of the Seller contemplated by this Agreement, and the compensation to be paid by the Purchaser, for the period beginning on the Sale Date and ending on the final Servicing Transfer Date, which provisions are attached hereto as Exhibit G and incorporated into this Agreement.

Investor: FNMA.

Loss or Losses : Any and all direct, actual and out-of-pocket losses, damages, deficiencies, claims, costs, penalties or expenses, including reasonable attorneys’ fees and disbursements, excluding (i) any amounts attributable to or arising from overhead allocations, general or administrative costs and expenses, or any cost for the time of any Party’s employees, (ii) consequential losses or damages consisting of speculative lost profits, lost investment or business opportunity, damage to reputation or operating losses, (iii) punitive or treble damages; (iv) ordinary deductions from the calculation of insurance or guaranty benefits by an Insurer assuming the servicer complied with Applicable Requirements, and (v) prepayment interest shortfalls payable to securities holders for the accrual on interest on mortgage-backed securities in excess of the amount payable by the Mortgagor upon the full prepayment of a Mortgage Loan; provided, however, that the exclusions set forth in clauses (ii) and (iii) above do not apply if and to the extent any such amounts are actually incurred in payment to a third party or government entity.

MERS : Mortgage Electronic Registration Systems, Inc., or any successor thereto.

MI : The default insurance provided by private mortgage insurance companies on certain Mortgage Loans, whether lender-paid or borrower-paid.

Mortgage : The mortgage, mortgage deed, deed of trust or other instrument creating a first lien or first priority ownership interest on an unsubordinated estate in fee simple in real property securing the Mortgage Note and related to a Mortgage Loan; except that with respect to real property located in jurisdictions in which the use of leasehold estates for residential properties is a widely-accepted practice, the mortgage, deed of trust or other instrument securing the Mortgage Note may secure and create a first lien upon a leasehold estate of the Mortgagor, as the case may be, including any riders, addenda, assumption agreements or modifications relating thereto.

Mortgage Loan : Each of those mortgage loans described in the Mortgage Loan Schedule, as the same may be amended and updated pursuant to Section 2.01 hereof.

Mortgage Loan Documents : With respect to each Mortgage Loan, (i) the original Mortgage Loan documents held by the Custodian, including the Mortgage Note, and if applicable, cooperative mortgage loan related documents and a power of attorney, a New York Consolidation, Extension and Modification Agreement, or other modification documents; and (ii) all documents required by the Investor to be held by the Custodian under the Applicable Requirements.

Mortgage Loan Schedule : The schedule of the Mortgage Loans setting forth the information with respect to each Mortgage Loan identified in Exhibit A , as may be updated and amended, and which will be delivered in electronic form. There will be a preliminary and a final Mortgage Loan Schedule.

Mortgage Note : With respect to any Mortgage Loan, the note or other evidence of indebtedness of the Mortgagor thereunder, including, if applicable, allonges and lost note affidavits.

Mortgage Servicing Rights : The rights and responsibilities with respect to servicing the Mortgage Loans under the Servicing Agreement, including any and all of the following if and to the extent provided therein: (a) all rights to service a Mortgage Loan; (b) all rights to receive Servicing Fees and Ancillary Income; (c) the right to collect, hold and disburse escrow payments or other payments with respect to the Mortgage Loan and any amounts actually collected with respect thereto and to receive interest income on such amounts to the extent permitted by Applicable Requirements; (d) all accounts and other rights to payment related to any of the property described in this paragraph; (e) possession and use of any and all Credit and Servicing Files pertaining to the Mortgage Loan or pertaining to the past, present or prospective servicing of the Mortgage Loan; (f) to the extent applicable, all rights and benefits relating to the direct solicitation of the related Mortgagors for refinance or modification of the Mortgage Loans and attendant right, title and interest in and to the list of such Mortgagors and data relating to their respective Mortgage Loans; and (g) all rights, powers and privileges incident to any of the foregoing.

Mortgaged Property : Any real or other property permitted by Applicable Requirements securing repayment of a related Mortgage Note, consisting of a fee simple interest in a single parcel of real property, improved by a residential dwelling, or other property permitted by Applicable Requirements.

Mortgagor : An obligor or co-signer under a Mortgage Loan and his/her successors in title to the Mortgaged Property.

Net Interest : Interest calculated at the annual rate of interest on a Mortgage Loan less Net Servicing Fees.

Net Servicing Fees : The base, monthly Servicing Fees based on a percentage of the outstanding principal balance of the Mortgage Loans payable to Seller prior to the Sale Date, less (i) any guarantee fees due to the Investor, less (ii) lender-paid mortgage insurance, (iii) any other components of the Servicing Fees that Seller is not entitled to retain as compensation pursuant to a Servicing Agreement, and (iv) the portion of any Servicing Fee that has been converted to excess yield and is required to be paid to the Investor pursuant to the Excess Servicing Rights Agreements.

NMS : The Consent Judgment with accompanying exhibits entered by the United States District Court for the District of Columbia on April 5, 2012 (in the action styled United States of America, et al. v. Bank of America Corp., et al. , No. 12-CV-00361, with respect to the settlement agreement among the plaintiffs in that action and Bank of America Corporation.

Offering Materials : That certain Confidential Offering Memorandum encaptioned “ Extremely Confidential – Project Shuttle,” dated as of September 2012, and the associated presentation encaptioned “Project Shuttle – Portfolio Stratification ,” dated as of September 2012, in each case delivered on behalf of Seller by Merrill Lynch, Pierce, Fenner & Smith Incorporated.

P & I Advances : Principal and Net Interest advances expended by Seller in accordance with each applicable Servicing Agreement (net of prepaid principal and interest, as applicable).

Party/Parties : The meaning specified in the first paragraph of this Agreement.

Person : Any individual, partnership, corporation, limited liability company, business entity, banking entity, joint stock company, trust, unincorporated organization, joint venture or other entity.

Purchase Price : As adjusted pursuant to Section 3.01(a), the product of the unpaid principal balance of the Mortgage Loans as to which the related Mortgage Servicing Rights are sold on the Sale Date, multiplied by the Purchase Price Percentage.

Purchase Price Percentage : The percentage determined and adjusted in accordance with Exhibit F hereto.

Purchased Assets : The meaning specified in Section 2.01 hereof.

Purchaser : Green Tree Servicing LLC, its successors and permitted assigns.

Purchaser Material Adverse Effect : A material and adverse effect upon the ability of Purchaser to consummate the Transactions or perform its obligations under the Transaction Documents.

Recourse : Any arrangement pursuant to which the servicer or any successor servicer bears the risk of all or any part of the ultimate credit losses (including with respect to any credit enhancements) incurred in connection with a default under, or the foreclosure of, acceptance of deed in lieu of foreclosure or related action in connection with, a Mortgage Loan, except that Recourse does not include losses in connection with a failure by the servicer or any successor servicer to comply with Applicable Requirements. Recourse shall not include (i) Seller’s or an Affiliate’s retained contingent liability to repurchase a Mortgage Loan that is determined to have been ineligible for sale to the Investor due to a breach of one or more representations and warranties, (ii) servicer’s P & I Advance obligations pursuant to Servicing Agreement, or (iii) servicer’s obligations to pay expenses, interest and other deductions in excess of the reimbursement limits, if any, set forth in the Applicable Requirements.

Regulato r: The Office of the Comptroller of the Currency or any successor thereto or other Governmental Authority having jurisdiction over Seller or Purchaser.

Related Escrow Accounts : Mortgage Loan escrow/impound accounts maintained by Seller relating to the Mortgage Servicing Rights, including accounts for buydown funds, real estate taxes and MI, flood and hazard insurance premiums.

Related Parties : With respect to a Person, such Person’s officers, directors, shareholders, partners, members, owners, employees, agents, attorneys, Affiliates and advisors.

Repurchase Price : As defined for Seller’s repurchase of Mortgage Servicing Rights in Section 11.03(b).

Rules : The meaning specified in Section 12.10 hereof.

Safeguard : The meaning specified in Section 7.23 hereof.

Sale Date : January 31, 2013, or such other date as may be mutually agreed to in writing by Seller and Purchaser, in each case, assuming that all conditions precedent to Closing have been satisfied in accordance with Article VIII and Article IX. The consummation of certain Transactions on the Sale Date, at such time on the Sale Date as is mutually agreed to by the Parties, shall be referred to herein as the “Closing”.

Seller : Bank of America, National Association, a national banking association, its successors and assigns.

Seller Material Adverse Effect : A material and adverse effect on (a) the Purchased Assets (taken as a whole) being sold on the Sale Date, (b) the ability of Seller to consummate the Transactions or perform its obligations under the Transaction Documents or (c) the ability of Purchaser to administer the Mortgage Servicing Rights; provided, that, for purposes of this Agreement, a Seller Material Adverse Effect shall not include any such effect to the extent resulting from (i) changes to the housing or mortgage market or the mortgage servicing industry generally; (ii) the announcement or disclosure of the Transactions; (iii) general economic, regulatory or political conditions or changes in the United States, including with respect to financial, banking or securities markets; (iv) military action or acts of terrorism or (v) changes in law or the Applicable Requirements that become effective after the date hereof that Seller is required to adopt in accordance therewith; provided further, that, in the case of each of clauses (i), (iii) and (v), none of such portion of the Purchased Assets, the ability of Seller to consummate the Transactions or perform its obligations under the Transaction Documents or the ability of Purchaser to administer the Mortgage Servicing Rights are, or are reasonably likely to be, materially disproportionately affected by such effect as compared to other Persons engaged in the conduct of businesses similar to Seller’s business of Servicing.

Servicing : The responsibilities with respect to servicing the Mortgage Loans under the Applicable Requirements, whether performed as a servicer, subservicer or interim servicer.

Servicing Agreement Consent : Any consent, approval or authorization that is required from the Investor pursuant to the terms of the Servicing Agreement in order to assign or otherwise transfer the related Mortgage Servicing Rights to Purchaser pursuant to the terms of this Agreement.

Services Agreement : The meaning specified in Section 7.23 hereof.

Servicing Agreement : The contracts, and all applicable procedures, manuals and guidelines incorporated therein, defining the rights and obligations of the Investor and servicer, with respect to the Mortgage Servicing Rights, consisting of, as applicable, the contracts and other documents, including the Guides (as each such contract and other document has been amended from time to time), and including waivers approved by the Investor, and including the Excess Servicing Rights Agreements under which the Seller or the Purchaser, as applicable, is obligated to service the Mortgage Loans relating to the Mortgage Servicing Rights.

Servicing Fees : All compensation payable to Seller under the applicable Servicing Agreement, including each servicing fee payable based on a percentage of the outstanding principal balance of the Mortgage Loans and any additional incentive compensation payable under HAMP and any payments received in respect of the foregoing and proceeds thereof.

Servicing Transfer Date : Each date on which the Seller ceases to be the interim servicer in respect of certain Mortgage Loans under the Interim Servicing Addendum and the physical transfer of servicing thereof to Purchaser occurs on the books and records of the Investor. The applicable Servicing Transfer Dates shall be as set forth on Schedule 3.02(a), or as otherwise mutually agreed upon by the Parties.

Servicing Transfer Instructions : The instructions detailing the procedures pursuant to which Seller shall effect each transfer of the Mortgage Servicing Rights, Advances, Custodial Funds, Credit and Servicing Files and Collateral Files to Purchaser, substantially in the form attached hereto as Exhibit E, with such changes as the parties may mutually agree upon.

Subsequent Transfer Date : The meaning specified in Section 11.04(c) hereof.

T & I Advances : Advances expended by the Seller for the payment of taxes and insurance amounts due related to the Mortgage Loans, in accordance with the Servicing Agreement.

Termination Date : March 31, 2013.

Third Party Claim : The meaning specified in Section 11.01 hereof.

Threshold : The meaning specified in Section 11.06(a) hereof.

Trailing Documents : Mortgage Loan Documents that are required by the Investor pursuant to Applicable Requirements to be part of the Collateral File that, as of the time of reference, are (i) in the custody of counsel in accordance with Applicable Requirements or (ii) have been submitted for recording and have not yet been returned by the applicable recording office.

Transfer Confirmation : A document, substantially in the form of Exhibit B hereto, executed by the Seller and the Purchaser, which sets forth the Mortgage Servicing Rights transferred to the Purchaser for Servicing on each Servicing Transfer Date.

Transaction Documents: The Transfer Confirmations, the Tri-Party Agreement and this Agreement (including, in each case, any and all exhibits, schedules and attachments to any such documents and any other documents executed or delivered in connection therewith).

Transactions : The sale of the Purchased Assets by Seller to Purchaser and the other transactions contemplated by this Agreement.

Tri-Party Agreement : An agreement by and among Seller, Purchaser and FNMA, providing for (among other things) (a) Seller’s retention of liability and responsibility for Mortgage Loan repurchase and other liabilities, obligations and remedies due to FNMA in connection with the origination, sale and prior servicing of the Mortgage Loans thereto and (b) the consent of FNMA to the Transactions, as applicable.

Section 1.02

General Interpretive Principles.

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a) The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;

(b) Accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;

(c) References herein to “Articles”, “Sections”, “Subsections”, “Paragraphs”, and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;

(d) A reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;

(e) The words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;

(f) The term “include” or “including” shall mean without limitation by reason of enumeration; and

(g) Any and all capitalized terms which are not defined herein shall have their respective meanings set forth in the Servicing Agreement.

ARTICLE II

SALE AND TRANSFER OF SERVICING

Section 2.01

Items to be Sold.

Subject to, and upon the terms and conditions of this Agreement, Seller shall, as hereinafter provided, sell, transfer, and deliver to Purchaser all of Seller’s right, title and interest in and to the Mortgage Servicing Rights, including its right, title and interest in the Custodial Funds, Collateral Files and Credit and Servicing Files (collectively, the “Purchased Assets”), and Purchaser agrees to purchase such right, title and interest in and to the Purchased Assets. Seller and Purchaser acknowledge and agree that the Mortgage Loan Schedule will be preliminary on the Sale Date, and will not fully account for Mortgage Loans that either may have been fully pre-paid prior to the Sale Date, or excluded from the transaction as of the Sale Date, as a result of the final application of the purchase criteria. No later than ten (10) Business Days after the Sale Date, Seller shall complete and provide to Purchaser a final Mortgage Loan Schedule with respect to the Mortgage Servicing Rights sold on the Sale Date.

Section 2.02

Sale Date.

(a) Purchased Assets . Subject to the terms and conditions of this Agreement, including the receipt of the Servicing Agreement Consent, on or before the Sale Date, all legal, beneficial and equitable ownership of and to the applicable Purchased Assets shall be sold, assigned, transferred, conveyed and delivered by Seller to Purchaser, and Purchaser shall purchase from Seller, all legal, beneficial and equitable ownership of and to such Purchased Assets, free and clear of all liens; provided, however, that the applicable Servicing Transfer Date may be later than the Sale Date.

(b) Deliverables . The following documents shall be exchanged between the Parties (as applicable) on or prior to the Sale Date:

(i) The duly executed corporate resolutions and certificate of Purchaser required by Sections 9.03 and 9.04;

(ii) The duly executed certificate of Seller required by Section 8.06;

(iii) The Servicing Agreement Consent obtained on or prior to the Sale Date;

(iv) The executed Tri-Party Agreement; and

(v) Any other documents required by this Agreement or the Tri-Party Agreement.

Section 2.03

Servicing Transfer Dates.

On each Servicing Transfer Date:

(a) Purchaser shall assume responsibility for Servicing, and Seller shall cease all Servicing activity related to the Mortgage Loans transferred on such Servicing Transfer Date;

(b) Seller shall provide Purchaser with an executed Power of Attorney in the form attached hereto as Exhibit J to be used by Purchaser as necessary for Purchaser to service the applicable Mortgage Loans subject to the Servicing Agreement in accordance with Applicable Requirements, if previously provided Powers of Attorney are not sufficient for such purposes; and

(c) Purchaser and Seller shall execute a Transfer Confirmation with respect to the Servicing of the Mortgage Servicing Rights transferred on such Servicing Transfer Date.

Section 2.04

Servicing Transfer Instructions.

In connection with each transfer of the Mortgage Servicing Rights from Seller to Purchaser pursuant to this Agreement, Seller and Purchaser shall follow the Servicing Transfer Instructions and the Servicing Agreement in all material respects. In any instance in which the Servicing Transfer Instructions conflict with the terms of this Agreement, this Agreement shall control.

ARTICLE III

CONSIDERATION

Section 3.01

Purchase Price.

(a) On the first Business Day following the Effective Date, Purchaser shall pay to the Escrow Agent the Deposit, as an earnest money deposit of a portion of the estimated Purchase Price for all of the Mortgage Servicing Rights intended to be sold hereunder, by wire transfer of immediately available funds, which shall be held by the Escrow Agent in accordance with the Escrow Agreement.

(b) In full consideration for the sale of the Mortgage Servicing Rights to be sold pursuant to Section 2.02(a)(i) and subject to the terms and conditions of this Agreement, Purchaser shall pay to the Seller the Purchase Price in accordance with this Section 3.01, as follows:

(i) On the Sale Date, Purchaser shall pay to Seller a sum equal to fifty percent (50%) of the Estimated Purchase Price (which shall be calculated in accordance with Section 3.01(c)), net of the Deposit, on the Sale Date immediately following the Closing by wire transfer of immediately available federal funds, to an account designated by Seller, and Seller and Purchaser shall promptly cause the Escrow Agent to release the Deposit to Seller as soon as practicable thereafter.

(ii) On the applicable Servicing Transfer Date, Purchaser shall pay to the Seller a sum equal to the portion of the Purchase Price with respect to the Mortgage Servicing Rights transferred on such Servicing Transfer Date that has not been paid to Seller by Purchaser as of such date, including with respect to Mortgage Loans that have prepaid between either (x) the Sale Date and the initial Servicing Transfer Date or (y) two Servicing Transfer Dates, plus interest thereon at the Federal Funds Rate for the period from the Sale Date to such initial Servicing Transfer Date and between Servicing Transfer Dates by wire transfer of immediately available federal funds, to an account designated by Seller.

(c) No later than three (3) Business Days prior to the Sale Date, Seller shall complete and provide to Purchaser, the (i) the preliminary Mortgage Loan Schedule and (ii) the Estimated Purchase Price Computation Worksheet setting forth the Estimated Purchase Price, in the form of Exhibit A-1 and based on information regarding the Mortgage Loans as of the previous month-end trial balance that is included in the preliminary Mortgage Loan Schedule.

(d) No later than ten (10) Business Days after the Sale Date, Seller shall complete and provide to Purchaser, the (i) final Mortgage Loan Schedule and (ii) the Purchase Price Computation Worksheet setting forth Seller’s computation of the Purchase Price, in the form of Exhibit A-2 and based on information regarding the Mortgage Loans as of the Sale Date that is included in the final Mortgage Loan Schedule. Within five (5) Business Days after delivery to the Purchaser of the Purchase Price Computation Worksheet, (A) the Seller shall pay to Purchaser (x) the amount, if any, by which fifty percent (50%) of the Estimated Purchase Price exceeds fifty percent (50%) of the Purchase Price, plus (y) interest on the applicable amount computed pursuant to clause (A)(x) above at the Federal Funds Rate for the period from the Sale Date to the date of payment in full of such amount; or (B) Purchaser shall pay to the Seller (x) the amount, if any, by which fifty percent (50%) of the Purchase Price exceeds fifty percent (50%) of the Estimated Purchase Price, plus (y) interest on the amount computed pursuant to clause (B)(x) above at the Federal Funds Rate for the period from the Sale Date to the date of payment in full of such amount.

Section 3.02

Servicing Transfer Dates and Payments for Advances.

(a) On each Servicing Transfer Date, (x) Seller shall cease to be the servicer, under the Interim Servicing Addendum or as owner of the Mortgage Servicing Rights, in respect of the applicable Mortgage Loans as set forth on Schedule 3.02(a) and (y) the physical transfer of Servicing thereof to Purchaser shall occur on the books and records of the Investor. Within five (5) Business Days after the applicable Servicing Transfer Date or such earlier period provided below, Seller shall provide or cause to be provided to Purchaser, as applicable:

(i) One or more readable tapes or electronic data files, in a form and content as mutually agreed, within two (2) Business Days after the immediately preceding Cutoff Date, to allow the Purchaser to service such Mortgage Loans in accordance with the Servicing Agreement following such Servicing Transfer Date;

(ii) Substantially all of the Credit and Servicing Files in the possession of Seller in accordance with the terms of the Agreement, providing the remainder as and when available;

(iii) Substantially all of the Collateral Files related to such Mortgage Loans in the possession of Seller’s Custodian, other than Trailing Documents, which may be by internal delivery with the Custodian if Purchaser’s and Seller’s Custodian are the same entity, providing the remainder as and when available;

(iv) With respect to such Mortgage Loans, Seller’s accounting to the Purchaser of the Related Escrow Account funds, of outstanding T & I Advances, suspense, and partial and unapplied funds, made in accordance with the Servicing Agreement and the Interim Servicing Addendum; and

(v) The Transfer Confirmation.

(b) Within seventeen (17) Business Days following each Servicing Transfer Date, Purchaser shall pay the Seller, by wire transfer of immediately available federal funds to an account designated by Seller, an amount equal to one hundred percent (100%) of all

delinquent P & I Advances funded or reimbursed by or on behalf of the Seller under the Servicing Agreement relating to the Mortgage Loans as to which the related Mortgage Servicing Rights were transferred on such Servicing Transfer Date, which were properly made by Seller under, and to which Seller is entitled to reimbursement of pursuant to, such Servicing Agreement, and for which Seller has not previously been reimbursed; provided that the following conditions have been satisfied:

(i) The transfer of servicing from the Seller to Purchaser has occurred under the Agreement pursuant to
Section 3.02(a); and

(ii) Within seven (7) Business Days prior to the required payment by Purchaser, the Seller has provided Purchaser with customary documentation and support, which may be in electronic form, for all properly made P & I Advances as to which Seller is entitled to recovery, accrued but not recovered or reimbursed through the close of business of the day prior to each Servicing Transfer Date including documentation related to loan level delinquent P & I Advances; provided that the right of Purchaser to withhold payment for such P & I Advances for insufficient documentation and support shall apply only to the P & I Advances with respect to the Mortgage Loans without such documentation and support.

(c) Within thirty (30) Business Days after each Servicing Transfer Date, Purchaser shall pay the Seller, by wire transfer of immediately available federal funds to an account designated by Seller, an amount equal to one hundred percent (100%) of all Corporate Advances, funded by or on behalf of the Seller under the Servicing Agreement relating to the Mortgage Loans as to which the related Mortgage Servicing Rights were transferred on such Servicing Transfer Date, which were properly made by Seller under, and to which Seller is entitled to reimbursement of pursuant to, such Servicing Agreement, and for which Seller has not previously been reimbursed; provided that the following conditions have been satisfied:

(i) The transfer of servicing from the Seller to Purchaser has occurred under the Agreement pursuant to
Section 3.02(a); and

(ii) No later than seven (7) Business Days prior to the required payment by Purchaser, the Seller has provided Purchaser with customary documentation and support for all properly made Corporate Advances as to which Seller is entitled to recovery, accrued but not recovered or reimbursed through the close of business of the day prior to such Servicing Transfer Date; provided that the right of Purchaser to withhold payment for such Corporate Advances for insufficient documentation and support shall apply only to the Corporate Advances with respect to the Mortgage Loans without such documentation and support.

(d) T & I Advances shall be recovered by Seller in accordance with Section 7.08.

(e) Notwithstanding anything in this Agreement to the contrary, with respect to Advances made by the Seller between the Sale Date, and the applicable Servicing Transfer Date, Purchaser shall reimburse Seller for ordinary deductions from the calculation of either insurance or guaranty benefits by an Insurer or reimbursement of Advances by the Investor assuming the servicer complied with Applicable Requirements; provided, that, for the

avoidance of doubt, Purchaser shall not be liable under this Section 3.02(e) to the extent that any such amounts relate to acts or omissions by Seller prior to such applicable Servicing Transfer Date that are not in compliance with the Applicable Requirements. Such reimbursement for non-recoverable Advances also shall include non-recoverable Advances that are required or authorized to be made pursuant to Applicable Requirements; provided, in the case of such non-recoverable Advances that are authorized (but not required) to be made pursuant to Applicable Requirements, only to the extent they are made in a manner consistent with past practice.

Section 3.03

Correction of Errors.

If, prior to or subsequent to the payment of any amounts due under this Article III to either Party, the outstanding principal balance of any Mortgage Loan or any applicable Advance is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, or if any payments made or not made under the Interim Servicing Addendum are not correct, the Parties shall mutually agree to an appropriate adjustment (and an associated reconciliation statement or other such documentation with respect to such adjustment), and the Party benefiting from the error shall pay to the other Party an amount sufficient to correct and reconcile the Purchase Price or such other amounts, as mutually agreed by the Parties, and if the correction is to the Purchase Price, such payment shall be accompanied by a payment of interest on the applicable amount computed at the Federal Funds Rate for the period from the Sale Date to the date of payment in full of such amount. Such amounts shall be paid by the applicable Party within ten (10) Business Days from receipt of satisfactory written verification of amounts due; provided, however, that if the Parties cannot agree on such amounts within such ten (10) Business Day period, a disputing Party shall promptly deliver to the other Party a written notice specifying the nature of its dispute (in reasonable detail) and the Parties shall promptly (and, in any event, within ten (10) Business Days thereafter) invoke the dispute resolution proceeding set forth in Section 12.10(i) hereof.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES AS TO SELLER

As an inducement to Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as of the Effective Date and, as applicable, the Sale Date as follows:

Section 4.01

Due Organization and Good Standing.

Seller is a national association duly organized, validly existing and in good standing under the laws of the United States. Seller is authorized to transact business in each jurisdiction in which Seller transacts business, and in each jurisdiction where a Mortgaged Property is located, in accordance with Applicable Requirements, except where the failure to be so qualified has not and would not reasonably be expected to, individually or in the aggregate, (A) result in a Seller Material Adverse Effect, (B) impair in any material respect the ability of Seller to perform its obligations under this Agreement or the Transaction Documents or (C) prevent or materially impede or delay the consummation of any of the Transactions.

Section 4.02

Authority and Capacity.

Seller has all requisite power, authority and capacity, subject to approvals required pursuant to Section 7.02 and such other consents and approvals as are required hereunder, to enter into this Agreement and each other applicable Transaction Document and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other applicable Transaction Document, and the consummation of the Transactions, have been duly and validly authorized by all necessary action. This Agreement constitutes, and each other applicable Transaction Document constitutes or will constitute, a valid and legally binding agreement of Seller enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Seller of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally, and by general equity principles.

Section 4.03

Title to the Purchased Assets.

Seller is, or as of the Sale Date, shall be, the sole and lawful owner of all right, title and interest in and to the Purchased Assets sold on the Sale Date in accordance with Applicable Requirements, is responsible for the maintenance of the Related Escrow Accounts and Custodial Accounts, and has, or as of the Sale Date, shall have, the sole right and authority, subject to any required Servicing Agreement Consent or otherwise, to transfer the Purchased Assets sold on the Sale Date, including the rights to reimbursement for related Advances paid for by Purchaser as contemplated hereby. The transfer, assignment and delivery of the Purchased Assets, including the rights to reimbursement for Advances paid for by Purchaser and of the Related Escrow Accounts and Custodial Accounts, as applicable, shall vest in Purchaser all rights to the Purchased Assets in accordance with Applicable Requirements, free and clear of any and all claims, charges, defenses, offsets and encumbrances of any kind or nature whatsoever.

Section 4.04

Effective Agreements.

The execution, delivery and performance of this Agreement and the other Transaction Documents by Seller, compliance with the terms hereof and thereof, and the consummation of the Transactions will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its charter or bylaws, or, upon obtaining the Servicing Agreement Consent, any instrument or agreement to which it is a party or by which it is bound or which affects the Purchased Assets, or any Applicable Requirements applicable to it or to the Purchased Assets, which violation, breach or default would reasonably be expected to (A) result in a Seller Material Adverse Effect, (B) impair in any material respect the ability of Seller or any of its applicable Affiliates to perform its obligations under this Agreement or any of the Transaction Documents or (C) prevent or materially impede or delay the consummation of the Transactions; or result in the creation or imposition of any lien, charge or encumbrance upon, any Purchased Assets or any of the Mortgage Loans.

Section 4.05

Membership and Standing.

(a) MERS Membership . Seller is an approved member in good standing of the MERS system.

(b) Seller/Servicer Standing . Seller is (i) an approved servicer, seller/servicer or issuer, as applicable, of mortgage loans for FNMA, (ii) properly licensed and qualified to do business and in good standing in each jurisdiction in which such licensing and qualification is necessary to act as the servicer under any of the Servicing Agreement and applicable law, and (iii) qualified to act as the servicer under the Servicing Agreement, and no event has occurred which would make any Seller unable to comply with all such eligibility requirements or which would require notification to FNMA. Seller has not received any written notice from any Governmental Entity that it intends to terminate or restrict Seller’s status as an approved servicer in its programs for which Seller is registered, approved or authorized.

Section 4.06

Consents, Approvals and Compliance.

Except for the Servicing Agreement Consent, there is no requirement applicable to Seller to make any filing with, or to obtain any permit, authorization, consent or approval of, any Person as a condition to the lawful performance by Seller of its obligations hereunder.

ARTICLE V

REPRESENTATIONS AND WARRANTIES AS TO

PURCHASED ASSETS

Subject to and as limited by Section 5.12, Seller represents and warrants to Purchaser as of the Effective Date, the Sale Date, and, with respect to Section 5.03 only, the applicable Servicing Transfer Date, as follows, irrespective of either the truth of accuracy or such representations and warranties or Seller’s or Purchaser’s knowledge of the truth or accuracy of such representations and warranties:

Section 5.01

Servicing.

(a) Compliance .

(i) (A) Each Mortgage Loan conformed and conforms to the Applicable Requirements in all material respects, and each Mortgage Loan was eligible for sale to, insurance by, or pooling to back securities issued or guaranteed by, or participation certificates issued by, the Investor or Insurer upon such sale, issuance of insurance or pooling, except in each case where such failure to conform or ineligibility would not be the contractual or legal responsibility of the Purchaser as the transferee under the Servicing Agreement or by virtue of the applicable Tri-Party Agreement; (B) each Mortgage Loan has been originated, underwritten and serviced in compliance with all Applicable Requirements in all material respects, except where such lack of compliance would not be the contractual or legal responsibility of the Purchaser as the transferee under the Servicing Agreement or by virtue of the applicable Tri-Party Agreement and (C) Seller is not otherwise in default with respect to Seller’s obligations under the Applicable Requirements.

(ii) Each Mortgage Loan which is required pursuant to Applicable Requirements or which is represented by Seller to have mortgage insurance or a guaranty certificate has such mortgage insurance or a guaranty certificate, except where the lack of such mortgage insurance or a guaranty certificate would not be the

contractual or legal responsibility of the Purchaser as transferee under the Servicing Agreement or by virtue of the applicable Tri-Party Agreement, and has an accurate holder identification for purposes of filing claims. All provisions of such insurance policies or guarantees have been and are being complied with in all material respects, all premiums due thereunder have been paid, and such policies and/or guarantee are in full force and effect, except where the lack of compliance or the lapse or invalidity of policies or guarantees would not be the contractual or legal responsibility of the Purchaser as transferee under the Servicing Agreement or by virtue of the applicable Tri-Party Agreement.

(b) Servicing Rights .

(i) Seller owns all right, title and interest in and to the Mortgage Servicing Rights free and clear of all liens, and has the sole right to act as servicer with respect to the Mortgage Loans pursuant to and subject to the terms and conditions of the Servicing Agreement.

(ii) Seller has not engaged any subservicers, subcontractors or other agents to perform any of its duties under any of the Servicing Agreement, other than engagements that are permitted by, and are in compliance in all material respects with the requirements of, the applicable Servicing Agreement, and all fees and expenses due and payable to any such subservicer, subcontractor or agent as of the Sale Date in connection therewith have been paid, or will be paid before overdue, by Seller.

(iii) There are no judicial and administrative judgments, orders, remediation plans, stipulations, awards, writs and injunctions applicable to any Mortgage Loan or Mortgage Servicing Right for which Purchaser is legally or contractually responsible as the transferee of the Mortgage Servicing Rights.

(i) The Servicing Agreement does not impose terms and conditions that materially increase the obligations in connection with the Servicing of the Mortgage Loans beyond that stated in the applicable Guides and that would apply to the Purchaser as the transferee of the Mortgage Servicing Rights.

(ii) Except as would not reasonably be expected to materially impair the ability of Purchaser to realize the economic benefits associated with the Transactions, the Servicing Agreement is a valid and binding obligation of the Seller, is in full force and effect, and is enforceable by Seller in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity, whether applied in a court of law or a court of equity.

(iii) The Investor has not provided written notice to the Seller that such party will terminate, modify or amend the Servicing Agreement or the Seller’s benefits or the Mortgage Servicing Rights under the Servicing Agreement.

(d) Mortgage Pools . All pools of Mortgage Loans have been initially certified, and all such pools shall be, when transferred to Purchaser, eligible for final certification and/or recertification, as applicable, and in each case only if required by Applicable Requirements, by Purchaser or the Custodian in accordance with Applicable Requirements. The Collateral Files to be delivered to Purchaser will include all documents customarily available as of the time of delivery that are necessary in order for Purchaser or the Custodian to finally certify and/or recertify the pools of Mortgage Loans, if required by and in accordance with the Applicable Requirements, except for those documents that are required as a result of the Transactions.

Section 5.02

Recourse Status.

All of the Mortgage Loans shall be without Recourse to Purchaser as the transferee of the Mortgage Servicing Rights.

Section 5.03

Advances.

(a) All Advances paid for by Purchaser to Seller or net against amounts paid over by Seller to Purchaser hereunder were made and are eligible for reimbursement in accordance with Applicable Requirements, except as provided in Section 3.02(e) hereof, are carried on the books of Seller at values determined in accordance with generally accepted accounting principles, are not subject to any set-off or claim that could be asserted against Seller, or to Seller’s knowledge, Purchaser, and Seller has not received any notice from any Investor, or any Insurer or other Person in which such Investor, Insurer or Person disputes or denies a claim by Seller for reimbursement in connection with an Advance.

(b) No Advance has been sold, transferred, assigned or pledged by Seller to any Person other than Purchaser. Seller has not taken any action that, or failed to take any action the omission of which, would materially impair the rights of Purchaser with respect to any such Advance.

Section 5.04

Accuracy of Information.

The information (i) in the data tapes provided by Seller, or its agents, to Purchaser on November 30, 2012, and (ii) in the Mortgage Loan Schedules pertaining to the Mortgage Loans, Advances and the Mortgage Servicing Rights, is true and correct in all material respects as of the dates indicated therein. The Mortgage Loan Schedules contain in all material respects a complete and accurate list of all of the Mortgage Servicing Rights sold or intended to be sold, and the related Mortgage Loans, as of the dates indicated therein.

Section 5.05

Delivery of Information.

The Collateral File and Credit and Servicing File for each Mortgage Loan collectively contain all documents and instruments required by the Applicable Requirements for servicing such Mortgage Loan in all material respects in accordance with Applicable Requirements without unreasonable expense or delay which would be caused solely by the condition of the Collateral File or the Credit and Servicing File.

Section 5.06

Repurchase.

There is no pending claim or demand against Seller for repurchase of any Mortgage Loan, or rescission of any MI or denial of an MI claim.

Section 5.07

Servicing Fee Not Sold

No portion of the base minimum Servicing Fee required under a Servicing Agreement payable by any Investor in connection with the Mortgage Servicing Rights on any Mortgage Loan has been sold, transferred, assigned or pledged by Seller to any third party other than Purchaser.

Section 5.08

Damage, Condemnation, and Related Matters.

There exists no physical damage to any Mortgaged Property from fire, flood, windstorm, earthquake, tornado, hurricane or any other similar casualty, which physical damage is not adequately insured against or would materially and adversely affect the value of any Purchased Assets or any Mortgaged Property, or the eligibility of any Mortgage Loan for insurance benefits by any Insurer, except where the existence of such physical damage would not be the contractual or legal responsibility of, or result in any liability to, the Purchaser as transferee under the Servicing Agreement or by virtue of the applicable Tri-Party Agreement.

Section 5.09

No Purchaser Responsibility.

Notwithstanding the sale of the Purchased Assets to Purchaser, if and to the extent and as provided in the Tri-Party Agreement as and when executed, Seller retains any remaining obligations to FNMA as the related Investor under the Servicing Agreement with FNMA including repurchase, indemnification and make-whole obligations, in respect of a breach of the selling representations and warranties in connection with the sale of the Mortgage Loans to FNMA

Section 5.10

Related Escrow and Custodial Accounts.

All Related Escrow Accounts and Custodial Accounts are being and have been maintained in accordance with the Applicable Requirements. Except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan documents and paid to Seller for the account of the Mortgagors are on deposit in the appropriate Related Escrow Account or Custodial Account.

Section 5.11

High Cost Loans.

No Mortgage Loan is classified as a “high cost mortgage” under Section 32 of the Home Ownership and Equity Protection Act of 1994 or is considered a “high cost mortgage” loan or “higher cost mortgage loan” under any other applicable law applicable at the time the loan was originated or any applicable Investor’s anti-predatory lending policy at the time of origination.

Section 5.12

Sole Purpose of Article V Representations and Warranties.

Purchaser acknowledges that Seller is providing the representations and warranties in Article V of this Agreement solely for purposes of establishing the basis on which claims for indemnification may be brought under the Agreement for Losses resulting from or arising out any breach of any such representations and warranties by Seller, irrespective of whether Seller knows or

should know of such breach and without disclosure of any such knowledge. Purchaser and Seller further acknowledge that some or all of the representations and warranties in Article V may be untrue, including in all material respects, and that Purchaser and/or Seller (as a result of Seller’s due diligence or otherwise) may have actual knowledge of facts rendering some of such representations and warranties untrue, including in all material respects. In no event shall a breach of any of Seller’s representations and warranties under the Agreement, or Seller’s knowledge or lack of disclosure thereof, be used as evidence of or be deemed to constitute bad faith, misconduct, misrepresentation or fraud by Seller, nor shall Purchaser’s knowledge of any such breach or lack of disclosure by Seller limit in any way Purchaser’s rights to seek indemnification under the Agreement. Purchaser acknowledges that its sole remedy for any breach of any representation or warranty in Article V is a claim for indemnity under the Agreement.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

As an inducement to Seller to enter into this Agreement, Purchaser represents and warrants as of the Effective Date and the Sale Date as follows:

Section 6.01

Due Organization and Good Standing.

Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser is qualified to transact business in each jurisdiction in which such qualification is deemed necessary to service the Mortgage Loans and has all related licenses, registrations, permits, and approvals required in accordance with Applicable Requirements, except where the failure to be so qualified has not and would not reasonably be expected to, individually or in the aggregate, (A) result in a Purchaser Material Adverse Effect, (B) impair in any material respect the ability of Purchaser to perform its obligations under this Agreement or the Transaction Documents or to acquire and operate the Purchased Assets or (C) prevent or materially impede or delay the consummation of any of the Transactions.

Section 6.02

Authority and Capacity.

Purchaser has all requisite limited liability company power, authority and capacity, subject to approvals required pursuant to Section 7.02 and such other consents and approvals as are required hereunder, to enter into this Agreement and each other applicable Transaction Document and to perform the obligations required of it hereunder and thereunder. The execution and delivery of this Agreement and each other applicable Transaction Document, and the consummation of the Transactions, have been duly and validly authorized by all necessary action. This Agreement constitutes, and each other applicable Transaction Document constitutes or will constitute, a valid and legally binding agreement of Purchaser enforceable in accordance with its terms, and no offset, counterclaim or defense exists to the full performance by Purchaser of this Agreement or such other Transaction Document, except as the same may be limited by bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and by general equity principles.

Section 6.03

Effective Agreements.

The execution, delivery and performance of this Agreement by Purchaser, its compliance with the terms hereof and the consummation of the Transactions will not violate, conflict with, result in a breach of, constitute a default under, be prohibited by or require any additional approval under its certificate of formation, limited liability company agreement, or other organizational documents and agreements, or, upon obtaining the Investor’s approval, any instrument or agreement to which it is a party or by which it is bound or which affects the Purchased Assets, or any Applicable Requirements applicable to it or to the Purchased Assets.

Section 6.04

Sophisticated Purchaser.

The Purchaser is a sophisticated investor and its bid and decision to purchase the Servicing Rights is based upon the Purchaser’s own independent experience, knowledge, due diligence and evaluation of the Transactions. The Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller or Seller’s agents other than the Offering Materials and the representations and warranties made by Seller herein.

Section 6.05

Purchaser/Servicer Standing.

Purchaser is (i) an approved servicer, seller/servicer or issuer, as applicable, of mortgage loans for FNMA and is in good standing with the requisite financial criteria and adequate resources to complete the Transactions on the conditions stated herein, (ii) properly licensed and qualified to do business and in good standing in each jurisdiction in which such licensing and qualification is necessary to act as the servicer under the Servicing Agreement and applicable law, (iii) an approved servicer for any nationally recognized Insurers providing MI on the Mortgage Loans, and (iv) qualified to act as, and satisfies all the criteria for acting as, the servicer under the Servicing Agreement, and no event has occurred which would make Purchaser unable to comply with all such eligibility requirements or which would require notification to FNMA. Purchaser has not received any written notice from any Governmental Entity that it intends to terminate or restrict Purchaser’s status as an approved servicer in its programs for which Purchaser is registered, approved or authorized.

Section 6.06

MERS Membership.

Purchaser is an approved member in good standing of the MERS system.

Section 6.07

Financial Ability.

Purchaser will have (when required under this Agreement) immediate access to all funds necessary to pay the Purchase Price and related fees and expenses and Purchaser will have (when required under this Agreement) the financial capacity to perform all of its other obligations under this Agreement.

Section 6.08

No Regulatory Impediment.

To Purchaser’s knowledge, there is no fact or circumstance relating to Purchaser’s business, operations, financial condition or legal status that might reasonably be expected to impair in any material respect its ability to obtain all consents, orders, authorizations, and approvals from any governmental authority necessary for the consummation of the purchase of the Mortgage Servicing Rights within the time period contemplated by this Agreement.

Section 6.09

Consents, Approvals and Compliance.

Except for the Servicing Agreement Consent, there is no requirement applicable to Purchaser to make any filing with, or to obtain any permit, authorization, consent or approval of, any Person as a condition to the lawful performance by Purchaser of its obligations hereunder.

ARTICLE VII

COVENANTS

Section 7.01

Assignments.

(a) With respect to those Mortgage Loans registered with MERS as of the Sale Date, Seller shall, within fourteen (14) days of the applicable Servicing Transfer Date, notify MERS, in accordance with MERS’ operating procedures, of the sale of the Mortgage Servicing Rights, and shall be responsible for the fees of MERS related to reflecting Purchaser as the owner of the Mortgage Servicing Rights. Seller shall provide Purchaser or its designee with the MERS mortgage loan identification number for each MERS-registered Mortgage Loan pursuant to Section 7.07.

(b) Within ninety (90) days after each Servicing Transfer Date, Seller, at its expense, shall prepare and send for recordation Assignments of Mortgage, including any assignments required by or to the Investor (which in all cases shall be accompanied with a check attached thereto in the appropriate amount for payment therefor) for any related Mortgage Loan that is not assigned of record to and registered with MERS as of such Servicing Transfer Date, in compliance with the applicable Servicing Agreement and the protocol detailed on Exhibit I ; provided, that, prior to such Servicing Transfer Date, Seller and Purchaser shall mutually agree to a list of such related Mortgage Loans (and Seller shall provide Purchaser with any documentation reasonably requested by Purchaser in connection therewith); provided, further, that, in the case of any such related Mortgage Loans subject to foreclosure proceedings, such Assignments of Mortgage shall not be recorded, but shall be sent by Seller to either Purchaser or the applicable foreclosure attorney (at Purchaser’s direction). Seller shall indicate to the applicable recording office that recorded Assignments of Mortgage should be returned to Purchaser, and Purchaser shall have responsibility for tracking the recording and return of the Assignments of Mortgage. Seller shall assure that all necessary documentation pursuant to Applicable Requirements related to demonstrating the chain of title for all loans is available, and provided, for Purchaser’s use, and if any such documentation is inadequate shall timely create, make available and provide such documentation for Purchaser, and take such steps as necessary to, properly record, assign or endorse the Mortgage Loans and the Mortgage Servicing Rights. In the event that any such Assignment of Mortgage prepared by Seller pursuant to this Section 7.01(b) is reasonably determined by Purchaser to be deficient, Seller shall promptly reimburse Purchaser for its reasonable out-of-pocket costs (which costs include, for the avoidance of doubt, reasonable fees of third party vendors which may be outside counsel) to rectify such Assignment of Mortgage and re-send it for recordation.

(c) Prior to the applicable Servicing Transfer Date, Seller shall provide Purchaser with a list of the names of each predecessor or Affiliate (or predecessor of each such Affiliate) of Seller (in each case, including any former names thereof) that may be relevant to Purchaser’s verification of the chain of title of any Mortgaged Property.

Section 7.02

Servicing Agreement Consent and Notices.

From the date hereof until the Sale Date, the Seller shall use its commercially reasonable efforts to obtain the Servicing Agreement Consent on or prior to the Sale Date (including by using such efforts to mail the required consent requests to the applicable third parties as soon as reasonably practicable following the Effective Date), and Purchaser shall use its commercially reasonable efforts to cooperate with the Seller to obtain such Servicing Agreement Consent. Prior to each Servicing Transfer Date, Purchaser and the Seller shall (i) execute (or cause to be executed) and deliver the documents required by the Investor in connection with the transfer of the related Mortgage Servicing Rights and, as applicable, the Servicing Agreement, hereunder, in form and substance reasonably satisfactory to both Parties, and (ii) cooperate with each other to transfer (to the extent permitted by the Investor) from Seller to Purchaser the benefit of any waivers granted by Investor directly related to Servicing the Mortgage Loans (which, for the avoidance of doubt, includes waivers related to Collateral Files), including with respect to Mortgage Loan Documents required to be held in the Collateral File. In addition, from the date hereof until the Sale Date, the Seller shall use its commercially reasonable efforts to provide all notices to third parties required under the Servicing Agreement in connection with the Transactions.

Section 7.03

Transfer Notices.

(a) Seller shall provide servicing transfer notices and any other similar notices to the Mortgagors as may be required under the Applicable Requirements, including the Federal Real Estate Settlement Procedures Act codified § 2601 et seq. and implemented by Regulation X, 24 C.F.R. Part 3500. Within fifteen (15) days following each Servicing Transfer Date, but not before any such Servicing Transfer Date unless agreed to in writing by Seller, the Purchaser shall deliver to each related Mortgagor a “Welcome Letter” in accordance with the Applicable Requirements and at Purchaser’s own cost and expense. No less than three (3) weeks prior to such Servicing Transfer Date, each Party shall submit to the other Party its form of such “Welcome Letter” or “Goodbye Letter” for review and approval. Purchaser shall not contact any Mortgagors prior to such Servicing Transfer Date unless agreed to in writing by Seller.

(b) Within thirty (30) days after each Servicing Transfer Date, (i) the Seller shall, in accordance with applicable Insurer requirements, provide written notice of the transfer to any Insurer requiring such notice; provided , however , that the Seller may give aggregate notice whenever possible, and (ii) the Seller shall notify related tax-bill services of the transfer. The form of all notices by the Seller pursuant to this Section 7.03(b) shall be subject to the review and reasonable approval of the Purchaser upon Purchaser’s request.

(c) If required by the Investor, and mutually agreed by the Parties, Purchaser may make one (1) post-Servicing Transfer Date ACH or other alternative form of withdrawal with respect to each Mortgagor under a Mortgage Loan owned by such Investor specified by Seller by a mutually agreed date, based on the ACH information provided by Seller. Purchaser shall obtain a new authorization from each such Mortgagor in accordance with

Applicable Requirements prior to making any ACH or other alternative forms of withdrawals other than such mutually agreed one (1) post-Servicing Transfer Date ACH or other alternative form of withdrawal. Notwithstanding anything to the contrary in any Transaction Documents, Purchaser acknowledges and agrees that Seller shall not be responsible for Purchaser’s compliance with Applicable Requirements in using such information for any post-Servicing Transfer Date ACH or other alternative form of withdrawal, or liable to Purchaser for any Losses resulting therefrom.

(d) In connection with any Mortgage Loans subject to bankruptcy proceedings, the Purchaser shall file transfers of claims as required by Applicable Requirements, including Rule 3001(e) of the Federal Rules of Bankruptcy Procedure; provided, that Seller shall promptly deliver to Purchaser (upon Purchaser’s request) any information and documentation that is reasonably necessary for Purchaser to comply with this Section 7.03(d); provided further, that, in the event Seller fails to deliver applicable proof of claim-related information (which information shall include accurate post-petition due date and proof of claim data) within thirty (30) days following each applicable Servicing Transfer Date to Purchaser (whether or not requested thereby), Seller shall promptly reimburse Purchaser for any expense in excess of $15.00, but no more than $50.00, per Mortgage Loan subject to bankruptcy proceedings incurred by Purchaser in complying with this Section 7.03(d) as a result of not receiving such proof of claim-related information. The form of all notices by Purchaser pursuant to this Section 7.03(d) shall be subject to the review and reasonable approval of Seller upon Seller’s request.

Section 7.04

Real Estate Taxing Authorities.

(a) Prior to each applicable Servicing Transfer Date, Seller shall be responsible for any tax penalties incurred due to incorrect or missing tax records processed or provided by Seller or Seller’s tax service agent to Purchaser.

(b) If a Mortgage Loan is escrowed, Seller shall pay or cause to be paid, prior to each applicable Servicing Transfer Date, all tax bills (including any applicable penalties and interest) with tax due dates prior to or within thirty (30) calendar days following such Servicing Transfer Date, but only if the tax bill was issued by the taxing authority at least thirty (30) calendar days prior to such Servicing Transfer Date. Purchaser shall pay or cause to be paid all other tax bills when due. Seller will promptly forward tax bills issued by the taxing authority less than thirty (30) calendar days prior to such Servicing Transfer Date, to be paid by Purchaser.

(c) Purchaser shall not be responsible for any tax penalties on escrowed Mortgage Loans (including any loss of discount for which a Mortgagor or any third party for the benefit of the Mortgagor has a legal claim) on Mortgage Loans for which the related tax due date occurs prior to or within thirty (30) calendar days following each applicable Servicing Transfer Date, but only if the tax bill was issued by the taxing authority at least thirty (30) calendar days prior to such Servicing Transfer Date. Purchaser shall be responsible for any other tax penalties.

(d) For all escrowed Mortgage Loans, Seller shall provide to Purchaser within two (2) Business Days after each applicable Servicing Transfer Date a current list of such Mortgage Loans that have taxes or assessments that were due prior to or within sixty (60) calendar days after such Servicing Transfer Date and not paid, and Purchaser shall be responsible for payment thereof when due.

(e) If Seller does not provide to Purchaser a life of loan tax service contract for a Mortgage Loan, Seller shall provide all information required by Purchaser or Purchaser’s tax monitoring vendor with respect to such real estate taxes.

Section 7.05

Hazard, Mortgage and Flood.

(a) For all escrowed Mortgage Loans, Seller shall pay or cause to be paid, prior to each applicable Servicing Transfer Date, all insurance bills with policy due dates prior to or within thirty (30) calendar days following such Servicing Transfer Date, if such insurance bills have been issued by insurance companies at least thirty (30) calendar days prior to such Servicing Transfer Date. Purchaser shall pay or cause to be paid all other insurance bills. Seller will promptly forward insurance bills issued by the insurance companies less than thirty (30) calendar days prior to such Servicing Transfer Date, to be paid by Purchaser.

(b) For all escrowed Mortgage Loans, Seller shall provide to Purchaser within two (2) Business Days after each applicable Servicing Transfer Date a current list of Mortgage Loans that have hazard and MI insurance premiums and/or assessments that are due prior to or within sixty (60) calendar days after such Servicing Transfer Date and not paid, and Purchaser shall be responsible for payment thereof when due.

(c) For all escrowed Mortgage Loans, Seller shall provide to Purchaser within two (2) Business Days after each applicable Servicing Transfer Date a current list of Mortgage Loans that have flood insurance premiums and/or assessments that were due prior to or within sixty (60) calendar days after such Servicing Transfer Date and not paid, and Purchaser shall be responsible for payment thereof when due.

(d) Seller shall provide all information required by Purchaser or Purchaser’s flood service monitoring vendor with respect to such flood insurance.

Section 7.06

Delivery of Mortgage Loan Documentation and Information.

(a) Seller shall provide Purchaser with prior written notice of the carrier, shipping arrangements and insurance arrangements, if applicable, with respect to the delivery of the Collateral Files and Credit and Servicing Files with respect to the Mortgage Loans.

(b) Within five (5) Business Days after receipt of a Trailing Document by Seller or Custodian, Seller shall provide, or cause to be provided, such Trailing Document to Purchaser’s Custodian.

(c) No later than five (5) Business Days after each applicable Servicing Transfer Date, Seller shall provide, or cause to be provided, to Purchaser true and correct originals or copies or electronic, .tif, .pdf, .xls or .doc formats of any and all Collateral Files and Credit and Servicing Files, in each case as are material to the Servicing of the Mortgage Loans transferred on such Servicing Transfer Date in compliance with all Applicable Requirements. Any costs and expenses to deliver the aforementioned files and information shall be borne by the Seller and any costs and expenses to convert such files and information into the format required by the Purchaser shall be borne by the Purchaser.

(d) Without limiting the generality of Section 7.07, from the date that is thirty (30) days prior to each applicable Servicing Transfer Date until the date that is thirty (30) days after such Servicing Transfer Date (or until all Credit and Servicing Files in possession of or on behalf of Seller have been provided to Purchaser by Seller, whichever is later), Seller shall provide Purchaser with access to Seller’s web portal containing such Credit and Servicing Files.

(e) Anything to the contrary contained in this Agreement notwithstanding, except for Applicable Requirements which must be satisfied, with respect to each Mortgage Loan, Seller may deliver any documents required to be delivered to Purchaser by means of electronic data containing the relevant information or a computer disk containing scanned images of some or all documents relating to the Mortgage Loan[; provided, that any such electronic data shall be in a format mutually agreed upon by the Parties, and any such electronic documents shall be identified by a loan number and document name or index, with cross-reference provided for document type indices].

Section 7.07

Delivery of Servicing System Information.

Prior to each applicable Servicing Transfer Date, the Seller shall furnish or cause to be furnished to the Purchaser preliminary Mortgage Loan data reflecting the status of payments, balances and other pertinent information necessary to service the related Mortgage Loans, along with any other pertinent information reasonably requested by Purchaser. Seller shall provide to Purchaser, on conversion files meeting the specifications of Exhibit C , or as otherwise agreed to by the Parties, that data relating to the Mortgage Loans that is necessary for the proper servicing of the Mortgage Loans or to ensure compliance with the Servicing Agreement. Final conversion files shall be provided no later than two (2) Business Days after the most recent Cutoff Date.

Section 7.08

Related Escrow Account Balances.

No later than five (5) Business Days after each applicable Servicing Transfer Date, Seller shall:

(a) Provide Purchaser by wire transfer of immediately available federal funds the net escrow amount (net of Seller’s unrecovered and unreimbursed, T & I Advances as to which Seller is entitled to recovery), loss drafts, suspense balances, any buydown balances and any unapplied funds associated with the Mortgage Loans as to which the related Mortgage Servicing Rights were transferred on such Servicing Transfer Date or, if such amount is a negative number, the Purchaser shall provide Seller by wire transfer of immediately available federal funds such negative amounts to Seller; and

(b) Provide Purchaser with an accounting statement sufficient to enable Purchaser to reconcile the balances referred to in Section 7.08(a) above with the accounts of the related Mortgage Loans.

Section 7.09

Payoffs, Assumptions, Modifications, Refinancings; Short Sales and Deeds in Lieu.

(a) Seller and Purchaser shall cooperate with and assist each other, as reasonably requested, in completing any payoff, assumption, modification, short sale, deed in lieu, or other loss mitigation option, in each case that is in process as of each applicable Servicing Transfer Date.

(b) Purchaser shall accept and continue processing any pending loan modification requests related to the Mortgage Loans. Purchaser shall honor all trial and permanent loan modification agreements entered into by Seller, and make any related required filings with Governmental Entities, Agencies, Investors and Insurers in accordance with Applicable Requirements.

(c) Seller shall complete the processing, underwriting, closing and funding of eligible requests and applications by Mortgagors to refinance Mortgage Loans in process as of the Sale Date under HARP where the resulting mortgage loan is intended for sale to the Investor, in accordance with Applicable Requirements. Seller shall sell the resulting mortgage loans to the Investor and concurrently transfer the related mortgage servicing rights to the Purchaser (upon and subject to the same terms and conditions as set forth in this Agreement with respect to the Mortgage Servicing Rights, including, for the avoidance of doubt, as set forth in Articles IV, V, VII, VIII and XI). Seller shall be entitled to retain all income and obligated to pay all expenses in connection with the origination and sale of such mortgage loans, and Purchaser shall not be obligated to pay any additional consideration for the related mortgage servicing rights.

Section 7.10

Mortgage Loan Payments and Trailing Bills Received After Servicing Transfer Date.

(a) All payments pertaining to Mortgage Loans with respect to which the related servicing is transferred on each applicable Servicing Transfer Date that are received by Seller after such Servicing Transfer Date, and until ninety (90) days thereafter, shall be forwarded by Seller to Purchaser by wire, or at Seller’s discretion if such funds or payments are received by check, by overnight delivery, with the check date stamped, within seven (7) Business Days following Seller’s receipt, except that payments or funds requiring exception processing shall be forwarded within ten (10) Business Days of Seller’s receipt. On and after the date which is ninety (90) days after each applicable Servicing Transfer Date, any payments or other funds remitted by a borrower and received by Seller shall, at Seller’s discretion, be returned to the related borrower, or forwarded to the Purchaser or its designee as described above within seven (7) Business Days following Seller’s receipt, except that payments or funds requiring exception processing shall be forwarded within ten (10) Business Days of Seller’s receipt. Payments shall be forwarded to the Purchaser or its designee as described above until Purchaser has been able to notify the borrower to change the payee to Purchaser from Seller. Any funds or payments by any other Person shall be forwarded by Seller, to Purchaser’s designee by wire or at Seller’s discretion if such funds or payments are received by check, by first class mail if such funds or payments are received by check within seven (7) Business Days of Seller’s receipt, except that payments or funds requiring exception processing shall be forwarded within ten (10) Business Days of Seller’s receipt.

(b) Seller will promptly forward, or cause vendors to send, to Purchaser any bills, invoices, statements or other notices of required payment for which the servicer of the Mortgage Loans is responsible pursuant to Applicable Requirements (e.g., taxes and insurance) that are received by Seller or prepared by such vendors after each applicable Servicing Transfer Date, whether related to the period before or after, or services provided before or after, such Servicing Transfer Date, and Purchaser shall promptly remit payment to such vendors as required in such servicing bills, invoices, statements or other notices of required payment; provided, that (i) notwithstanding the generality of the foregoing, such bills, invoices, statements or other notices of required payment received by Seller within fifteen (15) days after such Servicing Transfer Date shall be forwarded in the ordinary course to Purchaser within five (5) days thereafter for payment by Purchaser and (ii) if the payment of any such bill, invoice, statement or other notice of required payment (whether or not forwarded to Purchaser within the foregoing time period) pertained to the period prior to such Servicing Transfer Date and will reasonably be expected to result in a Loss to Purchaser for which Purchaser will not otherwise receive payment or reimbursement from any Investor or Mortgagor, such bill, invoice, statement or other notice of required payment will be promptly returned by Purchaser to Seller for payment by Seller.

Section 7.11

Misapplied and Returned Payments.

Misapplied and returned payments shall be processed as follows:

(a) Both Parties shall reasonably cooperate in correcting misapplication errors;

(b) The Party who discovers or receives notice of a misapplied payment shall immediately notify the other Party;

(c) Subject to Section 3.03 hereof, if a misapplied payment has created an improper Purchase Price as the result of an inaccurate outstanding principal balance, a check shall be issued to the Party shorted by the improper payment application within ten (10) Business Days after notice thereof by the other Party; and

(d) If any Mortgagor’s check presented to Seller prior to each Servicing Transfer Date is returned unpaid to Seller for any reason subsequent to each Servicing Transfer Date, Seller shall immediately forward the original unpaid check to Purchaser and Purchaser shall reimburse Seller therefor promptly upon Seller’s demand.

Section 7.12

Servicing Obligations.

(a) From the date hereof, until each applicable Servicing Transfer Date and subject to Sections 7.12(b)(ii), and as further provided for in that Interim Servicing Addendum, if applicable, Seller shall pay, perform and discharge all liabilities and obligations relating to the Servicing, including all liabilities and obligations under the Mortgage Loan Documents, and the Applicable Requirements; and shall pay, perform and discharge all the rights, obligations and duties with respect to the Related Escrow Accounts as required by the Investor, the Mortgage Loan Documents and all Applicable Requirements.

(b) On and after each applicable Servicing Transfer Date (except with respect to and as specified in Section 7.12(b)(i)):

(i) Purchaser shall pay, perform and discharge all liabilities and obligations relating to the Servicing and Mortgage Servicing Rights arising after such Servicing Transfer Date, including all liabilities and obligations under the Mortgage Loan Documents and, subject to Sections 7.12(b)(ii), the Applicable Requirements; and shall pay, perform and discharge all rights, obligations and duties with respect to the Related Escrow Accounts and Custodial Accounts as required by any Investor, Insurer, the Mortgage Loan Documents and, subject to Sections 7.12(b)(ii), all Applicable Requirements. Notwithstanding the foregoing, except as provided in Section 7.17(a) hereof, the Applicable Requirements with which Purchaser is required to comply hereunder shall not include any judicial and administrative judgments, orders, remediation plans, stipulations, awards, writs and injunctions applicable to any Mortgage Loan or Mortgage Servicing Right and to which Seller is a party, all of which, for the avoidance of doubt, shall remain the sole responsibility of Seller. For the avoidance of doubt, as between the Seller and Purchaser under this Agreement, if, as and to the extent provided in the Tri-Party Agreement, Purchaser is not assuming liabilities of the Seller (1) under the Servicing Agreement with respect to the Mortgage Servicing Rights that pertain to the period prior to the Sale Date, or (2) related to the origination of any Mortgage Loans subject to the Servicing Agreement; provided, that the foregoing clause shall not affect in any way Purchaser’s obligations under Section 7.17(a) hereof;

(ii) With respect to the Mortgage Loans, Purchaser covenants with Seller that Purchaser shall comply in all material respects with the servicing standards attached as Exhibit A (Settlement Term Sheet) to the NMS in accordance with their terms. Purchaser shall ensure its compliance with such servicing standards by, among other means, adopting certain of the provisions of Exhibit E (Enforcement Terms) to the NMS consisting of the designation of an independent internal quality control group to perform quarterly compliance reviews based on the “metrics” provided for therein, the adoption and implementation of a related “work plan” and, as applicable, any “corrective action plans,” and the preparation of quarterly reports of the results of its compliance reviews (which such reports shall be available for review by any Governmental Entity that has supervisory authority over Purchaser, including, without limitation, the Consumer Financial Protection Bureau and state licensing authorities). Notwithstanding anything to the contrary herein, the Parties agree that notwithstanding the foregoing, Purchaser is not assuming Seller’s obligations under the NMS and that any financial penalties that Seller may incur by or through the “Monitor” under the NMS as a result of any failure of Purchaser or its Affiliates to comply with the terms of the NMS shall remain the liability and obligation of Seller, except in the case of gross negligence or willful misconduct by Purchaser or its Affiliates; provided, that Seller shall provide prompt written notice to Purchaser following receipt of notice from any Governmental Entity alleging that Purchaser’s conduct constitutes gross negligence or willful misconduct;

(iii) Purchaser and Seller shall manage the litigation with respect to the Mortgage Loans that exists as of the applicable Servicing Transfer Date in accordance with a protocol that will be mutually agreed prior to the initial Servicing Transfer Date; provided, that, in no event shall Purchaser be required to manage or assume any responsibility in respect of defending any class action litigation or, subject to Applicable Requirements, any litigation in which Seller, and not Purchaser, is a defendant; and

(iv) Seller shall reasonably cooperate with Purchaser with respect to Purchaser’s performance of its obligations pursuant to this Section 7.12(b), including, but solely with respect to Purchaser’s covenant to comply in all material respects with the servicing standards attached as Exhibit A (Settlement Term Sheet) to the NMS in accordance with their terms, by providing Purchaser (upon Purchaser’s reasonable request) with a description of any of Seller’s policies and procedures used thereby in connection with servicing the Mortgage Loans as of the date hereof and by making Seller’s personnel available (at reasonable times and under reasonable conditions) to answer Purchaser’s questions with respect to such policies and procedures.

(c) From the date hereof, until each applicable Servicing Transfer Date, and as further provided for in that Interim Servicing Addendum , if applicable, Seller shall at all times be in good standing and authorized to conduct business in each jurisdiction where Seller transacts business and each jurisdiction where a Mortgaged Property is located, except where the failure of Seller to possess such qualifications would not be material to Purchaser.

(d) From the date hereof, until each applicable Servicing Transfer Date, and as further provided for in that Interim Servicing Addendum , if applicable, Seller shall at all times maintain all Related Escrow Accounts and Custodial Accounts in accordance with the Applicable Requirements; and, except as to payments which are past due under Mortgage Notes, all balances required by the Mortgages or other Mortgage Loan documents and paid to Seller for the account of the Mortgagors are on deposit in the appropriate Related Escrow Account or Custodial Account.

(e) From the date hereof, until each applicable Servicing Transfer Date, and as further provided for in that Interim Servicing Addendum , Seller shall remain an approved Agency Seller/Servicer in good standing with the requisite financial criteria and adequate resources to carry out Seller’s obligations herein, including without limitation under the Interim Servicing Addendum.

Section 7.13

Solicitation Rights.

(a) Subject to Section 7.13(b), following the Effective Date, neither Seller nor any of its Affiliates shall solicit the Mortgagors (nor shall Seller or its Affiliates direct any of their agents to solicit Mortgagors) to refinance the prepayment of the Mortgage Loans related to the Mortgage Servicing Rights.

(b) The restrictions under Section 7.13(a) shall not apply to:

(i) Advertising campaigns directed to the general public, including mass mailings based on commercially acquired mailing lists, newspaper, radio and television advertisements; or

(ii) Solicitations for financial services to any Mortgagor with whom Seller or an Affiliate has an existing customer relationship, unrelated to the Mortgage Loan, including solicitations for refinancing of mortgage loans only to the extent directed at all customers of Seller, or segments thereof that do not principally target the Mortgagors;

provided, however, that Seller and its Affiliates and agents shall not use any proprietary information related to the Mortgagors’ Mortgage Loans to conduct such advertising campaigns or solicitations to refinance the prepayment of the Mortgage Loans related to the Mortgage Servicing Rights.

Section 7.14

Year End Tax Reporting.

Seller shall be responsible for providing the Internal Revenue Service and Mortgagors with all appropriate tax forms and information for transactions affecting the Mortgage Loans during the respective calendar year, for the period prior to each applicable Servicing Transfer Date. Purchaser shall be responsible for providing the Internal Revenue Service and Mortgagors with all appropriate tax forms and information for transactions affecting the Mortgage Loans following each applicable Servicing Transfer Date.

Section 7.15

Cooperation.

Subject to Article XI, and without limiting the application of Sections 7.02, 7.12, 7.16 and 7.17, Seller and Purchaser shall each use its commercially reasonable efforts to cooperate with and assist each other, as reasonably requested, in carrying out the purposes of the Transaction Documents, and in connection with Seller’s obligations to comply with any remediation plan requirements, and any other continuing Seller obligations, with respect to the Purchased Assets. Each Party shall use its commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable or otherwise to promptly consummate and make effective the Transactions, (ii) obtain all authorizations, consents or approvals that are or may be or become necessary for the performance of its obligations under the Transaction Documents and the consummation of the Transactions, including the Servicing Agreement Consent, and (iii) fulfill all conditions to such Party’s obligations under this Agreement and the other Transaction Documents as promptly as practicable.

Section 7.16

Supplemental Information.

From time to time prior to and after each applicable Servicing Transfer Date, Seller shall, at its cost and expense, furnish Purchaser with incidental information, which is reasonably available to Seller, supplemental to the information contained in the documents and schedules delivered pursuant to this Agreement, which is necessary for the proper servicing of the Mortgage Loans or to ensure compliance with the Servicing Agreement. Seller shall provide Purchaser with originals of Mortgages and Assignments of Mortgage not previously provided by Seller in accordance with the protocol set forth on Exhibit I .

Section 7.17

Access to Information; Required Actions.

(a) If Seller is subject as an actual or prospective plaintiff or defendant to any claim, action, proceeding, investigation, inquiry, audit, examination, judgment, order (including with respect to the NMS and the Regulator), remediation plan relating to a Mortgage Loan or the Mortgage Servicing Rights or related Servicing, Purchaser, following

each applicable Servicing Transfer Date, shall reasonably cooperate with Seller and (i) make available to Seller, at Seller’s expense, all witnesses, pertinent records, data, documentation, materials and information in the Purchaser’s possession or under the Purchaser’s control relating thereto and (ii) implement such loss mitigation and remedial action or take such other actions as is reasonably required by Seller, in each case at Seller’s expense, to prosecute, defend, comply with or otherwise handle such claim, action, proceeding, investigation, inquiry, audit, examination, judgment, order, remediation plan, but subject to applicable laws and appropriate confidentiality agreements with Seller.

(b) Subsequent to each applicable Servicing Transfer Date, each Party shall furnish to the other Party such periodic, special, or other reports or information, and copies or originals of any documents contained in the Credit and Servicing File, for each related Mortgage Loan provided for herein, as may be reasonably requested in furtherance of the fulfillment of the requesting Party’s duties and obligations hereunder, under any Transaction Documents, or under Applicable Requirements, at the requesting Party’s sole cost and expense unless otherwise expressly provided in a Transaction Document, and provided that if any Transaction Document otherwise obligates the requested Party to deliver such materials or information without payment of costs, expense, or other consideration, this Section 7.17(b) shall not obligate the requesting Party to pay such cost or expense. All such reports, documents or information shall be provided by and in accordance with all reasonable instructions and directions which the requesting Party may give. Such documents shall be provided reasonably promptly following such a request. Purchaser shall not provide originals or copies of the Credit and Servicing Files to any Person that does not have a right thereto under the Servicing Agreement and Applicable Requirements.

(c) In connection with any action, claim or proceeding concerning MI or insurance with respect to any Mortgage Loan by an Insurer:

(i) Purchaser shall comply with the covenants specified in Exhibit L and, in each case at Seller’s expense, reasonably cooperate with Seller and make available to Seller any communication (including any request for missing documents, notification of impending coverage rescission, notification of impending claim denial, claim denials, coverage rescissions, and curtailments), all witnesses, pertinent records, and any materials and information in Purchaser’s possession or control relating thereto as may be reasonably required by Seller to bring or defend such action, claim or proceeding. The cooperation obligations in this Section shall include the obligation of Purchaser to provide Seller with notice within a reasonable time but no later than fifteen (15) Business Days after Purchaser becomes aware of any such action, claim or proceeding; and

(ii) Upon the request of Seller, Purchaser and Purchaser’s designee shall provide written authorization to the Insurers, if required, to allow Seller to respond to any such action, claim or proceeding directly to an Insurer. Such authorization shall state that Purchaser and Purchaser’s designee, as the case may be, ratify Seller’s ability to take steps the Seller determines to be reasonably necessary to pursue coverage under the MI, bond insurance or other insurance policies, including, without limitation, prosecuting and/or defending litigation and/or arbitration with mortgage insurers with respect to claims made and/or rescissions , denials or

curtailments the mortgage insurers have attempted or will attempt to effectuate, as well as settling with mortgage insurers at Seller’s discretion, either in Seller’s own name or as subcontractor or agent for Purchaser, but excluding any MI actions, claims or proceedings that arise from alleged servicing-related activities occurring after each applicable Servicing Transfer Date. At Seller’s request, Purchaser shall appoint Seller as its subcontractor or agent pursuant to the Servicing Agreement for the purpose of accomplishing the foregoing. Purchaser and/or Purchaser’s designee agree to execute all reasonable servicing-related functions pursuant to the terms of any existing or future settlements (copies of which will be provided to Purchaser), including processing claims, premiums, claim payments, etc. in accordance with the terms of a settlement agreement.]

(d) Additionally, each Party shall provide the other Party prompt notice of, and provide documents or communications evidencing or relating to: (i) any lawsuit, counterclaim or third party claim involving any Mortgage Loan, or (ii) any repurchase claim made by a third party or any Investor involving any Mortgage Loan, or (iii) any notice of claim cancellation or denial or a rescission of coverage by any mortgage insurance company relating to any Mortgage Loan, which if to Seller shall be sent to the e-mail address specified in the Servicing Transfer Instructions.

(e) Subject to applicable laws, Purchaser shall provide Seller with monthly reports with information about each Mortgage Loan based on the data fields specified in Exhibit H hereto. Seller shall use such information solely to manage its continuing liabilities and obligations with respect to the Mortgage Loans, including its contingent liability, or its Affiliates’ contingent liabilities, to repurchase from, or provide make-whole payments to, any Investor, Insurer or any other Person, including any Agency as more fully described in the Tri-Party Agreement, and for no other purpose.

Section 7.18

Tax, Flood and Other Set Up Costs.

Seller shall bear and pay all fees relating to the transfer of servicing to the Purchaser, including any Investor’s transfer processing fees, assignment preparation and recording fees (including in the case of any deficient assignments that are re-sent for recordation by Purchaser), MERS fees and costs of delivery and deposit expenses for the shipment of the Collateral Files, and the shipment of Credit and Servicing Files to the extent not delivered in the form of electronically imaged copies, to Purchaser and/or Custodian. Seller shall not be responsible for the costs of any tax or flood services contracts, certifications or set up costs, provided that Seller delivers all contracts or information as required by Sections 7.04(e) and 7.05(d), as applicable. If Seller fails to deliver such contracts or information, or such information is incorrect as to any Mortgage Loan, Seller shall bear and pay Purchaser’s actual, out-of-pocket costs and expenses for such contracts, certifications or set up costs for such Mortgage Loans, not to exceed $85.00 per Mortgage Loan for tax services contracts, and not to exceed $10.00 per Mortgage Loan for flood certifications.

Section 7.19

Document Custodian.

Bank of America, N.A., acting through its contractor and wholly owned subsidiary, ReconTrust Company, N.A., shall act as the initial Custodian for Purchaser as of each Servicing Transfer Date. Seller shall reasonably cooperate with Purchaser in Purchaser’s negotiation of a Custodial Agreement with ReconTrust Company, N.A. prior to the Sale Date. The fees and expenses of any Custodian, and other costs of delivery of documents with respect to any Mortgage Loan to any Custodian, other than the Custodian used with respect to such Mortgage Loan as of the Sale Date shall be borne by the Purchaser.

Section 7.20

Use of Name.

Except as otherwise required by applicable law, Purchaser shall not use Seller’s name in connection with Purchaser’s or its designee’s servicing of the Mortgage Loans or ownership of the Purchased Assets after each applicable Servicing Transfer Date, and shall remove all references to the name of Seller in materials and communications used in connection with Purchaser’s or its designee’s servicing of the Mortgage Loans or ownership of the Purchased Assets promptly after such Servicing Transfer Date.

Section 7.21

Conduct of Business Prior to the Closing.

From the date of this Agreement until the Sale Date, except as contemplated by this Agreement or as required by Applicable Requirements, the Seller shall use commercially reasonable efforts to conduct its servicing business with respect to the Mortgage Servicing Rights and operate the Purchased Assets in the ordinary course of business. Without limiting the generality of the foregoing sentence, from the date of this Agreement until the Sale Date, except as contemplated by this Agreement or as required by the Applicable Requirements, the Seller shall not, without the prior written consent of Purchaser, which shall not be unreasonably withheld or delayed:

(a) amend in any material respect or terminate the Servicing Agreement; provided, however, that the expiration of any such Servicing Agreement by its terms prior to the Sale Date shall be deemed not to be a termination of such Servicing Agreement under this clause (a);

(b) sell, transfer, assign, cancel, surrender, subject to any lien or otherwise dispose of or encumber any of the Purchased Assets in one transaction or a series of related transactions;

(d) agree to do any of the foregoing.

Section 7.22

No Transfer Without Consent.

Notwithstanding anything herein to the contrary, this Agreement shall not constitute an agreement to sell, assign, transfer, convey or deliver any interest in any Purchased Assets if a sale, assignment, transfer, conveyance, or delivery or an attempt to make such a sale, assignment, transfer, conveyance, or delivery without obtaining any applicable Servicing Agreement Consent would constitute a breach or violation of the Servicing Agreement or would affect adversely the rights of the Seller or the Purchaser thereunder; and any sale, assignment, transfer, conveyance, or delivery to the Purchaser of any interest in the Purchased Assets shall be made subject to such Servicing Agreement Consent.

Section 7.23

Use of Vendors.

Purchaser will enter into discussions with Safeguard Properties Management, LLC (“Safeguard”) and Safeguard Properties, LLC, between the date hereof and the initial Servicing Transfer Date in order to explore and discuss the possibility of entering into one or more agreements effective as of the initial Servicing Transfer Date pursuant to which Purchaser would continue to use Safeguard for the provision of Services in respect of all Mortgage Servicing Rights acquired hereunder on substantially the same terms as contained in the Outsourcing Agreement and Statement of Work (collectively, the “Services Agreement”), a copy of which Seller provided to Purchaser. “Services” shall have the meaning set forth in the Services Agreement. Purchaser will undertake such discussions in good faith in an effort to enter into such agreements to the extent that it is reasonably satisfied with the quality, pricing and other terms of such services as may be agreed with Safeguard. Notwithstanding the foregoing, but without limiting the foregoing, nothing contained herein shall require Purchaser to execute an agreement to procure the Services from Safeguard either at all or on any specific terms and conditions.

Section 7.24

Cooperation with Financing Efforts.

The Seller shall, at the Purchaser’s sole cost and expense, provide all cooperation reasonably requested by the Purchaser (that is customary) in connection with the Purchaser’s obtaining any financing required to consummate the Transactions (provided, that such requested cooperation shall not interfere unreasonably with the business or operations of the Seller), including delivering to the Purchaser (and/or assisting the Purchaser to prepare) reasonable due diligence materials pertaining to the Purchased Assets and requested by the Purchaser’s lenders or their representatives (including information to be used in the preparation of an informational package regarding the business, operations, financial projections and prospects of the Purchaser and the Purchased Assets which is customary for such financing or reasonably necessary for the completion of such financing by such lenders, to the extent reasonably requested by Purchaser).

Section 7.25

Excess Yield.

In the event that Seller has conveyed or advanced any “excess yield” to FNMA (whether pursuant to any Excess Servicing Rights Agreement or otherwise), Seller shall have no right to reimbursement in respect thereof from Purchaser.

Section 7.26

Subsequent Transfer of Mortgage Servicing Rights

If Purchaser assigns a Mortgage Servicing Right to any Person, it shall either obtain an agreement from such Person to assume Purchaser’s obligations under and otherwise comply with the requirements applicable to Purchaser set forth in Sections 7.12(b) (but with respect to clauses (ii) and (iii) only for so long as the applicable obligations under the NMS remain outstanding), 7.15 and 7.17, and shall ensure such Person’s compliance therewith.

Section 7.27

Joint Marketing Agreement

Promptly following the Effective Date, Seller shall share with Purchaser information regarding Mortgagors necessary or reasonably requested to enable Purchaser, following the Sale Date, to conduct refinancing solicitations of such Mortgagors and shall use best efforts to direct any

refinancing inquiries from Mortgagors to Purchaser, all in accordance with and subject to Applicable Requirements. Notwithstanding the foregoing, any refinancing solicitation of Mortgagors by Purchaser based on information provided by Seller, including references to Seller, shall only be conducted pursuant to a mutually agreeable protocol to be entered into by Purchaser and Seller promptly following the Effective Date (and in any event, within ten (10) days thereafter) or within such other time period mutually agreed upon by Purchaser and Seller). Purchaser shall indemnify, defend and hold Seller and its Related Parties harmless from and shall reimburse Seller and its Related Parties for any Losses suffered or incurred by Seller or its Related Parties that result from or arise out of Purchaser’s failure to use such information regarding, and solicit for refinancing, such Mortgagors in accordance with Applicable Requirements and the agreed upon protocol. Notwithstanding the foregoing, Purchaser shall neither indemnify, defend and hold Seller and its Related Parties harmless from nor reimburse Seller and its Related Parties for any Losses suffered or incurred by Seller or its Related Parties that result from or arise out of Purchaser’s reliance on the information provided by Seller pursuant to the agreed upon protocol relating to either the Mortgagor’s bankruptcy status or the Mortgagor’s prior notice to Seller of opt-out from information sharing. Purchaser acknowledges that Seller will not provide any information to Purchaser regarding whether Mortgagors in California have opted in or opted out of information sharing or otherwise are eligible or ineligible for solicitation based on such information sharing by virtue of California privacy laws.

Section 7.28

Compensatory Fee Payment

Prior to the Sale Date, Seller shall pay to FNMA all amounts required to be paid thereby pursuant to the Compensatory Fee Resolution Agreement between Seller and FNMA.

ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

The obligations of Purchaser under this Agreement are subject to the satisfaction, or waiver, of the following conditions as of the Sale Date.

Section 8.01

Correctness of Representations and Warranties.

The representations and warranties made by Seller in Article IV of this Agreement (other than the Fundamental Reps in Article IV) are true and correct, except for the failure or failures of such representations and warranties to be so true and correct that (after excluding any effect of materiality or Seller Material Adverse Effect qualifications set forth in any such representation or warranty) have not had and would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect. The Fundamental Reps made by Seller in Article IV of this Agreement are true and correct in all material respects.

Section 8.02

Compliance with Conditions.

All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Seller prior to the Sale Date, shall have been duly performed in all material respects.

Section 8.03

No Actions.

There shall not have been commenced or, to Seller’s knowledge, threatened any action, suit or proceeding which will likely materially and adversely affect the consummation of the Transactions.

Section 8.04

Consents.

Seller shall have obtained all consents, approvals or other requirements of third parties, if any, required for the consummation of the Transactions, including the Servicing Agreement Consent.

Section 8.05

Tri-Party Agreement.

Seller, Purchaser and FNMA shall have entered into the Tri-Party Agreement.

Section 8.06

Certificate of Seller.

On the Sale Date, Seller shall provide Purchaser a certificate, substantially in the form attached hereto as Exhibit D, signed by an authorized officer of Seller dated as of such date, applicable to the Transactions, to the effect that the conditions set forth in Sections 8.01and 8.02 have been satisfied as of such date.

Section 8.07

Delivery of Documents; Advance Financing.

Seller shall have delivered to Purchaser each of the documents provided for in Section 2.02(b) hereof, as applicable.

ARTICLE IX

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

The obligations of Seller under this Agreement are subject to the satisfaction, or waiver, of the following conditions as of the Sale Date:

Section 9.01

Correctness of Representations and Warranties.

The representations and warranties (other than the Fundamental Reps) made by Purchaser in this Agreement are true and correct, except for the failure or failures of such representations and warranties to be so true and correct that (after excluding any effect of materiality or Purchaser Material Adverse Effect qualifications set forth in any such representation or warranty) have not had and would not reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse Effect. The Fundamental Reps made by Purchaser in this Agreement are true and correct in all material respects.

Section 9.02

Compliance with Conditions.

All of the terms, conditions, covenants and obligations of this Agreement required to be complied with and performed by Purchaser prior to the Sale Date, shall have been duly performed in all material respects.

Section 9.03

Corporate Resolution.

Seller shall have received from Purchaser a certified copy of its corporate resolution approving the execution and delivery of this Agreement and the consummation of the Transactions, together with such other certificates of incumbency and other evidences of corporate authority as Seller or its counsel may reasonably request.

Section 9.04

Certificate of Purchaser.

On the Sale Date, Purchaser shall provide Seller a certificate, substantially in the form attached hereto as Exhibit D , signed by an authorized officer of Purchaser dated as of such date, applicable to the Transactions, to the effect that the conditions set forth in Sections 9.01 and 9.02 have been satisfied as of such date.

Section 9.05

No Actions.

There shall not have been commenced or, to the best of Purchaser’s knowledge, threatened any action, suit or proceeding that will likely materially and adversely affect the consummation of the Transactions.

Section 9.06

Delivery of Documents.

Purchaser shall have delivered to Seller each of the documents provided for in Section 2.02(b) hereof, as applicable.

ARTICLE X

TERMINATION

Section 10.01

Termination.

(a) This Agreement may be terminated at any time either (x) prior to the Closing with respect to the sale of Mortgage Servicing Rights or (y) except under Section 10.01(a)(iv) hereof, after the applicable Closing with respect to the related Interim Servicing Addendum as applied to the relevant Mortgage Loans:

(i) by the mutual written agreement of Purchaser and the Seller;

(ii) by the Seller or Purchaser ( provided , that the terminating Party is not then in breach of any representation, warranty, covenant or other agreement contained herein in any material respect, after excluding any effect of materiality or Seller Material Adverse Effect or Purchaser Material Adverse Effect qualifications set forth in any such representation or warranty) if there shall have been a breach of any of the applicable representations or warranties set forth in this Agreement on the part of the other Party, such that a condition to the obligation of the terminating Party to close the Transactions set forth in Article VIII or IX, as applicable, cannot be satisfied and which breach by its nature cannot be cured prior to the Termination Date or shall not have been cured within thirty (30) days after delivery of written notice of such breach by the terminating Party to the other Party;

(iii) by the Seller or Purchaser ( provided , that the terminating Party is not then in breach of any representation, warranty, covenant or other agreement contained herein in any material respect, after excluding any effect of materiality or Seller Material Adverse Effect or Purchaser Material Adverse Effect qualifications set forth in any such representation or warranty) if there shall have been a failure to perform or comply with any of the applicable covenants or agreements set forth in this Agreement on the part of the other Party in any material respect, such that a condition to the obligation of the terminating Party to close the Transactions set forth in Article VIII or IX, as applicable, cannot be satisfied and which failure by its nature cannot be cured prior to the Termination Date or shall not have been cured within thirty (30) days after delivery of written notice of such failure by the terminating Party to the other Party;

(iv) by the Seller or Purchaser, if the Closing or applicable Subsequent Closing shall not have occurred by the Termination Date or such later date as shall have been agreed to in writing by Purchaser and the Seller; provided , that no Party may terminate this Agreement pursuant to this Section 10.01(a)(iv) if the failure of the Closing or such Subsequent Closing to have occurred on or before the Termination Date was due to such Party’s willful breach of any representation or warranty or material breach of any covenant or other agreement contained in this Agreement;

(v) by the Seller or Purchaser if (A) final action has been taken by a Governmental Entity whose approval is required in connection with this Agreement and the Transactions, which final action (1) has become unappealable and (2) does not approve this Agreement or the Transactions, (B) any Governmental Entity whose approval or nonobjection is required in connection with this Agreement and the Transactions has stated that it will not issue the required approval or nonobjection, or (C) any court of competent jurisdiction or other Governmental Entity shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Transactions and such order, decree, ruling or other action shall have become final and unappealable.

(b) Either Party desiring to terminate this Agreement pursuant to Section 10.01(a) shall give written notice of such termination to the other Party.

Section 10.02

Effect of Termination.

In the event of termination of this Agreement pursuant to Section 10.01(a), (a) this Agreement shall forthwith become void and have no further force, except that the provisions of this Section 10.02, Section 12.01, Section 12.02, Section 12.03, Section 12.04, Section 12.06, Section 12.07, Section 12.09, Section 12.10, Section 12.11, Section 12.12, Section 12.14 and Section 12.15, and any other Section which, by its terms, relates to post-termination rights or obligations, shall survive such termination of this Agreement and remain in full force and effect, (b) Purchaser shall return to Seller all documents, information and other materials received from Seller or its representatives relating to Mortgage Servicing Rights, Mortgage Loans or Servicing, and the Transactions, whether so obtained before or after the execution hereof, without retention of copies thereof other than as required by applicable law or as required by Purchaser’s bona fide internal record keeping and retention policies and (c) Seller and Purchaser shall promptly cause the Escrow

Agent to disburse the remaining portion of the Deposit to Purchaser pursuant to Section 3.01(a) hereof, related to the Mortgage Servicing Rights under a Servicing Agreement as to which this Agreement is terminated; provided, that such termination is not by Seller pursuant to Section 10.01(a) hereof based on a breach by Purchaser. Notwithstanding the foregoing, the termination of this Agreement pursuant to Section 10.01(a) shall not affect the rights of either Party with respect to any liabilities incurred or suffered by such Party as a result of the breach by the other Party of any of its representations, warranties, covenants or agreements in this Agreement.

ARTICLE XI

INDEMNIFICATION; CURE OR REPURCHASE

Section 11.01

Indemnification by Seller.

Seller shall indemnify, defend and hold Purchaser and its Related Parties harmless from and shall reimburse Purchaser and its Related Parties for any Losses suffered or incurred by Purchaser or its Related Parties that result from or arise out of:

(a) Any breach of any representation or warranty by Seller;

(b) Any non-fulfillment of any covenant or other obligation of Seller contained in this Agreement or the Interim Servicing Addendum; and

(c) Any failure by Seller or any originator or prior servicer to originate, pool, sell or service any of the Mortgage Loans prior to each Servicing Transfer Date in compliance with all Applicable Requirements;

provided further, however, that Seller shall not be responsible to Purchaser or its Related Parties for that portion, if any, of any Loss that arises out of or results from Purchaser’s or its designee’s failure to service any of the Mortgage Loans or Mortgage Servicing Rights after each Servicing Transfer Date in compliance with all Applicable Requirements; and provided further, however, that Purchaser or such Related Parties have taken all reasonable and appropriate actions to mitigate any such Losses. Purchaser shall notify Seller promptly after receiving written notice of the assertion of any litigation, proceedings, governmental investigations, orders, injunctions, decrees or any third party claims subject to indemnification under this Agreement (each, a “Third Party Claim”), provided, however the failure to give such notification will not affect the indemnification provided hereunder unless the Seller is materially prejudiced by such failure and had no actual knowledge of such Third Party Claim, and then only to the extent of such prejudice. Upon receipt of such notice of a Third Party Claim, Seller shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to Purchaser; provided, however, Seller shall obtain the prior written approval of Purchaser before entering into any settlement of such Third Party Claim that includes any non-monetary relief, remedies or obligations that would be applicable to Purchaser or the Purchased Assets, which approval shall not be unreasonably withheld. In the event Purchaser reasonably concludes that there may be legal defenses available to it that are different from or in addition to those available to Seller, Purchaser shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld. Any exercise of such rights by Purchaser shall not relieve Seller of its obligations and liabilities under this Section 11.01 or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, Purchaser agrees to cooperate and cause its Related Parties to cooperate in good faith with Seller to ensure the proper and adequate defense of such Third Party Claim.

Section 11.02

Indemnification by Purchaser.

Purchaser shall indemnify, defend and hold Seller and its Related Parties harmless from and shall reimburse Seller and its Related Parties for any Losses suffered or incurred by Seller or its Related Parties that result from or arise out of:

(a) Any breach of a representation or warranty by Purchaser;

(b) Any non-fulfillment of any covenant or obligation of Purchaser contained in this Agreement or in the Interim Servicing Addendum;

(c) Any failure by Purchaser or its designee’s to service any of the Mortgage Loans and Mortgage Servicing Rights after each Servicing Transfer Date in compliance with all Applicable Requirements, except if and to the extent such failure results from a breach of a representation or warranty by Seller or any prior act or omission of Seller or any originator or prior servicer in violation of Applicable Requirements; and

(d) Seller’s cooperation with Purchaser’s financing efforts pursuant to Section 7.24 hereof, including the arrangement of such financing and information provided by Seller for such purpose and utilized in connection therewith, without regard to the relative fault of the Parties or any other equitable considerations, except to the extent that such information provided by Seller is materially inaccurate;

provided, however, that Seller or Related Party has taken all reasonable and appropriate actions to mitigate any such Losses. Seller shall notify Purchaser promptly after receiving written notice of the assertion of any Third Party Claim, provided, however, that the failure to give such notification will not affect the indemnification provided hereunder unless the Purchaser is materially prejudiced by such failure and had no actual knowledge of such Third Party Claim, and then only to the extent of such prejudice. Upon receipt of such notice of a Third Party Claim, Purchaser shall have the right to assume the defense of such Third Party Claim using counsel of its choice reasonably satisfactory to Seller; provided, however, Purchaser shall obtain the prior written approval of Seller before entering into any settlement of such Third Party Claim that includes any non-monetary relief, remedies or obligations that would be applicable to Seller, which approval shall not be unreasonably withheld. In the event Seller reasonably concludes that there may be legal defenses available to it that are different from or in addition to those available to Purchaser, Seller shall have the right to select separate counsel and to otherwise separately defend itself but shall not consent to the entry of a judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. Any exercise of such rights by Seller shall not relieve Purchaser of its obligations and liabilities under this Section 11.02 or any other provision of this Agreement. With respect to any Third Party Claim subject to indemnification under this Agreement, Seller agrees to cooperate in good faith with Purchaser to ensure the proper and adequate defense of such Third Party Claim.

Section 11.03

Cure or Repurchase.

(a) Seller shall repurchase the Mortgage Servicing Rights with respect to any Mortgage Loan from Purchaser if Seller or an Affiliate of Seller is obligated to repurchase the related Mortgage Loan from the Investor. Seller shall repurchase such Mortgage Servicing Rights from the Purchaser at the Repurchase Price, and reimburse Purchaser for the related outstanding Advances that were previously reimbursed to Seller by Purchaser in accordance with Article III of this Agreement and not recovered by Purchaser, or advances of the same type as the Advances that were properly made by Purchaser after each Servicing Transfer Date that are fully reimbursable pursuant to the related Servicing Agreement and as to which Purchaser is entitled to recovery.

(b) The Purchase Price recapture under this Section 11.03 and Section 11.04 (the “Repurchase Price”) shall be subject to the following provisions: from the Sale Date until the first anniversary of the Sale Date, the Seller shall pay Purchaser one hundred (100%) percent of the Purchase Price Percentage multiplied by the unpaid principal of the related Mortgage Loan as of the date of repurchase; after the first anniversary of the Sale Date and until the second anniversary of the Sale Date, the Seller shall pay Purchaser seventy-five (75%) percent of the Purchase Price Percentage multiplied by the unpaid principal of the related Mortgage Loan as of the date of repurchase; after the second anniversary of the Sale Date and until the third anniversary of the Sale Date, the Seller shall pay Purchaser fifty (50%) percent of the Purchase Price Percentage multiplied by the unpaid principal of the related Mortgage Loan as of the date of repurchase; after the third anniversary of the Sale Date and until the fourth anniversary of the Sale Date, the Seller shall pay Purchaser twenty-five (25%) percent of the Purchase Price Percentage multiplied by the unpaid principal of the related Mortgage Loan as of the date of repurchase; and after the fourth anniversary of the Sale Date, the Seller shall not pay any amount for the related Mortgage Servicing Rights.

(c) Notwithstanding anything to the contrary in this Agreement, but subject to Purchaser’s right to appeal any demands by any Investor and subject to Purchaser’s right to indemnification under this Article XI, Purchaser acknowledges and agrees that Purchaser shall be obligated to cure and/or repurchase any Mortgage Loan, if requested by the Investor, if the repurchase required by such Investor results from or arises out of (i) Purchaser’s having breached any representation, warranty, covenant, or other provision of this Agreement in any respect, (ii) Purchaser’s having failed to service any Mortgage Loan in accordance with Applicable Requirements and generally accepted servicing practices, or (iii) any act or omission of Purchaser (or any of its agents or representatives) which caused the Seller to breach the Servicing Agreement in any respect.

Section 11.04

Subsequent Transfer Due to Repurchase.

(a) In the event the Seller is required to repurchase any Mortgage Servicing Rights pursuant to Section 11.03 or otherwise, or requests a repurchase of Mortgage Servicing Rights related to a Mortgage Loan pursuant to the terms of this Agreement, on the next available Investor transfer date or such other date as agreed to by Purchaser and Seller, Seller shall deliver to Purchaser the related Repurchase Price and any other amounts to which Purchaser may be entitled under this Agreement in connection with a repurchase and Purchaser shall transfer the Mortgage Servicing Rights with respect to such Mortgage Loan to Seller. Upon such date, the Purchaser shall fully release its ownership interest in such Mortgage Servicing Rights and will have no claim to ownership of or any other interest in such Mortgage Loan.

(b) In the event the Seller or an Affiliate of Seller is required to repurchase any Mortgage Loans pursuant to the applicable Servicing Agreement, on the next available Investor transfer date, if applicable, or such other date as agreed to by Purchaser and Seller, Seller shall deliver to Purchaser or the Investor, as applicable, the related Repurchase Price and the Purchaser shall transfer or cooperate in the transfer, as applicable, of the Mortgage Loan to Seller. Upon such date, the Purchaser shall fully release its ownership interest in the Mortgage Servicing Rights with respect to such Mortgage Loan and will have no claim to ownership of or any other interest in such Mortgage Loan, and shall recognize the Seller as the owner of such Mortgage Loan and related Mortgage Servicing Rights.

(c) In the event that the Seller repurchases any Mortgage Loans, the Purchaser agrees to cooperate with the Seller, and any party designated as the successor servicer or subservicer, in transferring the Servicing to such successor servicer and/or in transferring the Mortgage Loan to Seller. In addition, the Purchaser shall be responsible for notifying the related Mortgagors of any transfer of Servicing in accordance with the Applicable Requirements. On or before the date upon which Servicing is transferred from the Purchaser to any successor servicer, with respect to one or more of the Mortgage Servicing Rights related to a Mortgage Loan and/or the Mortgage Loan is transferred to Seller, as applicable and as described in the preceding paragraphs of this Section 11.04 (the “Subsequent Transfer Date”), the Purchaser shall prepare, execute and deliver to the successor servicer any and all Mortgage Loan Documents, data tapes, and other instruments necessary or appropriate to effect the purposes of Servicing, and shall deliver all custodial and escrow funds related to such Mortgage Loans. The Purchaser shall reasonably cooperate with the Seller and such successor servicer in effecting the transfer of the Purchaser’s responsibilities and rights hereunder with respect to one or more of the Mortgage Servicing Rights related to a Mortgage Loan and/or Mortgage Loans. Seller shall bear all costs and expenses reasonably related to the transfer of such Mortgage Loans (including with regard to assignments (including in the case of any deficient assignments that are re-sent for recordation by Purchaser)). Notwithstanding the foregoing, the Parties may agree to the continued servicing or subservicing of any related Mortgage Loan by Purchaser or an Affiliate thereof on behalf of Seller, commencing on such Subsequent Transfer Date, pursuant to any existing or new servicing or subservicing agreement with Seller. In such event, Purchaser shall not be required to notify related Mortgagors of the transfer of servicing or deliver to Seller such Mortgage Loan Documents, data tapes, or other instruments, custodial or escrow funds, to the extent agreed by the Parties.

Section 11.05

Other Indemnification Provisions.

Other than to seek to compel performance a Party’s obligations under the Agreement, the indemnification and cure and repurchase provisions of this Article XI shall be the sole and exclusive remedies of each Party and their respective Related Parties (a) for any breach of any representation, warranty, covenant or agreement by the other Party contained in this Agreement and (b) arising out of the transactions contemplated by this Agreement, either under this Agreement, at law or in equity. For the avoidance of doubt, the right of any Person to receive an indemnification payment or payment in connection with a repurchase under this Article XI shall not create a right to offset

against such indemnification or repurchase payment any fee or payment payable by such Person under this Agreement; provided, however, that such Person shall have a right to offset against such payment any such fee or payment payable by such Person under this Agreement to the extent that such payment (i) has been agreed to by the Parties in writing or (ii) has been determined pursuant to a final and nonappealable award or decision by an arbitrator in accordance with Section 12.10 or, if applicable, a court of competent jurisdiction.

Section 11.06

Limitations on Indemnification.

(a) In addition to the other limitations contained in this Agreement, the indemnification obligations of Seller under this Article XI are subject to the following terms and conditions: (i) Seller shall be liable to the Purchaser and Purchaser Related Parties under Sections 11.01(a) and 11.01(c) (except with respect to Fundamental Reps, to which this clause (i) shall not apply) only if the aggregate amount of all Losses under Sections 11.01(a) and 11.01(c) exceeds one and one-half percent (1.5%) of the Purchase Price actually paid (the “Threshold”), in which case Seller shall be obligated to indemnify the Purchaser and Purchaser Related Parties for the aggregate amount of all such Losses under Sections 11.01(a) and 11.01(c) in excess of the Threshold; and (ii) Seller shall have no liability for indemnification hereunder for any Loss arising from a change in or contrary judicial interpretation of any federal, foreign, state or local law after the Sale Date having a retroactive effect.

(b) In addition to the other limitations contained in this Agreement, except with respect to Purchaser’s obligation to pay the Purchase Price and reimburse Seller for Advances in accordance with the terms of this Agreement, Purchaser’s indemnification obligations under this Article XI are subject to the following terms and conditions: Purchaser shall be liable to the Seller and Seller Related Parties under Sections 11.02(a) and 11.02(c) (except with respect to Fundamental Reps, to which this limitation shall not apply) only if the aggregate amount of all Losses under Sections 11.02(a) and 11.02(c) exceeds the Threshold, in which case Purchaser shall be obligated to indemnify the Seller and Seller Related Parties for all such Losses under Sections 11.02(a) and 11.01(c) in excess of the Threshold.

(c) In determining (i) whether there has been a breach of any representation or warranty by Seller or Purchaser pursuant to Section 11.01(a) or Section 11.02(a), respectively, and (ii) the amount of any Loss arising from such breach, such representation and warranty shall be considered without regard to any qualification by or reference to the words “Seller Material Adverse Effect,” “Purchaser Material Adverse Effect,” “material,” “materially” or any other similar words contained therein.

Section 11.07

Survival.

All of the representations and warranties of Seller contained in Article IV and all of the representations and warranties of Purchaser contained in Article VI shall survive the Sale Date, and continue in full force and effect for a period of eighteen (18) months thereafter (except in the case of Fundamental Reps, which shall survive indefinitely) and, except as otherwise provided in this Section 11.07, no Person may seek indemnification, cure or repurchase under this Article XI with respect to a breach of such representations and warranties after the expiration of such eighteen (18) month period. All of the representations and warranties of Seller contained in Article V shall

survive the Sale Date, and continue in full force and effect for a period of eighteen (18) months thereafter (except in the case of Fundamental Reps, which shall survive indefinitely and, except in the case of Section 5.03 (Advances), which shall survive for forty-eight (48) months) and, except as otherwise provided in this Section 11.07, Purchaser and its Related Parties may not seek indemnification, cure or repurchase under this Article XI with respect to a breach of such representations and warranties after the expiration of such eighteen (18) month period; provided, however, that, in the case of any Third Party Claims, Purchaser and its Related Parties shall be entitled to seek indemnification, cure or repurchase under this Article XI with respect to a breach of such representations and warranties for a period of forty-eight (48) months following the Sale Date. The indemnification obligations of Seller and Purchaser under Section 11.01(c) and 11.02(c), respectively, shall survive the Sale Date, and continue in full force and effect for a period of eighteen (18) months thereafter and, except as otherwise provided in this Section 11.07, Purchaser and Seller and their respective Related Parties may not seek indemnification under Sections 11.01(c) and 11.02(c), respectively, with respect to a fact or circumstance that gives rise to such indemnification after the expiration of such eighteen (18) month period; provided, however, that, in the case of any Third Party Claims, Purchaser and Seller and their respective Related Parties may seek indemnification under Sections 11.01(c) and 11.02(c), respectively, for a period of forty-eight months following the Sale Date. Such survival periods in all cases shall be extended to five (5) years with respect to claims by Purchaser against Seller arising out of or resulting from missing or materially inaccurate Credit and Servicing Files in violation of Applicable Requirements as to which Purchaser cannot determine with reasonable certainty the Applicable Requirements thereof. The foregoing limitations shall not apply with respect to those specific pending claims for indemnification for which the requisite written notice was given by either Party to the other Party on or prior to the end of the applicable survival period and as to which Losses have begun to accrue. The Parties’ respective covenants and agreements contained in this Agreement to be performed at or after the Sale Date, shall survive indefinitely unless otherwise set forth herein; provided, however, that any such survival shall not be deemed, directly or indirectly, to affect the survival periods specifically applicable to claims with respect to representations and warranties and indemnities provided in this Section.

Section 11.08

Treatment of Indemnity Payments.

Amounts paid under this Article VII shall be treated as adjustment to the Purchase Price and the Parties will report such payments consistent with such treatment, unless there is no basis for doing so under applicable law.

ARTICLE XII

MISCELLANEOUS

Section 12.01

Costs and Expenses.

Each of the Parties hereto shall bear its own fees, expenses and commissions of financial, legal and accounting advisors and other outside consultants incurred in connection with the due diligence, negotiation and execution of this Agreement and the Transactions. In addition, Seller shall be responsible for all costs, fees and expenses relating to: (i) file shipping costs and image transfer costs in connection with the sale of the Mortgage Servicing Rights contemplated herein; (ii) all registration fees or transfer costs assessed by MERS to reflect the transfer of the Mortgage Loans

registered with MERS; (iii) all fees and costs required to generate and deliver (and record) Assignments of Mortgage instruments to Purchaser (including the reimbursement of Purchaser for any required re-recordings made thereby as provided in Section 7.01(b)); (iv) transfer fees and expenses (including, for the avoidance of doubt, legal fees) imposed or incurred by the Investor or to process a request for Servicing Agreement Consent; (v) except as provided in Section 7.19, all fees and expenses of Seller’s Custodian to transfer the Mortgage Loans to the Purchaser’s Custodian, if applicable; and (vi) the filing of transfers of claims by Purchaser as provided in Section 7.03(d). Purchaser shall be responsible for all fees, costs and expenses relating to the retention of a back-up servicer that the Investor may require as a condition to providing a Servicing Agreement Consent, as well as, except otherwise set forth in this Agreement, all costs and expenses pertaining to conduct of the Servicing by Purchaser following its consummation of the Transactions.

Section 12.02

Confidentiality.

Each Party understands that certain information which it has been furnished and will be furnished in connection with the Transactions, including information concerning business procedures, servicing fees or prices, Non Public Personal Information and/or Personally Identifiable Financial Information (as those terms are defined in Sections 573.3(n) and (o) of the Office of Thrift Supervision Regulations on Privacy of Consumer Information published at 12 C.F.R. Chapter V implementing Title V of the Gramm-Leach-Bliley Act), policies or plans of the other Party or any of its Affiliates, is confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others (except for its Affiliates and its and their respective directors, managers, officers, employees, financing sources, agents, representatives and advisors who have a need to know such information) or use it, except in connection with the proposed acquisition contemplated by this Agreement or as such Party reasonably determines necessary as a part of its filing of Securities and Exchange Commission Forms 8-K, 10-Q or 10-K as related to disclosures to investors, without the prior written consent of the Party furnishing such information (and provided in connection with such Securities and Exchange Commission filings, the Party intending to disclose such information shall provide the other Party with drafts of the relevant portions of such filings sufficiently in advance of such filing to allow the other Party a reasonable opportunity to review and comment, and shall reasonably consider the comments provided by the other Party). Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or proprietary information for these purposes (provided, however that the public announcement of such information may be subject to Section 12.14, as provided therein). If Purchaser, any of its Affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the Transactions, Purchaser agrees to provide Seller with prompt notice of such request(s) so that Seller may seek an appropriate protective order and/or waive Purchaser’s compliance with the terms of this Section 12.02. If Seller, any of its Affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it in connection with the Transactions, Seller agrees to provide Purchaser with prompt notice of such request(s) so that Purchaser may seek an appropriate protective order and/or waive Seller’s compliance with the terms of this Section 12.02. Notwithstanding the terms of this Section 12.02, if, in the absence of a protective order or the receipt of a waiver hereunder, the Purchaser or Seller is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, the Purchaser or Seller may

disclose such information to such tribunal without liability hereunder. If the proposed acquisition is not consummated, each Party agrees to promptly return to the other, immediately upon request, all confidential materials, and all copies thereof, which have been furnished to it in connection with the Transactions.

Section 12.03

Broker’s Fees.

Each Party hereto represents and warrants to the other that it has made no agreement to pay any finder’s, agent’s, broker’s or originator’s fee arising out of or in connection with the subject matter of this Agreement, other than Seller’s agreement[s] with Phoenix Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Seller shall be responsible for all fees due to Phoenix Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. In the event the Purchaser enters into an agreement to pay any finder’s, agent’s, broker’s, advisor’s or originator’s fee arising out of or in connection with the subject matter of this Agreement, Purchaser shall be solely responsible for all such fees. The Parties hereto shall indemnify and hold each other harmless from and against any such obligation or liability and any expense incurred in investigating or defending (including reasonable attorneys’ fees) any claim based upon the other Party’s actions in connection with such obligation.

Section 12.04

Notices.

All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by prepaid overnight delivery service:


(a)	If to the Purchaser, to:	Green Tree Servicing LLC
		345 St. Peter Street
		1100 Landmark Towers
		St. Paul, Minnesota 55102
		Attention: General Counsel

	With a copy to:	Willkie Farr & Gallagher LLP
		787 Seventh Ave
		New York, New York 10019
		Attn: Rosalind Fahey Kruse

(b)	If to the Seller, to:	Bank of America
		Bank of America Office Park
		9000 Southside Blvd. - Bldg 400
		Jacksonville, Florida 32256-0787
		Attn: Larry Washington

	With a copy to:	Bank of America
		4500 Park Granada
		Calabasas, California 91302
		Attn: Paul Liu, Esq.


		With a copy to:		K&L Gates LLP
				1601 K St. N.W.
				Washington, D.C. 20006
				Attn: Laurence E. Platt

or to such other address as Purchaser or Seller shall have specified in writing to the other.

Section 12.05

Waivers.

Either Purchaser or Seller may, by written notice to the other:

(a) Extend the time for the performance of any of the obligations or other transactions of the other; and

(b) Waive compliance with or performance of any of the terms, conditions, covenants or obligations required to be complied with or performed by the other hereunder.

The waiver by Purchaser or Seller of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

Section 12.06

Entire Agreement; Amendment.

This Agreement and the Transaction Documents constitute the entire agreement between the Parties with respect to the sale of the Purchased Assets and supersede all prior agreements with respect thereto. This Agreement may be amended only in a written instrument signed by both Seller and Purchaser.

Section 12.07

Binding Effect.

This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties hereto and their successors and assigns, any rights, obligations, remedies or liabilities.

Section 12.08

Headings.

Headings on the Articles and Sections in this Agreement are for reference purposes only and shall not be deemed to have any substantive effect.

Section 12.09

Applicable Law.

This Agreement shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the Parties hereunder shall be determined in accordance with the laws of the State of New York applicable to contracts executed in and to be performed in that state, except to the extent preempted by Federal law. The Parties agree to waive trial by jury in the event of any dispute under this Agreement.

Section 12.10

Dispute Resolution.

Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in the city of New York, New York, before one or three neutral arbitrators as described below. The arbitration shall be administered by the American Arbitration Association (“AAA”) pursuant to its arbitration rules & procedures (collectively the “Rules”). Judgment on any award may be entered in any court having jurisdiction. This clause shall not preclude the parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. The Rules shall be supplemented by the provisions described below. In the event of any conflict between the Rules and the provisions described below, such provisions shall control.

(a) Any dispute in which a claim exceeds two hundred fifty thousand dollars ($250,000) shall be decided by three (3) neutral arbitrators (each, an “Arbitrator”) appointed by AAA in accordance with the Rules. Any dispute in which a claim is less than two hundred fifty thousand dollars ($250,000) shall be decided by one (1) neutral Arbitrator appointed by AAA in accordance with the Rules. Any Arbitrator appointed by AAA shall be a retired judge or a practicing attorney with no less than fifteen years of experience as an arbitrator;

(b) For any dispute in which the claim is less than two hundred fifty thousand dollars ($250,000) the Arbitrator is authorized to render a partial or full summary judgment, in a manner similar to the procedure provided for in Rule 56 of the Federal Rules of Civil Procedure;

(d) The Arbitrator(s) shall have no power or authority, under the Rules or otherwise, to relieve the Parties from their agreement hereunder to arbitrate or otherwise to amend or disregard any provision of this Agreement, including, without limitation, the provisions of this Section 12.10;

(e) The Arbitrator(s) shall have the authority to grant injunctive relief and order specific performance;

(f) The Arbitrator(s) shall not have the authority to award consequential or punitive damages or any form of damages other than compensatory damages;

(g) Each Party shall pay one-half of the fees and expenses of the Arbitrator(s) and one-half of the AAA case management fees; and

(h) The arbitration proceedings and all testimony, filings, documents, and information relating to or presented during the arbitration proceedings shall be deemed to be information subject to the confidentiality provisions of this Agreement.

(i) Notwithstanding the foregoing, in the event that the dispute between the parties involves the correction of errors pursuant to Section 3.03 of this Agreement, the Parties may elect instead to jointly engage a mutually acceptable, nationally recognized independent accounting firm to determine such dispute. The selected accounting firm shall be instructed to reach its determination within thirty (30) days following its engagement and such determination shall be final and binding on the Parties and shall not be subject to review by any court of law absent manifest error; provided, however that: (i) the accounting firm’s engagement shall be limited to resolving any amounts in dispute between the Parties based solely on the information presented by the Parties; provided further, however, that each Party shall provide the other Party with copies of information in its possession and control, or that could otherwise be reasonably obtained, with respect to the dispute upon the reasonable written request of such other Party; (ii) the accounting firm shall deliver to each of the Parties a written report setting forth its determination of the dispute along with any related calculations; and (iii) the fees, costs, and expenses of the accounting firm shall be allocated to the Parties based on the percentage which the portion of the disputed amount not awarded to each Party bears to the total amount disputed by such Party. Any request by a Party to adjust the Purchase Price or such other amounts pursuant to this Section 12.10(i) must be received by the other Party within one hundred eighty (180) days of the applicable Servicing Transfer Date.

Section 12.11

Incorporation of Exhibits and Schedules.

The Exhibits and Schedules hereto shall be incorporated herein and shall be understood to be a part hereof as though included in the body of this Agreement.

Section 12.12

Counterparts.

This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement.

Section 12.13

Severability of Provisions.

If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the rights of the Parties hereto.

Section 12.14

Public Announcement.

No public release or statement concerning the subject matter of this Agreement shall be made by either Party or any of their respective Affiliates or representatives without the express written consent and approval of the other Party, except as required by applicable law, including the Securities Exchange Act of 1934, judicial and administrative judgments, orders or remediation plans, or any listing agreement with or rules of any stock exchange, in which case the Party required to make the release or announcement shall notify the other Party and, to the extent possible, allow the other Party reasonable time to comment on such release or announcement in advance of such issuance, and such public release or statement shall further be subject to Section 12.02, if applicable. The Parties shall use all reasonable efforts to (a) develop a joint communications plan; (b) ensure that all public releases (or portions thereof) and other public statements with respect to the

Transactions shall be consistent with such joint communications plan and (c) unless otherwise required by applicable law, judicial and administrative judgments, orders or remediation plans, or any listing agreement with or rules of any stock exchange, to consult with each other before issuing any public release or otherwise making any public statement with respect to the Transaction Documents or the Transactions.

Section 12.15

Assignment.

Neither Party may assign or subcontract all or any part of this Agreement, or any interest herein, without the prior written consent of the other party, and any permitted assignee shall assume the assignor’s obligations under this Agreement; provided , that, notwithstanding the foregoing, Purchaser shall be permitted to assign (a) its rights and interests in (x) following the applicable Servicing Transfer Date, the Advances and (y) following the applicable Sale Date, the Mortgage Servicing Rights, in each case to be acquired hereunder to any of its financing sources as collateral security, and (b) following the completion of the transactions, subject to and in compliance with Section 7.25 hereof, this Agreement and any or all rights or obligations hereunder (including Purchaser’s rights to purchase the Purchased Assets) to one or more Affiliates of Purchaser, but in either case, no such assignment shall relieve Purchaser of its obligations hereunder.

Section 12.16

Conflicts between Transaction Documents.

In the event of any conflict, inconsistency or ambiguity between the terms and conditions of this Agreement (including, for the avoidance of doubt, the Interim Servicing Addendum) and any Transfer Confirmation, the terms of this Agreement shall control.

Section 12.17

No Third-Party Beneficiaries.

Except as provided in Section 7.09(b) relating to Mortgagors provisions of Sections 11.01 and 11.02 relating to Purchaser’s Related Parties and Seller’s Related Parties, respectively, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns, and nothing herein expressed or implied shall give or be construed to give to any Person, other than the Parties and such respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. For the avoidance of doubt, Seller and Purchaser acknowledge and agree that Mortgagors are not third party beneficiaries of this Agreement, except, if and to the extent required by Applicable Requirements, for the first two sentences of Section 7.09(b).

Section 12.18

Disclosures.

Pursuant to this Agreement, certain Schedules and Exhibits hereto contain disclosures that are necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Article V or to one or more of the covenants of Seller contained in this Agreement. Notwithstanding anything to the contrary herein, or in such disclosures, the inclusion of an item in such disclosures shall not be deemed an admission by Seller that such item represents a material exception or event, state of facts, circumstance, development, change or effect, or that such item has or will result in a Seller Material Adverse Effect.

[signatures on following page]

IN WITNESS WHEREOF, each of the undersigned Parties to this Agreement has caused this Agreement to be duly executed in its corporate name by one of its duly authorized officers, all as of the date first above written.


GREEN TREE SERVICING LLC
Purchaser

By:
Name:
Title:

BANK OF AMERICA, NATIONAL ASSOCIATION
Seller

By:
Name:
Title:

[Mortgage Servicing Rights Purchase and Sale Agreement]

EXHIBIT A

CONTENTS OF MORTGAGE LOAN SCHEDULE

[actual schedule delivered electronically]


ALL LOANS
1	Loan_Num	Loan Number/ID	100100	Text
2	Fannie Mae Loan No	Fannie Mae loan ID
3	Orig_Bal	Original Loan Amount	100,000	Number
4	Investor_Number	To help stratify Investor types, (FNMA MBS, FNMA A/A., FHLMC ARC, GNMA I, GNMA II, Private Investor, Warehouse, Subprime etc	FNMA A/A	Text
5	Investor Header File	To help distinguish Investor types, (FNMA MBS, FNMA A/A., FHLMC ARC, GNMA I, GNMA II, Private Investor, Warehouse, Subprime etc	FNMA MBS	Text
6	Note_Type	To distinguish Conventional, Conventional with PMI, FHA, VA, FHA 203, FHA 265, etc	CONV with PMI	Text
7	UPB	Current Principal Balance	100,000	Number
8	Orig_PI	Original Monthly P&I	1,200	Number
9	PI_Pmt	Current Monthly P&I Payment (IF DIFFERENT FROM ORIGINAL)	1,250	Number
10	TI_Pmt	T&I Constant (added to monthly payment) ($)	290	Number
11	Total_Pmt	Total Payment (T&I + P&I)	1,200	Number
12	Escrow_Flag	Paying Escrow or Not	Y	Text
13	Escrow_Bal	Escrow Balance (current total)	20,000	Number
14	Escrow_Adv_Bal	Escrow Advance Balance (see below advances)	2,000	Number
15	Orig_Stated_Term	Original Term (Balloon Term)	360	Number
16	Orig_Term	Amortization Term	480	Number
17	Balloon_Flag	Balloon Flag	Y	Text
18	PRODUCTCD	Loan Product Type (5/6 ARM, Fixed 30, Balloon 15/30….etc)	5/6 ARM	Text
19	First_Pmt_Dt	First Payment (Due) Date	2/1/2007	Date
20	Int_Paid_To_Dt	Paid Through Date	2/1/2008	Date
21	Maturity_Dt	Maturity Date	1/1/2037	Date
22	Orig_Dt	Origination Date	1/1/2007	Date
23	Orig_Rate	Original Note Rate	6.525	Number
24	Note_Rate	Current Interest Rate	6.625	Number
25	Sfee_Net	Net Serving Fee	0.375	Number
26	Gfee	Gurarantee Fee	0.25	Number
27	Lender_Paid_PMI	LPMI Fee/premium (if any)	0.1	Number
28	Pass through rate	Pass thru	5.9	Number

A-1


29	State	Property State	NY	Text
30	Zip_Code	Property Zip Code	10010	Text
31	Prop_Type	Property Type (e.g. SFD, Condo, etc.)	SFR	Text
32	Lien_Type	Lien Position	1	Text
33	Orig_LTV	Original LTV	85	Number
34	Orig_LTV_Combined	Combined LTV	100	Number
35	Appraised_Value	Appraisal Value	120,000	Number
36	Loan_Purpose	Loan Purpose	Purchase	Text
37	Owner_Occup	Occupancy Type Code	Primary	Text
38	Doc_Type	Documentation Type	Full Doc	Text
39	DOT Hist
40	FICO	Borrower FICO Scores	720	Number
41	Prepay_Penalty_Term	Prepayment Penalty Period/Term	3	Number
42	Orig_Non_Amort_Term	Interest Only period (if any, in months)	120	Number
43	IO_Flag	Interest only Indicator	Y	Text
44	Book_Value	Book Value or GAAP Basis	110	Number
45	Fcl_Flag	Foreclosure Flag	N	Text
46	Bk_Flag	Bankruptcy Flag	N	Text
47	Data_Dt	Data As of Date	1/1/2008	Date
48	SD_Loan_Status	S&D Loan Status (REO, Payment Plan, Current, DQ, Short-Sale….)	REO	Text
49	AVM Value if available	Automated Valuation Figures are helpful to calculate updated Loan to Value.	102,345	Number
50	IO Strip Security	Net Service Sold into an IO Security (if Applicble)	0.01	Number
51	XSIO Flag
52	ARM Margin
53	ARM Life Floor
54	ARM Life Ceiling
55	ARM Index
56	ARM Init PD Cap
57	ARM PD Rate Cap
58	ARM PD Rate Floor
59	ARM Life Cap
60	ARM First Rate Chg Dt
61	ARM Nxt Rate Chg Dt
62	ARM Next Pmt Chg Dt
63	ARM NegAM Flag
64	P&I Advances
65	T&I Advances
66	Corporate Advances All
67	Corporate Advances Advance Only
68	Curr Servicer ID
69	Prior Servicer ID
70	Transfer Date SSRVID
71	ALTA Flag

A-2

EXHIBIT A-1

ESTIMATED PURCHASE PRICE COMPUTATION WORKSHEET


Number of Loans
Unpaid Principal Balance as of month-end	$
Purchase Price Percentage		X	%
Product of Unpaid Principal Balance and Purchase Price Percentage	$
Total Estimated Purchase Price	$
Less Purchase Price Deposit Previously Paid	$
Remaining Purchase Price	$


Completed By: Sharon M. Fuller		Phone Number: 978.778.4223

WIRE INSTRUCTIONS


Bank Name:		Bank of America, N.A.
		New York, New York
ABA Number:		[ ]
Account Name:		[ ]
Account Number		[ ]
Reference:		[ ] MSR Sale [ / / ]

A-1-1

EXHIBIT A-2

PURCHASE PRICE COMPUTATION WORKSHEET


Number of Loans
Unpaid Principal Balance as of month-end	$
Purchase Price Percentage		X	%
Product of Unpaid Principal Balance and Purchase Price Percentage	$
Total Purchase Price	$
Remaining Purchase Price	$


Completed By: Sharon M. Fuller		Phone Number: 978.778.4223

WIRE INSTRUCTIONS


Bank Name:		Bank of America, N.A.
		New York, New York
ABA Number:		[ ]
Account Name:		[ ]
Account Number		[ ]
Reference:		[ ] MSR Sale [ / / ]

A-2-1

EXHIBIT A-3

DEPOSIT CALCULATION

$51,849,781.43

A-3-1

EXHIBIT B

FORM OF TRANSFER CONFIRMATION

[DATE]

[ ]

Attention: General Counsel

Re:

Transfer Confirmation

Ladies and Gentlemen:

This transfer confirmation (the “Transfer Confirmation”) between Bank of America, National Association (the “Seller”) and Green Tree Servicing LLC (the “Purchaser”) sets forth our acknowledgement, pursuant to which the Purchaser is accepting responsibility for the Servicing, and the Seller is transferring the Servicing of those certain Mortgage Loans identified on Schedule 1 hereto (and only those certain Mortgage Loans so identified), effective as of the date of this Transfer Confirmation, which notwithstanding anything to the contrary in the Agreement shall be the “Servicing Transfer Date” for such Servicing and the related Mortgage Loans and Mortgage Servicing Rights.

The transfer of the Servicing as contemplated herein shall be governed by that certain Mortgage Servicing Rights Purchase and Sale Agreement dated as of January 6, 2013, between the Seller and the Purchaser (the “Agreement”).

All exhibits hereto are incorporated herein in their entirety. In the event there exists any inconsistency between the Agreement (including, for the avoidance of doubt, the Interim Servicing Addendum) and this Transfer Confirmation, the Agreement shall be controlling notwithstanding anything contained in this Transfer Confirmation to the contrary. All capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

Kindly acknowledge your agreement to the terms of this Transfer Confirmation by signing in the appropriate space below and returning this Transfer Confirmation to the undersigned. Facsimile or electronically imaged signatures shall be deemed valid and binding to the same extent as the original.


BANK OF AMERICA, NATIONAL ASSOCIATION		GREEN TREE SERVICING LLC

By:		By:
	Name:		Name:
	Title:		Title:

B-1

EXHIBIT C

DATA TRANSFER SPECIFICATIONS

Electronic data transmission via NDM or SFTP.

Electronic master file.

Electronic ARM loan master file.

Electronic ARM data and history, if applicable.

Electronic escrow file.

Electronic tax and insurance payee file.

Pay histories and comments/notes (life of loan).

Electronic copy of data file layouts.

Information on how file was created including record format, record length and block size.

Comma delimited .txt, .xml, .pdf, .csv, .xls and other file formats may be provided as appropriate.

C-1

EXHIBIT D

OFFICER’S CERTIFICATE

(To be supplied on the Sale Date)

I, , the of [Bank of America, National Association (the “Seller”)][Green Tree ServicingLLC (the “Purchaser”)], pursuant to Section [8.06][9.04] of the Mortgage Servicing Rights Purchase and Sale Agreement between Green Tree Servicing LLC and Bank of America, National Association, dated as of January 6, 2013 (the “Agreement”), hereby certify on behalf of the [Seller][Purchaser] that, in each case as of the date hereof:

(i) [Each of the Seller’s representations and warranties made in Article IV of the Agreement (other than the Fundamental Reps in Article IV) are true and correct, except for the failure or failures of such representations and warranties to be so true and correct that (after excluding any effect of materiality or Seller Material Adverse Effect qualifications set forth in any such representation or warranty) have not had and would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect; and each of the Fundamental Reps made by Seller in Article IV of the Agreement are true and correct in all material respects;]

(ii) [Each of the Purchaser’s representations and warranties made in the Agreement (other than the Fundamental Reps) are true and correct, except for the failure or failures of such representations and warranties to be so true and correct that (after excluding any effect of materiality or Purchaser Material Adverse Effect qualifications set forth in any such representation or warranty) have not had and would not reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse Effect; and each of the Fundamental Reps made by Purchaser in the Agreement are true and correct in all material respects;]

(i) All of the terms, covenants, conditions and obligations of the Agreement required to be complied with and performed by the [Seller][Purchaser] at or prior to the date hereof have been duly complied with and performed in all material respects.

(ii) I am authorized to execute this Certificate on behalf of the [Seller][Purchaser].

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of [January ], 2013.


By:
Name:
Its:

D-1

EXHIBIT E

SERVICING TRANSFER INSTRUCTIONS

[SEE ATTACHED, AND ELECTRONICALLY PROVIDED

VERSION INCLUDING EMBEDDED ATTACHMENTS]

E-1

EXHIBIT F

PURCHASE PRICE PERCENTAGE

A. The Purchase Price Percentage (before the interest rate adjustment in B below) shall be determined by multiplying the Specified Multiple below by the Net Servicing Fees, expressed as an annualized rate on the unpaid principal balances of the related Mortgage Loans as of the Sale Date. The calculations in the following chart show the Purchase Price Percentage as if the Sale Date were November 30, 2012, and without any interest rate adjustments in B below.


Investor	Specified Multiple	Net Servicing Fee Rate (as of 11/30/12)	Purchase Price Percentage
FNMA

B. The Purchase Price Percentage determined in accordance with the above shall be further adjusted as follows: For every +/- 1 bps (0.01%) movement in the 7 year swap rate between December 7, 2012 and the Sale Date, the Purchase Price Percentage will be adjusted +/- by [ ] The 7 year swap rate on December 7, 2012 was [ ]. As necessary, the amount to be determined above will be based on linear interpolation. The 7 year swap rate is defined as the yield reported by Bloomberg under USSWAP7,<index>HP<GO> at ten a.m. (10:00 a.m.), East Coast Time, on the applicable date.

F-1

EXHIBIT G

INTERIM SERVICING ADDENDUM

1. DEFINITIONS.

For the purposes of this Interim Servicing Addendum (this “Addendum”), any capitalized term used and not defined herein that are defined in the Mortgage Servicing Rights Purchase and Sale Agreement (“Agreement”), dated as of January 6, 2013, by and between Bank of America, National Association and Green Tree Servicing LLC, shall have the meaning set forth in the Agreement. Other definitions are as follows:

(a) Delinquent Serviced Mortgage Loans . Mortgage Loans that are thirty (30) or more days delinquent as of the first of any month during the Interim Servicing Period.

(b) Interim Servicing Fee . The monthly Interim Servicing Fee payable to Seller for performing interim servicing of the Mortgage Loans shall be for each current Mortgage Loan having an outstanding principal balance as of the first day of the month and for each Delinquent Serviced Mortgage Loan having an outstanding principal balance as of the first day of the month as follows:


	Current		Delinquent
FNMA:	$	[ ]	$	[ ]

The Interim Servicing Fee shall be fully earned on the first day of the month, regardless of actual collections.

(c) Interim Servicing Period . The period of time on and after the Sale Date and before the applicable Servicing Transfer Date for each Mortgage Loan.

(d) Net Servicing Fee Percentage : The percentage identified in the Mortgage Loan Schedule and used to calculate the Servicing Fee in respect of an individual Mortgage Loan, in each case consistent with the terms of the Agreement and/or the Servicing Agreement.

(e) Servicing Fee : The monthly amount Purchaser shall be entitled to receive as its servicing fee. The Servicing Fee with respect to each Mortgage Loan equals the product of the Net Servicing Fee Percentage and the then outstanding principal balance of such Mortgage Loan if and to the extent payable under the Servicing Agreement. Solely for purposes of avoidance of doubt, Advances shall be paid out of Seller’s own funds and shall not be netted out of the Servicing Fee, subject to purchase by Purchaser of the outstanding Advances following each applicable Servicing Transfer Date in accordance with the terms of the Agreement.

2. TERM.

The applicability of these provisions shall commence as of the close of business on the Sale Date, and shall terminate on the final Servicing Transfer Date, unless extended by mutual agreement of the Parties.

G-1

3. RELATIONSHIP OF PURCHASER AND INTERIM SERVICER.

(a) Seller acknowledges that, subject to the terms and conditions of this Addendum, Purchaser will own all of the Purchased Assets as provided for in the Agreement, and shall be entitled to all Servicing Fee income payable under the Servicing Agreement, beginning on the Sale Date, notwithstanding that the Servicing Agreement and/or the Credit and Servicing Files may remain in the possession of Seller (and the Collateral Files in the possession of Custodian) to facilitate the performance of interim servicing activities described herein during the term of this Addendum, and, during the term hereof, the Seller is entitled to the Interim Servicing Fee and other compensation and economic benefit described in Section 8 below.

(b) As reasonably requested, Seller shall allow, or cause to be allowed as the case may be, Purchaser or any Person or Persons authorized by Purchaser full and complete access to the Credit and Servicing Files in its possession, and the Collateral Files in the possession of the Custodian, at any time during normal business hours, and shall make available its personnel to Purchaser or to such authorized Persons at any time during normal business hours for the purpose of responding to routine, general questions or inquiries regarding the Purchased Assets; provided , however , that any such access shall be arranged in such a manner as not to interfere with the normal business operations of Seller. Notwithstanding the foregoing, Seller may, in its sole discretion, deny or restrict such access to any information the disclosure of which is restricted by contract or law or which would result in the waiver of any legal privilege (including the attorney-client privilege).

(c) Seller acknowledges that the Related Escrow Accounts and Custodial Accounts of the Mortgage Loans, maintained pursuant to the Servicing Agreement, during the term of this Addendum are for the account of the Mortgagors under the Mortgage Loans, the Investors or Purchaser as their interests may appear. For convenience of administration, the balances and collections in the Related Escrow Accounts and Custodial Accounts may continue to be held in the bank accounts heretofore employed for such purpose. Except as required to be paid in accordance with Servicing Agreement, Seller shall be entitled to retain the economic benefit of Related Escrow Accounts and Custodial Accounts, until such time as dictated by this Addendum in conjunction with the applicable Servicing Transfer Date for a Mortgage Loan.

(d) In the performance of its duties and services hereunder, Seller shall be an independent contractor acting in its own behalf and for its own account and without authority, expressed or implied, to act for or on behalf of Purchaser in any capacity other than that of an independent contractor, except as otherwise expressly set forth hereinabove, or as may be authorized by Purchaser in writing from time to time.

4. SERVICING ACTIVITIES.

During the term of this Addendum, Seller shall, on behalf of Purchaser, properly conduct the Servicing by providing interim servicing for each of the Mortgage Loans in accordance with all Applicable Requirements, and shall diligently collect and pursue collection of, and properly remit to the appropriate Persons, all payments due under the Mortgage Loans as they become due, including but not limited to (i) principal, (ii) interest, (iii) escrow deposits, (iv) advances for hazard insurance premiums, mortgage insurance premiums, payments with regard to liens, taxes, legal fees, foreclosure costs, and other miscellaneous advances, (v) late charges and speedpay fees, (vi) extension, assumption, transfer and similar fees, (vii) insufficient funds check charges, and (viii) optional insurance related charges. Seller shall exercise no less than the standard of care that it

G-2

exercises in the servicing of loans for its own account for similar mortgage loans. All such amounts received shall be held separate and apart from Seller’s own funds if and to the extent required under the Servicing Agreement. Seller shall have all necessary Servicing authority of the Purchaser under the applicable Servicing Agreement, which is hereby delegated to the Seller by the Purchaser, to service and administer the Mortgage Loans in accordance with this Addendum and Applicable Requirements.

Among the services to be provided by Seller during the term of this Addendum, without limitation, are the following, all to be performed in accordance with Applicable Requirements and this Addendum:

(a) Seller shall timely remit payments of principal and interest received to the Investor for each of the Mortgage Loans, make any necessary deposits to or withdrawals from the Related Escrow Accounts and Custodial Accounts, and remit to Purchaser the Servicing Fee, less Seller’s Interim Servicing Fee, within ten (10) Business Days after each calendar month-end.

(b) Seller shall keep and maintain a complete and accurate set of books and records, in customary form and with customary content, including without limitation, an accounting of all funds collected and paid relating to the Mortgage Loans and the Servicing Agreement. Purchaser or Persons authorized by Purchaser may, at Purchaser’s expense, audit all applicable accounting records relating to Seller’s compliance with this Addendum, and Seller and Purchaser agree to make any accounting corrections which are appropriate or necessary in connection therewith subject to the dispute resolution procedures in Section 12.10(i) of the Agreement.

(c) Seller will maintain and employ throughout the term hereof a sufficient number of qualified employees or contractors to perform the servicing activities to be carried out hereunder in an efficient and professional manner, in no event less diligently than was carried out by Seller when it was the owner of the Mortgage Servicing Rights. At all times throughout the term, Seller shall maintain physical facilities and systems from which the Servicing can be performed in a manner consistent with the foregoing.

(d) Seller shall continue to deliver to the Investors those reports, information or computer tapes relating to the Mortgage Loans that Seller delivered in the ordinary course of business immediately prior to the Sale Date. Duplicate copies of such reports, in a mutually agreeable format, will be provided to the Purchaser within ten (10) Business Days of the respective Investor deadlines for each report’s finalization.

(e) Seller shall promptly deliver, or cause to be delivered to Purchaser or its designee all Credit and Servicing Files or Collateral Files at the end of the term of this Addendum or as otherwise provided for in this Addendum. Seller shall not destroy any Credit and Servicing Files or Collateral Files, other than duplicate copies.

(f) Seller shall handle all collection and foreclosure efforts with the Mortgagors of Mortgage Loans in its own name and provide and handle all delinquency notices in its own name.

(g) Seller shall collect and accept payments from the Mortgagors on the Mortgage Loans.

(h) Seller shall pay all real estate taxes.

G-3

(i) Seller shall prepare and record a satisfaction of Mortgage Loan for each Mortgage Loan that is paid in full during the term of this Addendum.

(j) Seller shall pay all hazard, flood and mortgage insurance premiums, and similar items. Seller shall continue to process and disburse insurance loss drafts and settlements during the term of this Addendum.

(k) Seller shall make all Advances that are required under the Servicing Agreement and, except as provided in Section 3.02(e) hereof, are eligible for reimbursement by the Investors, subject to reimbursement by the Purchaser in accordance with the terms of the Agreement.

(l) Seller shall mail all IRS forms, including without limitation form numbers 1099, 1099A or 1098, to all Persons entitled to receive such forms for the period from the inception of Servicing until the applicable Servicing Transfer Date with respect to the Servicing. Seller shall provide concurrent copies of such forms to Purchaser.

5. RELATED ESCROW ACCOUNTS.

During the Interim Servicing Period:

(a) The Related Escrow Accounts will continue to be held in the name of Seller.

(b) Seller shall retain the economic status benefits from such accounts.

6. FORECLOSURE.

During the term of these provisions, Seller agrees to take the following actions with respect to Mortgage Loans which are ninety (90) days delinquent or more, all in accordance with the Applicable Requirements:

(a) notify Purchaser as Mortgage Loans become ninety (90) days delinquent via monthly reports,

(b) perform all appropriate services, including but not limited to, the filing of a judicial or other foreclosure action or proceeding.

7. INSURANCE.

Seller shall maintain, at its expense, throughout the term hereof for itself, fidelity and errors and omissions bond coverage covering all employees handling funds, monies, documents and papers, including those received or held for the Investor, with respect to performance of Servicing hereunder, all in accordance with the Applicable Requirements.

8. INTERIM SERVICING FEE

(a) Purchaser shall pay to Seller the Interim Servicing Fee. Seller shall perform all of its obligations hereunder at Seller’s sole cost and expense, except as otherwise specifically provided herein. Seller shall also be entitled to retain as additional compensation the economic benefit resulting from holding all Custodial Accounts and Related Escrow Account balances until the applicable Servicing Transfer Date and all Ancillary Income received during the Interim Servicing Period[, including the initial HAMP servicer incentive fee earned under HAMP guidelines but not paid during or before the Interim Servicing Period (provided, that Purchaser shall be entitled to any HAMP performance incentive fees thereafter).

G-4

(b) The Interim Servicing Fee due to Seller shall be netted out of the payment of the Servicing Fee due to Purchaser. A report of the Servicing Fee and Interim Servicing Fee, on a loan-level basis, shall be delivered to Purchaser within thirty (30) calendar days, after each calendar month end. The Interim Servicing Fee is subject to verification and approval by Purchaser within five (5) Business Days after receipt of Seller’s certification.

9. TERMINATION.

Except as otherwise provided for herein, these provisions shall terminate at the expiration of the term of this Addendum as provided herein.

* * * * *

G-5

EXHIBIT H

REQUESTED DATA FIELDS FOR INFORMATION SHARING


Data Element Name	Data Element Description	Data Type
Data_AsOf_Dt	Data as-of date	SmallDateTime
Orig_ID	BAC Acct#	INT
ID	Servicer’s Loan ID	varchar(100)
Svc_Xfer_Eff_Dt	Transfer effective date	SmallDateTime
Zip_Code	Property zip code	varchar(10)
Curr_UPB	Unpaid principal balance	Float
Cur_Int_Rt	Interest rate	Float
Last_Pmt_Amt	Last payment amount	Float
Curr_Last_Pd_Instalmt_Dt	Last paid installment date	SmallDateTime
Liqdn_Type	Liquidation type	varchar(50)
Liqdn_Dt	Liquidation date	SmallDateTime
PI_Pmt_Amt	P and I payment amount	Float
Dlq_Status	Delinquency status	varchar(25)
Days_Dlq	Days delinquent	INT
Mdfcn_Ind	Loan modification indicator (1=modified)	char(1)
Mdfcn_Dt	Loan modification date	SmallDateTime
Post_Mdfcn_UPB	Post-modification unpaid principal balance	Float
Ln_Mdfc_Typ_Desc	Modification type description	varchar(100)
Post_Mdfcn_Int_Rt	Post-modification interest rate	Float
Post_Mdfcn_Term	Post-modification remaining term	INT
DlqMBAHistTxt	360 - 480 digit MBA payment hist	varchar(480)
Ever30Date	Date loan hit 30 days delinquent	SmallDateTime
Ever60Date	Date loan hit 60 days delinquent	SmallDateTime
Ever90Date	Date loan hit 90 days delinquent	SmallDateTime
Ever120Date	Date loan hit 120 days delinquent	SmallDateTime
Ever180Date	Date loan hit 180 days delinquent	SmallDateTime
FirstF1DlqMonDt	Date loan entered foreclosure	SmallDateTime
Curr_FICO	Current / Refreshed FICO	varchar(25)
BK_Ind	Bankruptcy indicator	char(1)
MI_In_Force	If loan had MI, is it still in place	char(1)
MI_ClaimFiledDt	If loan had MI, date in which the claim for loss is filed	SmallDateTime
MI_GrossRequestedAmt	If loan had MI, gross amount for which the claim for loss is filed	Float
MI_GrossIntRequestedAmt	If loan had MI, gross amount of accumulated interest requested in the claim for loss	Float
MI_GrossAuthorizedAmt	If loan had MI, gross claim amount authorized by MI company in Explanation of Benefits	Float
MI_GrossIntAuthorizedAmt	If loan had MI, gross amount of accumulated interest authorized by MI Company in Explanation of Benefits	Float
MI_NetPaidAmt	If loan had MI, net proceeds paid by the MI company	Float
UPB_At_Forcl	Unpaid principal balance at the time of foreclosure	Float

H-1

EXHIBIT I

MORTGAGE ASSIGNMENT PROTOCOL

Assignment Recording Waterfall (As determined on the Servicing Transfer Dates):

1.	Foreclosure Loans – Within 15 Days of Servicing Transfer Date

2.	Bankruptcy Loans – Within 15 Days of Servicing Transfer Date

3.	Mediation Loans – Within 15 Days of Servicing Transfer Date

4.	Mortgage Loans that are 90 or more days delinquent – Within 15 Days of Servicing Transfer Date

5.	Mortgage Loans that are between 60 and 90 days delinquent and that are secured by real property located in the states listed below – Within 15 Days of Sale

•

Connecticut

•

Florida

•

Iowa

•

Illinois

•

Indiana

•

Louisiana

•

Ohio

•

South Carolina

•

Virginia

•

New Mexico

6.	All other Mortgage Loans that are between 60 and 90 days delinquent – Within 30 Days of Servicing Transfer Date

7.	Mortgage Loans that are between 30 and 60 days delinquent – Within 60 Days of Servicing Transfer Date

8.	All other Mortgage Loans – Within 90 Days of Servicing Transfer Date

Original Recorded Mortgages Waterfall (As determined on the Servicing Transfer Date)

1.	Foreclosure Loans – Within 15 Days of Servicing Transfer Date

2.	Bankruptcy Loans – Within 15 Days of Servicing Transfer Date

3.	Mediation Loans – Within 15 Days of Servicing Transfer Date

4.	Mortgage Loans that are 90 or more days delinquent – Within 30 Days of Transfer

5.	Mortgage Loans that are between 60 and 90 days delinquent and that are secured by real property located in the states listed below – Within 30 Days of Servicing Transfer Date

•

Connecticut

•

Florida

•

Iowa

•

Illinois

•

Indiana

•

Louisiana

•

Ohio

•

South Carolina

I-1

•

Virginia

•

New Mexico

6.	All other Mortgage Loans that are between 60 and 90 days delinquent – Within 45 Days of Transfer

7.	Mortgage Loans that are between 30 and 60 days delinquent – Within 60 Days of Servicing Transfer Date

8.	All other Mortgage Loans – Within 90 Days of Servicing Transfer Date

I-2

EXHIBIT J

FORM OF POWER OF ATTORNEY

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

THAT, BANK OF AMERICA, N.A. (“ Seller ”), ¹ a national banking association, by these presents does hereby make, constitute and appoint Green Tree Servicing LLC (“ Servicer ”), a Delaware limited liability company, Seller’s true and lawful agent and attorney-in-fact, and hereby grants it authority and power to take, through its duly authorized officers and designated agents, the Actions (as such term is defined herein) in Seller’s name, place and stead. This limited power of attorney (“ Limited Power of Attorney ”) is given in connection with, and relates solely to that certain Mortgage Servicing Rights Purchase and Sale Agreement dated as of [date of agreement], between Seller and Servicer, under the terms of which Seller sold to Servicer the servicing rights to certain mortgage loans (such loans, the “ Loans ”). Each of the Loans comprises a promissory note evidencing a right to payment and performance secured by a security interest or other lien on real property evidenced by one or more mortgages, deeds of trust, deeds to secure debt or other forms of security instruments (each, a “ Mortgage ”). The parties agree that this Limited Power of Attorney is coupled with an interest.

As used above, the term “Actions” shall mean and be limited to the following acts, in each case only with respect to one or another of the Loans and only as mandated or permitted by federal, state or local laws or other legal requirements or restrictions:

Execute or file assignments of Mortgages, or of any beneficial interest in a Mortgage;

Execute or file reconveyances, deeds of reconveyance or releases or satisfactions of mortgage or similar instruments releasing the lien of a Mortgage;

Correct or otherwise remedy any errors or deficiencies contained in any transfer or reconveyance documents provided or prepared by Seller or a prior transferor, including, but not limited to note indorsements;

Execute or file quitclaim deeds or, only where necessary and appropriate, special warranty deeds or other deeds causing the transfer of title to a third party, in respect of property acquired through foreclosure or deed-in-lieu of foreclosure(“REO Property”);

Execute and deliver documentation with respect to the marketing and sale of REO Property, including, without limitation: eviction notices; listing agreements; purchase and sale agreements; escrow instructions; HUD-1 settlement statements; and any other document necessary to effect the transfer of REO Property.

¹	This Limited Power of Attorney is intended to cover Actions, as such term is defined herein, taken in the name of: Bank of America, N.A.; or Bank of America, N.A., as successor by merger to BAC Home Loans Servicing LP formerly known as Countrywide Home Loans Servicing LP.

J-1

Execute or file any documents necessary and appropriate to substitute the creditor or foreclosing party in a bankruptcy or foreclosure proceeding in respect of any of the Loans;

provided, however , that nothing herein shall permit the Servicer to commence, continue, or otherwise prosecute or pursue any foreclosure proceedings in the name of Seller. All note indorsements executed pursuant to this Limited Power of Attorney shall contain the words “without recourse,” and unless required by law, all others documents of transfer executed pursuant to this Limited Power of Attorney shall contain the following sentence: “This [ insert document title ] is made without recourse to or against [ insert name of entity in whose name the Action is taken ] or Bank of America, N.A., and without representation or warranty, express or implied, by [ insert name of entity in whose name the Action is taken ] or Bank of America, N.A.”

With respect to the Actions, Seller gives to said attorney-in-fact full power and authority to execute such instruments and to do and perform all and every act and thing requisite, necessary and proper to carry into effect the power or powers granted by or under this Limited Power of Attorney as fully, to all intents and purposes, as the undersigned might or could do, and hereby does ratify and confirm all that said attorney-in-fact shall lawfully do or cause to be done by authority hereof.

Nothing contained herein shall be construed to grant Servicer the power to (i) initiate or defend any suit, litigation, or proceeding in the name of Seller or be construed to create a duty of Seller to initiate or defend any suit, litigation, or proceeding in the name of Servicer, (ii) incur or agree to any liability or obligation in the name of or on behalf of Seller, or (iii) execute any document or take any action on behalf of, or in the name, place, or stead of, Seller, except as provided herein. This Limited Power of Attorney is entered into and shall be governed by the laws of the State of New York without regard to conflicts of law principles of such state.

J-2

IN WITNESS WHEREOF , the Seller has executed this Limited Power of Attorney this day of [Month and Year].


BANK OF AMERICA, NATIONAL ASSOCIATION

By:
Title:


Witness:
Name:
Title:

Witness:
Name:
Title:

STATE OF CALIFORNIA

COUNTY OF ( )

Subscribed and sworn to (or affirmed) before me on this day of , 20 , by Date Month Year

Name of Signer

proved to me on the basis of satisfactory evidence to be the person who appeared before me.

Place Notary Seal Above

J-3

EXHIBIT K

ESCROW AGREEMENT

[SEE ATTACHED]

K-1

EXHIBIT L

MI COVENANTS

Bank of America is engaged in ongoing resolution discussions with Mortgage Insurance providers regarding all adverse decisions associated with Mortgage Insurance coverage (including, but not limited to, requests for missing documents, notifications of impending coverage rescission, notifications of impending claim denial, claim denials, coverage rescissions, and curtailments), and the scope of this ongoing dialogue may include loans in the transfer population. While timely resolution of claims is a priority, Bank of America reserves all rights to appeal such adverse decisions, and will leverage all time periods allowed under the Master Policies in force and applicable law to do so.

To this end, the Successor Servicer shall provide written notification to the Mortgage Insurance providers, and shall obtain written authorization from the Mortgage Insurance providers, if required, allowing Bank of America to engage directly with them in ongoing resolution activities subsequent to the transfer. Further, Successor Servicer agrees to cooperate with Bank of America as outlined in the detailed protocols for post-transfer Mortgage Insurance claims resolution contained in herein.

2.	For inquiries on loans with MI, please use the following, as applicable:

Missing Documents: BAC_subservicer_requests@bankofamerica.com

Curtailments: curtailment_inbox@bankofamerica.com

Rescission/Denials: mi.rescissions_denials@bankofamerica.com

L-1

MI CLAIMS PROCESS FOR PURCHASER/TRANSFEREE

L-2

SCHEDULE 3.02(a)

Servicing Transfer Dates


2/28/2013			50,000.00
3/31/2013			300,000.00
4/30/2013			125,000.00
5/31/2013			100,798.00

GT Footnote:

May 31st transfer is an estimate of the remaining portfolio allocation. Actual loan count for the May 31st transfer could be reduced by portfolio runoff and loans excluded from transfer on scheduled transfer dates and executed in the late third and early fourth quarter in 2013.

Exhibit 10.46.2

Reference is made to (i) that certain master repurchase agreement dated as of February 27, 2013 (the “MRA”), between The Royal Bank of Scotland PLC, as buyer (“Buyer”) and Reverse Mortgage Solutions, Inc., as seller (“Seller”) and (ii) that certain pricing side letter dated as of February 27, 2013 (the “Pricing Letter”), between the Buyer and the Seller. Capitalized terms used herein but not defined herein shall have the meaning ascribed to such terms in the MRA or the Pricing Letter, as applicable.

The Seller hereby requests that the Buyer waive, and the Buyer does hereby waive (i) from and after November 1, 2012 through and including March 8, 2013, compliance by the Seller with the following financial covenants:

•

Section 13(mm)(ii) of the MRA (Maintenance of Adjustable Tangible Net Worth)

•

Section 13(mm)(iii) of the MRA (Maintenance of Leverage)

The Seller hereby also requests that Buyer waive, and the Buyer hereby does waive, from and after November 1, 2012 through and including March 31, 2013, compliance by the Seller with the following financial covenants:

•

Section 13(mm)(iv) of the MRA (Minimum Net Income)


Sincerely,

Reverse Mortgage Solutions, Inc.

By:
Name:
Title:

Acknowledged and Agreed:

The Royal Bank of Scotland plc

By:
Name:
Title:


		Reverse Mortgage Solutions, Inc. 2727 Spring Creek Drive—Spring, TX 77373 NMLS ID #1077636

Exhibit 10.48

FIRST AMENDMENT TO ADDENDUM TO MORTGAGE SELLING AND

SERVICING CONTRACT (EAF Agreement)

This First Amendment (the “First Amendment”) to that Addendum To Mortgage Selling and Servicing Contract dated effective as of July 1, 2012 (the “EAF Agreement”) by and between FANNIE MAE, a corporation organized and existing under the laws of the United States (“Fannie Mae”) and Green Tree Servicing LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Servicer”), is hereby mutually agreed upon and entered into effective January 3, 2013.

WITNESSETH:

WHEREAS , Fannie Mae and Servicer desire to include as Eligible Advances under the EAF Agreement certain advances applicable to those mortgage serving rights relating to Fannie Mae loans to be acquired by Servicer from a) Bank of America, National Association on or about January 31, 2013, b) GMAC Mortgage, LLC on or about January 31, 2013, and c) Flagstar Capital Markets Corporation on or about January 1, 2013.

NOW, THEREFORE , in consideration of the mutual premises, covenants and conditions and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon terms and subject to the conditions set forth herein, the Fannie Mae and Servicer agree as follows:

Section 1. Defined Terms . Unless otherwise defined herein, capitalized terms which are defined in the EAF Agreement, as amended hereby, are used herein as therein defined.

Section 2. Early Reimbursement Amount Limit . The Section of the EAF Agreement titled “Early Reimbursement Amount Limit” shall be amended and restated to provide as follows:

Fannie Mae’s obligation to make payment of Periodic Early Reimbursement Amounts will not exceed a maximum Aggregate Early Reimbursement Amount of One Hundred Fifty Million ($150,000,000) dollars or such other amount as increased in accordance with the following sentence. The Aggregate Early Reimbursement Amount shall be increased to accommodate a) the Eligible Advances applicable to the Mortgage Loans the mortgage servicing rights to which Servicer acquires from Bank of America, National Association on or about January 31, 2013, b) the BANA Legacy Servicing Advances (as defined herein), c) the Eligible Advances applicable to the Mortgage Loans the mortgage servicing rights to which Servicer acquires from GMAC Mortgage, LLC on or about January 31, 2013, and d) the GMACM Legacy Servicing Advances (as defined herein). Such increases in the Aggregate Early Reimbursement Amount shall be memorialized in a written agreement executed by Fannie Mae and the Servicer, and the effective date of the increases applicable to each of the portfolios acquired from Bank of America, National Association and GMAC Mortgage, LLC, respectively, shall be the first applicable transfer date for each portfolio, or such date as may otherwise be agreed to by the parties.

Section 3. Eligible Advances For Early Reimbursement . The Section of the EAF Agreement titled “Eligible Advances For Early Reimbursement” shall be supplemented to additionally provide as follows:

Eligible Advances shall also include any outstanding servicing advances paid or reimbursed by Servicer to:

a) Bank of America, National Association on or after the applicable transfer date in connection with a mortgage servicing rights sale to Servicer on or about January 31, 2013 (each such advance shall be deemed a “BANA Legacy Servicing Advance,”

b) GMAC Mortgage, LLC on or after the transfer date in connection with a mortgage servicing rights sale to Servicer on or about January 31, 2013 (each such advance shall be deemed a “GMACM Legacy Servicing Advance,” and

c) Flagstar Capital Markets Corporation in connection with a mortgage servicing rights sale to Servicer on or about January 1, 2013 (each such advance shall be deemed a “Flagstar Legacy Servicing Advance”).

Section 4. Early Reimbursement Rate . The Section of the EAF Agreement titled “Early Reimbursement Rate” shall be supplemented to additionally provide as follows:

Notwithstanding the foregoing, BANA Legacy Servicing Advances, GMACM Legacy Servicing Advances and Flagstar Legacy Servicing Advances shall have the following Early Reimbursement Rates:

P&I Delinquency Advance: 100%

T&I Escrow Advances: 80%

Corporate Servicing Advances: 80%

Section 5. Compensation Rate . The Section of the EAF Agreement titled “Compensation Rate” shall be amended and restated to provide as follows:

[ ] basis points over One-Month LIBOR. LIBOR will be set as of the last business day of the second month preceding the month in which the Settlement Date occurs. ( For example, if the Settlement Date is August 3 ^rd , LIBOR will be as of the last business day in June. ) Notwithstanding the foregoing, the Compensation Rate shall be [ ] basis points over One-Month LIBOR on Eligible Advances related to those mortgage servicing rights acquired by Servicer from a) Bank of America, National Association on or about January 31, 2013 (including BANA Legacy Servicing Advances), and b) GMAC Mortgage, LLC on or about January 31, 2013 (including GMACM Legacy Servicing Advances).

Section 6. Facility Amendment Fee . [ ] per annum of the amount the Early Reimbursement Amount Limit is increased as provided in Section 2 of this First Amendment shall be payable as an Amendment Fee on the first business day following the effective date of the increase and pro rated from such effective date to the scheduled end of the Early Reimbursement Period.

Section 7. Due Diligence . Notwithstanding the annual cap contained in the “Due Diligence” section of the EAF Agreement, Servicer shall be responsible for all reasonable out-of-pocket costs and expenses of Fannie Mae, including without limitation third party vendor fees, relating to Due Diligence reviews (anticipated to be performed monthly) applicable to the mortgage servicing rights which Servicer acquires from Bank of America, National Association on or about January 31, 2013.

Section 8. Continuing Effect of the EAF Agreement . Except as expressly amended hereby, the provisions of the EAF Agreement are and shall remain in full force and effect.

Section 9. Counterparts . This First Amendment to EAF Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

[Signatures Follow]

IN WITNESS WHEREOF, each of the undersigned parties has caused this First Amendment to EAF Agreement to be duly executed in its name by one of its duly authorized officers, all as of the date first above written.


FANNIE MAE						GREEN TREE SERVICING LLC

By:						By:

Name:						Name:

Title:						Title:

Exhibit 10.49

SECOND AMENDMENT TO ADDENDUM TO MORTGAGE SELLING AND

SERVICING CONTRACT (EAF Agreement)

This Second Amendment (the “Second Amendment”) to that Addendum To Mortgage Selling and Servicing Contract dated effective as of July 1, 2012 (the “EAF Agreement”) by and between FANNIE MAE, a corporation organized and existing under the laws of the United States (“Fannie Mae”) and GREEN TREE SERVICING LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Servicer”), is hereby mutually agreed upon and entered into effective January 31, 2013.

WITNESSETH:

WHEREAS , pursuant to that First Amendment to the EAF Agreement dated January 3, 2013, Fannie Mae agreed to increase the Early Reimbursement Amount Limit to accommodate Eligible Advances and GMACM Legacy Servicing Advances applicable to the Mortgage Loans the mortgage servicing rights to which Servicer acquires from GMAC Mortgage, LLC on or about January 31, 2013; and

WHEREAS, Fannie Mae and Servicer agreed to memorialize in a written agreement the amount and the effective date of the increases applicable to the mortgage servicing rights Servicer acquires from GMAC Mortgage, LLC on or about January 31, 2013.

Section 1. Defined Terms . Unless otherwise defined herein, capitalized terms which are defined in the EAF Agreement, as amended hereby, are used herein as therein defined.

Section 2. Early Reimbursement Amount Limit . To accommodate Eligible Advances and GMACM Legacy Servicing Advances applicable to the Mortgage Loans the mortgage servicing rights to which Servicer acquires from GMAC Mortgage, LLC on or about January 31, 2013, the Section of the EAF Agreement titled “Early Reimbursement Amount Limit” shall be amended and supplemented to include the following:

Fannie Mae’s obligation to make payment of Periodic Early Reimbursement Amounts will not exceed a maximum Aggregate Early Reimbursement Amount of Five Hundred Eighty-Five Million ($585,000,000) dollars effective January 31, 2013 through March 31, 2013. Effective April 1, 2013, the maximum Aggregate Early Reimbursement Amount shall be Three Hundred Seventy Million ($370,000,000) dollars.

Section 3. Continuing Effect of the EAF Agreement . Except as expressly amended hereby, the provisions of the EAF Agreement are and shall remain in full force and effect.

Section 4. Counterparts . This Second Amendment to EAF Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

[Signatures Follow]

IN WITNESS WHEREOF, each of the undersigned parties has caused this Second Amendment to EAF Agreement to be duly executed in its name by one of its duly authorized officers, all as of the date first above written.


FANNIE MAE						GREEN TREE SERVICING LLC

By:						By:

Name:						Name:

Title:						Title:

Exhibit 10.52.1

EXECUTION

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

between:

UBS REAL ESTATE SECURITIES INC., as Buyer

and

REVERSE MORTGAGE SOLUTIONS, INC., as Seller

Dated as of November 1, 2012

TABLE OF CONTENTS


		Page
SECTION 1.	APPLICABILITY; INCORPORATION OF CUSTOMER GUIDE		1

SECTION 2.	DEFINITIONS		2

SECTION 3.	INITIATION; TERMINATION		22

SECTION 4.	MARGIN AMOUNT MAINTENANCE		27

SECTION 5.	COLLECTIONS; INCOME PAYMENTS		28

SECTION 6.	REQUIREMENT OF LAW		29

SECTION 7.	TAXES.		30

SECTION 8.	SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT		33

SECTION 9.	PAYMENT, TRANSFER; ACCOUNTS		34

SECTION 10.	RESERVED		35

SECTION 11.	REPRESENTATIONS		35

SECTION 12.	COVENANTS		41

SECTION 13.	EVENTS OF DEFAULT		48

SECTION 14.	REMEDIES		50

SECTION 15.	INDEMNIFICATION AND EXPENSES; RECOURSE		53

SECTION 16.	SERVICING		54

SECTION 17.	DUE DILIGENCE		56



SECTION 18.	ASSIGNABILITY	57

SECTION 19.	TRANSFER AND MAINTENANCE OF REGISTER.	58

SECTION 20.	HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS	58

SECTION 21.	TAX TREATMENT	58

SECTION 22.	SET-OFF	58

SECTION 23.	TERMINABILITY	59

SECTION 24.	NOTICES AND OTHER COMMUNICATIONS	59

SECTION 25.	USE OF THE WAREHOUSE ELECTRONIC SYSTEM AND OTHER ELECTRONIC MEDIA	59

SECTION 26.	ENTIRE AGREEMENT; SEVERABILITY; SINGLE AGREEMENT	61

SECTION 27.	GOVERNING LAW	62

SECTION 28.	SUBMISSION TO JURISDICTION; WAIVERS	62

SECTION 29.	NO WAIVERS, ETC.	63

SECTION 30.	NETTING	63

SECTION 31.	CONFIDENTIALITY	63

SECTION 32.	INTENT	64

SECTION 33.	DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS	65

SECTION 34.	CONFLICTS	65

SECTION 35.	MISCELLANEOUS	65

SECTION 36.	GENERAL INTERPRETIVE PRINCIPLES	66

SCHEDULES AND EXHIBITS


SCHEDULE 1		Representations and Warranties

SCHEDULE 2		Responsible Officers

SCHEDULE 3		Scheduled Indebtedness

EXHIBIT A		Reserved

EXHIBIT B		Form of Seller’s Officer’s Certificate

EXHIBIT C		Form of Servicer Notice

EXHIBIT D		Form of Confirmation Letter

EXHIBIT E		Form of Power of Attorney

EXHIBIT F		Form of Section 7 Certificate

iii

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

This is an AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT (this “ Agreement ”), dated as of November 1, 2012, between Reverse Mortgage Solutions, Inc., a Delaware corporation (the “ Seller ”), and UBS Real Estate Securities Inc., a Delaware corporation (the “ Buyer ”). This Agreement amends and restates in its entirety that certain Master Repurchase Agreement, dated as of August 16, 2012, among Seller, Robert D. Yeary, as a guarantor, H. Marc Helm, as a guarantor, and Kevin J. Gherardi, as a guarantor and Buyer (the “ Previous Master Repurchase Agreement ”), which governed the purchase by the Buyer from Seller of Mortgage Loans and Agency Securities as more particularly described therein (any such Mortgage Loans or Agency Securities held by the buyer as of the Effective Date are collectively referred to herein as “ Existing Purchased Assets ”). As of the Effective Date, Seller and Buyer hereby agree that (i) any and all Existing Purchased Assets shall be subject to and governed by the provisions of this Agreement, that each Existing Purchased Asset shall constitute a “Purchased Asset” under this Agreement; and (ii) the Previous Master Repurchase Agreement shall be of no further force or effect, except with respect to any provisions of the Previous Master Repurchase Agreement which expressly survive termination thereof.

SECTION 1. APPLICABILITY; INCORPORATION OF CUSTOMER GUIDE

From time to time the parties hereto may enter into transactions in which Seller agrees to transfer to Buyer Mortgage Loans on a servicing released basis against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Mortgage Loans on a servicing released basis or Agency Securities backed by such Mortgage Loans on the Repurchase Date, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a “ Transaction ” and shall be governed by this Agreement (including any supplemental terms or conditions contained in any exhibits identified herein, as applicable hereunder), unless otherwise agreed in writing. This Agreement is not a commitment by Buyer to enter into Transactions with Seller but rather sets forth the procedures to be used in connection with periodic requests for Buyer to enter into Transactions with Seller. Seller hereby acknowledges that Buyer is under no obligation to agree to enter into, or to enter into, any Transaction pursuant to this Agreement. Any commitment to enter into Transactions shall be set forth in the Pricing Letter, and shall be subject to satisfaction of all terms and conditions of this Agreement.

The Customer Guide is one of the Program Documents as defined below. The Customer Guide is incorporated by reference into this Agreement and Seller agrees to adhere to all terms, conditions and requirements of the Customer Guide. Buyer may amend the Customer Guide from time to time as more particularly described in Section 35(e). In the event of a conflict or inconsistency between this Agreement and the Customer Guide, the terms of this Agreement shall govern unless subsequently amended by amendments to the Customer Guide. Seller’s execution and delivery of this Agreement constitutes Seller’s acknowledgment of receipt of the Customer Guide and Seller’s agreement to the terms and conditions set forth therein and herein with respect thereto.

The Pricing Letter is one of the Program Documents as defined below. The Pricing Letter is incorporated by reference into this Agreement and Seller agrees to adhere to all terms, conditions and requirements of the Pricing Letter as incorporated herein. In the event of a conflict or inconsistency between this Agreement and the Pricing Letter, the terms of the Pricing Letter shall govern.

SECTION 2. DEFINITIONS

As used herein, the defined terms set forth below shall have the meanings set forth herein. Additionally, as used herein, the following terms shall have the meanings defined in the Uniform Commercial Code: accounts, chattel paper (including electronic chattel paper), goods (including inventory and equipment and any accessions thereto), instruments (including promissory notes), documents, investment property, general intangibles (including payment intangibles and software), and supporting obligations, products and proceeds.

“ 1934 Act ” shall have the meaning set forth in Section 33 of the Agreement.

“ Accepted Servicing Practices ” shall mean, with respect to any Mortgage Loan, those mortgage servicing practices of prudent mortgage lending institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located.

“ Acquisition Cost ” shall mean the total cost to Seller of originating or acquiring a Mortgage Loan, which shall include (i) with respect to an originated Mortgage Loan, the outstanding principal balance advanced by Seller to the related Mortgagor or (ii) with respect to an acquired Mortgage Loan, the purchase price paid by Seller for such Mortgage Loan.

“ Affiliate ” shall mean with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code.

“ Agency ” shall mean Freddie Mac, Fannie Mae or Ginnie Mae, as applicable.

“ Agency Approval ” shall have the meaning set forth in Section 12(w) of the Agreement.

“ Agency Security ” shall mean a security issued in exchange for Purchased Mortgage Loans and backed by such Purchased Mortgage Loans that is (a) guaranteed by Ginnie Mae or (b) issued by Fannie Mae or Freddie Mac.

“ Agency Security Issuance Failure ” shall mean the failure of an Agency to cause the Delivery of an Agency Security in accordance with a Takeout Commitment.

“ Aging Limit ” shall have the meaning specified in the Pricing Letter.

“ Agreement ” shall mean this Amended and Restated Master Repurchase Agreement between Buyer and Seller, dated as of the date hereof, as the same may be further amended, supplemented or otherwise modified in accordance with the terms of the Agreement.

“ ALTA ” shall mean American Land Title Association, or any successor thereto.

“ Annual Financial Statement Date ” shall have the meaning set forth in the Pricing Letter.

“ Anti-Money Laundering Laws ” shall have the meaning set forth in Section 11(x) of the Agreement.

“ Application ” shall mean the application delivered by Seller to Buyer in connection with Buyer’s approval of Seller for the program evidenced by the Agreement.

“ Appraisal ” shall mean an appraisal meeting the requirements of the representations and warranties set forth in paragraph (nn) on Schedule 1 hereto

“ Appraised Value ” shall mean the value set forth in an Appraisal made in connection with the origination of the related Mortgage Loan as the value of the Mortgaged Property.

“ Appropriate Federal Banking Agency ” shall have the meaning ascribed to it by Section 1813(q) of Title 12 of the United States Code, as amended from time to time.

“ Approved CPA ” shall mean a certified public accountant approved by Buyer and Seller.

“ Approved Investor ” shall mean any institution which has made a Takeout Commitment and has been approved by Buyer.

“ Approved Mortgage Product ” shall mean each Mortgage Product approved by Buyer as identified in the Pricing Letter. Notwithstanding any reference to a Mortgage Product herein, such Mortgage Product shall not be an Approved Mortgage Product unless expressly identified as such in the Pricing Letter.

“ Approved Underwriting Guidelines ” shall mean the underwriting guidelines approved by Buyer in its sole discretion.

“ Asset Value ” shall, with respect to each Eligible Mortgage Loan or Agency Security, as of any date of determination, have the meaning specified under the heading “Asset Value” on Schedule 1 to the Pricing Letter subject to modification pursuant to the terms below. Where a Purchased Asset may qualify for two or more Asset Values hereunder, unless otherwise expressly agreed to by the Buyer in writing, such Purchased Asset shall be assigned the lower Asset Value. Without limiting the generality of the foregoing, Seller acknowledges that:

(a) the Asset Value of a Purchased Asset may be reduced to zero by Buyer if:

(i) such Purchased Asset is a Purchased Mortgage Loan that ceases to be an Eligible Mortgage Loan;

(ii) such Mortgage Note related to a Purchased Asset that is a Purchased Mortgage Loan has been released from the possession of Buyer (other than to an Approved Investor pursuant to a Bailee Letter) for a period in excess of 10 calendar days;

(iii) such Purchased Asset is a Purchased Mortgage Loan that has been released from the possession of Buyer to an Approved Investor pursuant to a Bailee Letter for a period in excess of 20 calendar days;

(iv) such Purchased Asset is a Purchased Mortgage Loan that is a Wet Loan for which the related Mortgage File has not been received by Buyer on or prior to the end of the Aging Limit for such Wet Loan; or

(v) such Purchased Asset is rejected by the related Approved Investor or there shall occur a Takeout Failure;

(vi) such Purchased Asset is a Purchased Mortgage Loan that is a Delinquent Mortgage Loan;

(vii) such Purchased Asset has been subject to Transactions hereunder for a period of greater than its applicable Aging Limit;

(viii) such Purchased Asset is a Purchased Mortgage Loan that Buyer has determined in its sole discretion that such Purchased Asset is not eligible for whole loan sale or securitization in a transaction consistent with the prevailing sale and securitization industry with respect to substantially similar Mortgage Loans; or

(ix) such Purchased Asset contains a breach of a representation warranty made by Seller in this Agreement; and

(b) the aggregate Asset Value of each Approved Mortgage Product shall not exceed the Concentration Limit for such applicable Approved Mortgage Product. If the aggregate Asset Value for any Approved Mortgage Product exceeds the applicable Concentration Limit, Buyer may, in its sole discretion, reduce the value of any related Purchased Assets selected by Buyer to zero until the aggregate Asset Value for such Approved Mortgage Product is less than or equal to the applicable Concentration Limit.

“ Assignment and Acceptance ” shall have the meaning set forth in Section 18 of the Agreement.

“ Assignment of Mortgage ” shall mean an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage.

“ Bailee Letter ” shall have the meaning assigned to such term in the Custodial Agreement.

“ Bankruptcy Code ” shall mean the United States Bankruptcy Code of 1978, as amended from time to time.

“ Beneficial Tax Owners ” shall have the meaning set forth in Section 7(e)(v) of the Agreement.

“ Business Day ” shall mean a day other than (i) a Saturday or Sunday, (ii) any day on which banking institutions are authorized or required by law, executive order or governmental decree to be closed in the State of New York or Texas or (iii) any day on which the New York Stock Exchange is closed.

“ Buydown Amount ” shall have the meaning set forth in Section 9(d) of the Agreement.

“ Buyer ” shall mean UBS Real Estate Securities Inc., its successors in interest and permitted assigns pursuant to Section 18 and, with respect to Section 7, its participants.

“ Cash Equivalents ” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or its Affiliates or of any commercial bank having capital and surplus in excess of $500,000,000, (c) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within 90 days after the day of acquisition, (d) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b) of this definition or (e) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (d) of this definition.

“ Change in Control ” shall mean:

(a) other than in connection with the proposed acquisition of Seller by Walter Investment Management Corp. or any Affiliate thereof, the sale, transfer, or other disposition of all or substantially all of Seller’s assets (excluding any such action taken in connection with any securitization transaction); or

(b) other than in connection with the proposed acquisition of Seller by Walter Investment Management Corp. or any Affiliate thereof, the consummation of a merger or consolidation of Seller with or into another entity or any other corporate reorganization (in one transaction or in a series of transactions), if more than 51% of the combined voting power of the continuing or surviving entity’s stock outstanding immediately after such merger, consolidation or such other reorganization is owned by persons who were not stockholders of Seller immediately prior to such merger, consolidation or other reorganization; or

(c) other than in connection with the proposed acquisition of Seller by Walter Investment Management Corp. or any Affiliate thereof, there is a change in the majority of the board of directors of Seller during any twelve month period.

“ Closing Protection Letter ” shall mean a letter of indemnification from a title insurer addressed to Seller and/or Buyer or for which Buyer is a third party beneficiary, with coverage that is customarily acceptable to Persons engaged in the origination of mortgage loans, identifying the Settlement Agent covered thereby and indemnifying Seller and/or Buyer (directly or as a third party beneficiary) against losses incurred due to malfeasance or fraud by the Settlement Agent or the failure of the Settlement Agent to follow the specific escrow instructions specified by Seller to the Settlement Agent or otherwise by Buyer with respect to the closing of the Mortgage Loan. The Closing Protection Letter shall be either with respect to the individual Mortgage Loan being purchased pursuant hereto or a blanket Closing Protection Letter which covers closings conducted by the Settlement Agent in the jurisdiction in which the closing of such Mortgage Loan takes place.

“ CLTA ” shall mean California Land Title Association, or any successor thereto.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“ Compare Ratio ” has the meaning set forth in Compare Report.

“ Compare Report ” means the DE Compare Report or the Institution Compare Report, as applicable.

“ Concentration Limit ” shall have the meaning specified in the Pricing Letter.

“ Conforming Mortgage Loan ” shall mean a Mortgage Loan other than a HECM Loan, which is secured by a first lien, such Mortgage Loan (a) conforms to the requirements of an Agency for securitization or cash purchase and has (i) a minimum FICO score of 660 and (ii) a DTI not more than 45% or (b) is eligible to be insured by FHA or guaranteed by VA (excluding any Mortgage Loan which exceeds Agency guidelines for maximum general conventional loan amount) and (i) has a minimum FICO score of 640; (ii) has a DTI less than 50% and (iii) has a LTV not more than 100%.

“ Confidential Information ” shall have the meaning set forth in Section 31 of the Agreement.

“ Confidential Terms ” shall have the meaning set forth in Section 31 of the Agreement.

“ Confirmation ” shall mean a confirmation letter in the form of Exhibit D hereto.

“ Costs ” shall have the meaning set forth in Section 15(a) of the Agreement.

“ Credit File ” shall mean with respect to each Mortgage Loan, the documents and instruments relating to the origination and administration of such Mortgage Loan.

“ Custodial Account ” shall have the meaning set forth in Section 5(a) of the Agreement.

“ Custodial Agreement ” shall mean that certain Custodial Agreement dated as of August 16, 2012, among Seller, Buyer and Custodian as the same may be amended from time to time.

“ Custodial Loan Transmission ” shall have the meaning set forth in the Custodial Agreement.

“ Custodian ” shall mean Wells Fargo Bank, National Association, or any successor thereto under the Custodial Agreement.

“ Customer Guide ” shall mean the guidelines and other information provided to Seller by Buyer from time to time, setting forth the policies and procedures to be followed by Seller when utilizing the facility contemplated under this Agreement.

“ DE Compare Ratio ” has the meaning set forth in the DE Compare Report.

“ DE Compare Report ” means with respect to Seller, the top of the three rows of the report entitled “Neighborhood Watch Early Warning System – Single Lender – Originator by Institution” and found at https://entp.hud.gov/sfnw/public/. Such report shall be generated using the following criteria: Mortgagee Selections: “Direct Endorsement Lender;” Delinquent Choices: “Seriously Delinquent;” and 2 Year Performance Period: “Data as of [END OF MOST RECENT PRIOR MONTH AVAILABLE].”

“ Default ” shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

“ Defaulting Party ” shall have the meaning set forth in Section 30 of the Agreement.

“ Defective Mortgage Loan ” shall mean a Mortgage Loan (a) which is in foreclosure, has been foreclosed upon or has been converted to real estate owned property, (b) for which the Mortgagor is in bankruptcy, (c) that is not subject to a valid and binding Takeout Commitment, (d) that is subject to a Takeout Commitment with respect to which Seller or Approved Investor is in default, (e) that is rejected or excluded for any reason from the related Takeout Commitment by the Approved Investor, (f) that is not purchased by the Approved Investor in compliance with the Takeout Commitment at or prior to the expiration or termination of the Takeout Commitment for any reason, or (g) that is not repurchased by Seller in compliance with the provisions of Section 3(f).

“ Delinquent Mortgage Loan ” shall mean any Mortgage Loan as to which any Monthly Payment, or part thereof, remains unpaid for 30 days or more following the original Due Date for such Monthly Payment.

“ Delivery ” shall mean (i) with respect to any Agency Security issued by Ginnie Mae, when Buyer is registered as the registered owner of such Agency Security on Ginnie Mae’s central registry and (ii) with respect to any Agency Security issued by Fannie Mae or Freddie Mac, the later to occur of (a) the issuance of such Agency Security and (b) the transfer of all of the right, title and ownership interest in such Agency Security to Buyer or its designee. An Agency Security shall be deemed to be “ Delivered ” upon Delivery in accordance herewith.

“ Dollars ” and “ $ ” shall mean lawful money of the United States of America.

“ DTI ” shall mean with respect to any Mortgagor, the ratio of the Mortgagor’s average monthly debt obligations to the Mortgagor’s average monthly gross income.

“ Due Date ” shall mean the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

“ E-Sign ” shall mean the federal Electronic Signatures in Global and National Commerce Act, as amended from time to time.

“ EDGAR ” shall have the meaning set forth in Section 12(d)(v) of the Agreement.

“ Effective Date ” shall mean the date upon which the conditions precedent set forth in Section 3(a) shall have been satisfied.

“ Electronic Record ” shall mean “Record” and “Electronic Record,” both as defined in E-Sign, and shall include but not be limited to, recorded telephone conversations, fax copies or electronic transmissions, including without limitation, those involving the Warehouse Electronic System.

“ Electronic Signature ” shall have the meaning set forth in E-Sign.

“ Electronic Tracking Agreement ” shall mean an Electronic Tracking Agreement among Buyer, Seller, MERS and MERSCORP Holdings, Inc., as the same may be amended from time to time.

“ Electronic Transactions ” shall mean transactions conducted using Electronic Records and/or Electronic Signatures or fax copies of signatures.

“ Eligible Mortgage Loan ” shall mean a Purchased Asset that is a Purchased Mortgage Loan which (a) is an Approved Mortgage Product, (b) complies with the representations and warranties set forth on Schedule 1 hereto (assuming that they are made as of each date of determination), (c) is not a Defective Mortgage Loan and (d) is not a Delinquent Mortgage Loan.

“ EO13224 ” shall have the meaning specified in Section 11(y) of the Agreement.

“ ERISA ” shall, with respect to any Person, mean the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor thereto, and the regulations promulgated and rulings issued thereunder.

“ ERISA Affiliate ” shall, with respect to any Person, mean any Person which is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code is treated as a single employer described in Section 414 of the Code.

“ Escrow Payments ” shall mean, with respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

“ Event of Default ” shall have the meaning specified in Section 13 of the Agreement.

“ Excluded Taxes ” shall have the meaning set forth in Section 7(e) of the Agreement.

“ Existing Purchased Assets ” shall have the meaning set forth in the opening paragraph of this Agreement.

“ Expenses ” shall mean all present and future expenses incurred by or on behalf of Buyer in connection with this Agreement or any of the other Program Documents and any amendment, supplement or other modification or waiver related hereto or thereto, whether incurred heretofore or hereafter, which expenses shall include the cost of title, lien, judgment and other record searches; attorneys’ fees; and costs of preparing and recording any UCC financing statements or other filings necessary to perfect the security interest created hereby.

“ Facility Termination Threshold ” shall have the meaning specified in the Pricing Letter.

“ Fannie Mae ” shall mean the Federal National Mortgage Association, or any successor thereto.

“ FDIA ” shall have the meaning set forth in Section 32(c) of the Agreement.

“ FDICIA ” shall have the meaning set forth in Section 32(d) of the Agreement.

“ FHA ” shall mean the Federal Housing Administration, an agency within the United States Department of Housing and Urban Development, or any successor thereto, and including the Federal Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA Regulations.

“ FHA Loan ” shall mean a Mortgage Loan which is the subject of an FHA Mortgage Insurance Certificate.

“ FHA Mortgage Insurance Certificate ” shall mean the certificate evidencing the contractual obligation of the FHA respecting the insurance of a Mortgage Loan.

“ FHA Regulations ” shall mean the regulations promulgated by the Department of Housing and Urban Development under the National Housing Act, as amended from time to time and codified in 24 Code of Federal Regulations, and other Department of Housing and Urban Development issuances relating to FHA Loans, including the related handbooks, circulars, notices and mortgagee letters.

“ FICO ” shall mean Fair Isaac & Co., or any successor thereto.

“ Fidelity Insurance ” shall mean insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate amount acceptable to Buyer.

“ Financial Statements ” shall have the meaning set forth in Section 12(d) of the Agreement.

“ Freddie Mac ” shall mean Federal Home Loan Mortgage Corporation, or any successor thereto.

“ GAAP ” shall mean generally accepted accounting principles in the United States of America, applied on a consistent basis and applied to both classification of items and amounts, and shall include, without limitation, the official interpretations thereof by the Financial Accounting Standards Board, its predecessors and successors.

“ Ginnie Mae ” shall mean the Government National Mortgage Association, or any successor thereto.

“ GLB Act ” shall have the meaning set forth in Section 31 of the Agreement.

“ Governmental Authority ” shall mean any nation or government, any state, county, municipality or other political subdivision thereof or any governmental body, agency, authority, department or commission (including, without limitation, any taxing authority) or any instrumentality or officer of any of the foregoing (including, without limitation, any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned by or controlled by the foregoing and with respect to any insured depository institution, including without limitation the Appropriate Federal Banking Agency.

“ Guarantee ” shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “ Guarantee ” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of a Person shall be deemed to be

an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “ Guarantee ” and “ Guaranteed ” used as verbs shall have correlative meanings.

“ HECM Loan ” shall mean a home equity conversion Mortgage Loan which is secured by a first lien and is eligible to be insured by FHA.

“ HECM Principal Balance ” shall means the principal balance of a HECM Loan (including without limitation all related Servicing Fees, Scheduled Payments and/or Unscheduled Payments, accrued interest and MIP Payments) reduced by all amounts received or collected in respect of principal on such HECM Loan.

“ Hedge Agreement ” shall mean, with respect to any or all of the Purchased Assets, any short sale of a US Treasury Security, or futures contract, or mortgage related security, or Eurodollar futures contract, or options related contract, or interest rate swap, cap or collar agreement or Takeout Commitment, or similar arrangement providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by Seller with a party and with terms, both acceptable to Buyer.

“ High Balance Conforming Mortgage Loan ” shall mean a Mortgage Loan other than a HECM Loan which is secured by a first lien, and such Mortgage Loan (a) conforms to the requirements of an Agency for securitization or cash purchase; (b) has an original Mortgage Loan principal balance in excess of general conventional loan amounts for Conforming Mortgage Loan; (c) has an original Mortgage Loan principal balance that is less than the maximum high balance county limit for the county in which the related Mortgaged Property is located and (d) has a minimum FICO score of 660.

“ High Cost Mortgage Loan ” shall mean a Mortgage Loan (a) classified as a “high cost” or “higher priced” loan under the Home Ownership and Equity Protection Act of 1994; (b) classified as a “high cost,” “high risk,” “high rate,” “threshold,” “covered,” or “predatory” loan under any other applicable state, federal or local law (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees) or (c) having a percentage listed under the Indicative Loss Severity Column (the column that appears in the S&P Anti-Predatory Lending Law Update Table, included in the then-current S&P’s LEVELS ^® Glossary of Terms on Appendix E).

“ HUD ” shall mean the Department of Housing and Urban Development or any successor thereto.

“ Inbound Account ” shall mean the account established pursuant to Section 9(c) of the Agreement.

“ Income ” shall mean, with respect to any Mortgage Loan at any time, any principal thereof then payable and all interest, dividends or other distributions payable thereon.

“ Indebtedness ” shall mean (i) all indebtedness for borrowed money or for the deferred purchase price of property or services and all obligations under leases which are or should be under GAAP, recorded as capital leases, in respect of which a person is directly or contingently liable as borrower, guarantor, endorser or otherwise, or in respect of which a person otherwise assures a creditor against loss, (ii) all obligations for borrowed money or for the deferred purchase price of a property or services secured by (or for which the holder has an existing right, contingent or otherwise, to be secured by) any lien upon property (including without limitation accounts receivable and contract rights) owned by a person, whether or not such person has assumed or become liable for the payment thereof, and (iii) all other liabilities and obligations which would be classified in accordance with GAAP as liabilities on a balance sheet or to which reference should be made in footnotes thereto, except for non-recourse obligations to Ginnie Mae.

“ Indemnified Party ” shall have the meaning set forth in Section 15(a) of the Agreement.

“ Insolvency Event ” shall mean, for any Person:

(a) that such Person shall discontinue or abandon operation of its business; or

(b) that such Person shall fail generally to, or admit in writing its inability to, pay its debts as they become due; or

(c) a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency, liquidation, reorganization or other similar Requirement of Law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person, or for any substantial part of its property, or for the winding-up or liquidation of its affairs; or

(d) the commencement by such Person of a voluntary case under any applicable bankruptcy, insolvency or other similar Requirement of Law now or hereafter in effect, or such Person’s consent to the entry of an order for relief in an involuntary case under any such Requirement of Law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person, or for any substantial part of its property, or any general assignment for the benefit of creditors; or

(e) that such Person shall become insolvent; or

(f) if such Person is a corporation, such Person, shall take any corporate action in furtherance of, or the action of which would result in any of the actions set forth in the preceding clauses (a), (b), (c), (d) or (e).

“ Institution Compare Ratio ” has the meaning set forth in the Institution Compare Report.

“ Institution Compare Report ” means with respect to Seller, the report entitled “Neighborhood Watch Early Warning System – Single Lender – Originator by Institution” and found at https://entp.hud.gov/sfnw/public/. Such report shall be generated using the following criteria: Mortgagee Selections: “Originator by Institution;” Delinquent Choices: “Seriously Delinquent;” and 2 Year Performance Period: “Data as of [END OF MOST RECENT PRIOR MONTH AVAILABLE].”

“ Insured Depository Institution ” shall have the meaning ascribed to such term by Section 1813(c)(2) of Title 12 of the United States Code, as amended from time to time.

“ Jumbo Mortgage Loan ” shall mean a Mortgage Loan which is secured by a first lien Mortgage that (i) has an original Mortgage Loan principal balance in excess of general Conforming Mortgage Loan limits but not in excess of $2,000,000, (ii) has an original Mortgage Loan principal balance in excess of the maximum high balance county limit for the county that the subject property is located in but not in excess of $2,000,000, (iii) meets the eligibility requirements of Buyer as determined in its sole discretion and (iv) has a Takeout Commitment from an Approved Investor which shall include evidence of an underwriting approval, with no conditions outstanding to close the Mortgage Loan and a Takeout Price, purchase price commitment number and purchase price commitment expiration date for the Mortgage Loan.

“ Lien ” shall mean any lien, claim, charge, restriction, pledge, security interest, mortgage and deed of trust or other encumbrance.

“ Litigation Threshold ” shall have the meaning specified in the Pricing Letter.

“ LTV ” shall mean, the ratio of (A) with respect to any Mortgage Loan (except for HECM Loans), the original outstanding principal amount of the Mortgage Loan, and (B) with respect to HECM Loans, the current HECM Principal Balance, to the Appraised Value of the Mortgaged Property at origination.

“ Maintenance Fee Rate ” shall have the meaning set forth in the Pricing Letter.

“ Manufactured Home Mortgage Loans ” shall have the meaning specified on Schedule 1 .

“ Margin Account ” shall mean the account established pursuant to Section 9(c) of the Agreement.

“ Margin Call ” shall have the meaning specified in Section 4(b) of the Agreement.

“ Margin Deficit ” shall have the meaning specified in Section 4(b) of the Agreement.

“ Market Value ” shall mean, as of any date with respect to any Purchased Asset, the price at which such Purchased Asset could readily be sold as determined by Buyer using a commercially reasonable methodology which price may be determined to be zero. Seller acknowledges that Buyer’s determination of Market Value is for the limited purpose of determining the value of the Purchased Assets for the purposes hereunder without the ability to

perform customary Buyer’s due diligence and is not necessarily equivalent to a determination of the fair market value of the Purchased Assets achieved by obtaining competing bids in an orderly market in which the originator/servicer is not in default hereunder and the bidders have adequate opportunity to perform customary loan and servicing due diligence. Buyer’s commercially reasonable determination of Market Value shall be conclusive upon the parties absent manifest error.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the Property, business, operations, financial condition or prospects of Seller or any Affiliate, (b) the ability of Seller or any Affiliate to perform its obligations under any of the Program Documents to which it is a party, (c) the validity or enforceability of any of the Program Documents, (d) the rights and remedies of Buyer or any Affiliate under any of the Program Documents, (e) the timely payment of any amounts payable under the Program Documents or (f) the Asset Value of the Purchased Assets taken as a whole.

“ Maximum Aggregate Purchase Price ” shall have the meaning set forth in the Pricing Letter.

“ Maximum Claim Amount ” shall mean the amount of insurance coverage for a HECM Loan provided by the related HUD/FHA insurance thereon.

“ MERS ” shall mean Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

“ MERS System ” shall mean the system of recording transfers of mortgages electronically maintained by MERS.

“ MIP Payment ” shall mean, with respect to a HECM Loan, all mortgage insurance premiums payable to either HUD or a private mortgage insurer, as set forth in the related Mortgage File.

“ Minimum Balance Requirement ” shall have the meaning set forth in the Pricing Letter.

“ Monthly Financial Statement Date ” shall have the meaning set forth in the Pricing Letter.

“ Monthly Payment ” shall mean the scheduled monthly payment of principal and interest on a Mortgage Loan.

“ Moody’s ” shall mean Moody’s Investor’s Service, Inc. or any successors thereto.

“ Mortgage ” shall mean each mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents, security agreement and fixture filing, deed to secure debt, assignment of rents, security agreement and fixture filing, or similar instrument creating and evidencing a first lien on real property and other property and rights incidental thereto.

“ Mortgage File ” shall mean, with respect to a Mortgage Loan, the documents and instruments relating to such Mortgage Loan and set forth in the Customer Guide and the Custodial Agreement.

“ Mortgage Interest Rate ” shall mean the rate of interest borne on a Mortgage Loan from time to time in accordance with the terms of the related Mortgage Note.

“ Mortgage Loan ” shall mean any first lien, one-to-four-family residential mortgage loan evidenced by a Mortgage Note and secured by a Mortgage, which Mortgage Loan is subject to a Transaction hereunder, which in no event shall include any mortgage loan which (a) is subject to Section 226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions), (b) includes any single premium credit, life or accident and health insurance or disability insurance, or (c) is a High Cost Mortgage Loan.

“ Mortgage Loan Released on Trust Receipt ” shall mean any Mortgage Loan which conforms to the eligibility requirements of an Approved Mortgage Product, with respect to which the Custodian has received all documents required to be delivered by Seller to the Custodian pursuant to the Custodial Agreement provided that the Custodian has returned the applicable Mortgage Note to Seller for purposes of corrections to the related documents.

“ Mortgage Loan Schedule ” shall mean with respect to any Transaction as of any date, a mortgage loan schedule in the form of a computer tape or other electronic medium generated by Seller and delivered to Buyer via the Warehouse Electronic System and to Custodian as specified in the Custodial Agreement, which provides mutually agreed upon information (including, without limitation, the information required pursuant to the Customer Guide) relating to the Purchased Assets in a format required pursuant to the Customer Guide.

“ Mortgage Note ” shall mean the promissory note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage.

“ Mortgage Product ” shall have the meaning set forth in the Pricing Letter.

“ Mortgaged Property ” shall mean the real property securing repayment of the debt evidenced by a Mortgage Note.

“ Mortgagor ” shall mean the obligor or obligors on a Mortgage Note, including any Person who has assumed or guaranteed the obligations of the obligor thereunder.

“ Net Income ” shall mean, for any Person for any period, the net income of such Person for such period as determined in accordance with GAAP.

“ Non-Excluded Taxes ” shall have the meaning set forth in Section 7(a) of the Agreement.

“ Non-Exempt Buyer ” shall have the meaning set forth in Section 7(e) of the Agreement.

“ Nondefaulting Party ” shall have the meaning set forth in Section 30 of the Agreement.

“ Note Amount ” shall mean the outstanding principal balance of a Mortgage Note.

“ Obligations ” shall mean (a) any amounts owed by Seller to Buyer in connection with a Transaction hereunder, together with interest thereon (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) and all other fees or expenses which are payable hereunder or under any of the Program Documents; and (b) all other obligations or amounts owed by Seller to Buyer or an Affiliate of Buyer under any other contract or agreement, in each case, whether such amounts or obligations owed are direct or indirect, absolute or contingent, matured or unmatured.

“ OFAC ” shall have the meaning set forth in Section 11(y) of the Agreement.

“ Operating Account ” shall mean the account established pursuant to Section 9(d) of the Agreement.

“ Operating Account Rate ” shall have the meaning set forth in the Pricing Letter.

“ Other Agency Mortgage Loan ” shall mean a Mortgage Loan other than a HECM Loan or Pricing Supplement Product which is secured by a first lien and does not meet the requirements of Conforming Mortgage Loan and (i) meets all applicable Fannie Mae or Freddie Mac underwriting standards and has received a favorable eligibility response from Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Prospector; or (ii) is eligible to be insured by FHA (excluding any Mortgage Loan which exceeds Agency guidelines for maximum general conventional loan amount).

“ Other Taxes ” shall have the meaning set forth in Section 7(b) of the Agreement.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“ Person ” shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof).

“ Personal Financial Statement Date ” shall have the meaning set forth in the Pricing Letter.

“ Plan ” shall have the meaning set forth in Section 11(s) of the Agreement.

“ PMI Policy ” shall mean a policy of primary mortgage guaranty insurance issued by a Qualified Insurer, as required by this Agreement with respect to certain Mortgage Loans.

“ Post-Default Rate ” shall have the meaning set forth in the Pricing Letter.

“ Power of Attorney ” shall have the meaning set forth in Section 8(b) of the Agreement.

“ Previous Master Repurchase Agreement ” shall have the meaning set forth in the opening paragraph of this Agreement.

“ Price Differential ” shall mean, with respect to any Transaction hereunder as of any date, the aggregate amount obtained by daily application of the Pricing Rate (or, during the continuation of an Event of Default, by daily application of the Post-Default Rate) for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the Repurchase Date (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction).

“ Pricing Letter ” shall mean that certain amended and restated letter agreement between Buyer and Seller, dated as of the date hereof, as the same may be amended from time to time.

“ Pricing Rate ” shall have the meaning set forth in the Pricing Letter.

“ Pricing Spread ” shall have the meaning set forth in the Pricing Letter.

“ Pricing Supplement Product ” shall have the meaning set forth in the Pricing Letter.

“ Principal Advance ” shall mean, with respect to a HECM Loan, any Scheduled Payment or Unscheduled Payment.

“ Principal Limit ” shall mean, with respect to a HECM Loan, the principal limit as set forth in the HECM Loan documents.

“ Program Documents ” shall mean this Agreement, the Pricing Letter, the Customer Guide, the Custodial Agreement, the Electronic Tracking Agreement, the Application, a Servicer Notice, if any, and the Power of Attorney.

“ Prohibited Person ” shall have the meaning set forth in Section 11(y) of the Agreement.

“ Property ” shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

“ Purchase Date ” shall mean the date on which Purchased Assets are transferred by Seller to Buyer or its designee.

“ Purchase Price ” shall have the meaning set forth in the Pricing Letter.

“ Purchased Agency Security ” shall mean each Agency Security that is subject to a Transaction and which has not been repurchased by Seller hereunder.

“ Purchased Assets ” shall mean the Purchased Mortgage Loans and the Purchased Agency Securities.

“ Purchased Mortgage Loan ” shall mean each Mortgage Loan sold by Seller to Buyer in a Transaction, as reflected in the Confirmation, and which has not been repurchased by Seller hereunder.

“ Qualified Insurer ” shall mean a mortgage guaranty insurance company duly authorized and licensed where required by law to transact mortgage guaranty insurance business and acceptable under the Approved Underwriting Guidelines.

“ Records ” shall mean all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller or any other person or entity with respect to a Purchased Asset. Records shall include the Mortgage Notes, any Mortgages, the Mortgage Files, the credit files related to the Purchased Asset and any other instruments necessary to document or service a Mortgage Loan.

“ Register ” shall have the meaning set forth in Section 19(b) of the Agreement.

“ Regulations T, U and X ” shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

“ Reportable Event ” shall mean any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .21, .22, .24, .26, .27 or .28 of PBGC Reg. § 4043.

“ Reporting Date ” shall have the meaning set forth in the Pricing Letter.

“ Reporting Period ” shall have the meaning provided in Section 11(s) of the Agreement.

“ Repurchase Assets ” shall have the meaning provided in Section 8(a) of the Agreement.

“ Repurchase Date ” shall mean the date on which Seller is to repurchase the Purchased Assets subject to a Transaction from Buyer which shall be the earliest of (i) the Termination Date or (ii) any date determined by application of the provisions of Sections 3(f) or 14.

“ Repurchase Price ” shall mean the price at which Purchased Assets are to be transferred from Buyer or its designee to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential plus any fees due as of the date of such determination.

“ Repurchase Roll Date ” shall mean the 15 ^th calendar day of each month, or if such day is not a Business Day, the next succeeding Business Day.

“ Requirement of Law ” shall mean as to any Person, the certificate of incorporation and bylaws or other organizational or governing documents of such Person, and any law, treaty, rule, regulation, procedure or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its Property is subject.

“ Responsible Officer ” shall mean an officer of Seller listed on Schedule 2 hereto, as such Schedule 2 may be amended from time to time.

“ Restricted Cash ” shall mean for any Person, any amount of cash of such Person that is contractually required to be set aside, segregated or otherwise reserved.

“ S&P ” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

“ Scheduled Indebtedness ” shall have the meaning set forth in Section 11(n) of the Agreement.

“ Scheduled Payments ” shall mean, on any date, the term or tenure monthly payments made to the borrower of a HECM Loan.

“ SEC ” shall have the meaning set forth in Section 12(d)(v) of the Agreement.

“ Section 4402 ” shall have the meaning set forth in Section 30 of the Agreement.

“ Section 7 Certificate ” shall have the meaning set forth in Section 7(e)(ii) hereof.

“ Seller ” shall mean Reverse Mortgage Solutions, Inc., or any successor in interest thereto.

“ Servicer ” shall mean Reverse Mortgage Solutions, Inc., its successors in interest and assigns as approved by Buyer.

“ Servicer Notice ” shall mean to the extent applicable, the notice acknowledged by the third party Servicer substantially in the form of Exhibit C hereto.

“ Servicing Agreement ” shall have the meaning set forth in Section 16(b) of the Agreement.

“ Servicing Fees ” shall mean, with respect to a HECM Loan, the fee payable to the Servicer and added to the HECM Principal Balance of such HECM Loan, in the amount reported to the Buyer.

“ Servicing Rights ” shall mean the rights of any Person to administer, service or subservice, the Purchased Assets or to possess related Records.

“ Servicing Term ” shall have the meaning set forth in Section 16(a) of the Agreement.

“ Settlement Agent ” shall mean (i) a title insurance company or its agent which has been pre-approved by Buyer in its sole discretion for which Buyer is in receipt of a Closing Protection Letter or (ii) a closing agent, other than a title insurance company or its agent, which has been pre-approved by Buyer in its sole discretion.

“ SIPA ” shall have the meaning set forth in Section 33 of the Agreement.

“ Specified Mortgage Loan ” shall have the meaning set forth in the Pricing Letter.

“ Subordinated Debt ” shall mean, as of the date of determination thereof, all indebtedness which has been subordinated in writing to the obligations owing to Buyer on terms and conditions acceptable to Buyer.

“ Subservicer ” shall have the meaning set forth in Section 16(b) of the Agreement.

“ Successor Servicer ” shall have the meaning set forth in Section 16(g) of the Agreement.

“ Subsidiary ” shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

“ Takeout Commitment ” “ shall mean (a) with respect to all Purchased Assets other than Jumbo Mortgage Loans or Agency Securities, either (i) a commitment of Seller to sell one or more such Purchased Assets to an Approved Investor (including an Agency) and the corresponding Approved Investor’s (including an Agency’s) commitment back to Seller to effectuate the foregoing, which commitment may be in the form of a “to be allocated” (TBA) commitment for which the related Purchased Assets are allocated or (ii) a commitment of an Agency to swap one or more Purchased Mortgage Loans for an Agency Security, which commitment may be in the form of a “to be allocated” (TBA) commitment for which the related Purchased Mortgage Loans are allocated; (b) with respect to Purchased Assets that are Jumbo Mortgage Loans, a commitment of Seller to sell one or more such Purchased Assets to an Approved Investor and the corresponding Approved Investor’s commitment back to Seller to effectuate the foregoing, which commitment meets the requirements set forth in the definition of “Jumbo Mortgage Loan”; and (c) with respect to Purchased Agency Securities, a commitment of Seller to sell one or more Purchased Agency Securities to an Approved Investor and the corresponding Approved Investor’s commitment back to Seller to effectuate the foregoing; and in each case, the expiration date of such commitment has not occurred.

“ Takeout Failure ” shall mean, with respect to any Takeout Commitment (i) for the purchase of a Purchased Asset, the failure of the Approved Investor to purchase such Purchased Asset pursuant to such Takeout Commitment and (ii) for the swap of a Purchased Mortgage Loan for an Agency Security backed by such Purchased Mortgage Loan, an Agency Security Issuance Failure.

“ Takeout Price ” shall mean the price at which the Approved Investor has agreed to purchase a Purchased Asset from Seller.

“ Tangible Net Worth ” shall mean, as of the date of determination thereof, such Person’ s stockholder’s equity less unacceptable assets (in accordance with HUD Handbook IG 2000.4, Consolidated Audit Guide for Audits of HUD Programs, as the same may be amended, modified or otherwise supplemented from time to time) less Restricted Cash plus Subordinated Debt with maturities in excess of one year.

“ Taxes ” shall have the meaning set forth in Section 7(a) of the Agreement.

“ Termination Date ” shall have the meaning set forth in the Pricing Letter.

“ Third Party Participants ” shall have the meaning set forth in Section 12(x) of the Agreement.

“ Third Party Transaction Parties ” shall have the meaning set forth in Section 17 of the Agreement.

“ Trade Assignment ” shall mean an assignment to Buyer of a forward trade between an Approved Investor and Seller with respect to one or more Purchased Agency Securities.

“ Transaction ” shall have the meaning specified in Section 1.

“ Transaction Request ” shall mean a request from Seller to Buyer to enter into a Transaction, which shall be submitted electronically through the Warehouse Electronic System in accordance with the Customer Guide.

“ Treasury Regulations ” shall mean regulations promulgated by the U.S. Department of the Treasury under the Code.

“ Trust Receipt ” shall have the meaning set forth in the Custodial Agreement.

“ Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non perfection of the security interest in any Repurchase Assets or the continuation, renewal or enforcement thereof is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of the Agreement relating to such perfection or effect of perfection or non perfection.

“ Unscheduled Payments ” shall mean, on any date, any payment made to a borrower of a HECM Loan under the terms of the related HECM Loan documents other than a Scheduled Payment.

“ VA ” shall mean the U.S. Department of Veterans Affairs, an agency of the United States of America, or any successor thereto including the Secretary of Veterans Affairs.

“ Warehouse Accounts ” shall have the meaning set forth in Section 9(c) of the Agreement.

“ Warehouse Electronic System ” shall mean the system utilized by Buyer either directly, or through its vendors, and which may be accessed by Seller in connection with delivering and obtaining information and requests as described further in the Customer Guide.

“ Warehouse Fees ” shall have the meaning set forth in the Pricing Letter.

“ Well Capitalized ” shall mean, with respect to any Insured Depository Institution, the maintenance by such Insured Depository Institution of capital ratios at or above the required minimum levels for such capital category under the regulations promulgated pursuant to Section 1831(o) (“ Prompt Corrective Action ”) of the United States Code, as amended from time to time, by the Appropriate Federal Banking Agency for such institution, as such regulation may be amended from time to time.

“ Wet Delivery Deadline ” shall have the meaning set forth in the Pricing Letter.

“ Wet File ” shall mean, with respect to a Wet Loan, the documents and instruments relating to such Mortgage Loan and set forth in the Customer Guide for Wet Loans.

“ Wet Loan ” shall mean a Mortgage Loan which Seller is selling to Buyer simultaneously with the origination thereof and for which the Mortgage File has not been delivered to Custodian.

SECTION 3. INITIATION; TERMINATION

(a) Conditions Precedent to Initial Transaction. Buyer’s agreement to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that Buyer shall have received from Seller any fees and expenses payable hereunder, and all of the following documents, each of which shall be satisfactory to Buyer and its counsel in form and substance:

(i) The following Program Documents, duly executed and delivered to Buyer:

(A) Agreement . This Agreement, duly executed by the parties thereto.

(B) Pricing Letter . The Pricing Letter, duly executed by the parties thereto in form and substance acceptable to Buyer.

(D) Electronic Tracking Agreement . For all Mortgage Loans which are registered on the MERS ^® System, an Electronic Tracking Agreement entered into, duly executed and delivered by the parties thereto, in full force and effect, free of any modification, breach or waiver.

(ii) [ RESERVED ].

(A) Application . A duly completed Application, executed and delivered by Seller to Buyer.

(B) Other Program Documents . Any other Program Documents, duly executed by the parties thereto.

(iii) Organizational Documents . Certified copies of the organizational documents of Seller.

(iv) Good Standing Certificate . A certified copy of a good standing certificate from the jurisdiction of organization of Seller, dated as of no earlier than the date 10 Business Days prior to the Purchase Date with respect to the initial Transaction hereunder.

(v) Officer’s Certificate . An officer’s certificate of Seller in form and substance as set forth in Exhibit B attached hereto.

(vi) Opinion of Counsel . An opinion of Seller’s counsel, in form and substance reasonably acceptable to Buyer.

(vii) [ RESERVED ].

(viii) [ RESERVED ].

(ix) Security Interest . Evidence that all other actions necessary or, in the opinion of Buyer, desirable to perfect and protect Buyer’s interest in the Purchased Assets and other Repurchase Assets have been taken, including, without limitation, UCC searches of applicable jurisdictions and duly authorized and filed Uniform Commercial Code financing statements on Form UCC-1.

(x) Insurance . Evidence that Seller has added endorsements for theft of warehouse lender money and collateral, naming Buyer as a loss payee under its Fidelity Insurance and as a direct loss payee/right of action under its errors and omissions insurance policy.

(xi) Fees . Payment of any fees and other costs and expenses due to Buyer hereunder.

(xii) Other Documents . Such other documents as Buyer and Seller may reasonably request, in form and substance reasonably acceptable to Buyer.

(b) Conditions Precedent to all Transactions . Upon satisfaction of the conditions set forth in this Section 3(b), Buyer may enter into a Transaction with Seller. Buyer’s entering into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect thereto to the intended use thereof:

(i) Due Diligence Review . Without limiting the generality of Section 17 of the Agreement, Buyer shall have completed, to its satisfaction, its preliminary due diligence review of the related Mortgage Loans and Seller.

(ii) No Default . No Default or Event of Default shall have occurred and be continuing under the Program Documents.

(iii) Representations and Warranties . Both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in Section 11 of the Agreement, shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(iv) Maximum Aggregate Purchase Price . After giving effect to the requested Transaction, the aggregate outstanding Purchase Price for all Purchased Assets subject to then outstanding Transactions under this Agreement shall not exceed the Maximum Aggregate Purchase Price.

(v) No Margin Deficit . After giving effect to the requested Transaction, the Asset Value of all Purchased Assets exceeds the aggregate Purchase Price for such Transactions.

(vi) Transaction Request . Seller shall have delivered to Buyer, in accordance with the timeframes set forth in the Customer Guide, and to Custodian, in accordance with the timeframes set forth in the Custodial Agreement, (a) a Transaction Request and (b) a Mortgage Loan Schedule with respect to all Mortgage Loans subject to the requested Transaction.

(vii) Delivery of Mortgage File . Seller shall have delivered to Custodian, in accordance with the timeframes set forth in the Custodial Agreement, with respect to each Mortgage Loan subject to the requested Transaction (a) which is not a Wet Loan, the Mortgage File with respect to each such Mortgage Loan and (b) with respect to each Wet Loan, (1) the Wet File with respect to each such Mortgage Loan and (2) on or prior to the Wet Delivery Deadline, the Mortgage File.

(viii) Delivery of Trust Receipt . Custodian shall have delivered to Buyer, in accordance with the timeframes set forth in the Custodial Agreement, a Trust Receipt (accompanied by a Custodial Loan Transmission) with respect to each Mortgage Loan subject to the requested Transaction.

(ix) MERS . Buyer shall have received from Seller evidence that Buyer has been registered as the “warehouse lender” on the MERS System.

(x) Fees and Expenses . Buyer shall have received all fees and expenses as contemplated by Sections 9 and 15(b) which amounts, at Buyer’s option, may be withheld from the proceeds remitted by Buyer to Seller pursuant to any Transaction hereunder; and

(xi) No Violation of Law . If any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of incorporation and bylaws or other organizational or governing documents) or any change in the interpretation or application of any Requirement of Law thereof or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof shall result in Buyer’s entering into any Transaction to be a violation of such Requirement of Law.

(xii) No Material Adverse Change . None of the following shall have occurred and/or be continuing:

(A) an event or events shall have occurred in the good faith determination of Buyer resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by securities or an event or events shall have occurred resulting in Buyer not being able to finance Mortgage Loans through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or

(B) an event or events shall have occurred outside of Buyer’s control resulting in the effective absence of a “securities market” for securities backed by mortgage loans or an event or events shall have occurred outside of Buyer’s control resulting in Buyer not being able to sell securities backed by mortgage loans; or

(C) there shall have occurred a material adverse change in the financial condition of Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of Buyer to fund its obligations under this Agreement; or

(D) there shall have occurred (i) a material change in financial markets, an outbreak or escalation of hostilities or a material change in national or international political, financial or economic conditions; (ii) a general suspension of trading on major stock exchanges; or (iii) a disruption in or moratorium on commercial banking activities or securities settlement services;

provided , that with respect to this Section 3(b)(xii), Buyer shall have provided Seller with notice that such event or events have occurred and Buyer shall have exercised its right not to enter into transactions under other similar committed warehouse and repurchase facilities with sellers similar to Seller and collateral similar to the Purchased Assets, solely as a result of such event or events.

Each Transaction Request delivered by Seller hereunder shall constitute a certification by Seller that all the conditions set forth in this Section 3(b) (other than clause (xii) hereof) have been satisfied (both as of the date of such notice or request and as of Purchase Date).

(i) Seller shall deliver a Transaction Request through the Warehouse Electronic System to Buyer as specified in the Customer Guide and to Custodian as specified in the Custodial Agreement prior to entering into any Transaction. Such Transaction Request shall include all information required by Buyer pursuant to the Customer Guide. Following receipt of such request, Buyer may agree to enter into such requested Transaction, in which case Buyer shall fund the Purchase Price in accordance with this Agreement. Buyer’s funding the Purchase Price of the Transaction and Seller’s acceptance thereof, will constitute the parties agreement to enter into such Transaction. Upon remittance of the Purchase Price to Seller, Seller hereby grants, assigns, conveys and transfers all rights in and to the Purchased Assets evidenced on the related Asset Schedule submitted through the Warehouse Electronic System. Buyer shall confirm the terms of each Transaction by issuing a Confirmation to Seller by the end of the day on each Purchase Date.

(ii) Each Confirmation together with this Agreement, shall be conclusive evidence of the terms of the Transaction(s) covered thereby unless objected to in writing by Seller no more than two (2) Business Days after the date such Confirmation was received by Seller or unless a corrected Confirmation is sent by Buyer; provided that Buyer’s failure to issue a Confirmation shall not affect the obligations of Seller under any Transaction. An objection sent by Seller must state specifically that such writing which is an objection, must specify the provision(s) being objected to by Seller, must set forth such provision(s) in the manner that Seller believes they should be stated, and must be received by Buyer no more than two (2) Business Days after the Confirmation was received by Seller.

(iii) The Repurchase Date for each Transaction shall not be later than the Termination Date.

(iv) Subject to the terms and conditions of this Agreement, during such period Seller may sell, repurchase and resell Purchased Assets hereunder.

(v) No later than the date and time set forth in the Custodial Agreement, Seller shall deliver to Custodian the Mortgage File pertaining to each Eligible Mortgage Loan (other than a Wet Loan) to be purchased by Buyer.

(vi) Upon Buyer’s receipt of the Trust Receipt (accompanied by a Custodial Loan Transmission) in accordance with the Custodial Agreement and subject to the provisions of this Section 3, the Purchase Price will then be made available to Seller by Buyer transferring, via wire transfer, in the aggregate amount of such Purchase Price in funds immediately available.

(d) Issuance of Agency Securities . Seller may cause Purchased Mortgage Loans to be pooled for the purpose of backing an Agency Security. At such time as an Agency Security backed by a pool of Purchased Mortgage Loans is delivered to Buyer by the applicable Agency, (a) such Agency Security shall immediately and with no further action on the part of Buyer, Seller or Custodian become subject to a Transaction hereunder and (b) the pool of Purchased Mortgage Loans backing such Agency Security shall immediately and with no further action on the part of Buyer, Seller or Custodian no longer be subject to a Transaction hereunder and Buyer shall have been deemed to release any ownership and/or security interest it has in such pool of Purchased Mortgage Loans.

(e) Repurchase Roll Date; Buyer Requests . On the Repurchase Roll Date for each month, (A) Seller shall repurchase all Purchased Assets that are subject to any outstanding Transactions hereunder for at least thirty (30) calendar days on such date at the Repurchase Price for such Purchased Assets and (B) provided that there shall exist no Default, simultaneously with such repurchase, Buyer shall enter into a new Transaction with Seller at a Purchase Price equal to the Purchase Price with respect to all Purchased Assets other than Purchased Assets (1) that had an Asset Value of zero immediately prior to such repurchase or (2) for which Buyer shall have given at least three (3) Business Days’ notice to Seller that the Repurchase Roll Date shall constitute the Repurchase Date. The amounts constituting the Purchase Price for the new Transactions and the Repurchase Price for the old Transactions may, unless otherwise objected to by Buyer, be netted. Buyer shall confirm such new Transaction by issuing a Confirmation in accordance with Section 3(c).

(f) Repurchase; Purchase by an Approved Investor

(i) Seller may repurchase Purchased Assets without penalty or premium on any date or Seller may be required to repurchase Purchased Assets in accordance with Section 3(e). Any repurchase of Purchased Assets may occur simultaneously with a sale of the Purchased Asset to an Approved Investor. Additional requirements for repurchase or sale of a Purchased Asset shall be set forth in the Customer Guide.

(ii) On the Repurchase Date, termination of the Transaction will be effected by reassignment to Seller or its designee of the Purchased Assets against the simultaneous transfer of the Repurchase Price as described in the Customer Guide. Such obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Asset.

SECTION 4. MARGIN AMOUNT MAINTENANCE

(a) Buyer shall determine the Market Value of each Purchased Asset at such intervals as determined by Buyer in its sole discretion.

(b) If at any time the aggregate Asset Value of the Purchased Assets subject to Transactions is less than the aggregate Purchase Price for the Purchased Assets (a “ Margin Deficit ”), then Buyer may by notice to Seller (as such notice is more particularly set forth below, a “ Margin Call ”), require Seller to transfer to Buyer or its designee cash in the amount of the Margin Deficit.

(c) Notice delivered pursuant to Section 4(b) may be given by any written or electronic means. Any notice given before 10:00 a.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on such Business Day; notice given after 10:00 a.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the following Business Day.

(d) The failure of Buyer, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Buyer to do so at a later date. Seller and Buyer each agree that a failure or delay by Buyer to exercise its rights hereunder shall not limit or waive Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.

(e) Any cash transferred to Buyer pursuant to Section 4(b) above be applied to all Obligations under this Agreement.

SECTION 5. COLLECTIONS; INCOME PAYMENTS

(a) Upon request of Buyer, Seller shall establish and maintain a segregated time or demand deposit account for the benefit of Buyer (the “ Custodial Account ”) with Buyer and shall deposit into the Custodial Account, within two (2) Business Days of receipt, all Income received with respect to each Mortgage Loan sold hereunder. Seller shall cause all Income received with respect to the Purchased Assets by any Servicer to be remitted directly to the Custodial Account. Under no circumstances shall Seller deposit any of its own funds into the Custodial Account or otherwise commingle its own funds with funds belonging to Buyer as owner of any Mortgage Loans. Seller shall name the Custodial Account “Reverse Mortgage Solutions, Inc., in trust for and for the benefit of UBS Real Estate Securities Inc.”

(b) All Income received with respect to a Mortgage Loan purchased hereunder, whether or not deposited in the Custodial Account, shall be held in trust for the exclusive benefit of Buyer as the owner of such Mortgage Loan.

(c) Following an Event of Default, Seller shall remit to Buyer funds in the Custodial Account as required under the terms of this Agreement. Such remittances shall be by wire transfer in accordance with wire transfer instructions previously given to Seller by Buyer.

(d) Seller authorizes Buyer to withdraw any Income otherwise due Buyer hereunder from designated Seller’s accounts as more particularly set forth in the Customer Guide.

(e) Seller shall not change the identity or location of the Custodial Account. Seller shall from time to time, at its own cost and expense, execute such directions to Buyer, and other papers, documents or instruments as may be mutually agreed to and reasonably requested by Buyer.

(f) If Buyer so requests, Seller shall promptly notify Buyer of each deposit in the Custodial Account, and each withdrawal from the Custodial Account, made by it with respect to Mortgage Loans owned by Buyer and serviced by Seller. Seller shall also deliver to Buyer, in a commercially reasonable timeframe, photocopies of all periodic bank statements and other records relating to the Custodial Account as Buyer may from time to time request.

(g) The amount required to be paid or remitted by Seller to Buyer, not made when due shall bear interest from the due date until the remittance, transfer or payment is made, payable by Seller, at the lesser of the Post-Default Rate or the maximum rate of interest permitted by law. If there is no maximum rate of interest specified by applicable law, interest on such sums shall accrue at the Post-Default Rate.

SECTION 6. REQUIREMENT OF LAW

(a) If any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of incorporation and bylaws or other organizational or governing documents) including those regarding capital adequacy, or any change in the interpretation or application of any Requirement of Law thereof or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

(i) shall subject Buyer to any Tax or increased Tax of any kind whatsoever or change the basis of taxation of payments to Buyer;

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of Buyer;

(iii) shall impose on Buyer any other condition;

and the result of any of the foregoing is to increase the cost to Buyer, by an amount which Buyer deems to be material, of entering, continuing or maintaining any Transaction or to reduce any amount due or owing hereunder in respect thereof, or shall have the effect of reducing Buyer’s rate of return then, in any such case, Seller shall promptly pay Buyer such additional amount or amounts as calculated by Buyer in good faith as will compensate Buyer for such increased cost or reduced amount receivable on an after-tax basis.

(b) If Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of incorporation and bylaws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any corporation controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital

as a consequence of its obligations hereunder to a level below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer to be material, then from time to time, Seller shall promptly pay to Buyer such additional amount or amounts as will compensate Buyer for such reduction.

(c) If Buyer becomes entitled to claim any additional amounts pursuant to this Section 6, it shall promptly notify Seller of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by Buyer to Seller shall be conclusive in the absence of manifest error.

SECTION 7. TAXES.

(a) Any and all payments by or on behalf of Seller under or in respect of this Agreement or any other Program Documents to which Seller is a party shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “ Taxes ”), unless required by law. If any Person shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Agreement or any of the other Program Documents to Buyer (including, for purposes of Section 6 and this Section 7, any agent, assignee, successor or participant), (i) Seller shall make all such deductions and withholdings in respect of Taxes, (ii) Seller shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance with any Requirement of Law, and (iii) the sum payable by Seller shall be increased as may be necessary so that after Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable under this Section 7) such Buyer receives an amount equal to the sum it would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Agreement the term “ Non-Excluded Taxes ” are Taxes other than, in the case of a Buyer, (i) Taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which such Buyer is organized or of its applicable lending office, or any political subdivision thereof, unless such Taxes are imposed as a result of such Buyer having executed, delivered or performed its obligations or received payments under, or enforced, this Agreement or any of the other Program Documents (in which case such Taxes will be treated as Non-Excluded Taxes), and (ii) Taxes imposed as a result of its failure to comply with the requirements of Sections 1471 through 1474 of the Code (as in effect on the date hereof) and any Treasury Regulations promulgated thereunder.

(b) In addition, Seller hereby agrees to pay or, at the Buyer’s option, timely reimburse it for payment of, any present or future stamp, recording, documentary, excise, filing, intangible, property or value-added taxes, or similar taxes, charges or levies that arise from any payment made under or in respect of this Agreement or any other Program Document or from the execution, delivery, enforcement or registration of, any performance, receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other Program Document (collectively, “ Other Taxes ”).

(c) Seller hereby agrees to indemnify Buyer (including its Beneficial Tax Owners) for, and to hold it harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 7 imposed on or paid by such Buyer (or any Beneficial Tax Owners thereof) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. A certificate as to the amount of such Taxes or liabilities delivered to Seller by Buyer shall be conclusive absent manifest error. The indemnity by Seller provided for in this Section 7(c) shall apply and be made whether or not the Non-Excluded Taxes, Other Taxes or any other liabilities for which indemnification hereunder is sought have been correctly or legally asserted. Amounts payable by Seller under the indemnity set forth in this Section 7(c) shall be paid within ten (10) days from the date on which Buyer makes written demand therefor.

(d) Within thirty (30) days after the date of any payment of Taxes, Seller (or any Person making such payment on behalf of Seller) shall furnish to Buyer for its own account a certified copy of the original official receipt evidencing payment thereof.

(e) For purposes of this Section 7(e), the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Code. Each Buyer (including for avoidance of doubt any assignee, successor or participant) that either (i) is not organized under the laws of the United States, any State thereof, or the District of Columbia or (ii) whose name does not include “Incorporated,” “Inc.,” “Corporation,” “Corp.,” “P.C.,” “insurance company,” or “assurance company” (a “ Non-Exempt Buyer ”) shall deliver or cause to be delivered to Seller the following properly completed and duly executed documents:

(i) in the case of a Non-Exempt Buyer that is not a United States person or is a disregarded entity for U.S. federal income tax purposes owned by a person that is not a United States person, a complete and executed (x) U.S. Internal Revenue Service Form W-8BEN with Part II completed in which such Buyer claims the benefits of a tax treaty with the United States providing for a zero or reduced rate of withholding (or any successor forms thereto), including all appropriate attachments or (y) a U.S. Internal Revenue Service Form W-8ECI (or any successor forms thereto); or

(ii) in the case of a Non-Exempt Buyer that is an individual, (x) for non-United States persons, a complete and executed U.S. Internal Revenue Service Form W-8BEN (or any successor forms thereto) and a certificate substantially in the form of Exhibit F (a “ Section 7 Certificate ”) or (y) for United States persons, a complete and executed U.S. Internal Revenue Service Form W-9 (or any successor forms thereto); or

(iii) in the case of a Non-Exempt Buyer that is organized under the laws of the United States, any State thereof, or the District of Columbia and that is not a disregarded entity for U.S. federal income tax purposes owned by a person that is not a United States person, a complete and executed U.S. Internal Revenue Service Form W-9 (or any successor forms thereto); or

(iv) in the case of a Non-Exempt Buyer that (x) is not organized under the laws of the United States, any State thereof, or the District of Columbia and (y) is treated as a corporation for U.S. federal income tax purposes, a complete and executed U.S. Internal Revenue Service Form W-8BEN (or any successor forms thereto) and a Section 7 Certificate; or

(v) in the case of a Non-Exempt Buyer that (A) is treated as a partnership or other non-corporate entity, and (B) is not organized under the laws of the United States, any State thereof, or the District of Columbia, (x)(i) a complete and executed U.S. Internal Revenue Service Form W-8IMY (or any successor forms thereto) (including all required documents and attachments) and (ii) a Section 7 Certificate, and (y) in the case of a non-withholding foreign partnership or trust, without duplication, with respect to each of its beneficial owners and the beneficial owners of such beneficial owners looking through chains of owners to individuals or entities that are treated as corporations for U.S. federal income tax purposes (all such owners, “ Beneficial Tax Owners ”), the documents that would be provided by each such Beneficial Tax Owner if such Beneficial Tax Owner were Buyer; or

(vi) in the case of a Non-Exempt Buyer that is disregarded for U.S. federal income tax purposes, the document that would be required by clause (i), (ii), (iii), (iv), (v), (vii) and/or this clause (vi) of this Section 7(e) with respect to its Beneficial Tax Owner if such Beneficial Tax Owner were Buyer; or

(vii) in the case of a Non-Exempt Buyer that (A) is not a United States person and (B) is acting in the capacity of an “intermediary” (as defined in U.S. Treasury Regulations), (x)(i) a U.S. Internal Revenue Service Form W-8IMY (or any successor form thereto) (including all required documents and attachments) and (ii) a Section 7 Certificate, and (y) if the intermediary is a “non-qualified intermediary” (as defined in U.S. Treasury Regulations), from each person upon whose behalf the “non-qualified intermediary” is acting the documents that would be required by clause (i), (ii), (iii), (iv), (v), (vi), and/or this clause (vii) with respect to each such person if each such person were Buyer.

If a Buyer provides a form pursuant to Section 7(e)(i)(x) and the form provided by the Buyer at the time such Buyer first becomes a party to this Agreement or, with respect to a grant of a participation, the effective date thereof, indicates a United States interest withholding tax rate under the tax treaty in excess of zero, withholding tax at such rate shall be treated as Taxes other than “Non-Excluded Taxes” (“ Excluded Taxes ”) and shall not qualify as Non-Excluded Taxes unless and until such Buyer provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate shall be considered Excluded Taxes solely for the periods governed by such form. If, however, on the date a Person becomes an assignee, successor or participant to this Agreement, the Buyer transferor was entitled to indemnification or additional amounts under this Section 7, then the Buyer assignee, successor or participant shall be entitled to indemnification or additional amounts to the extent that the Buyer transferor was entitled to such indemnification or additional amounts for Non-Excluded Taxes, and the Buyer assignee, successor or participant shall be entitled to additional indemnification or additional amounts for any other or additional Non-Excluded Taxes.

(f) For any period with respect to which a Buyer has failed to provide Seller with the appropriate form, certificate or other document described in Section 7(e) (other than if such failure is due to a change in any Requirement of Law, or in the interpretation or application thereof, occurring after the date on which a form, certificate or other document originally was required to be provided), such Buyer shall not be entitled to indemnification or additional amounts under subsection (a) or (c) of this Section 7 with respect to Non-Excluded Taxes imposed by the United States by reason of such failure; provided, however, that should a Buyer become subject to Non-Excluded Taxes because of its failure to deliver a form, certificate or other document required hereunder, Seller shall take such steps as such Buyer shall reasonably request, to assist such Buyer in recovering such Non-Excluded Taxes.

(g) Without prejudice to the survival of any other agreement of Seller hereunder, the agreements and obligations of Seller contained in this Section 7 shall survive the termination of this Agreement and the other Program Documents. Nothing contained in Section 6 or this Section 7 shall require Buyer to complete, execute or make available any of its Tax returns or any other information that it deems to be confidential or proprietary, or whose completion, execution or submission would, in Buyer’s judgment, materially prejudice Buyer’s legal or commercial position.

SECTION 8. SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

(a) Security Interest . On each Purchase Date, Seller hereby sells, assigns and conveys all rights and interests in the Purchased Assets identified on the related Mortgage Loan Schedule and the Repurchase Assets related thereto. Although the parties intend that all Transactions hereunder be sales and purchases and not loans (other than as set forth in Section 21 for U.S. tax purposes), in the event any such Transactions are deemed to be loans, and in any event Seller hereby pledges to Buyer as security for the performance by Seller of its Obligations and hereby grants, assigns and pledges to Buyer a fully perfected first priority security interest in the Purchased Assets; the Records related to the Purchased Assets; the Program Documents (to the extent such Program Documents and Seller’s right thereunder relate to the Purchased Assets); any Property relating to any Purchased Asset or the related Mortgaged Property; any Takeout Commitments relating to any Purchased Assets; any Closing Protection Letter, escrow letter or settlement agreement relating to any Purchased Asset; any Servicing Rights relating to any Purchased Asset; all insurance policies and insurance proceeds relating to any Purchased Asset or the related Mortgaged Property, including but not limited to any payments or proceeds under any related primary insurance or hazard insurance; any Income relating to any Purchased Asset; the Custodial Account; the Margin Account, the Inbound Account; the Operating Account; any Hedge Agreements relating to any Purchased Asset; and any other contract rights, accounts (including any interest of Seller in escrow accounts) and any other payments, rights to payment (including payments of interest or finance charges) and general intangibles to the extent that the foregoing relates to any Purchased Asset; and any other assets relating to the Purchased Assets (including, without limitation, any other accounts) or any interest in the Purchased Assets; accounts relating to any Purchased Asset; chattel paper (including electronic chattel paper) relating to any Purchased Asset; goods (including inventory and equipment and any accessions thereto) relating to any Purchased Asset; instruments (including promissory notes) relating to any Purchased Asset; documents relating to any Purchased Asset; investment property relating to any

Purchased Asset; general intangibles (including payment intangibles and software) together with all accessions and additions thereto relating to any Purchased Asset; substitutions and replacements therefor relating to any Purchased Asset; and all products and proceeds, in all instances, whether now owned or hereafter acquired, now existing or hereafter created and wherever located relating to any Purchased Asset (collectively, the “ Repurchase Assets ”).

Seller acknowledges that it has sold the Purchased Assets to Buyer on a servicing released basis and it has no rights to service the Purchased Assets. Without limiting the generality of the foregoing and in the event that Seller is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, Seller grants, assigns and pledges to Buyer a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created. The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as defined under Sections 101(47)(v) and 741(7)(xi) of the Bankruptcy Code.

Seller hereby authorizes Buyer to file such financing statement or statements relating to the Repurchase Assets and the Servicing Rights as Buyer, at its option, may deem appropriate. Seller shall pay the searching and filing costs for any financing statement or statements prepared or searched pursuant to this Agreement.

(b) Buyer’s Appointment as Attorney in Fact . Seller agrees to execute a Power of Attorney, the form of Exhibit E hereto (the “ Power of Attorney ”), to be delivered on the date hereof.

SECTION 9. PAYMENT, TRANSFER; ACCOUNTS

(a) Payments and Transfers of Funds . Unless otherwise mutually agreed in writing, all transfers of funds to be made by Seller hereunder shall be made in Dollars, in immediately available funds, without deduction, set off or counterclaim, to Buyer at the account maintained by Buyer, on the date on which such payment shall become due, all as more particularly described in the Customer Guide.

(b) Remittance of Purchase Price . On the Purchase Date for each Transaction, ownership of the Purchased Assets shall be transferred to Buyer or its designee against the simultaneous transfer of the Purchase Price. With respect to the Purchased Assets being sold by Seller on a Purchase Date, Seller hereby sells, transfers, conveys and assigns to Buyer or its designee without recourse, but subject to the terms of this Agreement, all the right, title and interest of Seller in and to the Purchased Assets together with all right, title and interest in and to the proceeds of any related Repurchase Assets. All transfers of cash and assets shall be made in accordance with the Customer Guide.

(c) Inbound Account; Margin Account . Buyer shall maintain for Seller an Inbound Account and a Margin Account (the “ Warehouse Accounts ”), each identified in the Customer Guide. The Warehouse Accounts shall be in the form of non-interest bearing book-entry accounts. Buyer shall have exclusive withdrawal rights from the Warehouse Accounts. All amounts on deposit in the Warehouse Accounts shall be held as cash margin and collateral

for all Obligations under this Agreement. Without limiting the generality of the foregoing, in the event that a Margin Call or other Default exists, Buyer shall be entitled to use any or all of the amounts on deposit in any Warehouse Account to cure such circumstance or otherwise exercise remedies available to Buyer without prior notice to, or consent from, Seller. Notwithstanding the foregoing, Seller acknowledges that (i) Buyer is not a depository institution, (ii) Buyer has no duties to Seller on a depository to customer basis with respect to the Warehouse Accounts, (iii) the Warehouse Accounts are not deposit or demand accounts, (iv) amounts in the Warehouse Accounts are not insured by the Federal Deposit Insurance Corporation, any governmental entity or otherwise and (v) Buyer is not required to segregate funds in the Warehouse Accounts from its own funds or from funds held for others but must keep a separate accounting thereof.

(d) Operating Account . Seller may remit to Buyer funds to be held in an interest bearing account (the “ Operating Account ”) as unsegregated cash margin and collateral for all Obligations under this Agreement (such amount, to the extent not applied to Obligations under this Agreement, the “ Buydown Amount ”). The Buydown Amount will accrue interest at the Operating Account Rate, subject to Section 9(e) below. Seller shall be entitled to request a drawdown of the Buydown Amount or remit additional funds to be added to the Buydown Amount no more than one time per week. Without limiting the generality of the foregoing, in the event that a Margin Call or other Default exists, the Buyer shall be entitled to use any or all of the Buydown Amount to cure such circumstance or otherwise exercise remedies available to the Buyer without prior notice to, or consent from, Seller. Within two (2) Business Days’ receipt of written request from Seller, and provided no Margin Call or other Default exists, Buyer shall remit any portion of such Buydown Amount back to Seller.

(e) Maintenance of Balances . If Seller shall fail to maintain with Buyer during any calendar month deposits in the Operating Account in the aggregate, after charges to compensate Buyer for services rendered to Seller, equal to at least the Minimum Balance Requirement, Seller shall pay to Buyer a fee equal to the amount of such deficit multiplied by the Maintenance Fee Rate.

(f) Fees . Seller shall pay in immediately available funds to Buyer all fees, including without limitation, the Warehouse Fees, as and when required hereunder. All such payments shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Buyer at such account designated by Buyer. Without limiting the generality of the foregoing or any other provision of this Agreement, Buyer may withdraw and retain from the Operating Account or Margin Account any Warehouse Fees due and owing to Buyer.

SECTION 10. RESERVED

SECTION 11. REPRESENTATIONS

Seller represents and warrants to Buyer that as of the Purchase Date for any Purchased Assets and as of the date of this Agreement and any Transaction hereunder and at all times while the Program Documents are in full force and effect and/or any Transaction hereunder is outstanding:

(a) Acting as Principal . Seller will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal).

(b) No Broker . Seller has not dealt with any broker, investment banker, agent, or other person, except for Buyer, who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement.

(c) Financial Statements . Seller has heretofore furnished to Buyer a copy, certified by its president or chief financial officer, of its (a) Financial Statements for Seller for the fiscal year ended the Annual Financial Statement Date, setting forth in each case in comparative form the figures for the previous year, with an unqualified opinion thereon of an Approved CPA and (b) Financial Statements for Seller for such monthly period(s), of Seller up until Monthly Financial Statement Date, and Financial Statements of Walter Investment Management Corp. for such quarterly periods(s) up until the Quarterly Financial Statement Date, setting forth in each case in comparative form the figures for the previous year. All such Financial Statements are complete and correct and fairly present, in all material respects, the consolidated financial condition of Seller and Walter Investment Management Corp. and the consolidated results of its operations as at such dates and for such monthly or quarterly periods, all in accordance with GAAP. Since the Annual Financial Statement Date, there has been no material adverse change in the consolidated business, operations or financial condition of Seller taken as a whole from that set forth in said Financial Statements nor is Seller aware of any state of facts which (without notice or the lapse of time) would or could result in any such material adverse change or could have a Material Adverse Effect. Seller does not have, on the Annual Financial Statement Date, any liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Seller except as heretofore disclosed to Buyer in writing.

(d) Organization, Etc . Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Seller (a) has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not have a Material Adverse Effect; (b) is qualified to do business and is in good standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify would not have a Material Adverse Effect; and (c) has full power and authority to execute, deliver and perform its obligations under the Program Documents.

(e) Authorization, Compliance, Approvals . The execution and delivery of, and the performance by Seller of its obligations under, the Program Documents to which it is a party (a) are within Seller’s powers, (b) have been duly authorized by all requisite action, (c) do not violate any provision of applicable law, rule or regulation, or any order, writ, injunction or decree of any court or other Governmental Authority, or its organizational documents, (d) do not

violate any indenture, agreement, document or instrument to which Seller is a party, any of the Repurchase Assets is bound or to which it is subject and (e) are not in conflict with, do not result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or except as may be provided by any Program Document, result in the creation or imposition of any Lien upon any of the Repurchase Assets of Seller pursuant to, any such indenture, agreement, document or instrument. Seller is not required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the consummation of the Transactions contemplated herein and the execution, delivery or performance of the Program Documents to which it is a party.

(f) Litigation . There are no actions, suits, arbitrations, or to the best of Seller’s knowledge, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting Seller or any of its Subsidiaries or affecting any of the Repurchase Assets or any of the other properties of Seller before any Governmental Authority which (i) questions or challenges the validity or enforceability of the Program Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) except as disclosed to Buyer, makes a claim or claims in an aggregate amount greater than the Litigation Threshold, (iii) individually or in the aggregate, if adversely determined, would be reasonably likely to have a Material Adverse Effect, (iv) requires filing with the SEC in accordance with its regulations or (v) relates to any violation of the Home Ownership and Equity Protection Act or any state, city or district high cost home mortgage or predatory lending law.

(g) Purchased Assets .

(i) Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset to any other Person, and immediately prior to the sale of such Purchased Asset to Buyer, Seller was the sole owner of such Purchased Asset and had good and marketable title thereto, free and clear of all Liens, in each case except for Liens to be released simultaneously with the sale to Buyer hereunder.

(ii) The provisions of this Agreement are effective to either constitute a sale of Repurchase Assets to Buyer or to create in favor of Buyer a valid first priority security interest in all right, title and interest of Seller in, to and under the Repurchase Assets.

(h) Proper Names; Chief Executive Office/Jurisdiction of Organization . Seller does not operate in any jurisdiction under a trade name, division name or name other than those names previously disclosed in writing by Seller to Buyer. On the Effective Date, Seller’s chief executive office is, and has been, located as specified on the signature page hereto. Seller’s jurisdiction of organization, type of organization and organizational identification number is as set forth in the Pricing Letter.

(i) Location of Books and Records . The location where Seller keeps its books and records, including all computer tapes, computer systems and storage media and records related to the Repurchase Assets is its chief executive office.

(j) Enforceability . This Agreement and all of the other Program Documents executed and delivered by Seller in connection herewith are legal, valid and binding obligations of Seller and are enforceable against Seller in accordance with their terms except as such enforceability may be limited by (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar Requirement of Law affecting creditors rights generally and (ii) general principles of equity.

(k) Ability to Perform . Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in the Program Documents to which it is a party on its part to be performed.

(l) No Default . No Default or Event of Default has occurred and is continuing.

(m) No Adverse Selection . Seller has not selected the Purchased Assets in a manner so as to adversely affect Buyer’s interests.

(n) Scheduled Indebtedness . All Indebtedness which is presently in effect and/or outstanding is listed on Schedule 3 hereto (the “ Scheduled Indebtedness ”) and no defaults or events of default exist thereunder.

(o) Accurate and Complete Disclosure . The information, reports, Financial Statements, exhibits and schedules furnished in writing by or on behalf of Seller to Buyer in connection with the negotiation, preparation or delivery of this Agreement or performance hereof and the other Program Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by or on behalf of Seller to Buyer in connection with this Agreement and the other Program Documents and the transactions contemplated hereby and thereby including without limitation, the information set forth in the related Mortgage Loan Schedule, will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to Seller, after due inquiry, that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Program Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to Buyer for use in connection with the transactions contemplated hereby or thereby.

(p) Margin Regulations . The use of all funds acquired by Seller under this Agreement will not conflict with or contravene any of Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System as the same may from time to time be amended, supplemented or otherwise modified.

(q) Investment Company . Neither Seller nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(r) Solvency . As of the date hereof and immediately after giving effect to each Transaction, the fair value of the assets of Seller is greater than the fair value of the liabilities (including, without limitation, contingent liabilities if and to the extent required to be recorded as a liability on the Financial Statements of Seller in accordance with GAAP) of Seller and Seller is solvent and, after giving effect to the transactions contemplated by this Agreement and the other Program Documents, will not be rendered insolvent or left with an unreasonably small amount of capital with which to conduct its business and perform its obligations. Seller does not intend to incur, nor does it believe that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not contemplating the commencement of an insolvency, bankruptcy, liquidation, or consolidation proceeding or the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of itself or any of its property.

(s) ERISA . From the fifth fiscal year preceding the current year through the termination of this Agreement (the “ Reporting Period ”), with respect to any pension or benefit plan maintained by Seller or any ERISA Affiliate, or to which Seller or any ERISA Affiliate contributes or has contributed (each, a “ Plan ”), the benefits under which Plan are guaranteed, in whole or in part, by the PBGC (i) Seller and each ERISA Affiliate has funded and will continue to fund each Plan as required by the provisions of Section 412 of the Code; (ii) Seller and each ERISA Affiliate has caused and will continue to cause each Plan to pay all benefits when due; (iii) neither Seller nor any ERISA Affiliate has been or is obligated to contribute to any multiemployer plan as defined in Section 3(37) of ERISA; (iv) Seller (on behalf of ERISA Affiliate, if applicable) will provide to Buyer (A) no later than the date of submission to the PBGC, a copy of any notice of a Plan’s termination (B) no later than the date of submission to the Department of Labor or to the Internal Revenue Service, as the case may be, a copy of any request for waiver from the funding standards or extension of the amortization periods required by Section 412 of the Code and (C) notice of any Reportable Event as such term is defined in ERISA (and has, prior to the date of this Agreement, provided to Buyer a copy of any document described in clauses (iv)(A), (B) or (C) relating to any date in the Reporting Period prior to the date of this Agreement); and (v) Seller and each ERISA Affiliate will subscribe from the date of this Agreement to the termination of this Agreement to any contingent liability insurance provided by the PBGC to protect against employer liability upon termination of a guaranteed pension plan, if available to Seller or ERISA Affiliate, as applicable.

(t) Taxes .

(i) Seller and its Subsidiaries have timely filed all income, franchise and other material Tax returns that are required to be filed by them and have timely paid all Taxes due and payable by them or imposed with respect to any of their property and all other material fees and other charges imposed on them or any of their property by any Governmental Authority, except for any such Taxes the amount or validity of which is currently being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP.

(ii) There are no Liens for Taxes with respect to any assets of Seller or its Subsidiaries, and no claim is being asserted with respect to Taxes of Seller or its Subsidiaries, except for statutory Liens for Taxes not yet due and payable or for Taxes the amount or validity of which is currently being contested in good faith by appropriate proceedings diligently conducted and, in each case, with respect to which adequate reserves have been provided in accordance with GAAP.

(iii) Seller is and has always been treated as a corporation for U.S. federal income tax purposes.

(u) No Reliance . Seller has made its own independent decisions to enter into the Program Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. Seller is not relying upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.

(v) Plan Assets . Seller is not an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Assets are not “plan assets” within the meaning of 29 CFR §2510.3-101, as modified by Section 3(42) of ERISA, in Seller’s hands and transactions by or with Seller are not subject to any state or local statute regulating investments of, or fiduciary obligations with respect to, governmental plans within the meaning of Section 3(32) of ERISA.

(w) Agency Approvals . To the extent previously approved, Seller is approved by Fannie Mae as an approved lender and Freddie Mac as an approved seller/servicer, and, to the extent necessary, approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act. In each such case, Seller is in good standing, with no event having occurred or Seller having any reason whatsoever to believe or suspect will occur, including, without limitation, a change in insurance coverage which would either make Seller unable to comply with the eligibility requirements for maintaining all such applicable approvals or require notification to the relevant Agency. Seller has adequate financial standing, servicing facilities, procedures and experienced personnel necessary for the sound servicing of mortgage loans of the same types as may from time to time constitute Mortgage Loans and in accordance with Accepted Servicing Practices.

(x) Anti-Money Laundering Laws . Seller has complied with all applicable anti-money laundering laws and regulations, including without limitation the USA Patriot Act of 2001 (collectively, the “ Anti - Money Laundering Laws ”); Seller has established an anti-money laundering compliance program as required by the Anti-Money Laundering Laws, has conducted the requisite due diligence in connection with the origination of each Mortgage Loan for purposes of the Anti-Money Laundering Laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the assets used by the said Mortgagor to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Mortgagor for purposes of the Anti-Money Laundering Laws.

(y) No Prohibited Persons . Neither Seller nor any of its Affiliates, officers, directors, partners or members, is an entity or person (or to the Seller’s knowledge, owned or controlled by an entity or person): (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“ EO13224 ”); (ii) whose

name appears on the United States Treasury Department’s Office of Foreign Assets Control (“ OFAC ”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO13224; or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a “ Prohibited Person ”). Neither Seller nor any of its Affiliates, officers, directors, partners or members or, to the knowledge of any such entity or any of its officers, directors, partners or members is currently subject to any economic sanctions administered or imposed by OFAC, the United Nations Security Council, the European Union or other relevant sanctions authority, and neither Seller nor any of its Affiliates will directly or indirectly use the proceeds of any Transactions contemplated hereunder, or lend, contribute or otherwise make available such proceeds to or for the benefit of any person or entity for the purpose of financing or supporting the activities of any person or entity currently subject to any such sanctions by such authorities.

(z) Insured Depository Institution Representations . If Seller is an Insured Depository Institution, Seller makes the following additional representations and warranties: (i) the Program Documents do not violate any statutory or regulatory requirements applicable to Seller; (ii) the Program Documents have been (1) executed contemporaneously with the definitive agreement reached by Buyer and Seller, (2) Seller’s Board of Directors has authorized Seller’s officers to negotiate and enter into the Agreement, which authorization shall be reflected in the minutes of said board, and (3) entered into the official records of Seller, a copy of which approvals, certified by a vice president or higher officer of Seller, has been provided to Buyer; (iii) the aggregate amount of the Purchase Price of the Transactions, after giving effect to any Transactions being made on the Purchase Date hereof, between Buyer and Seller does not exceed any restrictions or limitations imposed by the board of directors or regulatory requirements of Seller and (iv) as of any date of determination, Seller is Well Capitalized.

(aa) Takeout Commitments . With respect to any Takeout Commitment with an Agency, if applicable, (1) with respect to the wire transfer instructions as set forth in Freddie Mac Form 987 (Wire Transfer Authorization for a Cash Warehouse Delivery) such wire transfer instructions are identical to Buyer’s wire instructions or the Buyer has approved such wire transfer instructions in writing in its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068 (Fixed-Rate, Graduated-Payment, or Growing-Equity Mortgage Loan Schedule) or Fannie Mae Form 1069 (Adjustable-Rate Mortgage Loan Schedule), as applicable, is identical to the Payee Number that has been identified by Buyer in writing as Buyer’s Payee Number or the Buyer has approved the related Payee Number in writing in its sole discretion. With respect to any Takeout Commitment with an Agency for which the Agency is swapping the related Purchased Mortgage Loans for a mortgage backed security, the applicable Agency documents list Buyer or its designee as sole subscriber.

SECTION 12. COVENANTS

On and as of the date of this Agreement and each Purchase Date and at all times until this Agreement is no longer in force, Seller covenants, jointly and severally, as follows:

(a) Preservation of Existence; Compliance with Law . Seller shall (i) preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises necessary for the operation of its business; (ii) comply in all material respects with any applicable Requirement of Law, rules, regulations and orders, whether now in effect or hereafter enacted or promulgated by any applicable Governmental Authority (including, without limitation, all environmental laws); (iii) maintain all licenses, permits or other approvals that, if not maintained, would materially affect the ability of Seller to conduct its business and to perform its obligations under the Program Documents, and shall conduct its business in all material respects in accordance with any applicable Requirement of Law and strictly in accordance with any applicable Requirement of Law relating to fraud, misrepresentation or malfeasance; and (iv) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied.

(b) Taxes .

(i) Seller and its Subsidiaries shall timely file all income, franchise and other material Tax returns that are required to be filed by them and shall timely pay all Taxes due and payable by them or imposed with respect to any of their property and all other material fees and other charges imposed on them or any of their property by any Governmental Authority, except for any such Taxes the amount or validity of which is currently being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP.

(ii) Seller will be treated as a corporation for U.S. federal income tax purposes.

(c) Notice of Proceedings or Adverse Change . Seller shall give notice to Buyer immediately (unless otherwise specified below) after a Responsible Officer of Seller has any knowledge of:

(i) the occurrence of any Default or Event of Default;

(ii) any (a) default or event of default under any Indebtedness of Seller or (b) litigation, investigation, regulatory action or proceeding that is pending or threatened by or against Seller in any federal or state court or before any Governmental Authority which, if not cured or if adversely determined, would reasonably be expected to have a Material Adverse Effect or constitute a Default or Event of Default, and (c) any Material Adverse Effect with respect to Seller;

(iii) any litigation or proceeding that is pending or to the best of Seller’s knowledge threatened against (a) Seller in which the amount involved exceeds the Litigation Threshold and is not covered by insurance, in which injunctive or similar relief is sought, or which, would reasonably be expected to have a Material Adverse Effect and (b) to the best of Seller’s knowledge, any litigation or proceeding that is pending or threatened in connection with any of the Repurchase Assets, which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;

(iv) Other than in connection with the acquisition of Seller by Walter Investment Management Corp. or its permitted assignees under that certain stock purchase agreement for the purchase of 100% of the equity interest in Seller, as soon as reasonably possible, notice of any of the following events: (A) a change in the insurance coverage of Seller, with a copy of evidence of same attached; (B) any material change in accounting policies or financial reporting practices of Seller; (C) promptly upon receipt of notice or knowledge of any Lien or security interest (other than security interests created hereby or under any other Program Document) on, or claim asserted against, any of the Repurchase Assets; (D) the termination or nonrenewal of any debt facilities of Seller which have a maximum principal amount (or equivalent) available of more than the Facility Termination Threshold; (E) any Change in Control; and (F) any other event, circumstance or condition that has resulted, or has a possibility of resulting, in a Material Adverse Effect; and

(v) Promptly, but no later than two (2) Business Days after Seller receives notice of the same, (A) any Mortgage Loan submitted for inclusion into an Agency Security and rejected by that Agency for inclusion in such Agency Security or (B) any Mortgage Loan submitted to an Approved Investor (whole loan or securitization) and rejected for purchase by such Approved Investor; (C) any request for repurchase of or indemnification for a Mortgage Loan purchased by a third party investor or (D) the termination or suspension of approval of Seller to sell any Mortgage Loans to any investor.

(d) Financial Reporting . Seller shall maintain a system of accounting established and administered in accordance with GAAP consistently applied, and furnish to Buyer, with a certification by the president or chief financial officer of Seller (the following hereinafter referred to as the “ Financial Statements ”):

(i) Within ninety (90) days after the close of each fiscal year, audited consolidated balance sheets and the related consolidated and statements of income and stockholder’s equity and of cash flows as at the end of such year for Seller for the fiscal year, setting forth in each case in comparative form the figures for the previous year, with an unqualified opinion thereon of an Approved CPA;

(ii) Within sixty (60) days after the end of each calendar quarter, the consolidated balance sheets for the calendar quarter and the end of the prior calendar year, the consolidated statements of income for the calendar quarter and calendar year-to-date period and corresponding prior calendar year periods, the consolidated statement of stockholder’s equity for the calendar year-to-date period and the consolidated statements of cash flows for the calendar year-to-date period and corresponding prior year calendar period for Seller;

(iii) Within thirty (30) days after the end of each month, the consolidated balance sheets and the related consolidated statements of income for Seller for such monthly period(s), of Seller;

(iv) Simultaneously with the furnishing of each of the Financial Statements to be delivered pursuant to subsection (i)-(ii) above, and upon request by Buyer, a certificate in the form of Exhibit A to the Pricing Letter and certified by the president or chief financial officer of Seller;

(v) Within forty-five (45) days after the end of the first three (3) calendar quarters of each calendar year and within ninety (90) days after the end of each calendar year, the 10-Q quarterly report or 10-K annual report, as applicable, of Walter Investment Management Corp. that has been filed on EDGAR which indicates compliance with each financial covenant made by Walter Investment Management Corp. in (i) that certain First Lien Credit Agreement, dated as of July 1, 2011 between Walter Investment Corp. and the lenders specified therein and (ii) that certain Second Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Corp. and the lenders specified therein, as the same may be amended, restated, supplemented or otherwise modified from time to time.

(vi) Promptly after the filing or delivery thereof, copies of all financial information, proxy materials and reports if any, which the Borrower or any of its Subsidiaries shall publicly file with the Securities and Exchange Commission or any successor thereto (the “SEC”) (which delivery requirement shall be deemed satisfied by the posting of such information, materials or reports on the SEC’s Electronic Date Gateway, Analysis and Retrieval System (“EDGAR”) or any successor website maintained by the SEC so long as Buyer shall have been promptly notified by Seller via email of the posting thereof); and

(vii) Promptly, from time to time, such other information regarding the business affairs, operations and financial condition of Seller and Buyer as may be reasonably available and upon reasonable request.

(e) Further Assurances . Seller shall execute and deliver to Buyer all further documents, financing statements, agreements and instruments, and take all further actions that may be required under any applicable Requirement of Law, or that Buyer may reasonably request, in order to effectuate the transactions contemplated by this Agreement and the Program Documents or, without limiting any of the foregoing, to grant, preserve, protect and perfect the validity and first-priority of the security interests created or intended to be created hereby.

(f) True and Correct Information . All information, reports, exhibits, schedules, Financial Statements or certificates of Seller or any of its officers or of any of Seller’s Affiliates or any of their officers (solely to the extent any such information, reports, exhibits, schedules, Financial Statements or certificates of any of Seller’s Affiliates or any of their officers relates to Seller, this Agreement or any Transaction hereunder) furnished to Buyer hereunder and during Buyer’s diligence of Seller will be true and complete and will not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All required Financial Statements, information and reports delivered by Seller to Buyer pursuant to this Agreement shall be prepared in accordance with GAAP, or as applicable, to SEC filings, the appropriate SEC accounting requirements.

(g) ERISA Events . Seller shall not and shall not permit any ERISA Affiliate to be in violation of any provision of Section 11(s) of this Agreement and Seller shall not be in violation of Section 11(v) of this Agreement.

(h) Financial Condition Covenants . Seller shall comply with the Financial Condition Covenants set forth in the Pricing Letter.

(i) Hedging . Seller shall hedge all Purchased Assets in accordance with Seller’s hedging policies. Seller shall deliver to Buyer, not later than 1:00 p.m. (New York City time) on each Monday, or if Monday is not a Business Day, on the next succeeding Business Day, a hedging report, in a form reasonably satisfactory to Buyer. Seller shall (i) review the hedging policies periodically to confirm that they are being complied with in all material respects and are adequate to meet Seller’s business objectives; (ii) in the event Seller makes any amendment or modification to the hedging policies, within 10 days of such amendment or modification deliver to Buyer a complete copy of the amended or modified hedging policies. Additionally, Buyer may in its reasonable discretion and upon reasonable notice request a current copy of Seller’s hedging policies at any time.

(j) Servicer Approval . Seller shall not cause the Mortgage Loans to be serviced by any servicer other than a servicer expressly approved in writing by Buyer, which approval shall be deemed granted by Buyer with respect to Seller with the execution of this Agreement.

(k) Insurance . Seller shall maintain Fidelity Insurance and errors and omissions insurance in respect of its officers, employees and agents is such amounts reasonably acceptable to Buyer, which shall include a provision that such policies cannot be terminated or materially modified without at least 30 days’ prior notice to Buyer. Seller shall notify Buyer of any material change in the terms of any such insurance. Seller shall maintain endorsements for theft of warehouse lender money and collateral, naming Buyer as a loss payee under its Fidelity Insurance and as a direct loss payee/right of action under its errors and omissions insurance policy.

(l) Books and Records . Seller shall, to the extent practicable, maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Repurchase Assets in the event of the destruction of the originals thereof), and keep and maintain or obtain, as and when required, all documents, books, records and other information reasonably necessary or advisable for the collection of all Repurchase Assets.

(m) Illegal Activities . Seller shall not engage in any conduct or activity that could subject its assets to forfeiture or seizure.

(n) Material Change in Business . Seller shall not make any material change in the nature of its business as carried on at the date hereof.

(o) [RESERVED] .

(p) Scheduled Indebtedness . Seller shall provide Buyer with written notice of the incurrence by Seller of any additional material Indebtedness (other than (i) the Scheduled Indebtedness listed under the definition thereof and (ii) usual and customary accounts payable for a mortgage company).

(q) Disposition of Assets; Liens . Seller shall not create, incur, assume or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on any of the Repurchase Assets, whether real, personal or mixed, now or hereafter owned, other than the Liens created in connection with the transactions contemplated by this Agreement; nor shall Seller cause any of the Purchased Assets to be sold, pledged, assigned or transferred except as permitted hereunder. Notwithstanding the foregoing or anything to the contrary in this Agreement or in any of the Program Documents, Seller and Buyer agree that solely prior to Tuesday, November 6, 2012, no (i) breach of any representation, warranty or covenant contained in this Agreement or in any of the Program Documents or (ii) default or Event of Default under this Agreement or under any of the Program Documents, shall occur as a result of the creation or the existence of any Lien or encumbrance on any Repurchase Assets pursuant to that certain First Lien Credit Agreement, dated as of July 1, 2011 (the “ First Lien Credit Agreement ”), between Walter Investment Management Corp. and the lenders specified therein or pursuant to any documents ancillary thereto, that is subordinate to the interests of Buyer in such Repurchase Assets. On or before November 6, 2012, Seller shall amend the First Lien Credit Agreement, and any documents or filings ancillary thereto, such that no mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on the Repurchase Assets is created, incurred, assumed or suffered by Seller under the First Lien Credit Agreement.

(r) Transactions with Affiliates . Seller shall not enter into any transaction, including, without limitation, the purchase, sale, lease or exchange of property or assets or the rendering or accepting of any service with any Affiliate unless such transaction is (i) not otherwise prohibited by Sections 12(j), 12(s), 13(l) and 18 of this Agreement and (ii) in the ordinary course of Seller’s business.

(s) Organization . Seller shall not (i) cause or permit any change to be made in its name, organizational identification number, identity or corporate structure, each as described in Section 11(h) or (ii) change its jurisdiction of organization, unless it shall have provided Buyer thirty (30) days’ prior written notice of such change and shall have first taken all action required by Buyer for the purpose of perfecting or protecting the lien and security interest of Buyer established hereunder.

(t) Mortgage Loan Reports . Upon request by Buyer, Seller will furnish to Buyer monthly electronic Mortgage Loan performance data in mutually agreed upon format, including, without limitation, a Mortgage Loan Schedule, delinquency reports, pool analytic reports and static pool reports (i.e., delinquency, foreclosure and net charge off reports) and monthly stratification reports summarizing the characteristics of the Mortgage Loans.

(u) Reserved .

(v) Approved Underwriting Guidelines . Seller shall not submit to Buyer for purchase, and Buyer shall have no obligation to purchase, any Mortgage Loan underwritten in accordance with underwriting guidelines, including amendments to Approved Underwriting Guidelines not expressly approved by Buyer, other than Approved Underwriting Guidelines.

(w) Agency Approvals; Servicing . To the extent previously approved, Seller shall maintain its status with Fannie Mae and Ginnie Mae as an approved lender and Freddie Mac as an approved seller/servicer, in each case in good standing (each such approval, an “ Agency Approval ”). Should Seller, for any reason, cease to possess all such applicable Agency Approvals to the extent necessary, should Seller experience any change in its delegated underwriting authority from any Agency, or should notification of an adverse occurrence to the relevant Agency or to HUD, FHA or VA be required, Seller shall so notify Buyer in writing within one (1) Business Day of such event. Notwithstanding the preceding sentence and to the extent previously approved, Seller shall take all necessary action to maintain all of its applicable Agency Approvals at all times during the term of this Agreement and each outstanding Transaction.

(x) Sharing of Information . Subject to Section 31 hereof, Seller hereby allows and consents to Buyer, subject to applicable law, exchanging information related to Seller, its credit, its mortgage loan originations and the Transactions hereunder with third party lenders, facility providers and Approved Investors (collectively, “ Third Party Participants ”), and Seller shall permit each Third Party Participant to share such similar information with Buyer. In furtherance of the foregoing, Seller shall use its commercially reasonable efforts to provide Buyer access to each Third Party Participant’s electronic system to retrieve the information described herein.

(y) [RESERVED] .

(z) Takeout Payments . With respect to each Purchased Asset subject to a Takeout Commitment, Seller shall arrange that all payments under the related Takeout Commitment shall be paid directly to the Buyer as described in the Customer Guide, or to an account approved by the Buyer in writing prior to such payment.

(aa) Issuance of Agency Securities . If Purchased Mortgage Loans are pooled for the purpose of backing an Agency Security, Seller shall deliver to the applicable Agency in a commercially reasonable timeframe any and all documents necessary to enable such Agency to make Delivery to Buyer or its designee of an Agency Security backed by the related Purchased Mortgage Loans. Seller shall not revoke such instructions to an Agency.

(bb) Trade Assignment . Upon Custodian certifying a Purchased Mortgage Loan to an Agency for the issuance of an Agency Security backed by such Purchased Mortgage Loan, Seller shall deliver to Buyer a Trade Assignment executed by Seller with respect to such Agency Security.

(cc) Compliance with Privacy Laws . Notwithstanding anything in this Agreement to the contrary, Seller shall comply with all applicable local, state and federal laws, including, without limitation, all privacy and data protection law, rules and regulations that are applicable to the Purchased Assets and/or any applicable terms of this Agreement (the “ Confidential Information ”). Seller understands that the Confidential Information may contain

“nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “ GLB Act ”), and Seller agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. Seller shall implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the GLB Act) of Buyer or any Affiliate of Buyer which Buyer holds (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. Seller shall, at a minimum establish and maintain such data security program as is necessary to meet the objectives of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information as set forth in the Code of Federal Regulations at 12 C.F.R. Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570. Upon request, Seller will provide evidence reasonably satisfactory to allow Buyer to confirm that Seller has satisfied its obligations as required under this Section. Without limitation, this may include Buyer’s review of audits, summaries of test results, and other equivalent evaluations of Seller. Seller shall provide Buyer with commercially reasonable notice following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of Buyer or any Affiliate of Buyer provided directly to Seller by Buyer or such Affiliate. Seller shall provide such notice to Buyer by personal delivery, by facsimile with confirmation of receipt, or by overnight courier with confirmation of receipt to the applicable requesting individual.

(dd) Investment Company . Within thirty days of the date hereof, Seller shall provide evidence satisfactory to Buyer that supports the conclusion that neither Seller nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

SECTION 13. EVENTS OF DEFAULT

If any of the following events (each an “ Event of Default ”) occur, Buyer shall have the rights set forth in Section 14, as applicable:

(a) Payment Default . Seller shall default in the payment of (i) any amount payable by it hereunder or under any other Program Document, (ii) Expenses (and such failure to pay Expenses shall continue for more than 30 calendar days) or (iii) any other Obligations, when the same shall become due and payable, whether at the due date thereof, or by acceleration or otherwise; or

(b) Representation and Warranty Breach . Any representation, warranty or certification made or deemed made herein or in any other Program Document by Seller or any certificate furnished to Buyer pursuant to the provisions hereof or thereof or any information with respect to the Mortgage Loans furnished in writing by on behalf of Seller shall prove to have been untrue or misleading in any material respect as of the time made or furnished (other than the representations and warranties set forth in Schedule 1 , which shall be considered solely for the purpose of determining the Market Value of the Purchased Assets; unless (i) Seller shall have made any such representations and warranties with actual knowledge that they were materially false or misleading at the time made; or (ii) any such representations and warranties have been determined using commercially reasonable methodology to be materially false or misleading on a regular basis); or

(c) Immediate Covenant Default . The failure of Seller to perform, comply with or observe any term, covenant or agreement applicable to Seller contained in any of Sections 12(a) ( Preservation of Existence; Compliance with Law ); (d) ( Financial Reporting ); (f) ( True and Correct Information ); (g) ( ERISA Events ); (h) ( Financial Condition Covenants ); (k) ( Insurance ); (m) ( Illegal Activities .); (n) ( Material Change in Business ); (q) ( Disposition of Assets; Liens ); (r) ( Transactions with Affiliates ); (s) ( Organization ); (t) ( Mortgage Loan Reports ); (v) ( Approved Underwriting Guidelines );(w) ( Agency Approvals; Servicing) ; (z) ( Takeout Payments ) or (bb) ( Trade Assignment ); or

(d) Additional Covenant Defaults . Seller shall fail to observe or perform any other covenant or agreement contained in this Agreement (and not identified in Section 13(c)) or any other Program Document, and if such default shall be capable of being remedied, and such failure to observe or perform shall continue unremedied for a period of 5 Business Days; or

(e) Judgments . A judgment or judgments for the payment of money in excess of the Litigation Threshold in the aggregate shall be rendered against Seller or any of its Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof, and Seller or any such Affiliate shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or

(f) Cross-Default . Any “event of default” or any other default which permits a demand for, or requires, the early repayment of obligations due by Seller or its Subsidiaries under any agreement with Buyer or its Subsidiaries (after the expiration of any applicable grace period under any such agreement) relating to any Indebtedness of Seller or any Subsidiary, as applicable, or any default under any obligation when due; or

(g) Other Cross-Default . Any “event or default” or any other default which permits a demand for, or requires, the early repayment of obligations (i) due by Seller or its Subsidiaries with any note, indenture, loan agreement, guaranty, swap agreement, Hedge Agreement or other Indebtedness in excess of $500,000 of Seller or any of its Subsidiaries or (ii) due by Walter Investment Management Corp. under (1) that certain First Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management Corp. and the lenders specified therein or (2) that certain Second Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management Corp. and the lenders specified therein, as the same may be amended, restated, modified or otherwise supplemented from time to time; or

(h) Insolvency Event . An Insolvency Event shall have occurred with respect to Seller or any Affiliate; or

(i) Enforceability . For any reason, this Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be perfected and of first priority, or any Person (other than Buyer) shall contest the validity, enforceability, perfection or priority of any Lien granted pursuant thereto, or any party thereto (other than Buyer) shall seek to disaffirm, terminate, limit or reduce its obligations hereunder; or

(j) Liens . Seller shall grant, or suffer to exist, any Lien on any Repurchase Asset (except any Lien in favor of Buyer); or at least one of the following fails to be true (A) the Repurchase Assets shall have been sold to Buyer, or (B) the Liens contemplated hereby are first priority perfected Liens on any Repurchase Assets in favor of Buyer or shall be Liens in favor of any Person other than Buyer; or

(k) Material Adverse Effect . A Material Adverse Effect shall occur as determined by commercially reasonable standards; or

(l) Change in Control . A Change in Control shall have occurred; or

(m) Going Concern . Seller’s audited Financial Statements or notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of Seller as a “going concern” or reference of similar import; or

(n) Investigations . There shall occur the initiation of any investigation, audit, examination or review of Seller by an Agency, any Governmental Authority, any trade association or consumer advocacy group relating to the origination, sale or servicing of mortgage loans by Seller or the business operations of Seller that is reasonably likely to cause a Material Adverse Effect; or

(o) Inability to Perform . An officer of Seller shall admit its inability to, or its intention not to, perform any of Seller’s obligations; or

(p) Governmental Action . Seller shall become the subject of a cease and desist order of the Appropriate Federal Banking Agency or any other Governmental Authority or enter into a memorandum of understanding or consent agreement with the Appropriate Federal Banking Agency or other Governmental Authority, any of which, would have, or is purportedly the result of any condition which would be reasonably likely to have, a Material Adverse Effect.

SECTION 14. REMEDIES

(a) If an Event of Default occurs, the following rights and remedies are available to Buyer; provided, that an Event of Default shall be deemed to be continuing unless expressly waived by Buyer in writing.

(i) At the option of Buyer, exercised by written or electronic notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Insolvency Event of Seller), the Repurchase Date for each Transaction hereunder, if it has not already occurred, shall be deemed immediately to occur.

(ii) If Buyer exercises or is deemed to have exercised the option referred to in subsection (a)(i) of this Section,

(A) Seller’s obligations in such Transactions to repurchase all Purchased Assets, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subsection (a)(i) of this Section, (1) shall thereupon become immediately due and payable and (2) all Income paid after such exercise or deemed exercise shall be retained by Buyer and applied to the aggregate unpaid Repurchase Price and any other amounts owed by Seller hereunder;

(B) to the extent permitted by any applicable Requirement of Law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the date of the exercise or deemed exercise of such option to but excluding the date of payment of the Repurchase Price as so increased, (x) the Post-Default Rate in effect following an Event of Default to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subsection (a)(i) of this Section (decreased as of any day by (i) any amounts applied by Buyer pursuant to clause (C) of this subsection, and (ii) any proceeds from the sale of Purchased Assets applied to the Repurchase Price pursuant to subsection (a)(iv) of this Section; and

(C) all Income actually received by Buyer pursuant to Section 5 shall be applied to the aggregate unpaid Obligations owed by Seller.

(iii) Upon the occurrence of one or more Events of Default, Buyer shall have the right to obtain (A) a physical transfer of the servicing of the Purchased Assets in accordance with Section 16(c) and (B) physical possession of all files of Seller relating to the Purchased Assets and the Repurchase Assets and all documents relating to the Purchased Assets which are then or may thereafter come in to the possession of Seller or any third party acting for Seller (including any Servicer) and Seller shall deliver to Buyer such assignments as Buyer shall request. Buyer shall be entitled to specific performance of all agreements of Seller contained in the Program Documents.

(iv) At any time on the Business Day following notice to Seller (which notice may be the notice given under subsection (a)(i) of this Section), in the event Seller has not repurchased all Purchased Assets, Buyer may (A) immediately sell, without demand or further notice of any kind, at a public or private sale, without any representations or warranties of Buyer and at such price or prices as Buyer may deem satisfactory any or all Purchased Assets and the Repurchase Assets subject to a such Transactions hereunder and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by Seller hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets and the Repurchase Assets in an amount equal to the Market Value of the Purchased Assets against the aggregate unpaid Repurchase Price and any other amounts owing by Seller hereunder. The proceeds of any disposition of Purchased Assets and the Repurchase Assets shall be applied as determined by Buyer in its sole discretion.

(v) Seller shall be liable to Buyer for (A) the amount of all reasonable legal or other expenses (including, without limitation, all actual out-of-pocket costs and expenses of Buyer in connection with the enforcement of this Agreement or any other agreement evidencing a Transaction, whether in action, suit or litigation or bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally, further including, without limitation, the reasonable fees and expenses of counsel (including the costs of internal counsel of Buyer) incurred in connection with or as a result of an Event of Default, (B) actual out-of-pocket damages in an amount equal to the reasonable cost (including all reasonable fees, expenses and commissions) of Buyer entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default, and (iii) any other actual out-of-pocket loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction.

(vi) Buyer shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or any applicable Requirement of Law.

(b) Buyer may exercise one or more of the remedies available hereunder immediately upon the occurrence of an Event of Default and at any time thereafter without notice to Seller. All rights and remedies arising under this Agreement as amended from time to time hereunder are cumulative and not exclusive of any other rights or remedies which Buyer may have.

(c) Seller recognizes that the market for the Purchased Assets may not be liquid and as a result it may not be possible for Buyer to sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner. In view of the nature of the Purchased Assets, Seller agrees that liquidation of any Purchased Asset may be conducted in a private sale. Seller acknowledges and agrees that any such private sale may result in prices and other terms less favorable to Buyer than if such sale were a public sale, and notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. Seller further agrees that it would not be commercially unreasonable for Buyer to dispose of any Purchased Asset by using internet sites that provide for the auction or sale of assets similar to the Purchased Assets, or that have the reasonable capability of doing so, or that match buyers and sellers of assets.

(d) Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Buyer to enforce its rights by judicial process. Seller also waives any defense (other than a defense of payment or performance) Seller might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of the Repurchase Assets, or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length.

(e) To the extent permitted by any applicable Requirement of Law, Seller shall be liable to Buyer for interest on any amounts owing by Seller hereunder, from the date Seller becomes liable for such amounts hereunder until such amounts are (i) paid in full by Seller or (ii) satisfied in full by the exercise of Buyer’s rights hereunder. Interest on any sum payable by Seller to Buyer under this Section 14(e) shall be at a rate equal to the Post-Default Rate.

(f) Without limiting the rights of Buyer hereto to pursue all other legal and equitable rights available to Buyer for Seller’s failure to perform its obligations under this Agreement, Seller acknowledges and agree that the remedy at law for any failure to perform obligations hereunder would be inadequate and Buyer shall be entitled to specific performance, injunctive relief, or other equitable remedies in the event of any such failure. The availability of these remedies shall not prohibit Buyer from pursuing any other remedies for such breach, including the recovery of monetary damages.

SECTION 15. INDEMNIFICATION AND EXPENSES; RECOURSE

(a) Seller agrees to hold Buyer, and its Affiliates and their officers, directors, employees, agents and advisors (each an “ Indemnified Party ”) harmless from and indemnify, on an after-Tax basis, any Indemnified Party against all actual out-of-pocket liabilities, losses, damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against such Indemnified Party (collectively, “ Costs ”), relating to or arising out of this Agreement (including, without limitation, as a result of a breach of any representation or warranty contained on Schedule 1 ), any other Program Document or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, any other Program Document or any transaction contemplated hereby or thereby, that, in each case, results from anything other than the Indemnified Party’s gross negligence or willful misconduct. Without limiting the generality of the foregoing, Seller agrees to hold any Indemnified Party harmless from and indemnify such Indemnified Party, on an after-Tax basis, against all Costs and Taxes incurred or assessed as a result of or otherwise in connection with the holding of the Mortgage Loans or Agency Securities or any failure by Seller or Subsidiary thereof to pay when due any Taxes for which such Person is liable, that result from anything other than the Indemnified Party’s gross negligence or willful misconduct. In any suit, proceeding or action brought by an Indemnified Party in connection with this Agreement, any Mortgage Loan or Agency Security for any sum owing thereunder, or to enforce any provisions of any Mortgage Loan or Agency Security, Seller will save, indemnify on an after-Tax basis and hold such Indemnified Party harmless from and against all actual out-of-pocket expense, loss or damage suffered by reason of any defense, set off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller. Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all the Indemnified Party’s actual out-of-pocket costs and expenses incurred in connection with the enforcement or the preservation of Buyer’s rights under this Agreement, any other Program Document or any transaction contemplated hereby or thereby, including without limitation the actual out-of-pocket reasonable fees and disbursements of its counsel.

(b) Seller agrees to pay as and when billed by Buyer all of the out-of-pocket costs and expenses incurred by Buyer in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement, any other Program Document or any other documents prepared in connection herewith or therewith. Seller agrees to pay as and when billed by Buyer all of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including without limitation search and filing fees and all the reasonable actual fees, disbursements and expenses of counsel to Buyer. Seller agrees to pay Buyer all the reasonable out-of-pocket due diligence, inspection, testing and review costs and expenses incurred by Buyer with respect to Mortgage Loans submitted by Seller for purchase under this Agreement, including, but not limited to, those out-of-pocket costs and expenses incurred by Buyer pursuant to Sections 15(a) and 17 hereof.

(c) The obligations of Seller from time to time to pay the Repurchase Price, the Price Differential, the Obligations and all other amounts due under this Agreement shall be full recourse obligations of Seller.

(d) Each of Buyer and Seller agrees not to assert any claim against the other party or any of their respective Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Program Documents, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated hereby or thereby.

SECTION 16. SERVICING

(a) As a condition of purchasing a Mortgage Loan, Buyer may require Seller to service such Mortgage Loan as agent for Buyer for a term of thirty (30) days (the “ Servicing Term ”). If the Servicing Term expires with respect to any Purchased Mortgage Loan for any reason other than such Purchased Mortgage Loan no longer being subject to a Transaction hereunder, then upon written agreement of Buyer, Seller shall continue to service the Purchased Mortgage Loan for an additional thirty (30) days. Each thirty (30) day extension period shall automatically expire without notice unless Buyer agrees in writing to any additional thirty (30) day extension period(s). Seller shall service the Purchased Mortgage Loans in accordance with prudent mortgage loan servicing standards and procedures generally accepted in the mortgage banking industry and in accordance with all applicable requirements of the Agencies, Requirement of Law, the provisions of any applicable servicing agreement, and the requirements of any applicable Takeout Commitment and the Approved Investor, so that the eligibility of the Mortgage Loan for purchase under such Takeout Commitment is not voided or reduced by such servicing and administration.

(b) If any Mortgage Loan that is proposed to be sold on a Purchase Date is serviced by a servicer other than Seller (a “ Subservicer ”), or if the servicing of any Mortgage Loan is to be transferred to a Subservicer, Seller shall provide a copy of the related servicing agreement and a Servicer Notice executed by such Subservicer (collectively, the “ Servicing Agreement ”) to Buyer prior to such Purchase Date or servicing transfer date, as applicable. Each such Servicing Agreement shall be in form and substance acceptable to Buyer. In addition,

Seller shall have obtained the prior written consent of Buyer for such Subservicer to subservice the Mortgage Loans, which consent may be withheld in Buyer’s sole discretion. In no event shall Seller’s use of a Subservicer relieve Seller of its obligations hereunder, and Seller shall remain liable under this Agreement as if Seller were servicing such Mortgage Loans directly.

(c) Seller shall transfer actual servicing of each Purchased Mortgage Loan, together with all of the related Records in its possession, to Buyer’s designee and designate Buyer’s designee as the servicer in the MERS System upon the earliest of (i) the occurrence of a Default or Event of Default hereunder, (ii) the termination of Seller as interim servicer by Buyer pursuant to this Agreement, (iii) the expiration (and non-renewal) of the Servicing Term, or (iv) transfer of servicing to any entity approved by Buyer and the assumption thereof by such entity. Buyer shall have the right to terminate Seller as interim servicer of any of the Purchased Mortgage Loans, which right shall be exercisable at any time in Buyer’s sole discretion, upon written notice. Seller’s transfer of the Records and servicing under this Section shall be in accordance with customary standards in the industry and such transfer shall include the transfer of the gross amount of all escrows held for the related mortgagors (without reduction for unreimbursed advances or “negative escrows”).

(d) During the period Seller is servicing the Purchased Mortgage Loans as agent for Buyer, Seller agrees that Buyer is the owner of the related Credit Files and Records and Seller shall at all times maintain and safeguard and cause the Subservicer to maintain and safeguard the Credit File for the Purchased Mortgage Loans (including photocopies or images of the documents delivered to Buyer), and, in accordance with customary standards in the industry, accurate and complete records of its servicing of the Purchased Mortgage Loan; Seller’s possession of the Credit Files and Records being for the sole purpose of servicing such Purchased Mortgage Loan and such retention and possession by Seller being in a custodial capacity only.

(e) Within fifteen (15) days after the end of each month, Seller shall deliver to Buyer reports, in a mutually agreed upon format, regarding the status of any Purchased Mortgage Loan being serviced by Seller, which reports shall include, but shall not be limited to, a description of any default thereunder for more than thirty (30) days or such other circumstances that could cause a material adverse effect on such Purchased Mortgage Loan, Buyer’s title to such Purchased Mortgage Loan or the collateral securing such Purchased Mortgage Loan; Seller may be required to deliver such reports until the repurchase of the Purchased Mortgage Loan by Seller. Seller shall provide commercially reasonable notice to Buyer if it becomes aware of any payment default that occurs under the Purchased Mortgage Loan or any default under any Servicing Agreement that would materially and adversely affect any Purchased Mortgage Loan subject thereto. Within thirty (30) days after the end of each calendar quarter, Seller shall deliver to Buyer a report regarding valuation of the Servicing Rights.

(f) Seller shall release its custody of the contents of any Credit File or Mortgage File only (i) in accordance with the written instructions of Buyer, (ii) upon the consent of Buyer, which consent, prior to the occurrence of an Event of Default, shall not be unreasonably withheld, when such release is required as incidental to Seller’s servicing of the Purchased Mortgage Loan, is required to complete the Takeout Commitment or comply with the Takeout Commitment requirements, or (iii) as required by any applicable Requirement of Law.

(g) Buyer reserves the right to appoint a successor servicer at any time to service any Purchased Mortgage Loan (each a “ Successor Servicer ”) in its sole discretion. If Buyer elects to make such an appointment due to a Default or Event of Default, Seller shall be assessed all costs and expenses incurred by Buyer associated with transferring the servicing of the Purchased Mortgage Loans to the Successor Servicer. In the event of such an appointment, Seller shall perform all acts and take all action so that any part of the Credit File and related Records held by Seller, together with all funds in the Custodial Account and other receipts relating to such Purchased Mortgage Loan, are promptly delivered to Successor Servicer, and shall otherwise reasonably cooperate with Buyer in effectuating such transfer. Seller shall have no claim for lost servicing income, lost profits or other damages if Buyer appoints a Successor Servicer hereunder and the servicing fee is reduced or eliminated.

(h) For the avoidance of doubt, Seller retains no economic rights to the servicing of the Purchased Mortgage Loans provided that Seller shall continue to service the Purchased Mortgage Loans hereunder as part of its Obligations hereunder. As such, Seller expressly acknowledges that the Purchased Mortgage Loans are sold to Buyer on a “servicing released” basis.

SECTION 17. DUE DILIGENCE

(a) Seller acknowledges that Buyer has the right, upon commercially reasonable notice, to perform continuing due diligence reviews with respect to the Mortgage Loans, Seller, Settlement Agents, Approved Investors and other parties which may be involved in or related to Transactions (collectively, “ Third Party Transaction Parties ”), from time to time, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agrees that upon reasonable prior notice to Seller, unless an Event of Default shall have occurred, in which case no notice is required, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Mortgage Files and any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession or under the control of Seller. Seller will use best efforts to cause Third Party Transaction Parties to cooperate with any due diligence requests of Buyer. Seller shall also make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Mortgage Files and the Mortgage Loans. Without limiting the generality of the foregoing, Seller acknowledges that Buyer may purchase Mortgage Loans from Seller based solely upon the information provided by Seller to Buyer in the Mortgage Loan Schedule and the representations, warranties and covenants contained herein, and that Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Mortgage Loans purchased in a Transaction, including, without limitation, ordering broker’s price opinions, new credit reports and new appraisals on the related Mortgaged Properties and otherwise re-generating the information used to originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon third party underwriter to perform such underwriting. Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing, during normal business hours and upon commercially reasonable prior notice, Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession, or under the control, of Seller. Seller further agrees that it shall pay all out-of-pocket costs and expenses incurred by Buyer in connection with Buyer’s activities pursuant to this Section 17.

SECTION 18. ASSIGNABILITY

The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by Seller without the prior written consent of Buyer. Buyer may from time to time, with the consent of Seller prior to the occurrence of an Event of Default, assign all or a portion of its rights and obligations under this Agreement and the Program Documents to any party, including, without limitation, any affiliate of Buyer, pursuant to an executed assignment and acceptance by Buyer and assignee (“ Assignment and Acceptance ”), specifying the percentage or portion of such rights and obligations assigned; provided , however , the consent of Seller shall not be required after the occurrence of an Event of Default. Upon such assignment, (a) such assignee shall be a party hereto and to each Program Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall succeed to the applicable rights and obligations of Buyer hereunder, and (b) Buyer shall, to the extent that such rights and obligations have been so assigned by it be released from its obligations hereunder and under the Program Documents. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Nothing in this Agreement express or implied, shall give to any Person, other than the parties to this Agreement and their successors hereunder, any benefit of any legal or equitable right, power, remedy or claim under this Agreement. Unless otherwise stated in the Assignment and Acceptance, Seller shall continue to take directions solely from Buyer unless otherwise notified by Buyer in writing. Buyer may distribute to any prospective assignee any document or other information delivered to Buyer by Seller.

Buyer may sell participations to one or more Persons in or to all or a portion of its rights and obligations under this Agreement; provided, however, that (i) Buyer’s obligations under this Agreement shall remain unchanged, (ii) Buyer shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) Seller shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and obligations under this Agreement and the other Program Documents except as provided in Section 7.

Subject to Section 31, Buyer may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 18, disclose to the assignee or participant or proposed assignee or participant, as the case may be, any information relating to Seller or any of its Subsidiaries or to any aspect of the Transactions that has been furnished to Buyer by or on behalf of Seller or any of its Subsidiaries; provided that such assignee or participant agrees to hold such information subject to the confidentiality provisions of this Agreement.

In the event Buyer assigns all or a portion of its rights and obligations under this Agreement, the parties hereto agree to negotiate in good faith an amendment to this Agreement to add agency provisions similar to those included in agreements for similar syndicated repurchase facilities.

SECTION 19. TRANSFER AND MAINTENANCE OF REGISTER.

(a) Subject to acceptance and recording thereof pursuant to Section 19(b), from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of Buyer under this Agreement. Any assignment or transfer by Buyer of rights or obligations under this Agreement that does not comply with this Section 19 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 19(b) hereof.

(b) Buyer shall maintain, on Seller’s behalf, a register (the “ Register ”) on which it will record each Assignment and Acceptance and participation. The Register shall include the names and addresses of Buyer (including all assignees, successors and participants) and the percentage or portion of such rights and obligations assigned. Failure to make any such recordation, or any error in such recordation shall not affect Seller’s obligations in respect of such rights.

SECTION 20. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

Title to all Purchased Assets and Repurchase Assets shall pass to Buyer and Buyer shall have free and unrestricted use of all Purchased Assets. Nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Assets or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating the Purchased Assets to any Person, including without limitation, the Federal Home Loan Bank, in all cases subject to Buyer’s obligation to reconvey the Purchased Assets (and not substitutes therefor) on the Repurchase Date to Seller. Nothing contained in this Agreement shall obligate Buyer to segregate any Purchased Assets delivered to Buyer by Seller.

SECTION 21. TAX TREATMENT

Notwithstanding anything to the contrary in this Agreement or any other Program Documents, each party to this Agreement acknowledges that it is its intent for U.S. federal, state and local income and franchise tax purposes to treat each Transaction as indebtedness of Seller that is secured by the Purchased Assets and the Purchased Assets as owned by Seller in the absence of a Default by Seller. All parties to this Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by any Requirement of Law (in which case such party shall promptly notify the other party of such Requirement of Law).

SECTION 22. SET-OFF

In addition to any rights and remedies of Buyer hereunder and by law, Buyer shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from Seller or any Affiliate thereof to Buyer or any of its Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return excess margin), credits, indebtedness or claims or cash, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Buyer or any Affiliate thereof to or for the credit or the account of Seller or any Affiliate thereof. Buyer agrees promptly to notify Seller after any such set-off and application made by Buyer; provided that the failure to give such notice shall not affect the validity of such set-off and application.

Buyer shall at any time have the right, in each case until such time as Buyer determines otherwise, to retain, to suspend payment or performance of, or to decline to remit, any amount or property that Buyer would otherwise be obligated to pay, remit or deliver to Seller hereunder if an Event of Default or Default has occurred.

SECTION 23. TERMINABILITY

Each representation and warranty made or deemed to be made by entering into a Transaction, herein or pursuant hereto shall survive the making of such representation and warranty, and Buyer shall not be deemed to have waived any Default that may arise because any such representation or warranty shall have proved to be false or misleading, notwithstanding that Buyer may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time the Transaction was made. Notwithstanding any such termination or the occurrence of an Event of Default, all of the representations and warranties and covenants hereunder shall continue and survive. The obligations of Seller under Section 15 hereof shall survive the termination of this Agreement.

SECTION 24. NOTICES AND OTHER COMMUNICATIONS

Except as otherwise expressly permitted by this Agreement, all notices, requests and other communications provided for herein (including without limitation any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including without limitation by electronic transmission) delivered to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof or thereof); and with respect to Buyer, as specified in the Customer Guide or, as to any party, at such other address as shall be designated by such party in a written notice to each other party. In all cases, to the extent that the related individual set forth in the respective “Attention” line is no longer employed by the respective Person, such notice may be given to the attention of a Responsible Officer of the respective Person or to the attention of such individual or individuals as subsequently notified in writing by a Responsible Officer of the respective Person. Except as otherwise provided in this Agreement and except for notices given under Section 3 (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when transmitted electronically or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid.

SECTION 25. USE OF THE WAREHOUSE ELECTRONIC SYSTEM AND OTHER ELECTRONIC MEDIA

Seller acknowledges and agrees that Buyer may require or permit certain transactions with Buyer be conducted electronically using Electronic Records and/or Electronic Signatures. Seller consents to the use of Electronic Records and/or Electronic Signatures whenever expressly required or permitted by Buyer and acknowledges and agrees that Seller shall be bound by its Electronic Signature and by the terms, conditions, requirements, information and/or instructions contained in any such Electronic Records.

Seller agrees to adopt as its Electronic Signature its user identification codes, passwords, personal identification numbers, access codes, a facsimile image of a written signature and/or other symbols or processes as provided or required by Buyer from time to time (as a group, any subgroup thereof or individually, hereinafter referred to as Seller’s Electronic Signature). Seller acknowledges that Buyer will rely on any and all Electronic Records and on Seller’s Electronic Signature transmitted or submitted to Buyer.

Buyer shall not be liable for the failure of either its or Seller’s internet service provider, or any other telecommunications company, telephone company, satellite company or cable company to timely, properly and accurately transmit any Electronic Record or fax copy.

Before engaging in Electronic Transactions with Seller, Buyer may provide Seller, or require Seller to create, user identification codes, passwords, personal identification numbers and/or access codes, as applicable, to permit reasonable access to Buyer’s computer information processing system. Each Person permitted access to the Warehouse Electronic System must have a separate identification code and password. Seller shall be fully responsible for protecting and safeguarding any and all user identification codes, passwords, personal identification numbers and access codes provided or required by Buyer. Seller shall adopt and maintain security measures to prevent the loss, theft or unauthorized or improper disclosure or use of any and all user identification codes, passwords, personal identification numbers and/or access codes by Persons other than the individual Person who is authorized to use such information. Seller shall provide commercially reasonable notice to Buyer in the event (i) of any loss, theft or unauthorized disclosure or use of any of the user identification codes, passwords, personal identification numbers and/or access codes or (ii) Seller has confirmed there has been a breach of security or that its access to Warehouse Electronic System is no longer secure for any reason.

Seller understands and agrees that it shall be fully responsible for protecting and safeguarding its computer hardware and software from any and all (a) computer “viruses,” “time bombs,” “trojan horses” or other harmful computer information, commands, codes or programs that may cause or facilitate the destruction, corruption, malfunction or appropriation of, or damage or change to, any of Seller’s or Buyer’s computer information processing systems, including without limitation, all hardware, software, Electronic Records, information, data and/or codes and (b) computer “worms,” “trap doors” or other harmful computer information, commands, codes or programs that enable unauthorized access to Seller’s and/or Buyer’s computer information processing systems, including without limitation, all hardware, software, Electronic Records, information, data and/or codes.

Seller agrees that Buyer may, in its sole discretion and from time to time, without limiting Seller’s liability set forth herein, establish minimum security standards that Seller must, at a minimum, comply with in an effort to (x) protect and safeguard any and all user identification codes, passwords, personal identification numbers and/or access codes from loss, theft or unauthorized disclosure or use; and (y) prevent the infiltration and “infection” of Seller’s hardware and/or software by any and all computer “viruses,” “time bombs,” “trojan horses,” “worms,” “trapdoors” or other harmful computer codes or programs.

If Buyer, from time to time, establishes minimum security standards, Seller shall comply with such minimum security standards within the time period established by Buyer. Buyer shall have the right to confirm Seller’s compliance with any such minimum security standards. Seller’s compliance with such minimum security standards shall not relieve Seller from any of its liability set forth herein.

Whether or not Buyer establishes minimum security standards, Seller shall continue to be fully responsible for adopting and maintaining security measures that are consistent with the risks associated with conducting electronic transactions with Buyer. Seller’s failure to adopt and maintain appropriate security measures or to comply with any minimum security standards established by Buyer may result in, among other things, termination of Seller’s access to Buyer’s computer information processing systems.

Seller understands and agrees that certain elements or components of the Warehouse Electronic System may be provided by third party vendors, and hereby holds Buyer harmless from any actual out-of-pocket liabilities, losses, damages, judgments, reasonable costs and expenses of any kind which may be imposed on, incurred by or asserted against Seller relating to or arising out of Seller’s use of the Warehouse Electronic System including without limitation, the use of any elements or components provided by third party vendors.

SECTION 26. ENTIRE AGREEMENT; SEVERABILITY; SINGLE AGREEMENT

This Agreement, together with the Program Documents, constitute the entire understanding between Buyer and Seller with respect to the subject matter they cover and shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions involving Purchased Assets. By acceptance of this Agreement, Buyer and Seller each acknowledge that they have not made, and are not relying upon, any statements, representations, promises or undertakings not contained in this Agreement. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and that each has been entered into in consideration of the other Transactions. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that Buyer shall be entitled to set off claims and apply property held by it in respect of any Transaction against obligations owing to it in respect of any other Transaction hereunder; (iii) that payments, deliveries, and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries, and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries, and other transfers may be applied against each other and netted and (iv) to promptly provide notice to the other after any such set off or application.

SECTION 27. GOVERNING LAW

THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF ELECTRONIC CONTRACTS, OTHER RECORDS, ELECTRONIC RECORDS AND ELECTRONIC SIGNATURES USED IN CONNECTION WITH ANY ELECTRONIC TRANSACTION BETWEEN BUYER AND SELLER SHALL BE GOVERNED BY E-SIGN.

SECTION 28. SUBMISSION TO JURISDICTION; WAIVERS

BUYER AND SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER PROGRAM DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED; AND

(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

(v) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER PROGRAM DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

SECTION 29. NO WAIVERS, ETC.

No failure on the part of Buyer to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under any Program Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any Program Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. An Event of Default shall be deemed to be continuing unless expressly waived by Buyer in writing.

SECTION 30. NETTING

If Buyer and Seller are “financial institutions” as now or hereinafter defined in Section 4402 of Title 12 of the United States Code (“ Section 4402 ”) and any rules or regulations promulgated thereunder (a) all amounts to be paid or advanced by one party to or on behalf of the other under this Agreement or any Transaction hereunder shall be deemed to be “payment obligations” and all amounts to be received by or on behalf of one party from the other under this Agreement or any Transaction hereunder shall be deemed to be “payment entitlements” within the meaning of Section 4402, and this Agreement shall be deemed to be a “netting contract” as defined in Section 4402; (b) the payment obligations and the payment entitlements of the parties hereto pursuant to this Agreement and any Transaction hereunder shall be netted as follows. In the event that either party (the “ Defaulting Party ”) shall fail to honor any payment obligation under this Agreement or any Transaction hereunder, the other party (the “ Nondefaulting Party ”) shall be entitled to reduce the amount of any payment to be made by the Nondefaulting Party to the Defaulting Party by the amount of the payment obligation that the Defaulting Party failed to honor.

SECTION 31. CONFIDENTIALITY

Buyer and Seller hereby acknowledge and agree that all written or computer-readable information provided by one party to any other regarding the terms set forth in any of the Program Documents or the Transactions contemplated thereby (the “ Confidential Terms ”) shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party, which consent shall not be unreasonably withheld, except to the extent that (i) it is necessary to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies or regulatory bodies or in order to comply with any

applicable federal or state laws, (ii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, (iii) in the event of an Event of Default Buyer determines such information to be necessary or desirable to disclose in connection with the marketing and sales of the Purchased Assets or otherwise to enforce or exercise Buyer’s or Seller’s rights hereunder or (iv) by Buyer or Seller in connection with any marketing material undertaken by Buyer. In addition, Seller or any Affiliate of Seller may disclose all or any portion of this Agreement (including a summary of the terms thereof) with any Governmental Authority, including the filing of this Agreement or any portion thereof (including a summary of the terms thereof) with the SEC via EDGAR.

Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Document, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that neither Seller nor Buyer may disclose the name of or identifying information with respect to Buyer or Seller or any other Indemnified Party, or any pricing terms (including, without limitation, the Pricing Rate, Warehouse Fees and, Purchase Price) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Buyer or Seller, which consent shall not be unreasonably withheld. The provisions set forth in this Section 31 shall survive the termination of this Agreement.

SECTION 32. INTENT

(a) The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the Bankruptcy Code, as amended and a “securities contract” as that term is defined in Section 741 of Title 11 of the Bankruptcy Code, as amended and that all payments hereunder are deemed “margin payments” or “settlement payments” as defined in Title 11 of the Bankruptcy Code.

(b) This Agreement is intended to be a “repurchase agreement” and a “securities contract,” within the meaning of Section 555 and Section 559 under the Bankruptcy Code. It is understood that either party’s right to liquidate Purchased Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 14 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the Bankruptcy Code, as amended.

(c) The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“ FDIA ”), then each Transaction hereunder is a “qualified financial contract,” a “repurchase agreement” and a “securities contract” as such terms are defined in FDIA and any rules, orders or policy statements thereunder.

(d) It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“ FDICIA ”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

(e) Each Party intends that this Agreement constitutes and shall be construed and interpreted as a “master netting agreement” within the meaning of and as such terms are used in Section 561 of the Bankruptcy Code and each party agrees that this Agreement is intended to create mutuality of obligations among the parties, and as such, this Agreement constitutes a contract which (i) is between all of the parties and (ii) places each party in the same right and capacity.

SECTION 33. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that (a) in the case of Transactions in which one of the parties is a broker or dealer registered with the SEC under Section 15 of the Securities Exchange Act of 1934 (“ 1934 Act ”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“ SIPA ”) do not protect the other party with respect to any Transaction hereunder and (b) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

SECTION 34. CONFLICTS

In the event of any conflict between the terms of this Agreement, any other Program Agreement and any Confirmation, the documents shall control in the following order of priority: first, the terms of the Confirmation shall prevail, then the terms of this Agreement shall prevail, and then the terms of the other Program Agreement shall prevail.

SECTION 35. MISCELLANEOUS

(a) Counterparts . This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of a signature page of this Agreement in Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Agreement.

(b) Captions . The captions and headings appearing herein are for included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

(c) Acknowledgment . Seller and Buyer hereby acknowledge that (i) each has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Program Documents; (ii) neither Buyer nor Seller has a fiduciary relationship to the other Party; and (iii) no joint venture exists between Buyer and Seller.

(d) Documents Mutually Drafted . Seller and Buyer agree that this Agreement each other Program Document prepared in connection with the Transactions set forth herein have been mutually drafted and negotiated by each party, and consequently such documents shall not be construed against either party as the drafter thereof.

(e) Amendments . This Agreement and each other Program Document may be amended from time to time, with the consent and assent of Seller; provided, however, that the Customer Guide may be amended from time to time without the consent of Seller; provided, further, that such amended provisions of the Customer Guide shall not apply to Seller absent its consent, and such amendments shall be effective immediately upon the consent Seller to the change.

(f) Acknowledgement of Anti Predatory Lending Policies . Buyer has in place internal policies and procedures that expressly prohibit its purchase of any High Cost Mortgage Loan.

(g) Authorizations . Any of the persons whose signatures and titles appear on Schedule 2 are authorized, acting singly, to act for Seller, under this Agreement. Any persons identified in the Customer Guide are authorized to act for Buyer under this Agreement.

SECTION 36. GENERAL INTERPRETIVE PRINCIPLES

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to “Articles”, “Sections”, “Subsections”, “Paragraphs”, and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; (e) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; (f) the term “include” or “including” shall mean without limitation by reason of enumeration; (g) all times specified herein or in any other Program Document (unless expressly specified otherwise) are local times in New York, New York unless otherwise stated; and (h) all references herein or in any Program Document to “good faith” means good faith as defined in Section 1-201(19) of the UCC as in effect in the State of New York.

[THIS SPACE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date set forth above.


BUYER:

UBS REAL ESTATE SECURITIES INC.

By:
		Name:
		Title:

By:
		Name:
		Title:

Address for Notices : AS SET FORTH IN THE CUSTOMER GUIDE

SELLER :

REVERSE MORTGAGE SOLUTIONS, INC.

By:
		Name:
		Title:


Address for Notices :
		2727 Spring Creek Drive
		Spring, Texas 77373
		Attention: Michael D. Kent, President, Mortgage Lending Division
		Fax No.: (866) 479-1823
		Telephone No: (281) 404-7987

Signature Page to the RMS Master Repurchase Agreement

SCHEDULE 1

REPRESENTATIONS AND WARRANTIES

Seller represents and warrants to Buyer, with respect to each Mortgage Loan, that as of the Purchase Date for the purchase of any Purchased Mortgage Loans by Buyer from Seller and as of the date of this Agreement and any Transaction hereunder and at all times while the Program Documents and any Transaction hereunder is in full force and effect, that the following are true and correct. For purposes of this Schedule 1 and the representations and warranties set forth herein, a breach of a representation or warranty shall be deemed to have been cured with respect to a Mortgage Loan if and when Seller has taken or caused to be taken action such that the event, circumstance or condition that gave rise to such breach no longer adversely affects such Mortgage Loan. With respect to those representations and warranties which are made to the best of Seller’s knowledge, if it is discovered by Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

(a) Mortgage Loans as Described . The information set forth in the Mortgage Loan Schedule is complete, true and correct in all material respects.

(b) Payments Current . No payment required under the Mortgage Loan is 30 days or more delinquent nor has any payment under the Mortgage Loan been 30 days or more delinquent at any time since the origination of the Mortgage Loan.

(d) Approved Underwriting Guidelines . The Mortgage Loan satisfies the Approved Underwriting Guidelines.

(e) No Outstanding Charges . There are no defaults in complying with the terms of the Mortgage, and all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is earlier, to the day which precedes by one month the Due Date of the first installment of principal and interest.

(f) Original Terms Unmodified . To the best of Seller’s knowledge, the terms of the Mortgage Note and Mortgage have not been impaired, waived, altered or modified in any respect, from the date of origination except by a written instrument which has been recorded, if necessary to protect the interests of Buyer, and which has been delivered to the Custodian or to

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such other Person as Buyer shall designate in writing, and the terms of which are reflected in the Mortgage Loan Schedule. To the best of Seller’s knowledge, the substance of any such waiver, alteration or modification has been approved by the issuer of any related PMI Policy and the title insurer, if any, to the extent required by the policy, and its terms are reflected on the Mortgage Loan Schedule, if applicable. To the best of Seller’s knowledge, no Mortgagor has been released, in whole or in part, except in connection with an assumption agreement, approved by the issuer of any related PMI Policy and the issuer of the title insurer, to the extent required by the policy, and which assumption agreement is part of the Mortgage File delivered to the Custodian or to such other Person as Buyer shall designate in writing and the terms of which are reflected in the Mortgage Loan Schedule.

(g) No Defenses . To the best of Seller’s knowledge, the Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and no Mortgagor was a debtor in any state or federal bankruptcy or insolvency proceeding at, or subsequent to, the time the Mortgage Loan was originated.

(h) Hazard Insurance . Pursuant to the terms of the Mortgage, to the best of Seller’s knowledge, all buildings or other improvements upon the Mortgaged Property are insured by a generally acceptable insurer against loss by fire, hazards of extended coverage and such other hazards as are provided for in the Fannie Mae guides or by Freddie Mac, as well as all additional requirements set forth in the Approved Underwriting Guidelines. If required by the National Flood Insurance Act of 1968, as amended, each Mortgage Loan is covered by a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration as in effect which policy conforms to Fannie Mae and Freddie Mac, as well as all additional requirements set forth in the Servicing Agreement. To the best of Seller’s knowledge, all individual insurance policies contain a standard mortgagee clause naming Seller and its successors and assigns as mortgagee, and all premiums thereon have been paid and such policies may not be reduced, terminated or cancelled without 30 days’ prior written notice to the mortgagee. The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor’s cost and expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at such Mortgagor’s cost and expense, and to seek reimbursement therefor from the Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “ master ” or “ blanket ” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. To the best of Seller’s knowledge, the hazard insurance policy is the valid and binding obligation of the insurer, is in full force and effect, and will be in full force and effect and inure to the benefit of Buyer upon the consummation of the transactions contemplated by this Agreement. Seller has not engaged in, and has no knowledge of the Mortgagor’s or any servicer’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of such policy, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other person or entity, and no such unlawful items have been received, retained or realized by Seller.

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(i) Compliance with Applicable Laws . To the best of Seller’s knowledge, any and all requirements of any federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, anti-predatory lending laws, laws covering fair housing, fair credit reporting, community reinvestment, homeowners equity protection, equal credit opportunity, mortgage reform and disclosure laws or unfair and deceptive practices laws applicable to the Mortgage Loan have been complied with, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations. Seller shall maintain in its possession, available for Buyer’s inspection, and shall deliver to Buyer upon demand, evidence of compliance with all requirements set forth herein.

(j) No Satisfaction of Mortgage . The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor, to the best of Seller’s knowledge, has any instrument been executed that would effect any such release, cancellation, subordination or rescission. Seller has not waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan to be in default, nor has Seller waived any default resulting from any action or inaction by the Mortgagor.

(k) Location and Type of Mortgaged Property . To the best of Seller’s knowledge, the Mortgaged Property is a fee simple property located in the state identified in the Mortgage Loan Schedule except that with respect to real property located in jurisdictions in which the use of leasehold estates for residential properties is a widely-accepted practice, the Mortgaged Property may be a leasehold estate and consists of a single parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual residential condominium or cooperative unit in a low-rise or high-rise condominium or cooperative project, or an individual unit in a planned unit development and that to the best of Seller’s knowledge, no residence or dwelling is (i) a mobile home or (ii) a manufactured home, provided, however, that any condominium or cooperative unit or planned unit development shall not fall within any of the “Ineligible Projects” of part VIII, Section 102 of the Fannie Mae Selling Guide and shall conform with the Approved Underwriting Guidelines. The Mortgaged Property is not raw land. In the case of any Mortgaged Properties that are manufactured homes (a “ Manufactured Home Mortgage Loans ”), (i) such Manufactured Home Mortgage Loan conforms with the applicable Fannie Mae or Freddie Mac requirements regarding mortgage loans related to manufactured dwellings, (ii) to the best of Seller’s knowledge, the related manufactured dwelling is permanently affixed to the land, (iii) the related manufactured dwelling and the related land are subject to a Mortgage properly filed in the appropriate public recording office and naming Seller as mortgagee, (iv) to the best of Seller’s knowledge, the applicable laws of the jurisdiction in which the related Mortgaged Property is located will deem the manufactured dwelling located on such Mortgaged Property to be a part of the real property on which such dwelling is located, and (v) such Manufactured Home Mortgage Loan is (x) a qualified mortgage under Section 860G(a)(3) of the Internal Revenue Code of 1986, as amended and (y) secured by manufactured

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housing treated as a single family residence under Section 25(e)(10) of the Code. As of the date of origination, to the best of Seller’s knowledge, no portion of the Mortgaged Property was used for commercial purposes, and since the date of origination, to the best of Seller’s knowledge, no portion of the Mortgaged Property has been used for commercial purposes; provided, that Mortgaged Properties which contain a home office shall not be considered as being used for commercial purposes as long as the Mortgaged Property has not been altered for commercial purposes and is not storing any chemicals or raw materials other than those commonly used for homeowner repair, maintenance and/or household purposes.

(l) Valid First Lien . Each Mortgage is a valid and subsisting first lien of record on a single parcel of real estate constituting the Mortgaged Property, including all buildings and improvements on the Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time, subject in all cases to the exceptions to title set forth in the title insurance policy with respect to the related Mortgage Loan, which exceptions are generally acceptable to prudent mortgage lending companies, and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage. The lien of the Mortgage is subject only to:

(i) the lien of current real property taxes and assessments not yet due and payable.

(ii) covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions generally and specifically referred to in the lender’s title insurance policy delivered to the originator of the Mortgage Loan and (a) specifically referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (b) which do not adversely affect the Appraised Value of the Mortgaged Property set forth in such appraisal; and

(iii) other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting, enforceable and perfected first lien and first priority security interest on the property described therein and Seller has full right to sell and assign the same to Buyer. The Mortgaged Property was not, as of the date of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage.

(m) Validity of Mortgage Documents . The Mortgage Note and the Mortgage and any other agreement executed and delivered by a Mortgagor in connection with a Mortgage Loan are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms. To the best of Seller’s knowledge, all parties to the

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Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by other such related parties. To the best of Seller’s knowledge, the documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not misleading. To the best of Seller’s knowledge, no fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to a Mortgage Loan has taken place on the part of any Person, including without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination or servicing of the Mortgage Loan or in the application or any insurance in relation to such Mortgage Loan. Seller has reviewed all of the documents constituting the Servicing File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein in all material respects.

(n) Full Disbursement of Proceeds . Other than with respect to a HECM Loan, the Mortgage Loan has been closed and the proceeds of the Mortgage Loan have been fully disbursed and there is no requirement for future advances thereunder, and any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with. To the best of Seller’s knowledge, all costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage. To the best of Seller’s knowledge, all points and fees related to each Mortgage Loan were disclosed in writing to the Mortgagor in accordance with applicable state and federal law and regulation.

(o) Ownership . Seller is the sole owner of record and holder of the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon the sale of the Mortgage Loans to Buyer, Seller will retain the Mortgage Files or any part thereof with respect thereto not delivered to the Custodian, Buyer or Buyer’s designee, in trust only for the purpose of servicing and supervising the servicing of each Mortgage Loan. The Mortgage Loan is not assigned or pledged, and Seller has good, indefeasible and marketable title thereto, and has full right to transfer and sell the Mortgage Loan to Buyer free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell and assign each Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest. Seller intends to relinquish all rights to possess, control and monitor the Mortgage Loan.

(p) Doing Business . To the best of Seller’s knowledge, all parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (2) either (i) organized under the laws of such state, or (ii) qualified to do business in such state, or (iii) a federal savings and loan association, a savings bank or a national bank having a principal office in such state, or (3) not doing business in such state.

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(q) LTV, PMI Policy . No Conforming Mortgage Loan has an LTV greater than 100%. The LTV of the Conforming Mortgage Loan either is not more than 80% or the excess over 75% of the Appraised Value is and will be insured as to payment defaults by a PMI Policy until the LTV of such Mortgage Loan is reduced to 80%. To the best of Seller’s knowledge, all provisions of such PMI Policy have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. To the best of Seller’s knowledge, no action, inaction, or event has occurred and no state of facts exists that has, or will result in the exclusion from, denial of, or defense to coverage. Any Mortgage Loan subject to a PMI Policy obligates the Mortgagor thereunder to maintain the PMI Policy and to pay all premiums and charges in connection therewith. The Mortgage Interest Rate for the Mortgage Loan as set forth on the Mortgage Loan Schedule is net of any such insurance premium.

(r) Title Insurance . The Mortgage Loan is covered by an ALTA lender’s title insurance policy, or with respect to any Mortgage Loan for which the related Mortgaged Property is located in California a CLTA lender’s title insurance policy, or other generally acceptable form of policy or insurance acceptable to Fannie Mae or Freddie Mac and, to the best of Seller’s knowledge, each such title insurance policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring Seller, its successors and assigns, as to the first priority lien of the Mortgage in the original principal amount of the Mortgage Loan, subject only to the exceptions contained in clauses (1), (2) and (3) of paragraph (l) of this Schedule 1 , and in the case of adjustable rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. To the best of Seller’s knowledge, where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged Property or any interest therein. To the best of Seller’s knowledge, the title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. Seller, its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy, and, to the best of Seller’s knowledge, no prior holder of the related Mortgage, including Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person or entity, and no such unlawful items have been received, retained or realized by Seller.

(s) No Defaults . Other than payments due but not yet 30 days or more delinquent, there is no material default, breach, violation or event which would permit acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event which would permit acceleration, and to the best of Seller’s knowledge, nor any of its predecessors, have waived any default, breach, violation or event which would permit acceleration.

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(t) No Mechanics’ Liens . To the best of Seller’s knowledge, there are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to such liens) affecting the related Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related Mortgage.

(u) Location of Improvements; No Encroachments . To the best of Seller’s knowledge, all improvements which were considered in determining the Appraised Value of the Mortgaged Property lay wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged Property. To the best of Seller’s knowledge, no improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation.

(v) Origination; Payment Terms . Unless otherwise indicated on the Mortgage Loan Schedule, the Mortgage Loan was originated by Seller. Seller is a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or other similar institution which is supervised and examined by a federal or state authority. To the best of Seller’s knowledge, the documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not misleading. Other than with respect to HECM Loans, no Mortgage Loan contains terms or provisions which would result in negative amortization. Other than with respect to HECM Loans, principal payments on the Mortgage Loan commenced no more than sixty days after funds were disbursed in connection with the Mortgage Loan. The mortgage interest rate as well as the lifetime rate cap and the periodic cap are as set forth on the Mortgage Loan Schedule. Other than with respect to HECM Loans, the Mortgage Note is payable in equal monthly installments of principal and interest, which installments of interest, with respect to adjustable rate Mortgage Loans, are subject to change due to the adjustments to the mortgage interest rate on each interest rate adjustment date, with interest calculated and payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more than thirty years from commencement of amortization. Unless otherwise specified and other than with respect to HECM Loans, the Mortgage Loan is payable on the first day of each month. There are no Mortgage Loans which contain a provision allowing the Mortgagor to convert the Mortgage Note from an adjustable interest rate Mortgage Note to a fixed interest rate Mortgage Note.

(w) Customary Provisions . The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and merchantable title to the

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Mortgaged Property. To the best of Seller’s knowledge, there is no homestead or other exemption or other right available to the Mortgagor or any other person, or restriction on Seller or any other person, including without limitation, any federal, state or local, law, ordinance, decree, regulation, guidance, attorney general action, or other pronouncement, whether temporary or permanent in nature, that would interfere with, restrict or delay, either (y) the ability of Seller, Buyer or any servicer or any successor servicer to sell the related Mortgaged Property at a trustee’s sale or otherwise, or (z) the ability of Seller, Buyer or any servicer or any successor servicer to foreclose on the related Mortgage.

(x) Conformance with Agency and Approved Underwriting Guidelines . The Mortgage Loan was underwritten in accordance with the Approved Underwriting Guidelines (a copy of which has been delivered to Buyer). The Mortgage Note and Mortgage are on forms acceptable to Freddie Mac, Fannie Mae or FHA, as applicable, and Seller has not made any representations to a Mortgagor that are inconsistent with the mortgage instruments used.

(y) Occupancy of the Mortgaged Property . To the best of Seller’s knowledge, the Mortgaged Property is lawfully occupied under applicable law. To the best of Seller’s knowledge, all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities.

(z) No Additional Collateral . The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage and the security interest of any applicable security agreement or chattel mortgage referred to in clause (j) above.

(aa) Deeds of Trust . In the event the Mortgage constitutes a deed of trust, to the best of Seller’s knowledge, a trustee, authorized and duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and, to the best of Seller’s knowledge, no fees or expenses are or will become payable by Buyer to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor.

(bb) Acceptable Investment . There are no circumstances or conditions with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the Mortgage File or the Mortgagor’s credit standing that can reasonably be expected to cause private institutional investors to regard the Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become delinquent, or adversely affect the value or marketability of the Mortgage Loan, or cause the Mortgage Loans to prepay during any period materially faster or slower than the mortgage loans originated by Seller generally.

(cc) Delivery of Mortgage Documents . The Mortgage Note, the Mortgage, the Assignment of Mortgage and any other documents required to be delivered under the Custodial Agreement for each Mortgage Loan have been delivered to the Custodian. Seller is in possession of a complete, true and accurate Mortgage File in compliance with the Customer Guide in all material respects, except for such documents the originals of which have been delivered to the Custodian.

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(dd) Condominiums/Planned Unit Developments . If the Mortgaged Property is a condominium unit or a planned unit development (other than a de minimis planned unit development) such condominium or planned unit development project is (i) acceptable to Fannie Mae or Freddie Mac or (ii) located in a condominium or planned unit development project which has received project approval from Fannie Mae or Freddie Mac. To the best of Seller’s knowledge, the representations and warranties required by Fannie Mae with respect to such condominium or planned unit development have been satisfied and remain true and correct.

(ee) Transfer of Mortgage Loans . The Assignment of Mortgage with respect to each Mortgage Loan is in recordable form and, to the best of Seller’s knowledge, is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located. The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by Seller are not subject to the bulk transfer or similar statutory provisions in effect in any applicable jurisdiction.

(ff) Due-On-Sale . The Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder, and to the best of Seller’s knowledge, such provision is enforceable.

(gg) Assumability . No Mortgage Loan is assumable.

(hh) No Buydown Provisions; No Graduated Payments or Contingent Interests . The Mortgage Loan does not contain provisions pursuant to which Monthly Payments are paid or partially paid with funds deposited in any separate account established by Seller, the Mortgagor, or anyone on behalf of the Mortgagor, or paid by any source other than the Mortgagor nor does it contain any other similar provisions which may constitute a “buydown” provision. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature.

(ii) Consolidation of Future Advances . Any future advances made to the Mortgagor prior to the Purchase Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence acceptable to Fannie Mae and Freddie Mac and/or FHA, as applicable. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan.

(jj) Mortgaged Property Undamaged; No Condemnation Proceedings . To the best of Seller’s knowledge, there is no proceeding pending or threatened for the total or partial condemnation of the Mortgaged Property. To the best of Seller’s knowledge, the Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended and each Mortgaged Property is in good repair.

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(kk) Collection Practices; Escrow Deposits; Interest Rate Adjustments . The origination, servicing and collection practices used by Seller with respect to the Mortgage Loan have been in all material respects in compliance with Accepted Servicing Practices, applicable laws and regulations, and have been in all material respects legal and proper and prudent in the mortgage origination and servicing business. With respect to escrow deposits and Escrow Payments, all such payments are in the possession of, or under the control of, Seller and there exist no material deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. All Escrow Payments have been collected in full compliance with state and federal law and the provisions of the related Mortgage Note and Mortgage. To the best of Seller’s knowledge, an escrow of funds is not prohibited by applicable law and has been established in an amount sufficient to pay for every item that remains unpaid and has been assessed but is not yet due and payable. No escrow deposits or Escrow Payments or other charges or payments due Seller have been capitalized under the Mortgage or the Mortgage Note. All mortgage interest rate adjustments have been made in material compliance with state and federal law and the terms of the related Mortgage and Mortgage Note on the related interest rate adjustment date. If, pursuant to the terms of the Mortgage Note, another index was selected for determining the mortgage interest rate, the same index was used with respect to each Mortgage Note which required a new index to be selected, and such selection did not conflict with the terms of the related Mortgage Note. Seller executed and delivered any and all notices required under applicable law and the terms of the related Mortgage Note and Mortgage regarding the mortgage interest rate and the Monthly Payment adjustments. To the best of Seller’s knowledge, any interest required to be paid pursuant to state, federal and local law has been properly paid and credited.

(ll) No Violation of Environmental Laws . To the best of Seller’s knowledge, the Mortgaged Property is free from any and all toxic or hazardous substances and to the best of Seller’s knowledge, there exists no violation of any local, state or federal environmental law, rule or regulation. To the best of Seller’s knowledge, there is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue; there is no violation of any environmental law, rule or regulation with respect to the Mortgaged Property; and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property.

(mm) Servicemembers Civil Relief Act of 2003 . The Mortgagor has not notified Seller, and Seller has no knowledge of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003.

(nn) Appraisal . The Mortgage File contains an appraisal of the related Mortgaged Property signed prior to the approval of the Mortgage Loan application by a qualified appraiser, duly appointed by Seller, who to the best of Seller’s knowledge, had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of Fannie Mae, Freddie Mac or FHA and Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated.

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(oo) Disclosure Materials . The Mortgagor has executed a statement to the effect that the Mortgagor has received all disclosure materials required by, and Seller has complied with, in all material respects, all applicable law with respect to the making of the Mortgage Loans. Seller shall maintain such statement in the Mortgage File.

(pp) Construction or Rehabilitation of Mortgaged Property . No Mortgage Loan was made in connection with the construction or rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged Property.

(qq) Value of Mortgaged Property . Seller has no knowledge of any circumstances existing that could reasonably be expected to adversely affect the value or the marketability of any Mortgaged Property or Mortgage Loan or to cause the Mortgage Loans to prepay during any period materially faster or slower than similar mortgage loans held by Seller generally secured by properties in the same geographic area as the related Mortgaged Property.

(rr) No Defense to Insurance Coverage . To the best of Seller’s knowledge, Seller has caused or will cause to be performed any and all acts required to preserve the rights and remedies of Buyer in any insurance policies applicable to the Mortgage Loans including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of coinsured, joint loss payee and mortgagee rights in favor of Buyer. To the best of Seller’s knowledge, no action has been taken or failed to be taken, no event has occurred and no state of facts exists or has existed on or prior to the Purchase Date (whether or not known to Seller on or prior to such date) which has resulted or will result in an exclusion from, denial of, or defense to coverage under any applicable, special hazard insurance policy, or applicable PMI Policy or bankruptcy bond (including, without limitation, any exclusions, denials or defenses which would limit or reduce the availability of the timely payment of the full amount of the loss otherwise due thereunder to the insured) whether arising out of actions, representations, errors, omissions, negligence, or fraud of Seller, the related Mortgagor or any party involved in the application for such coverage, including the appraisal, plans and specifications and other exhibits or documents submitted therewith to the insurer under such insurance policy, or for any other reason under such coverage, but not including the failure of such insurer to pay by reason of such insurer’s breach of such insurance policy or such insurer’s financial inability to pay.

(ss) Escrow Analysis . With respect to each Mortgage, Seller has within the last twelve months (unless such Mortgage was originated within such twelve month period) analyzed the required Escrow Payments for each Mortgage and adjusted the amount of such payments so that, assuming all required payments are timely made, any deficiency will be eliminated on or before the first anniversary of such analysis, or any overage will be refunded to the Mortgagor, in accordance with Real Estate Settlement Procedures Act and any other applicable law.

(tt) Prior Servicing . Each Mortgage Loan has been serviced in all material respects in strict compliance with Accepted Servicing Practices.

Sch. 1-11

(uu) Credit Information . As to each consumer report (as defined in the Fair Credit Reporting Act, Public Law 91-508) or other credit information furnished by Seller to Buyer, that Seller has full right and authority and is not precluded by law or contract from furnishing such information to Buyer and Buyer is not precluded from furnishing the same to any subsequent or prospective purchaser of such Mortgage. Seller shall hold Buyer harmless from any and all actual out-of-pocket damages, losses, costs and expenses (including attorney’s fees) arising from disclosure of credit information in connection with Buyer’s secondary marketing operations and the purchase and sale of mortgages or Servicing Rights thereto.

(vv) Leaseholds . If the Mortgage Loan is secured by a long-term residential lease, to the best of Seller’s knowledge, (1) the lessor under the lease holds a fee simple interest in the land; (2) the terms of such lease expressly permit the mortgaging of the leasehold estate, the assignment of the lease without the lessor’s consent and the acquisition by the holder of the Mortgage of the rights of the lessee upon foreclosure or assignment in lieu of foreclosure or provide the holder of the Mortgage with substantially similar protections; (3) the terms of such lease do not (a) allow the termination thereof upon the lessee’s default without the holder of the Mortgage being entitled to receive written notice of, and opportunity to cure, such default, (b) allow the termination of the lease in the event of damage or destruction as long as the Mortgage is in existence, (c) prohibit the holder of the Mortgage from being insured (or receiving proceeds of insurance) under the hazard insurance policy or policies relating to the Mortgaged Property or (d) permit any increase in rent other than pre-established increases set forth in the lease; (4) the original term of such lease is not less than 15 years; (5) the term of such lease does not terminate earlier than five years after the maturity date of the Mortgage Note; and (6) the Mortgaged Property is located in a jurisdiction in which the use of leasehold estates in transferring ownership in residential properties is a widely accepted practice.

(ww) Prepayment Penalty . To the best of Seller’s knowledge, no Mortgage Loan is subject to a prepayment penalty such that an amount in excess of the unpaid principal balance is due by the Mortgagor if Mortgagor prepays the Mortgage Loan prior to the maturity date of such Mortgage Loan.

(xx) Predatory Lending Regulations; High Cost Loans . To the best of Seller’s knowledge, no Mortgage Loan (i) is classified as a High Cost Mortgage Loan; (ii) is subject to Section 226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions) or (iii) is subject to any law, regulation or rule that (A) imposes liability on a mortgagee or a lender to a mortgagee for upkeep to a Mortgaged Property prior to completion of foreclosure thereon, or (B) imposes liability on a lender to a mortgagee for acts or omissions of the mortgagee or otherwise defines a mortgagee in a manner that would include a lender to a mortgagee. To the best of Seller’s knowledge, no Mortgagor was encouraged or required to select a Mortgage Loan product offered by Seller or the originator which is a higher cost product designed for less creditworthy borrowers, unless at the time of the Mortgage Loan’s origination, such Mortgagor did not qualify taking into account credit history and debt to income ratios for a lower cost credit product then offered by Seller or originator. If, at the time of loan application, the Mortgagor qualified for a lower cost credit product then offered by Seller or the originator’s standard mortgage channel (if applicable), to the best of Seller’s knowledge, Seller or the originator directed the Mortgagor towards such standard mortgage channel, or offered such lower-cost credit product to the Mortgagor.

Sch. 1-12

(yy) Ohio Stated Income Exclusion . To the best of Seller’s knowledge, each Mortgage Loan with an origination date on or after January 1, 2007 which is secured by Mortgaged Property located in Ohio was originated pursuant to a program which requires verification of the borrower’s income in accordance with “Full and Alternative Documentation” programs as described within the Approved Underwriting Guidelines.

(zz) Origination . To the best of Seller’s knowledge, no predatory or deceptive lending practices, including, without limitation, the extension of credit without regard to the ability of the Mortgagor to repay and the extension of credit which has no apparent benefit to the Mortgagor, were employed in the origination of the Mortgage Loan.

(aaa) Single-premium Credit or Life Insurance Policy . In connection with the origination of any Mortgage Loan, to the best of Seller’s knowledge, no proceeds from any Mortgage Loan were used to purchase any single premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreement as a condition of obtaining the extension of credit. To the best of Seller’s knowledge, no Mortgagor obtained a prepaid single-premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreement in connection with the origination of the Mortgage Loan; no proceeds from any Mortgage Loan were used to purchase single premium credit insurance policies (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreements as part of the origination of, or as a condition to closing, such Mortgage Loan.

(bbb) Tax Service Contract; Flood Certification Contract . Each Mortgage Loan is covered by a paid in full, life of loan, tax service contract and a paid in full, life of loan, flood certification contract and each of these contracts is assignable to Buyer.

(ccc) Qualified Mortgage . The Mortgage Loan is a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code.

(ddd) Regarding the Mortgagor . To the best of Seller’s knowledge, the Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a “living trust” and such “living trust” is in compliance with Fannie Mae guidelines for such trusts.

(eee) Recordation . Each original Mortgage was recorded and, except for those Mortgage Loans subject to the MERS identification system, to the best of Seller’s knowledge, all subsequent assignments of the original Mortgage (other than the assignment to Buyer) have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of Seller, or is in the process of being recorded.

(fff) FICO Scores . Except with respect to HECM Loans, each Mortgage Loan has a non-zero FICO score.

(ggg) Georgia Mortgage Loans . There is no Mortgage Loan that was originated on or after March 7, 2003 that is a “ high cost home loan ” as defined under the Georgia Fair Lending Act.

Sch. 1-13

(hhh) Illinois Mortgage Loans . All Mortgage Loans originated on or after September 1, 2006 secured by property located in Cook County, Illinois are recordable at the time of origination.

(iii) Subprime Mortgage Loans . No Mortgage Loan is a “Subprime Home Loan” as defined in New York Banking Law 6-m, effective September 1, 2008.

(jjj) Balloon Mortgage Loans . No Mortgage Loan is a balloon mortgage loan that has an original stated maturity of less than seven (7) years.

(kkk) Adjustable Rate Mortgage Loans . Each Mortgage Loan that is an adjustable rate Mortgage Loan and that has a residential loan application date on or after September 13, 2007, complies in all material respects with the Interagency Statement on Subprime Mortgage Lending, 72 FR 37569 (July 10, 2007), regardless of whether the Mortgage Loan’s originator or Seller is subject to such statement as a matter of law.

(lll) Agency Mortgage Loans . Each Mortgage Loan that is subject to a Takeout Commitment with an Agency as the Approved Investor had a principal balance at its origination that did not exceed such Agency’s conforming loan limits as of the Purchase Date.

(mmm) Nontraditional Mortgage Loan . Each Mortgage Loan that is a “nontraditional mortgage loan” within the meaning of the Interagency Guidance on Nontraditional Mortgage Product Risks, 71 FR 58609 (October 4, 2006), and that has a residential loan application date on or after September 13, 2007, complies in all material respects with such guidance, regardless of whether the Mortgage Loan’s originator or Seller is subject to such guidance as a matter of law.

(nnn) Mandatory Arbitration . To the best of Seller’s knowledge, no Mortgage Loan is subject to mandatory arbitration.

(ooo) Federal Home Loan Bank . No Mortgage Loan sold by Seller hereunder is expressly prohibited by the Federal Home Loan Bank of New York’s Member Products Guide.

(ppp) Wet Loans . With respect to each Mortgage Loan that is a Wet Loan, to the best of Seller’s knowledge, (i) such Mortgage Loan (other than a Mortgage Loan originated in the State of New York) is covered by a duly authorized, executed, delivered and enforceable Closing Protection Letter, and (ii) the Settlement Agent has been instructed in writing by Seller to hold the related Mortgage Loan documents as agent and bailee for Buyer or Buyer agent and to promptly forward such Mortgage Loan documents to Custodian.

(qqq) Takeout Commitment . Each Conforming Mortgage Loan, Jumbo Mortgage Loan, HECM Loan, High Balance Conforming Mortgage Loan, Other Agency Mortgage Loan, Mortgage Loan Release on Trust Receipt, Wet Loan, Specified Mortgage Loan and Agency Security is covered by a Takeout Commitment, does not exceed the availability under such Takeout Commitment (taking into consideration mortgage loans which have been purchased by the respective Approved Investor under the Takeout Commitment and mortgage loan which Seller has identified to Buyer as covered by such Takeout Commitment) and conforms to the requirements and the specifications set forth in such Takeout Commitment and the related regulations, rules, requirements and/or handbooks of the applicable Approved Investor and is eligible for sale to and insurance or guaranty by, respectively the applicable Approved Investor and applicable insurer.

Sch. 1-14

Each Takeout Commitment is a legal, valid and binding obligation of Seller enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(rrr) Prior Financing . No Mortgage Loan has been subject to any other repurchase agreement or credit facility prior to the initial Purchase Date of such Mortgage Loan.

(sss) HECM Loans . With respect to each HECM Loan, in all material respects: (i) all of the related Mortgage Loan documents, including the Mortgage Note, are in a form required by, or acceptable under, the HUD handbook provisions relating to reverse mortgage loans; (ii) all requirements as to any improvement and/or repair to the Mortgaged Property and to the disbursement of set-aside amounts for such HECM Loan have been complied with; (iii) all advances of principal secured by the related Mortgage are consolidated and such consolidated principal amount bears a single interest rate as set forth in the Mortgage Loan Schedule; (iv) no portion of any proceeds of such HECM Loan received by the related Mortgagor on the closing date of such HECM Loan were disbursed at the closing for any purpose prohibited under the HUD handbook provisions relating to reverse mortgage loans (including, without limitation, for estate planning purposes); (v) the outstanding principal balance of the HECM Loan does not exceed the lesser of (x) 98% of the maximum claim amount and (y) the related principal limit; (vi) all advances of principal made on such HECM Loan (A) shall automatically become subject to a Transaction under the Repurchase Agreement without the requirement of Buyer to remit any additional Purchase Price and (B) with Seller disbursing such advances of principal to the related Mortgagor with its own funds and not the funds of any third party lender; (vii) such HECM Loan is eligible to be pooled into an HECM mortgage-backed security, but no participation in such HECM Loan shall have been pooled into an HECM mortgage-backed securitization; (viii) the related Mortgaged Property is lawfully occupied by the Mortgagor as such Mortgagor’s primary residence; (ix) the related principal limit, all scheduled payments and other calculation terms have each been calculated in accordance with and comply with all requirements of the HUD handbook provisions relating to reverse mortgage loans; (x) such HECM Loan bears interest at a rate of interest permitted in accordance with the provisions of the HUD handbook provisions relating to reverse mortgage loans; (xi) no Mortgagor under such HECM Loan is less than sixty-two (62) years old and is otherwise an eligible Mortgagor in accordance with the requirements of the HUD handbook provisions relating to reverse mortgage loans; (xii) each Mortgagor has received all counseling required under the HUD handbook provisions relating to reverse mortgage loans and (xiii) the Custodian holds the related Mortgage Note (except for Wet Loans).

Sch. 1-15

SCHEDULE 2

RESPONSIBLE OFFICERS

SELLER AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for Seller under this Agreement:


Name	Title	Signature

Robert D. Yeary	Chairman

H. Marc Helm	President/Chief Executive Officer/Secretary

Kevin J. Gherardi	Chief Information Officer/Treasurer/EVP

Leslie Flynne	Chief Operating Officer/EVP

Michael R. Clendennen	Chief Financial Officer/EVP

Michael D. Kent	Executive Vice President

Alan Paylor	Executive Vice President

James R. Wright	Executive Vice President

Donna M. Jett	Senior Vice President

Thomas Helm	Senior Vice President

Ralph Rosynek	Senior Vice President

Eleanor Johnson	Senior Vice President

Minnie Farley	Vice President

Suzanne Musick	Vice President

Debra Moran	Vice President

Brenda Phillips	Vice President

Debbie Sims	Vice President

Sch. 2-1



Mary Herbert		Vice President

Kayce Davis		Vice President

Robbye Johnson		Vice President

Debra McMahon		Assistant Vice President

Lynette Sneed		Assistant Vice President

Patricia Gonzales		Assistant Vice President

Sch. 2-2

BUYER AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for Buyer under this Agreement:

AUTHORIZED REPRESENTATIVES OF UBS REAL ESTATE SECURITIES INC.


Name		Title		Signature

Sch. 2-3

SCHEDULE 3

SCHEDULED INDEBTEDNESS

See Attached

Sch. 3-1

EXHIBIT A

[Reserved]

Exh. A-1

EXHIBIT B

OFFICER’S CERTIFICATE OF

REVERSE MORTGAGE SOLUTIONS, INC.

The undersigned officer of Reverse Mortgage Solutions, Inc. (“RMS”) hereby certifies, after reasonable investigation, as follows:

1. There is no action, suit, proceeding or investigation pending or, to the best of my knowledge, threatened against RMS which, in my judgment, either in any one instance or in the aggregate, would be reasonably likely to result in any material adverse change in the properties, business or financial condition, or prospects of such party or in any material impairment of the right or ability of such party to carry on its business substantially as now conducted or in any material liability on the part of such party or which would draw into question the validity of the Repurchase Agreement, the Pricing Letter or the Mortgage Loans or of any action taken or to be taken in connection with the transactions contemplated thereby, or which would be reasonably likely to impair materially the ability of such party to perform under the terms of the Repurchase Agreement, the Pricing Letter or the Mortgage Loans.

2. The execution, delivery and performance by RMS of, and the consummation of the transactions contemplated by the Repurchase Agreement and the Pricing Letter do not and will not (a) violate any provision of RMS’s charter or bylaws, (b) violate any order, writ, injunction or decree of any court or governmental authority or agency or any arbitral award applicable to RMS of which I have knowledge (after due inquiry) or (c) result in a breach of, constitute a default under, require any consent under, or result in the acceleration or required prepayment of any indebtedness pursuant to the terms of, any agreement or instrument of which I have knowledge (after due inquiry) to which RMS is a party or by which it is bound or to which it is subject, or (except for the Liens created pursuant to the Repurchase Agreement) result in the creation or imposition of any Lien upon any Property of such party pursuant to the terms of any such agreement or instrument.

Capitalized terms used herein but not defined herein shall have the meanings assigned to them in the amended and restated master repurchase agreement dated as of November 1, 2012 (the “Repurchase Agreement”), between RMS, as seller, and UBS Real Estate Securities Inc., as buyer.

[SIGNATURE PAGE FOLLOWS]

Exh. B-1

IN WITNESS WHEREOF, the undersigned has executed this Certificate as an officer of RMS as of the day of , 2012.


REVERSE MORTGAGE SOLUTIONS, INC.

By:
		Name:
		Title:

Exh. B-2

RESOLUTIONS OF REVERSE MORTGAGE SOLUTIONS, INC.

CORPORATE RESOLUTION

(Authorizing Master Repurchase Agreement)

The undersigned, being each and every Director (herein so called) of REVERSE MORTGAGE SOLUTIONS, INC., a Delaware corporation (“Seller”), in accordance with the applicable laws of the state of Delaware, do hereby consent and agree, effective as of November 1, 2012 (the “Effective Date”), as follows:

RESOLVED, that because of the benefit expected to result to Seller, each Director and officer of the Seller (each of the foregoing is referred to herein as an “Authorized Party”) be, and each of them is, hereby authorized and directed, in the name of, and on behalf of the Seller, to do any and all things deemed necessary or advisable, in each Authorized Party’s sole discretion, to: (a) negotiate, enter into, and perform the Seller’s duties and obligations under (i) that certain Amended and Restated Master Repurchase Agreement (the “Master Repurchase Agreement”) dated the Effective Date, by and between the Seller and UBS Real Estate Securities, Inc. (the “Buyer”) and (ii) that certain Amended and Restated Pricing Letter (the “Pricing Letter”) dated the Effective Date, by and between the Seller and the Buyer; (b) ratify and perform Seller’s duties and obligations under the other Program Documents (as defined in the Master Repurchase Agreement) to which Seller is a party; (c) negotiate, enter into, and perform the Seller’s duties and obligations under any and all subsequent renewals, extensions, increases, decreases, amendments or modifications of the foregoing; (d) sell from time to time mortgage loans to the Buyer pursuant to the Master Repurchase Agreement and the other Program Documents; and (e) grant to the Buyer the protections, liens, security interests and other rights contemplated by the Master Repurchase Agreement and the other Program Documents; all upon such terms and conditions as any Authorized Party shall, in such Authorized Party’s sole discretion, deem necessary or advisable. In connection with the Seller’s performance of its duties and obligations under the Master Repurchase Agreement and the other Program Documents (including, without limitation, with regard to the sale of any and all mortgage loans by the Seller to the Buyer), the Seller shall be bound to the Buyer by, and the Buyer may rely upon, any communication or act, purporting to be done by any director, officer, employee or agent of the Seller provided that the Buyer believes, in good faith, that the same is being done by such person; and

FURTHER RESOLVED, that each Authorized Party is authorized in the name of, and on behalf of the Seller to do and perform, or to cause to be done and performed, all acts and things as such Authorized Party shall deem necessary, advisable or appropriate to implement the resolutions contained herein, and to execute and deliver all such agreements, certificates, instruments or documents of every character, including without limitation, mortgage warehouse agreements, participation agreements, promissory notes, deeds of trust, security agreements, pledge agreements and collateral assignments, and to do and perform, or cause to be done and performed, any other acts and things as such Authorized Party shall deem necessary, advisable or appropriate to comply with the purposes and intent of the resolutions contained herein and to consummate the transactions contemplated by the Master Repurchase Agreement and the other Program Documents; and

FURTHER RESOLVED, unless otherwise required by applicable law, each Authorized Party is authorized to execute all of the foregoing and take all the foregoing actions without the joinder of any other director, officer or other representative of the Seller, and the corporate seal of the Seller (if any) need not be affixed to any executed instrument. Any and all actions taken by an Authorized Party for and on behalf of the Seller with the Buyer and with respect to the Master Repurchase Agreement and/or the other Program Documents prior to this resolution are hereby ratified, confirmed, adopted and approved in all respects and for all purposes; and

Exh. B-3

FURTHER RESOLVED, by their execution hereinbelow, each of the undersigned does hereby certify, consent and agree, as of the Effective Date, that: (a) they constitute all of the Directors of the Seller; (b) the Seller is duly incorporated and validly existing under the laws of the state of its formation; (c) the powers of the Seller are exercised by or under the control of, and the business and affairs of the Seller are governed by, the Directors, and each of the Directors has been duly elected, appointed and qualified as the same; (d) the execution of this written resolution is authorized by the organizational documents of the Seller; (e) no consent or approval is required from any other person or entity with respect to the matters set forth herein; (f) the officers of the Seller listed on Exhibit A attached hereto and made a part hereof, are all of the duly elected, qualified and acting officers of the Seller holding the office set forth adjacent to their name, as hereby agreed pursuant to the unanimous consent of the undersigned; (g) attached hereto as Exhibit B is a true and correct copy of the Amended and Restated Certificate of Incorporation (herein so called) of the Seller, and any amendments thereto, as presently in effect, and the same have not been rescinded or modified, and are presently in full force and effect; and (h) attached hereto as Exhibit C is a true and correct copy of the Bylaws (herein so called) of the Seller, and any amendments thereto, as presently in effect, and the same have not been rescinded or modified, and are presently in full force and effect.

This resolution and the authorizations contained herein (a) supersede and control any provision to the contrary in any document pursuant to which the Seller is organized and (b) shall continue in full force and effect until the Buyer shall have received notice in writing from the Seller of the revocation hereof, and such revocation shall be effective only as to any mortgage loans purchased by the Buyer pursuant to the Master Repurchase Agreement and/or other financial accommodations extended or committed to the Seller by the Buyer after the Buyer’s receipt of such notice in accordance with the provisions of the Master Repurchase Agreement.

The undersigned further certify that the activities covered by the foregoing certifications constitute duly authorized activities of the Seller; that said certifications are now in full force and effect; and that there is no provision in any document pursuant to which the Seller is organized and/or which governs the Seller’s continued existence limiting the power of the undersigned to make the certifications set forth herein, and that the same are in conformity with the provisions of all such documents.

For the purposes of this resolution, a facsimile transmission hereof may be accepted and relied upon for all purposes by the Buyer and any other person or entity to which this resolution is delivered, and any facsimile copy shall be binding upon each signatory hereto. Each signatory hereto agrees, however, to cause “ink signed originals” of this resolution to be executed and delivered to the Buyer as soon as practicable but in any event within ten (10) days from the date hereof.

This resolution may be executed in one or more counterparts, all of which together shall be one and the same instrument.

The undersigned direct that this resolution be filed with the minutes of the proceedings of the Seller.

[Signature Page Follows]

Exh. B-4

EXECUTED effective as of the Effective Date.


By:
		Name: Robert D. Yeary
		Title: Director

By:
		Name: H. Marc Helm
		Title: Director

By:
		Name: Kevn J. Gherardi
		Title: Director

CERTIFICATION

I, H. Marc Helm, Secretary of the Seller, do hereby certify and declare that the foregoing is a full, true and correct copy of the resolutions duly passed and adopted by the Directors of the Seller, by written consent of all Directors of the Seller; that said resolutions are now in full force and effect; that there is no provision in the Amended and Restated Certificate of Incorporation or Bylaws (or similar organizational documents) of the Seller, or any shareholder agreement, limiting the power of the Directors of the Seller to pass the foregoing resolutions and that such resolutions are in conformity with the provisions of such Amended and Restated Certificate of Incorporation and Bylaws (and/or similar organizational documents); and that no approval by the shareholders of, or any of the outstanding shares of, Seller is required with respect to the matters which are the subject of the foregoing resolutions.



		H. Marc Helm, Secretary

		* * *
STATE OF ________________	§
	§
COUNTY OF ______________	§

This document was acknowledged before me on the day of , 2012, by H. Marc Helm, Secretary of Reverse Mortgage Solutions, Inc., a Delaware corporation, known to me to be the person who executed this document in the capacity and for the purposes therein stated.



Notary Public, State of

[NOTARY STAMP]

Exh. B-5

EXHIBIT A

(TO CORPORATE RESOLUTION)

LIST OF OFFICERS

[To be attached]

Exh. B-6

EXHIBIT B

(TO CORPORATE RESOLUTION)

ARTICLES OF INCORPORATION

Exh. B-7

EXHIBIT C

(TO CORPORATE RESOLUTION)

BYLAWS

Exh. B-8

EXHIBIT C

FORM OF SERVICER NOTICE

[Date]

Reverse Mortgage Solutions, Inc., as Servicer

2727 Spring Creek Dr.

Spring Texas 77373

Attention: Thomas Helm, Sr. Vice President

With a copy to:

Reverse Mortgage Solutions, Inc., as Servicer

2727 Spring Creek Dr.

Spring Texas 77373

Attention: Michael D. Kent, President, Mortgage Lending Division


Re:		Amended and Restated Master Repurchase Agreement, dated as of November 1, 2012 (the “ Agreement ”), between Reverse Mortgage Solutions, Inc. (“ Seller ”), and UBS Real Estate Securities Inc. (the “ Buyer ”).

Ladies and Gentlemen:

Reverse Mortgage Solutions, Inc. (the “ Servicer ”) is servicing certain mortgage loans for Seller pursuant to that certain Servicing Agreement between the Servicer and Seller. Pursuant to the Agreement, the Servicer is hereby notified that Seller has pledged to Buyer certain mortgage loans which are serviced by Servicer which are subject to a security interest in favor of Buyer.

Upon receipt of a Notice of Event of Default from Buyer in which Buyer shall identify the mortgage loans which are then pledged to Buyer under the Agreement (the “ Mortgage Loans ”), the Servicer shall segregate all amounts collected on account of such Mortgage Loans, hold them in trust for the sole and exclusive benefit of Buyer, and remit such collections in accordance with Buyer’s written instructions. Following such Notice of Event of Default, Servicer shall follow the instructions of Buyer with respect to the Mortgage Loans, and shall deliver to Buyer any information with respect to the Mortgage Loans reasonably requested by Buyer.

Notwithstanding any contrary information which may be delivered to the Servicer by Seller, the Servicer may conclusively rely on any information or Notice of Event of Default delivered by Buyer, and Seller shall indemnify and hold the Servicer harmless for any and all claims asserted against it for any actions taken in good faith by the Servicer in connection with the delivery of such information or Notice of Event of Default.

Please acknowledge receipt of this instruction letter by signing in the signature block below and forwarding an executed copy to Buyer promptly upon receipt. Any notices to

Exh. C-1

Buyer should be delivered to the following addresses: UBS Real Estate Securities Inc., 1285 Avenue of the Americas, 8 ^th Floor, New York, NY 10019; Attention: Gary Timmerman; Telephone: (212) 649-8156; Facsimile: (212) 719-2971.


Very truly yours,

UBS REAL ESTATE SECURITIES INC.

By:
		Name:
		Title:

By:
		Name:
		Title:


ACKNOWLEDGED:

REVERSE MORTGAGE SOLUTIONS, INC., as Servicer

By:
		Name:
		Title:

Exh. C-2

EXHIBIT D

FORM OF CONFIRMATION LETTER

[Date]

Reverse Mortgage Solutions, Inc., as Servicer

2727 Spring Creek Dr.

Spring Texas 77373

Attention: Thomas Helm, Sr. Vice President

With a copy to:

Reverse Mortgage Solutions, Inc., as Servicer

2727 Spring Creek Dr.

Spring Texas 77373

Attention: Michael D. Kent, President, Mortgage Lending Division

Confirmation No.:

Ladies/Gentlemen:

[This letter confirms our agreement to purchase from you the Mortgage Loans listed in Appendix I hereto in accordance with the terms listed in Appendix I, pursuant to the Amended and Restated Master Repurchase Agreement governing purchases and sales of Mortgage Loans between us, dated as of November 1, 2012 (the “ Agreement ”).]

[The Servicing Term for the Purchased Assets listed in Appendix I is hereby extended until the date set forth in Appendix I.]


UBS REAL ESTATE SECURITIES INC.

By:
		Name:
		Title:

Exh. D-1

EXHIBIT E

FORM OF POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Reverse Mortgage Solutions, Inc. (“ Seller ”) hereby irrevocably constitutes and appoints UBS Real Estate Securities Inc. (“ Buyer ”) and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Seller and in the name of Seller or in its own name, from time to time in Buyer’s discretion:

(a) in the name of Seller, or in its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any assets purchased by Buyer under the Amended and Restated Master Repurchase Agreement (as amended, restated or modified) dated November 1, 2012 (the “ Assets ”) and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Buyer for the purpose of collecting any and all such moneys due with respect to any other assets whenever payable;

(b) to pay or discharge taxes and liens levied or placed on or threatened against the Assets;

(c) (i) to direct any party liable for any payment under any Assets to make payment of any and all moneys due or to become due thereunder directly to Buyer or as Buyer shall direct; (ii) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Assets; (iii) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Assets; (iv) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Assets or any proceeds thereof and to enforce any other right in respect of any Assets; (v) to defend any suit, action or proceeding brought against Seller with respect to any Assets; (vi) to settle, compromise or adjust any suit, action or proceeding described in clause (vii) above and, in connection therewith, to give such discharges or releases as Buyer may deem appropriate; and (viii) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Assets as fully and completely as though Buyer were the absolute owner thereof for all purposes, and to do, at Buyer’s option and Seller’s expense, at any time, and from time to time, all acts and things which Buyer deems necessary to protect, preserve or realize upon the Assets and Buyer’s Liens thereon and to effect the intent of this Agreement, all as fully and effectively as Seller might do;

(d) for the purpose of carrying out the transfer of servicing with respect to the Assets from Seller to a successor servicer appointed by Buyer in its sole discretion and to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish such transfer of servicing, and, without limiting the generality of the foregoing, Seller hereby gives Buyer the power and right, on behalf of Seller, without assent by Seller, to, in the name of Seller or its own name, or otherwise, prepare and send or cause to be sent “good-bye” letters to all mortgagors under the Assets, transferring the servicing of the Assets to a successor servicer appointed by Buyer in its sole discretion;

Exh. E-1

(e) for the purpose of delivering any notices of sale to mortgagors or other third parties, including without limitation, those required by law.

Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

Seller also authorizes Buyer, from time to time, to execute, in connection with any sale, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Assets.

The powers conferred on Buyer hereunder are solely to protect Buyer’s interests in the Assets and shall not impose any duty upon it to exercise any such powers. Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Seller for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND BUYER ON ITS OWN BEHALF AND ON BEHALF OF BUYER’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]

Exh. E-2

IN WITNESS WHEREOF Seller has caused this power of attorney to be executed and Seller’s seal to be affixed this day of , 2012.


REVERSE MORTGAGE SOLUTIONS, INC. (Seller)

By:
		Name:
		Title:

Exh. E-3

Acknowledgment of Execution by Seller (Principal):


STATE OF )
) ss.:
COUNTY OF )

On the day of , 2012 before me, the undersigned, a Notary Public in and for said State, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity as for Reverse Mortgage Solutions, Inc. and that by his signature on the instrument, the person upon behalf of which the individual acted, executed the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day and year in this certificate first above written.


Notary Public

My Commission expires

Exh. E-4

EXHIBIT F

FORM OF SECTION 7 CERTIFICATE

Reference is hereby made to the Master Repurchase Agreement dated as of August 8, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”), between Reverse Mortgage Solutions, Inc. (the “ Seller ”), and UBS Real Estate Securities Inc. (the “ Buyer ”). Pursuant to the provisions of Section 7 of the Agreement, the undersigned hereby certifies that:

1. It is a natural individual person, treated as a corporation for U.S. federal income tax purposes, disregarded for U.S. federal income tax purposes (in which case a copy of this Section 7 Certificate is attached in respect of its sole beneficial owner), or treated as a partnership for U.S. federal income tax purposes (one must be checked).

2. It is the beneficial owner of amounts received pursuant to the Agreement.

3. It is not a bank, as such term is used in section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “ Code ”), or the Agreement is not, with respect to the undersigned, a loan agreement entered into in the ordinary course of its trade or business, within the meaning of such section.

4. It is not a 10-percent shareholder of Seller within the meaning of section 871(h)(3) or 881(c)(3)(B) of the Code.

5. It is not a controlled foreign corporation that is related to Seller within the meaning of section 881(c)(3)(C) of the Code.

6. Amounts paid to it under the Agreement and the other Program Documents (as defined in the Agreement) are not effectively connected with its conduct of a trade or business in the United States.

Dated:


[NAME OF UNDERSIGNED]

By:
		Name:

Exh. F-1

Exhibit 10.52.2

EXECUTION

UBS REAL ESTATE SECURITIES INC.

1285 Avenue of the Americas

New York, New York 10019

November 1, 2012

REVERSE MORTGAGE SOLUTIONS, INC.

2727 Spring Creek Drive

Spring, Texas 77373

Attention: Thomas Helm, Sr. Vice President

REVERSE MORTGAGE SOLUTIONS, INC.

2727 Spring Creek Drive

Spring, Texas 77373

Attention:

Michael D. Kent, President,

Mortgage Lending Division

Re:

Amended and Restated Pricing Letter

Ladies and Gentlemen:

Reference is hereby made to, and this amended and restated side letter (the “Pricing Letter”) is hereby incorporated by reference into, the Amended and Restated Master Repurchase Agreement, dated as of November 1, 2012, (as amended, supplemented and otherwise modified from time to time, the “Agreement”), among Reverse Mortgage Solutions, Inc. (the “Seller”) and UBS Real Estate Securities Inc. (the “Buyer”). This Pricing Letter amends and restates in its entirety that certain side letter (the “Original Pricing Letter”), dated as of August 16, 2012, by and among Seller, Robert D. Yeary, as a guarantor, H. Marc Helm, as a guarantor, and Kevin J. Gherardi, as a guarantor, and Buyer. Any capitalized term used but not defined herein shall have the meaning assigned to such term in the Agreement.

SECTION 1. Definitions . The following terms shall have the meanings set forth below.

“Aging Limit” shall mean, with respect to each Purchased Asset, the number of days set forth on Schedule 1 under the heading “Aging Limit.”

“Annual Financial Statement Date” shall mean 12/31/2011.

“Approved Mortgage Product” shall mean the following Mortgage Products approved by Buyer for Transactions under the Agreement: (a) Conforming Mortgage Loans, High Balance Conforming Mortgage Loans, HECM Loans, Other Agency Mortgage Loans, Mortgage Loans Released on Trust Receipt, Jumbo Mortgage Loans, Specified Mortgage Loans,

Wet Loans and Agency Securities and (b) any additional “Approved Mortgage Product” Buyer in its sole discretion determines to accept as reflected in a Pricing Supplement in the form of Exhibit B hereto (such Approved Mortgage Product incorporated pursuant to a Pricing Supplement, a “ Pricing Supplement Product ”). In no event shall an Ineligible Product be an Approved Mortgage Product.”

“Concentration Limit” shall mean, with respect to each Purchased Asset, the concentration limit set forth on Schedule 1 under the heading “Concentration Limit.”

“Facility Termination Threshold” shall mean $[__].

“Index Rate” shall equal One-Month LIBOR; provided , that the Index Rate shall at all times be at least equal [__]%.

“Litigation Threshold” shall mean $[__].

“Maintenance Fee Rate” shall mean a rate equal to the Index Rate plus [__]%.

“Maximum Aggregate Purchase Price” shall mean $50,000,000.

“Minimum Balance Requirement” shall mean $[__].

“Monthly Financial Statement Date” shall mean 9/30/2012.

“Mortgage Product” shall mean a type or category of Mortgage Loan that may be originated by the Seller from time to time.

“One-Month LIBOR” shall mean, with respect to each day a Transaction is outstanding (and reset on each day a Transaction is outstanding), the rate per annum equal to one month LIBOR as quoted on Bloomberg Screen BTMM Page under the heading LIBOR FIX BBAM for the prior Business Day (and if such date is not a Business Day, the One-Month LIBOR rate in effect on the Business Day immediately preceding such date) provided however if such screen does not include such rate or is unavailable on any applicable date then One-Month LIBOR for the applicable day shall be One-Month LIBOR as in effect with respect to the immediately preceding Business Day. One-Month LIBOR shall be reset by Buyer as described above and Buyer’s determination of One-Month LIBOR shall be conclusive upon the parties absent manifest error on the part of Buyer.

“Operating Account Rate” shall equal, for any month, (a) One-Month LIBOR plus [__]% if the average balance of the Operating Account during given quarter equals or exceeds the Minimum Balance Requirement, or (b) [__]; provided , however , interest shall not accrue on any amounts in the Operating Account in excess of the aggregate outstanding Repurchase Price for all Purchased Assets at any time.

“Post-Default Rate” shall mean a rate equal to the sum of (a) the Pricing Rate plus (b) [__]%.

“Pricing Rate” shall be a rate per annum equal to the sum of (i) the Index Rate plus (ii) the Pricing Spread. Buyer’s calculations with respect thereto shall be conclusive absent manifest error.

“Pricing Spread” shall mean, with respect to each Purchased Asset, the pricing spread set forth on Schedule 1 under the heading “Pricing Spread.” Where a Purchased Asset may qualify for two or more Pricing Spreads hereunder, unless otherwise expressly agreed to by the Buyer in writing, such Purchased Asset shall be assigned the higher Pricing Spread, as applicable.

“Purchase Price” shall mean, with respect to each Purchased Asset, the price at which such Purchased Asset is transferred by Seller to Buyer on the Purchase Date, which absent agreement between Buyer and Seller to the contrary shall equal the Asset Value of such Purchased Asset on the related Purchase Date, and thereafter, shall equal such initial Purchase Price as reduced from time to time in accordance with the Agreement.

“Purchase Price Percentage” shall mean, with respect to each Purchased Asset, the purchase price percentage set forth on Schedule 1 under the heading “Purchase Price Percentage.”

“Quarterly Financial Statement Date” shall mean 9/30/2012.

“Reporting Date” shall mean the 10 ^th day of each month, or if such day is not a Business Day, the next succeeding Business Day.

“Specified Mortgage Loan” shall mean, with respect to each Purchased Asset that is a Purchased Mortgage Loan, a Mortgage Loan that exceeds the Aging Limit for the related Approved Mortgage Product.

“Termination Date” shall mean May 1, 2013, or such date as determined by Buyer pursuant to its rights and remedies under the Agreement.

“Test Period” shall mean any fiscal quarter.

“Warehouse Fees” shall mean those fees listed on Schedule 2 hereto.

“Wet Delivery Deadline” shall mean with respect to each Wet Loan, the date that is [__] Business Days following the related Purchase Date for such Wet Loan.

SECTION 2. No Commitment . The Agreement does not constitute a commitment by Buyer to enter into Transactions under the Agreement.

SECTION 3. Termination by Seller . Notwithstanding anything to the contrary set forth herein or in the Agreement, upon the receipt of any notice from Buyer pursuant to Section 6 or 7 of the Agreement, and provide that no Default or Event of Default shall have occurred and be continuing, Seller may terminate the Agreement upon thirty (30) days’ prior written notice to Buyer (such date of termination, the “ Termination Date ”); provided , such termination shall not be effective until Seller has paid any and all amounts set forth in such

notice from Buyer pursuant to Section 6 or Section 7 of the Agreement, and any amounts otherwise due and payable under any other provision of the Program Documents, including all amounts due and payable on the Termination Date.

SECTION 4. Financial Condition Covenants . Without limiting any provision set forth in the Agreement, the Seller shall comply with the following covenants:

(i) Maintenance of Tangible Net Worth . The Seller shall maintain a Tangible Net Worth of not less than $30,000,000.

(ii) Maintenance of Ratio of Indebtedness to Tangible Net Worth . The Seller shall maintain the ratio of Indebtedness minus Subordinated Debt with maturities in excess of one (1) year from any date of determination to Tangible Net Worth no greater than 12:1.

(iii) Maintenance of Profitability . The Seller shall not permit, for any Test Period, Net Income for such Test Period, before income taxes and before Non-Cash Charges for such Test Period, to be less than $1.00. For purposes of the foregoing sentence, “Non-Cash Charges” shall mean changes, whether positive or negative, in the fair value of non-recourse obligations to Ginnie Mae and the Mortgage Loans held by Seller collateralizing such non-recourse obligations, and stock compensation expenses.

(iv) Maintenance of Liquidity . The Seller shall ensure that, as of the end of each calendar month, it has cash and Cash Equivalents (excluding Restricted Cash or cash pledged to any Person), in an amount not less than $7,500,000.

(v) Guarantees . Without the written approval of Buyer, Seller shall not create, incur, assume or suffer to exist any Guarantees, except to the extent reflected in Seller’s Financial Statements or notes thereto or any Guarantee made in connection with that certain First Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management Corp. and the lenders specified therein, and that certain Second Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management Corp. and the lender specified therein, and any extension, renewal or refinancing thereof.

(vi) Maintenance of Compare Ratio . Seller’s Compare Ratio with respect to its DE Compare Report and Institution Compare Report shall not exceed 175%.

(vii) Additional Warehouse Lines . The aggregate availability (whether drawn or undrawn) under Seller’s warehouse, repurchase or other mortgage financing facilities, early purchase programs or as soon as pooled plus programs (including, without limitation, this Agreement), combined, shall not be less than an amount equal to the product of (x) two (2) multiplied by (y) the Maximum Aggregate Purchase Price.

SECTION 5. Parties; Jurisdictions .

Seller:

“Jurisdiction of Organization of Seller” shall mean Delaware.

“Type of Organization of Seller” shall mean corporation.

“Organizational Identification Number of Seller” shall mean 4304886.

“UCC Filing Jurisdictions of Seller” shall mean Delaware.

SECTION 6. Exhibits and Schedules . All exhibits and schedules are incorporated into this Pricing Letter and the Agreement, as applicable.

SECTION 7. Fees . In addition to the fees contemplated by the Agreement, Seller shall pay the Warehouse Fees as and when required hereunder.

SECTION 8. Severability . Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 9. GOVERNING LAW . THIS PRICING LETTER AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS PRICING LETTER, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF ELECTRONIC CONTRACTS, OTHER RECORDS, ELECTRONIC RECORDS AND ELECTRONIC SIGNATURES USED IN CONNECTION WITH ANY ELECTRONIC TRANSACTION BETWEEN BUYER AND SELLER SHALL BE GOVERNED BY E-SIGN.

SECTION 10. Counterparts . This Pricing Letter may be executed in one or more counterparts and by different parties hereto on separate counterparts, each of which, when so executed, shall constitute one and the same agreement.

SECTION 11. Amended and Restated . This Pricing Letter amends and restates the Original Pricing Letter in its entirety.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Seller and the Buyer have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.


UBS REAL ESTATE SECURITIES INC., as Buyer

By:
		Name:
		Title:

By:
		Name:
		Title:

REVERSE MORTGAGE SOLUTIONS, INC., as Seller

By:
		Name:
		Title:

Signature Page to Pricing Side Letter

SCHEDULE 1


Approved Mortgage Product	Concentration Limit (based upon Maximum Aggregate Purchase Price unless otherwise noted)	Pricing Spread	Asset Value (each percentage, the Purchase Price Percentage)	Aging Limit (Days from initial Purchase Date unless otherwise noted)
Conforming Mortgage Loan	[__]%	[__]%	[__].	[__].
High Balance Conforming Mortgage Loan	[__]%	[__]%	[__].	[__].
Jumbo Mortgage Loan	[__]%	[__]%	[__].	[__].
Wet Loan	[__]%	[___]	[__].	[__].
HECM Loan	[__]%	[__]%	[__].	[__].
Other Agency Mortgage Loan	[__]%	[__]%	[__].	[__].
Agency Security	[__]%	[__]%	[__].	[__].
Specified Mortgage Loan	[__]%	[__]	[__].	[__].
Mortgage Loan Released on Trust Receipt	No more than [__] Mortgage Loans at any time	[__]	[__].	[__].

Sch. 1-1

SCHEDULE 2

WAREHOUSE FEES

Exception Fee . For each Purchased Asset which exceeds the Concentration Limit for the related Approved Mortgage Product or which exceeds the Aging Limit, Seller shall pay to Buyer in immediately available funds a non-refundable Exception Fee equal to [__] percent ([__]%) per annum of the Purchase Price that accrues per day due and owing upon such Purchased Asset first exceeding the Concentration Limit for the related Approved Mortgage Product or first exceeding the Aging Limit and payable in arrears no later than the 10th day (and if such day is not a Business Day, the following Business Day) following the end of each calendar month. The selection of the specific Purchased Assets that exceed the Concentration Limit for an Approved Mortgage Product shall be performed by Buyer in its sole discretion. The payment of the Exception Fee shall not limit Buyer’s right to reduce the Market Value with respect to any Purchased Asset in accordance with the definition of Market Value.

Asset Handling Fee . For each Purchased Mortgage Loan $[__].

Purchase and Repurchase Wire Fee . $[__] for each outgoing/incoming wire.

Asset Handling Fees and Purchase and Repurchase Wire Fees will be deducted from investor remittances prior to the release of proceeds to Seller. All other fees not otherwise listed herein will be due within 15 days of Buyer’s notification and invoice submission to Seller.

Sch. 2-1

EXHIBIT A

COMPLIANCE CERTIFICATE

I, , do hereby certify that I am the duly elected, qualified and authorized [CFO/TREASURER/FINANCIAL OFFICER] of Reverse Mortgage Solutions, Inc. (“ Seller ”). This Certificate is delivered to you in connection with Section 12(d)(iv) of the Amended and Restated Master Repurchase Agreement dated as of November 1, 2012, between the Seller, as seller, and UBS Real Estate Securities Inc., as buyer (as amended from time to time, the “ Agreement ”), as the same may have been amended from time to time. Capitalized terms shall have the meaning set forth in the Agreement. I hereby certify that, as of the date of the financial statements attached hereto and as of the date hereof, the Seller is and has been in compliance with all the terms of the Agreement and, without limiting the generality of the foregoing, I certify that:

Maintenance of Tangible Net Worth . The Seller has maintained a Tangible Net Worth of not less than $30,000,000.

Maintenance of Ratio of Indebtedness to Tangible Net Worth . The Seller has maintained the ratio of Indebtedness minus Subordinated Debt with maturities in excess of one (1) year from any date of determination to Tangible Net Worth no greater than 12:1.

Maintenance of Profitability . The Seller has not permitted, for any Test Period, Net Income for such Test Period, before income taxes and before Non-Cash Charges for such Test Period, to be less than $1.00. For purposes of the foregoing sentence, “Non-Cash Charges” shall mean changes, whether positive or negative, in the fair value of non-recourse obligations to Ginnie Mae and the Mortgage Loans held by Seller collateralizing such non-recourse obligations, and stock compensation expenses.

Maintenance of Liquidity . The Seller has ensured that, as of the end of each calendar month, it has cash and Cash Equivalents (excluding Restricted Cash or cash pledged to any Person), in an amount not less than $7,500,000.

Maintenance of Compare Ratio . The Seller’s Compare Ratio with respect to its DE Compare Report and Institution Compare Report has not exceeded 175%.

Guarantees . The Seller has not created, incurred, assumed or suffered to exist any Guarantees, except to the extent reflected in the Seller’s Financial Statements or notes thereto or any Guarantee made in connection with that certain First Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management Corp. and the lenders specified therein, and that certain Second Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management Corp. and the lender specified therein, and any extension, renewal or refinancing thereof.

Exh. A-1

Scheduled Indebtedness . All Indebtedness (other than Indebtedness evidenced by the Agreement) of Seller existing on the date hereof is listed on Schedule 2 hereto.

Additional Warehouse Lines . The aggregate availability (whether drawn or undrawn) under Seller’s warehouse, repurchase or other mortgage financing facilities, early purchase programs or as soon as pooled plus programs (including, without limitation, this Agreement), combined, is not less than an amount equal to the product of (x) two (2) multiplied by (y) the Maximum Aggregate Purchase Price.

Financial Statements . The financial statements attached hereto as Schedule 3 fairly present in all material respects the financial condition and results of operations of Seller and its consolidated Subsidiaries and the financial condition and results of operations of Seller, in accordance with GAAP, consistently applied, as at the end of, and for, the calendar month ending on [DATE] (subject to normal year-end adjustments).

Documentation . Seller has performed the documentation procedures required by its operational guidelines with respect to endorsements and assignments, including the recordation of assignments, or has verified that such documentation procedures have been performed by a prior holder of such Mortgage Loan.

Compliance . Seller has observed or performed in all material respects all of its covenants and other agreements, and satisfied every condition, contained in the Agreement and the other Program Agreements to be observed, performed and satisfied by it. [If a covenant or other agreement or condition has not been complied with, Seller shall describe such lack of compliance and provide the date of any related waiver thereof.]

Regulatory Action . Seller is not currently under investigation or, to best of Seller’s knowledge, no investigation by any federal, state or local government agency is threatened. Seller has not been the subject of any government investigation which has resulted in the voluntary or involuntary suspension of a license, a cease and desist order, or such other action as could adversely impact Seller’s business. [If so, Seller shall describe the situation in reasonable detail and describe the action that Seller has taken or proposes to take in connection therewith.]

No Default . No Default or Event of Default has occurred or is continuing. [ If any Default or Event of Default has occurred and is continuing, Seller shall describe the same in reasonable detail and describe the action Seller has taken or proposes to take with respect thereto, and if such Default or Event of Default has been expressly waived by Buyer in writing, Seller shall describe the Default or Event of Default and provide the date of the related waiver.]

Repurchases and Early Payment Default Requests . Attached hereto as Schedule 4 is a true and correct summary of the portfolio performance including representation breaches, missing document breaches, repurchases due to fraud, early payment default requests, and Mortgage Loans subject to other warehouse

Exh. A-2

lines in excess of 60 days summarized on the basis of (a) pending repurchase demands (including weighted average duration of outstanding request), (b) satisfied repurchase demands and (c) total repurchase demands.

IN WITNESS WHEREOF, I have set my hand this day of 2012.


REVERSE MORTGAGE SOLUTIONS, INC.

By:
		Name:
		Title:

Exh. A-3

SCHEDULE 1 TO

OFFICER’S COMPLIANCE CERTIFICATE

CALCULATIONS OF FINANCIAL COVENANTS

As of the month ended [DATE]

Exh. A-4

SCHEDULE 2 TO

OFFICER’S COMPLIANCE CERTIFICATE

SCHEDULED INDEBTEDNESS

Exh. A-5

SCHEDULE 3 TO

OFFICER’S COMPLIANCE CERTIFICATE

FINANCIAL STATEMENTS

Exh. A-6

SCHEDULE 4 TO

OFFICER’S COMPLIANCE CERTIFICATE

REPURCHASE REQUESTS


	Breach of Representation & Warranty	Missing Collateral Documents	Events of Default	Breach of Fraud Representation	Mortgage Loans subject to other warehouse lines in excess of 60 days
Pending Repurchase Claims
Satisfied Repurchase Claims
TOTAL

Exh. A-7

EXHIBIT B

FORM OF PRICING SUPPLEMENT

Pricing Supplement dated as of [ ], 2012 (this “ Pricing Supplement ”), between Reverse Mortgage Solutions, Inc. (the “Seller”) and UBS Real Estate Securities Inc. (the “Buyer”).

RECITALS

The Buyer and the Seller Parties are parties to that certain Amended and Restated Master Repurchase Agreement, dated as of November 1, 2012 (as may be amended from time to time, the “ Repurchase Agreement ”) and that certain Amended and Restated Pricing Letter, dated as of November 1, 2012 (the “ Existing Pricing Letter ;” as subsequently amended by this Pricing Supplement, as may be amended and restated from time to time, the “ Pricing Letter ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Repurchase Agreement and the Existing Pricing Letter, as applicable.

The Buyer in its sole discretion has agreed to enter into this Pricing Supplement and the Seller has agreed, subject to the terms and conditions of this Pricing Supplement, that the Repurchase Agreement and the Existing Pricing Letter be supplemented and amended to reflect the addition of [kind of mortgage loan] as an Approved Mortgage Product subject to the terms and conditions of this Pricing Supplement.

Accordingly, the Buyer and the Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Repurchase Agreement and Existing Pricing Letter are hereby supplemented and amended as follows:

SECTION 1. Approved Mortgage Product . From and after the date hereof, [insert type of Mortgage Loans] shall be an “Approved Mortgage Product” subject to the terms hereof. “[ Product Name] ” shall mean [INSERT DEFINITION OF NEW APPROVED ELIGIBLE PRODUCT].

Schedule 1 Financial Terms. From and after the date hereof, [Product Name] shall be subject to the following Concentration Limit, Pricing Spread, Asset Value and Aging Limit:

Approved Mortgage

Product

Concentration
Limit (based
upon Maximum
Aggregate
Purchase Price
unless otherwise
noted)

Pricing Spread

Asset Value
(each
percentage, the
Purchase Price
Percentage)

Aging Limit
(Days from
initial Purchase
Date unless
otherwise
noted)

[___]%

[__].

Exh. B-1

SECTION 2. Representations and Warranties . From and after the date hereof, all references to the representations and warranties set forth on Schedule 1 with respect to [Product Name] (but only [Product Name] and no other Approved Mortgage Products shall be deemed modified as follows:

[Insert any changes to the applicable mortgage loans]

SECTION 3. Definitions . From and after the date hereof, all references to the following definitions set forth in the Repurchase Agreement with respect to [Product Name] (but only as to [Product Name] and no other Mortgage Loans) shall be deemed modified as follows:

[Insert any changes for the applicable mortgage loans]

SECTION 4. Conditions Precedent . This Pricing Supplement shall become effective on the date hereof (the “Supplement Effective Date”), subject to the satisfaction of the following conditions precedent:

(a) Delivered Documents . On the Supplement Effective Date, the Buyer shall have received the following documents, each of which shall be satisfactory to the Buyer in form and substance:

(i) this Pricing Supplement, executed and delivered by duly authorized officers, as applicable, of the Buyer and the Seller; and

(ii) such other documents as the Buyer or counsel to the Buyer may reasonably request.

(b) [Insert any required fee or other condition precedent]

SECTION 5. Ratification of Agreement . As amended by this Pricing Supplement, the Repurchase Agreement and the Existing Pricing Letter is in all respects ratified and confirmed and the Repurchase Agreement and the Existing Pricing Letter as so modified by this Pricing Supplement shall be read, taken, and construed as one and the same instrument.

SECTION 6. Representations and Warranties . Seller hereby represents and warrants to the Buyer that it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, and that no Default or Event of Default has occurred or is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 11 of the Repurchase Agreement. Seller hereby represents and warrants that this Pricing Supplement has been duly and validly executed and delivered by it, and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 7. Limited Effect . Except as expressly amended and modified by this Pricing Supplement, the Pricing Letter shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 8. Severability Clause . In case any provision in this Pricing Supplement shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Exh. B-2

SECTION 9. Counterparts . This Pricing Supplement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Pricing Supplement by signing any such counterpart. The parties agree that this Pricing Supplement, any documents to be delivered pursuant to this Pricing Supplement and any notices hereunder may be transmitted between them by email and/or by facsimile. Delivery of an executed counterpart of a signature page of this Agreement in Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Agreement. The original documents shall be promptly delivered, if requested.

SECTION 10. GOVERNING LAW . THIS PRICING SUPPLEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS PRICING SUPPLEMENT, THE RELATIONSHIP OF THE PARTIES TO THIS PRICING SUPPLEMENT, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES TO THIS PRICING SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS PRICING SUPPLEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF ELECTRONIC CONTRACTS, OTHER RECORDS, ELECTRONIC RECORDS AND ELECTRONIC SIGNATURES USED IN CONNECTION WITH ANY ELECTRONIC TRANSACTION BETWEEN BUYER AND SELLER SHALL BE GOVERNED BY E-SIGN.

SECTION 11. Binding Effect . This Pricing Supplement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION 12. Amendments . This Pricing Supplement and each other Program Document may be amended from time to time, with the consent and assent of Seller; provided , however , that the Customer Guide may be amended from time to time without the consent of Seller; provided , further , that such amended revisions of the Customer Guide shall not apply to Seller absent its consent, and such amendments shall be effective immediately upon consent of Seller to the change, and Mortgage Loans sold to Buyer after the effective date shall be governed by the revised Pricing Supplement.

Exh. B-3

IN WITNESS WHEREOF, the Seller and the Buyer have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.


UBS REAL ESTATE SECURITIES INC., as Buyer

By:
		Name:
		Title:

By:
		Name:
		Title:

REVERSE MORTGAGE SOLUTIONS, INC., as Seller

By:
		Name:
		Title:

Exh. B-4

Exhibit 10.52.3

AMENDMENT NO. 1

TO PRICING LETTER

Amendment No. 1 dated as of December 12, 2012 (the “ Amendment ”), among UBS Real Estate Securities Inc. (the “ Buyer ”) and Reverse Mortgage Solutions, Inc. (the “ Seller ”).

RECITALS

The Buyer and Seller are parties to that certain Master Repurchase Agreement, dated as of November 1, 2012 (as may be amended from time to time, the “ Repurchase Agreement ”) and that certain Pricing Letter, dated as of November 1, 2012 (the “ Existing Pricing Letter ”, as subsequently amended by this Amendment, and as may be further amended from time to time, the “ Pricing Letter ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Repurchase Agreement and the Existing Pricing Letter, as applicable.

The Buyer and Seller have agreed, subject to the terms and conditions of this Amendment, that the Existing Pricing Letter be amended to reflect certain agreed upon revisions to the terms of the Existing Pricing Letter.

Accordingly, the Buyer and Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Pricing Letter is hereby amended as follows:

SECTION 1. Definition Amendments . For the period of time starting on the Amendment Effective Date, as herein defined, and ending on February 12, 2013, Section 1 of the Existing Pricing Letter is hereby amended by deleting the definitions of “ Maximum Aggregate Purchase Price ” and “ Minimum Balance Requirement ” in their entirety and replacing them with the following:

“ Maximum Aggregate Purchase Price ” shall mean $75,000,000.

“ Minimum Balance Requirement ” shall mean $[__].

SECTION 2. Conditions Precedent . This Amendment shall become effective on the date hereof (the “ Amendment Effective Date ”), subject to the Buyer having received the following documents, each of which shall be satisfactory to the Buyer in form and substance:

(a) this Amendment, executed and delivered by duly authorized officers, as applicable, of the Buyer and Seller; and

(b) such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 3. Ratification of Agreement . As amended by this Amendment, the Existing Pricing Letter is in all respects ratified and confirmed and the Existing Pricing Letter as so modified by this Amendment shall be read, taken, and construed as one and the same instrument.

SECTION 4. Representations and Warranties . Seller hereby represents and warrants to Buyer that it is in compliance with all the terms and provisions set forth in the Existing Pricing Letter and Repurchase Agreement on its part to be observed or performed, and that no Default or Event of Default has occurred or is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 11 of the Repurchase Agreement.

SECTION 2. SECTION 5. Limited Effect . Except as expressly amended and modified by this Amendment, the Existing Pricing Letter shall continue to be, and shall remain, in full force and effect in accordance with its terms. This Amendment embodies the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written negotiations, agreements and understandings of the parties with respect to the subject matter hereof.

SECTION 6. Counterparts . This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. The parties agree that this Amendment, any documents to be delivered pursuant to this Amendment and any notices hereunder may be transmitted between them by email and/or by facsimile. Delivery of an executed counterpart of a signature page of this Agreement in Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Agreement. The original documents shall be promptly delivered, if requested.

SECTION 7. GOVERNING LAW . THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AMENDMENT, THE RELATIONSHIP OF THE PARTIES TO THIS AMENDMENT, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES TO THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AMENDMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE EFFECTIVENESS, VALIDITY AND ENFORCEABILITY OF ELECTRONIC CONTRACTS, OTHER RECORDS, ELECTRONIC RECORDS AND ELECTRONIC SIGNATURES USED IN CONNECTION WITH ANY ELECTRONIC TRANSACTION BETWEEN BUYER AND SELLER SHALL BE GOVERNED BY E-SIGN.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Seller and the Buyer have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.


UBS Real Estate Securities Inc., as Buyer

By:
		Name: Title:

By:

Name:

Title:


Reverse Mortgage Solutions, Inc., as Seller

By:
		Name: Title:

[Signature page to Amendment No. 1 to Pricing Letter]

Exhibit 10.52.4

AMENDMENT NO. 2

TO PRICING LETTER

Amendment No. 2 dated as of February 11, 2013 (the “ Amendment ”), among UBS Real Estate Securities Inc. (the “ Buyer ”) and Reverse Mortgage Solutions, Inc. (the “ Seller ”).

RECITALS

The Buyer and Seller are parties to that certain Master Repurchase Agreement, dated as of November 1, 2012 (as may be amended from time to time, the “ Repurchase Agreement ”) and that certain Pricing Letter, dated as of November 1, 2012 as amended by Amendment No. 1 dated as of December 11, 2012 (the “ Existing Pricing Letter ”, as subsequently amended by this Amendment, and as may be further amended from time to time, the “ Pricing Letter ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Repurchase Agreement and the Existing Pricing Letter, as applicable.

Accordingly, the Buyer and Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Pricing Letter is hereby amended as follows:

SECTION 1. Definition Amendments . For the period of time starting on the Amendment Effective Date, as herein defined, and ending on February 19, 2013, Section 1 of the Existing Pricing Letter is hereby amended by deleting the definitions of “ Maximum Aggregate Purchase Price ” and “ Minimum Balance Requirement ” in their entirety and replacing them with the following:

“ Maximum Aggregate Purchase Price ” shall mean $75,000,000.

“ Minimum Balance Requirement ” shall mean $[__].

(a) this Amendment, executed and delivered by duly authorized officers, as applicable, of the Buyer and Seller; and

(b) such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 4. SECTION 5. Limited Effect . Except as expressly amended and modified by this Amendment, the Existing Pricing Letter shall continue to be, and shall remain, in full force and effect in accordance with its terms. This Amendment embodies the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written negotiations, agreements and understandings of the parties with respect to the subject matter hereof.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Seller and the Buyer have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.


UBS Real Estate Securities Inc., as Buyer

By:
		Name: Title:

By:

Name:

Title:


Reverse Mortgage Solutions, Inc., as Seller

By:
		Name: Title:

[Signature page to Amendment No. 2 to Pricing Letter]

Exhibit 10.52.5

EXECUTION VERSION

AMENDMENT NO. 3 TO AMENDED AND RESTATED PRICING LETTER

AND

AMENDMENT NO. 1 TO AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

Amendment No. 3 to Amended and Restated Pricing Letter (the “ Pricing Letter Amendment ”) and Amendment No. 1 to Amended and Restated Master Repurchase Agreement (the “ Repurchase Agreement Amendment ”, and together with the Pricing Letter Amendment, this “ Amendment ”) dated as of February 19, 2013, among UBS REAL ESTATE SECURITIES INC. (the “ Buyer ”) and REVERSE MORTGAGE SOLUTIONS, INC. (the “ Seller ”).

RECITALS

The Buyer and the Seller are parties to that certain Amended and Restated Master Repurchase Agreement, dated as of November 1, 2012, (as amended by this Amendment and from time to time, the “ Repurchase Agreement ”) and the related Amended and Restated Pricing Letter, dated as of November 1, 2012, as amended by that certain Amendment No. 1 to Pricing Letter, dated as of December 11, 2012 and as amended by that certain Amendment No. 2 to Pricing Letter, dated as of February 11, 2013 (as the same may be further amended by this Amendment and from time to time, the “ Pricing Letter ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Repurchase Agreement or in the Pricing Letter, as applicable.

The Buyer and the Seller have agreed, subject to the terms and conditions of this Amendment, that the Repurchase Agreement be amended to reflect certain agreed upon revisions to the terms of the Repurchase Agreement.

The Buyer and the Seller have agreed, subject to the terms and conditions of this Amendment, that the Pricing Letter be amended to reflect certain agreed upon revisions to the terms of the Pricing Letter.

Accordingly, the Buyer and the Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Repurchase Agreement and the Pricing Letter are hereby amended as follows:

SECTION 1. Amendment to Repurchase Agreement . Effective as of the Amendment Effective Date, the Repurchase Agreement is hereby amended as follows:

1.1 Section 2 of the Repurchase Agreement is hereby amended by inserting the following definitions in the appropriate alphabetical order:

““ Guarantor ” shall mean Walter Investment Management Corp., or any successor in interest thereto.”

““ Program Documents ” shall mean this Agreement, the Pricing Letter, the Customer Guide, the Program Guaranty, the Custodial Agreement, the Electronic Tracking Agreement, the Application, a Servicer Notice, if any, and the Power of Attorney.”

““ Program Guaranty ” shall mean that certain guaranty made by the Guarantor in favor of Buyer, as amended from time to time.”

““ Syndicated Credit Agreement ” shall mean that certain credit agreement dated as of November 28, 2012 among Walter Investment Management Corp., Credit Suisse AG and the lenders party thereto, as the same may be amended, supplemented or otherwise modified from time to time.

1.2 Section 12 of the Repurchase Agreement is hereby amended by deleting Section 12(d)(v) in its entirety and replacing it as follows:

“Within forty-five (45) days after the end of the first three (3) calendar quarters of each calendar year and within ninety (90) days after the end of each calendar year, the 10-Q quarterly report or 10-K annual report, as applicable, of Walter Investment Management Corp. that has been filed on EDGAR which indicates compliance with each financial covenant made by Walter Investment Management Corp. in the Syndicated Credit Agreement.”

1.3 Section 12 of the Repurchase Agreement is hereby amended by deleting Section 12(q) in its entirety and replacing it as follows:

“Seller shall not create, incur, assume or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on any of the Repurchase Assets, whether real, personal or mixed, now or hereafter owned, other than the Liens created in connection with the transactions contemplated by this Agreement; nor shall Seller cause any of the Purchased Assets to be sold, pledged, assigned or transferred except as permitted hereunder.”

1.4 Section 12 of the Repurchase Agreement is hereby amended by deleting Section 12(dd) and replacing it as follows:

“(dd) Notice of Change in Financial Covenants in Syndicated Credit Agreement. The Seller shall provide written notice to Buyer of any change to any financial covenant contained in the Syndicated Credit Agreement within five (5) Business Days of such change.

1.5 Section 13 of the Repurchase Agreement is hereby amended by deleting Section 13(g) in its entirety and replacing it as follows:

“(g) Any “event of default” or any other default which permits a demand for, or requires, the early repayment of obligations (i) due by Seller or its Subsidiaries with any note, indenture, loan agreement, guaranty, swap agreement, Hedge Agreement or other Indebtedness in excess of $500,000 of Seller or any of its Subsidiaries or (ii) due by Walter Investment Management Corp. under the Syndicated Credit Agreement; or”

1.6 Section 13 of the Repurchase Agreement is hereby amended by deleting Section 13(p) in its entirety and replacing it as follows and adding the following Section 13(q) after such replaced Section 13(p):

“(p) Governmental Action. Seller shall become the subject of a cease and desist order of the Appropriate Federal Banking Agency or any other governmental Authority or enter into a memorandum of understanding or consent agreement with the Appropriate Federal Banking Agency or other Governmental Authority, any of which, would have, or is purportedly the result of any condition which would be reasonably likely to have, a Material Adverse Effect; or

(q) Additional Covenant Defaults. Guarantor shall fail to observe or perform any representation, warranty, covenant or agreement contained in the Program Guaranty.”

1.7 Schedule 3 of the Repurchase Agreement is hereby amended by deleting Number 3 in its entirety and replacing it as follows:

“3. That certain credit agreement dated as of November 28, 2012 among Walter Investment Management Corp., Credit Suisse AG and the lenders party thereto, as the same may be amended, supplemented or otherwise modified from time to time.

SECTION 2. Amendment to the Pricing Letter . Effective as of the Amendment Effective Date (unless otherwise specified below), the Pricing Letter is hereby amended as follows:

2.1 Effective as of the Amendment Effective Date and ending on April 30, 2013, the definition of “ Maximum Aggregate Purchase Price ” in Section 1 of the Pricing Letter is deleted in its entirety and replaced as follows:

““Maximum Aggregate Purchase Price” shall mean $125,000,000.”

2.2 Effective as May 1, 2013, the definition of “ Maximum Aggregate Purchase Price ” in Section 1 of the Pricing Letter shall be deleted in its entirety and replaced as follows:

““Maximum Aggregate Purchase Price” shall mean $50,000,000.”

2.3 The definition of “ Minimum Balance Requirement ” in Section 1 of the Pricing Letter is deleted in its entirety and replaced as follows:

““Minimum Balance Requirement” shall equal an amount that is the product of [__]% multiplied by the Maximum Aggregate Purchase Price.”

2.4 Section 1 of the Pricing Letter is hereby amended by adding the following definition in the appropriate alphabetical order:

“Advance Rate Trigger” shall mean the failure of the Guarantor to maintain (ii) an Interest Expense Coverage Ratio (as such term is defined in the Syndicated Credit Agreement) of not less than 5 basis points higher than the applicable ratio provided as of November 28, 2012 in the table in Section 6.08 of the Syndicated Credit Agreement or (ii) a Total Leverage Ratio (as such term is defined in the Syndicated Credit Agreement) of not greater than 5 basis points lower than the applicable ratio provided as of November 28, 2012 in the table in Section 6.09 of the Syndicated Credit Agreement; provided , that if any required Interest Expense Coverage Ratio or Total Leverage Ratio is amended to be less restrictive, such amended required Interest Expense Coverage Ratio or Total Leverage Ratio, as applicable, shall be in effect with respect to this definition of “Advance Rate Trigger” only upon the written consent of Buyer; and provided , further , that if any required Interest Expense Coverage Ratio or Total Leverage Ratio is amended to be more restrictive, such amended required Interest Expense Coverage Ratio or Total Leverage Ratio, as applicable, shall be in effect with respect to this definition of “Advance Rate Trigger” without further action on the part of Buyer.”

2.5 Schedule 1 of the Pricing Letter is deleted in its entirety and replaced with Schedule 1 attached hereto.

SECTION 3. Conditions Precedent . This Amendment shall become effective as of the date hereof (the “ Amendment Effective Date ”) subject to the satisfaction of the following conditions precedent:

3.1 Delivered Documents . On the Amendment Effective Date, the Buyer shall have received the following documents, each of which shall be satisfactory to the Buyer in form and substance:

(a) this Amendment, executed and delivered by duly authorized officers of the Buyer and the Seller; and

(b) such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 4. Limited Effect . Except as expressly amended and modified by this Amendment, each of the Repurchase Agreement and the Pricing Letter shall continue to be, and shall remain, in full force and effect in accordance with its terms and the execution of this Amendment by the Buyer. This Amendment embodies the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written negotiations, agreements and understandings of the parties with respect to the subject matter hereof.

SECTION 5. Severability . Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 6. Counterparts . This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.


UBS REAL ESTATE SECURITIES INC., as Buyer

By:
Name:
Title:

By:
Name:
Title:

REVERSE MORTGAGE SOLUTIONS, INC., as Seller

By:
Name:
Title:

[Signature Page to Amendment No. 3 to A&R Pricing Letter and Amendment No. 1 to A&R Master Repurchase Agreement]

SCHEDULE 1


Approved Mortgage Product	Concentration Limit (based upon Maximum Aggregate Purchase Price unless otherwise noted)	Pricing Spread	Asset Value (each percentage, the Purchase Price Percentage)	Aging Limit (Days from initial Purchase Date unless otherwise noted)
Conforming Mortgage Loan	[__]%	[__]%	[__].	[__].
High Balance Conforming Mortgage Loan	[__]%	[__]%	[__].	[__].
Jumbo Mortgage Loan	[__]%	[__]%	[__].	[__].
Wet Loan	[__]%	[__].	[__].	[__].
HECM Loan	[__]%	[__]%	[__].	[__].
Other Agency Mortgage Loan	[__]%	[__]%	[__].	[__].
Agency Security	[__]%	[__]%	[__].	[__].
Specified Mortgage Loan	[__]%	[__]%	[__].	[__].
Mortgage Loan Released on Trust Receipt	[__]	[__].	[__].	[__].

Exh. S-1

Exhibit 10.52.6

UBS REAL ESTATE SECURITIES INC.

677 Washington Boulevard

Stamford, CT 06901

March 14, 2013

Reverse Mortgage Solutions, Inc.

2727 Spring Creek Drive

Spring, Texas 77373

Attention: Michael Kent

Ladies and Gentlemen:

Reference is hereby made to (i) the Amended and Restated Master Repurchase Agreement, dated as of November 1, 2012 (as may be amended, restated, supplemented and or otherwise modified from time to time, the “ Agreement ”), between UBS Real Estate Securities Inc. (“ Buyer ”) and Reverse Mortgage Solutions, Inc. (“ Seller ”); (ii) the Amended and Restated Pricing Letter, dated as of November 1, 2012 (as may be amended, restated, supplemented and or otherwise modified from time to time, the “ Pricing Letter ”), between Buyer and Seller; and (iii) that certain Guaranty, dated as of February 19, 2013, made by Walter Investment Management Corp. (“ Guarantor ”) in favor of Buyer (as may be amended, restated, supplemented and or otherwise modified from time to time, the “ Guaranty ”). Unless otherwise defined in this letter waiver (this “ Letter Waiver ”), capitalized terms used herein shall have the meanings assigned to them in the Agreement.

1. Pursuant to the terms of this Letter Waiver, the Seller hereby requests that the Buyer waive, from and after November 1, 2012 until and including March 8, 2013, compliance by the Seller with (i) Section 4(i) of the Pricing Letter (Maintenance of Tangible Net Worth); (ii) Section 4(ii) of the Pricing Letter (Maintenance of Ratio of Indebtedness to Tangible Net Worth) and (iii) from and after November 1, 2012 until and including March 8, 2013, compliance by the Seller with Section 4(iii) of the Pricing Letter (Maintenance of Profitability). The foregoing covenants are referred to herein as the “Financial Covenants”.

2. Except with respect to representations, warranties and covenants relating to compliance with the Financial Covenants, Seller hereby reaffirms all other representations, warranties and covenants made by it in the Agreement and the other Program Documents and agrees that all such representations, warranties and covenants shall be deemed to have been remade as of the Effective Date (as defined below) and represents that as of November 1, 2012, and the Effective Date, no Events of Default have occurred and are continuing.

3. In reliance upon the representations, warranties and covenants of Seller contained herein, in the Agreement and in any documents or instruments executed in connection herewith and therewith, Buyer hereby waives compliance with the Financial Covenants as set forth in Paragraph 1 above.

4. Buyer has not waived, is not by this Letter Waiver waiving, and has no intention of waiving, any Event of Default under the Agreement. Buyer reserves its rights, in its sole discretion, to exercise any or all of its rights and remedies under the Agreement as a result of any Event of Default which may occur after the date hereof, and Buyer has not waived any of such rights or remedies, and nothing in this Letter Waiver, and no delay on their part in exercising any such rights or remedies, should, or shall, be construed as a waiver of any such rights or remedies. For the avoidance of doubt, Buyer is not waiving compliance with the Financial Covenants after the date set forth in Section 1.

5. Seller hereby consents to and joins in this Letter Waiver and hereby declares and agrees that its obligations under the Program Documents are and shall continue in full force and effect for the benefit of Buyer and there are no offsets, claims or defenses of Seller with respect to any Program Document and its obligations thereunder are hereby ratified and confirmed in all respects. The Seller and the Guarantor hereby acknowledge and agree that: (i) Buyer and each of its respective affiliates, employees, officers, agents, contractors and attorneys (collectively, the “ Released Parties ”) have acted in good faith in negotiating and entering into this Letter Waiver, the Guaranty and the Agreement and that the provisions hereof and thereof are not in breach or violation of any duty or obligation, express or implied, of Buyer, Seller or Guarantor; (ii) each of the Released Parties has fully performed all of its express and implied obligations to Seller and Guarantor in connection with the Agreement and with respect to all other contractual relationships between and/or among Buyer, Seller and Guarantor; and (iii) neither Seller nor Guarantor has any claim, demand or cause of action against any Released Party of any nature, whether in tort or in contract. In consideration for the execution of this Letter Waiver, Seller and Guarantor do hereby release and forever discharge each Released Party from any and all actions, causes of action, debts, dues, claims, demands, liabilities and obligations of every kind and nature, both at law and in equity, known or unknown, now existing, which might be asserted against such Released Party arising out of, based upon or associated with any action taken or not taken by such Released Party from the beginning of time to the date of this Letter Waiver. The Seller and the Guarantor further agree to indemnify and hold each of the Released Parties, each of their respective affiliates and their respective officers, directors, attorneys, agents and employees harmless from any loss, claim, damage, judgment, liability, or expense (including attorneys’ fees) suffered by or rendered against any of them on account of any claims arising out of or relating to the Agreement, the Guaranty or this Letter Waiver and the obligations of each of them thereunder. Each of the Seller and the Guarantor further states that it has carefully read the foregoing release and indemnity, knows the contents thereof and grants the same as its own free act or deed. This Section shall survive the termination of the Agreement and the repayment, satisfaction or discharge of all Obligations thereunder.

6. (a) The Agreement, except to the extent of the waiver specifically provided for herein, is, and shall continue to be, in full force and effect. The execution, delivery and effectiveness of this Letter Waiver shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Buyer under the Agreement or Pricing Letter.

(b) This Letter Waiver may be executed in any number of counterparts, and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Letter Waiver.

- 2 -

(c) This Letter Waiver shall become effective as of the date (the “ Effective Date ”) on which Buyer shall have received counterparts of this Letter Waiver executed by a duly authorized officer of each party hereto and Seller shall have taken such other action, including delivery of approvals, consents, opinions, documents, fees and instruments, as Buyer may reasonably request.

(d) Upon the effectiveness of this Letter Waiver, each reference in the Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import shall mean and be a reference to the Agreement as modified hereby, and each reference to the Agreement in any other Program Document or any other document, instrument or agreement, executed and/or delivered in connection with any Program Document shall mean and be a reference to the Agreement as modified hereby.

(e) This Letter Waiver shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

(f) Seller hereby agrees that in addition to any costs otherwise required to be paid pursuant to the Program Documents, Seller shall pay the reasonable legal fees and out-of-pocket expenses of legal counsel to Buyer in connection with the consummation of this Letter Waiver.

(g) Seller hereby intends, acknowledges and agrees that (i) Buyer is a financial participant as defined in section 101(22A) of the Bankruptcy Code; (ii) Buyer is a repo participant as defined in section 101(46) of the Bankruptcy Code; (iii) the Agreement is a securities contract as defined in section 741(7) of the Bankruptcy Code and a repurchase agreement as defined in section 101(47) of the Bankruptcy Code; and (iv) Buyer’s right to exercise any remedies pursuant to this Letter Waiver is (a) a contractual right to liquidate the Agreement and/or this Letter Waiver as described in section 555 and 559 of the Bankruptcy Code, (b) a contractual right (as defined in section 555 and 559 of the Bankruptcy Code) under a credit enhancement forming a part of and related to the Agreement and/or (c) a contractual right (as defined in section 555 and 559 of the Bankruptcy Code) to offset or net out a payment amount or other transfer obligation arising under or in connection with the Agreement and/or this Letter Waiver.

(h) GOVERNING LAW . THIS LETTER WAIVER AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS LETTER WAIVER, THE RELATIONSHIP OF THE PARTIES TO THIS LETTER WAIVER, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES TO THIS LETTER WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS LETTER WAIVER.

- 3 -

Please confirm your agreement to the terms and conditions set forth herein by signing and returning the enclosed copy of this letter, whereupon it shall be a binding agreement between us.


Very truly yours,

UBS REAL ESTATE SECURITIES, INC, as Buyer

By:
		Name:
		Title:


By:
		Name:
		Title:

Agreed and Accepted:

REVERSE MORTGAGE SOLUTIONS, INC., as Seller

By:

Name:

Title:

[Signature page to Letter Waiver dated March 14, 2013]

Exhibit 10.53.1

AMENDED AND RESTATED

MORTGAGE WAREHOUSE AGREEMENT

by and between

REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION,

and

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

DATED:

November 1, 2012

AGREEMENT NO.:

3369

Mortgage Warehouse Agreement

AMENDED AND RESTATED

MORTGAGE WAREHOUSE AGREEMENT

THIS AMENDED AND RESTATED MORTGAGE WAREHOUSE AGREEMENT (this “ Agreement ”) is made and entered into as of November 1, 2012 (the “ Effective Date ”) between REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION (the foregoing are each individually and collectively referred to herein as “ Seller ”) and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION.

RECITALS

A. Seller is active in the business of originating residential mortgage loans secured by one-to-four family residences and is seeking additional funding through sales of participation interests in such loans to facilitate its ability to further originate such loans in its own name.

B. Bank is, among other things, in the business of purchasing participation interests in residential mortgage loans.

C. Seller shall have no obligation to offer for sale, and Bank shall have no obligation to purchase, participation interests in such loans. However, Seller and Bank desire to set forth the terms under which such offers and purchases, if any, can be made.

D. Seller and Bank had previously entered into that certain Mortgage Warehouse Agreement, dated as of May 21, 2012 (the “ Previous Warehouse Agreement ”), governing the purchase by Bank from Seller of ownership interests in loans as more particularly described therein (any and all such ownership interests currently held by Bank as of the Effective Date are collectively referred to herein as “ Exiting Participation Interests ” and such related mortgage loans are referred to as “ Existing Mortgage Loans ”). Seller and Bank are hereby amending and restating the Previous Warehouse Agreement in its entirety with the execution of this Agreement. As of the Effective Date, Seller and Bank hereby agree that: (i) any and all Existing Participation Interests in Existing Mortgage Loans shall be subject to and governed by the provisions of this Agreement, that each Existing Participation Interest shall constitute a “Participation Interest” under this Agreement, and that each Existing Mortgage Loan shall constitute a “Mortgage Loan” under this Agreement; and (ii) the Previous Warehouse Agreement shall be of no further force or effect.

AGREEMENT

NOW, THEREFORE, for and in consideration of the covenants, representations, warranties and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Specific Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:

“ Maximum Participation Balance ” shall mean an amount equal to Seventy-Five Million and No/100 Dollars ($75,000,000.00).

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“ Minimum Pledged Balance ” shall mean good funds in an amount not less than one and one half percent (1.50%) of the Maximum Participation Balance.

“ Participation Interest Rate ” shall mean the per annum rate of interest payable to Bank for its Participation Interest in a Mortgage Loan purchased pursuant to this Agreement, and shall be calculated as a fixed rate equal to the greater of: (a) the Mortgage Note rate minus fifty basis points (0.50%) for such Mortgage Loan or (b) the Rate Floor; provided, that the Participation Interest Rate shall not at any time be greater than the maximum rate permitted under applicable Law. Subject to applicable Law, Bank may, in its sole and absolute discretion, adjust the Participation Interest Rate to be charged for individual Mortgage Loans upon thirty (30) days advance written notice to Seller, in which case, commencing upon the thirty-first (31 ^st ) day from the date of such notice, the Participation Interest Rate for individual Mortgage Loans in which Bank purchases a Participation Interest on or after such date shall be the lesser of (a) the rate of interest set forth in such written notice or (b) the maximum rate permitted under applicable Law.

“ Participation Percentage ” shall mean, with respect to a Participation Interest in a Mortgage Loan purchased hereunder by Bank from Seller, a percentage equal to ninety-nine percent (99%) (the “ Standard Participation Percentage ”); provided, however, if Bank elects, in its sole discretion, to make an Advance for the purchase of a Participation Interest in a Mortgage Loan which is greater or less than an amount equal to the Standard Participation Percentage multiplied by the outstanding principal amount of such Mortgage Loan at the time of its closing with the Escrow Agent, the Participation Percentage in such Mortgage Loan shall be determined by dividing the amount of such Advance by such outstanding principal amount, said fraction to be expressed as a percentage. Seller agrees to accept each Participation Percentage reflected on Bank’s books and records absent manifest error conclusively established by Seller.

“ Rate Floor ” shall mean a percentage equal to four hundred basis points (4.00%). Subject to applicable Law, Bank may, in its sole and absolute discretion, adjust the Rate Floor for individual Mortgage Loans upon thirty (30) days advance written notice to Seller, in which case, commencing upon the thirty-first (31 ^st ) day from the date of such notice, the Rate Floor set forth in such written notice shall apply to all individual Mortgage Loans in which Bank purchases a Participation Interest on or after such date.

“ Target Usage Amount ” shall mean an amount equal to Seventy-Five percent (75%) of the Maximum Participation Balance.

“ Transaction Fee ” shall mean a transaction fee in an amount equal to Fifty and No/100 Dollars ($50.00) per Mortgage Loan in which Bank purchases a Participation Interest. Subject to applicable Law, Bank may, at its sole and absolute discretion, adjust the amount of the Transaction Fee upon thirty (30) days advance written notice to Seller, in which case, commencing upon the thirty-first (31 ^st ) day from the date of such notice, the Transaction Fee for Participation Interests in Mortgage Loans purchased by Bank on or after such date shall be equal to the Transaction Fee set forth in such written notice.

1.2 General Defined Terms . In addition to the terms defined in Section 1.1 , as used in this Agreement, the following terms shall have the meanings set forth below:

“ Account ” or “ Accounts ” shall mean each of the following accounts to be established and maintained pursuant to this Agreement: (a) the Participation Account, (b) the Pledged Account, (c) the Remittance Account, and (d) the Repayment Account.

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“ Advance ” shall mean each disbursement by Bank pursuant to the terms of this Agreement for the purchase of a Participation Interest. An Advance shall be deemed to be made on the earliest of the following to occur: (a) funds are wired by Bank to the Escrow Agent or other designated party regardless of whether funds are actually received by the Escrow Agent or any other designated party on the date of the initiation of such wire; or (b) funds are otherwise transferred by Bank to the Escrow Agent regardless of whether funds are actually received by the Escrow Agent on the date of such transfer. In no event will the amount of the Purchase Price or any Advance be increased pursuant to or as the result of the funding of the Pledged Account.

“ Aggregate Participation Balance ” means, at any given time, an amount equal to (a) the aggregate sum of each Advance of the Purchase Price for a Participation Interest in a Mortgage Loan which (i) Mortgage Loan is not yet fully, finally and indefeasibly sold to an Investor pursuant to the terms and conditions of this Agreement and the full amount of the proceeds of such sale allocable to Bank’s Percentage Interest have not yet been indefeasibly received by Bank or (ii) Participation Interest in the Mortgage Loan has not been fully, finally and indefeasibly repurchased by Seller pursuant to the terms and conditions of this Agreement and the full amount of the proceeds of such repurchase have not been indefeasibly received by Bank; plus (b) that portion of any and all accrued but unpaid interest in each such Mortgage Loan represented by Bank’s Participation Interest therein; plus (c) any other amounts expended by Bank in connection with each such Mortgage Loan, less (d) any amounts paid to Bank by Seller in accordance with Section 4.6 hereto.

“ Appraisal ” shall mean a valuation of Residential Real Property which secures a Mortgage Loan, meeting all Legal Requirements, and having been performed by an Approved Appraiser.

“ Approved Appraiser ” shall mean an appraiser who is duly licensed under and otherwise meets all applicable Legal Requirements and is acceptable to Bank in its sole and absolute discretion.

“ Bank ” means TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, and its successors and assigns.

“ Bank Document Deliverables ” means any and all agreements, instruments and documents (including all Closing Deliverables) required by Bank to be delivered to it hereunder.

“ Bank Payment Deliverables ” means any and all checks, commercial paper, notes, cash or other forms of payment of any and all sums (a) to be paid to Bank under this Agreement but which have been received by Seller (including any proceeds received by Seller with respect to a Mortgage Loan sold to an Investor) or (b) received by Seller during the occurrence of an Event of Default which sums relate to any Mortgage Note in which Bank purchased a Participation Interest.

“ Bankruptcy Code ” means Title 11 of the United States Code, as now or hereafter in effect.

“ Bailee Letter ” shall mean (a) a Master Bailee Agreement in the form of Exhibit A-1 or such other form required by Bank, executed and delivered by the applicable Investor to Bank, or (b) a Bailee Letter, in the form of Exhibit A-2 or such other form required by Bank, executed and delivered by the applicable Investor to Bank.

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“ Borrower ” shall mean every Person who is the obligor under a Mortgage Loan.

“ Business Day ” shall mean any day other than a Saturday, Sunday or day on which commercial banks are authorized or required to be closed under the Laws of the State of Texas. Unless otherwise provided herein, the term “ day ” means a calendar day.

“ Commitment Amount ” shall mean the sum an Investor agrees to pay for a Mortgage Loan under a Firm Commitment.

“ Conventional Loan ” shall mean a Mortgage Loan excluding FHA Loans and VA Loans. As used herein, the term “Conventional Loan” may also include Non-Conforming Conventional Loans.

“ Custodian ” means the individual executing this Agreement as Custodian, in his or her individual capacity.

“ Effective Purchase/Sale Termination Date ” shall mean the earlier of (a) the Scheduled Purchase/Sale Termination Date or (b) the date on which Seller’s rights hereunder to request Bank to purchase Participation Interest shall terminate pursuant to Section 5.1(a) , Section 5.1(b) or Section 9.2 or otherwise in accordance with the express terms of this Agreement or the other Warehouse Documents.

“ Escrow Agent ” shall mean the title company or agency, approved in advance by Bank in its sole and absolute discretion, which is responsible for the final closing of a Mortgage Loan in favor of a Borrower.

“ Event of Default ” shall mean any of the events specified in Section 9.1 .

“ FHA ” shall mean the Federal Housing Administration as established under the National Housing Act or Title V of the Housing Act of 1949, as amended.

“ FHA Loan ” shall mean a loan represented by a Mortgage Note, payment of which is one hundred percent (100.0%) insured by the FHA or a loan for which there is a current, binding and enforceable commitment for insurance issued by the FHA.

“ FHLMC ” shall mean the Federal Home Loan Mortgage Corporation, a wholly owned corporate instrumentality of the United States of America created pursuant to the Emergency Home Finance Act of 1970, as amended.

“ Firm Commitment ” shall mean a current, valid, binding and enforceable commitment issued by an Investor (other than an Issuer) in favor of Seller to purchase a Mortgage Loan to an identified Borrower, which such commitment must be in form and substance satisfactory to Bank (including with respect to the amount to be paid for the purchase of the Mortgage Loan and the Investor delivery expiration date), in its sole and absolute discretion. If Seller has been approved in advance by Bank to sell to an Issuer certain Mortgage Loans in which Bank has purchased Participation Interests, then, notwithstanding anything to the contrary in this Agreement: (b) such sale shall not be subject to a Firm Commitment and (b) Seller covenants and agrees that Seller shall sell to the Issuer each such applicable Mortgage Loan (i) at a price not less than the amount of the Advance for such Mortgage Loan plus accrued interest at the Participation Interest Rate and (ii) within the timeframe required under this Agreement.

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“ Financial Statements ” shall mean the financial statement or statements of Seller described or referred to in Section 7.1 , and such financial statements of each Investor as Bank shall reasonably request, whichever is applicable in the context so used.

“ FNMA ” shall mean the Federal National Mortgage Association, a wholly owned corporate instrumentality of the United States of America.

“ Generally Accepted Accounting Principles ” or “ GAAP ” shall mean those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied for all applicable periods, except that any accounting principle or practice required to be changed by the said Accounting Principles Board or Financial Accounting Standards Board (or other appropriate board or committee of the said Boards) in order to continue as a generally accepted accounting principle or practice may be so changed.

“ GNMA ” shall mean the Government National Mortgage Association, a wholly owned corporate instrumentality of the United States of America within the Department of Housing and Urban Development, or its successor.

“ Governmental Authority ” shall mean any and all (domestic or foreign) federal, state, county, municipal, city or other government, department, commission, board, court, agency or any other instrumentality of any of them.

“ Instruments ” shall mean such documents (if any), in form and substance acceptable to Bank, as are necessary to grant or convey to Bank an undivided ownership interest in the applicable Mortgage Loan equal to its Participation Percentage therein.

“ Insurance Policy ” shall mean (a) a hazard insurance policy in an amount representing coverage at least equal to the outstanding principal balance of the applicable Mortgage Loan in form required for Mortgage Loans on Residential Real Property by FNMA, FHLMC and GNMA, and (b) if the Mortgaged Property is located in a one hundred (100) year flood zone or other areas of special flood hazard as determined by applicable Law, then a policy of flood insurance in an amount equal to the then principal balance of the applicable Mortgage Note or the maximum amount of flood insurance available.

“ Investor ” shall mean (a) any Person (other than an Issuer), approved in advance by Bank in its sole and absolute discretion, who agrees to purchase a Mortgage Loan pursuant to a Firm Commitment and/or (b) an Issuer if Seller has been approved in advance by Bank to sell to one or more Issuers Mortgage Loans in which Bank has purchased Participation Interests and such Issuer has been approved in advance by Bank.

“ Issuer ” shall mean an issuer of a mortgaged-backed security, which Issuer (if required by Bank) has been approved in advance by Bank.

“ Law ” or “ law ” shall mean any and all present and future law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, guideline, authorization or other direction or requirement of any Governmental Authority. The terms “ Law ” and “ law ” include (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. Law No. 111-203, 124 Stat. 1376 (2010), and any and all Laws issues thereunder or in connection therewith, as may be amended from time to time (collectively, the “ Dodd-Frank Act ”),

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(b) the Interagency Appraisal and Evaluation Guidelines jointly issued on December 2, 2010 by the Office of the Comptroller of Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration, as the same may be amended from time to time (collectively, the “ Interagency Appraisal Guidelines ”), and (iii) any and all similar Laws from time to time in effect.

“ Legal Requirements ” shall mean any and all Laws (including any and all Laws which relate to environmental standards or controls, energy regulations and occupational, safety and health standards or controls) of any Governmental Authority which exercises jurisdiction over Bank, Seller or any of their respective Property, or with respect to the Borrower or the sale and financing of Residential Real Property.

“ Lien ” shall mean any lien, mortgage, security interest, assignment, tax lien, pledge or encumbrance, or conditional sale or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, or any other interest in Property designed to secure the repayment of indebtedness.

“ Loan Application ” shall mean a completed application for a Mortgage Loan in its final form, signed by all applicable Borrowers and which meets all Legal Requirements.

“ Mortgage Loan ” shall mean a loan evidenced by a Mortgage Note and secured by a Security Instrument.

“ Mortgage Note ” shall mean a full recourse promissory note secured by a Security Instrument and evidencing a Mortgage Loan.

“ Mortgaged Property ” shall mean the Residential Real Property subject to a Security Instrument securing a Mortgage Loan.

“ Non-Conforming Conventional Loan ” shall mean any Mortgage Loan except for FHA Loans and VA Loans, represented by a Mortgage Note which is not eligible for sale to FNMA and FHLMC, unless otherwise approved by Bank.

“ Obligated Party ” means Seller or any other Person who is or becomes party to any agreement that guarantees or secures payment and performance of Seller’s obligations under this Agreement.

“ Participation Account ” shall mean a deposit account established and maintained by Seller at Bank for the purpose of providing the source of funds for Seller’s Funding Amounts. With respect to each Mortgage Loan in which Bank elects to purchase a Participation Interest, (a) Seller shall maintain on deposit in the Participation Account good funds in an amount not less than Seller’s Funding Amount for such Mortgage Loan and (b) subject to the terms and conditions of this Agreement, Bank shall debit Seller’s Funding Amount for the Mortgage Loan from the Participation Account and disburse such funds to the applicable Escrow Agent.

“ Participation Interest ” shall mean an undivided percentage ownership interest in a Mortgage Note and Mortgage Loan purchased by Bank from Seller, and owned by Bank, pursuant to this Agreement, which undivided percentage ownership interest of Bank in such Mortgage Note and Mortgage Loan shall equal the Participation Percentage for such Mortgage Loan.

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“ Person ” shall mean any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, or any other form of entity.

“ Pledge Agreement ” shall mean each pledge or security agreement, in such form approved by Bank, now or hereafter executed for the benefit of Bank in connection with this Agreement, including each agreement attached hereto as Exhibit C .

“ Pledged Account ” shall mean the depository account or accounts established and maintained by Seller at Bank in which Seller shall maintain on deposit at all times throughout the term of this Agreement good funds not less than the Minimum Pledged Balance and which are pledged in favor of Bank in accordance with the terms hereof and pursuant to the Pledge Agreement.

“ Property ” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“ Purchase Price ” shall mean, with respect to a Participation Interest in a Mortgage Loan to be purchased by Bank, an amount equal to the outstanding principal amount of the Mortgage Loan at the time of its closing with the Escrow Agent multiplied by the Bank’s Participation Percentage for the Participation Interest in such Mortgage Loan.

“ Qualifying Mortgage Loan ” shall mean a Mortgage Loan: (a) to be sold to an Issuer (if approved in advance by Bank) or for which Seller has received a Firm Commitment from an Investor (other than an Issuer), a copy of which Firm Commitment has been delivered to Bank in accordance with Section 2.1 and accepted by Bank and which is valid and enforceable in accordance with its terms; (b) which is evidenced by a Mortgage Note, in form and substance acceptable to Bank in its sole and absolute discretion, payable to the order of Seller, which Mortgage Note, at Bank’s discretion, either is accompanied by an allonge affixed thereto fully endorsed to Seller (if applicable) and endorsed in blank by Seller, or may be endorsed in blank by Bank pursuant to a power of attorney for and on behalf of Seller; (c) which is secured by a Security Instrument, in form and substance acceptable to Bank, in its sole and absolute discretion; (d) which is otherwise in form and substance acceptable to Bank, in its sole and absolute discretion; and (e) which conforms in all respects with all the requirements of the Firm Commitment to purchase the same (unless Seller has been approved in advance by Bank to sell to an Issuer the Qualified Mortgage Loan).

“ Remittance Account ” shall mean a depository account established and maintained by Seller at Bank into which Bank shall deposit all sums, if any, to be remitted by Bank to Seller hereunder.

“ Repayment Account ” shall mean a deposit account established, owned and controlled by Bank, into which all Investor funds to purchase Mortgage Loans shall be funded, and such account and all funds deposited or maintained therein shall constitute the sole property of Bank and disbursed and applied pursuant to this Agreement.

“ Request ” shall mean Seller’s request for the purchase of a Participation Interest in a Qualifying Mortgage Loan by Bank from Seller and the Advance of funds with respect to such purchase, which Request shall be delivered to Bank in such manner and shall contain such information as may be required by Bank from time to time.

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“ Residential Real Property ” shall mean a single platted lot of land improved with a one-to-four family residence.

“ Restricted Accounts ” shall mean the Participation Account and the Pledged Account.

“ Security Instrument ” shall mean a full recourse mortgage or deed of trust securing a Mortgage Loan and granting a perfected first priority lien on Residential Real Property.

“ Seller’s Funding Amount ” shall mean the total amount to be funded by Seller (through sources other than an Advance) in connection with the closing of a Mortgage Loan in which Bank has elected to purchase a Participation Interest. With respect to a Mortgage Loan in which Bank elects to purchase a Participation Interest, Seller’s Funding Amount shall equal the Total Funding Amount for the Mortgage Loan less the related Purchase Price.

“ Software Agreement ” shall mean an agreement, in such form approved by Bank, now or hereafter executed by Seller relating to the software or interface which Bank may require Seller to utilize as a condition to Bank’s purchase of Participation Interests hereunder, including the agreement attached hereto as Exhibit I .

“ Termination Date ” shall mean the date on which this Agreement shall terminate pursuant to Section 5.1(c) or otherwise in accordance with the express terms of this Agreement or the other Warehouse Documents.

“ Title Commitment ” shall mean with respect to a Mortgage Loan, the written commitment by or on behalf of a nationally recognized title insurance company, which is acceptable to Bank in its sole and absolute discretion, for the issuance of an original Title Policy covering the Mortgaged Property and insuring the lien of the Security Instrument relating to such Mortgage Loan.

“ Title Policy ” shall mean an ALTA Loan Policy of Title Insurance, a standard Texas form of Loan Policy of Title Insurance, or such other insurance policy which is acceptable to Bank in its sole and absolute discretion, with such standard endorsements as may be reasonably required by Bank, issued by a nationally recognized title insurance company acceptable to Bank in its sole and absolute discretion.

“ Total Funding Amount ” shall mean, with respect to a Mortgage Loan in which Bank elects to purchase a Participation Interest, the total amount to be funded by Seller and on behalf of Seller (including through an Advance) in connection with the closing of the Mortgage Loan as set forth in the related Request and settlement statement for the Mortgage Loan; provided, however, the respective portion of such amount to be funded by Bank through an Advance shall not exceed an amount equal to the Standard Participation Percentage multiplied by the outstanding principal amount of such Mortgage Loan at the time of its closing with the Escrow Agent unless Bank elects, in its sole and absolute discretion, to make an Advance in excess of such amount.

“ UCC ” shall mean the Uniform Commercial Code of the State of Texas or other applicable jurisdiction, as it may be amended from time to time.

“ VA ” shall mean the United Stated Department of Veterans Affairs.

“ VA Loan ” shall mean a loan represented by a Mortgage Note, payment of which is partially or completely guaranteed by the VA under the Servicemen’s Readjustment Act of 1944 or Chapter 37 of Title 38 of the United States Code or a loan for which there is a current binding and enforceable commitment for a guaranty issued by the VA.

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“ Warehouse Documents ” shall mean this Agreement, each Instrument, each Pledge Agreement, the Software Agreement and any and all other agreements, instruments and documents evidencing, securing or pertaining to Bank’s discretionary purchase of Participation Interests in Mortgage Loans from Seller, as shall from time to time be executed and delivered to Bank by Seller, any Obligated Party or any other Person pursuant to or in connection with this Agreement, including each addendum to this Agreement (if any) executed by Bank and Seller, any future amendments hereto, or restatements hereof, together with any and all renewals, extensions, and restatements of, and amendments and modifications to, any such agreements, documents, and instruments.

1.3 Other Defined Terms . In addition to the terms defined in Section 1.1 and Section 1.2 , as used in this Agreement, other capitalized terms contained in this Agreement shall have the meanings assigned to them.

1.4 Other Definitional Provisions .

(a) All terms defined in this Agreement shall have the above defined meanings when used in any document, certificate, report or other document, instrument, or writing made or delivered pursuant to this Agreement or the other Warehouse Documents, unless the context therein shall otherwise require.

(b) Words used herein in the singular, where the context so permits, shall be deemed to include the plural and vice versa. The definitions of words in the singular herein shall apply to such words when used in the plural where the context so permits and vice versa.

(c) The words “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” when used in this Agreement shall refer to the entire Agreement and not to any particular provision or section; and the word “including,” as used herein, shall mean “including, without limitation.”

(d) All references herein to “Articles” and “Sections” are, unless specified otherwise, references to articles and sections of this Agreement. All references herein to an “Exhibit,” “Schedule” or “Addendum” are references to exhibits, schedules or addenda attached hereto, all of which are made a part hereof for all purposes, the same as if set forth herein verbatim, it being understood that if any exhibit, schedule or addenda attached hereto, which is to be executed and delivered, contains blanks, the same shall be completed correctly and in accordance with the terms and provisions contained and as contemplated herein prior to or at the time of the execution and delivery thereof.

ARTICLE 2

PURCHASE OF PARTICIPATION INTERESTS

2.1 Request for Purchase . At any time prior to the Effective Purchase/Sale Termination Date, Seller may make a Request for a Participation Interest in one or more Qualifying Mortgage Loans to be purchased by Bank by delivering or causing to be delivered to Bank, by electronic media or in such other manner, as may be required by Bank from time to time, such information and materials as Bank may require in accordance with its standard procedures then in effect, including the following information and materials (and/or the information derived from the following materials, and Bank expressly reserves the right to require delivery of a true and correct copy of such materials) for each such Qualifying Mortgage Loan:

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(a) Total Funding Amount;

(b) Loan Application;

(d) Appraisal for the Mortgaged Property;

(e) Firm Commitment (unless Seller has been approved in advance by Bank to sell to an Issuer the Qualified Mortgage Loan);

(f) Interest rate lock confirmation (furnished by the applicable Investor);

(g) Verifications of deposit and employment;

(h) The name, address, phone and facsimile number of the Escrow Agent, and the name of a contact person with Escrow Agent, and wiring instructions for delivery of an Advance to the Escrow Agent;

(i) Seller’s executed closing instructions letter to the Escrow Agent which complies with Section 3.2(b) ;

(j) If requested by Bank, an originally executed power of attorney appointing Bank as Seller’s agent for purposes of the endorsement or execution of any documents for the transfer or assignment of the Qualifying Mortgage Loan;

(k) If requested by Bank, a Title Commitment for the Mortgaged Property; and

(l) Insured Closing Service Letter from the title insurance company which will issue the Title Policy covering the acts or omissions of the Escrow Agent in the settlement process for the Qualifying Mortgage Loan.

To assist Bank in making its decision as to purchasing a Participation Interest in any particular Qualifying Mortgage Loan, Seller will timely provide Bank or Bank’s agents with the information and/or items listed and as set forth in this Section. Each submission of a Request shall be deemed to constitute a representation and warranty by Seller on the date of such Request and on the date of the applicable Advance made pursuant to such Request that the Request relates to a Qualifying Mortgage Loan and that the information and materials submitted to Bank in connection with such Request are true, correct and complete in all respects.

2.2 Decision to Purchase . The decision to purchase a Participation Interest in any Mortgage Loan shall be made by Bank in its sole and absolute discretion. Bank shall be under no obligation to purchase any Participation Interest in any Mortgage Loan, or any amount thereof. In each instance where a Request is submitted to Bank, Bank will make an independent decision whether to purchase a Participation Interest in any Mortgage Loan contemplated by the Request. Bank may decline to purchase any Participation Interest in any Mortgage Loan for any reason or for no reason whatsoever. The election of Bank to purchase a Participation Interest in a Mortgage Loan shall be evidenced by Bank’s payment of the Purchase Price. If for any reason whatsoever Bank fails to pay the Purchase Price for a Participation Interest in a Mortgage Loan, then it shall be conclusive evidence of Bank’s election not to purchase a Participation Interest in such Mortgage Loan.

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2.3 Conditions to Each Purchase . As a condition precedent to each Advance hereunder for the purchase of a Participation Interest, in addition to all other requirements set forth herein, Seller shall deliver to Bank all of the following, each being duly executed, endorsed, notarized where applicable and delivered and in form and substance satisfactory to Bank:

(a) This Agreement and the Pledge Agreement;

(b) All financing statements required by Bank, including a UCC-1 financing statement identifying Seller, as debtor, and Bank, as secured party, which covers the collateral described on Exhibit E , and Seller hereby authorizes Bank and its representatives to execute, deliver and file of record all such financing statements;

(c) Such signature cards, depository account agreements, USA PATRIOT Act forms and information, and such other documents and instruments, as Bank may require for Seller to establish at Bank, the Pledged Account, the Participation Account and the Remittance Account or to implement the arrangements contemplated herein;

(d) Evidence satisfactory to Bank that all necessary action on the part of Seller and each other Obligated Party has been taken with respect to the execution and delivery of the Warehouse Documents and the performance of the matters contemplated thereby, so that this Agreement and all of the other Warehouse Documents shall be valid and binding upon each Person executing and delivering the same. Such evidence shall include certified organizational documents, certified resolutions, and certificates of incumbency for Seller and each other Obligated Party that is not an individual, each in form and substance acceptable to Bank;

(e) For Seller and each Obligated Party which is not an individual, a copy, certified as true, complete and correct, by an authorized officer, partner, member, manager or other representative of such entity, of the documents evidencing the formation and governance of the operations and affairs of such entity, together with all amendments thereto;

(f) For Seller and each Obligated Party which is not an individual, a certificate of existence and good standing showing that such entity is in good standing under the Laws of the state of its formation and certificates indicating that such entity has qualified to transact business and is in good standing in all other states where it transacts business;

(g) Evidence, in form and substance acceptable to Bank in its sole and absolute discretion, that Seller has received, and the same are currently in existence and good standing, any and all licenses, permits, approvals and other consents under any and all Government Requirements to permit Seller to lawfully originate, sell, service, and otherwise handle such Mortgage Loans as herein contemplated;

(h) If requested by Bank, a written certification that the representations and warranties of Seller contained in this Agreement and each other Warehouse Document (other than those representations and warranties which are, by their terms, expressly limited to the date of the agreement in which they were initially made) are true and correct in all material respects on and as of the date of the Advance;

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(i) If requested by Bank, a written certification that no Event of Default has occurred or is continuing as of the date of the Advance;

(j) One or more limited power of attorney in the form of Exhibit B executed in connection with each Advance;

(k) The information and other items required to be delivered to Bank pursuant to Section 2.1 ; and

(l) Such other documents as Bank may reasonably request at any time at or prior to the date of the first Advance hereunder or as a condition to any subsequent Advance hereunder, including any and all Pledge Agreements required by Bank to be executed in connection with the transactions contemplated by this Agreement.

Further, as a condition precedent to each Advance hereunder for the purchase of a Participation Interest, in addition to all other requirements set forth herein, Seller shall maintain on deposit in the Participation Account an amount not less than Seller’s Funding Amount for the Mortgage Loan that is the subject matter of the related Request.

Each submission of a Request shall be deemed to constitute a representation and warranty by Seller on the date of such Request and on the date of the applicable Advance made pursuant to such Request as to the facts specified in Sections 2.3 (g), (h) and (i) . It is understood and agreed that Bank shall not make any Advance for the Purchase Price of any Participation Interest unless with respect thereto Bank is in receipt of all Instruments and all other agreements and documents required to be delivered to Bank under this Agreement and all other conditions precedent and requirements set forth herein are satisfied or waived by Bank in writing.

All conditions precedent hereunder to each Advance for the purchase of a Participation Interest are imposed solely for the benefit of Bank. Bank’s election, in its sole discretion, to waive any condition precedent hereunder for an Advance shall not constitute a waiver of the satisfaction of such condition precedent for any subsequent Advance.

2.4 Funding of Mortgage Loans; Payment of Purchase Price . For each Participation Interest in a Mortgage Loan which Bank elects to purchase pursuant to the terms and conditions of this Agreement:

(a) Bank shall debit an amount equal to Seller’s Funding Amount for such Mortgage Loan from the Participation Account and wire such funds directly to the Escrow Agent’s escrow account designated in the related Request or deliver such funds in such other manner acceptable to Bank in its sole discretion. Bank shall not make an Advance unless Seller shall maintain on deposit in the Participation Account good funds in an amount not less than Seller’s Funding Amount for the Mortgage Loan; and

(b) As payment for the purchase of the Participation Interest, Bank shall make an Advance in an amount equal to the Purchase Price for the Participation Interest to the Escrow Agent’s escrow account designated in the related Request or deliver such funds in such other manner acceptable to Bank in its sole discretion.

2.5 Ownership Interest . Upon an Advance by Bank for the purchase of a Participation Interest in a Mortgage Loan: (a) Bank shall immediately become fully vested with an undivided percentage ownership interest in such Mortgage Loan, the related Mortgage Note, and any and all of the

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documents of every nature in the possession of Bank, Seller or third parties relating to such Mortgage Loan, which percentage ownership interest shall equal the Participation Percentage for such Mortgage Loan; and (b) Seller shall immediately make proper entries on its books and records disclosing the absolute sale to Bank of such Participation Interest in such Mortgage Loan and the related Mortgage Note.

2.6 Payment of Transaction Fee . Seller agrees to pay to Bank, a Transaction Fee for each Participation Interest purchased by Bank. Each Transaction Fee shall be (a) earned by Bank on the date of the purchase of a Participation Interest by Bank and (b) deducted by Bank from the proceeds received by Bank in connection with the sale to an Investor of the Mortgage Loan in which Bank purchased the Participation Interest. Notwithstanding the foregoing, Bank may, at its sole and absolute discretion, net any Transaction Fee from any sale proceeds received by Bank when a Mortgage Loan in which Bank owns a Participation Interest is sold to an Investor or other third party.

2.7 Maximum Total Purchase Commitment . Notwithstanding anything to the contrary contained herein, Bank shall never be obligated to purchase and hold, at any one time, Participation Interests such that Aggregate Participation Balance exceeds the Maximum Participation Balance. Nothing contained in this Section shall limit, impair or affect the provisions of Section 2.2 .

2.8 Overline Funding . Seller may from time to time request “ Overline Funding ” (i.e., Seller submits a Request to Bank which, if funded by Bank, would cause the Aggregate Participation Balance to exceed the Maximum Participation Balance). Bank may, in its sole and absolute discretion, elect to make Advances to purchase Participation Interests in response to one or more Requests representing an Overline Funding; provided, that: (a) any such Overline Funding (whether one Request or multiple Requests) shall not (i) exceed in the aggregate an amount predetermined and approved in writing by Bank prior to such Overline Funding, and (ii) be available to Seller after the date predetermined and approved in writing by Bank prior to such Overline Funding; and (b) (i) throughout the duration of any such Overline Funding, the amount of the Minimum Pledged Balance shall be increased by such additional amount as Bank requires, in the exercise of its sole and absolute discretion, and (ii) as a condition precedent and prior to any such Overline Funding, Seller shall deposit into the Pledged Account, and thereafter Seller shall maintain in the Pledged Account, good funds in an amount not less than the Minimum Pledged Balance as increased pursuant to clause (b)(i) of this sentence.

2.9 Client to Client Funding . If Seller delivers a Request to Bank for Bank’s purchase of a Participation Interest in a Mortgage Loan to pay off a Mortgage Loan in which Bank already holds a participation interest pursuant to a separate agreement with a different mortgage company (each a “ Client-to-Client Funding ”), then Seller: (a) shall provide any and all information Bank requests regarding or related to that Participation Interest representing the Client-to-Client Funding; and (b) acknowledges and agrees that any such Client-to-Client Funding is conditioned upon the timely satisfaction of all conditions as Bank may in its sole and absolute discretion determine to be necessary or appropriate, including the consent of the original mortgage company to the Client-to-Client Funding and Bank’s agreement to the application of the funds advanced under the Client-to-Client Funding.

ARTICLE 3

DELIVERY OF CLOSING DOCUMENTS

3.1 Items to be Delivered to Bank After an Advance . Subject to Section 3.2 and Section 3.3 , within two (2) Business Days after an Advance for the purchase of a Participation Interest in a Mortgage Loan, Seller shall provide to Bank or cause to be provided to Bank, all of the following (collectively, the “ Closing Deliverables ”) with respect to such Mortgage Loan:

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(a) To Bank, the original of the fully executed Mortgage Note, which shall be, at Bank’s election, either: (i) accompanied by an original allonge affixed thereto fully endorsed to Seller (if applicable) and endorsed in blank by Seller; or (ii) without any endorsement thereon, if Bank has received and accepted a valid power of attorney for and on behalf of Seller in form and substance satisfactory to Bank, in Bank’s sole and absolute discretion, authorizing Bank to endorse such Mortgage Note for and on behalf of Seller;

(b) To Bank, if requested, the original filed copy, or a copy certified as true, correct and complete by the Escrow Agent, of the fully executed and acknowledged Security Instrument securing such Mortgage Loan;

(c) To Bank, if requested, a copy of the HUD-1 Settlement Statement for the Mortgage Loan fully executed by the Escrow Agent and Borrower, certified as true, correct and complete by the Escrow Agent;

(d) To Bank, if requested, a copy of a fully executed “Buydown Agreement” for the Mortgage Loan, if applicable, certified as true, correct and complete by the Escrow Agent;

(e) To Bank, if requested, a copy of the fully executed Loan Application for the Mortgage Loan, certified as true, correct and complete by the Escrow Agent;

(f) To Bank, if requested, a copy of the fully executed Title Commitment for the Mortgage Loan, certified as true, correct and complete by the Escrow Agent;

(g) To Bank, if requested, copies of the original fully executed Title Policy for the Mortgage Loan, certified as true, correct and complete by the Escrow Agent;

(h) To Bank, if requested, copies of all disclosure statements related to the Mortgage Loan, fully executed where applicable, evidencing compliance with all Federal and State disclosures applicable to credit transactions, certified by the Escrow Agent to be true, correct and complete; and

(i) To Bank, any other items reasonably requested by Bank.

BANK RESERVES THE RIGHT TO REQUIRE COPIES OF ANY OF THE FOREGOING FOR REVIEW PRIOR TO MAKING ANY ADVANCE RELATING TO A PARTICIPATION INTEREST IN ANY SPECIFIC MORTGAGE LOAN.

3.2 Procedure for Delivery of Original Executed Mortgage Note; Closing Instructions Letter .

(a) Each original fully executed Mortgage Note (together with such allonge(s) and endorsement(s) required hereunder) shall be delivered to Bank from escrow directly by the Escrow Agent for the related Mortgage Loan within two (2) Business Days after the Advance for the purchase of a Participation Interest in such Mortgage Loan, unless otherwise expressly provided by Bank in writing to Seller with respect to a specific Mortgage Loan (it being understood that any such writing from Bank shall only apply to the specific Mortgage Loan referenced therein).

(b) In connection with the closing of each Mortgage Loan in which Bank has or will purchase a Participation Interest: (i) prior to the closing of the Mortgage Loan, Seller shall deliver a closing instructions letter to the applicable Escrow Agent, in form and content acceptable to

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Bank; and (ii) if required by Bank, prior to the closing of the Mortgage Loan, Seller shall (A) obtain a copy of the closing instructions countersigned by the Escrow Agent and (B) provide a copy of the countersigned closing instructions letter to Bank.

3.3 Documents Held in Custody/Trust . Without limiting the requirements set forth in Section 3.2(a) , Seller acknowledges and agrees that any and all Closing Deliverables which are at any time in the care of Seller after Bank’s purchase of a Participation Interest in the related Mortgage Loan shall be held and delivered to Bank pursuant to the terms and conditions of Section 5.11 . Nothing contained in this Section authorizes or permits the delivery to Seller or any other Person of any Closing Deliverables which are to be delivered by each Escrow Agent directly to Bank hereunder.

ARTICLE 4

SALE OF LOANS TO INVESTORS;

AGED LOANS; REPURCHASE OBLIGATIONS

4.1 Short Term Nature of Investment . It is understood that each Participation Interest which Bank elects to purchase shall be purchased by Bank for its own account for the short term investment of its capital. For each Participation Interest purchased by Bank, it is the intent of Bank and Seller to have the Mortgage Loan sold and delivered to the respective Investor and for the Investor to have delivered to Bank the full amount of the proceeds from such sale within twenty (20) days following the closing of the Mortgage Loan. Notwithstanding the foregoing, it is understood and agreed that Bank shall not have and does not undertake any duty, obligation or liability arising from or related to any Firm Commitment or any Investor.

4.2 Resale of Mortgage Loans .

(a) The resale of each Mortgage Loan in which Bank has purchased a Participation Interest shall be in accordance with the terms of any Firm Commitment approved by Bank as a condition to Bank’s purchase of the Participation Interest in such Mortgage Loan. If an Investor fails to perform or anticipatorily breaches any such Firm Commitment, then Seller shall take immediate action to promptly locate and consummate the sale of such Mortgage Loan to another Investor at a price not less than the amount of the Advance for such Mortgage Loan plus accrued interest at the Participation Interest Rate. Further, to the extent that Bank does not receive full payment of a Participation Interest in a Mortgage Loan pursuant to this Agreement within thirty (30) days following the Advance by Bank for the purchase of the Participation Interest in such Mortgage Loan, and without limiting or qualifying any other rights or remedies available to Bank hereunder, Bank shall have the right, at its election, in Bank’s sole and absolute discretion, to increase the Participation Interest Rate for such Mortgage Loan and/or assess a processing fee pursuant to Section 4.5 , require curtailment payments pursuant to Section 4.6 and/or require Seller to repurchase Bank’s Participation Interest pursuant to Section 4.7 .

(b) Notwithstanding anything to the contrary in any Firm Commitment, the procedures for the sale to an Investor by Seller and Bank of each Mortgage Loan in which Bank purchased a Participation Interest shall be as follows:

(i) With respect to each applicable Mortgage Loan, Bank shall deliver to the Investor, under a Bailee Letter, the documents for each Mortgage Loan being sold which are held by Bank pursuant to this Agreement, accompanied by the allonge fully endorsed to Seller (if applicable) and endorsed in blank by Seller or, if Seller has granted Bank a power of attorney, as endorsed by Bank as agent for Seller under such power of attorney in favor of the Investor.

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(ii) Within a period of time acceptable to Bank, but in no event more than twenty (20) days after the delivery by Bank to such Investor of the Mortgage Note delivered with such Bailee Letter, the Investor shall pay or cause to be paid to Bank, as a payment hereunder for the purchase of the applicable Mortgage Loan, an amount equal to: (A) the outstanding principal balance of the Mortgage Note; (B) the accrued but unpaid interest on the Mortgage Note; plus (C) all other amounts outstanding which were advanced or incurred by the holder of the Mortgage Note which are secured by the Mortgage Loan documents; less (D) all sums held as an escrow amount under or pursuant to the terms of the Mortgage Loan documents.

(iii) The proceeds from the sale of the Mortgage Loan to an Investor shall be paid directly to Bank pursuant to Section 4.3 and processed in accordance with Section 4.4 .

(c) Bank’s ownership of a Participation Interest in a Mortgage Loan to be sold to an Investor shall continue in effect until such time as Bank shall have irrevocably received in immediately available funds and applied any and all sums payable to Bank under clauses (a), (b), (c) and (d) of Section 5.12 with respect to such Mortgage Loan.

4.3 Payments From Investors . When a Mortgage Loan in which Bank purchased a Participation Interest is sold or shipped to an Investor, funds paid by such Investor for the purchase of such Mortgage Loan shall be paid directly to Bank by such Investor into the Repayment Account. Seller shall direct each Investor make all such payments directly to Bank into the Repayment Account. Without limiting the foregoing requirements of this Section 4.3 , any funds or other forms of payment by Investors for the purchase of Mortgage Loans in which Bank purchased a Participation Interest that are at any time in the care of Seller shall be held and delivered pursuant to the terms and conditions of Section 5.11 .

4.4 Processing Payments From Investors . Bank shall promptly notify Seller of the receipt of funds deposited into the Repayment Account by an Investor (each an “ Investor Payment ”). With respect to each Investor Payment:

(a) Seller shall promptly confirm to Bank the Mortgage Loan to which the Investor Payment applies; provided, however, if Seller shall not have provided such confirmation to Bank by the last Business Day of the calendar month in which Bank provided notice to Seller of the Investor Payment, then Bank may, in its sole discretion, determine and designate the Mortgage Loan to which the Investor Payment applies;

(b) Bank reserves the right, in its sole discretion, to determine whether to accept or reject the Investor Payment if insufficient funds were delivered by Investor to fully pay the amounts set forth in clauses (a), (b), (c) and (d) of Section 5.12 with respect to such Mortgage Loan to which the Investor Payment applies. Seller acknowledges that Bank may, in its sole discretion, elect to accept an Investor Payment for which insufficient funds were delivered if: (i) an Event of Default shall have occurred; (ii) if Bank, in good faith, shall have determined that an adverse change in the financial condition of Seller has occurred which may materially and adversely affect the ability of Seller to perform its obligations under this Agreement or the other Warehouse Documents; or (iii) the occurrence of any actual or suspected fraud or malfeasance on the part of Seller or the Investor or any of their respective agents or employees; and

(c) If the Investor Payment is accepted by Bank, the proceeds of the Investor Payment shall be applied by Bank pursuant to Section 5.12 .

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All notices to be given and actions to be taken pursuant to this Section shall be effectuated by electronic media or in such other manner, as required by Bank from time to time.

4.5 Administrative Costs for Aged Loans . In addition to the other rights and remedies of Bank hereunder for aged Mortgage Loans, and without limiting or qualifying such rights and remedies, to the extent permitted by applicable Law, in order to defray Bank’s administrative costs for extended processing of Participation Interests in Mortgage Loans which are not timely sold, Seller shall pay to Bank, if required by Bank in its sole discretion, a monthly processing fee of Five Hundred and No/100 Dollars ($500.00) for each Mortgage Loan which is not sold to an Investor within thirty (30) days following the date of Bank’s Advance to purchase the Participation Interest therein, with the first payment due on the thirtieth (30 ^th ) day following the date of the Advance and with a like payment due at the end of each thirty (30) day period thereafter until such Participation Interest is paid in full. Further, in addition to the other rights and remedies of Bank hereunder for aged Mortgage Loans, and without limiting or qualifying such rights and remedies, to the extent permitted by applicable Law, Bank may, in its sole discretion, with respect to any Participation Interest in a Mortgage Loan which is not timely sold to an Investor in accordance with this Agreement: (a) increase the Participation Interest Rate for such Participation Interest in the Mortgage Loan by up to one percent (1.0%), effective as of thirty (30) days following the date of the Advance by Bank for the purchase of the Participation Interest in such Mortgage Loan; (b) further increase the then-current Participation Interest Rate for such Mortgage Loan by up to an additional one-half percent (0.5%) plus any increase in the Participation Interest Rate permitted by clause (a) of this sentence but not previously assessed by Bank, effective as of forty-five (45) days following the date of the Advance by Bank for the purchase of the Participation Interest in such Mortgage Loan; and (c) further increase the then-current Participation Interest Rate for such Mortgage Loan by up to an additional one percent (1.0%) plus any increases in the Participation Interest Rate permitted by clauses (a) and (b) of this sentence but not previously assessed by Bank, effective as of sixty (60) days following the date of the Advance by Bank for the purchase of a Participation Interest in such Mortgage Loan; provided such Participation Interest Rate shall not be increased higher than the maximum rate permitted under applicable Law.

4.6 Curtailment for Aged Loans . In addition to the other rights and remedies of Bank hereunder for aged Mortgage Loans, and without limiting or qualifying such rights and remedies, to the extent permitted by applicable Law, Seller shall pay to Bank, if required by Bank in its sole discretion: (a) an amount to be determined by Bank, but not less than ten percent (10.0%) of each Advance made by Bank to purchase a Participation Interest in a Mortgage Loan which is not sold to an Investor within thirty (30) days following the date of the Advance; (b) an additional amount to be determined by Bank, but not less than ten percent (10.0%) of each Advance made by Bank to purchase a Participation Interest in a Mortgage Loan which is not sold to an Investor within forty-five (45) days following the date of the Advance; (c) an additional amount to be determined by Bank, but not less than ten percent (10.0%) of each Advance made by Bank to purchase a Participation Interest in a Mortgage Loan which is not sold to an Investor within sixty (60) days following the date of the Advance; and (d) an additional amount equal to the balance of each Advance made by Bank to purchase a Participation Interest in a Mortgage Loan which is not sold within seventy-five (75) days following the date of the Advance. Notwithstanding the foregoing, Bank reserves the right to demand the repurchase of Participation Interests in a Mortgage Loans in accordance with Section 4.7 .

4.7 Repurchase .

(a) Bank shall have the right to require Seller, upon demand, to repurchase a Participation Interest in a Mortgage Loan for any of the following reasons: (i) if a material representation or warranty given by Seller as to a particular Mortgage Loan is breached that is not cured to the satisfaction of Bank within ten (10) Business Days after written notice is delivered to

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Seller; (ii) if an Event of Default shall have occurred and is continuing; (iii) if final post-closing Mortgage Loan documentation is improper or incomplete after a reasonable period of time after the closing of the Mortgage Loan, the determination of which is at Bank’s sole and absolute discretion, which documentation has not been corrected to the satisfaction of Bank within ten (10) Business Days after written notice is delivered to Seller; (iv) if Bank discovers fraud on the part of Seller or its agents or employees or of Borrower or any other Person with respect to such Mortgage Loan; (v) if the Investor, for any reason, fails to purchase the Mortgage Loan or if, for any reason, Bank has not been paid in full for its Participation Interest in the Mortgage Loan, within thirty (30) days following the Advance by Bank to purchase the Participation Interest therein; or (vi) if any Investor has requested the repurchase of the Mortgage Loan because of any breach stated in clauses (i) through (v) of this sentence or because of any breach of or failure to comply with any requirement in its Firm Commitment or interest rate lock confirmation.

(b) Without limiting Bank’s right to require the earlier repurchase of a Participation Interest in accordance with Section 4.7(a) , Seller shall automatically be obligated to immediately repurchase a Participation Interest in a Mortgage, whether or not Bank has provided written notice thereof to Seller, no later than the earlier of: (a) seventy-five (75) days following the Advance by Bank to purchase the Participation Interest if by such time (i) an Investor for any reason fails to purchase the Mortgage Loan or (ii) Bank has not received payment in full for its Participation Interest for any reason; or (b) the occurrence of an Event of Default as specified in Section 9.1(e) or Section 9.1(f) with respect to Seller.

(c) Upon Bank’s receipt of funds in the amount of the full repurchase price for the repurchase a Participation Interest in a Mortgage Loan, Bank shall transfer its Percentage Interest therein to Seller as evidenced by the delivery by Bank of the related Mortgage Note to Seller.

(d) The repurchase price for each Participation Interest in a Mortgage Loan shall be calculated by multiplying the unpaid balance of such Mortgage Loan as of the date of repurchase of the Participation Interest by the Purchase Price (expressed as a percentage of par) originally paid by Bank for the Participation Interest in such Mortgage Loan plus all accrued unpaid interest with respect to the Participation Interest and any charges incurred by or properly payable to Bank. Bank shall have the right to offset amounts in the Pledged Account in order to effect the repurchase of any Participation Interest in a Mortgage Loan, and upon any such offset, Seller shall immediately deposit funds into the Pledged Account in the amount required to fully restore the Minimum Pledged Balance.

4.8 Bank’s Direct Contact with Investors . Seller irrevocably authorizes Bank and its agents to directly deliver all pertinent documentation to, and communicate and disclose, receive and share information with, any Investor which is purchasing or is to purchase a Mortgage Loan in which Bank owns a Participation Interest. Further, Seller authorizes Bank to exchange with any Investors pertinent financial information which is available to the general public regarding Seller and any Obligated Party on the SEC’s Electronic Date Gateway, Analysis and Retrieval System (“EDGAR”) or any successor website maintained by the SEC.

ARTICLE 5

GENERAL PROVISIONS

5.1 Termination; Burn-Down .

(a) Unless earlier terminated in accordance with this Agreement (including pursuant to Section 5.1(b) or Section 5.2 ) or extended by written agreement executed by Seller and Bank, Seller’s rights hereunder to request Bank to purchase Participation Interests shall automatically terminate one (1) year from the Effective Date (“ Scheduled Purchase/Sale Termination Date ”).

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(b) Notwithstanding anything herein to the contrary, and without limiting Bank’s rights and remedies under Section 9.2 , prior to the Scheduled Purchase/Sale Termination Date, upon thirty (30) days’ advance written notice to the other party, either party hereto may terminate for any reason whatsoever Seller’s rights hereunder to request Bank to purchase Participation Interests by providing written notice thereof to the other party. It is understood that the continuation of this Agreement by Bank (and, accordingly, the continuation of Seller’s rights hereunder to request Bank to purchase Participation Interests) is based upon the quality of the Mortgage Loans originated by Seller and Seller’s performance in connection therewith and herewith and also based upon market conditions and the business objectives of Bank and Seller which may change from time to time.

(c) Any and all outstanding Participation Interests acquired by Bank on or before the Effective Purchase/Sale Termination Date shall continue to be subject to the terms and conditions of this Agreement. Unless extended by a written agreement executed by Seller and Bank, this Agreement shall automatically terminate and cease to be in force and effect (except with respect to the provisions of this Agreement which expressly survive termination) without any action or notice upon such time as: (i) Seller shall no longer have any rights hereunder to request Bank to purchase Participation Interests; (ii) pursuant to the terms and conditions of this Agreement, each Mortgage Loan in which Bank purchased a Participation Interest has been (A) sold to an Investor and Bank has received the full amount of the proceeds of such sale allocable to its Percentage Interest and/or (B) repurchased by Seller and Bank has received the full amount of the proceeds from such repurchase; (iii) Bank has received full and indefeasible payment of all amounts due and payable to Bank pursuant to the Warehouse Documents; and (iv) Bank has remitted to Seller all sums, if any, required hereunder to be remitted by Bank to Seller.

5.2 Target Usage; Termination for Non-Usage . While pursuant to Section 2.2 , Bank is not obligated to purchase, and Seller is not obligated to sell, any Participation Interests, or any amount thereof, Bank and Seller contemplate that Seller shall sell, and Bank shall purchase, Participation Interests such that, at any given time, the Aggregate Participation Balance shall equal or exceed the Target Usage Amount. Should for any calendar quarter, the Aggregate Participation Balance, on average for such calendar quarter, not equal or exceed the Target Usage Percentage, Bank may elect to increase the Rate Floor or terminate pursuant to Section 5.1(b) Seller’s right to request Bank to purchase Participation Interests under this Agreement.

5.3 Seller’s Accounts; Security Interest .

(a) Seller shall at all times during the term of this Agreement maintain each Restricted Account with Bank. With respect to each Restricted Account, Seller may deposit funds into the Restricted Account, however Seller shall not be permitted to withdraw, transfer or otherwise exercise any rights to access any funds held therein and Seller shall have no rights to exercise dominion or control over the Restricted Account. Bank is hereby authorized to debit funds from each Restricted Account in accordance with the terms and conditions of this Agreement without any notice to or permission from Seller.

(b) Seller shall at all times during the term of this Agreement maintain the Remittance Account with Bank. Subject to the terms and conditions of this Agreement and the other Warehouse Documents, Seller shall be permitted to withdraw, transfer and otherwise exercise rights to access any funds held therein.

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(c) Concurrently with the execution hereof, Seller shall execute and deliver to Bank the Pledge Agreement and shall deposit into the Pledged Account, and thereafter for the duration of this Agreement maintain in the Pledged Account, good funds in an amount not less than the Minimum Pledged Balance. Seller shall replenish funds in the Pledged Account, such that the Pledged Account is fully restored to the Minimum Pledged Balance, in the event Bank shall offset or apply funds from the Pledged Account in accordance with the terms of this Agreement.

(d) To secure Bank’s undertakings hereunder, Seller hereby grants Bank a security interest in and to (i) each of Seller’s Accounts and in and to all funds of Seller within the custody and control of Bank and (ii) all rights, title and interest of Seller in and to all Mortgage Loans (including servicing rights, if any) in which Bank purchased a Participation Interest. For this purpose, this Agreement shall constitute a security agreement in accordance with the UCC, and Bank shall have all the rights of a secured creditor with respect to such security, and additionally shall have the right to hold and “freeze” such accounts and funds upon the occurrence of an Event of Default or in the event that Bank, for any reason, “suspends” Seller’s rights hereunder or terminates Seller’s rights under this Agreement. Without limiting the rights and remedies available to Bank, upon the occurrence of an Event of Default, Bank may exercise its rights of set off and apply all or any portion of the funds held in one or more of the Accounts towards any amounts due to Bank under this Agreement or any other Warehouse Document.

5.4 Subordination . It is expressly understood and agreed that all of Seller’s rights, title and interests in and to any and all Mortgage Loans in which Bank purchased a Participation Interest (including Seller’s servicing rights, if any) are subordinate and inferior to Bank’s Participation Interests in such Mortgage Loans, from and after the date Bank pays the Purchase Price.

5.5 Power of Attorney . Seller hereby irrevocably appoints Bank and each officer of Bank as its attorney-in-fact, with full power of substitution, for, on behalf of, and in the name of Seller, to: (a) endorse and deliver to any Person any notes, checks, drafts, money orders or other instruments of payment coming into Bank’s possession and representing any payment made with respect to any Mortgage Loan in which Bank has purchased a Participation Interest or otherwise received in connection with any Mortgage Loan in which Bank purchased a Participation Interest (including the proceeds from the sale of any such Mortgage Loan received from an Investor), and any collateral and any Firm Commitment therefor; (b) prepare, complete, execute, deliver and record, (i) any endorsement to Bank, any Investor or any other Person, of any applicable Mortgage Note, or (ii) any assignment to Bank, any Investor or any other Person, of the interest in any Mortgage Note, Security Instrument and other related Mortgage Loan documents for a Mortgage Loan in which Bank has purchased a Participation Interest; (c) do anything necessary or desirable to effect transfer of all or any part of each Mortgage Loan in which Bank has purchased a Participation Interest to Bank or to any Investor or any other Person; (d) commence, prosecute, settle, discontinue, defend, or otherwise dispose of any claim relating to any Firm Commitment or any Mortgage Loan in which Bank has purchased a Participation Interest; (e) sign Seller’s name wherever appropriate to effectuate the purposes of this Agreement; and (f) to take such further action as Bank may deem appropriate, and to act under changed circumstances, the exact nature of which may not be currently foreseen or foreseeable, in order to fully and completely effectuate Bank’s rights under this Agreement. The powers and authorities herein conferred on Bank may be exercised by Bank through any Person who, at the time of the execution of a particular instrument, is an officer of Bank. The limited power of attorney conferred by this Section is granted for a valuable consideration and is coupled with an interest and, therefore, is irrevocable so long as any duties or obligations to Bank under this Agreement or any other Warehouse Document, or any part thereof, shall remain unpaid or otherwise unsatisfied, or so long as Bank may elect to purchase any Participation Interests hereunder. The limited power of attorney conferred hereunder shall not be affected by any subsequent disability or incapacity of the principal or by the lapse of time. To facilitate processing, Bank may request that Seller execute and

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deliver a separate, limited power of attorney in such form and content required by Bank, but any failure of Bank to request and obtain such separate power of attorney instrument shall not mitigate or undermine the rights and powers conferred under this Section.

5.6 MERS ^® System . Bank reserves the right to require that all Mortgage Loans in which Bank purchases a Participation Interest be registered and processed on the MERS ^® System or any other mortgage processing system designated by Bank.

5.7 Regulatory Compliance . In connection with each Mortgage Loan in which Bank purchases a Participation Interest, Seller hereby represents, warrants and certifies to Bank that each such Mortgage Loan was made pursuant to and in accordance with the applicable terms and provisions of the Federal Truth in Lending Act, the Real Estate Settlement Procedures Act, the Equal Credit Opportunity Act, Dodd-Frank Act, the Interagency Appraisal Guidelines, and all other Laws relating to the financing of Residential Real Property, each of which Laws have been fully satisfied and strictly complied with by Seller or other applicable parties, and that Bank shall have no obligation with respect to the compliance with any such Laws, or the filing of any reports, certifications or other documents or items with or to Borrower, any Governmental Authority, or any other Person whatsoever. IN THIS RESPECT, SELLER HEREBY INDEMNIFIES AND HOLDS HARMLESS BANK FROM AND AGAINST ANY AND ALL COSTS, EXPENSES, LIABILITIES, DAMAGES, PENALTIES, FINES, AND OTHER LIABILITIES AND OBLIGATIONS INCURRED BY OR ASSERTED AGAINST BANK IN CONNECTION WITH ANY BREACH OR INACCURACY OF THE TERMS CONTAINED IN THIS SECTION.

5.8 Verifications . Bank shall have the right to re-verify all information obtained by Seller regarding any Borrower, including verification of employment, verification of deposit and all information included in each related Loan Application. Seller shall cooperate with Bank in such re-verification process. Further, Bank shall have full right and authority to obtain an updated credit report on any Borrower. In such verification process, Seller, upon the request of Bank, shall supply a copy of Borrower’s handwritten, typed or signed Loan Application.

5.9 Servicing Responsibilities . Seller will have the responsibility for the administration and servicing of each Mortgage Loan in which Bank has purchased a Participation Interest until such Mortgage Loan is sold to an Investor. With respect to each Mortgage Loan in which Bank has purchased a Participation Interest, Seller shall be responsible for the period from and after the purchase of the Participation Interest in such Mortgage Loan for the execution of all appropriate notices and all other acts necessary to protect title in Seller and Bank, or their respective successors or assignees, as the case may be, as to the ownership of such Mortgage Loan and for preserving all rights in and to said Mortgage Loan and administering it in all respects consistent with applicable Law, and for servicing the same in a manner consistent with industry practices and with Bank’s policies and practices.

5.10 Remittance . In connection with Seller’s servicing of the Mortgage Loans in which Bank purchased Participation Interests, Seller will forward directly to Bank, Bank’s pro rata share of all funds received under each such Mortgage Loan on or before the next Business Day after Seller’s receipt of the same. If applicable, Seller will properly endorse and deliver not later than the next Business Day to Bank any checks received as payment under any such Mortgage Loans. Nothing contained in this Section authorizes or permits payment to Seller of any amounts which are otherwise required under this Agreement to be paid directly to Bank (including any and all funds paid by an Investor for the purchase of a Mortgage Loan in which Bank purchased a Participation Interest). All funds received by Seller pursuant to this Section shall be held in accordance with Section 5.11 .

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5.11 Custodial and Trust Provisions .

(a) Any and all amounts required to be paid to Bank hereunder shall be paid to Bank pursuant to the terms and conditions of this Agreement. Without limiting the foregoing, any and all Bank Payment Deliverables received by Seller:

(i) Shall be held by Custodian as agent for Bank for the limited purposes set forth in this Section 5.11(a)(i) . In such event, Custodian hereby agrees, in Custodian’s individual capacity, (A) to immediately accept, take custody of and keep safely the Bank Payment Deliverables delivered to Seller, (B) to hold the Bank Payment Deliverables as agent and bailee of Bank for Bank’s sole benefit, (C) (I) to immediately turn over and deliver to Bank each Bank Payment Deliverable, in kind, and in the exact form received, no later than one (1) Business Day after receipt thereof, and concurrently, obtain the endorsement to Bank any instruments or other form of payment payable to Seller but which is to be paid to Bank under this Agreement and (II) not to release any Bank Payment Deliverable to any other Person (including Seller) without Bank’s prior written consent, and (D) to act solely as agent and bailee of Bank with respect to the Bank Payment Deliverables and not to act, with respect to any Bank Payment Deliverable, at the direction or instruction of Seller if inconsistent with the terms and provisions of this Agreement. Nothing contained in this Section authorizes or permits payment to Seller, Custodian or any other Person of any amounts which are required under this Agreement to be paid directly to Bank.

(ii) Shall be held in trust by Seller as the property and for the benefit of Bank to the extent that any such Bank Payment Deliverables are or are deemed to be in or under the custody, possession or control of Seller. In such event, Seller shall, and has a fiduciary duty to Bank, (A) to hold in trust, as the property and for the benefit of Bank, the Bank Payment Deliverables and (B) (I) to immediately turn over and deliver to Bank the Bank each Payment Deliverable, in kind, and in the exact form received, no later than one (1) Business Day after receipt thereof, and concurrently, endorse to Bank any instrument or other form of payment payable to Seller, but which is to be paid to Bank under this Agreement and (II) not to release any Bank Payment Deliverable to any other Person (other than Custodian) without Bank’s prior written consent. Nothing contained in this Section authorizes or permits payment to Seller or any other Person of any amounts which are required under this Agreement to be paid directly to Bank.

(b) Any and all agreements, instruments and documents (including all Closing Deliverables) required to be delivered to Bank hereunder shall be delivered to Bank pursuant to the terms and conditions of this Agreement. Without limiting the foregoing, any and all Bank Document Deliverables received by Seller:

(i) Shall be held by Custodian as agent for Bank for the limited purposes set forth in this Section 5.11(b)(i) . In such event, Custodian hereby agrees, in Custodian’s individual capacity, (A) to immediately accept, take custody of and keep safely the Bank Document Deliverables delivered to Seller, (B) to hold the Bank Document Deliverables as agent and bailee of Bank for Bank’s sole benefit, (C) (I) to immediately turn over and deliver to Bank each Bank Document Deliverable no later than one (1) Business Day after receipt thereof (except that Custodian may deliver the applicable Closing Deliverables to Bank by such later time, if any, permitted to Seller by the express terms of this Agreement) and (II) not to release any Bank Document Deliverable to any other Person (including Seller) without Bank’s prior written consent, and (D) to act solely as agent and bailee of Bank with respect to any and all such Bank Document Deliverables and not to act, with respect to any Bank Document Deliverable, at the direction or

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instruction of Seller if inconsistent with the terms and provisions of this Agreement. Nothing contained in this Section authorizes or permits the delivery to Seller or Custodian of any Bank Document Deliverables which are required under this Agreement to be delivered directly to Bank.

(ii) Shall be held in trust by Seller as the property and for the benefit of Bank to the extent that any such Bank Document Deliverables are or are deemed to be in or under the custody, possession or control of Seller. In such event, Seller shall, and has a fiduciary duty to Bank, (A) to hold in trust for Bank, and as the property and for the benefit of Bank, the Bank Document Deliverables and (B) (I) to immediately turn over and deliver to Bank each Bank Document Deliverable no later than one (1) Business Day after receipt thereof (except that Seller may deliver the applicable Closing Deliverables to Bank by such later time, if any, permitted by the express terms of this Agreement) and (II) not to release any Bank Document Deliverable to any other Person (other than Custodian) without Bank’s prior written consent. Nothing contained in this Section authorizes or permits the delivery to Seller or any other Person of any Bank Document Deliverables which are required under this Agreement to be delivered directly to Bank.

(c) With respect to each Mortgage Loan in which Bank has purchased a Participation Interest, until such time as such Mortgage Loan has been indefeasibly sold to the applicable Investor (pursuant to the related Firm Commitment unless Seller has been approved in advance by Bank to sell to an Issuer the Qualified Mortgage Loan) and Bank has received all of the proceeds of such sale, any and all agreements, instruments, files, records and other documents related to the Mortgage Loan (including, the applicable credit file and underwriting standards under which Seller approved the Mortgage Loan) other than those (if any) previously delivered to Bank pursuant to the terms of this Agreement, shall be held pursuant to the terms and conditions of Section 5.11(a) and delivered to Bank no later than (1) Business Day after Bank’s request.

(d) The authority of Custodian to act on behalf of Bank shall be limited to the specific authority granted to Custodian in Section 5.11(a)(i) and Section 5.11(b)(i) , or as may be hereafter granted to Custodian by Bank in writing. Bank may at any time terminate Custodian’s authority hereunder by providing written notice thereof to Seller and Custodian, and in such event, provided no Event of Default is continuing, Seller shall (i) immediately designate a successor Custodian acceptable to Bank in its sole discretion and (ii) deliver to Bank a written agreement, in such form and content acceptable to Bank, executed by Seller and the successor Custodian pursuant to which the successor Custodian agrees to be bound by the terms of Section 5.11(a)(i) and Section 5.11(b)(i) . Further, Custodian may terminate its duties and obligations hereunder by providing at least thirty (30) days advance written notice thereof to Bank; provided that, no later than the date of the termination of Custodian’s duties and obligations hereunder, Seller shall have (i) designated a successor Custodian acceptable to Bank in its sole discretion and (ii) delivered to Bank a written agreement, in such form and content acceptable to Bank, executed by Seller and the successor Custodian pursuant to which the successor Custodian agrees to be bound by the terms of Section 5.11(a)(i) and Section 5.11(b)(i) .

5.12 Application of Payments . Any and all sums received by Bank in connection with any Participation Interest in a Mortgage Loan purchased by Bank (including, subject to Section 4.4 , the proceeds from the sale to an Investor of a Mortgage Loan in which Bank purchased a Participation Interest) shall be applied and disbursed by Bank in the following order upon Bank’s actual receipt of such sums:

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(a) To payment of all outstanding Transaction Fees and other fees, costs and expenses assessed or incurred by Bank and chargeable under this Agreement or any other Warehouse Document with respect to such Mortgage Loan;

(b) To payment of Bank’s accrued but unpaid interest with respect to such Mortgage Loan at the Participation Interest Rate;

(d) To the payment of all other amounts outstanding (if any) which were disbursed by Bank to Seller in connection with such Mortgage Loan;

(e) To the establishment of escrow reserves if and to the extent required for such Mortgage Loan;

(f) To payment of any outstanding amounts set forth in clauses (a), (b), (c), (d) and (e) of this Section with respect to any other Mortgage Loan in which Bank purchased a Participation Interest that has been sold to an Investor, to be applied and disbursed by Bank in the order set forth in such clauses above;

(g) To any other amounts due by Seller to Bank hereunder, including any amounts necessary to replenish the Pledged Account in order to maintain the Minimum Pledged Balance;

(h) To payment of accrued but unpaid interest and outstanding principal allocable to Seller’s ownership interest in such Mortgage Loan. Any and all such sums due to Seller shall be paid to Seller on or before the next Business Day after receipt thereof by Bank and shall be disbursed by Bank into the Remittance Account; and

(i) Thereafter, as otherwise required to be in compliance with this Agreement.

If any sums received by Bank in connection with the sale to an Investor of a Mortgage Loan in which Bank purchased a Participation Interest is insufficient to pay any and all sums payable to Bank under clauses (a), (b), (c) and (d) of this Section with respect to such Mortgage Loan, then Bank shall be entitled at any time to use any and all available funds in the Pledged Account or otherwise covered by the Pledge Agreement to satisfy such amounts payable to Bank but not to Seller. If after resorting to the foregoing described sources of payment, Bank is still owed any funds under clauses (a), (b), (c) or (d) of this Section, then Seller agrees to pay any such deficiency to Bank immediately upon demand. In the event that Bank uses any funds in the Pledged Account or otherwise covered by the Pledge Agreement to satisfy such amounts payable to Bank, then Seller shall immediately deposit funds into the Pledged in the amount required to fully restore the Minimum Pledged Balance. Bank shall be under no duty at any time to apply any amounts due from any Investor or from any other Person with respect to any purchase of any Mortgage Loan until Bank has actually received such amounts in immediately available funds. Further, notwithstanding anything herein to the contrary, Bank shall be under no duty at any time to apply any amounts representing Investor Payments except pursuant to the procedures set forth in Section 4.4 .

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

In order to induce Bank to enter into this Agreement and, subject to the terms and conditions of this Agreement, to make Advances for the purchase of Participation Interests in Mortgage Loans, Seller represents and warrants to Bank, to the best of Seller’s knowledge and belief, after due inquiry, as follows:

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6.1 Organization and Good Standing . Seller is duly organized and existing in good standing under the Laws of the state of its formation, is duly qualified to do business and is in good standing in all jurisdictions in which it is required to be qualified to do business, and has the power and authority to own its Properties and assets and to transact the business in which it is engaged and is or will be qualified in those states wherein it transacts business in the future.

6.2 Authorization and Power . Seller has the requisite power and authority to, and has taken all action necessary to authorize it to, execute, deliver and perform this Agreement, the other Warehouse Documents to which Seller is a party, and all of the other documents herein contemplated to be executed by Seller or otherwise to be executed by Seller from time to time in connection herewith; Seller will continue at all times during the term of this Agreement to have the requisite power and authority to do the foregoing; and Seller has received, has in its possession, and will maintain in full force and effect and in good standing, any and all federal, state and local licenses or approvals which may be necessary for Seller to undertake the actions required of it pursuant to this Agreement and to conduct its business.

6.3 No Conflicts or Consents . Neither the execution and delivery of this Agreement, the other Warehouse Documents to which Seller is a party, or any other documents to be executed in connection herewith, nor the consummation of any of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will contravene or materially conflict with any Legal Requirement, or any loan agreement, lease, promissory note, indenture, mortgage, deed of trust, or other agreement or instrument to which Seller is a party or by which Seller or any of its Property may be bound or be subject, or violate any provision of the documents creating or governing Seller.

6.4 Enforceable Obligations . This Agreement, the other Warehouse Documents, and all other documents to be executed in connection herewith, to which Seller is or will become a party, are or upon execution will be the legal, valid and binding obligations of Seller, are enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or other Laws of general application relating to the enforcement of creditors’ rights.

6.5 Valid Interest . Upon funding of an Advance for the purchase a Participation Interest in a Mortgage Loan, Bank shall have a valid, unencumbered Participation Interest in such Mortgage Loan.

6.6 No Liens . All Mortgage Loans are free and clear of all Liens and other adverse claims of any nature, other than the Liens created by the Mortgage Loan documents, and neither Seller nor any Person claiming by or through Seller or otherwise has any right, title or interest (including servicing rights) in and to Bank’s Participation Interest in such Mortgage Loans.

6.7 Financial Condition . Seller has delivered to Bank copies of its most recent balance sheet, and the related statements of income, stockholders’ equity and changes in financial position for the year ending on the date indicated therein, audited by independent certified public accountants; such financial statements are true and correct, fairly present the financial condition of Seller as of such date and have been prepared in accordance with GAAP as of the date hereof; there are no obligations, liabilities or indebtedness (including contingent and indirect liabilities and obligations or unusual forward or long term commitments) of Seller which are not reflected in such financial statements; and no change having a material adverse effect has occurred in the financial condition or business of Seller since the date of such financial statements.

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6.8 Material Agreements . To the best of its knowledge, Seller is not in default under any loan agreement, mortgage, security agreement or other material agreement or obligation to which it is a party or by which any of its Properties is bound, and the execution of this Agreement and the other Warehouse Documents to which Seller is a party, and Seller’s performance of its duties and obligations hereunder and thereunder, will not cause a default under any loan agreement, mortgage, security agreement or other material agreement or obligation to which Seller is a party or by which any of its Properties is bound.

6.9 No Litigation . Except as previously disclosed to Bank in writing, there are no actions, suits or legal, equitable, arbitration or administrative proceedings pending, or to the knowledge of Seller, threatened against Seller which, if determined adversely to Seller, may have a material adverse effect on Seller or its financial condition.

6.10 Taxes . All tax returns required to be filed by Seller in any jurisdiction have been filed and all taxes, assessments, fees and other governmental charges upon Seller or upon any of its Properties, income or franchises have been paid (if applicable, prior to the time that such taxes, assessments, fees or other governmental charges could give rise to a Lien), unless protested in good faith by appropriate proceedings. There is no proposed tax assessment against Seller.

6.11 No Approvals Required . Neither the execution and delivery of this Agreement, the other Warehouse Documents to which Seller is a party, and all other documents to be executed in connection herewith, nor the consummation of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, or the registration, recording or filing of any document with, or the taking of any other action in respect of, any Governmental Authority or other Person.

6.12 Representations as to Mortgage Loans . As to each Mortgage Loan in which a Participation Interest is being purchased by Bank (and with regard to the related Request, Mortgage Note, Security Instrument, Mortgage Property, Borrower and Investor for each such Mortgage Loan), Seller represents and warrants as follows:

(a) The applicable documents for the Mortgage Loan (including the Mortgage Note and Security Instrument) will have been duly executed by the Borrower, and where applicable, acknowledged, and recorded; and the Mortgage Loan is valid and complies with all applicable lending Laws applicable to the Borrower, Seller and Bank and with respect to the Residential Real Property;

(b) There has been no assignment, sale or hypothecation of the Mortgage Loan by Seller, and the Mortgage Loan is free and clear of all Liens and other encumbrances;

(c) The outstanding principal balance of the Mortgage Loan will be as stated in the Request; all costs, fees and expenses incurred in making, closing and recording the Mortgage Loan will have been paid; no part of the Mortgaged Property has been released from the Lien of the Security Instrument; the terms of the Mortgage Loan have in no way been changed or modified from that represented in the Request; the Mortgage Loan is current and not in default; and all taxes and assessments against the Mortgaged Property have been paid in full or properly provided for through escrow of funds being assigned and delivered to Bank with the other Mortgage Loan documents;

(d) The Mortgaged Property is in good repair and is free from substantial damage;

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(e) The Mortgage Loan which Seller represents to be insured by a private mortgage insurer will be so insured;

(f) All applicable Laws have been complied with, including (as applicable) the Dodd-Frank Act, the Interagency Appraisal Guidelines, the Laws and regulations for insurance of accounts by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Real Estate Settlement Procedures Act, Regulation X, the Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting Act, the Fair Housing Act, the Flood Disaster Protection Act, the Federal Truth in Lending Act of 1968 and Regulation Z, the Depository Institutions Deregulation and Monetary Control Act of 1980, the Garn St. Germain Depository Institutions Acts of 1982, the Cranston Gonzales Affordable Housing Act, the Home Mortgage Disclosures Act, and regulations issued pursuant thereto, usury limitations, and all conditions within the control of Seller as to the validity of the insurance or guaranty as required by the National Housing Act of 1934, and the rules and regulations thereunder, or as required by the Servicemen’s Readjustment Act of 1944, and the rules and regulations thereunder, or by the mortgage insurers and other insurers, have been properly satisfied, and said insurance or guaranty is valid and enforceable;

(g) The endorsement of the Mortgage Note by or on behalf of Seller (whether executed by Seller or by Bank pursuant to the power of attorney herein granted or such other power of attorney delivered by Seller to Bank in accordance with this Agreement) and the assignment of the Mortgage Note, Security Instrument and the other Mortgage Loan documents (whether executed by Seller or by Bank pursuant to the power of attorney herein granted or such other power of attorney delivered by Seller to Bank in accordance with this Agreement) will be valid and enforceable under all applicable Law;

(h) At the time the Mortgage Loan was originated, (i) if the Mortgage Loan is a FNMA or FHLMC eligible loan, Seller complied fully with the underwriting guidelines then in effect for FNMA or FHLMC or (ii) if the Mortgage Loan not a FNMA or FHLMC eligible loan, Seller complied fully with the underwriting guidelines of the Investor;

(i) All conditions as to the validity of the applicable insurance as required by all Legal Requirements and by private mortgage insurance companies or other insurers, if and to the extent applicable, will have been properly satisfied, and said insurance is valid and enforceable;

(j) Seller will have obtained, and have in its possession, in due form, all documentation (except those documents executed at the closing of the Mortgage Loan, which are or will be, at such time, in the possession of the Escrow Agent) required to legally effect such Mortgage Loan prior to or upon closing, and all such documentation will be held and delivered to Bank pursuant to the terms and conditions of this Agreement;

(k) No default will exist as to the Mortgage Loan;

(l) The Mortgage Loan is valid and, to the best of Seller’s knowledge, secured by a valid first Lien on the Mortgaged Property, and the Mortgaged Property is free and clear of all Liens, claims and encumbrances having priority over the Lien of the Mortgage Loan except for any real estate taxes and special assessments not yet due and payable. A Title Policy will be furnished to Bank and will insure Seller its successors and/or assigns) as the holder of the Mortgage Note for the Mortgage Loan, and its successors and assigns, with respect to the Mortgage Loan, without exceptions, as holding the first Lien against the Mortgaged Property for the full amount of the Mortgage Loan. Seller, or an attorney acting on Seller’s behalf, has obtained and reviewed a Title Commitment to insure the title and first Lien on the Mortgaged Property to assure that the forgoing warranty is true and correct;

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(m) The Mortgage Loan is not delinquent and there are no defaults by the Borrower in complying with the terms of the Mortgage Loan, and, to the best of Seller’s knowledge, all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges relating to any of the Mortgaged Property which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid;

(n) Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a Person other than the Borrower, directly or indirectly, for the payment of any amount required by the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is greater, to the day which precedes by one month the due date of the first installment of principal and interest;

(o) To the best of Seller’s knowledge, all of the improvements which are included for the purpose of determining the appraised value of the Mortgaged Property lie wholly within the boundaries of the Mortgaged Property and do not encroach upon building restriction lines, and no improvements on adjoining properties encroach upon the Mortgaged Property. Seller has obtained a Title Policy without exceptions for boundary line and building line encroachments; and

(p) Seller has no knowledge of any circumstances or conditions with respect to the Mortgage Loan, the Mortgaged Property, the Borrower or the Borrower’s credit standing that can be reasonably expected to cause the Investor or any other private institutional investors, FNMA, FHLMC, or GNMA to regard the loan as an unacceptable investment, cause the Mortgage Loan to become delinquent, or adversely affect the value or marketability of the Mortgage Loan.

6.13 Other Warehousing Facilities . Listed on Exhibit G are all current mortgage warehousing facilities of Seller other than with Bank. Seller covenants and agrees to notify Bank in writing prior to entering into any other warehousing facilities. In addition, Seller covenants and agrees to promptly notify Bank in writing regarding any material change in any warehouse facility of Seller (including as to the maximum amount of such facility) or any default by Seller under any such warehouse facility.

6.14 Affiliate Escrow Agents . Listed on Exhibit H are all current title companies and other Persons that provide closing services in connection with residential mortgage loan transactions which are directly or indirectly controlled by Seller or under common control with Seller (each an “ Affiliate Escrow Agent ”). In addition, Seller represents and warrants that, prior to the Effective Date, Seller has delivered to Bank true, correct and complete copies of the financial statements for each Affiliate Escrow Agent. Seller covenants and agrees to promptly notify Bank in writing regarding any new Affiliate Escrow Agents arising after the Effective Date.

6.15 Survival of Representations . All representations and warranties (other than representations and warranties in Section 6.12 with respect to Mortgage Loans in which Bank no longer owns any Participation Interests) by Seller herein shall survive the termination or expiration of this Agreement, and all documents to be executed in connection herewith and the making of any and all Advances. Any and all investigations at any time made by or on behalf of Bank shall not limit, impair or diminish Bank’s right to rely on any and all representations and warranties by Seller herein.

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ARTICLE 7

AFFIRMATIVE COVENANTS

At all times during the term of this Agreement, and thereafter until Seller shall have performed all of its obligations hereunder, Seller covenants and agrees that:

7.1 Financial Statements and Reports . Seller shall furnish to Bank the following, all in form and detail satisfactory to Bank:

(a) Promptly after becoming available, and in any event within ninety (90) days after the close of each fiscal year of Seller, an audited balance sheet of Seller as of the end of such year, and an audited statement of income and stockholder’s equity of Seller for such year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, accompanied by the related report of independent certified public accountants acceptable to Bank, which report shall be to the effect that such statements have been prepared in accordance with GAAP;

(b) If requested by Bank, on or before the thirtieth (30 ^th ) day of any calendar month: (i) a statement of income and expenses of Seller for the prior calendar month; and (ii) a statement, in form and substance acceptable to Bank, setting forth the status, as of the last day of the prior calendar month, of all Loan Applications being processed by Seller for closing and sale to Bank pursuant hereto;

(c) Promptly after becoming available, and in any event within forty-five (45) days after the close of each fiscal quarter of Seller, balance sheets of Seller as of the end of such fiscal quarter and end of prior fiscal year, statements of income for the fiscal quarter and fiscal year-to-date period and corresponding fiscal quarters of the preceding fiscal years and statement of stockholder’s equity for the fiscal year-to-date period, prepared in accordance with GAAP and certified by the principal financial officer of Seller. Such quarterly financial statements shall be prepared on a consolidated basis and shall include the financial information of such entities required by Bank;

(d) If Seller has been approved by Bank to sell Mortgage Loans to Issuers, weekly hedging reports, in such form and content required by Bank;

(e) Promptly upon receipt thereof, a copy of each other report submitted to Seller by independent accountants in connection with any annual, interim or special audit of the books of Seller; and

(f) Such other information concerning the business, Properties or financial condition of Seller as Bank may reasonably request.

7.2 Taxes and Other Liens . Seller shall pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its income or upon any of its Property as well as all claims of any kind (including claims for labor, materials, supplies and rent) which, if unpaid, might become a Lien upon any or all of its Property or the Mortgage Loans; provided, however, Seller shall not be required to pay any such tax, assessment, charge, levy or claim regarding its Property (other than Mortgage Loans in which a Participation Interest is being purchased by Bank) if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted by or on behalf of Seller and if Seller shall have set up reserves therefor adequate under GAAP.

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7.3 Maintenance . Seller shall: (a) maintain its existence and all of its licenses, permits, franchises, qualifications and rights that are necessary in order for Seller to conduct its business; (b) observe and comply in all material respects with all Legal Requirements; and (c) maintain its Properties and all Properties leased by or consigned to it or held under title retention or conditional sales contracts in such condition at all times as is necessary for the proper conduct of its business.

7.4 Further Assurances . Seller shall promptly cure any defects in the execution and delivery of this Agreement, the other Warehouse Documents, and all other documents executed in connection herewith. Seller shall, at its expense, promptly execute and deliver to Bank, upon Bank’s reasonable request, all such other and further documents, agreements and instruments in compliance with or accomplishment of the covenants and agreements of Seller in this Agreement, the other Warehouse Documents and all documents executed in connection herewith. In addition, Seller will provide Bank with any and all documentation required by Bank relating to the business and background of Seller and its directors, officers, employees and representatives, and any certifications reasonably required by Bank to verify Seller’s compliance with any applicable Laws.

7.5 Accounts . To facilitate the transfer of funds contemplated by this Agreement, Seller shall establish and maintain at Bank each of the Accounts.

7.6 Required Web-Based Applications and Software . To facilitate the purchase and sale of the Participation Interests contemplated by this Agreement, Seller shall execute and deliver to Bank the Software Agreement and/or such other agreements regarding the license or use of certain web-based applications and/or software required by Bank from time to time, and shall implement and utilize such applications and/or software contemplated thereby until otherwise instructed by Bank. Seller acknowledges that it shall be required to purchase certain hardware and software and related equipment and peripherals in order to properly utilize such applications and/or software required by Bank.

7.7 Reimbursement of Expenses . Seller shall pay, upon demand by Bank, all out of pocket fees and expenses incurred by Bank in negotiating or entering into this Agreement or in administering or enforcing its rights and remedies under this Agreement, the other Warehouse Documents, and all other documents executed in connection herewith, which amounts shall include all court costs, attorneys’ fees (including for trial, appeal or other proceedings), fees of auditors and accountants, and investigation expenses reasonably incurred by Bank in connection with any such matters, together with interest at the highest rate allowed by applicable Law on each such amount from the date of written demand or request for reimbursement until the date of reimbursement. Seller and Bank shall otherwise each be responsible for their own out of pocket expenses unless expressly provided otherwise in this Agreement or the other Warehouse Documents.

7.8 Insurance . Seller shall maintain with financially sound and reputable insurers, insurance with respect to its business and Properties against such liabilities, casualties, risks and contingencies and in such types and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated and as required by Bank. The insurance required herein shall include, at a minimum: (a) a fidelity bond of at least One Million and No/100 Dollars ($1,000,000.00); and (b) an errors and omissions policy with minimum coverage of at least One Million and No/100 Dollars ($1,000,000.00); each with maximum deductibles of Fifty Thousand and No/100 Dollars ($50,000.00) and each in such form, with endorsements and issued by insurers reasonably acceptable to Bank. Bank reserves the right, in its sole and absolute discretion, to increase such insurance coverage requirements for Seller ab initio or from time to time during the term of this Agreement.

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7.9 Accounts and Records . Seller shall keep books of record and account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and activities, in accordance with GAAP. Seller shall maintain its deposit accounts, certificates of deposit and other similar accounts only in accounts insured by an agency of the United States of America with depository institutions having capital, surplus and undivided profits aggregating at least Twenty Million and No/100 Dollars ($20,000,000.00).

7.10 Right of Inspection . Seller shall permit any officer, employee, agent or representative of Bank: (a) with at least twenty-four hours (24) written notice, to examine Seller’s books of record and accounts and any and all files and records relating to the Mortgage Loans in which Bank has purchased or will purchase a Participation Interest (including any in-file credit reports), and make copies and extracts of any and all of the foregoing; and (b) discuss the affairs, finances and accounts of Seller with Seller’s officers, accountants and auditors.

7.11 Notice of Certain Events . Seller shall promptly notify Bank of any event or notice thereof which would or could have a material adverse effect upon Seller. Without limiting the generality of the foregoing, Seller shall promptly deliver to Bank copies of all notices and other documents and correspondence from any Governmental Authority regarding any alleged non-compliance or potential non-compliance with the Dodd-Frank Act or any other Legal Requirement.

7.12 Performance of Certain Obligations . Seller shall perform and observe the provisions of each Firm Commitment, and shall not agree or consent to any modification of any Firm Commitment after same has been presented to Bank, without the prior written approval of Bank.

7.13 Notice of Default . Seller shall furnish to Bank immediately upon becoming aware of the existence of any Event of Default, a written notice specifying the nature and period of existence thereof and the action which Seller is taking or proposes to take with respect thereto.

7.14 Compliance with Documents . Seller shall promptly and fully comply with any and all covenants, agreements and provisions of this Agreement, the other Warehouse Documents to which Seller is a party, and all other documents executed in connection with this Agreement.

7.15 Reserved .

7.16 Records . Seller will maintain in its files all records relating to each Mortgage Loan in which a Participation Interest is purchased by Bank for the period of time required by applicable Law, but in no event for less than twenty-five (25) months from the purchase of such Participation Interest by Bank. Within twenty-four (24) hours following any demand therefor, Seller will supply Bank with certified copies and/or originals of any such records. Further, Bank shall have the right to inspect and make copies of the same at Seller’s office in accordance with Section 7.10 .

7.17 Additional Covenants . Seller shall at all times during the term of this Agreement comply with each covenant set forth the addendum (if any) executed by Seller and Bank attached hereto as Exhibit F .

7.18 INDEMNIFICATION . SELLER SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS BANK, EACH AFFILIATE OF BANK, AND EACH OF ITS AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, SUCCESSORS, AND ASSIGNS (COLLECTIVELY, THE “ INDEMNIFIED PARTIES ”) FROM AND AGAINST ANY AND ALL LOSSES , LIABILITIES, DAMAGES, CLAIMS, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES), ACTIONS, PROCEEDINGS, OR DISPUTES INCURRED OR SUFFERED OR TO WHICH ANY INDEMNIFIED PARTY MAY BECOME

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SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO THIS AGREEMENT, THE OTHER WAREHOUSE DOCUMENTS, THE MORTGAGE LOANS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN EACH CASE, SOLELY RELATING TO CLAIMS OF ANY PERSON OTHER THAN SELLER OR FOR WHICH A REMEDY IS NOT OTHERWISE EXPRESSLY PROVIDED HEREIN, RESULTING FROM: (A) ANY NEGLIGENT OR FRAUDULENT ACT OR OMISSION OF SELLER OR ITS AGENTS OR EMPLOYEES; (B) ANY BREACH BY SELLER OF ANY MATERIAL WARRANTY OR REPRESENTATION CONTAINED HEREIN; (C) ANY BREACH BY SELLER OF ANY MATERIAL TERM OR CONDITION OF THIS AGREEMENT; (D) SELLER’S USE FOR ANY MORTGAGE LOAN OF ANY FORM OR DOCUMENT NOT PROVIDED OR APPROVED BY BANK; (D) ANY MISCALCULATIONS AND OTHER ERRORS WHICH RESULT FROM SELLER’S INDEPENDENT PROCESSING PROCEDURES OR ITS MISUSE OR ALTERATION OF ANY FORMS OR DOCUMENTS PROVIDED OR APPROVED BY BANK; OR (F) ANY FAILURE BY SELLER TO COMPLY WITH ANY LAW. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER WAREHOUSE DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) ARISING OUT OF OR RESULTING FROM THE SOLE CONTRIBUTORY OR ORDINARY NEGLIGENCE OF SUCH PERSON; PROVIDED, HOWEVER, THE INDEMNITIES PROVIDED IN THIS SECTION DO NOT EXTEND TO LOSSES, LIABILITIES, CLAIMS, OR DAMAGES CAUSED BY BANK’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. BANK MAY EMPLOY AN ATTORNEY OR ATTORNEYS TO PROTECT OR ENFORCE ITS RIGHTS, REMEDIES AND RECOURSES UNDER THIS AGREEMENT AND THE OTHER WAREHOUSE DOCUMENTS, AND TO ADVISE AND DEFEND BANK WITH RESPECT TO ANY SUCH ACTIONS AND OTHER MATTERS. SELLER SHALL REIMBURSE BANK FOR THEIR RESPECTIVE ATTORNEYS’ FEES AND EXPENSES (INCLUDING EXPENSES AND COSTS FOR EXPERTS) IMMEDIATELY UPON RECEIPT OF A WRITTEN DEMAND THEREFOR, WHETHER ON A MONTHLY OR OTHER TIME INTERVAL, AND WHETHER OR NOT AN ACTION IS ACTUALLY COMMENCED OR CONCLUDED. ALL OTHER REIMBURSEMENT AND INDEMNITY OBLIGATIONS HEREUNDER SHALL BECOME DUE AND PAYABLE WHEN ACTUALLY INCURRED BY BANK. ANY PAYMENTS NOT MADE WITHIN FIVE (5) DAYS AFTER WRITTEN DEMAND THEREFOR SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED UNDER APPLICABLE LAW FROM THE DATE OF SUCH DEMAND UNTIL FULLY PAID. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT. EACH OF BANK AND SELLER AGREES NOT TO ASSERT ANY CLAIM AGAINST THE OTHER PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES, OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT (BUT EXCLUDING ANY ATTORNEYS’ FEES AND COSTS OF BANK PAYABLE BY SELLER HEREUNDER), CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE WAREHOUSE DOCUMENTS, THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE TRANSACTIONS, THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

7.19 Audit . Seller shall permit any third-party consultant engaged by Bank (each an “ Auditor ”), at the expense of Seller, to inspect and conduct an audit of Seller’s business operations and records related thereto; provided, however, if such audit is conducted by Bank more than once during any fiscal year, and such additional audit is not the result of the occurrence and continuation of an Event of Default, Bank shall be responsible for the fee payable to the Auditor that performed such additional audit. In connection with each audit, Seller shall cooperate with the Auditor and will cause Seller’s employees,

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agents and contractors to cooperate with the Auditor, and Seller shall furnish or cause to be furnished to the Auditor such information and documentation the Auditor may consider necessary or useful in connection with the performance of the audit.

ARTICLE 8

NEGATIVE COVENANTS

At all times during the term of this Agreement, and thereafter until Seller shall have performed all of its obligations hereunder, Seller covenants and agrees that:

8.1 No Merger, Etc . Without the prior written consent of Bank, Seller shall not: (a) become a party to any merger or consolidation; (b) purchase or otherwise acquire all or any part of the assets or shares or other evidence of beneficial ownership of any Person; (c) sell or otherwise transfer all or substantially all of the assets or Properties of Seller to any other Person; (d) remove or transfer to any other Person affiliated with Seller, any of the key employees or principal officers of Seller, as determined by Bank in its sole and absolute discretion; or (e) wind-up, dissolve or liquidate. If Seller takes such action while no sums are outstanding hereunder, such action must be disclosed to Bank in writing and approved by Bank in writing prior to Bank making any further Advances hereunder.

8.2 Fiscal Year; Method of Accounting . Other than in connection with the acquisition of Seller by Walter Investment Management Corp. or its permitted assignees under that certain stock purchase agreement for the purchase of 100% of the equity interest in Seller, Seller shall not, without giving prior written notice to Bank, change its fiscal year or method of accounting.

8.3 Actions with respect to Mortgage Loans . Seller shall not:

(a) Release the Lien of any Security Instrument of any Mortgage Loan in which a Participation Interest is being or has been purchased by Bank; or

(b) Grant, create, incur, permit or suffer to exist any Lien upon the Mortgaged Property which is security for any Mortgage Loan in which a Participation Interest is owned by or is being sold to Bank except for the Lien granted under the Security Instrument of such Mortgage Loan.

8.4 Compliance with Material Agreements . Seller shall not permit any default to occur with respect to any material agreement, indenture, mortgage or document binding on it or affecting its Property or business, if such default may have a material adverse effect on the financial condition or business of Seller.

8.5 Seller’s Representations Regarding Interests Sold . Seller will not represent to any Person that Seller owns all or any portion of the Participation Interests purchased by Bank under this Agreement.

ARTICLE 9

EVENTS OF DEFAULT;

CERTAIN RIGHTS AND REMEDIES OF BANK

9.1 Events of Default . An Event of Default shall exist if any one or more of the following occurs:

(a) Seller shall fail to punctually make any payment of fees or other sums when due hereunder, or under any other Warehouse Document to which it is a party or other document executed in connection herewith, and such failure shall continue for a period of three (3) days thereafter;

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(b) The failure or refusal of Seller or any other Obligated Party to perform, observe or comply with any covenant or agreement contained in this Agreement, any other Warehouse Document or any other document executed in connection herewith, which failure or refusal is not otherwise addressed in this Section, and such failure or refusal continues for a period of five (5) days following the earlier of knowledge by Seller or notification by Buyer to Seller in writing in accordance with Section 10.5 hereof;

(c) Any material statement, warranty or representation made at any time by or on behalf of Seller or any other Obligated Party in this Agreement, any other Warehouse Document or any document executed in connection herewith, or in any writing, or any statement or representation made in any certificate, report, or opinion delivered to Bank pursuant to any Warehouse Document, is false, calculated to mislead, misleading or erroneous in any material respect at the time made; provided, however, notwithstanding the foregoing, any such false, misleading or erroneous statement, warranty or representation with respect to the matters set forth in Section 6.12 shall not constitute a Default so long as (i) at any given time, false, misleading or erroneous statements, warranties or representations regarding the matters set forth in Section 6.12 have not been made with respect to Mortgage Loans (in which Bank holds Participation Interests) which, in the aggregate, have a total outstanding principal balance of not less than $1,000,000.00 and (ii) pursuant to Section 4.7 and as otherwise required under this Agreement, Seller shall repurchase Bank’s respective Participation Interest in each Mortgage Loan for which a false, misleading or erroneous statement, warranty or representation was made with respect to the matters set forth in Section 6.12 ;

(d) An event of default shall occur (after the expiration of any applicable grace and cure periods) (i) in the punctual payment of any material indebtedness of Seller or any other Obligated Party owing to any Person (other than Bank), or in the performance, observance or compliance with any other covenant, agreement or obligation of any agreement executed in connection therewith or (ii) in the performance of any other material agreement binding upon Seller or any other Obligated Party, in each case, that has not been waived in writing by the applicable counterparty;

(e) Seller or any other Obligated Party shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of such Person or of all or a substantial part of its assets; (ii) file a voluntary petition in bankruptcy, admit in writing that it is unable to pay its debts as they become due or generally not pay its debts as they become due; (iii) make a general assignment for the benefit of creditors; (iv) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency laws; (v) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding; or (vi) take any action for the purpose of effecting any of the foregoing;

(f) An involuntary petition or complaint shall be filed against Seller or any other Obligated Party seeking bankruptcy or reorganization of such Person or the appointment of a receiver, custodian, trustee, intervenor or liquidator of it, or of all or substantially all of its assets, and such petition or complaint shall not have been dismissed within thirty (30) days of the filing thereof; or an order, order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition or complaint seeking reorganization of such Person or appointing a receiver, custodian, trustee, intervenor or liquidator of such Person, or of all or substantially all of its assets, and such order, judgment or decree shall continue unstayed and in effect for a period of thirty (30) days;

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(g) Seller shall fail within thirty (30) days to pay, bond or otherwise discharge any judgment or order for payment of money in excess of One Million and No/100 Dollars ($1,000,000.00) that is not otherwise being satisfied in accordance with its terms and is not stayed on appeal or otherwise being contested in good faith;

(h) Any event of default shall occur (after the expiration of any applicable grace and cure periods) under any documents evidencing, securing or pertaining to any indebtedness of Seller or any other Obligated Party to Bank that has not been waived in writing by the Bank;

(i) Any Person shall levy on, seize, or attach all or any material portion of the Property of Seller or any other Obligated Party which is not permanently dismissed or discharged within thirty (30) days after commencement of such action;

(j) The failure to deliver any Closing Deliverables to Bank pursuant to the terms and conditions of Article 3 and such failure shall continue for two (2) days after written notice thereof from Bank; provided, however, that Bank shall not be required to give more than three (3) such notices in any twelve (12)-month period.

(l) The dissolution of Seller or any other Obligated Party which is an entity for any reason, or the death or incapacity of any Obligated Party who is an individual;

(m) Other than in connection with the acquisition of the Seller by Walter Investment Management Corp. or its permitted assignees under that certain stock purchase agreement for the purchase of 100% of the equity interest in Seller, without the prior written consent of Bank, more than twenty percent (20.0%) in the aggregate of the record or beneficial ownership of Seller shall have been transferred, assigned or hypothecated to any Person when compared to such ownership as of the Effective Date;

(n) Other than in connection with the acquisition of the Seller by Walter Investment Management Corp. or its permitted assignees under that certain stock purchase agreement for the purchase of 100% of the equity interest in Seller, any material adverse change in the financial condition of Seller or any other Obligated Party from the condition shown on the financial statements submitted to Bank and relied upon by Bank in connection with the execution of this Agreement, which change would materially and adversely affect the ability of Seller or any other Obligated Party to perform the obligations of any such party to Bank under any Warehouse Document, the materiality and adverse effect of such change in financial condition to be reasonably determined by Bank in accordance with its credit standards and underwriting practices in effect at the time of making such determination; or

(o) The failure or refusal of Seller or any other Obligated Party to perform, observe or comply with any covenant or agreement contained in Section 4.6 or Section 4.7 .

Notwithstanding anything to the contrary in this Agreement or in any of the Warehouse Documents, Seller and Bank agree that prior to Tuesday, November 6, 2012, no (i) breach of any representation, warranty or covenant contained in this Agreement or in any of the Warehouse Documents or (ii) default or Event of Default under this Agreement or under any of the Warehouse Documents shall occur as a result of the creation or the existence of any lien or encumbrance on any Mortgage Loan pursuant to that certain First Lien Credit Agreement, dated as of July 1, 2011, between Walter Investment Management

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Corp. and the lenders specified therein or pursuant to any documents ancillary thereto so long as such liens and encumbrances are subordinate to any and all liens, encumbrances and interests of Bank in and to such Mortgage Loans.

9.2 Default Remedies . Upon the occurrence of an Event of Default, without any presentment, demand, protest, notice of protest and nonpayment, or other notice of any kind, all of which are hereby expressly waived by Seller, Bank may, in its sole and absolute discretion, immediately: (a) terminate Seller’s rights hereunder to request Bank to purchase Participation Interests, “suspend” Seller’s rights hereunder to request Bank to purchase Participation Interests, and/or exercise Bank’s other rights and remedies hereunder; (b) pursuant to the power of attorney conferred to Bank by Seller in connection with this Agreement (and in reliance of Section 10.18 in the event that Bank exercises the following remedy after the occurrence of an Event of Default specified in Section 9.1(e) or Section 9.1(f) ), sell in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as Bank shall reasonably deem satisfactory, any or all Mortgage Loans in which Bank then holds Participation Interests and apply the proceeds thereof to the aggregate outstanding Advances by Bank for purchase the Participation Interests and to any other amounts owing to Bank in connection with this Agreement or the other Warehouse Documents, in such order and amounts determined by Bank; (c) exercise its rights and remedies under any Pledge Agreement, any other Warehouse Document or other document or instrument executed in connection with this Agreement; and/or (d) exercise any other right or remedy otherwise available to Bank at law or in equity. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default as specified in Section 9.1(k) or Section 9.1(l) , Bank may demand that either: (a) Seller shall take immediate action to promptly locate a new Investor acceptable to Bank and/or obtain a new Firm Commitment from such Investor; or (b) Seller repurchase the Participation Interest in the Mortgage Loans which are affected by such Sections. Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(e) or Section 9.1(f) occurs, fees and other sums due hereunder shall become automatically and immediately due and payable, both without any action by Bank and without presentment, demand, protest, notice of protest and nonpayment, notice of acceleration or of intent to accelerate, or any other notice of any kind, all of which are hereby expressly waived, notwithstanding anything contained herein to the contrary.

ARTICLE 10

MISCELLANEOUS

10.1 Accounting Principles . Where the character or amount of any asset or liability or item of income or expense is required to be determined or other financial or accounting computation is required to be made for the purposes of this Agreement or the other Warehouse Documents, such determination shall be made in accordance with GAAP, except where such principles are inconsistent with the requirements of this Agreement. In addition, any accounting term used in this Agreement or the other Warehouse Documents shall have, unless otherwise specifically provided therein, the meaning customarily given to such term in accordance with GAAP or other method of accounting acceptable to Bank.

10.2 Time . Time is of the essence of each and every term of this Agreement and the other Warehouse Documents.

10.3 Titles of Articles, Sections and Subsections . All titles or headings to articles, sections, subsections or other divisions of this Agreement or any other Warehouse Document or the exhibits or addenda hereto or thereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the content of such articles, sections, subsections or other divisions, such content being controlling as to the agreement between the parties hereto.

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10.4 Seller’s Status . It is agreed that Seller and Bank are not partners or joint venturers, and nothing contained herein shall be construed to create a partnership, joint venture or similar relationship between the parties. Seller shall not act as or hold itself out to the public as being an agent for Bank, but is to act in all loan origination, administration and servicing matters hereunder for itself only, except to the extent that Seller is required under this Agreement to act as a trustee with fiduciary duties to hold for the benefit of Bank the Mortgage Loans and the Mortgage Loan documents, and any and all funds and receipts, whether as principal, interest, escrows of otherwise, in respect of any Mortgage Loan in which a Participation Interest is owned by Bank, and to make the remittances of any and all such documents and funds as specified in this Agreement. It further is agreed that Seller, as trustee, shall not assign its responsibilities under this Agreement except in accordance with this Agreement.

10.5 Notices . Any and all notices, requests and other communications required or permitted to be given under or in connection with this Agreement, the other Warehouse Documents or any other documents executed in connection herewith, except as otherwise provided herein or therein, shall be in writing and mailed, faxed, or sent by electronic mail to the respective address, facsimile number or email address, and to the attention of the designated recipient, provided below for Bank and provided on the signature page of this Agreement for Seller (or to such other address, facsimile number or email address, or to such designated recipient, as either party may designate in a written notice to the other party furnished pursuant to this Section). Such notices, requests and other communications so sent shall be deemed to have been given immediately if made by facsimile or electronic mail (confirmed by concurrent written notice sent first class U.S. mail, postage prepaid), or one (1) day after sending by recognized national overnight courier company, signature of recipient required if to Seller or Bank; any notice, request and other communication sent by any other means shall be deemed made when actually received in writing by the designated recipient of the party to which notice is provided in accordance with this Section. Notwithstanding the foregoing, Requests or communications related to a Request shall not be effective until actually received by Bank. Bank’s address for notices is:

TEXAS CAPITAL BANK, N.A.

2350 Lakeside Boulevard, Suite 310

Richardson, Texas 75082

Attention: Jack Nunnery, Executive Vice President

Facsimile: (800) 542-0353

E-mail: jack.nunnery@texascapitalbank.com

10.6 Amendments and Waivers . Subject to Section 10.7, any provision of this Agreement or any other Warehouse Document or any other documents executed in connection herewith, may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by all the parties to this Agreement, such Warehouse Document or such other documents, as the case may be.

10.7 Amendment Due to Government Regulation . Both Bank and Seller understand that Bank is subject to the supervision of various Governmental Authorities. Should any Governmental Authority direct Bank to discontinue any practice set forth herein or to amend the terms hereof, Bank shall take immediate action to do so and shall notify Seller of such action. Seller hereby consents to such action and agrees to enter into any amendment or termination hereof as may be reasonably required by Bank to bring Bank into full compliance with applicable Laws.

10.8 Disclosure of Information . Seller agrees that Bank may elect, at any time and in its sole discretion, to sell and grant an undivided percentage interest in all or a portion of Bank’s Participation Interests to one or more financial institutions, private investors and/or other entities (collectively, “ Sub-Participants ”). Seller further agrees that Bank may disseminate to any such actual or potential Sub-Participants all documents and information (including, without limitation, all financial information) which

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has been or is hereafter provided to or known to Bank in connection with this Agreement, including, with respect to Seller, each Obligated Party and each Mortgage Loan in which Bank has purchased a Participation Interest; provided, however, that any such documents or information (including financial information) disclosed by Bank to a Sub-Participant shall be subject to the provisions of a confidentiality agreement (in a form substantially similar in all material respects to the form pre-approved by Seller on or prior to the date on which this Agreement is executed by Seller).

10.9 Invalidity . In the event that any one or more of the provisions contained in this Agreement, any Warehouse Document or any other documents executed in connection herewith or therewith shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, the other Warehouse Documents or any other documents executed in connection herewith or therewith.

10.10 Survival . All covenants, agreements, representations and warranties made herein and in any other Warehouse Document shall continue in full force and effect as long as Bank has the right to purchase Participation Interests hereunder and until all obligations to Bank hereunder and thereunder have been fully satisfied and discharged. Without limiting the generality of the foregoing, termination of this Agreement by either party pursuant to the terms of this Agreement shall not relieve Seller of: (a) its duties, obligations, representations, warranties, covenants, agreements or indemnities which accrued under this Agreement prior to the Effective Purchase/Sale Termination Date or the Termination Date; or (b) performance of its duties and obligations hereunder so long as any Mortgage Loan in which Bank owns a Participation Interest remains unsold to an Investor.

10.11 Successors and Assigns; Notice of Merger, Acquisition or Sale .

(a) All covenants and agreements contained by or on behalf of Seller in this Agreement or any Warehouse Document shall bind Seller’s successors and assigns and shall inure to the benefit of Bank and its successors and assigns. Seller shall not, however, have the right to assign its rights under this Agreement or any interest herein, without the prior written consent of Bank, which consent may be withheld by Bank for any reason.

(b) Bank shall promptly notify Seller in writing if: (i) Bank is acquired by merger or acquisition or if Bank otherwise conveys substantially all of its assets and/or (ii) Bank sells its Warehouse Lending Group (including, all, but not less than all, rights, titles and interests of Bank in and to this Agreement).

10.12 Intentionally Omitted .

10.13 Bank’s Consent or Approval . Except where otherwise expressly provided in this Agreement or the other Warehouse Documents, in any instance under this Agreement or the other Warehouse Documents where the approval, consent or the exercise of judgment of Bank is required: (a) the granting or denial of such approval or consent and the exercise of such judgment shall be (i) within the sole discretion of Bank and (ii) deemed to have been given only by a specific writing intended for that purpose and executed by Bank; and (b) in order to be effective, such approval, consent or exercise of judgment must be given by Bank prior to the applicable action to be taken by Seller which requires Bank’s approval, consent or exercise of judgment, unless otherwise agreed to in writing by Bank. Each provision for consent, approval, inspection, review, or verification by Bank is for Bank’s own purposes and benefit only.

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10.14 Cumulative Rights . The rights and remedies of Bank under this Agreement and any other documents executed in connection herewith shall be cumulative, and shall be in addition to any rights and remedies of Bank at law or in equity.

10.15 Acceptance of Agreement in Texas; Governing Law . Seller has signed this Agreement and submits it to Bank for acceptance at Bank’s offices in Richardson, Collin County, Texas. Seller and Bank shall make all payments and perform all other obligations arising hereunder at Collin County, Texas, and this Agreement is made and entered into at Collin County, Texas. This Agreement and all of the terms and conditions hereof and the rights of the parties hereto shall be governed by and interpreted in accordance with the Laws of the State of Texas and venue for any legal action brought hereunder shall lie in Collin County, Texas.

10.16 Seller’s Understanding . Seller has read this Agreement and has had the opportunity to seek and/or receive counsel from an attorney of Seller’s choice as to the effects hereof.

10.17 Nature of Transactions .

(a) The relationship established by this Agreement and the other Warehouse Documents between Bank and Seller is that of a seller and purchaser of Participation Interests in Mortgage Loans. It is the intention of Bank and Seller that (i) the purchase and sale of each Participation Interest hereunder shall for all purposes be treated and construed as a sale by Seller of a certain undivided percentage ownership interest in the related Mortgage Loan and the purchase by Bank of a certain undivided percentage ownership interest in the related Mortgage Loan, and (ii) each purchase of a Participation Interest by Bank and each sale of a Participation Interest by Seller is a sale of an undivided interest in a promissory note to Bank, and that pursuant to Section 9.109 of the UCC, Bank and Seller’s characterization of each such sale and purchase of a Participation Interest shall be conclusive that (A) the transaction is a sale and is not a secured transaction and (B) legal and equitable title has passed to Bank in the Mortgage Loan in which Bank acquired such Participation Interest. Notwithstanding any term, condition or other provision of this Agreement or the other Warehouse Documents, it is the intention of Seller and of Bank that nothing contained herein or in the other Warehouse Documents shall be construed in such a way as to constitute any transaction contemplated hereby as a loan or extension of credit from Bank to Seller.

(b) Should any court of competent jurisdiction deem any transaction governed by this Agreement to be a loan or extension of credit, as collateral security for Seller’s obligations to Bank under this Agreement, Bank shall have a first priority security interest in the following with respect to each Mortgage Loan in which Bank purchased Participation Interest, wherever the following is located and whether the following is now owned or existing or is owned, acquired, or arises hereafter, including acquisition by contract or by operation of Law (all terms used in this Section which are defined in the UCC shall have the meanings given to such terms in the UCC): (i) all right, title and interest of Seller in and to each Mortgage Note and Security Instrument; (ii) all right, title and interest of Seller in and to each Mortgage Loan, guaranty, loan document, Title Policy, insurance policy, take-out commitment, and any other right ancillary to or securing or relating to any Mortgage Note; (iii) all accounts and receivables of Seller arising out of or relating to any and all Mortgage Loans; (iv) all general intangibles of Seller relating to or arising out of any and all Mortgage Loans; (v) all of the rights of Seller to the payment of money, including tax refund and insurance proceeds, relating to any and all Mortgage Loans or the real properties securing the same; (vi) all files, records, books, ledger cards (including computer programs, tapes and related electronic data processing software) and writings of Seller or in which it has an interest in any way relating to any and all Mortgage Loans; (vii) all other personal property of

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Seller of any kind or type whatsoever relating to any and all Mortgage Loans; and (vii) all additions, substitutions, replacements, proceeds, interest, and products of each of the foregoing described in this Section. For this purpose, this Agreement shall constitute a security agreement in accordance with the UCC, and Bank shall have all the rights of a secured creditor with respect to such security.

10.18 Repurchase Agreement . It is expressly stipulated to be the intent of Bank and Seller, and understood and agreed by Bank and Seller, that (a) this Agreement constitutes a “repurchase agreement” under Section 101(47) of the Bankruptcy Code and (b) pursuant to Sections 362(b), 555 and 559 of the Bankruptcy Code, the rights of Bank under this Agreement related to the sale and repurchase of Mortgage Loans (including, the rights of Bank hereunder, upon the occurrence of an Event of Default, to liquidate and/or foreclose on the Mortgage Loans in which it holds Participation Interests) shall not be stayed, avoided or otherwise limited by the operation of any provision of the Bankruptcy Code. Bank and Seller further acknowledge that the provisions of this Agreement providing for Bank’s delivery of the Mortgage Loans in which the Bank owns a Participation Interest to Investors are for the convenience of Seller, and that, in the absence of any such delivery to and payments by an Investor, Seller is obligated to repurchase Bank’s Participation Interests in the Mortgage Loans in accordance with the terms hereof.

10.19 Usury Savings Provision . It is expressly stipulated to be the intent of Bank and Seller, and understood and agreed by Bank and Seller, that this Agreement: (a) does not represent a loan from Bank to Seller; and (b) allows Bank to purchase the Participation Interests for its own account and for a short term investment. If, notwithstanding the foregoing or the terms of this Agreement, a court of competent jurisdiction establishes a loan or extension of credit within this Agreement from Bank to Seller, then the parties to this Agreement hereby understand, acknowledge and agree that in such event: (a) Seller shall be the underlying obligor of that loan or extension of credit established by such court of competent jurisdiction; (b) Seller is utilizing the proceeds of that loan or extension of credit established by such court of competent jurisdiction for business, commercial, investment, or similar purposes; and (c) Seller has determined that it is beneficial to use any and all proceeds of that loan or extension of credit established by such court of competent jurisdiction to establish collateral for that loan or extension of credit established by such court of competent jurisdiction by: (i) making deposits at Bank; (ii) purchasing certificates of deposit from Bank; and/or (iii) establishing other accounts at Bank. Furthermore, it is Bank’s and Seller’s intention and agreement that if a court of competent jurisdiction establishes a loan or extension of credit from Bank to Seller under this Agreement, then any proceeds of that loan or extension of credit established by such court of competent jurisdiction deposited with Bank as additional collateral for that loan or extension of credit: (a) shall be considered a compensating balance under and pursuant to Section 276.003 of the Texas Finance Code; and (b) shall not be considered a reduction in the amount of the proceeds of that loan and/or extension of credit from Bank to Seller. Additionally, it is the stipulated, understood and agreed to be the intent of Bank and Seller that this Agreement shall at all times comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the Indebtedness (as hereinafter defined), if any, or applicable United States federal law to the extent that such law permits Bank to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law. For purposes of this provision, “ Indebtedness ” shall mean all indebtedness, if any, evidenced, referenced, described, or established by a court of competent jurisdiction under this Agreement, and all amounts payable in the performance of any covenant or obligation in any of the other documents or any other communication or writing by or between Bank and Seller related to the transaction or transactions that are the subject matter of this Agreement, or any part of such Indebtedness, if any. If the applicable law is ever judicially interpreted so as to render usurious any amount contracted for, charged, taken, reserved or received in respect of the Indebtedness, if any, including by reason of the acceleration of the maturity or the prepayment thereof, then it is Bank’s and Seller’s express intent that all amounts charged in excess of the Maximum Lawful Rate (as hereinafter defined), if any, shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Lawful Rate theretofore

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collected by Bank, if any, shall be credited on the principal balance of the Indebtedness, if any, or, if the Indebtedness, if any, has been or would thereby be paid in full, refunded to Seller, and the provisions of this Agreement and any underlying documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable laws, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if the Indebtedness has been paid in full before the end of the stated term hereof, then Bank and Seller agree that Bank shall, with reasonable promptness after Bank discovers or is advised by Seller that interest was received in an amount in excess of the Maximum Lawful Rate, either credit such excess interest against the Indebtedness then owing by Seller to Bank and/or refund such excess interest to Seller. If and to the extent Indebtedness is determined to exist by a court of competent jurisdiction, then Seller hereby agrees that as a condition precedent to any claim seeking usury penalties against Bank, Seller will provide written notice to Bank, advising Bank in reasonable detail of the nature and amount of the violation, and Bank shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Seller or crediting such excess interest against the Indebtedness, if any, then owing by Seller to Bank. All sums contracted for, charged, taken, reserved or received by Bank for the use, forbearance or detention of Indebtedness, if any, shall, to the extent permitted by applicable law, be amortized, prorated, allocated or spread, using the actuarial method, throughout the stated term of this Agreement (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Indebtedness, if any, does not exceed the Maximum Lawful Rate from time to time in effect and applicable to the Indebtedness, if any, for so long as debt is outstanding. In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving tri-party accounts) apply to this Agreement or any other part of the Indebtedness, if any. If and to the extent any Indebtedness is determined to exist under this Agreement by a court of competent jurisdiction, then notwithstanding anything to the contrary contained herein or in any of underlying documents referenced herein, it is not the intention of Bank to accelerate the maturity of any interest, if any, that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. If and to the extent any Indebtedness is determined to exist under this Agreement by a court of competent jurisdiction, then the terms and provisions of this paragraph shall control and supersede every other term, covenant or provision contained herein, in any of the other underlying documents referenced within this Agreement or in any other document or instrument pertaining to the Indebtedness. As used herein, the term “ Maximum Lawful Rate ” shall mean the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved in accordance with the applicable Laws of the State of Texas (or applicable United States federal law to the extent that such law permits Bank to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law), taking into account all fees, charges and any other value whatsoever made in connection with the transaction evidenced by this Agreement. To the extent United States federal law permits contracting for, charging, taking, receiving or reserving a greater amount of interest than under Texas law, then such United States federal law will be relied upon instead of Texas law for the purpose of determining the Maximum Lawful Rate. Additionally, if and to the extent any Indebtedness is determined to exist under this Agreement by a court of competent jurisdiction, to the extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time utilize any other method of establishing the Maximum Lawful Rate under Texas law or under other applicable law by giving notice, if required, to Seller as provided by such applicable law now or hereafter in effect.

10.20 WAIVER OF JURY TRIAL . TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, SELLER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER WAREHOUSE DOCUMENTS OR ANY OF THE DOCUMENTS, INSTRUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

Mortgage Warehouse Agreement

Page 41

10.21 Joint and Several Liability . The liability of all Persons obligated in any manner under this Agreement and any of the other Warehouse Documents shall be joint and several. If more than one Person shall execute this Agreement as “Seller”, then the term “Seller” as used herein and in the other Warehouse Documents shall refer both to each such Person individually and to all such Persons collectively.

10.22 Counterparts . To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all Persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

10.23 ENTIRE AGREEMENT . THIS WRITTEN AGREEMENT AND THE OTHER WAREHOUSE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

10.24 Reporting . Seller or any Affiliate of Seller may disclose all or any portion of this Agreement (including a summary of the terms thereof) with any Governmental Authority, including the filing of this Agreement or any portion thereof (including a summary of the terms thereof) with the United States Securities and Exchange Commission (the “SEC”) via the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR); provided that Seller or any Affiliate of Seller shall only disclose all or any portion of this Agreement to the extent required by such Governmental Authority.

[Signature Pages Follow]

Mortgage Warehouse Agreement

Page 42

EXECUTED by Seller to be effective as of the Effective Date.


SELLER: REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION

By:
Name:		H. MARC HELM
Title:		CHIEF EXECUTIVE OFFICER

Seller’s Contact Information for Notices:

REVERSE MORTGAGE SOLUTIONS, INC. 2727 SPRING CREEK DRIVE SPRING, TX 77373 Attention: H. MARC HELM Facsimile: (281) 404-7950 E-mail: mhelm@rmsnav.com

* * *


STATE OF		§
		§
COUNTY OF		§

This document was acknowledged before me on the ____ day of __________________, 20___, by H. MARC HELM, CHIEF EXECUTIVE OFFICER of REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION, known to me to be the person who executed this document in the capacity and for the purposes therein stated.



		Notary Public, State of

[NOTARY STAMP]

[Custodian’s Signature Page Follows]

Mortgage Warehouse Agreement

Page 43

EXECUTED effective as of the Effective Date, the undersigned Custodian hereby joins in the execution of this Agreement for the limited purpose of evidencing Custodian’s consent and agreement to the terms and conditions of Section 5.11 .


CUSTODIAN:

H. MARC HELM

Custodian’s Contact Information for Notices:

H. MARC HELM 2727 SPRING CREEK DRIVE SPRING, TX 77373 Facsimile: (281) 404-7950 E-mail: mhelm@rmsnav.com

* * *


STATE OF		§
		§
COUNTY OF		§

This document was acknowledged before me on the ____ day of __________________, 20___, by H. MARC HELM, in such person’s individual capacity, known to me to be the person who executed this document in the capacity and for the purposes therein stated.



		Notary Public, State of

[NOTARY STAMP]

[Bank’s Signature Page Follows]

Mortgage Warehouse Agreement

Page 44

ACCEPTED AND AGREED to by Bank at Richardson, Collin County, Texas, and executed to be effective as the Effective Date.


BANK:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
		Lisa Yowell, Vice President

Mortgage Warehouse Agreement

Page 45

EXHIBIT LIST


Exhibit A-1	-	Master Bailee Agreement
Exhibit A-2	-	Bailee Letter
Exhibit B	-	Power of Attorney
Exhibit C	-	Pledge Agreement
Exhibit D	-	Reserved
Exhibit E	-	UCC-1 Financing Statement
Exhibit F	-	Additional Warehouse Facility Covenants Addendum
Exhibit G	-	List of Current Warehouse Facilities
Exhibit H	-	List of Current Affiliate Escrow Agents
Exhibit I	-	Software Agreement

Mortgage Warehouse Agreement

Page 46

EXHIBIT A-1

(TO MORTGAGE WAREHOUSE AGREEMENT)

MASTER BAILEE AGREEMENT

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit A-1

[BANK’S LETTERHEAD]

[DATE]

[INVESTOR’S NAME]

[INVESTOR’S ADDRESS]

Attn: [CONTACT PERSON]

Re:

Master bailee agreement with respect to residential mortgage loans originated by REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION (the foregoing are each individually and collectively referred to herein as “ Mortgage Originator ”)

To Whom It May Concern:

Texas Capital Bank, National Association (“ Bank ”) has been requested by Mortgage Originator to purchase participation interests in, finance, or otherwise provide warehousing accommodations with respect to residential mortgage loans (“ Mortgage Loans ”) originated by Mortgage Originator for ultimate delivery and sale to you, among other investors. As a condition precedent to providing such financial accommodations to Mortgage Originator, Bank requires your written approval and agreement to the terms of this letter.

Bank (and/or other parties) may from time to time deliver and tender to you original promissory notes and other pertinent loan documentation relating to Mortgage Loans in which Bank has purchased participation interests, financed or otherwise provided warehousing accommodations. These instruments and documents shall be delivered to you from time to time in connection with your anticipated purchase of the Mortgage Loans.

You agree to accept and hold all such promissory notes and other pertinent loan documentation evidencing, securing or related to Mortgage Loans in trust for and as bailee for Bank, and to take no action to sell, transfer, encumber or endorse the same without Bank’s prior written consent. You shall be responsible for ensuring the safety of said promissory notes and pertinent documentation until you have purchased and paid for and Bank has received good funds representing the purchase price for each such Mortgage Loan, or until said promissory notes and other pertinent loan documentation have been returned by you to and received by Bank. Any and all of Bank’s rights, titles and interests (including security interests) in and to each Mortgage Loan and each promissory note and loan document evidencing, securing, or related to each such Mortgage Loan shall continue until final payment in good funds to purchase such Mortgage Loan has been made by you and received and accepted by Bank (provided, however, if Mortgage Originator retains servicing rights for any such Mortgage Loans in which Mortgage Originator has granted a security interest to Bank, Bank shall continue to have a security interest therein unless released by Bank in writing).

Unless changed by Bank by subsequent written notice to you, payment of the purchase price for each such Mortgage Loan, in an amount to be agreed upon by Bank, shall be made by wire transfer as follows:

Texas Capital Bank, National Association

ABA #111017979

For Credit to: REVERSE MORTGAGE SOLUTIONS, INC.

Account No.: 2111006967

Mortgage Warehouse Agreement: Exhibit A-1

Page 1

If payment by you of the purchase price for any Mortgage Loan is not made to Bank within twenty (20) days of the delivery of the promissory note and other pertinent loan documentation evidencing, securing, or related to such Mortgage Loan, then you shall return the promissory note and all other pertinent loan documentation evidencing, securing, or related to such Mortgage Loan directly to Bank at the address set forth above.

This letter shall apply to and govern every Mortgage Loan delivered to you (except for any Mortgage Loans that are delivered to you under a separate bailee letter subsequently executed by Bank containing different terms and conditions, in which case, such separate letter shall apply to and govern each specific Mortgage Loan referenced therein) until: (a) thirty (30) days following the date you deliver to Bank, at the address set forth above, and Bank receives, a written notice of revocation stating that from and after such thirty (30)-day period you will no longer accept the terms hereof; or (b) Bank provides written notice to you, at the address set forth above, of its revocation of the terms of this letter, in which case the terms of this letter shall terminate on the date set forth on such written notice. The terms of this letter supersede and control the terms of any prior agreements between the parties regarding the subject matter of this letter.

Please acknowledge your receipt hereof and your agreement to the above terms by executing this letter and returning a copy to Bank. In the interest of time, we would appreciate receiving a facsimile copy on the date hereof, with the original to promptly follow by U.S. Mail. However, any failure to countersign and return shall not mitigate your duties or obligations to Bank as a bailee hereunder. You acknowledge that Bank is relying upon the covenants made by you in this letter.

Thank you for your cooperation.


Very truly yours, TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
Name:
Title:


AGREED TO AND ACCEPTED: [ INVESTOR’S LEGAL NAME], a [STATE OF FORMATION] [ENTITY TYPE]

By:
Name:
Title:

Mortgage Warehouse Agreement: Exhibit A-1

Page 2

EXHIBIT A-2

(TO MORTGAGE WAREHOUSE AGREEMENT)

BAILEE LETTER

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit A-2

[BANK’S LETTERHEAD]

[DATE]

[INVESTOR’S NAME]

[INVESTOR’S ADDRESS]

Attn: [CONTACT PERSON]

Re:

Bailee letter with respect to a residential mortgage loan originated by REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION (the foregoing are each individually and collectively referred to herein as “ Mortgage Originator ”)

To Whom It May Concern:

Texas Capital Bank, National Association (“ Bank ”) is tendering to you one promissory note (the “ Promissory Note ”) in the original principal amount of $ , executed by , dated and payable to , along with other pertinent loan documentation. Until full and final payment therefor is made by you in accordance with this letter, you agree to hold said Promissory Note and related documents in trust for and as bailee for Bank, and to take no further action to sell, transfer or endorse the same without Bank’s prior written consent.

Payment of the purchase price for the Promissory Note, in the amount agreed upon by Bank, shall be made by wire transfer as follows:

Texas Capital Bank, National Association

ABA #111017979

For Credit to: REVERSE MORTGAGE SOLUTIONS, INC.

Account No.: 2111006967

If payment in full for the purchase price for the Promissory Note is not made by you within twenty (20) days of the date hereof, then you agree to take all necessary action to immediately return the Promissory Note and all related documents to Bank at the above address. You will be responsible for ensuring the safety of said Promissory Note and documents until they are paid for or returned to and received by Bank. Any and all of Bank’s rights, titles and interests (including security interests) in and to the Promissory Note and related documents shall continue until final payment in good funds to purchase such Promissory Note has been made by you and received and accepted by Bank (provided, however, if Mortgage Originator retains servicing rights with respect to the loan evidenced by the Promissory Note and in which servicing rights Mortgage Originator has granted a security interest to Bank, Bank shall continue to have a security interest therein unless released by Bank in writing).

Please acknowledge your receipt hereof and agreement to the above terms by executing this letter and returning a copy to Bank. We would appreciate receiving a facsimile copy on the date of receipt hereof and the original by U.S. mail. However, any failure to countersign and return shall not mitigate your duties and obligations to Bank as a bailee hereunder. You acknowledge that Bank is relying upon the covenants made by you in this letter.

Mortgage Warehouse Agreement: Exhibit A-2

Page 1


Very truly yours, TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
Name:
Title:


AGREED TO AND ACCEPTED: [ INVESTOR’S LEGAL NAME], a [STATE OF FORMATION] [ENTITY TYPE]

By:
Name:
Title:

Mortgage Warehouse Agreement: Exhibit A-2

Page 2

EXHIBIT B

(TO MORTGAGE WAREHOUSE AGREEMENT)

POWER OF ATTORNEY

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit B

LIMITED POWER OF ATTORNEY

Pursuant to that certain Amended and Restated Mortgage Warehouse Agreement (as amended or modified from time to time, the “ Warehouse Agreement ”) dated November 1, 2012 (“ Effective Date ”), executed by the undersigned (the undersigned are each individually and collectively referred to herein as “ Seller ”) and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”), relating to Bank’s discretionary purchase of Participation Interests in Mortgage Loans originated by Seller, Seller hereby irrevocably appoints Bank and each officer of Bank as its attorney-in-fact, with full power of substitution, for, on behalf of, and in the name of Seller, to: (a) endorse and deliver to any Person any notes, checks, drafts, money orders or other instruments of payment coming into Bank’s possession and representing any payment made in respect of any Mortgage Loan in which Bank has purchased a Participation Interest in accordance with the Warehouse Agreement, and any collateral and the Firm Commitment therefor; (b) prepare, complete, execute, deliver and record, (i) any endorsement to Bank, any Investor or any other Person, of any applicable Mortgage Note, or (ii) any assignment to Bank, any Investor or any other Person, of the interest in any Mortgage Note, Security Instrument and other related Mortgage Loan documents for a Mortgage Loan in which Bank has purchased a Participation Interest pursuant to the Warehouse Agreement; (c) do anything necessary or desirable to effect transfer of all or any part of each Mortgage Loan in which Bank has purchased a Participation Interest in accordance with the Warehouse Agreement to Bank or to any Investor or any other Person; (d) commence, prosecute, settle, discontinue, defend, or otherwise dispose of any claim relating to any Firm Commitment or any Mortgage Loan in which Bank has purchased a Participation Interest in accordance with the Warehouse Agreement; (e) sign Seller’s name wherever appropriate to effectuate the purposes of the Warehouse Agreement; and (f) to take such further action as Bank may deem appropriate, and to act under changed circumstances, the exact nature of which may not be currently foreseen or foreseeable, in order to fully and completely effectuate Bank’s rights under the Warehouse Agreement. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Warehouse Agreement.

The powers and authorities herein conferred on Bank may be exercised by Bank through any Person who, at the time of the execution of a particular instrument, is an officer of Bank. The limited power of attorney conferred herein is granted for a valuable consideration and is coupled with an interest and, therefore, is irrevocable so long as any duties or obligations to Bank under the Warehouse Agreement or the other Warehouse Documents, or any part thereof, shall remain unpaid or otherwise unsatisfied, and so long as Bank may elect to purchase Participation Interests under the Warehouse Agreement.

This appointment shall be construed in accordance with the Laws of the State of Texas, and venue for any proceeding hereunder shall lie exclusively in Collin County, Texas.

Dated effective as of the Effective Date.


SELLER: REVERSE MORTGAGE SOLUTIONS, INC.

By:
Name:		H. MARC HELM
Title:		CHIEF EXECUTIVE OFFICER

* * *


STATE OF		§
		§
COUNTY OF		§

This document was acknowledged before me on the day of , 20 , by H. MARC HELM, CHIEF EXECUTIVE OFFICER of REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION, known to me to be the person who executed this document in the capacity and for the purposes therein stated.

Notary Public, State of

[NOTARY STAMP]

Mortgage Warehouse Agreement: Exhibit B

Page 1

EXHIBIT C

(TO MORTGAGE WAREHOUSE AGREEMENT)

PLEDGE AGREEMENT

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit C

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “ Pledge ”) is executed effective as of November 1, 2012 (“ Effective Date ”), by REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION (the foregoing are each individually and collectively referred to herein as “ Seller ”), and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”).

RECITALS

A. Pursuant to that certain Amended and Restated Mortgage Warehouse Agreement dated November 1, 2012, executed by Bank and Seller, as may have been amended or modified from time to time (the “ Warehouse Agreement ”), Bank has agreed, on a discretionary basis, to purchase Participation Interests in various Mortgage Loans subject to the terms and conditions of the Warehouse Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Warehouse Agreement.

B. As partial consideration for Bank entering into the Warehouse Agreement and/or for Bank to now or hereafter purchase Participation Interests subject to the terms and conditions of the Warehouse Agreement, Seller has agreed, pursuant to the terms and conditions of this Pledge, to assign and pledge to Bank, and grant Bank a security interest in and to, certain accounts established and maintained by Seller at Bank pursuant to the Warehouse Agreement and described herein.

AGREEMENT

NOW, THEREFORE, for and in consideration of the matters set forth above and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Seller does hereby assign and pledge as collateral, for the purpose of securing the performance by Seller of each and every of its duties and obligations under the Warehouse Agreement and the other Warehouse Documents, all of Seller’s right, title and interest in and to each depository and other account established by Seller at Bank pursuant to the Warehouse Agreement, and all funds therein contained and all earnings thereon and proceeds thereof (collectively, the “ Account ”), including without limitation the Account more particularly described on Schedule 1 attached hereto. For the avoidance of doubt, the foregoing pledge shall not include any account (other than the Accounts) established by Seller at Bank which is not specifically established pursuant to the Warehouse Agreement.

2. Should any default occur under the terms of the Warehouse Agreement or any other Warehouse Document, then Bank may enforce this Pledge in any manner provided by at law or in equity, and charge all or any portion of any sums owing under the Warehouse Agreement or any other Warehouse Document, for any reason as provided therein or herein, to the extent of the withdrawal value of said Account. Should such default occur, Bank may proceed against the Account without exhausting its remedies against any parties liable under or with respect to the Warehouse Agreement or any other Warehouse Document or against any other security therefor, whether in court, by foreclosure, by private sale or otherwise, at which Bank may be a purchaser, and without making any election, and this Pledge may be enforced and all sums due under the Warehouse Agreement or any other Warehouse Document shall be charged to the aforesaid withdrawal value of such Account to the extent thereof, and Seller shall be liable for the excess, if any.

Mortgage Warehouse Agreement: Exhibit C

Page 1

3. Seller shall maintain the Account with Bank for the full term of the Warehouse Agreement. Seller will not create, incur, or suffer to exist any Lien on the Account except the security interest created by this Pledge.

4. Nothing in this Pledge shall be construed as requiring Bank to enforce this Pledge. Bank’s failure to do so on one or more occasions shall not affect Bank’s right so to do; nor will enforcement of this Pledge for less than the full value of the Account impair the effectiveness of this Pledge as to the remaining value thereof. Bank may elect to enforce its rights under the Warehouse Agreement or any other Warehouse Document without resort to the remedies provided in this Pledge.

5. Bank expressly agrees that at such time as the duties and obligations of Seller under the Warehouse Agreement have been performed and satisfied without the necessity of Bank exercising its rights hereunder or any other Warehouse Document, and no defense against the duties and obligations under the Warehouse Agreement or any other Warehouse Document or adverse claims of ownership to any security therefor is being asserted, then this Pledge shall be released in writing by Bank.

6. From and after the occurrence of an Event of Default or a default under any other Warehouse Document, Seller authorizes Bank, at Bank’s option, to collect and receive any and all sums becoming due upon the Account, such sums to be held by Bank without liability for interest thereon and applied toward the performance of the duties and obligations to Bank under the Warehouse Agreement and any other Warehouse Document. Subject to the terms hereof and the Warehouse Agreement, Bank shall have the full control of the Account until it is released in accordance herewith. All interest, if any, earned on the Account prior to an Event of Default or a default under any other Warehouse Document shall be paid to Seller.

7. Included within Bank’s rights and remedies provided for herein is the right of Bank to sell the Account at public or private sale to the highest bidder for cash, after having given notice of the time, place and terms of such public or private sale at least ten (10) days after sending reasonable notice to Seller and to such other Person or Persons legally entitled thereto under the UCC. Bank shall transfer to the purchaser at such sale said Account, and the recitals in such transfer shall be prima facie evidence of the truth of the matters therein stated, and all prerequisites to such sale required hereunder and under the Laws of Texas shall be presumed to have been performed. The proceeds of the sale shall be applied as follows: (a) first, to the reasonable expenses of the sale; (b) then, to unpaid sums due under the Warehouse Agreement or any other Warehouse Document hereby secured; (c) then, to the discharge of any excess or damages which Bank may be entitled to reimbursement provided in the Warehouse Agreement or any other Warehouse Document, or may be entitled to under the terms thereof, or under the terms of this Pledge; and (d) the balance, if any, including any surplus, to Seller. Bank shall have the right to purchase at such public sale, being the highest bidder thereof.

8. Bank, in addition to the rights and remedies provided for in the preceding paragraphs, shall have all the rights and remedies of a secured party under the UCC, and shall have the common law rights of set off and banker’s lien, and Bank shall be entitled to avail itself of all such other rights and remedies as may be now or hereafter existing at law or in equity for the performance of all duties and obligations under the Warehouse Agreement and the other Warehouse Documents, and the foreclosure of the security interest created hereby and the resort to any remedy provided hereunder or provided by the UCC, or by any other Law of Texas, shall not prevent the concurrent exercise or enforcement of any other appropriate remedy or remedies.

9. The requirement of reasonable notice to Seller of the time and place of any public sale of the Account, or of the time after which any private sale or any other intended disposition thereof is to be made, shall be met if such notice is mailed, postage prepaid, to Seller at the notice address set forth in the Warehouse Agreement, at least ten (10) days before the date of any public sale or at least ten (10) days before the time after which any private sale or other disposition is to be made.

Mortgage Warehouse Agreement: Exhibit C

Page 2

10. Nothing in the foregoing shall be construed as requiring Bank to enforce this security or to resort to the security hereof in any particular manner excluding other rights or remedies. Bank’s failure to enforce this security in any fashion on one or more occasions shall not affect its right so to do; nor will enforcement hereof for less than the full extent or value of the Account impair the effectiveness of the security hereof as to any remaining value or interest thereof. Bank may proceed first to enforce all duties and obligations under the Warehouse Agreement and the other Warehouse Documents hereby secured without resort to the remedies provided in this Pledge; in such event the terms of the Warehouse Agreement and the other Warehouse Documents alone shall be controlling and no provisions hereof shall be construed as requiring Bank to perform any condition precedent to the enforcement of such duties and obligations and the security therefor against any and all Persons liable therefor nor prevent the continued holding of the Account and the collection of sums thereunder for proper application to the duties and obligations of the Warehouse Agreement.

11. Bank may remedy any default, without waiving the same, or may waive any default without waiving any prior or subsequent default.

12. The security interest herein created shall not be affected by or affect any other security taken for the performance of the duties or obligations under the Warehouse Agreement hereby secured, or any part thereof, and any extensions may be made for the performance of such duties and obligations without affecting the priority of this Pledge or the validity thereof. Bank and its successors shall not be limited by any election of remedies if it chooses to foreclose this security interest by suit. The right to sell under the terms hereof shall also exist cumulative with said suit and one method shall not bar the other, but both may be exercised at the same or different times; provided; however that one shall not be a defense to the other.

13. Seller represents to and covenants and agrees with Bank that Seller will at any time or from time to time, upon the written request of Bank, execute and deliver such further documents and do such other acts and things as Bank may specify for the purpose of further assurance and of effecting the purposes of this Pledge, and otherwise do any and all things and acts whatsoever which Bank may request in order to perfect this Pledge and the security interests created thereby.

14. The law governing this Pledge shall be the UCC and other applicable laws of the State of Texas, and this Pledge shall be performable in Collin County, Texas. All terms used herein which, are defined in the Texas Business & Commerce Code shall have the same meaning herein as in said Code.

15. If any clause or provision of this Pledge is illegal, invalid, or unenforceable, under present or future Laws effective during the term hereof, then it is the intention of the parties hereto that the remainder of this Pledge shall not be affected thereby. It is also the intention of the parties hereto that in lieu of each clause or provision that is illegal, invalid or unenforceable, there be added as a part of this Pledge a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.

16. The Account is delivered herewith or is authorized to be held by Bank.

17. The term of this Pledge shall begin on the date hereof and shall expire upon the occurrence of: (a) the expiration of the term of the Warehouse Agreement; and (b) the full and final satisfaction of all duties, obligations and liabilities of Seller under the Warehouse Agreement, as confirmed in writing by Bank. This Pledge shall be binding upon Seller and inure to the benefit of Bank and its successors and assigns.

Mortgage Warehouse Agreement: Exhibit C

Page 3

18. The liability of all Persons obligated in any manner under this Pledge shall be joint and several. If more than one Person shall execute this Pledge as “Seller”, then the term “Seller” as used herein shall refer both to each such Person individually and to all such Persons collectively.

19. THIS WRITTEN AGREEMENT AND THE OTHER WAREHOUSE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Signature Page Follows]

Mortgage Warehouse Agreement: Exhibit C

Page 4

EXECUTED by Seller to be effective as of the Effective Date.


SELLER: REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION

By:
Name:		H. MARC HELM
Title:		CHIEF EXECUTIVE OFFICER

* * *


STATE OF		§
		§
COUNTY OF		§


Notary Public, State of

[NOTARY STAMP]


AGREED TO AND ACCEPTED BY BANK AT RICHARDSON, COLLIN COUNTY, TEXAS, AS OF THE EFFECTIVE DATE: TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
		Lisa Yowell, Vice President

Mortgage Warehouse Agreement: Exhibit C

Page 5

SCHEDULE 1

(TO PLEDGE AGREEMENT)

LIST OF ACCOUNTS


Account Name	Account Number
REVERSE MORTGAGE SOLUTIONS, INC. PLEDGED ACCOUNT		2113011528

Mortgage Warehouse Agreement: Exhibit C

Page 6

EXHIBIT D

(TO MORTGAGE WAREHOUSE AGREEMENT)

RESERVED

Mortgage Warehouse Agreement: Exhibit D

EXHIBIT E

(TO MORTGAGE WAREHOUSE AGREEMENT)

UCC-1 FINANCING STATEMENT

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit E

UCC-1 FINANCING STATEMENT

SCHEDULE OF COLLATERAL

DEBTOR:

REVERSE MORTGAGE SOLUTIONS, INC.

SECURED PARTY:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

This Financing Statement covers the following types or items of property (collectively, the “ Collateral ”):

All right, title and interest of Debtor, of every kind and nature, in and to all of the following property, assets and rights of Debtor, wherever located, whether now existing or hereafter arising, and whether now or hereafter owned or acquired by or accruing or owing to Debtor, and all proceeds and products thereof:

All Designated Deposit Accounts of Debtor maintained with Secured Party, including all funds, certificates, checks, drafts, wire transfer receipts, and other earnings, profits, or other proceeds from time to time representing, deposited into, or held in such Designated Deposit Accounts.

Any and all Instruments, Certificated Securities, Uncertificated Securities, General Intangibles and Investment Property of Debtor in the actual or constructive possession of Secured Party or any Person designated as a bailee (“ Bailee ”), or in transit to or from Secured Party or Bailee, constituting or relating to Mortgage Notes in which Secured Party has purchased a participation interest, until final payment is made to Secured Party for such Mortgage Notes pursuant to the Warehouse Agreement, and any and all agreements and documents related to any of the foregoing, including, without limitation, all Mortgage Notes and Mortgages delivered, or to be delivered, to Secured Party or Bailee or to be held by Debtor in trust for Secured Party or Bailee, including, without limitation:

(i)

any and all rights, titles and interests Debtor may now or hereafter have in and to any and all promissory notes, Mortgages, guaranties, bonds, insurance policies, commitments, and other Instruments, documents, or agreements ever executed and delivered in connection with its mortgage lending business relating to such Mortgage Notes and Mortgages;

(ii)

any and all present and future Accounts, Chattel Paper, documents, Instruments, General Intangibles, Payment Intangibles and other personal property now owned or hereafter acquired by Debtor arising out of or related to such Mortgage Notes and Mortgages;

(iii)

any and all proceeds from the sale, financing or other disposition of the items described in (i) and (ii) above;

(iv)

all Software, files, surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards, accounting records, and other records, information, and data of Debtor relating to the Mortgage Loans (including, without limitation, all information, data, programs, tapes, discs and cards necessary to administer and service such Mortgage Loans);

(v)

All Takeout Commitments relating to the Mortgage Notes;

Mortgage Warehouse Agreement: Exhibit E

Page 1

(vi)

All right, title and interest of Debtor under all agreements between Debtor and Persons other than Debtor pursuant to which Debtor undertakes to service Mortgage Loans, including, without limitation, the rights of Debtor to income and reimbursement thereunder;

(vii)

All purchase agreements, credit agreements or other agreements pursuant to which Debtor acquired such Mortgage Loans and all promissory notes, security agreements and other instruments and documents executed by Debtor pursuant thereto or in connection therewith, insofar as such agreements, instruments and documents relate to the Mortgage Notes and Mortgages; and

(viii)

All right, title and interest of Debtor in and to any other asset of Debtor which has been or hereafter at any time is delivered to Secured Party or Bailee hereunder.

As used in this Financing Statement, the terms “ Accounts ”, “ Certificated Securities ”, “ Chattel Paper ”, “ Deposit Accounts ”, “ General Intangibles ”, “ Instruments ”, “ Investment Property ”, “ Payment Intangibles ”, “ Software ”, and “ Uncertificated Securities ” shall have the respective meanings assigned to them in the Texas Uniform Commercial Code as the same may hereafter be amended. In addition, as used herein the following terms shall have the meanings set forth below:

“ Approved Takeout Investor ” means FNMA, FHLMC, GNMA and any other investor approved by Secured Party.

“ Designated Deposit Account ” or “ Designated Deposit Accounts ” shall mean any each of the following accounts established and maintained pursuant to, and as defined in, the Warehouse Agreement: (a) the Participation Account, (b) the Pledged Account, (c) the Remittance Account, and (d) the Repayment Account.

“ Mortgage ” means the trust deed, mortgage, deed of trust, or other instrument creating a lien on real property securing a Mortgage Note.

“ Mortgage Loan ” means a mortgage loan made to an individual person that is not a construction or non-residential commercial loan, is evidenced by a valid promissory note, is secured by a Mortgage that grants perfected first priority lien on the residential real property, and is a mortgage loan in which Secured Party has purchased a participation interest.

“ Mortgage Note ” means a promissory note evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

“ Mortgagor ” means the current and unreleased obligor(s) on a Mortgage Note.

“ Person ” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, or any other form of entity.

“ Secured Obligations ” means that all obligations of Debtor for funds advanced pursuant to those certain agreement(s) by and between Debtor and Secured Party relating to Secured Party’s purchase of participation interests in Mortgage Loans originated or held by Debtor, as may be from time to time supplemented, amended, modified, extended or restated.

Mortgage Warehouse Agreement: Exhibit E

Page 2

“ Takeout Commitment ” means a written commitment of an Approved Takeout Investor to purchase one or more Mortgage Loans under which such eligible Mortgage Loans will be delivered to such Approved Takeout Investor, on terms satisfactory to Secured Party, in its reasonable discretion.

“ Warehouse Agreement ” means that certain Amended and Restated Mortgage Warehouse Agreement dated as of November 1, 2012, between Debtor and Secured Party.

Mortgage Warehouse Agreement: Exhibit E

Page 3

EXHIBIT F

(TO MORTGAGE WAREHOUSE AGREEMENT)

ADDITIONAL WAREHOUSE FACILITY COVENANTS ADDENDUM

[Follows This Cover Page (If Applicable ¹ )]

¹	If an Additional Warehouse Facility Covenants Addendum does not follow this cover page, then this addendum is not applicable unless such an addendum is subsequently executed by Bank and Seller.

Mortgage Warehouse Agreement: Exhibit F

ADDITIONAL WAREHOUSE FACILITY COVENANTS ADDENDUM

THIS ADDITIONAL WAREHOUSE FACILITY COVENANTS ADDENDUM (this “ Addendum ”) is effective as of November 1, 2012 (the “ Effective Date ”), and is entered into by the undersigned executing this Addendum as “ Seller ” and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”) concurrently with, and as a condition to the effectiveness of, that certain Amended and Restated Mortgage Warehouse Agreement (as amended and modified from time to time, the “ Warehouse Agreement ”) dated the Effective Date, executed by Bank and Seller. Accordingly, Bank and Seller agree as follows:

1. Financial Covenants . Seller covenants and agrees that, as long as the Warehouse Agreement remains in effect, or longer if Bank continues to own a Participation Interest in any Mortgage Loan purchased under the Warehouse Agreement, Seller will, at all times, observe, perform and comply with each of the following covenant(s):

(a) Minimum Tangible Net Worth . Seller shall maintain Tangible Net Worth of not less than $35,000,000.00. “ Tangible Net Worth ” means, at any particular time, all amounts which, in conformity with GAAP, would be properly included as owner’s equity on Seller’s balance sheet, but excluding (i) all assets which are properly classified as intangible assets, and (ii) loans or advances to, or receivables from officer or employee of Seller.

(b) Minimum Liquid Assets . Seller shall maintain Liquid Assets of not less than $12,000,000.00. “ Liquid Assets ” means, at any particular time, the sum of Seller’s cash, cash equivalents (certificates of deposit and other depository accounts established at FDIC-insured banks), United States government-issued securities and other registered, unrestricted equity or debt securities which are publicly traded on a recognized United States exchange and have been approved by Bank, in its sole and absolute discretion and which, in all events, are held in Seller’s name and are free and clear of all Liens (except Liens in favor of Bank).

(c) Maximum Leverage Ratio . Seller shall maintain a Leverage Ratio of not greater than 12.0 to 1.0. “ Leverage Ratio ” means, as of any date of computation, the ratio of (i) Seller’s Liabilities minus non-recourse securitizations to (ii) Tangible Net Worth. “ Liabilities ” means, at any particular time, all amounts which, in conformity with GAAP, would be included as liabilities on a balance sheet, and shall specifically include the aggregate par value of Bank’s Participation Interest in any Mortgage Loans. “ Subordinated Debt ” means all debt of Seller whether now or hereafter incurred which is subordinate in right of payment and priority to Seller’s obligations to Bank under the Warehouse Agreement, as provided in a written agreement in form and content satisfactory to Bank. “ Tangible Net Worth ” means, at any particular time, all amounts which, in conformity with GAAP, would be properly included as owner’s equity on Seller’s balance sheet, but excluding (i) all assets which are properly classified as intangible assets, and (ii) loans or advances to, or receivables from, any owner, officer or employee of Seller.

If Seller is required under the Warehouse Agreement to deliver to Bank quarterly consolidated financial statements, then the above-described financial covenants will tested and calculated by Bank based on the consolidated financial information of Seller and each other entity whose financial information is required by Bank to be set forth on such consolidated financial statements.

After the Effective Date, Seller and Bank may, in their sole discretion, enter into certain written agreements executed by Seller and Bank evidencing or otherwise governing one or more credit facilities extended by Bank to Seller in addition to the financial accommodations evidenced and governed by the Warehouse Agreement (collectively, “ Credit Agreements ”), which Credit Agreements may include (a)

Mortgage Warehouse Agreement: Exhibit F

Page 1

certain financial covenants pertaining to Seller in addition to those contained in this Addendum (each a “ New Financial Covenant ”) and (b) one or more of the same financial covenants contained in this Addendum, but with certain modified terms pertaining to Seller with respect to each such financial covenant (each a “ Modified Financial Covenant ”). In such event, unless otherwise agreed to by Bank, the financial covenants contained in this Addendum shall automatically be modified and amended from time to time (a) to include each New Financial Covenant and (b) to include the most recent terms of each Modified Financial Covenant to the extent inconsistent with those contained in this Addendum. Except as modified and amended in accordance with the terms of the previous sentence, this Addendum shall continue in full force and effect as originally executed and delivered. The modifications and amendments contemplated hereby shall not be affected by the termination of any Credit Agreement, and shall survive the termination of each Credit Agreement.

2. Intentionally Omitted.

3. Compliance Certificates . Seller acknowledges Bank has requested, and Seller shall timely prepare and furnish to Bank, the financial statements and reports described in the Warehouse Agreement, plus such additional financial reports and information as Bank may from time to time request. In addition, Seller shall prepare and submit to Bank, on a quarterly basis and no later than thirty (30) days following the end of each calendar quarter, a compliance certificate executed by Seller, demonstrating Seller’s compliance with the covenants set forth in Section 1 and Section 2 of this Addendum and such substantiation thereof as may be required by Bank, all in such form and content required by Bank from time to time. A copy of Bank’s current required form of compliance certificate is attached hereto as Exhibit F-1 . Although compliance certificates are to be delivered to Bank on a quarterly basis, Seller shall at all times comply with all covenants set forth in Section 1 and Section 2 of this Addendum and Bank may test Seller’s compliance with such covenants at any time.

4. Breach . Any breach by Seller of any of the covenants set forth herein shall entitle Bank to exercise its rights and remedies under the Warehouse Agreement or any other Mortgage Warehouse Document.

5. Miscellaneous . This Addendum is made a part of and is incorporated into the Warehouse Agreement. Except as hereby modified or supplemented, the Warehouse Agreement shall remain in full force and effect. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Warehouse Agreement. The liability of all Persons obligated in any manner under this Addendum shall be joint and several. If more than one Person shall execute this Addendum as “Seller”, then the term “Seller” as used herein shall refer both to each such Person individually and to all such Persons collectively.

[Signature Page Follows]

Mortgage Warehouse Agreement: Exhibit F

Page 2

EXECUTED by Seller to be effective as of the Effective Date.


SELLER: REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION

By:
Name: Title:		H. MARC HELM CHIEF EXECUTIVE OFFICER

* * *


STATE OF		§
		§
COUNTY OF		§


Notary Public, State of

[NOTARY STAMP]


AGREED TO AND ACCEPTED BY BANK AT RICHARDSON, COLLIN COUNTY, TEXAS, AS OF THE EFFECTIVE DATE: TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
		Lisa Yowell, Vice President

Mortgage Warehouse Agreement: Exhibit F

Page 3

EXHIBIT F-1

(TO FINANCIAL COVENANTS ADDENDUM

TO MORTGAGE WAREHOUSE AGREEMENT)

COMPLIANCE CERTIFICATE

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit F

Page 4

COMPLIANCE CERTIFICATE

REPORTING PERIOD: , 20 through , 20

This Compliance Certificate (this “ Certificate ”) is being delivered in connection with that certain Amended and Restated Mortgage Warehouse Agreement (as amended and modified from time to time, and including all addenda and exhibits thereto, the “ Agreement ”) dated November 1, 2012 executed by TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”) and the undersigned executing this Certificate as “ Seller ”. Capitalized terms used in this Certificate shall, unless otherwise indicated herein, have the meanings set forth in the Agreement. On behalf of Seller, the undersigned certifies to Bank as of the last day of the reporting period indicated above (the “ Determination Date ”) that: (a) no Event of Default has occurred and is continuing; (b) all representations and warranties of Seller contained in the Agreement and in the other Warehouse Documents are true and correct in all material respects; and (c) the information set forth below and all documents provided to Bank to substantiate the same are true, correct and complete.

Minimum Tangible Net Worth:


Actual Tangible Net Worth (as of the Determination Date)			Required minimum Tangible Net Worth (pursuant to the Agreement)

GAAP Net Worth	$
Less:
Goodwill, Patents, etc.	($	)
Related Party Receivables	($	)
Officer/Employee Receivables	($	)
Other Intangibles	($	)
TOTAL TANGIBLE NET WORTH:	$		$	35,000,000.00

Minimum Liquid Assets:


Actual Liquid Assets (as of the Determination Date)			Required minimum Liquid Assets (pursuant to the Agreement)
Total Liquidity	$
Less:
Pledged Liquid Assets	($	)
Other Encumbered/Ineligible
Liquid Assets	($	)
Plus:
Liquidity Pledged to Bank (If Deducted Above)	$
TOTAL ELIGIBLE LIQUIDITY:	$		$	12,000,000.00

Mortgage Warehouse Agreement: Exhibit F

Page 5

Maximum Leverage Ratio :


Actual Leverage Ratio (as of the Determination Date)			Required maximum Leverage Ratio (pursuant to the Agreement)

Liabilities	$
Less: Non-Recourse Securitizations	($	)
NON-SUBORDINATED LIABILITIES:	$
GAAP Net Worth	$
Less:
Goodwill, Patents, etc.	($	)
Related Party Receivables	($	)
Officer/Employee Receivables	($	)
Other Intangibles	($	)
TANGIBLE NET WORTH:	$
LEVERAGE RATIO (NON-SUBORDINATED LIABILITIES / TOTAL TANGIBLE NET WORTH):	to 1.0			12.0 to 1.0

[Signature Page Follows]

Mortgage Warehouse Agreement: Exhibit F

Page 6

EXECUTED by Seller as of the Determination Date.


SELLER :

REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION

By:
Name:
Title:

Mortgage Warehouse Agreement: Exhibit F

Page 7

EXHIBIT G

(TO MORTGAGE WAREHOUSE AGREEMENT)

LIST OF CURRENT WAREHOUSE FACILITIES


Warehouse Lender	Maximum Facility Amount
COMMUNITY TRUST BANK	$	55,000,000.00
UBS REAL ESTATE SECURITIES INC.	$	50,000,000.00

Mortgage Warehouse Agreement: Exhibit G

EXHIBIT H

(TO MORTGAGE WAREHOUSE AGREEMENT)

LIST OF CURRENT AFFILIATE ESCROW AGENTS


Name of Affiliate Escrow Agent (including any d/b/a)		Address
NOT APPLICABLE		NOT APPLICABLE

Mortgage Warehouse Agreement: Exhibit H

EXHIBIT I

(TO MORTGAGE WAREHOUSE AGREEMENT)

SOFTWARE AGREEMENT

[Follows This Cover Page]

Mortgage Warehouse Agreement: Exhibit I

SOFTWARE AGREEMENT

THIS SOFTWARE AGREEMENT (this “ Software Agreement ”) is made and entered into by and between TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”), and the undersigned executing this Software Agreement as “ Seller ”. Bank and Seller are sometimes collectively referred to as the “ Parties ” and each as a “ Party ”.

RECITALS

A. Bank is in the business of purchasing on an interim basis Participation Interests in residential mortgage loans held for sale to third party investors and, in this connection, has entered into that certain Amended and Restated Mortgage Warehouse Agreement with Seller, dated November 1, 2012 (as amended or modified, the “ Warehouse Agreement ”), regarding Bank’s discretionary purchase of Participation Interests in Mortgage Loans originated or acquired and held by Seller. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings given to such terms in the Warehouse Agreement.

B. In order to facilitate the interface between Bank and Seller with respect to the Bank’s discretionary purchase of Participation Interests in Mortgage Loans and certain other transactions contemplated by the Warehouse Agreement and to expedite Seller’s access to various data and information related thereto, Bank has purchased and/or licensed from third parties and enhanced and customized, and may hereafter continue to purchase and/or license from third parties and enhance and customize various web-based applications and/or software (collectively and as subsequently modified, the “ Applications ”) for use by mortgage originators, such as Seller, in connection with the day-to-day business relationship between Bank and Seller under the Warehouse Agreement.

C. Seller desires to acquire the License to utilize the Applications, and Bank is willing to provide the License on the terms and conditions set forth herein.

NOW, THEREFORE, for and in consideration of the premises, recitals and the agreements contained in this Software Agreement, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT

1. Grant of License . Bank hereby grants Seller a non-exclusive, non-assignable license (the “ License ”) to utilize the Applications, as same may be modified, replaced, enhanced or upgraded by Bank from time to time. Seller acknowledges that Seller is not obtaining any proprietary or other interest in the Applications, and such Applications, together with all such enhancements and upgrades, including enhancements and upgrades developed in part by Seller, are and remain the sole property of Bank and/or Bank’s licensor. Seller disclaims any title to the Applications or rights thereunder or interest therein except as expressly set forth in this Software Agreement.

2. Termination . Nothing herein shall obligate Bank to perpetually license, maintain, service and/or support the Applications. Bank reserves the right to terminate this Software Agreement and the License and Seller’s access and use of the Applications at any time by providing written notice thereof to Seller. Without limiting the generality of the foregoing, this Software Agreement and the term of the License shall expire, and the rights of Seller to utilize the Applications, shall automatically terminate in the event the Warehouse Agreement is terminated for any reason or expressly in accordance with its terms. Bank’s right to terminate this License pursuant to this Section 2 shall be in addition to, and not in lieu of, each other right and remedy Bank may have under this Software Agreement, the Warehouse Agreement and/or applicable Law which shall include but not be limited to monetary damages and equitable relief.

Mortgage Warehouse Agreement: Exhibit I

Page 1

3. Required Equipment and Software . Seller, at its sole cost and expense, shall be obligated to purchase, acquire, install, and maintain such computing systems and other hardware and equipment, software, and telecommunication lines, as may be necessary to interface with and effectively use the Applications.

4. Use of Applications to Facilitate Transactions . Bank may from time to time, in its sole discretion, modify its operating procedures under the Warehouse Agreement and/or this Software Agreement in order to utilize or take maximum advantage of operating efficiencies available through use of the Applications. Seller shall be required to use the Applications, as required by Bank from time to time, in connection with the purchase and sale of the Participation Interests and other transactions contemplated by the Warehouse Agreement. In this regard, and without limiting the foregoing, each requests by Seller for the purchase by Bank of a Participation Interest in a Mortgage Loan shall be transmitted via the Applications, and neither Bank nor Seller shall be required to issue a participation certificate or other Instrument to evidence Bank’s purchase of a Participation Interest in a particular Mortgage Loan.

4. No Ownership Interest; Use . It is agreed and understood that Seller shall not receive any ownership interest in the Applications as a result of this Software Agreement. Seller shall use the Applications solely in connection with its business relationship with Bank under the Warehouse Agreement and for no other purpose. Seller shall not modify, reproduce or reverse engineer in any form all or any part of the Applications without the prior written consent of Bank, which may be granted or withheld by Bank in its sole and absolute discretion. Seller acknowledges that the Applications represent and contain and/or allows access to proprietary confidential information and trade secrets and represent the intellectual property of Bank and/or any third party developer or licensor of the Applications, and Seller agrees, both during the term of this Software Agreement and at all times thereafter: (a) not to communicate, divulge or use the Applications other than in connection with its relationship with Bank under the Warehouse Agreement; (b) not to divulge or allow access to the Applications to or by any third party except Seller’s employees who must have access to it in connection with the discharge of their duties to Seller in connection with the Warehouse Agreement and then only if such employees are subject to such written confidentiality and nondisclosure covenants as Bank may deem appropriate; (c) to immediately notify Bank upon the occurrence of any unauthorized knowledge, possession, or use of the Applications or any part thereof or information made available thereby; (d) to immediately cease using the Applications upon termination of this Software Agreement; (e) not to sublicense or otherwise allow any other Person to use the Applications; (f) not to transfer or allow access to the Applications to any other Person; and (g) not to grant to any Person the right to do anything Seller may not do within this Software Agreement.

5. Warranties . SELLER UNDERSTANDS AND AGREES THAT THE APPLICATIONS ARE BEING LICENSED, DELIVERED AND MADE AVAILABLE “AS IS”, “WHERE IS”, “WITH ALL FAULTS”, AND WITH ANY AND ALL LATENT AND PATENT DEFECTS, WITHOUT ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY BY BANK, AND BANK HEREBY DISCLAIMS AND SELLER HEREBY WAIVES ANY AND ALL IMPLIED REPRESENTATIONS, WARRANTIES AND COVENANTS. EXCEPT AS EXPRESSLY STATED HEREIN, BANK HAS NOT MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A

Mortgage Warehouse Agreement: Exhibit I

Page 2

PARTICULAR PURPOSE WITH RESPECT TO THE APPLICATIONS OR THEIR CONDITION, OR EXPENSES TO BE INCURRED WITH RESPECT THERETO, THE OBLIGATIONS, RESPONSIBILITIES OR LIABILITIES OF THE OWNER THEREOF AS TO APPLICATIONS OR ANY OTHER MATTER TO OR AFFECTING THE APPLICATIONS, AND BANK HEREBY DISCLAIMS AND RENOUNCES ANY AND ALL SUCH REPRESENTATIONS AND WARRANTIES.

ADDITIONALLY, BANK DISCLAIMS AND BY ITS ACCEPTANCE HEREOF, SELLER ACKNOWLEDGES THAT BANK HAS NOT WARRANTED, WHETHER EXPRESSLY OR BY IMPLICATION, THAT THE APPLICATIONS WILL SATISFY ANY PARTICULAR OPERATING STANDARDS OR LEVEL OF FUNCTIONALITY. SELLER IS SOLELY RESPONSIBLE FOR DETERMINING AND ACHIEVING SELLER’S DESIRED RESULTS FOR USE OF THE APPLICATIONS, FOR EVALUATING THE APPLICATION’S CAPABILITIES AND FOR SUCCESSFULLY OPERATING THE APPLICATIONS. IN NO EVENT SHALL BANK (OR ANY THIRD PARTY DEVELOPER OR LICENSOR OF THE APPLICATIONS) BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR OTHER DAMAGES SUFFERED BY SELLER, OR FOR LOST DATA OR LOST PROFITS TO SELLER OR ANY OTHER PERSON, WHETHER OR NOT DUE TO THE NEGLIGENCE OF BANK OR SUCH THIRD PARTY DEVELOPER OR LICENSOR, ARISING OUT OF THE USE OR INABILITY TO USE THE APPLICATIONS, EVEN IF BANK OR SUCH THIRD PARTY DEVELOPER OR LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR DEFECTS. THIS SECTION 5 SHALL SURVIVE EXPIRATION OR TERMINATION OF THIS SOFTWARE AGREEMENT AND OF THE WAREHOUSE AGREEMENT.

6. Indemnity . SELLER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS EACH INDEMNIFIED PARTY, (A) DUE TO ANY BREACH BY SELLER OF ANY WARRANTY OR REPRESENTATION CONTAINED HEREIN, (B) ANY BREACH BY SELLER OF ANY COVENANT, TERM OR CONDITION OF THIS SOFTWARE AGREEMENT, AND/OR (C) INCURRED IN CONNECTION WITH THE APPLICATIONS LICENSED TO SELLER UNDER THIS SOFTWARE AGREEMENT, INCLUDING, WITHOUT LIMITATION, DUE TO THE UNAUTHORIZED ACCESS TO, USE OF, OR TAMPERING WITH, THE APPLICATIONS OR THE INFORMATION MADE AVAILABLE THEREBY. WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF, OR ARE CLAIMED TO BE CAUSED BY OR TO ARISE OUT OF, THE NEGLIGENCE, WHETHER SOLE, COMPARATIVE OR CONTRIBUTORY, OR STRICT LIABILITY OF SUCH INDEMNIFIED PARTY. HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO AN INDEMNIFIED PARTY TO THE EXTENT THAT THE SUBJECT OF THE RELEASE OR INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. IF AN INDEMNIFIED PARTY SUFFERS ANY LIABILITY, LOSS OR DAMAGE, OR IF ANY CLAIM, ACTION OR PROCEEDING SHALL BE ASSERTED OR BROUGHT AGAINST AN INDEMNIFIED PARTY BY REASON OF ANY SUCH ACT OR OMISSION OF SELLER, AS STATED ABOVE, SELLER SHALL, UPON DEMAND FROM THE INDEMNIFIED PARTY, OBTAIN, AT SELLER’S EXPENSE, REPRESENTATION BY LEGAL COUNSEL SATISFACTORY TO THE INDEMNIFIED PARTY TO DEFEND THE INDEMNIFIED PARTY AGAINST ANY SUCH ACTION AND/OR CLAIM AND SHALL PAY ALL COSTS INCURRED BY THE INDEMNIFIED PARTY IN SUCH DEFENSE. THIS SECTION 6 SHALL SURVIVE EXPIRATION OR TERMINATION OF THIS SOFTWARE AGREEMENT AND OF THE WAREHOUSE AGREEMENT.

Mortgage Warehouse Agreement: Exhibit I

Page 3

7. Equitable Relief . Seller acknowledges that a remedy at law will be inadequate if Seller violates any provision of this Agreement. Seller consents to Bank obtaining from a court having jurisdiction an injunction, restraining order, specific performance or any other equitable relief against Seller to enforce any such provision. Bank’s right to obtain such equitable relief shall be in addition to, and not in lieu of, each other right and remedy they may have under this Software Agreement, the Warehouse Agreement, the Warehouse Documents or applicable law, which shall include, but not be limited to, monetary damages and equitable relief.

8. Seller’s Release and Assumption of Risks . Seller is fully aware of the inherent security risks of any software or web-based application and in particular, the risk that unauthorized third parties may through unauthorized use, “hacking”, “Trojan horses”, viruses or otherwise be able to access and manipulate the use of the Applications and the data made available thereby without Bank in any way being aware that the user is not Seller. Seller voluntarily assumes all such risks. Accordingly, as a condition precedent to the grant of this License, SELLER HEREBY RELEASES AND DISCHARGES EACH INDEMNIFIED PARTY AND ANY THIRD PARTY DEVELOPER OR LICENSOR OF THE APPLICATIONS FROM ANY AND ALL CLAIMS, DEMANDS, DAMAGES, DUTIES, OBLIGATIONS, LOSSES OR LIABILITIES FOR ANY AND ALL INJURIES, CLAIMS, DEMANDS, DAMAGES, DUTIES, OBLIGATIONS, LOSSES OR LIABILITIES THAT SELLER OR ITS LICENSEES, INVITEES, EMPLOYEES, HEIRS, SUCCESSORS, ASSIGNS, REPRESENTATIVES, EXECUTORS, AGENTS, OR THEIR RESPECTIVE HEIRS, EXECUTORS, REPRESENTATIVES, SUCCESSORS, AGENTS, OR ASSIGNS (EACH A “ RELEASING PARTY ”) INCUR AND/OR SUFFER IN WHOLE OR IN PART DUE TO ANY AND ALL DEFECTS OF THE APPLICATIONS OR ANY UNAUTHORIZED PARTIES ACCESS THAT RESULTS IN THE DIVERSION, MISAPPROPRIATION OR USE OF THE INFORMATION MADE AVAILABLE THROUGH THE APPLICATIONS OR SELLER’S FUNDS AT BANK OR OTHERWISE. THE RELEASE AND DISCHARGE IN THIS PARAGRAPH WILL APPLY EVEN IF THE RELEASING PARTY’S INJURIES, CLAIMS, DEMANDS, DAMAGES, DUTIES, OBLIGATIONS, LOSSES OR LIABILITIES ARE CAUSED IN WHOLE OR IN PART BY THE ORDINARY NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, AND/OR STRICT LIABILITY OF AN INDEMNIFIED PARTY OR ANY THIRD PARTY DEVELOPER.

9. Notices . All notices, demands, or other communications under this Software Agreement shall be in writing and shall be delivered in accordance with the notice provisions contained in the Warehouse Agreement.

10. Governing Law . This Software Agreement shall be governed by and construed under the laws of the State of Texas. Venue for any proceeding hereunder shall be the venue set forth in the Warehouse Agreement.

11. Severability . If any term herein is declared to be void or unenforceable by a court of competent jurisdiction, such declaration shall have no effect on the other terms of this Software Agreement, which will remain in effect and fully enforceable, and any provision so declared unenforceable shall be construed by such court so as to be enforceable to the maximum extent permitted by law.

12. Assignment and Sublicense . Seller shall not assign, sublicense or otherwise transfer any of its rights under this Software Agreement without the prior written consent of Bank, which consent may be granted or withheld by Bank in its sole and absolute discretion.

Mortgage Warehouse Agreement: Exhibit I

Page 4

13. Entire Agreement and Amendment . This Software Agreement embodies the entire agreement and understanding among the respective Parties and supersede all prior agreements and understandings (both written and oral) between the Parties relating to the subject matter hereof and thereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the Parties. No amendment to this Software Agreement shall be effective unless made in a writing duly executed by Bank and Seller and specifically referring to each provision of this Software Agreement being amended.

14. Waiver . No failure of Bank or Seller to exercise or delay in exercising any right or remedy under this Software Agreement shall constitute a waiver of such right or remedy. No waiver by Bank or Seller shall be effective unless made in a writing duly executed by Bank or Seller, whichever the case may be, and specifically referring to each such right or remedy being waived.

15. Time is of the Essence . Time is of the essence of each and every term of this Software Agreement.

16. Attorneys’ Fees . If any Party to this Software Agreement, or the successors or assigns of any Party, finds it necessary to take any action to interpret or enforce any provision hereof, or to secure specific performance or to collect damages of any kind for breach of this Software Agreement, the prevailing party or parties will be entitled to recover from the losing party or parties its or their reasonable court costs and expenses arising out of or incurred by reason of the action, including but not limited to reasonable attorneys’ fees.

17. Counterparts . This Software Agreement may be executed in electronic, facsimile or original counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

18. Headings . Section headings or titles used in this Software Agreement are for convenience or reference only and do not constitute a limitation on the content of any part of this Software Agreement.

19. Legal Counsel . This Software Agreement is a negotiated agreement and, in the event of any ambiguity herein, such ambiguity shall not be construed against either Party. The Parties acknowledge they have been represented by legal counsel in connection with the negotiation and execution of this Software Agreement or that they have had an opportunity to engage such counsel. The Parties further acknowledge they fully understand the meaning and intent of this Software Agreement and voluntarily execute this Software Agreement.

20. Incorporation by Reference . The terms of this Software Agreement are incorporated into the Warehouse Agreement, which continues in full force and effect. Any default by Seller under this Software Agreement shall be deemed an Event of Default under the Warehouse Agreement, thereby entitling Bank to exercise its rights and remedies thereunder.

21. Joint and Several Liability . The liability of all Persons obligated in any manner under this Software Agreement shall be joint and several. If more than one Person shall execute this Software Agreement as “Seller”, then the term “Seller” as used herein shall refer both to each such Person individually and to all such Persons collectively.

Mortgage Warehouse Agreement: Exhibit I

Page 5

[Signature Page Follows]

Mortgage Warehouse Agreement: Exhibit I

Page 6

EXECUTED by Seller to be effective as of the Effective Date.


SELLER :

REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION

By:
Name:		H. MARC HELM
Title:		CHIEF EXECUTIVE OFFICER

* * *


STATE OF		§
		§
COUNTY OF		§



		Notary Public, State of

[NOTARY STAMP]

AGREED TO AND ACCEPTED BY BANK AT RICHARDSON,

COLLIN COUNTY, TEXAS, AS OF THE EFFECTIVE DATE:


TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
		Lisa Yowell, Vice President

Mortgage Warehouse Agreement: Exhibit I

Page 7

Exhibit 10.53.2

LOGO

December 28, 2012

Reverse Mortgage Solutions, Inc.

2727 Spring Creek Drive

Spring, Texas 77373

Attn: H. Marc Helm

Re:

Mortgage Warehouse Agreement (as modified or amended prior to the date of this letter, the “ Warehouse Agreement ”) dated May 21, 2012, executed by Reverse Mortgage Solutions, Inc., a Delaware corporation (the foregoing are each individually and collectively referred to herein as “ Seller ”) and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”)

Dear Mr. Helm:

This letter relates to the above-referenced Warehouse Agreement. All capitalized terms used but not defined in this letter shall have the meanings set forth in the Warehouse Agreement.

The purpose of this letter is to confirm that Seller has requested Overline Funding under the Warehouse Agreement subject to the terms and conditions set forth in this letter. Bank may, in its sole and absolute discretion, elect to make Advances to purchase Participation Interests in response to one or more Requests representing Overline Funding, subject to the following terms and conditions: (a) any Overline Funding (whether one Request or multiple Requests) (i) shall not exceed in the aggregate $ 25,000,000.00 (“ Maximum Overline Amount ”) and (ii) in the aggregate, when added to the Aggregate Participation Balance, shall not exceed the sum of the Maximum Overline Amount plus the Maximum Participation Balance; (b) the Overline Funding set forth in this letter shall no longer be available to Seller (and Bank shall no longer process Requests which represent Overline Funding) on or after 5:00 P.M. (Central Time) on May 21 , 2013 ; and (c) as a condition precedent to any and all Overline Funding, Seller shall maintain a Minimum Pledged Balance of not less than $1, 500 ,000.00 shall be deemed increased accordingly during such time as Overline Funding is available to Seller pursuant to this letter. All Participation Interests purchased by Bank through Overline Funding shall be governed, secured, and guaranteed by the Warehouse Agreement other Warehouse Documents. This letter supplements and further defines, but does not amend or modify, the terms of the Warehouse Agreement, and the Warehouse Agreement is and remains in full force and effect in accordance with its terms.

If the foregoing correctly reflects your agreement as to the matters contained in this letter, please indicate such agreement by signing the acknowledgment where indicated below. Please note that this letter will not be binding upon Bank unless and until such time a fully executed copy of this letter is returned to the undersigned. This letter may be executed in one or more counterparts, all of which together shall be one and the same instrument.


Sincerely,

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:
		Lisa Yowell, Vice President



2350 Lakeside Boulevard, Suite 310 — Richardson, TX 75082		Letter Agreement (Overline) / Version: 2012-2

December 28, 2012

Page 2 of 2

AGREED TO AND APPROVED BY SELLER:

this ____ day of _______________, 20____

Reverse Mortgage Solutions, Inc., a Delaware

corporation


By:
Name:		H. Marc Helm
Title:		Chief Executive Officer

* * *


STATE OF		§
		§
COUNTY OF		§

This document was acknowledged before me on the ____ day of __________________, 20___, by H. Marc Helm, Chief Executive Officer of Reverse Mortgage Solutions, Inc., a Delaware corporation, known to me to be the person who executed this document in the capacity and for the purposes therein stated.



		Notary Public, State of

[NOTARY STAMP]

**No Guaranty Required Per Warehouse Credit Facility Approval**



2350 Lakeside Boulevard, Suite 310 — Richardson, TX 75082		Letter Agreement (Overline) / Version: 2012-2

Exhibit 10.53.3

CHANGE IN TERMS AGREEMENT

THIS CHANGE IN TERMS AGREEMENT (this “ Agreement ”) is made and entered into effective as of February , 2013 (the “ Effective Date ”), and is entered into by the undersigned executing this Agreement as “ Seller ” and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (“ Bank ”).

RECITALS

A. Seller and Bank have entered into that certain Amended and Restated Mortgage Warehouse Agreement (as amended or modified from time to time, and including all addenda and exhibits thereto, the “ Warehouse Agreement ”) dated November 1, 2012, relating to Bank’s discretionary purchase of Participation Interests in Mortgage Loans originated by Seller. Capitalized terms used and not otherwise defined herein shall have the respective meanings assigned to such terms in the Warehouse Agreement.

B. Seller and Bank now desire to modify and amend certain terms and provisions of the Warehouse Agreement as more particularly described herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises, the covenants, representations, warranties and/or agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:

1. Effective as of the Effective Date, Section 1(c) of Exhibit F to the Warehouse Agreement is hereby amended, restated and modified as follows:

(c) Maximum Leverage Ratio . Seller shall maintain a Leverage Ratio of not greater than 12.0 to 1.0. “ Leverage Ratio ” means, as of any date of computation, the ratio of (i) Seller’s Liabilities minus Non-Recourse Securitizations minus any Subordinated Debt to (ii) Tangible Net Worth. “ Liabilities ” means, at any particular time, all amounts which, in conformity with GAAP, would be included as liabilities on a balance sheet, and shall specifically include the aggregate par value of Bank’s Participation Interest in any Mortgage Loans. “ Subordinated Debt ” means all debt of Seller whether now or hereafter incurred which is subordinate in right of payment and priority to Seller’s obligations to Bank under the Warehouse Agreement, as provided in a written agreement in form and content satisfactory to Bank. “ Tangible Net Worth ” means, at any particular time, all amounts which, in conformity with GAAP, would be properly included as owner’s equity on Seller’s balance sheet, but excluding (i) all assets which are properly classified as intangible assets, and (ii) loans or advances to, or receivables from, any owner, officer or employee of Seller. “ Non- Recourse Securitizations ” means the aggregate amount of any indebtedness that is reflected on the balance sheet of Seller in respect of obligations incurred pursuant to a securitization transaction, solely to the extent such obligations are secured by the assets securitized thereby and are non-recourse to Seller.

Page 1

Change in Terms Agreement

File No. 4437-690-041

2. Effective as of the Effective Date, Section 3 of Exhibit F to the Warehouse Agreement is hereby amended, restated and modified as follows:

3. Compliance Certificates . Seller acknowledges Bank has requested, and Seller shall timely prepare and furnish to Bank, the financial statements and reports described in the Warehouse Agreement, plus such additional financial reports and information as Bank may from time to time request. In addition, Seller shall prepare and submit to Bank, on a quarterly basis and no later than forty-five (45) days following the end of each calendar quarter, a compliance certificate executed by Seller, demonstrating Seller’s compliance with the covenants set forth in Section 1 and Section 2 of this Addendum and such substantiation thereof as may be required by Bank, all in such form and content required by Bank from time to time. A copy of Bank’s current required form of compliance certificate is attached hereto as Exhibit F-1 . Although compliance certificates are to be delivered to Bank on a quarterly basis, Seller shall at all times comply with all covenants set forth in Section 1 and Section 2 of this Addendum and Bank may test Seller’s compliance with such covenants at any time.

3. Effective as of the Effective Date, the Warehouse Agreement is hereby supplemented, amended and modified to incorporate the foregoing provisions. This Agreement (a) supersedes and modifies any and all inconsistent provisions in the Warehouse Agreement and the other Warehouse Documents (including any and all prior change in terms agreements) and (b) is made a part of and is incorporated into the Warehouse Agreement. Except as hereby modified, the Warehouse Agreement and the other Warehouse Documents shall remain in full force and effect. Nothing contained in this Agreement shall affect or impair any Liens or other security (if any) in favor of Bank created pursuant to the Warehouse Documents. Further, except as may be expressly set forth in this Agreement, nothing contained herein shall affect, impair or release the liability of any Person who may now or hereafter be liable to Bank under the Warehouse Documents. This Agreement shall be governed by and construed in accordance with Texas law and applicable federal law.

4. Seller represents and warrants that it has the power and authority required to enter into and perform its obligations under this Agreement and to make the agreements set forth herein. This Agreement may not be modified, amended or discharged except by written amendment executed by Seller and Bank. The terms and provisions of this Agreement shall be binding upon any successors and permitted assigns of Seller and shall benefit the successors and assigns of Bank. This Agreement may be executed in multiple counterparts, each to constitute a separate agreement, but all, taken together, to constitute one and the same agreement.

5. THIS WRITTEN AGREEMENT AND THE OTHER WAREHOUSE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Signature Page Follows]

Page 2

Change in Terms Agreement

File No. 4437-690-041

EXECUTED to be effective as of the Effective Date.


SELLER:

REVERSE MORTGAGE SOLUTIONS, INC., A DELAWARE CORPORATION

By:
Name:		H. MARC HELM
Title:		CHIEF EXECUTIVE OFFICER

* * *


STATE OF		§
		§
COUNTY OF		§



				Notary Public, State of

[NOTARY STAMP]

AGREED TO AND ACCEPTED BY BANK AT RICHARDSON,

COLLIN COUNTY, TEXAS, AS OF THE EFFECTIVE DATE :

TEXAS CAPITAL BANK,

NATIONAL ASSOCIATION


By:
		Lisa Yowell, Vice President

Page 3

Change in Terms Agreement

File No. 4437-690-041

Exhibit 10.53.4

Reference is made to that certain amended and restated mortgage warehouse agreement dated as of November 1, 2012 (as amended, the “Warehouse Agreement”), between Texas Capital Bank, National Association, as bank (“Bank”) and Reverse Mortgage Solutions, Inc., as seller (“Seller”). Capitalized terms used herein but not defined herein shall have the meaning ascribed to such terms in the Warehouse Agreement.

The Seller hereby requests that the Bank waive, and the Bank does hereby waive from and after November 1, 2012 until and including March 8, 2013, compliance by the Seller with the following financial covenants:

•

Section 1(a) of the Additional Warehouse Facility Covenants Addendum attached as Exhibit F to the Warehouse Agreement (Minimum Tangible Net Worth)

•

Section 1(c) of the Additional Warehouse Facility Covenants Addendum attached as Exhibit F to the Warehouse Agreement (Maximum Leverage Ratio)

Sincerely,


Reverse Mortgage Solutions, Inc.

By:
Name:
Title:

Acknowledged and Agreed:


Texas Capital Bank, National Association

By:
Name:
Title:

Reverse Mortgage Solutions, Inc.

2727 Spring Creek Drive—Spring, TX 77373

NMLS ID #107636

Exhibit 21

SUBSIDIARIES OF REGISTRANT


Subsidiary		State of Incorporation
Walter Mortgage Company, LLC (3)		Delaware
Mid-State Capital, LLC (1)		Delaware
Walter Investment Holding Company LLC (1)		Delaware
Hanover SPCA, Inc. (1)		Delaware
Best Insurors, Inc. (2)		Florida
Walter Investment Reinsurance Company, Ltd (2)		Bermuda
Marix Servicing, LLC (2)		Delaware
Walter Investment Properties, LLC (2)		Delaware
Green Tree Credit Solutions LLC (2)		Delaware
Green Tree Asset Acquisition LLC (4)		Delaware
Green Tree Investment Holdings III LLC (4)		Delaware
Green Tree Home Lending LLC (4)		Delaware
Green Tree Investment Holdings II LLC (4)		Delaware
Green Tree Investment Management LLC (4)		Delaware
Green Tree Insurance Agency, Inc. (5)		Minnesota
Green Tree Insurance Agency of Nevada, Inc. (5)		Nevada
Green Tree Insurance Agency Reinsurance Limited (5)		Turks and Caicos Islands
Landmark Asset Receivables Management LLC (6)		Delaware
Green Tree Loan Acquisition II LLC (7)		Delaware
Green Tree CL LLC (6)		Delaware
Green Tree HE/HI Corp. (8)		Delaware
Green Tree HE/HI LLC (9)		Delaware
Green Tree MH Corp. (10)		Delaware
Green Tree MH LLC (11)		Delaware
Green Tree Licensing LLC (12)		Delaware
Green Tree Servicing Corp. (13)		Delaware
Green Tree Servicing LLC (14)		Delaware
Green Tree Advance Receivables II LLC (15)		Delaware
Green Tree Loan Company (13)		Minnesota
Green Tree Credit LLC (13)		New York
Green Tree Consumer Discount Company (13)		Pennsylvania
Green Tree SerVertis Acquisition LLC (16)		Delaware
Green Tree SerVertis GP LLC (16)		Delaware
WIMC Real Estate Investment LLC (1)		Delaware
Walter Reverse Acquisition LLC (1)		Delaware
Reverse Mortgage Solutions, Inc. (17)		Delaware
REO Management Solutions, LLC (18)		Delaware
Mortgage Asset Systems, LLC (18)		Delaware
Specialty Servicing Solutions, LLC (18)		Delaware
REO Leasing Solutions, LLC (18)		Delaware
Mortgage Consultants of America Corporation (18)		Texas
Central Asset Review, LLC (18)		Delaware
Security One Lending (2) for accounting purposes only		California

(1)	A subsidiary of Walter Investment Management Corp.

(2)	A subsidiary of Walter Investment Holding Company LLC

(3)	Merged with Green Tree Servicing LLC

(4)	A subsidiary of Green Tree Credit Solutions LLC

(5)	A subsidiary of Green Tree Investment Holdings III LLC

(6)	A subsidiary of Green Tree Investment Holdings II LLC

(7)	A subsidiary of Green Tree Investment Holdings II LLC (99%) and Green Tree MH Corp. (1%)

(8)	A subsidiary of Green Tree CL LLC

(9)	A subsidiary of Green Tree CL LLC (100%) and Green Tree HE/HI Corp. (non-economic interest)

(10)	A subsidiary of Green Tree HE/HI LLC

(11)	A subsidiary of Green Tree HE/HI LLC (100%) and Green Tree MH Corp. (non-economic interest)

(12)	A subsidiary of Green Tree MH LLC

(13)	A subsidiary of Green Tree Licensing LLC

(14)	A subsidiary of Green Tree Licensing LLC (100%) and Green Tree Servicing Corp. (non-economic interest)

(15)	A subsidiary of Green Tree Servicing LLC

(16)	A subsidiary of Green Tree Investment Management LLC

(17)	A subsidiary of Walter Reverse Acquisition LLC

(18)	A subsidiary of Reverse Mortgage Solutions, Inc.

EXHIBIT 23.1

Consent of Independent Registered Certified Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-160743) pertaining to the Walter Investment Management Corp. 1999 Equity Incentive Plan (As Amended) and the Walter Investment Management Corp. 2009 Long-Term Incentive Award Plan of Walter Investment Management Corp. and in the Registration Statement (Form S-3 No. 333-179013) of Walter Investment Management Corp. and in the related Prospectus of our reports dated March 18, 2013, with respect to the consolidated financial statements of Walter Investment Management Corp. and subsidiaries, and the effectiveness of internal control over financial reporting of Walter Investment Management Corp. and subsidiaries, included in this Annual Report (Form 10-K) for the year ended December 31, 2012.

/s/ Ernst & Young LLP

Tampa, Florida

March 18, 2013

EXHIBIT 31.1

CERTIFICATION BY MARK J. O’BRIEN

PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(a),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark J. O’Brien, certify that:

1. I have reviewed this Annual Report on Form 10-K of Walter Investment Management Corp. (the “Registrant”) for the year ended December 31, 2012 (the “Report”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; and

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d) disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Mark J. O’Brien

Mark J. O’Brien

Chief Executive Officer

(principal executive officer)

Date: March 18, 2013

EXHIBIT 31.2

CERTIFICATION BY CHARLES E. CAUTHEN

PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14(a),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles E. Cauthen, certify that:

1. I have reviewed this Annual Report on Form 10-K of Walter Investment Management Corp. (the “Registrant”) for the year ended December 31, 2012 (the “Report”);

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Charles E. Cauthen

Charles E. Cauthen

Chief Financial Officer

(principal financial officer)

Date: March 18, 2013

EXHIBIT 32

WALTER INVESTMENT MANAGEMENT CORP. AND SUBSIDIARIES

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

Mark J. O’Brien, Chief Executive Officer, and Charles E. Cauthen, Chief Financial Officer, of Walter Investment Management Corp. (the “Company”), certify to each such officer’s knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that:

1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: March 18, 2013	By:	/s/ Mark J. O’Brien
		Mark J. O’Brien
		Chief Executive Officer (principal executive officer)

Date: March 18 , 2013	By:	/s/ Charles E. Cauthen
		Charles E. Cauthen
		Chief Financial Officer (principal financial officer)