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88 Florida-Based Services Firm Reports Q2 Net Loss Walter Investment Management Corp., a Tampa, Florida-based services business that offers solutions to owners of subprime and other asset-light mortgage platforms, announced in its recently released quarterly financial report that the company experi- enced a GAAP net loss of $12.9 million for Q2 2014. "Walter Investment delivered strong operating results for the quarter as we focused on executing against our strategic plan" said Mark J. O'Brien, Walter Invest- ment's chairman and CEO. "Our servicing segment boarded 289,000 accounts while continuing to enhance the performance of our existing portfolios, lowering delinquen- cies on our first-lien mortgage portfolios by 28 percent as compared to the prior-year quarter. Additionally we provided more than 14,000 modifications to consumers, driving positive outcomes for both consumers and investors." e company's net income was $45 mil- lion after adjustments made for goodwill impairment charges in the reverse mortgage segment and reductions in the company's servicing rights' fair value. e net income of $45 million is down from the $88.6 million reported for Q2 2013. Walter Investment reported an adjusted pre-tax earnings rate (previously known as core earnings) from Q2 2014 of $70.1 million after taxes, which was a 43 percent decrease from Q2 2013. ose were not the only areas where Wal- ter Investment experienced a loss, however. e company's total revenue for Q2 2014 was $413.7 million, down 31 percent from Q2 2013. at figure includes a decrease of $116.3 million in servicing revenue and fees, fueled by a decrease of $136.7 million from variation inputs changes—offset by $31.3 million in increased servicing revenue and fees and a decrease of $91.3 million in net gains on sales of loans in originations. All the company's other revenues experi- enced a $25.4 million increase, impacted by a performance fee of $34.2 million the invest- ment management business earned. e 2014 Q2 report states that the near- term profitability of Walter Investment and the reverse mortgage sector as a whole were greatly affected by new regulations implemented in the last 12 months, but the company believes the changes will benefit the business in the long term. "We believe the combination of strong execution against our strategic plan coupled with ensuring each of our businesses em- braces and drives a culture of compliance and positive consumer experience will provide benefits to each of our core constituencies: consumers, clients, our stakeholders, and regulators," continued O'Brien. Negative Equity Rate in Tampa Bay Is Problematic While the national negative equity rate continues to fall (down to 18.8 percent, according to the Zillow Q1 2014 Negative Equity Report), many neighborhoods in the Tampa Bay area of Florida are well above that rate. Some areas in Tampa Bay even fall within the highest rates in the country. Many ZIP codes in the northern and eastern parts of Tampa have negative equity rates above 50 percent among homeowners with mortgages, according to the Zillow report. In the Palm River-Clair Mel section of East Tampa and in Gibsonton on the east side of the bay, 67 percent of homeowners are underwater with their mortgages. e same is true of 65 percent of homeowners in Tampa immediately to the west of Palm River-Clair Mel and adjacent to Palm River-Clair Mel on the north side. Both of those rates fall within the highest 1 percent in the U.S. Other ZIP codes with a percentage of homeowners underwater on mortgages in the Tampa Bay area include Riverview, directly north of Gibsonton, at 60 percent (which falls within the top 5 percent in the nation); Plant City, east of Tampa, which posted a rate of 57 percent; Ruskin, in the southeast section of the bay, at 58 percent; and ZIP code 33612 in North Tampa at 56 percent. Many neighborhoods in the Tampa Bay area did not reach 50 percent but still posted rates of 40 percent or above. Despite these high negative equity rates among many neighborhoods in Tampa Bay, some areas did fall below the national rate. Only 17 percent of homeowners who live in the 33629 ZIP code of South Tampa were upside down on their mortgages, accord- ing to Zillow. In St. Pete beach, the rate of homeowners who are underwater with their mortgages was down to 16 percent, which was the lowest anywhere in Tampa Bay. According to Zillow, an average of about one in five homeowners with a mortgage is underwater. e Zillow report states that this high rate is contributing to inventory short- ages and is preventing a full recovery for the housing market. For Q 4 in 2013, the nation's "effective" negative equity rate stood at 36.9 percent. is number includes homeowners with a mortgage whose equity in their homes is at 20 percent or below. e Zillow report for Q1 2014 predicts that the national negative equity rate will continue to fall and will be down to 17 percent by the end of Q1 in 2015. Florida Payrolls Lose Jobs, But Unemployment Rate Holds Steady e unemployment rate in Florida for July remained unchanged from the previous month at 6.2 percent despite losing 1,600 jobs from the payrolls, according to a report re- cently released by the Wells Fargo Securities Economics Group. July's job losses in Florida followed a gain of 34,900 in June. Despite the jobs lost in July, Florida's nonfarm payrolls saw a year-over- year increase of 2.9 percent, well above the national average of 1.9 percent, according to the Wells Fargo report. Florida felt the biggest job losses in July in the areas of local government (-4,000), whole- sale trade (-3,600), and manufacturing (-2,900). e biggest job gain came in the construction industry at +4,400, a significant increase of 10.9 percent from July 2013. e report said the spike in construction jobs available in Florida in July can be attributed to a large number of major construction or civil engineering projects, such as airport expansion, theme park additions, and high-rise condominiums. Another area where Florida saw job gains was in tourism, which saw 2,200 jobs add- ed—a 3.7 increase from July 2013, according to Wells Fargo. e addition of a new Harry Potter park at Universal Studios contributed to employment gains in the entertainment and arts industries, according to the report. Tourism and arts are not the only areas where Florida saw increases for July, however. e state also experienced year-over-year gains in professional and business ser- vices (3.4 percent) even though the number declined from June. Also according to the report, Florida saw significant year-over-year increases in employment for two relatively high-paying occupations, the architectural and engineering industries (8.6 percent) and the computer systems design industry and related occupations (6.5 percent).

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