An investment firm being sued over its purchase of a reverse mortgage company has entered into an agreement to buy another reverse mortgage company
Despite a group of investors announcing they would sue Walter Investment Management for not fully disclosing all the facts when it purchased Reverse Mortgage Holdings, the company has entered into an agreement to buy another reverse mortgage company.
Investors of Walter Investment said in a statement this week that the company failed to disclose all the facts when it purchased Reverse Mortgage Holdings. The suit alleges the company did not disclose facts about its liabilities, inflated its value and also made misleading financial statements when it acquired the company. In March of 2013, managers at the company disclosed some of the financial weaknesses of the purchase and the company’s stock subsequently dropped 20%, investors claim. The suit also alleges company insiders sold nearly $7m of stock before the stock price collapse.
Despite the lawsuit, Walter Investment announced this week it would be building up its investments in the reverse mortgage industry by purchasing another reverse mortgage lender, Urban Financial Group from KCG Holdings for roughly $15m. Reverse Mortgage Solutions will also enter into an agreement to purchase the mortgage servicing rights of Urban’s assets.
"Urban is a significant player in the reverse mortgage originations sector with a track record of operational excellence and a highly respected management team. We believe the development of this strategic relationship with Brian and Urban will result in a long-standing and mutually beneficial relationship for both entities," Mark J. O'Brien, chairman and CEO of Walter Investment, said.
