TAMPA — Walter Investment Management Corp. plans to invest $15 million in Urban Financial Group, a reverse mortgage originator.
Walter Investment (symbol: WAC; recent price: $39.40) agreed to the deal with UFG Holdings LLC, a company controlled by an investor group led by Walter's own chief strategy officer, Brian Libman.
UFG Holdings plans to acquire 100% of the membership interests of Urban Financial Group from KCG Holdings Inc. in the fourth quarter, says a news release. When the deal closes, Libman will resign from Walter Investment.
In return for providing a $15 million loan to Urban Financial, Tampa-based Walter Investment will receive warrants entitling Walter to purchase up to 19% of the common units of UFG. Plus, Walter Investment subsidiary Reverse Mortgage Solutions will be able to purchase the servicing rights to the mortgages originated by Urban Financial.
“Urban is a significant player in the reverse mortgage originations sector with a track record of operational excellence and a highly respected management team,” Mark J. O'Brien, chairman/CEO of Walter Investment, says in the release.
“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,” O'Brien says.
UFG's purchase of Urban is subject to customary closing conditions, including regulatory approvals by multiple governmental entities, including the U.S. Department of Housing and Urban Development and the Federal National Mortgage Association.
Walter Investment is an asset manager, mortgage servicer and originator focused on finding solutions for consumers and credit owners. The company has more than 4,800 employees.