8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

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

Date of Report (Date of earliest event reported): July 1, 2011

Walter Investment Management Corp.

(Exact name of registrant as specified in its charter)

Maryland	001-13417	13-3950486
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3000 Bayport Drive, Suite 1100 Tampa, FL	33607
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (813) 421-7600

N/A
(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Introductory Note

     On July 8, 2011, Walter Investment Management Corp. (the “Company”), filed a Current Report on Form 8-K (the “Original Form 8-K”) to report, among other things, that pursuant to the terms of a Membership Interest Purchase Agreement, dated as of March 25, 2011, by and among GTH LLC (the “Seller”), GTCS Holdings LLC (“Green Tree”) and the Company, the Company completed its acquisition (the “Acquisition”) of Green Tree from the Seller.

     As permitted under Item 9.01 of Form 8-K, the Company indicated in the Original Form 8-K that it would file the financial statements and the pro forma financial information required under Item 9.01 of Form 8-K within 71 calendar days after the date on which the Original Form 8-K was required to be filed. This Amendment No. 1 on Form 8-K/A amends the Original Form 8-K to include the required financial statements and pro forma financial information.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired

     In connection with the Acquisition, the following financial statements of Green Tree are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively:

• audited consolidated balance sheets of Green Tree as of December 31, 2010 and 2009, and the related audited consolidated statements of income, changes in members’ equity and cash flows for each of the two years in the period ended December 31, 2010;

• audited consolidated balance sheets of Green Tree as of December 31, 2009 and 2008, and the related audited consolidated statements of income, changes in members’ equity and cash flows for each of the two years in the period ended December 31, 2009; and

• condensed consolidated balance sheets of Green Tree as of June 30, 2011 (unaudited) and December 31, 2010, and the related unaudited condensed consolidated statements of income, changes in members’ equity and cash flows for the six months ended June 30, 2011 and 2010.

(b) Pro Forma Financial Information

     In addition, the following unaudited pro forma condensed combined financial information of the Company is attached hereto as Exhibit 99.4:

• unaudited pro forma condensed combined income statement for the year ended December 31, 2010 and the unaudited pro forma condensed combined balance sheet and income statement as of and for the six months ended June 30, 2011.

(d) Exhibits

Exhibit Number	Description
99.1	Audited consolidated balance sheets of Green Tree as of December 31, 2010 and 2009, and the related audited consolidated statements of income, changes in members’ equity and cash flows for each of the two years in the period ended December 31, 2010
99.2	Audited consolidated balance sheets of Green Tree as of December 31, 2009 and 2008, and the related audited consolidated statements of income, changes in members’ equity and cash flows for each of the two years in the period ended December 31, 2009
99.3	Condensed consolidated balance sheets of Green Tree as of June 30, 2011 (unaudited) and December 31, 2010, and the related unaudited condensed consolidated statements of income, changes in members’ equity and cash flows for the six months ended June 30, 2011 and 2010
99.4	Unaudited pro forma condensed combined income statement for the year ended December 31, 2010 and the unaudited pro forma condensed combined balance sheet and income statement as of and for the six months ended June 30, 2011

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WALTER INVESTMENT MANAGEMENT
Date: August 29, 2011	By:	/s/ Stuart Boyd
		Stuart Boyd, Vice President
		General Counsel and Secretary

EXHIBIT INDEX

Exhibit Number	Description
99.1	Audited consolidated balance sheets of Green Tree as of December 31, 2010 and 2009, and the related audited consolidated statements of income, changes in members’ equity and cash flows for each of the two years in the period ended December 31, 2010
99.2	Audited consolidated balance sheets of Green Tree as of December 31, 2009 and 2008, and the related audited consolidated statements of income, changes in members’ equity and cash flows for each of the two years in the period ended December 31, 2009
99.3	Condensed consolidated balance sheets of Green Tree as of June 30, 2011 (unaudited) and December 31, 2010, and the related unaudited condensed consolidated statements of income, changes in members’ equity and cash flows for the six months ended June 30, 2011 and 2010
99.4	Unaudited pro forma condensed combined income statement for the year ended December 31, 2010 and the unaudited pro forma condensed combined balance sheet and income statement as of and for the six months ended June 30, 2011

EX-99.1

Exhibit 99.1

GTCS Holdings LLC

Consolidated Financial Statements
December 31, 2010 and 2009

Table of Contents

	Page
Report of Independent Auditors		1
Consolidated Balance Sheets		2
Consolidated Statements of Income		3
Consolidated Statements of Changes in Members’ Equity		4
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements		6

Report of Independent Auditors

To the Members of GTCS Holdings LLC:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of changes in members’ equity, and of cash flows present fairly, in all material respects, the financial position of GTCS Holdings LLC and its subsidiaries (collectively, the Company) at December 31, 2010 and December 31, 2009 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America. 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

March 1, 2011

PricewaterhouseCoopers LLP, 225 South Sixth Street, Suite 1400, Minneapolis, MN 55402 T: (612) 596 6000, F: (612) 373 7160, www.pwc.com/us

GTCS Holdings LLC
Consolidated Balance Sheets
December 31, 2010 and 2009
(Dollars in millions)

	2010		2009
ASSETS
Assets:
Cash and cash equivalents	$	54.3	$	29.0
Restricted cash		149.6		144.5
Insurance premiums receivable		121.9		130.3
Loans related to consolidated variable interests, at fair value		608.3		—
Receivables related to consolidated variable interests, at fair value		121.8		—
Servicing rights (includes $171.9 million and $197.1 million, respectively, carried at fair value)		208.0		239.0
Servicer and protective advances		82.4		105.6
Intangible asset, net		51.5		62.3
Other assets		95.4		87.6
Total assets	$	1,493.2	$	798.3
LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Collateralized borrowings	$	371.3	$	421.2
Bonds payable related to consolidated variable interests, at fair value		792.1		—
Other liabilities		88.5		166.9
Escrow payable		56.2		70.9
Payable to insurance carriers		53.2		59.0
Payable to trusts/investors		76.5		73.6
Total liabilities		1,437.8		791.6
Members’ equity		55.4		6.7
Total liabilities and members’ equity	$	1,493.2	$	798.3

See accompanying notes to consolidated financial statements.

2

GTCS Holdings LLC
Consolidated Statements of Income
For the Years Ended December 31, 2010 and 2009
(Dollars in millions)

	2010		2009
Revenues:
Servicing income	$	239.4	$	228.0
Change in fair value of assets related to consolidated variable interests		97.4		—
Commission income		53.9		54.9
Ancillary servicing income		40.9		30.0
Other income		36.9		30.6
Total revenues		468.5		343.5
Expenses:
Change in fair value of bonds payable related to consolidated variable interests		95.0		—
Interest expense		42.6		44.0
Salaries and benefits		147.8		129.5
Other operating costs and expenses		87.3		71.0
Change in fair value of servicing rights		12.3		34.7
Impairment (recovery of) charges		1.0		(5.6	)
Total expenses		386.0		273.6
Net income before taxes		82.5		69.9
Income taxes		11.4		10.9
Net income	$	71.1	$	59.0

See accompanying notes to consolidated financial statements.

3

GTCS Holdings LLC
Consolidated Statements of Changes in Members’ Equity
For the Years Ended December 31, 2010 and 2009
(Dollars in millions)

	Members’
	Equity
Balance, December 31, 2008	$	133.7
Contributions from members		12.9
Distributions to members		(210.3	)
Comprehensive income:
Net income		59.0
Change in unrealized gain on hedges, net of tax		11.4
Total comprehensive income		70.4
Balance, December 31, 2009	$	6.7
Contributions from members		5.3
Distributions to members		(27.7	)
Comprehensive income:
Net income		71.1
Total comprehensive income		71.1
Balance, December 31, 2010	$	55.4

See accompanying notes to consolidated financial statements.

4

GTCS Holdings LLC
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2010 and 2009
(Dollars in millions)

	2010			2009
Cash flows from operating activities:
Net income	$	71.1		$	59.0
Adjustments to reconcile net income to cash provided by operating activities:
Impairment (recovery of) charges		1.0			(5.6	)
Amortization and depreciation		26.2			22.5
Change in fair value of servicing rights		12.3			34.7
Change in fair value of consolidated variable interests		(2.4	)		—
Change in servicer and protective advances		10.7			(15.7	)
Change in insurance premiums receivable		8.4			7.2
Change in payable to insurance carriers		(5.8	)		(3.4	)
Other		8.0			15.2
Net cash provided by operating activities		129.5			113.9
Cash flows from investing activities:
Payments received on assets related to consolidated variable interests		161.5			—
Principal payments received on loans		1.6			2.1
Servicing related acquisitions		(1.2	)		(9.5	)
Capital expenditures		(7.7	)		(4.1	)
Loan purchases		(4.9	)		(6.0	)
Other		(2.4	)		3.5
Net cash provided by (used in) investing activities		146.9			(14.0	)
Cash flows from financing activities:
Payments on bonds related to consolidated variable interests		(163.5	)		—
Proceeds from issuance of collateralized borrowings		5.8			388.5
Payments on collateralized borrowings		(66.9	)		(319.6	)
Cash from affiliates		1.2			0.2
Members’ contributions		—			1.5
Distributions to members		(27.7	)		(210.3	)
Net cash used in financing activities		(251.1	)		(139.7	)
Net increase (decrease) in cash and cash equivalents		25.3			(39.8	)
Cash and cash equivalents, beginning of year		29.0			68.8
Cash and cash equivalents, end of year	$	54.3		$	29.0
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	36.7		$	27.6
Cash paid for taxes		15.5			13.6
Non-cash transactions:
Financed servicing related acquisitions		—			34.4
Contribution of fair value of swap		—			4.7
Capital contributions related to unit based incentive plan		5.3			6.7
Transfers from loans to other assets (see Note 3)		3.2			—

See accompanying notes to consolidated financial statements.

5

GTCS Holdings LLC
Notes to Consolidated Financial Statements

1.	DESCRIPTION OF BUSINESS
	GTCS Holdings LLC (“GTCS Holdings”) is a limited liability corporation established on December 18, 2009 when GTH LLC (“GTH”) legally separated its operating business into a separate subsidiary and is collectively referred to herein as “GTCS Holdings,” “we,” “Green Tree” or the “Company”. GTCS Holdings provides third party servicing for residential mortgage, manufactured housing and consumer installment loans and contracts. GTCS Holdings also includes a nationwide licensed insurance agency business servicing their customers’ needs for property and casualty, as well as life and health insurance products.
	The consolidated financial statements for the year ended December 31, 2009 have been prepared on a carve-out basis to include the financial results of the operating businesses of GTH that are contained in GTCS Holdings subsequent to December 18, 2009 in accordance with accounting principles generally accepted in the United States of America. As part of the carve-out process, certain administrative expenses of the Company were allocated between the Company and its affiliates. Additionally, certain accounting and administrative expenses of the Company attributed to other businesses were allocated to other affiliates. Management believes that such allocations are reasonable; however, the expenses may not be indicative of the actual expenses that would have been incurred by the Company had it been operating as an independent company for the year ended December 31, 2009.
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Principles of consolidation
	The consolidated financial statements include the assets and liabilities and results of operations of GTCS Holdings and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in the consolidation.
	Use of estimates and assumptions
	When the Company prepares consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, the Company is required to make estimates and assumptions that significantly affect various reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting periods. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates.
	Cash and cash equivalents
	Cash and cash equivalents include cash and highly liquid short-term investments with maturities of less than three months. We carry them at cost, which approximates estimated fair value.
	Restricted cash
	Restricted cash includes: (a) cash collected on behalf of the securitization trusts/investors for principal and interest on loans held in securitization trusts serviced by Green Tree that has not yet been remitted to the trust/investors; (b) cash collected for principal and interest on the loans related to

6

GTCS Holdings LLC
Notes to Consolidated Financial Statements

consolidated variable interests held in segregated trust accounts to be used to pay the principal and interest on Green Tree’s bonds payable related to consolidated variable interests; (c) cash collected on loans related to consolidated variable interests that has not yet been remitted to the segregated trust accounts; (d) cash collected and held in escrow to be used to pay real estate taxes and insurance on behalf of borrowers; and (e) cash collected for insurance claims related to the borrowers’ properties which are held by the Company until repairs to the insured properties have been completed.

Insurance premiums receivable and payable to insurance carriers

      Insurance premiums receivable consist of receivables for premiums on insurance policies for property and casualty. Customers generally finance their insurance premiums over the life of the policy, typically one to three years. New policies issued are recorded at face value. A corresponding payable to the carrier, net of commission, is also recorded at the time a new policy is set up. Payments are made to the carriers on a contractual basis either up front or over time, generally one to three years depending on the type of product. Green Tree maintained cancellation reserves of $3.3 million as of both December 31, 2010 and 2009 for estimated forfeitures of commission income due to the cancellation of customers’ policies. These reserves are recorded in Other liabilities on the consolidated balance sheets. Green Tree analyzes the adequacy of its cancellation reserves based on historical cancellation rates and records any required adjustments to reserves against commission income.

Loans related to consolidated variable interests

      Loans related to consolidated variable interests consist of manufactured housing loans and contracts in 10 securitization trusts serviced by the Company that were required to be consolidated on our consolidated balance sheet as of January 1, 2010 pursuant to FASB Accounting Standards Update 2009-17 (“ASU 2009-17”) as the Company has a mandatory clean-up call obligation. These loans are owned by the securitization trusts. Green Tree does not receive economic benefit from the loans while the loans are held by the securitization trusts other than the servicing fees paid to the Company to service these loans. Once Green Tree exercises the mandatory call obligation, the Company will own these loans. See Note 3 for further discussion on the Company’s involvement with these variable interest entities (“VIEs”). The Company elected to account for these loans at fair value. The yield on these loans, along with any changes in fair value related to performance or valuation assumptions, is recorded in the Change in fair value of assets related to VIEs in the consolidated statements of income.

      The Company had $15.9 million of unpaid principal balances on all loans that were 60 days or more delinquent as of December 31, 2010.

Receivables related to consolidated variable interests

      Receivables related to consolidated variable interests consist of the expected draws on letters of credit (“LOCs”) from a third party related to the 10 securitizations that were required to be consolidated pursuant to ASU 2009-17. The LOCs are credit enhancements to the securitizations. The cash flows from the LOC draws are used to pay bondholders of these securitizations for shortfalls in principal and interest collections on the loans in the securitizations and are paid directly to the underlying securitization trusts. The Company elected to carry these receivables at fair value. The fair value represents the net present value of the expected LOC draws through the mandatory call dates. The yield on these receivables, along with any changes in fair value related to performance or

7

GTCS Holdings LLC
Notes to Consolidated Financial Statements

valuation assumptions, is recorded in the Change in fair value of assets related to VIEs in the consolidated statements of income.

Servicing rights

      Acquired servicing rights related to certain securitization trusts and whole loan portfolios are initially recorded at estimated fair value on the acquisition date. Manufactured housing servicing rights are carried at estimated fair value with changes in fair value recorded in the consolidated statements of income.

      The Company carries its servicing rights for residential mortgage portfolios at the lower of amortized cost or fair market value. All newly acquired servicing rights are initially measured at fair value. These servicing rights are amortized based on expected cash flows in proportion to and over the estimated life of net servicing income with the amortization being recorded in Other operating costs and expenses on the consolidated statements of income. These servicing rights, stratified by product type, are compared to the estimated fair value on a quarterly basis. To the extent that the carrying value exceeds the estimated fair value for any specific strata, a valuation allowance would be established through recording of impairment in the consolidated statements of income.

Servicer and protective advances

      Servicer and protective advances include principal and interest advances to certain securitization trusts for delinquent customer payments not received in monthly cash collections of the underlying collateral. Also included in servicer and protective advances are advances to protect the collateral serviced by the Company including property taxes, insurance, certain legal fees and refurbishment of repossessed assets. These assets are carried at cost net of estimated loss reserves. Estimated losses related to these advances are recorded in Other operating costs and expenses in the consolidated statements of income.

      The following table summarizes the components of servicer and protective advances as of December 31, 2010 and 2009 (dollars in millions):

	2010		2009
Principal and interest advances	$	20.9	$	34.0
Protective advances		61.5		71.6
Total servicer and protective advances	$	82.4	$	105.6

Intangible asset

      The intangible asset is related to certain acquired customer relationships which are critical to the renewal of insurance policies, mainly related to the Company’s voluntary property and casualty business. The intangible asset is amortized based on the estimated revenue streams related to these customer relationships over the estimated remaining life. The remaining capitalized value of the intangible asset is analyzed annually to determine if any impairment is required. No impairment was recorded in the years ended December 31, 2010 and 2009. Amortization of the intangible asset was $10.8 million and $12.0 million for the years ended December 31, 2010 and 2009, respectively.

8

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      Accumulated amortization of the intangible asset was $38.4 million and $27.7 million as of December 31, 2010 and 2009, respectively.

      Amortization expense as of December 31, 2010 for the expected remaining life of the intangible asset is estimated to be (dollars in millions):

2011	$	9.3
2012		8.2
2013		7.2
2014		6.1
2015		5.2
Thereafter		15.5
Total	$	51.5

Other assets

      Other assets include goodwill, deferred debt issuance costs, property, plant and equipment, repossessed assets, servicing fees due from securitization trusts and other parties for whom the Company performs servicing of mortgages and contracts, a note receivable from GTH, and miscellaneous other assets.

Bonds payable related to consolidated variable interests

      Bonds payable related to consolidated variable interests relate to the outstanding bonds payable of the 10 securitizations that were required to be consolidated on our consolidated balance sheet as of January 1, 2010 pursuant to ASU 2009-17. The interest and principal payments on these bonds are funded by the cash flows from the mortgage loans and any required letter of credit draws discussed above. The Company elected to carry the bonds payable at fair value. The fair value represents the net present value of the interest and principal payments on the bonds through the mandatory call dates. The yield on these bonds, along with any changes in fair value related to performance or valuation assumptions, is recorded in the Change in fair value of bonds payable related to consolidated variable interests in the consolidated statements of income.

Income taxes

      As a limited liability company, the Company and certain of its limited liability subsidiaries are not subject to income taxes. Tax liabilities associated with the earnings of these entities are the responsibility of its members.

      As permitted under the regulations of a limited liability corporation, the Company’s operating subsidiary, Green Tree Investment Holdings III LLC (“GTIH III”), has elected to be treated as a corporation for tax purposes. Income taxes are accounted for using the asset and liability method. Our income tax expense includes deferred income taxes arising from temporary differences between the tax and financial reporting basis of assets and liabilities. In estimating future tax consequences, the Company uses tax rates expected to be applicable in future years other than enactments of changes in tax laws or rates. The Company includes interest and penalties related to income taxes as a component of income tax expense. Amounts attributable to interest and penalties related to income taxes are immaterial.

9

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      Pursuant to Financial Accounting Standards Board’s (“FASB”) guidance on “Accounting for Uncertainty in Income Taxes”, contained in Accounting Standards Codification Topic 740-10 (“ASC 740-10”), tax benefits are recognized by the Company related to tax positions only if it is more likely-than-not to be sustained solely on its technical merits as of a given reporting date. If a tax position is not considered by the Company to be more-likely-than-not sustained based solely on its technical merits, the Company does not recognize a tax benefit. As of December 31, 2010 and 2009, the Company did not have any material uncertain tax positions.

Derivatives and hedge accounting

      The Company maintains an overall risk management strategy that incorporates the use of derivatives to manage interest rate risks to hedge its exposure to changes in LIBOR-based interest rates with respect to its floating rate debt. The estimated fair value generally reflects the estimated amounts the Company would receive/pay to terminate the derivatives.

      For the year ended December 31, 2010, the Company had swaptions and caps that were not designated under hedge accounting. For derivatives not designated under hedge accounting, the Company records all changes in fair value to Other income during the period of change.

      During 2009, the Company had interest rate swaps that were designated and qualified as cash flow hedges. The effective portion of the gain or loss on the derivative instrument was reported as a component of Other comprehensive income and reclassified into earnings in the same line item associated with the hedged item in the same period during which the hedged item affected earnings. Prior to December 31, 2009, the Company de-designated and liquidated or distributed its interest rate swaps.

      For qualified cash flow hedges, Green Tree formally documented all relationships between the hedging instruments and hedged items at the time of designation, as well as its risk management objective and strategy for undertaking the hedge transactions. This process included linking all hedges that were designated as cash flow hedges to specific assets and liabilities on the consolidated balance sheets, to specific firm commitments, or to the forecasted transactions. The Company also formally assessed, both at the inception and on an ongoing basis, whether the derivatives used in the hedging transactions were highly effective in offsetting changes in fair values or cash flows of hedged items. The hedge accounting treatment described above was discontinued if a derivative instrument was terminated or the hedge designation was removed.

Revenue recognition for servicing rights

      Servicing income includes contractual servicing fees based as a percentage of the unpaid principal balance of the related collateral and servicing incentive fees earned based on the performance of certain loan portfolios serviced by the Company. Ancillary servicing income received related to servicing includes late fees, prepayment fees and collection fees. Ancillary servicing income also includes revenue earned through the government’s Home Affordable Modification Program and other modification programs. Contractual servicing fees and incentives are recorded on an accrual basis. Ancillary servicing income is recognized when uncertainties regarding collection are resolved.

10

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Revenue recognition for commission income

      Green Tree recognizes commission income on policies written when the policy is sold to the customer, net of estimated future policy cancellations. The commissions are based on a percentage of the price of the insurance policy sold which varies by type of insurance product.

Fair value measurement

      The fair value of an asset or liability is 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. Fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a three level hierarchy for fair value measurements. The valuation hierarchy is based on the transparency of the inputs to the valuation of the asset or liability at the measurement date. The categorization of an asset or liability within the fair value hierarchy is based on the lowest level of significant input to its valuation. The three levels of the fair value hierarchy are described below:

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

Level 2: Valuations including quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability either directly or indirectly for substantially the full term of the financial instrument.

Level 3: Valuations that require inputs that are supported by little or no market activity. The unobservable inputs are significant to the fair value measurements and represent the Company’s best assumptions of how market participants would estimate the fair value of these assets.

      The following methods and assumptions are used to determine the estimated fair value of the assets and liabilities carried on the Company’s consolidated balance sheets at fair value on a recurring basis:

Loans and receivables related to consolidated variable interests: Upon adoption of the new consolidation accounting guidance on January 1, 2010, we elected to measure our loans and receivables related to consolidated variable interests under the fair value option as our interests prior to consolidation were predominately carried at fair value with changes in fair value recorded to earnings. Accordingly, the fair value option was elected to effectively continue fair value accounting through earnings for our interests in those variable interests. These loans have an unpaid principal balance of $1,005.7 million as of December 31, 2010.

The loans related to consolidated variable interests 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 the projected cash flows over the estimated life of the loans.

The Company’s valuation considers assumptions for prepayments, defaults, severity and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing the

11

GTCS Holdings LLC
Notes to Consolidated Financial Statements

loans, including but not limited to recent historical experience as well as current and/or 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 Company estimates the fair value of the receivables related to consolidated variable interests at the net present value of the cash flows from the letters of credit used to pay bondholders for the remaining life of the securitization trust. The estimate of the cash to be collected from the letters of credit is based on the shortfall of cash flows from the loans in the securitization trusts compared to the required bond payments of the securitization trusts. The cash provided by the letters of credit is determined by analyzing the credit assumptions for the underlying collateral in each of the securitizations.

The discount rate assumption for these assets is primarily based on collateral and credit risk characteristics combined with an assessment of market interest rates.

Servicing rights carried at fair value: Manufactured housing servicing rights 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 the cash flows of the servicing income to be received. The Company’s valuation considers assumptions and estimates of contractual servicing fees, ancillary revenue, costs to service, collateral repayment and default rates, and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing servicing rights, including but not limited to recent historical experience as well as current and/or expected relevant market conditions. Ancillary revenue and cost to service assumptions are primarily based on historical experience as well as other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

Bonds payable related to consolidated variable interests: Upon adoption of the new consolidation accounting guidance on January 1, 2010, we elected to measure our bonds payable related to consolidated variable interests under the fair value option as our interests prior to consolidation were predominately carried at fair value with changes in fair value recorded to earnings. Accordingly, the fair value option was elected to effectively continue fair value accounting through earnings for our interests in those variable interests. These bonds payable have an unpaid principal balance of $1,020.8 million as of December 31, 2010.

These bonds are 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 bonds is based on the net present value of the projected bond principal and interest payments for the remaining life of the securitization trusts. The Company’s valuation considers assumptions and estimates for principal and interest payments on the bonds and letter of credit draws. An analysis of the credit assumptions for the underlying collateral in each of the securitizations is performed to determine the required payments to bondholders. The assumptions include prepayments, defaults, severity and

12

GTCS Holdings LLC
Notes to Consolidated Financial Statements

discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing bonds, including but not limited to recent historical experience as well as current and/or expected relevant market 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 is primarily based on credit characteristics combined with an assessment of market interest rates.

Mandatory repurchase obligation: This liability relates to a mandatory repurchase obligation for two securitizations in which the Company is required to repurchase loans from the securitizations when a loan becomes 90 days delinquent. The Company estimates the fair value of the contingent obligation based on the expected net present value of future cash flows using level 3 assumptions including prepayment, default and severity rates applicable to the underlying loans’ historical and projected performance.

The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation of the mandatory repurchase obligation that a market participant would consider in valuing these liabilities, including but not limited to recent historical experience as well as current and/or expected relevant market conditions and other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

Accrued professional fees related to certain securitizations: This liability relates to payments mainly for surety and auction agent fees that the Company will be required to make over the remaining life of certain securitizations. 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 cash flows of the accrued professional fees required to be paid related to the securitizations. The Company’s valuation considers assumptions and estimates of collateral repayment, default rates and discount rates.

The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation of the accrued professional fees related to certain securitizations that a market participant would consider in valuing these liabilities, including but not limited to recent historical experience as well as current and/or expected relevant market conditions and other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

Mandatory obligation to exercise clean-up calls: This liability relates to a mandatory obligation to exercise the clean-up calls on 10 securitizations serviced by the Company. The mandatory obligation is triggered when the remaining collateral balance equals approximately 10% of the initial collateral balance. The Company estimates the fair value of the contingent obligation based on the expected net present value of the expected collateral loss at the date of call using level 3 assumptions including prepayment, default and severity rates applicable to the underlying loans’ historical and projected performance.

13

GTCS Holdings LLC
Notes to Consolidated Financial Statements

The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation of the mandatory obligation that a market participant would consider in valuing these liabilities, including but not limited to recent historical experience as well as current and/or expected relevant market conditions and other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

Upon adoption of the new consolidation accounting guidance on January 1, 2010, we consolidated the 10 securitization trusts related to this obligation and removed the mandatory obligation to exercise clean-up calls liability from our consolidated balance sheet. For additional information see “Transactions with consolidated VIEs” in Note 3.

      The following are the estimated values of the assets and liabilities carried on the Company’s consolidated balance sheets at fair value on a recurring basis at December 31, 2010 and 2009 using level 3 significant unobservable inputs (dollars in millions):

	Fair Value at
	Reporting Date
December 31, 2010
Loans related to consolidated variable interests	$	608.3
Receivables related to consolidated variable interests		121.8
MH servicing rights		171.9
Bonds payable related to consolidated variable interests		(792.1	)
Mandatory repurchase obligation(1)		(13.4	)
Accrued professional fees related to certain securitizations(1)		(10.5	)
December 31, 2009
MH servicing rights	$	197.1
Mandatory repurchase obligation(1)		(13.6	)
Accrued professional fees related to certain securitizations(1)		(11.3	)
Mandatory obligation to exercise clean-up calls(1)		(54.1	)

(1) Mandatory repurchase obligation, accrued professional fees related to certain securitizations and mandatory obligation to exercise clean-up calls are included in Other liabilities on the Company’s consolidated balance sheets.

14

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      The following is a reconciliation of the changes in fair value of the level 3 assets and liabilities carried on the Company’s consolidated balance sheets at fair value on a recurring basis at December 31, 2010 and 2009 (dollars in millions):

							Changes in
	Fair Value,			Initial			Valuation			Realization			Cash
	Beginning			Consolidation			Inputs or			of Expected			Payments			Fair Value,
	of Year			of VIEs(1)			Assumptions			Cash Flows			(Collections)(2)			End of Year
December 31, 2010
Loans related to consolidated variable interests	$	—		$	664.3		$	(3.7	)	$	100.8		$	(153.1	)	$	608.3
Receivables related to consolidated variable interests		—			141.9			(5.8	)		6.1			(20.4	)		121.8
MH servicing rights		197.1			(12.9	)		23.4	(3)		(35.7	)		—			171.9
Bonds payable related to consolidated variable interests		—			(860.6	)		12.2			(107.2	)		163.5			(792.1	)
Mandatory repurchase obligation		(13.6	)		—			(0.9	)		1.1			—			(13.4	)
Accrued professional fees related to certain securitizations		(11.3	)		—			(0.9	)		(1.5	)		3.2			(10.5	)
Mandatory obligation to exercise clean-up calls		(54.1	)		54.1			—			—			—			—
December 31, 2009
MH servicing rights	$	231.8		$	—		$	9.8	(3)	$	(44.5	)	$	—		$	197.1
Mandatory repurchase obligation		(13.1	)		—			(2.3	)		1.8			—			(13.6	)
Accrued professional fees related to certain securitizations		(11.7	)		—			(1.5	)		(1.6	)		3.5			(11.3	)
Mandatory obligation to exercise clean-up calls		(55.8	)		—			8.3			(6.6	)		—			(54.1	)

(1)	Refer to Note 3 for discussion of the Company’s consolidation of the assets and liabilities of certain VIEs on January 1, 2010.
(2)	Cash payments on loans and bonds payable related to consolidated variable interests include interest payments.
(3)	Reflects changes due to cost to service assumptions and performance of the underlying collateral for the year ended December 31, 2010 and performance of the underlying collateral for the year ended December 31, 2009.

      The following methods and assumptions were used to determine the estimated fair values of the Company’s financial instruments not accounted for at fair value:

Cash and cash equivalents and restricted cash: The Company carries its cash and cash equivalents and restricted cash at cost, which approximates estimated fair value. The valuation of these short-term, highly liquid assets is based on level 1 inputs.

Insurance premiums receivable: These receivables are not traded in an active market. The estimated fair value of these assets is based on the net present value of the expected cash flows. The estimated fair value is based on level 3 assumptions of the underlying collateral serviced by the Company including delinquency and default rates as these insurance premiums are collected as part of the customers’ loan payments or from the related trust.

15

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Servicer and protective advances: The Company estimates the fair value of servicer and protective advances based on level 3 unobservable market inputs using the present value of projected cash flows over the expected life of the receivables and the Company’s estimated pricing of advances on similar collateral.

Collateralized borrowings: The Company estimates fair value of its collateralized borrowings using level 2 observable inputs including comparable market transactions and interest rates that are consistent with market rate pricing based on the Company’s credit worthiness.

Payable to insurance carriers: This liability represents payments to the Company’s carriers of insurance policies related to the insurance receivables noted above. There is not a traded market for these or similar payables; therefore, the Company utilized level 3 unobservable inputs to estimate the fair value of the carrier payable based on the net present value of the expected carrier payments over the life of the payables.

     The following are the estimated values of our financial instruments at December 31, 2010 and 2009, which are recorded on the Company’s consolidated balance sheets at their carrying amounts (dollars in millions):

	2010				2009
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	54.3	$	54.3	$	29.0	$	29.0
Restricted cash		149.6		149.6		144.5		144.5
Insurance premiums receivable		121.9		111.8		130.3		117.6
Servicer and protective advances		82.4		81.2		105.6		90.3
Financial liabilities:
Collateralized borrowings	$	371.3	$	385.1	$	421.2	$	424.4
Payable to insurance carriers		53.2		50.7		59.0		54.6

	Recently issued accounting standards
	ASU 2010-20, Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses. In April 2010, the FASB issued this accounting standards update requiring enhanced disclosures regarding the credit quality of finance receivables and allowance for credit losses, as well as further disaggregation of such receivables and allowances. For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011. The Company does not expect the implementation of this standards update to have a material impact on our consolidated financial statements.
3.	VARIABLE INTEREST ENTITIES
	Involvement with securitizations
	Green Tree has various agreements related to securitization trusts. Securitization trusts are special purpose entities (“SPEs”). A SPE is an entity that was formed for a limited purpose. The Company’s involvement with these SPEs includes servicing of the underlying loans, obligations to

16

GTCS Holdings LLC
Notes to Consolidated Financial Statements

exercise mandatory clean-up calls on securitization trusts and reimbursement obligations related to letters of credit on securitization trusts.

      SPEs are generally considered variable interest entities (“VIE”). A VIE is an entity that has either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the ability to control the entity’s activities. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual ownership or other interest that changes with changes in fair value of the VIE’s net assets. To determine whether or not a variable interest we hold could potentially be significant to the VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE. We assess whether or not we are the primary beneficiary of a VIE on an on-going basis. We evaluate each involvement in a SPE for classification as a VIE. When a SPE meets the definition of a VIE and we determine that the Company is the primary beneficiary, the assets and liabilities of the VIE are included in the consolidated financial statements of the Company.

      The accounting guidance for VIEs was amended in 2009 and was effective for financial statements issued for fiscal years beginning after November 15, 2009. As a result of the adoption of this standard on January 1, 2010, we recorded assets and liabilities of consolidated VIEs and derecognized our existing assets and liabilities associated with those VIEs. The consolidation of these assets and liabilities did not have an impact on the cash flows the Company receives from the securitizations or expected payments of contingent liabilities related to these securitizations.

      The consolidation resulted in changes to assets, liabilities and equity as of January 1, 2010 as detailed in the following table (dollars in millions):

	Added to			Removed from
	Balance Sheet			Balance Sheet
Restricted cash	$	16.2		$	—
Loans related to consolidated variable interests		664.3
Receivables related to consolidated variable interests		141.9			—
Servicing rights		—			(12.9	)
Servicer and protective advances		—			(8.5	)
Servicing fee receivable(1)		—			(1.0	)
Repossessed assets related to consolidated variable interests(2)		4.6			—
Bonds payable related to consolidated variable interests		(860.6	)		—
Mandatory clean-up calls on certain securitizations(3)		—			54.1
Payable to trusts/investors		—			1.9
Net equity impact	$	(33.6	)	$	33.6

(1)	Servicing fee receivable was included in Other assets on the Company’s consolidated balance sheet.
(2)	Repossessed assets related to consolidated variable interests are included in Other assets on the Company’s consolidated balance sheet.
(3)	Mandatory clean-up calls on certain securitizations were included in Other liabilities on the Company’s consolidated balance sheet.

17

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      The Company has elected to carry the assets and liabilities associated with the consolidation of the VIEs at fair value using level 3 inputs, with the exception of restricted cash, which is carried at cost, which approximates estimated fair value, due to its short-term nature. See discussion of fair value measurements in Note 2. We have segregated our involvement with VIEs between those VIEs we consolidate and those we do not consolidate. The classifications of assets and liabilities in our balance sheet associated with our involvement with VIEs as of December 31, 2010 are as follows (dollars in millions):

	Consolidated			Unconsolidated
	VIEs			VIEs(1)		Total
Assets
Restricted cash	$	16.9		$	—	$	16.9
Loans related to consolidated variable interests		608.3			—		608.3
Receivable related to consolidated variable interests		121.8			—		121.8
Servicing rights		—			192.0		192.0
Principal and interest advances		—			20.9		20.9
Repossessed assets related to consolidated variable interests(2)		3.2			—		3.2
Liabilities
Bonds payable related to consolidated variable interests		(792.1	)		—		(792.1	)
Net assets	$	(41.9	)	$	212.9	$	171.0

(1)	Refer to “Transactions with unconsolidated VIEs” on page 19 for discussion of unconsolidated VIEs.
(2)	Repossessed assets related to consolidated variable interests are included in Other assets on the Company’s consolidated balance sheet as of December 31, 2010.

Transactions with consolidated VIEs

      Servicing arrangements with mandatory clean-up call obligation: The Company services $1.0 billion of loans related to 10 securitizations for which it receives contractual servicing fees. The Company also has a mandatory obligation to exercise the clean-up calls on these securitizations. The mandatory obligation is triggered when the remaining collateral balances equal approximately 10% of the initial collateral balances. The total outstanding collateral balances at the respective call dates are approximately $418.1 million. These securitizations were originated between 1998 and 2000 by a third party and the Company expects to call the securitizations beginning in 2017. The Company has consolidated these assets as we have determined that Green Tree is the primary beneficiary because we have the power to direct the activities that most significantly impact the securitizations as the servicer and the mandatory clean-up call is a significant interest in the securitizations. The assets of the VIEs are used to pay Green Tree’s servicing fee and the third party bondholders. Some of these securitizations also contain letters of credit as credit enhancements that the securitizations draw from if there are not enough cash flows from the underlying collateral to pay the bondholders. Green Tree’s obligation related to these letters of credit is discussed under “Servicing arrangements with letter of credit reimbursement obligation” in the “Transactions with unconsolidated VIEs” section below.

18

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      Prior to January 1, 2010, Green Tree had recorded the estimated fair value of the mandatory call obligation as a liability of $54.1 million based on the performance of the underlying collateral in these securitizations. The estimated fair value was equal to the net present value of the expected collateral loss at the date of call. This liability was recorded in Other liabilities on the consolidated balance sheet as of December 31, 2009. The Company recorded a reversal of impairment of $8.3 million and $6.5 million of interest expense in the year ended December 31, 2009 related to changes in the estimated fair value of this liability.

Transactions with unconsolidated VIEs

     The Company has involvement in VIEs that are not consolidated on our balance sheets. The involvements with these VIEs include servicing activities, reimbursement obligations related to certain securitizations supported by letters of credit and securitizations that are consolidated by affiliates. The involvements with unconsolidated VIEs are recorded on our consolidated balance sheets, primarily in servicing rights.

     The following table provides a summary of unconsolidated VIEs with which we have significant continuing involvement, but are not the primary beneficiary as of December 31, 2010 (dollars in millions):

	Total
	Unconsolidated				Carrying
	VIE Assets		Carrying		Value
	(Unpaid		Value		(Principal and		Maximum
	Principal		(Servicing		Interest		Exposure to
	Balance)		Rights)		Advances)		Loss(1)
Securitizations where only involvement is servicing activities	$	23,681.8	$	188.8	$	18.9	$	207.7
Servicing arrangements with letter of credit reimbursement obligation		279.6		3.2		2.0		170.2
Servicing activities related to securitizations consolidated by affiliates		841.0		—		—		—
Total	$	24,802.4	$	192.0	$	20.9	$	377.9

(1) The company’s maximum exposure to loss for these VIEs is equal to the carrying value of servicing rights and principal and interest advances associated with the VIE, as well as the amount of the obligation to reimburse an unrelated third party for the final $165.0 million drawn on letters of credit for the servicing arrangements with letter of credit reimbursement obligation.

     Securitizations where Green Tree’s only involvement is servicing activities: Green Tree services $23.7 billion of residential mortgage loans and other consumer loans for securitization trusts in which Green Tree’s only relationship with the securitization is that of a servicer. Green Tree did not originate or securitize these loans. Green Tree does not hold any other interests in any of these securitization trusts. We do not consolidate these VIEs in our consolidated balance sheets as Green Tree does not have a variable interest that could potentially be significant to the VIEs.

     Servicing arrangements with letter of credit reimbursement obligation: Green Tree services $0.3 billion of loans related to four securitization trusts that have not been consolidated on the

19

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Company’s balance sheet where Green Tree has an obligation to reimburse a third party for the final $165.0 million on letters of credit for the aggregate of 12 securitizations if drawn. Eight of these securitizations were consolidated on the Company’s balance sheet as of January 1, 2010 due to the Company’s mandatory clean-up call obligation. The letters of credit were provided by the seller of the securitizations as credit enhancements on these securitizations. The securitization trusts will draw from these letters of credit if there are not enough cash flows from the underlying collateral to pay the bondholders of these securitizations. The total amount outstanding on these letters of credit for all 12 securitizations was $314.9 million and $330.4 million at December 31, 2010 and 2009, respectively. Based on management’s estimates of the underlying performance on the collateral in these securitizations, Green Tree does not currently anticipate that the final $165.0 million will be drawn, and therefore, no liability for the fair value of this obligation was recorded as of December 31, 2010 or 2009. Actual performance may differ from this estimate in the future.

      The four securitizations are not consolidated in our consolidated balance sheet as Green Tree is not deemed to be the primary beneficiary of these VIEs as the Company does not have a variable interest that could potentially be significant to the VIEs.

      Servicing activities related to securitizations consolidated by affiliates: Green Tree services $0.8 billion of loans for securitization trusts in which Green Tree Investments II LLC, a related party, owns residual interests in these securitizations and has consolidated the assets and liabilities of the securitizations on its balance sheet. The Company’s involvement in these securitizations is limited to the servicing activities in which the Company receives a fixed servicing fee from the underlying trusts in accordance with the pooling and servicing agreements. The Company is not the primary beneficiary as the Company does not have a variable interest that could potentially be significant to the VIEs.

4. SERVICING RIGHTS

     Servicing rights consist of contractual rights purchased from third parties to receive servicing fees on the unpaid principal balance of the underlying collateral. The table below details the Company’s servicing rights as of December 31, 2010 and 2009 (dollars in millions):

	2010		2009
Servicing rights carried at fair value	$	171.9	$	197.1
Servicing rights carried at lower of cost or fair value		36.1		41.9
Total servicing rights	$	208.0	$	239.0

Servicing rights carried at fair value

     Servicing rights carried at fair value consist of contractual rights purchased from third parties to receive servicing fees for servicing manufactured housing loans (“MH servicing rights”) at annual rates based on the unpaid principal balance of the related collateral. Refer to the “Fair value measurement” section within Note 2 for a reconciliation of the changes in fair value of MH servicing rights carried on the Company’s consolidated balance sheets at December 31, 2010 and 2009.

20

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     The estimation of fair value of MH servicing rights requires significant judgment. The fair value of MH servicing rights is estimated using the present value of projected cash flows over the estimated period of net servicing income.

     At December 31, 2010 and 2009, key economic assumptions used to determine the estimated fair value of the MH servicing rights and the sensitivity of the estimated fair value to immediate changes in those assumptions are as follows (dollars in millions):

	2010			2009
Estimated fair value of MH servicing rights	$	171.9		$	197.1
Cumulative scheduled principal balance of serviced MH loans at the end of the period	$	11,682.9		$	14,403.2
Weighted average remaining life in years		6.7			6.2
Weighted average stated customer interest rate on underlying collateral		9.3	%		9.3	%

     Assumptions to determine the estimated fair value of MH servicing rights at December 31, 2010 and 2009 and the estimated impacts of adverse changes are as follows (dollars in millions):

	2010			2009
Expected cost to service as a percentage of principal balance of serviced loans (a)		0.87	%		0.87	%
Impact on estimated fair value of 2 basis point increase	$	(8.5	)	$	(10.0	)
Impact on estimated fair value of 4 basis point increase	$	(17.0	)	$	(19.9	)
Expected ancillary fees as a percentage of principal balance of serviced loans (a)		0.09	%		0.09	%
Impact on estimated fair value of 1 basis point decrease	$	(4.3	)	$	(5.0	)
Impact on estimated fair value of 2 basis point decrease	$	(8.5	)	$	(10.0	)
Expected conditional repayment rate as a percentage of principal balance of serviced loans (a)		2.9	%		3.5	%
Impact on estimated fair value of 10 percent increase	$	(1.4	)	$	(2.0	)
Impact on estimated fair value of 20 percent increase	$	(2.7	)	$	(4.0	)
Expected conditional default rate as a percentage of principal balance of serviced loans (a)		3.9	%		4.1	%
Impact on estimated fair value of 10 percent increase	$	(2.3	)	$	(2.8	)
Impact on estimated fair value of 20 percent increase	$	(4.5	)	$	(5.5	)
Weighted average discount rate (a)		13.0	%		14.0	%
Impact on estimated fair value of 10 percent increase	$	(6.2	)	$	(7.5	)
Impact on estimated fair value of 20 percent increase	$	(12.0	)	$	(14.5	)

(a) The valuation of MH servicing rights is affected by the underlying assumptions including the expected cost of servicing, ancillary fees, prepayments of principal, defaults and discount rate. Should actual performance and timing differ materially from our projected assumptions, it could have a material effect on the valuation of our MH servicing rights. The valuation is determined by discounting cash flows over the expected life of the serviced loans. The stress tests above are also over the life of the serviced loans and are applied equally at each point in the assumption curve.

21

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in estimated fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in estimated fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the estimated fair value of the MH servicing rights is calculated without changing any other assumption; however, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

Servicing rights carried at lower of amortized cost or fair value

     Servicing rights carried at lower of amortized cost or fair value (“Mortgage servicing rights”) consist of contractual rights purchased from third parties to receive servicing fees from servicing residential mortgage loans at annual rates based on the unpaid principal balance of the related collateral. To the extent that the carrying value exceeds the estimated fair value for any specific strata, a valuation allowance would be established through the recognition of impairment in the consolidated statements of income. No impairment or related valuation allowance was recorded for the years ended December 31, 2010 and 2009.

     The following schedule summarizes the changes in the balances of Mortgage servicing rights for the periods ended December 31, 2010 and 2009 (dollars in millions) at amortized cost:

	2010			2009
Mortgage servicing rights, beginning of year	$	41.9		$	1.0
Servicing assets (sold) purchased		(0.4	)		42.9
Amortization		(5.4	)		(2.0	)
Net change in amortized cost		(5.8	)		40.9
Mortgage servicing rights, end of year	$	36.1		$	41.9

     The estimation of fair value of Mortgage servicing rights requires significant judgment. The fair value of Mortgage servicing rights is estimated using the present value of projected cash flows over the estimated period of net servicing income. At December 31, 2010 and 2009, key economic assumptions used to determine the estimated fair value of the Mortgage servicing rights and the sensitivity of the estimated fair value to immediate changes in those assumptions are as follows (dollars in millions):

	2010			2009
Carrying amount	$	36.1		$	41.9
Estimated fair value	$	37.0		$	42.2
Cumulative scheduled principal balance of serviced loans at the end of the period	$	8,670.4		$	10,271.4
Weighted average remaining life in years		5.2			6.7
Weighted average stated customer interest rate on underlying collateral		6.7	%		7.2	%

22

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      Assumptions to determine the estimated fair value of the Mortgage servicing rights at December 31, 2010 and 2009 and the estimated impacts of adverse changes are as follows (dollars in millions):

	2010			2009
Expected cost to service as a percentage of principal balance of serviced loans (a)		0.25	%		0.28	%
Impact on estimated fair value of 2 basis point increase	$	(4.8	)	$	(6.6	)
Impact on estimated fair value of 4 basis point increase	$	(9.6	)	$	(13.1	)
Expected ancillary fees as a percentage of principal balance of serviced loans (a)		0.06	%		0.05	%
Impact on estimated fair value of 1 basis point decrease	$	(2.1	)	$	(3.0	)
Impact on estimated fair value of 2 basis point decrease	$	(4.3	)	$	(6.0	)
Expected conditional repayment rate as a percentage of principal balance of serviced loans (a)		6.3	%		2.6	%
Impact on estimated fair value of 10 percent increase	$	(0.6	)	$	(0.3	)
Impact on estimated fair value of 20 percent increase	$	(1.1	)	$	(0.6	)
Expected conditional default rate as a percentage of principal balance of serviced loans (a)		9.1	%		9.1	%
Impact on estimated fair value of 10 percent increase	$	(0.8	)	$	(0.6	)
Impact on estimated fair value of 20 percent increase	$	(1.6	)	$	(1.2	)
Weighted average discount rate (a)		22.2	%		22.2	%
Impact on estimated fair value of 10 percent increase	$	(1.6	)	$	(2.3	)
Impact on estimated fair value of 20 percent increase	$	(3.1	)	$	(4.3	)

(a) The valuation of Mortgage servicing rights is affected by the underlying assumptions including the expected cost of servicing, ancillary fees, prepayments of principal, defaults and discount rate. Should actual performance and timing differ materially from our projected assumptions, it could have a material effect on the valuation of our Mortgage servicing rights. The valuation is determined by discounting cash flows over the expected life of the serviced loans. The stress tests above are also over the life of the serviced loans and are applied equally at each point in the assumption curve.

     These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in estimated fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in estimated fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the estimated fair value of the Mortgage servicing rights is calculated without changing any other assumption; however, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

Other servicing

      The Company services an additional $10.2 billion and $9.5 billion of loans for others in servicing and sub-servicing arrangements at December 31, 2010 and 2009, respectively, on which the Company receives a contractual servicing fee based on outstanding serviced collateral or other various contractual fee arrangements.

23

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     Additionally, the Company services $1.0 billion of loans related to consolidated variable interests on which the Company receives a servicing fee; however, the servicing revenue is not recorded in Servicing income due to the consolidation of the assets on the consolidated balance sheet as of January 1, 2010.

5. COLLATERALIZED BORROWINGS

     Collateralized borrowings at December 31, 2010 and 2009 were as follows (dollars in millions):

	2010						2009
	Dollars			Rate(1)			Dollars			Rate(1)
Credit Agreement	$	307.0			8.0	%	$	350.0			8.0	%
Receivables Loan Agreement		58.0			6.8	%		65.6			6.8	%
MSR Credit Agreement		20.1			2.8	%		22.9			2.7	%
Total collateralized borrowings at par		385.1						438.5
Discount on Credit Agreement		(13.8	)					(17.3	)
Total collateralized borrowings	$	371.3					$	421.2

(1) All interest rates are floating rates based on LIBOR as of the end of the period.

      The Company entered into a six-year $350.0 million Credit Agreement with a syndication of lenders on December 18, 2009. The Credit Agreement also provides for a five-year $30.0 million revolving facility. The agreement allows for an incremental issuance of term notes of up to $75.0 million less any amounts borrowed on the revolving facility. The Company issued $350.0 million of term notes under this facility on December 18, 2009 for proceeds of $332.5 million. The term notes have a required payment of $7.0 million per quarter and an additional annual required payment based on certain percentages of the annual cash flows generated by the Company. The revolving facility allows for borrowings of up to $30.0 million in aggregate on a revolving line, including a swing line with a maximum borrowing of $2.5 million and letters of credit with a maximum borrowing of $10.0 million. The Company has not borrowed any amounts under the revolving facilities of the agreement through December 31, 2010. The Credit Agreement is collateralized by cash flows, certain investments and stock of the Company. In addition, certain subsidiaries of the Company have provided a guaranty for the payment in full of these obligations. The loan contains certain financial covenants including interest coverage and loan leverage ratios. The Company was in compliance with all covenants as of and for the year ended December 31, 2010. Prior to entering into the Credit Agreement, the Company had a four-year $500.0 million Credit and Guaranty Agreement. This facility was paid in full using proceeds from the issuance of the Credit Agreement on December 18, 2009.

     In July 2009, the Company entered into a three-year Receivables Loan Agreement collateralized by certain principal and interest advances and protective advances reimbursable from securitization trusts serviced by the Company. The principal and interest on these notes are paid using the cash flows from the underlying advances. Accordingly, the timing of the principal payments on these notes is dependent on the payments received on the underlying advances that back the notes. The Company is able to pledge new advances to the facility up to an outstanding note balance of $75.0 million. The advance rates on this facility vary by product type ranging from 70%

24

GTCS Holdings LLC
Notes to Consolidated Financial Statements

to 91.5%. The facility expires in July 2012. Prior to entering into the Receivables Loan Agreement, the Company had notes outstanding under the Advance Receivables Backed Notes, Series 2004-1 which were collateralized by certain principal and interest advances and protective advances reimbursable from securitization trusts serviced by the Company. This facility was paid in full using proceeds from the issuance of the Receivables Loan Agreement in July 2009.

     The Company entered into a MSR Credit Agreement to finance the Company’s purchase of servicing rights in November 2009. The note is secured by the servicing rights purchased. The MSR Credit Agreement requires equal monthly payments for 36 months based on the final borrowings of the facility.

      For the years ended December 31, 2010 and 2009, the effective yield on collateralized borrowings was 9.4% and 8.4%, respectively, including amortization of discounts and related debt issuance costs of $7.1 million and $6.9 million, respectively. The discounts and debt issuance costs are being amortized into interest expense on an effective yield basis over the life of the collateralized borrowings.

6. DERIVATIVES

      Green Tree has interest rate swaps/contracts that are used to economically hedge its exposure to changes in LIBOR based interest risk with respect to its floating rate debt. These derivatives are carried at fair value with the changes in fair value included in Other income. The Company recognized $1.3 million and $0.3 million of losses related to these interest rate contracts within Other income in the consolidated statements of income for the years ended December 31, 2010 and 2009, respectively.

     The use of derivatives exposes Green Tree to credit risk associated with the performance of the counterparties to the derivative contract. The amount of credit risk that Green Tree is exposed to is the amount that is reported as a derivative asset in its consolidated balance sheets. Credit risk is minimized through master netting arrangements. The Company held interest rate swaptions and caps not designated under hedge accounting with a notional balance of $480.0 million and fair value of $0.8 million and a notional balance of $60.0 million and fair value of $0.1 million at December 31, 2010 and 2009, respectively.

      In 2009, the Company held interest rate swaps to protect against changes in the LIBOR rate on variable rate debt that effectively converted floating rate interest payments to fixed rate payments on outstanding debt. These swaps were designated as cash flow hedges, and reduced the impact of the then future LIBOR rate changes on interest expense. Prior to December 31, 2009, these interest rate swaps were de-designated and liquidated or distributed by the Company.

25

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      The following table shows the gains (losses) recognized in the consolidated statements of income related to derivatives designated as cash flow hedges in 2009 (dollars in millions):

		Loss Reclassified from
Derivatives in Cash	Gain Recognized in OCI	Accumulated OCI into	Gain Recognized in Interest
Flow Hedging	on Derivative	Interest	Rate Swap Expense
Relationships	(Effective Portion)	Expense (Effective Portion)	(Ineffective Portion)(1)
Interest rate contracts	$8.8	$(8.8)	$1.7

(1) The amount of gain recognized in interest rate swap expense was comprised of i) the ineffective portion of the derivative of $0.7 million and ii) the amount excluded from the assessment of hedge effectiveness of $1.0 million for the year ended December 31, 2009.

     The following schedule summarizes the changes in accumulated other comprehensive income related to changes in fair value of interest rate swaps designated as cash flow hedges for the year ended December 31, 2009 (dollars in millions):

	2009
Cumulative net unrealized losses in other comprehensive loss, beginning of year	$	(12.0	)
Decrease in unrealized losses		8.8
Reclassification of OCI associated with contribution of swaps to members		4.9
Reclassification of unrealized losses to other income		(1.7	)
Cumulative unrealized losses in other comprehensive loss, end of year	$	—

7. OTHER DISCLOSURES

Related party

     The Company serviced $0.9 billion and $1.0 billion of loans as of December 31, 2010 and 2009, respectively, for its affiliates. Servicing revenue recognized on assets serviced for its affiliates totaled $6.8 million and $8.0 million during the years ended December 31, 2010 and 2009, respectively.

     Under the Credit Agreement entered into by the Company on December 18, 2009, the Company issued $350.0 million of term notes of which GTH purchased $75.0 million at $71.3 million. Prior to December 31, 2010, GTH sold all $75.0 million of the term notes to third parties. In addition, the Company has a $5.4 million note receivable due from GTH, which was negotiated on an arm’s length basis between the two parties.

26

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Leases

      The Company rents office space under operating leases which are noncancellable. Rent expense was $8.8 million and $8.5 million for the years ended December 31, 2010 and 2009, respectively. Future required minimum rental payments as of December 31, 2010 are as follows (dollars in millions):

2011	$	5.9
2012		4.6
2013		2.3
2014		2.0
2015		0.4
Thereafter		—
Total	$	15.2

Repurchase obligation

      The Company has a mandatory repurchase obligation for two securitizations in which the Company is required to repurchase loans at par from the securitizations when a loan becomes 90 days delinquent. The total of the loans outstanding in these two securitizations was $102.3 million and $112.4 million as of December 31, 2010 and 2009, respectively. The Company estimated the fair value of this contingent obligation at $13.4 million and $13.6 million as of December 31, 2010 and 2009, respectively, using prepayment, default and severity rate assumptions applicable to the underlying loans’ historical and projected performance. This obligation is included in Other liabilities on the consolidated balance sheets. Based on our estimates, the Company expects to incur undiscounted losses of approximately $22.1 million related to repurchases over the remaining life of these securitizations. The Company repurchased $4.9 million and $6.0 million of unpaid principal balances during the years ended December 31, 2010 and 2009, respectively. Additionally, the Company recorded $0.9 million and $2.3 million of impairment charges related to this liability for the years ended December 31, 2010 and 2009, respectively, and $1.5 million of interest expense related to this liability for each of the years ended December 31, 2010 and 2009. Actual performance may differ from this estimate in the future.

Income taxes

      As permitted under the regulations of a limited liability company, the Company’s GTIH III subsidiary is treated as a corporation for income tax purposes. Income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax basis of assets and liabilities. These amounts are reflected in the balance of the Company’s net income tax liability of $12.2 million and $16.2 million as of December 31, 2010 and 2009, respectively, which are included in Other liabilities on the consolidated balance sheets.

27

GTCS Holdings LLC
Notes to Consolidated Financial Statements

      The components of the Company’s income tax assets and liabilities were as follows as of December 31, 2010 and 2009 (in millions):

	2010			2009
Deferred tax assets (liabilities):
Deductible (taxable) timing differences:
Intangible	$	(14.3	)	$	(17.6	)
Insurance		1.0			1.0
Other		0.7			0.8
Total deferred tax liabilities before valuation allowance		(12.6	)		(15.8	)
Less: valuation allowance		—			—
Total deferred tax liability		(12.6	)		(15.8	)
Current income tax receivable (payable)		0.4			(0.4	)
Net income tax liability	$	(12.2	)	$	(16.2	)

     The Company recorded net income tax expense of $11.4 million and $10.9 million for the years ended December 31, 2010 and 2009, respectively, which are included in Income taxes on the consolidated statements of income and consisted of the following (in millions):

	2010			2009
Current tax expense	$	14.6		$	14.5
Deferred tax expense		(3.2	)		(3.6	)
Net income tax expense	$	11.4		$	10.9

Defined contribution plan

     The Company has a qualified multi-employer defined contribution plan for its subsidiaries for which substantially all employees are eligible. The Company’s cash contributions, which match certain voluntary employee contributions to the plan, totaled $1.9 million and $1.7 million for the years ended December 31, 2010 and 2009, respectively. Participant vesting in employer matching contributions and earnings thereon is an additional 25% for each subsequent year of service and 100% after completion of four years of service.

Unit based incentive plans

     GTH issued phantom and other profit sharing units through various long-term incentive plans that provide for participants to share in a percentage of eligible distributions made by GTH upon achievement of certain performance based conditions. The phantom plan does not meet the criteria to be accounted for as an equity award and therefore the compensation expense related to the phantom plan is based on the fair value of the award as of the consolidated balance sheet dates. At December 31, 2010 and 2009, GTH used a five-year vesting and performance period to determine the amount of expense to record for the current period. The year ended December 31, 2010 represents year three of the five-year vesting and performance period. The fair value of the award is based on the value of GTH and its subsidiaries which was determined using a projected cash flow model.

28

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     The Company recorded its allocable share of this expense through Salaries and benefits, with an offset to Members’ equity, in the form of a capital contribution, of $5.3 million and $6.7 million for the years ended December 31, 2010 and 2009, respectively. The allocation was based on the Company’s cash flows as a percentage of the total cash flows of GTH. The liability for payments under the phantom plan is recorded on the consolidated balance sheets of GTH as they have sole responsibility for payment.

      GTH’s profit sharing units are accounted for as equity awards. Compensation expense for the award is recorded based on the fair value of the award at grant date. The fair value at grant date is recorded into compensation expense over the estimated performance period of the award. The accumulated compensation expense recorded by the Company was not material as of December 31, 2010 or 2009.

Litigation

     The Company and its affiliates are from time to time engaged in various matters of litigation. While the ultimate liability with respect to these litigation matters and claims cannot be determined at this time, the Company believes that damages, if any, and other amounts relating to pending matters are not likely to be material to its consolidated financial statements. Accordingly, the Company has not established reserves for these various matters of litigation.

Subsequent events

     Subsequent events have been evaluated through March 1, 2011, which is the date the consolidated financial statements were available to be issued. There have been no material subsequent events that would require recognition in our 2010 consolidated financial statements or disclosure in the Notes to those consolidated financial statements.

29

EX-99.2

Exhibit 99.2

GTCS Holdings LLC

Consolidated Financial Statements
December 31, 2009 and 2008

Table of Contents

	Page
Consolidated Balance Sheets		2
Consolidated Statements of Income		3
Consolidated Statements of Changes in Members’ Equity		4
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements		6

PricewaterhouseCoopers LLP 225

South Sixth Street

Suite 1400

Minneapolis MN 55402

Telephone (612) 596 6000

Facsimile (612) 373 7160

pwc.com

Report of Independent Auditors

To the Members of GTCS Holdings LLC:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of changes in members’ equity, and of cash flows present fairly, in all material respects, the financial position of GTCS Holdings LLC and its subsidiaries (collectively, the Company) at December 31, 2009 and December 31, 2008 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America. 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

October 22, 2010

GTCS Holdings LLC
Consolidated Balance Sheets
December 31, 2009 and 2008
(Dollars in millions)

	2009		2008
ASSETS
Assets:
Cash and cash equivalents	$	29.0	$	68.8
Restricted cash		144.5		72.8
Insurance premiums receivable		130.3		137.5
Servicing rights		239.0		232.8
Servicer and protective advances		105.6		89.9
Intangible asset		62.3		74.3
Other assets		87.6		73.8
Total assets	$	798.3	$	749.9
LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Collateralized borrowings	$	421.2	$	311.0
Other liabilities		166.9		150.8
Interest rate swaps		—		19.2
Escrow payable		70.9		24.7
Payable to insurance carriers		59.0		62.4
Payable to trusts/investors		73.6		48.1
Total liabilities		791.6		616.2
Members’ equity		6.7		133.7
Total liabilities and members’ equity	$	798.3	$	749.9

See accompanying notes to consolidated financial statements.

2

GTCS Holdings LLC
Consolidated Statements of Income
For the Years Ended December 31, 2009 and 2008
(Dollars in millions)

	2009			2008
Revenues:
Servicing income	$	228.0		$	206.3
Commission income		54.9			58.2
Ancillary and servicing income		30.0			30.5
Other income		30.6			26.8
Total revenues		343.5			321.8
Expenses:
Interest expense		44.0			41.6
Salaries and benefits		129.5			117.4
Other operating costs and expenses		71.0			63.8
Change in fair value of servicing rights		34.7			20.2
(Recovery of) impairment charges		(5.6	)		11.8
Total expenses		273.6			254.8
Net income before taxes		69.9			67.0
Income taxes		10.9			11.2
Net income	$	59.0		$	55.8

See accompanying notes to consolidated financial statements.

3

GTCS Holdings LLC
Consolidated Statements of Changes in Members’ Equity
For the Years Ended December 31, 2009 and 2008
(Dollars in millions)

	Members’
	Equity
Balance, December 31, 2007	$	52.7
Contributions from members		42.8
Distributions to members		(11.2	)
Comprehensive income:
Net income		55.8
Change in unrealized loss on hedges, net of tax		(6.4	)
Total comprehensive income		49.4
Balance, December 31, 2008		133.7
Contributions from members		12.9
Distributions to members		(210.3	)
Comprehensive income:
Net income		59.0
Change in unrealized gain on hedges, net of tax		11.4
Total comprehensive income		70.4
Balance, December 31, 2009	$	6.7

See accompanying notes to consolidated financial statements.

4

GTCS Holdings LLC
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2009 and 2008
(Dollars in millions)

	2009			2008
Cash flows from operating activities:
Net income	$	59.0		$	55.8
Adjustments to reconcile net income to cash provided by operating activities:
(Recovery of) impairment charges		(5.6	)		11.8
Amortization and depreciation		22.5			15.5
Loss on liquidation of repossessed assets		0.2			0.5
Change in fair value of servicing rights		34.7			20.2
Change in servicer and protective advances		(15.7	)		(2.3	)
Change in insurance premiums receivable		7.2			(11.8	)
Change in payable to insurance carriers		(3.4	)		4.6
Change in interest rate swaps		(2.5	)		1.6
Other		17.5			4.7
Net cash provided by operating activities		113.9			100.6
Cash flows from investing activities:
Principal payments received on finance receivables		2.1			2.0
Servicing related acquisitions		(9.5	)		(43.9	)
Finance receivable purchases		(6.0	)		(4.4	)
Other		(0.6	)		(3.6	)
Net cash used in investing activities		(14.0	)		(49.9	)
Cash flows from financing activities:
Proceeds from issuance of collateralized borrowings		388.5			18.0
Payments on collateralized borrowings		(319.6	)		(185.4	)
Cash from affiliates		0.2			62.4
Members’ contributions		1.5			42.8
Distributions to members		(210.3	)		(8.7	)
Net cash used in financing activities		(139.7	)		(70.9	)
Net decrease in cash and cash equivalents		(39.8	)		(20.2	)
Cash and cash equivalents, beginning of year		68.8			89.0
Cash and cash equivalents, end of year	$	29.0		$	68.8
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	27.6		$	30.9
Cash paid for taxes		13.6			13.8
Non-cash transactions:
Financed servicing related acquisitions		34.4			—
Distribution of loans for manufactured housing securitization		—			2.5
Contribution of unit based incentive plan		6.7			—
Contribution of fair value of swap		4.7			—

See accompanying notes to consolidated financial statements.

5

GTCS Holdings LLC
Notes to Consolidated Financial Statements

1. DESCRIPTION OF BUSINESS

     GTH LLC (“GTH”) legally separated its operating business into a separate subsidiary called GTCS Holdings LLC (“GTCS Holdings”) on December 18, 2009. These consolidated financial statements have been prepared on a carve-out basis to include the financial results of the operating businesses of GTH that are contained in GTCS Holdings subsequent to December 18, 2009 in accordance with accounting principles generally accepted in the United States of America. These operating businesses are collectively referred to herein as “GTCS Holdings,” “we,” “Green Tree” or the “Company”. GTCS Holdings includes the servicing of first and second lien residential, manufactured housing and consumer installment loans and contracts. GTCS Holdings also includes a nationwide licensed insurance agency business servicing their customers’ needs for property and casualty as well as life and health insurance products.

     As part of the carve-out process, certain administrative expenses of GTH were allocated to the Company. Additionally, certain accounting and administrative expenses of the Company attributed to other businesses were allocated to other affiliates. Management believes that such allocations are reasonable; however the expenses may not be indicative of the actual expenses that would have been incurred by the Company had it been operating as an independent company for the periods presented.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

     The carve-out financial statements include the assets and liabilities and results of operations of GTH’s operating businesses. All material intercompany transactions and balances have been eliminated in the carve-out.

Use of estimates and assumptions

     When the Company prepares financial statements in conformity with accounting principles generally accepted in the United States of America, the Company is required to make estimates and assumptions that significantly affect various reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates.

Cash and cash equivalents

     Cash and cash equivalents include cash and highly liquid short-term investments with maturities of less than three months. We carry them at cost, which approximates estimated fair value.

Restricted cash

     Restricted cash includes: (a) cash collected on behalf of the securitization trusts/investors for principal and interest on finance receivables held in securitization trusts serviced by Green Tree that has not yet been remitted to the trust/investors; (b) cash collected and held in escrow to be used to pay real estate taxes and insurance on behalf of borrowers; and (c) cash collected for insurance claims

6

GTCS Holdings LLC
Notes to Consolidated Financial Statements

related to the borrowers’ properties which are held by the Company until repairs to the insured properties have been completed.

Insurance premiums receivable and payable to insurance carriers

     Insurance premiums receivable consist of receivables for premiums on insurance policies for property and casualty. Customers generally finance their insurance premiums over the life of the policy, typically one to three years. New policies issued are recorded at face value. A corresponding payable to the carrier, net of commission, is also recorded at the time a new policy is set up. Payments are made to the carriers on a contractual basis either up front or over time, generally one to three years depending on the type of product. Green Tree maintained cancellation reserves of $3.3 million and $3.7 million as of December 31, 2009 and 2008, respectively, for estimated forfeitures of commission income due to the cancellation of customers’ policies. These reserves are recorded in other liabilities on the balance sheets. Green Tree analyzes the adequacy of its cancellation reserves based on historical cancellation rates and records any required adjustments to reserves against commission income.

Servicing rights

     Acquired servicing rights related to certain securitization trusts and whole loan portfolios are initially recorded at estimated fair value on the acquisition date. As allowed under “Accounting for Servicing of Financial Assets”, the Company adopted the fair value method of accounting for its manufactured housing servicing rights portfolios. Accordingly, manufactured housing servicing rights are carried at estimated fair value with changes in fair value recorded in the statements of income.

     The Company carries its servicing rights for first and second lien residential portfolios at the lower of amortized cost or fair market value. All newly acquired servicing rights are initially measured at fair value. These servicing rights are amortized based on expected cash flows in proportion to and over the estimated life of net servicing income with the amortization being recorded in other operating costs and expenses on the statements of income. These servicing rights, stratified by product type, are compared to fair value on a quarterly basis. To the extent that the carrying value exceeds the estimated fair value for any specific strata, a valuation allowance would be established through recording of impairment in the statements of income.

Servicer and protective advances

     Servicer and protective advances include principal and interest advances to certain securitization trusts for delinquent customer payments not received in monthly cash collections of the underlying collateral. Also included in servicer and protective advances are advances to protect the collateral serviced by the Company including property taxes, insurance, certain legal fees and refurbishment of repossessed assets. These assets are carried at cost net of required estimated loss reserves. Estimated losses related to these advances are recorded in other operating costs and expenses in the statements of income.

7

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     The following table summarizes the components of servicer and protective advances as of December 31, 2009 and 2008 (dollars in millions):

	2009		2008
Principal and interest advances	$	34.0	$	32.4
Protective advances		71.6		57.5
Total servicer and protective advances	$	105.6	$	89.9

Intangible asset

     The intangible asset is related to certain acquired customer relationships which are critical to the renewal of insurance policies, mainly related to the Company’s voluntary property and casualty business. The intangible asset is amortized based on the estimated revenue streams related to these customer relationships over the estimated remaining life. The remaining capitalized value of the intangible asset is analyzed annually to determine if any impairment is required. No impairment was recorded in the years ended December 31, 2009 and 2008. Amortization of the intangible was $12.0 million and $12.9 million for the years ended December 31, 2009 and 2008, respectively. Accumulated amortization of the intangible asset was $27.7 million and $15.6 million as of December 31, 2009 and 2008, respectively.

     Intangible amortization expense as of December 31, 2009 for the expected remaining life of the intangible is estimated to be (dollars in millions):

2010	$	10.8
2011		9.4
2012		8.3
2013		7.3
2014		6.1
Thereafter		20.4
Total	$	62.3

Other assets

     Other assets include goodwill, deferred debt issuance costs, property, plant and equipment, repossessed assets, servicing fees due from securitization trusts and other parties for whom the Company performs sub-servicing of finance receivables and miscellaneous other assets.

Income taxes

     As a limited liability company, the Company and certain of its limited liability subsidiaries are not subject to income taxes. Tax liabilities associated with the earnings of these entities are the responsibility of its members.

     As permitted under the regulations of a limited liability corporation, the Company’s operating subsidiary Green Tree Investment Holdings III LLC (“GTIH III”) has elected to be treated as a

8

GTCS Holdings LLC
Notes to Consolidated Financial Statements

corporation for tax purposes. Income taxes are accounted for using the asset and liability method. Our income tax expense includes deferred income taxes arising from temporary differences between the tax and financial reporting basis of assets and liabilities. In estimating future tax consequences, the Company uses tax rates expected to be applicable in future years other than enactments of changes in tax laws or rates. The Company includes interest and penalties related to income taxes as a component of income tax expense. Amounts attributable to interest and penalties related to income taxes are immaterial.

     In 2009, the Company implemented the Financial Accounting Standards Board’s (“FASB”) guidance on “Accounting for Uncertainty in Income Taxes”, contained in Accounting Standards Codification Topic 740-10 (“ASC 740-10”). Pursuant to ASC 740-10, tax benefits are recognized by the Company related to tax positions only if it is more likely-than-not to be sustained solely on its technical merits as of a given reporting date. If a tax position is not considered by the Company to be more-likely-than-not sustained based solely on its technical merits, the Company does not recognize a tax benefit. There was no impact to the Company’s financial statements as a result of the adoption of this guidance.

Interest rate swaps and hedge accounting

     The Company maintains an overall risk management strategy that incorporates the use of interest rate swaps to manage interest rate risks to hedge its exposure to changes in LIBOR-based interest rates with respect to its floating rate debt. The estimated fair value generally reflects the estimated amounts the Company would receive or pay to terminate the interest rate swap. See fair value measurement disclosures for a description of the related valuation methodologies.

     For interest rate swaps that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the hedged item in the same period or periods during which the hedged item affected earnings. The remaining gain or loss on the interest rate swap in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in interest rate swap expense in current earnings during the period of change. Prior to December 31, 2009, the Company de-designated and liquidated or distributed its interest rate swaps.

     Green Tree formally documents all relationships between hedging instruments and hedged items at the time of designation, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all hedges that are designated as cash flow hedges to specific assets and liabilities on the balance sheets, to specific firm commitments, or to the forecasted transactions. The Company also formally assesses both at the inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The hedge accounting treatment described above is no longer applied if a derivative instrument is terminated or the hedge designation is removed.

Revenue recognition for servicing rights

     Servicing income is recorded on an accrual basis based on the contractual servicing fees as a percentage of the unpaid principal balance of the related collateral. Ancillary income received related to servicing includes late fees, prepayment fees and collection fees. Ancillary income is recognized once uncertainties regarding collection are resolved.

9

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Revenue recognition for commission income

     Green Tree recognizes commission income on policies written when the policy is sold to the customer, net of estimated future policy cancellations. The commissions are based on a percentage of the price of the insurance policy sold which varies by type of insurance product.

Fair value measurement

     The fair value of an asset or liability is 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. Fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a three level hierarchy for fair value measurements. The valuation hierarchy is based on the transparency of the inputs to the valuation of the asset or liability at the measurement date. The categorization of an asset or liability within the fair value hierarchy is based on the lowest level of significant input to its valuation. The three levels of the fair value hierarchy are described below:

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

Level 2: Valuations including quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability either directly or indirectly for substantially the full term of the financial instrument.

Level 3: Valuations that require inputs that are supported by little or no market activity. The unobservable inputs are significant to the fair value measurements and represent the Company’s best assumptions of how market participants would estimate the fair value of these assets.

     The following methods and assumptions are used to determine the estimated fair value of the assets and liabilities carried on the Company’s balance sheets at fair value:

Servicing rights carried at fair value: Manufactured housing servicing rights 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 the cash flows of the servicing income to be received. The Company’s valuation considers assumptions and estimates of contractual servicing fees, ancillary revenue, costs to service, collateral repayment and default rates, and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing servicing rights, including but not limited to recent historical experience as well as current and/or expected relevant market conditions. Ancillary revenue and costs to service assumptions are primarily based on historical experience as well as other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

10

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Interest rate swaps: These liabilities are valued at the net present value of the expected future cash payments based on the spread of the fixed rate and floating LIBOR rate over the remaining life of the swap using level 2 observable market inputs. The Company utilizes third party quotes and/or publically published LIBOR rates to determine key assumptions and/or inputs within the Company’s valuation models.

     The following methods and assumptions were used to determine the estimated fair values of the Company’s financial instruments not accounted for at fair value:

Insurance premiums receivable: These receivables are not traded in an active market. The estimated fair value of these assets is based on the net present value of the expected cash flows. The estimated fair value is based on level 3 assumptions of the underlying collateral serviced by the Company including delinquency and default rates as these insurance premiums are collected as part of the customers’ loan payments.

Servicer and protective advances: The Company estimates the fair value of servicer and protective advances based on level 3 unobservable market inputs using the present value of projected cash flows over the expected life of the receivables and the Company’s estimated pricing of advances on similar collateral.

Collateralized borrowings: The Company estimates fair value of its collateralized borrowings using the net present value of expected payments over the life of the borrowings using level 2 observable inputs. The Company’s debt is currently at rates that are consistent with market rate pricing based on the Company’s credit worthiness. All of the Company’s borrowings carry variable interest rates and have been issued in the last six months of 2009.

Payable to insurance carriers: This liability represents payments to the Company’s carriers of insurance policies related to the insurance receivables noted above. There is not a traded market for these or similar payables; therefore, the Company utilized level 3 unobservable inputs to estimate the fair value of the carrier payable based on the net present value of the expected carrier payments over the life of the payables.

11

GTCS Holdings LLC
Notes to Consolidated Financial Statements

          Following are the estimated values of our financial instruments at December 31, 2009 and 2008 (dollars in millions):

	2009				2008
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Insurance premiums receivable	$	130.3	$	117.6	$	137.5	$	122.8
Servicer and protective advances		105.6		90.3		89.9		83.0
Financial liabilities:
Collateralized borrowings	$	421.2	$	424.4	$	311.0	$	311.0
Interest rate swaps		—		—		19.2		19.2
Payable to insurance carriers		59.0		54.6		62.4		57.7

          The estimated fair values of cash and cash equivalents approximate their carrying values due to their highly liquid short-term nature.

Recently issued accounting standards

     ASC 105, Generally Accepted Accounting Principles. In June 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-01, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This standard establishes the FASB Accounting Standards Codification (“ASC”) as the only source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP, with the exception of Statements of Financial Accounting Standards not yet included in the Codification. The adoption of this standard did not impact the Company’s financial condition or results of operations.

     ASC 820-10-65-4, Fair Value Measures. In April 2009, the FASB issued additional guidance for estimating fair value when the level of activity for the asset or liability has significantly decreased. Our initial adoption of this standard during the year did not have a material effect on our financial statements.

     ASC 820, Fair Value Measures and Disclosure. In January 2010, the FASB issued ASU 2010-06, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”) effective for periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements in the rollforward of activity in Level 3 fair value measurements for which the disclosures are effective for fiscal years beginning after December 15, 2010. ASU 2010-06 requires a gross presentation of activities within the Level 3 rollforward, and adds a new requirement to disclose transfers in and out of Level 1 and 2 measurements. It also clarifies two existing disclosure requirements of ASC 820-10, Fair Value Measurements and Disclosures — Overall. Because ASU 2010-06 impacts the disclosure and not the accounting treatment for fair value measurements, the adoption will not have an impact on the Company’s financial statements.

     ASC 860, Transfers and Servicing. This statement revises existing sale accounting criteria for transfers of financial assets. Among other things, this statement eliminates the concept of a Qualified Special Purpose Entity (“QSPE”). As a result, existing QSPEs generally will be subject to

12

GTCS Holdings LLC
Notes to Consolidated Financial Statements

consolidation in accordance with the guidance provided in this statement. The Company does not expect the implementation of this standards update to have a material impact on our financial statements.

     ASC 810, Consolidation. In June 2009, the FASB issued amended guidance related to the consolidation of variable-interest entities (“VIE”). These amendments require an assessment to determine the primary beneficiary of a VIE based on whether the entity:

• has the power to direct matters that most significantly impact the activities of the VIE; and

• has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

     Additionally, the amendments require an ongoing reconsideration of the primary beneficiary and provide a framework for the events that trigger a reassessment of whether an entity is a VIE. This guidance was effective for financial statements issued for fiscal years beginning after November 15, 2009.

     The adoption of this standard on January 1, 2010 will result in the consolidation of certain VIEs that are not currently recorded on the Company’s balance sheets related to mandatory clean-up calls on certain securitizations. The consolidation of these assets and liabilities will have no impact on the cash flows the Company receives from the securitizations or expected payments of contingent liabilities related to these securitizations.

     The consolidation will result in changes to assets, liabilities and equity as of January 1, 2010 as detailed in the following table (dollars in millions):

	Add to			Remove from
	Balance Sheet			Balance Sheet
Restricted cash	$	16.2		$	—
Loans and repossessed assets related to consolidated variable interests		663.3			—
Receivable related to consolidated variable interests		142.0			—
Servicing rights and servicer and protective advances					(21.2	)
Bonds payable related to consolidated variable interests		(854.4	)		—
Contingent mandatory clean-up calls on certain securitizations		—			54.1
Net equity impact	$	(32.9	)	$	32.9

13

GTCS Holdings LLC
Notes to Consolidated Financial Statements

3. SERVICING RIGHTS

     Servicing rights consist of contractual rights purchased from third parties to receive servicing fees on unpaid principal balance of the underlying collateral. The table below details the Company’s servicing rights as of December 31, 2009 and 2008 (dollars in millions):

	2009		2008
Servicing rights carried at fair value	$	197.1	$	231.8
Servicing rights carried at lower of cost or fair value		41.9		1.0
Total servicing rights	$	239.0	$	232.8

     Servicing rights carried at fair value

     Servicing rights carried at fair value consist of contractual rights purchased from third parties to receive servicing fees for servicing manufactured housing loans (“MH Servicing Rights”) at annual rates based on the unpaid principal balance of the related collateral.

     The change in the MH Servicing Rights for the years ended December 31, 2009 and 2008 were as follows (dollars in millions):

	2009			2008
MH Servicing Rights, beginning of year, at fair value	$	231.8		$	219.2
Change in fair value:
Due to changes in valuation inputs or assumptions (1)		9.8			27.1
Due to realization of expected cash flows		(44.5	)		(47.3	)
Servicing rights acquired		—			32.8
Net change in fair value		(34.7	)		12.6
MH Servicing Rights, end of year, at fair value	$	197.1		$	231.8

(1) Reflects changes due to performance of the underlying collateral.

     The estimation of fair value of MH Servicing Rights requires significant judgment. The fair value of MH Servicing Rights is estimated using the present value of projected cash flows over the estimated period of net servicing income.

14

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     At December 31, 2009 and 2008, key economic assumptions used to determine the estimated fair value of the MH Servicing Rights and the sensitivity of the estimated fair value to immediate changes in those assumptions are as follows (dollars in millions):

	2009			2008
Estimated fair value of MH Servicing Rights	$	197.1		$	231.8
Cumulative scheduled principal balance of serviced MH finance receivables at December 31, 2009	$	14,403.2		$	16,220.8
Weighted average remaining life in years		6.2			6.2
Weighted average stated customer interest rate on underlying collateral		9.3	%		9.6	%

     Assumptions to determine the estimated fair value of MH Servicing Rights at December 31, 2009 and 2008 and the estimated impacts of adverse changes are as follows (dollars in millions):

	2009			2008
Expected cost to service as a percentage of principal balance of serviced finance receivables (a)		0.87	%		0.86	%
Impact on estimated fair value of 2 basis point increase	$	(10.0	)	$	(11.1	)
Impact on estimated fair value of 4 basis point increase	$	(19.9	)	$	(22.2	)
Expected ancillary fees as a percentage of principal balance of serviced finance receivables (a)		0.09	%		0.09	%
Impact on estimated fair value of 1 basis point decrease	$	(5.0	)	$	(5.5	)
Impact on estimated fair value of 2 basis point decrease	$	(10.0	)	$	(11.1	)
Expected conditional repayment rate as a percentage of principal balance of serviced finance receivables (a)		3.5	%		4.0	%
Impact on estimated fair value of 10 percent increase	$	(2.0	)	$	(2.7	)
Impact on estimated fair value of 20 percent increase	$	(4.0	)	$	(5.4	)
Expected conditional default rate as a percentage of principal balance of serviced finance receivables (a)		4.1	%		4.4	%
Impact on estimated fair value of 10 percent increase	$	(2.8	)	$	(3.5	)
Impact on estimated fair value of 20 percent increase	$	(5.5	)	$	(6.9	)
Weighted average discount rate (a)		14.0	%		14.0	%
Impact on estimated fair value of 10 percent increase	$	(7.5	)	$	(8.8	)
Impact on estimated fair value of 20 percent increase	$	(14.5	)	$	(16.9	)

(a) The valuation of MH Servicing Rights is affected by the underlying assumptions including the expected cost of servicing, ancillary fees, prepayments of principal, defaults and discount rate. Should actual performance and

15

GTCS Holdings LLC
Notes to Consolidated Financial Statements

timing differ materially from our projected assumptions, it could have a material effect on the valuation of our MH Servicing Rights. The valuation is determined by discounting cash flows over the expected life of the serviced finance receivables. The stress tests above are also over the life of the serviced finance receivables and are applied equally at each point in the assumption curve.

     These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in estimated fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in estimated fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the estimated fair value of the MH Servicing Rights is calculated without changing any other assumption; however, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

     Servicing rights carried at lower of amortized cost or fair value:

     Servicing rights carried at lower of amortized cost or fair value “Mortgage Servicing Rights” consist of contractual rights purchased from third parties to receive servicing fees from servicing first and second lien residential loans at annual rates based on the unpaid principal balance of the related collateral. To the extent that the carrying value exceeds the estimated fair value for any specific strata, a valuation allowance would be established through the recognition of impairment in the statements of income. No impairment or related valuation allowance was recorded for the years ending December 31, 2009 and 2008.

     The following schedule summarizes the changes in the balances of Mortgage Servicing Rights for the periods ended December 31, 2009 and 2008 (dollars in millions) at amortized cost:

	2009			2008
Mortgage Servicing rights, beginning of year	$	1.0		$	—
Servicing assets acquired		42.9			1.5
Amortization		(2.0	)		(0.5	)
Net change in amortized cost		40.9			1.0
Mortgage Servicing Rights, end of year	$	41.9		$	1.0

     The estimation of fair value of Mortgage Servicing Rights requires significant judgment. The fair value of Mortgage Servicing Rights is estimated using the present value of projected cash flows over the estimated period of net servicing income. At December 31, 2009, key economic assumptions used to determine the estimated fair value of the Mortgage Servicing Rights and the sensitivity of the estimated fair value to immediate changes in those assumptions are as follows (dollars in millions):

Carrying amount	$	41.9
Estimated fair value		42.2
Cumulative scheduled principal balance of serviced finance receivables at December 31, 2009		10,271.4

16

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     Assumptions to determine the estimated fair value of the Mortgage Servicing Rights at December 31, 2009 and the estimated impacts of adverse changes are as follows (dollars in millions):

Expected cost to service as a percentage of principal balance of serviced finance receivables (a)		0.28	%
Impact on estimated fair value of 2 basis point increase	$	(6.6	)
Impact on estimated fair value of 4 basis point increase	$	(13.1	)
Expected ancillary fees as a percentage of principal balance of serviced finance receivables (a)		0.05	%
Impact on estimated fair value of 1 basis point decrease	$	(3.0	)
Impact on estimated fair value of 2 basis point decrease	$	(6.0	)
Expected conditional repayment rate as a percentage of principal balance of serviced finance receivables (a)		2.6	%
Impact on estimated fair value of 10 percent increase	$	(0.3	)
Impact on estimated fair value of 20 percent increase	$	(0.6	)
Expected conditional default rate as a percentage of principal balance of serviced finance receivables (a)		9.1	%
Impact on estimated fair value of 10 percent increase	$	(0.6	)
Impact on estimated fair value of 20 percent increase	$	(1.2	)
Weighted average discount rate (a)		22.2	%
Impact on estimated fair value of 10 percent increase	$	(2.3	)
Impact on estimated fair value of 20 percent increase	$	(4.3	)

(a) The valuation of Mortgage Servicing Rights is affected by the underlying assumptions including the expected cost of servicing, ancillary fees, prepayments of principal, defaults and discount rate. Should actual performance and timing differ materially from our projected assumptions, it could have a material effect on the valuation of our Mortgage Servicing Rights. The valuation is determined by discounting cash flows over the expected life of the serviced finance receivables. The stress tests above are also over the life of the serviced finance receivables and are applied equally at each point in the assumption curve.

     These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in estimated fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in estimated fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the estimated fair value of the Mortgage Servicing Rights is calculated without changing any other assumption; however, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

17

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     Sub-servicing:

     The Company sub-serviced approximately $9.5 billion and $7.8 billion of finance receivables for others at December 31, 2009 and 2008, respectively, on which the Company receives a contractual sub-servicing fee based on outstanding serviced collateral or other various contractual fee arrangements.

4. COLLATERALIZED BORROWINGS

     Collateralized borrowings at December 31, 2009 and 2008 were as follows (dollars in millions): (All interest rates are floating rates based on LIBOR as of the end of the period)

	2009						2008
	Dollars			Rate			Dollars		Rate
Credit Agreement	$	350.0			8.0	%	$	—	NA
Receivables Loan Agreement		65.6			6.8	%		—	NA
MSR Credit Agreement		22.9			2.7	%			NA
Credit and Guaranty Agreement		—		NA				238.5		7.1	%
Advance Receivables Backed Notes Series 2004-1		—		NA				72.5		4.5	%
Total collateralized borrowings at par		438.5						311.0
Discount on Credit Agreement		(17.3	)					—
Total collateralized borrowings	$	421.2					$	311.0

     The Company entered into a six-year $350.0 million Credit Agreement with a syndication of lenders on December 18, 2009. The Credit Agreement also provides for a five-year $30.0 million revolving facility. The agreement allows for an incremental issuance of term notes of up to $75.0 million less any amounts borrowed on the revolving facility. The Company issued $350.0 million of term notes under this facility on December 18, 2009 for proceeds of $332.5 million. The term notes have a required payment of $7.0 million per quarter and an additional annual required payment based on certain percentages of the annual cash flows generated by the Company. The revolving facility allows for borrowings of up to $30.0 million in aggregate on a revolving line, including a swing line with a maximum borrowing of $2.5 million and letters of credit with a maximum borrowing of $10.0 million. The Company has not borrowed any amounts under the revolving facilities of the agreement as of December 31, 2009. The Credit Agreement is collateralized by cash flows, certain investment and stock of the Company. In addition, certain subsidiaries of the Company have provided a guaranty for the payment in full of these obligations. The loan contains certain financial covenants including interest coverage and loan leverage ratios. The Company was in compliance with all covenants as of December 31, 2009. At December 31, 2008, the Company had a four-year $500.0 million Credit and Guaranty Agreement which had an outstanding balance of $238.5 million. This facility was paid in full using proceeds from the issuance of the Credit Agreement on December 18, 2009.

     In July 2009, the Company entered into a three-year Receivables Loan Agreement collateralized by certain principal and interest advances and protective advances reimbursable from securitization trusts serviced by the Company. The principal and interest on these notes are paid

18

GTCS Holdings LLC
Notes to Consolidated Financial Statements

using the cash flows from the underlying advances. Accordingly, the timing of the principal payments on these notes is dependent on the payments received on the underlying advances that back the notes. The Company is able to pledge new advances to the facility up to an outstanding note balance of $75.0 million. The advance rates on this facility vary by product type ranging from 70% to 91.5%. The facility expires in July 2012. At December 31, 2008, the Company had notes outstanding under the Advance Receivables Backed Notes, Series 2004-1 totaling $72.5 million which were collateralized by certain principal and interest advances and protective advances reimbursable from securitization trusts serviced by the Company. This facility was paid in full using proceeds from the issuance of the Receivables Loan Agreement in July 2009.

     The Company entered into a MSR Credit Agreement to finance the Company’s purchase of servicing rights in November 2009. The note is secured by the servicing rights purchased. The MSR Credit Agreement requires equal monthly payments for the next 36 months based on the final borrowings of the facility.

     For the years ended December 31, 2009 and 2008, the effective interest rate on collateralized borrowings was 8.4% and 7.0%, respectively, including amortization of discounts and related debt issuance costs of $6.9 million and $1.8 million, respectively. The discounts and debt issuance costs are being amortized into interest expense on an effective yield basis over the life of the collateralized borrowings.

5. DERIVATIVES

     To protect against changes in the LIBOR rate on variable rate debt, the Company had entered into interest rate swaps that effectively converted floating rate interest payments to fixed rate payments on outstanding debt. These swaps were designated as cash flow hedges, and reduced the impact of the then future LIBOR rate changes on interest expense. Prior to December 31, 2009, these interest rate swaps were de-designated and liquidated or distributed by the Company.

     Green Tree also had other interest rate derivatives that were economic hedges to protect the Company from changes in LIBOR rate on variable rate debt and did not meet the criteria for hedge accounting treatment. These derivatives were carried at fair value with the changes in fair value included in interest rate swap expense.

     The use of derivatives exposes Green Tree to credit risk associated with the performance of the counterparties to the derivative contract. The amount of credit risk that Green Tree is exposed to is the amount that is reported as a derivative asset in its balance sheets. Credit risk is minimized through master netting arrangements.

19

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     The following table details the notional balances and the fair values for Green Tree’s derivatives as of December 31, 2009 and 2008 (dollars in millions):

	December 31, 2009				December 31, 2008
	Notional or		Fair Value		Notional or		Fair Value
	Contractual		Asset		Contractual		Liability
	Amount		Derivatives		Amount		Derivatives
Interest Rate Swaps Designated as Cash Flow Hedges
Interest Rate Contracts	$	—	$	—	$	269.1	$	18.8
Interest Rate Swaps and Cap Not Designated Under Hedge Accounting
Interest Rate Contracts	$	60.0	$	0.1	$	10.2	$	0.4
Total			$	0.1			$	19.2

     The following table shows the gains (losses) recognized in the statements of income related to derivatives designated as cash flow hedges (dollars in millions):

						Loss Reclassified from						Gain (Loss) Recognized in
	Gain (Loss) Recognized					Accumulated OCI into						Interest Rate Swap
Derivatives in Statement 133	in OCI on Derivative					Interest Expense (Effective						Expense (Ineffective
Cash Flow Hedging	(Effective Portion)					Portion)(1)						Portion)(2)
Relationships	2009		2008			2009			2008			2009		2008
Interest Rate Contracts	$	8.8	$	(8.2	)	$	(8.8	)	$	(7.3	)	$	1.7	$	(1.6	)

(1)	The gain (loss) is recognized in interest expense.
(2)	The amount of gain (loss) recognized in interest rate swap expense was comprised of i) the ineffective portion of the derivative of $0.7 million and ($1.6) million for the years ended December 31, 2009 and 2008, respectively, and ii) the amount excluded from the assessment of hedge effectiveness of $1.0 million for the year ended December 31, 2009.

20

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     The following schedule summarizes the changes in accumulated other comprehensive income related to changes in fair value of interest rate swaps designated as cash flow hedges for the year ended December 31, 2009 and 2008, respectively (dollars in millions):

	2009			2008
Cumulative net unrealized losses in other comprehensive loss, beginning of year	$	(12.0	)	$	(5.4	)
Decrease (increase) in unrealized losses		8.8			(8.2	)
Reclassification of unrealized losses to other income		3.2			1.6
Cumulative unrealized losses in other comprehensive loss, end of year	$	—		$	(12.0	)

     The following table shows the losses recognized in the statements of income related to derivatives not designated under hedge accounting (dollars in millions):

Derivatives Not	Loss Recognized in
Designated as	Interest Rate Swap
Hedging	Expense
Instruments	2009			2008
Interest Rate Contracts	$	(0.2	)	$	(0.4	)

6. OTHER DISCLOSURES

     Related Party

     The Company serviced $1.0 billion and $1.2 billion of finance receivables as of December 31, 2009 and 2008, respectively, for its affiliates. Servicing revenue recognized on assets serviced for its affiliates totaled $8.0 million and $9.4 million during the years ended December 31, 2009 and 2008, respectively.

     Under the Credit Agreement entered into by the Company on December 18, 2009, the Company issued $350.0 million of term notes of which GTH purchased $75.0 million at $71.3 million. Subsequent to December 31, 2009, GTH sold all $75.0 million of the term notes to third parties.

21

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Leases

     The Company rents office space under operating leases which are noncancellable. Rent expense was $8.5 million and $7.5 million for the years ended December 31, 2009 and 2008, respectively. Future required minimum rental payments as of December 31, 2009 are as follows (dollars in millions):

2010	$	7.8
2011		7.2
2012		6.0
2013		3.8
2014		3.9
Thereafter		8.2
Total	$	36.9

Contingencies

     The Company has a mandatory repurchase obligation for two securitizations in which the Company is required to repurchase loans from the securitizations when a loan becomes 90 days delinquent. The total of the loans outstanding in these two securitizations was $112.4 million and $125.4 million as of December 31, 2009 and 2008, respectively. The Company estimated the fair value of this contingent obligation at $13.6 million and $13.1 million as of December 31, 2009 and 2008, respectively, using prepayment, default and severity rate assumptions applicable to the underlying loans’ historical and projected performance. This obligation is included in other liabilities on the consolidated balance sheets. Based on our estimates, the Company expects to incur undiscounted losses of approximately $21.8 million related to repurchases over the remaining life of these securitizations. The Company repurchased $6.0 million and $4.4 million of unpaid principal balances during the years ended December 31, 2009 and 2008, respectively. Additionally the Company recorded $2.3 million and $1.9 million of impairment charges and $1.5 million and $1.2 million of interest expense related to this liability during the years ended December 31, 2009 and 2008, respectively. Actual performance may differ from this estimate in the future.

     The Company also has a mandatory obligation to exercise the clean-up calls on certain securitizations serviced by the Company. The mandatory obligation is triggered when the remaining collateral balance equals approximately 10% of the initial collateral balance. The total outstanding collateral balance of all the securitization trusts at the respective call dates is approximately $416.5 million. These securitizations were originated between 1998 and 2000 by a third party and the Company expects to be required to call the securitizations beginning in 2016. Based on management’s estimates of the performance of the underlying collateral in these securitizations, the Company estimated the fair value of this contingent liability at $52.5 million and $55.8 million as of December 31, 2009 and 2008, respectively, which is equal to the net present value of the call purchase price in excess of the estimated fair value of the collateral at the date of the call. This liability is included in other liabilities on the consolidated balance sheets. The Company recorded a reversal of impairment of $8.3 million and $6.5 million of interest expense in the year ended December 31, 2009 and $9.9 million of impairment charges and $4.3 million of interest expense during the year ended December 31, 2008 related to this liability. Actual performance may differ from this estimate in the future.

22

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     In connection with an acquisition, the Company has a reimbursement obligation for certain letters of credit related to 12 securitizations serviced by the Company. The seller provided these letters of credit as credit enhancements on these securitizations. The securitizations will draw from these letters of credit if there are not enough cash flows from the underlying collateral to pay the bondholders of these securitizations. The total amount outstanding on these letters of credit was $330.4 million and $340.7 million at December 31, 2009 and 2008, respectively. The Company has an obligation to reimburse the seller for the final $165.0 million on the letters of credit if drawn. Based on management’s estimates of the underlying performance on the collateral in these securitizations, Green Tree does not currently anticipate that the final $165.0 million will be drawn, and therefore, no liability for the fair value of this obligation was recorded as of December 31, 2009 or 2008. Actual performance may differ from this estimate in the future.

Income taxes

     As permitted under the regulations of a limited liability company, GTIH III is treated as a corporation for income tax purposes. Income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax basis of assets and liabilities. These amounts are reflected in the balance of the Company’s net income tax liability of $16.2 million and $18.2 million as of December 31, 2009 and 2008, respectively, which are included in other liabilities on the balance sheets.

     The components of the Company’s income tax assets and liabilities were as follows as of December 31, 2009 and 2008 (in millions):

	2009			2008
Deferred tax assets (liabilities):
Deductible (taxable) timing differences:
Intangible	$	(17.6	)	$	(21.3	)
Interest rate swap		—			1.1
Deferred debt costs		—			0.6
Insurance		1.0			0.5
Net operating losses		—			0.1
Other		0.8			0.3
Total deferred tax liabilities before valuation allowance		(15.8	)		(18.7	)
Less: valuation allowance		—			—
Total deferred tax liability		(15.8	)		(18.7	)
Current income tax (payable) receivable		(0.4	)		0.5
Net income tax liability	$	(16.2	)	$	(18.2	)

23

GTCS Holdings LLC
Notes to Consolidated Financial Statements

     The Company recorded net income tax expense of $10.9 million and $11.2 million for the years ended December 31, 2009 and 2008, respectively, which are included in income taxes on the statements of income and consisted of the following (in millions):

	2009			2008
Current tax expense	$	14.5		$	14.8
Deferred tax expense		(3.6	)		(3.6	)
Net income tax expense	$	10.9		$	11.2

Defined contribution plan

     The Company has a qualified multi-employer defined contribution plan for its subsidiaries for which substantially all employees are eligible. The Company’s cash contributions, which match certain voluntary employee contributions to the plan, totaled $1.7 million and $1.5 million for the years ended December 31, 2009 and 2008, respectively. Participant vesting in employer matching contributions and earnings thereon is an additional 25% for each subsequent year of service and 100% after completion of four years of service.

Unit based incentive plans

     GTH issued phantom and other profit sharing units through various long-term incentive plans that provide for participants to share in a percentage of eligible distributions made by GTH upon achievement of certain performance based conditions. The phantom plan does not meet the criteria to be accounted for as an equity award and therefore the compensation expense related to the phantom plan is based on the fair value of the award as of the balance sheet dates. At December 31, 2009, GTH used a five year vesting and performance period to determine the amount of expense to record for the current period. The fair value of the award is based on the value of GTH and its subsidiaries which was determined using a projected cash flow model.

     The Company recorded its allocable share of this expense through salaries and benefits, with an offset to members’ equity of $6.7 million in 2009. The allocation was based on the Company’s cash flows as a percentage of the total cash flows of GTH. No expense was recorded for the phantom plan in 2008 as GTH’s measurement indicated that the likelihood of achieving the underlying performance conditions that would require the recognition of expense pursuant to the plan was not probable at that time. The liability for payments under the phantom plan is recorded on the balance sheet of GTH as they have sole responsibility for payment.

     GTH’s profit sharing units are accounted for as equity awards. Compensation expense for the award is recorded based on the fair value of the award at grant date. The fair value at grant dated is recorded into compensation expense over the estimated performance period of the award. The accumulated compensation expense recorded by the Company was not material as of December 31, 2009 or 2008.

24

GTCS Holdings LLC
Notes to Consolidated Financial Statements

Litigation

     The Company and its affiliates are from time to time engaged in various matters of litigation. While the ultimate liability with respect to these litigation matters and claims cannot be determined at this time, the Company believes that damages, if any, and other amounts relating to pending matters are not likely to be material to its financial statements. Accordingly, the Company has not established reserves for these various matters of litigation.

Subsequent Events

     Subsequent events have been evaluated through October 22, 2010, which is the date the financial statements were available to be issued.

     Through October 22, 2010, the Company made distributions totaling $19.0 million to its parent GTH.

25

EX-99.3

Exhibit 99.3

GTCS Holdings LLC

Consolidated Financial Statements
June 30, 2011
(Unaudited)

Table of Contents

	Page
Consolidated Balance Sheets	2
Consolidated Statements of Income	3
Consolidated Statements of Changes in Members’ Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6

GTCS Holdings LLC
Consolidated Balance Sheets
(Dollars in millions)
(Unaudited)

	June 30, 2011		December 31, 2010
ASSETS
Assets:
Cash and cash equivalents	$	51.9	$	54.3
Restricted cash		179.4		149.6
Insurance premiums receivable		118.5		121.9
Loans related to consolidated variable interests, at fair value		726.5		608.3
Receivables related to consolidated variable interests, at fair value		84.9		121.8
Servicing rights (includes $175.1 million and $171.9 million, respectively, carried at fair value)		207.5		208.0
Servicer and protective advances		82.6		82.4
Intangible asset, net		46.9		51.5
Other assets		96.7		95.4
Total assets	$	1,594.9	$	1,493.2
LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Collateralized borrowings	$	329.0	$	371.3
Bonds payable related to consolidated variable interests, at fair value		861.7		792.1
Other liabilities		82.1		88.5
Escrow payable		83.3		56.2
Payable to insurance carriers		53.6		53.2
Payable to trusts/investors		78.8		76.5
Total liabilities		1,488.5		1,437.8
Members’ equity		106.4		55.4
Total liabilities and members’ equity	$	1,594.9	$	1,493.2

See accompanying notes to consolidated financial statements.

2

GTCS Holdings LLC
Consolidated Statements of Income
(Dollars in millions)
(Unaudited)

	For the Six Months Ended
	June 30,
	2011			2010
Revenues:
Servicing income	$	122.5		$	122.3
Change in fair value of assets related to consolidated variable interests		165.5			43.6
Commission income		26.9			27.4
Ancillary servicing income		21.2			18.5
Other income		19.4			17.1
Total revenues		355.5			228.9
Expenses:
Change in fair value of bonds payable related to consolidated variable interests		146.5			43.3
Interest expense		19.4			24.1
Salaries and benefits		103.6			74.5
Other operating costs and expenses		43.6			42.5
Change in fair value of servicing rights		(3.2	)		8.6
Impairment charges		0.4			0.1
Total expenses		310.3			193.1
Net income before taxes		45.2			35.8
Income taxes		6.5			5.7
Net income	$	38.7		$	30.1

See accompanying notes to consolidated financial statements.

3

GTCS Holdings LLC
Consolidated Statements of Changes in Members’ Equity
(Dollars in millions)
(Unaudited)

	Members’
	Equity
Balance, December 31, 2009	$	6.7
Contributions from members		2.5
Distributions to members		(11.2	)
Comprehensive income:
Net income		30.1
Total comprehensive income		30.1
Balance, June 30, 2010	$	28.1
Balance, December 31, 2010	$	55.4
Contributions from members		28.8
Distributions to members		(16.5	)
Comprehensive income:
Net income		38.7
Total comprehensive income		38.7
Balance, June 30, 2011	$	106.4

See accompanying notes to consolidated financial statements.

4

GTCS Holdings LLC
Consolidated Statements of Cash Flows
(Dollars in millions)
(Unaudited)

	For the Six Months Ended
	June 30,
	2011			2010
Cash flows from operating activities:
Net income	$	38.7		$	30.1
Adjustments to reconcile net income to cash provided by operating activities:
Impairment charges		0.4			0.1
Amortization and depreciation		14.5			15.3
Change in fair value of servicing rights		(3.2	)		8.6
Change in fair value of consolidated variable interests		(19.0	)		(0.3	)
Change in servicer and protective advances		(0.2	)		9.0
Change in insurance premiums receivable		3.4			2.5
Change in payable to insurance carriers		0.4			(0.7	)
Other		31.0			(12.8	)
Net cash provided by operating activities		66.0			51.8
Cash flows from investing activities:
Payments received on assets related to consolidated variable interests		78.5			88.2
Principal payments received on loans		1.0			1.1
Servicing related acquisitions		(0.4	)		(0.4	)
Capital expenditures		(5.1	)		(3.3	)
Loan purchases		(2.2	)		(2.6	)
Other		(2.3	)		4.4
Net cash provided by investing activities		69.5			87.4
Cash flows from financing activities:
Payments on bonds related to consolidated variable interests		(76.9	)		(86.0	)
Proceeds from issuance of collateralized borrowings		1.0			4.4
Payments on collateralized borrowings		(45.1	)		(27.2	)
Cash (to) from affiliates		(0.4	)		0.1
Distributions to members		(16.5	)		(11.2	)
Net cash used in financing activities		(137.9	)		(119.9	)
Net (decrease) increase in cash and cash equivalents		(2.4	)		19.3
Cash and cash equivalents, beginning of period		54.3			29.0
Cash and cash equivalents, end of period	$	51.9		$	48.3
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	14.2		$	17.1
Cash paid for taxes		7.2			7.5
Non-cash transactions:
Capital contributions related to unit based incentive plan		28.8			2.5
Transfers from loans to other assets (see Note 3)		6.7			3.7

See accompanying notes to consolidated financial statements.

5

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

1.	DESCRIPTION OF BUSINESS
	GTCS Holdings LLC (“GTCS Holdings”) is a limited liability corporation established on December 18, 2009 when GTH LLC (“GTH”) legally separated its operating business into a separate subsidiary and is collectively referred to herein as “GTCS Holdings,” “we,” “Green Tree” or the “Company”. GTCS Holdings provides third party servicing for residential mortgage, manufactured housing and consumer installment loans and contracts. GTCS Holdings also includes a nationwide licensed insurance agency business servicing their customers’ needs for property and casualty, as well as life and health insurance products.
	Principles of consolidation
	The consolidated financial statements include the assets and liabilities and results of operations of GTCS Holdings and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in the consolidation.
	Use of estimates and assumptions
	When the Company prepares consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, the Company is required to make estimates and assumptions that significantly affect various reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting periods. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates.
	Recently issued accounting standards
	Accounting Standards Update (ASU) 2011-02 (ASC 310, Receivables): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The amendments in this ASU clarify the guidance on a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. This additional guidance will assist creditors in determining whether a restructuring or modification of a receivable meets the criteria to be considered a troubled debt restructuring. If the restructuring is considered a troubled debt restructuring, creditors are required to make certain disclosures in their financial statements. In addition, the calculation of the allowance for credit losses for that receivable follows the impairment guidance specific to impaired receivables.
	The amendments in this ASU are effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. An entity should disclose the information which was deferred by ASU 2011-01, Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, for interim and annual periods beginning on or after June 15, 2011. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.
	ASU 2011-04 (ASC 820, Fair Value Measurement): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this

6

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

	ASU explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments clarify FASB’s intent about the application of existing fair value measurement and disclosure requirements and prescribe certain additional disclosures about fair value measurements, including: for fair value measurements within Level 3 of the fair value hierarchy, disclosing the valuation process used and the sensitivity of fair value measurement to changes in unobservable inputs; and for items not carried at fair value but for which fair value must be disclosed, categorization by level of the fair value hierarchy. The provisions of this ASU are effective for interim and annual periods beginning on or after December 15, 2011, with early adoption prohibited. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.
	ASU 2011-05 (ASC 220, Comprehensive Income): Presentation of Comprehensive Income, Current U.S. GAAP allows reporting entities three alternatives for presenting other comprehensive income and its components in financial statements. One of those presentation options is to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. This ASU eliminates that option. This ASU also requires consecutive presentation of the statement of net income and other comprehensive income and requires an entity to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2011. Our adoption of this standard will not have a material impact on our consolidated financial statements.
2.	FAIR VALUE MEASUREMENT
	The fair value of an asset or liability is 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. Fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a three level hierarchy for fair value measurements. The valuation hierarchy is based on the transparency of the inputs to the valuation of the asset or liability at the measurement date. The categorization of an asset or liability within the fair value hierarchy is based on the lowest level of significant input to its valuation.

The three levels of the fair value hierarchy are described below:

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

Level 2: Valuations including quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability either directly or indirectly for substantially the full term of the financial instrument.

Level 3: Valuations that require inputs that are supported by little or no market activity. The unobservable inputs are significant to the fair value measurements and represent the Company’s best assumptions of how market participants would estimate the fair value of these assets.

7

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

      The following methods and assumptions are used to determine the estimated fair value of the assets and liabilities carried on the Company’s consolidated balance sheets at fair value on a recurring basis:

Loans and receivables related to consolidated variable interests: Upon adoption of the new consolidation accounting guidance on January 1, 2010, we elected to measure our loans and receivables related to consolidated variable interests under the fair value option as our interests prior to consolidation were predominately carried at fair value with changes in fair value recorded to earnings. Accordingly, the fair value option was elected to effectively continue fair value accounting through earnings for our interests in those variable interests. These loans have an unpaid principal balance of $956.7 million and $1,005.7 million as of June 30, 2011 and December 31, 2010, respectively. The Company had $13.7 million and $15.9 million of unpaid principal balances on all loans that were 60 days or more delinquent as of June 30, 2011 and December 31, 2010, respectively.

The loans related to consolidated variable interests 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 the projected cash flows over the estimated life of the loans.

The Company’s valuation considers assumptions for prepayments, defaults, severity and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing the loans, including but not limited to recent historical experience as well as current and/or 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 Company estimates the fair value of the receivables related to consolidated variable interests at the net present value of the cash flows from the letters of credit used to pay bondholders for the remaining life of the securitization trust. The estimate of the cash to be collected from the letters of credit is based on the shortfall of cash flows from the loans in the securitization trusts compared to the required bond payments of the securitization trusts. The cash provided by the letters of credit is determined by analyzing the credit assumptions for the underlying collateral in each of the securitizations.

The discount rate assumption for these assets is primarily based on collateral and credit risk characteristics combined with an assessment of market interest rates.

Servicing rights carried at fair value: Manufactured housing servicing rights 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 the cash flows of the servicing income to be received. The Company’s valuation considers assumptions and estimates of contractual servicing fees, ancillary revenue, costs to service, collateral repayment and default rates, and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing servicing rights, including but not limited to recent historical experience as well as current and/or expected relevant

8

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

market conditions. Ancillary revenue and cost to service assumptions are primarily based on historical experience as well as other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

Bonds payable related to consolidated variable interests: Upon adoption of the new consolidation accounting guidance on January 1, 2010, we elected to measure our bonds payable related to consolidated variable interests under the fair value option as our interests prior to consolidation were predominately carried at fair value with changes in fair value recorded to earnings. Accordingly, the fair value option was elected to effectively continue fair value accounting through earnings for our interests in those variable interests. These bonds payable have an unpaid principal balance of $969.6 million and $1,020.8 million as of June 30, 2011 and December 31, 2010, respectively.

These bonds are 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 bonds is based on the net present value of the projected bond principal and interest payments for the remaining life of the securitization trusts. The Company’s valuation considers assumptions and estimates for principal and interest payments on the bonds and letter of credit draws. An analysis of the credit assumptions for the underlying collateral in each of the securitizations is performed to determine the required payments to bondholders. The assumptions include prepayments, defaults, severity and discount rates. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation that a market participant would consider in valuing bonds, including but not limited to recent historical experience as well as current and/or expected relevant market 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 is primarily based on credit characteristics combined with an assessment of market interest rates.

Mandatory repurchase obligation: This liability relates to a mandatory repurchase obligation for two securitizations in which the Company is required to repurchase loans from the securitizations when a loan becomes 90 days delinquent. The Company estimates the fair value of the contingent obligation based on the expected net present value of future cash flows using level 3 assumptions including prepayment, default and severity rates applicable to the underlying loans’ historical and projected performance.

The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation of the mandatory repurchase obligation that a market participant would consider in valuing these liabilities, including but not limited to recent historical experience as well as current and/or expected relevant market conditions and other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

9

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

Accrued professional fees related to certain securitizations: This liability relates to payments mainly for surety and auction agent fees that the Company will be required to make over the remaining life of certain securitizations. 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 cash flows of the accrued professional fees required to be paid related to the securitizations. The Company’s valuation considers assumptions and estimates of collateral repayment, default rates and discount rates.

The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the valuation of the accrued professional fees related to certain securitizations that a market participant would consider in valuing these liabilities, including but not limited to recent historical experience as well as current and/or expected relevant market conditions and other operational considerations. 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 is primarily based on collateral characteristics combined with an assessment of market interest rates.

        The following are the estimated values of the assets and liabilities carried on the Company’s consolidated balance sheets at fair value on a recurring basis at June 30, 2011 and December 31, 2010, using level 3 significant unobservable inputs (dollars in millions):

	Fair Value at			Fair Value at
	June 30, 2011			December 31, 2010
Loans related to consolidated variable interests	$	726.5		$	608.3
Receivables related to consolidated variable interests		84.9			121.8
MH servicing rights		175.1			171.9
Bonds payable related to consolidated variable interests		(861.7	)		(792.1	)
Mandatory repurchase obligation(1)		(13.6	)		(13.4	)
Accrued professional fees related to certain securitizations(1)		(10.4	)		(10.5	)

(1) Mandatory repurchase obligation and accrued professional fees related to certain securitizations are included in Other liabilities on the Company’s consolidated balance sheets.

10

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

     The following is a reconciliation of the changes in fair value of the level 3 assets and liabilities carried on the Company’s consolidated balance sheets at fair value on a recurring basis at June 30, 2011 and 2010 (dollars in millions):

										Accretion/
										Amortization
							Changes in			Related to
	Fair Value,			Initial			Valuation			Realization of
	Beginning of			Consolidation of			Inputs or			Expected Cash			Cash Payments			Fair Value,
	Period			VIEs			Assumptions			Flows			(Collections)(1)			End of Period
June 30, 2011
Loans related to consolidated variable interests	$	608.3		$	—		$	146.4		$	46.0		$	(74.2	)	$	726.5
Receivables related to consolidated variable interests		121.8			—			(28.3	)		1.4			(10.0	)		84.9
MH servicing rights		171.9			—			19.7	(2)		(16.5	)		—			175.1
Bonds payable related to consolidated variable interests		(792.1	)		—			(99.8	)		(46.7	)		76.9			(861.7	)
Mandatory repurchase obligation		(13.4	)		—			(0.4	)		0.2			—			(13.6	)
Accrued professional fees related to certain securitizations		(10.5	)		—			(0.8	)		(0.6	)		1.5			(10.4	)
June 30, 2010
Loans related to consolidated variable interests	$	—		$	664.3		$	(16.8	)	$	52.1		$	(79.4	)	$	620.2
Receivables related to consolidated variable interests		—			141.9			4.8			3.5			(11.9	)		138.3
MH servicing rights		197.1			(12.9	)		9.1	(2)		(17.7	)		—			175.6
Bonds payable related to consolidated variable interests		—			(860.6	)		12.3			(55.6	)		86.0			(817.9	)
Mandatory repurchase obligation		(13.6	)		—			(0.1	)		0.6			—			(13.1	)
Accrued professional fees related to certain securitizations		(11.3	)		—			(0.5	)		(0.7	)		1.6			(10.9	)
Mandatory obligation to exercise clean-up calls		(54.1	)		54.1			—			—			—			—

(1)	Cash payments on loans and bonds payable related to consolidated variable interests include interest payments.
(2)	Reflects changes due to cost to service assumptions and performance of the underlying collateral and discount rate assumptions for the six months ended June 30, 2011 and performance of the underlying collateral and discount rate assumptions for the six months ended June 30, 2010.

     The following methods and assumptions were used to determine the estimated fair values of the Company’s financial instruments not accounted for at fair value:

Cash and cash equivalents and restricted cash: The Company carries its cash and cash equivalents and restricted cash at cost, which approximates estimated fair value. The valuation of these short-term, highly liquid assets is based on level 1 inputs.

11

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

Insurance premiums receivable: These receivables are not traded in an active market. The estimated fair value of these assets is based on the net present value of the expected cash flows. The estimated fair value is based on level 3 assumptions of the underlying collateral serviced by the Company including delinquency and default rates as these insurance premiums are collected as part of the customers’ loan payments or from the related trust.

Servicer and protective advances: The Company estimates the fair value of servicer and protective advances based on level 3 unobservable market inputs using the present value of projected cash flows over the expected life of the receivables and the Company’s estimated pricing of advances on similar collateral.

Collateralized borrowings: The Company estimates fair value of its collateralized borrowings using level 2 observable inputs including comparable market transactions and interest rates that are consistent with market rate pricing based on the Company’s credit worthiness.

Payable to insurance carriers: This liability represents payments to the Company’s carriers of insurance policies related to the insurance receivables noted above. There is not a traded market for these or similar payables; therefore, the Company utilizes level 3 unobservable inputs to estimate the fair value of the carrier payable based on the net present value of the expected carrier payments over the life of the payables.

     The following are the estimated values of our financial instruments at June 30, 2011 and December 31, 2010, which are recorded on the Company’s consolidated balance sheets at their carrying amounts (dollars in millions):

	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	51.9	$	51.9	$	54.3	$	54.3
Restricted cash		179.4		179.4		149.6		149.6
Insurance premiums receivable		118.5		114.0		121.9		111.8
Servicer and protective advances		82.6		75.3		82.4		81.2
Financial liabilities:
Collateralized borrowings	$	329.0	$	341.0	$	371.3	$	385.1
Payable to insurance carriers		53.6		52.8		53.2		50.7

12

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

3. VARIABLE INTEREST ENTITIES

     Involvement with securitizations

     Green Tree has various agreements related to securitization trusts. Securitization trusts are special purpose entities (“SPEs”). A SPE is an entity that was formed for a limited purpose. The Company’s involvement with these SPEs includes servicing of the underlying loans, obligations to exercise mandatory clean-up calls on securitization trusts and reimbursement obligations related to letters of credit on securitization trusts.

     SPEs are generally considered variable interest entities (“VIE”). A VIE is an entity that has either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the ability to control the entity’s activities. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual ownership or other interest that changes with changes in fair value of the VIE’s net assets. To determine whether or not a variable interest could potentially be significant to the VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE. We assess whether or not we are the primary beneficiary of a VIE on an on-going basis. We evaluate each involvement in a SPE for classification as a VIE. When a SPE meets the definition of a VIE and we determine that the Company is the primary beneficiary, the assets and liabilities of the VIE are included in the consolidated financial statements of the Company.

13

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

     The Company has elected to carry the assets and liabilities associated with the consolidation of the VIEs at fair value using level 3 inputs, with the exception of restricted cash, which is carried at cost, which approximates estimated fair value, due to its short-term nature. See discussion of fair value measurements in Note 2. We have segregated our involvement with VIEs between those VIEs we consolidate and those we do not consolidate. The classifications of assets and liabilities in our balance sheet associated with our involvement with VIEs as of June 30, 2011 and December 31, 2010, are as follows (dollars in millions):

	Consolidated			Unconsolidated
	VIEs			VIEs(1)		Total
June 30, 2011
Assets
Restricted cash	$	16.5		$	—	$	16.5
Loans related to consolidated variable interests		726.5			—		726.5
Receivable related to consolidated variable interests		84.9			—		84.9
Servicing rights		—			191.6		191.6
Principal and interest advances		—			19.4		19.4
Repossessed assets related to consolidated variable interests(2)		2.7			—		2.7
Liabilities
Bonds payable related to consolidated variable interests		(861.7	)		—		(861.7	)
Net assets (liabilities)	$	(31.1	)	$	211.0	$	179.9
December 31, 2010
Assets
Restricted cash	$	16.9		$	—	$	16.9
Loans related to consolidated variable interests		608.3			—		608.3
Receivable related to consolidated variable interests		121.8			—		121.8
Servicing rights		—			192.0		192.0
Principal and interest advances		—			20.9		20.9
Repossessed assets related to consolidated variable interests(2)		3.2			—		3.2
Liabilities
Bonds payable related to consolidated variable interests		(792.1	)		—		(792.1	)
Net assets (liabilities)	$	(41.9	)	$	212.9	$	171.0

(1)	Refer to “Transactions with unconsolidated VIEs” on page 15 for discussion of unconsolidated VIEs.
(2)	Repossessed assets related to consolidated variable interests are included in Other assets on the Company’s consolidated balance sheets as of June, 30, 2011 and December 31, 2010.

14

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

Transactions with consolidated VIEs

     Servicing arrangements with mandatory clean-up call obligation: The Company services $1.0 billion of loans related to 10 securitizations as of June 30, 2011 and December 31, 2010, for which it receives contractual servicing fees. The Company also has a mandatory obligation to exercise the clean-up calls on these securitizations. The mandatory obligation is triggered when the remaining collateral balances equal approximately 10% of the initial collateral balances. The total outstanding collateral balances at the respective call dates are approximately $418.2 million. These securitizations were originated between 1998 and 2000 by a third party and the Company expects to call the securitizations beginning in 2017. The Company has consolidated these assets as we have determined that Green Tree is the primary beneficiary because we have the power to direct the activities that most significantly impact the securitizations as the servicer and the mandatory clean-up call is a significant interest in the securitizations. The assets of the VIEs are used to pay Green Tree’s servicing fee and the third party bondholders. Some of these securitizations also contain letters of credit as credit enhancements that the securitizations draw from if there are not enough cash flows from the underlying collateral to pay the bondholders. Green Tree’s obligation related to these letters of credit is discussed under “Servicing arrangements with letter of credit reimbursement obligation” in the “Transactions with unconsolidated VIEs” section below.

Transactions with unconsolidated VIEs

     The Company has involvement in VIEs that are not consolidated on our balance sheets. The involvements with these VIEs include servicing activities, reimbursement obligations related to certain securitizations supported by letters of credit and securitizations that are consolidated by affiliates. The involvements with unconsolidated VIEs are recorded on our consolidated balance sheets, primarily in servicing rights.

15

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

          The following table provides a summary of unconsolidated VIEs with which we have significant continuing involvement, but are not the primary beneficiary as of June 30, 2011 and December 31, 2010 (dollars in millions):

	Total
	Unconsolidated VIE
	Assets				Carrying Value
	(Unpaid Principal		Carrying Value		(Principal and		Maximum Exposure to
	Balance)		(Servicing Rights)		Interest Advances)		Loss(1)
June 30, 2011
Securitizations where only involvement is servicing activities	$	24,327.1	$	188.4	$	17.7	$	206.1
Servicing arrangements with letter of credit reimbursement obligation		264.2		3.2		1.7		169.9
Servicing activities related to securitizations consolidated by affiliates		784.3		—		—		—
Total	$	25,375.6	$	191.6	$	19.4	$	376.0
December 31, 2010
Securitizations where only involvement is servicing activities	$	23,681.8	$	188.8	$	18.9	$	207.7
Servicing arrangements with letter of credit reimbursement obligation		279.6		3.2		2.0		170.2
Servicing activities related to securitizations consolidated by affiliates		841.0		—		—		—
Total	$	24,802.4	$	192.0	$	20.9	$	377.9

(1) The company’s maximum exposure to loss for these VIEs is equal to the carrying value of servicing rights and principal and interest advances associated with the VIE, as well as the amount of the obligation to reimburse an unrelated third party for the final $165.0 million drawn on letters of credit for the servicing arrangements with letter of credit reimbursement obligation.

          Securitizations where Green Tree’s only involvement is servicing activities: Green Tree services $24.3 billion and $23.7 billion of residential mortgage loans and other consumer loans for securitization trusts in which Green Tree’s only relationship with the securitization is that of a servicer as of June 30, 2011 and December 31, 2010, respectively. Green Tree did not originate or securitize these loans. Green Tree does not hold any other interests in any of these securitization trusts. We do not consolidate these VIEs in our consolidated balance sheets as Green Tree does not have a variable interest that could potentially be significant to the VIEs.

          Servicing arrangements with letter of credit reimbursement obligation: Green Tree services $0.3 billion of loans related to four securitization trusts that have not been consolidated on the Company’s balance sheet where Green Tree has an obligation to reimburse a third party for the final $165.0 million on letters of credit for the aggregate of 12 securitizations if drawn as of June 30, 2011 and December 31, 2010. Eight of these securitizations were consolidated on the Company’s balance sheet as of January 1, 2010 due to the Company’s mandatory clean-up call obligation. The letters of

16

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

credit were provided by the seller of the securitizations as credit enhancements on these securitizations. The securitization trusts will draw from these letters of credit if there are not enough cash flows from the underlying collateral to pay the bondholders of these securitizations. The total amount outstanding on these letters of credit for all 12 securitizations was $307.3 million and $314.9 million at June 30, 2011 and December 31, 2010, respectively. Based on management’s estimates of the underlying performance on the collateral in these securitizations, Green Tree does not currently anticipate that the final $165.0 million will be drawn, and therefore, no liability for the fair value of this obligation was recorded as of June 30, 2011 or December 31, 2010. Actual performance may differ from this estimate in the future.

          The four securitizations are not consolidated in our consolidated balance sheet as Green Tree is not deemed to be the primary beneficiary of these VIEs as the Company does not have a variable interest that could potentially be significant to the VIEs.

          Servicing activities related to securitizations consolidated by affiliates: Green Tree services $0.8 billion of loans for securitization trusts in which Green Tree Investments II LLC, a related party, owns residual interests in these securitizations and has consolidated the assets and liabilities of the securitizations on its balance sheet as of June 30, 2011 and December 31, 2010. The Company’s involvement in these securitizations is limited to the servicing activities in which the Company receives a fixed servicing fee from the underlying trusts in accordance with the pooling and servicing agreements. The Company is not the primary beneficiary as the Company does not have a variable interest that could potentially be significant to the VIEs.

4. SERVICING RIGHTS

          Servicing rights consist of contractual rights purchased from third parties to receive servicing fees on the unpaid principal balance of the underlying collateral. The table below details the Company’s servicing rights as of June 30, 2011 and December 31, 2010 (dollars in millions):

	June 30, 2011		December 31, 2010
Servicing rights carried at fair value	$	175.1	$	171.9
Servicing rights carried at lower of cost or fair value		32.4		36.1
Total servicing rights	$	207.5	$	208.0

Servicing rights carried at fair value

          Servicing rights carried at fair value consist of contractual rights purchased from third parties to receive servicing fees for servicing manufactured housing loans (“MH servicing rights”) at annual rates based on the unpaid principal balance of the related collateral. Refer to the “Fair value measurement” section within Note 2 for a reconciliation of the changes in fair value of MH servicing rights carried on the Company’s consolidated balance sheets at June 30, 2011 and 2010.

          The estimation of fair value of MH servicing rights requires significant judgment. The fair value of MH servicing rights is estimated using the present value of projected cash flows over the estimated period of net servicing income.

          

17

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

          At June 30, 2011 and December 31, 2010, key economic assumptions used to determine the estimated fair value of the MH servicing rights are as follows (dollars in millions):

	June 30, 2011			December 31, 2010
Estimated fair value of MH servicing rights	$	175.1		$	171.9
Cumulative scheduled principal balance of serviced MH loans at the end of the period	$	10,970.3		$	11,682.9
Weighted average remaining life in years		7.0			6.7
Weighted average stated customer interest rate on underlying collateral		9.3	%		9.3	%
Weighted average discount rate (a)		12.0	%		13.0	%
Expected cost to service as a percentage of principal balance of serviced loans (a)		0.86	%		0.87	%
Expected ancillary fees as a percentage of principal balance of serviced loans (a)		0.09	%		0.09	%
Expected conditional repayment rate as a percentage of principal balance of serviced loans (a)		2.6	%		2.9	%
Expected conditional default rate as a percentage of principal balance of serviced loans (a)		3.4	%		3.9	%

(a) The valuation of MH servicing rights is affected by the underlying assumptions including the expected cost of servicing, ancillary fees, prepayments of principal, defaults and discount rate. Should actual performance and timing differ materially from our projected assumptions, it could have a material effect on the valuation of our MH servicing rights. The valuation is determined by discounting cash flows over the expected life of the serviced loans.

Servicing rights carried at lower of amortized cost or fair value

          Servicing rights carried at lower of amortized cost or fair value (“Mortgage servicing rights”) consist of contractual rights purchased from third parties to receive servicing fees from servicing residential mortgage loans at annual rates based on the unpaid principal balance of the related collateral. To the extent that the carrying value exceeds the estimated fair value for any specific strata, a valuation allowance would be established through the recognition of impairment in the consolidated statements of income. No impairment or related valuation allowance was recorded for the six months ended June 30, 2011 and 2010.

18

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

          The following schedule summarizes the changes in the balances of Mortgage servicing rights for the periods ended June 30, 2011 and 2010, (dollars in millions) at amortized cost:

	June 30, 2011			June 30, 2010
Mortgage servicing rights, beginning of period	$	36.1		$	41.9
Servicing assets sold		(0.1	)		(0.5	)
Amortization		(3.6	)		(3.1	)
Net change in amortized cost		(3.7	)		(3.6	)
Mortgage servicing rights, end of period	$	32.4		$	38.3

          The estimation of fair value of Mortgage servicing rights requires significant judgment. The fair value of Mortgage servicing rights is estimated using the present value of projected cash flows over the estimated period of net servicing income. At June 30, 2011 and December 31, 2010, key economic assumptions used to determine the estimated fair value of the Mortgage servicing rights are as follows (dollars in millions):

	June 30, 2011			December 31, 2010
Carrying amount	$	32.4		$	36.1
Estimated fair value	$	42.4		$	37.0
Cumulative scheduled principal balance of serviced loans at the end of the period	$	7,596.0		$	8,670.4
Weighted average remaining life in years		5.3			5.2
Weighted average stated customer interest rate on underlying collateral		6.7	%		6.7	%
Weighted average discount rate (a)		12.2	%		22.2	%
Expected cost to service as a percentage of principal balance of serviced loans (a)		0.23	%		0.25	%
Expected ancillary fees as a percentage of principal balance of serviced loans (a)		0.05	%		0.06	%
Expected conditional repayment rate as a percentage of principal balance of serviced loans (a)		7.6	%		6.3	%
Expected conditional default rate as a percentage of principal balance of serviced loans (a)		7.8	%		9.1	%

(a) The valuation of Mortgage servicing rights is affected by the underlying assumptions including the expected cost of servicing, ancillary fees, prepayments of principal, defaults and discount rate. Should actual performance and timing differ materially from our projected assumptions, it could have a material effect on the valuation of our Mortgage servicing rights. The valuation is determined by discounting cash flows over the expected life of the serviced loans.

Other servicing

          The Company services an additional $18.8 billion and $10.2 billion of loans for others in servicing and sub-servicing arrangements at June 30, 2011 and December 31, 2010, respectively, on which the Company receives a contractual servicing fee based on outstanding serviced collateral or other various contractual fee arrangements.

19

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

          Additionally, the Company services $1.0 billion of loans related to consolidated variable interests on which the Company receives a servicing fee at June 30, 2011 and December 31, 2010; however, the servicing revenue is not recorded in Servicing income due to the consolidation of the assets on the consolidated balance sheet as of January 1, 2010.

5. OTHER DISCLOSURES

Repurchase obligation

          The Company has a mandatory repurchase obligation for two securitizations in which the Company is required to repurchase loans at par from the securitizations when a loan becomes 90 days delinquent. The total of the loans outstanding in these two securitizations was $98.1 million and $102.3 million as of June 30, 2011 and December 31, 2010, respectively. The Company estimated the fair value of this contingent obligation at $13.6 million and $13.4 million as of June 30, 2011 and December 31, 2010, respectively, using prepayment, default and severity rate assumptions applicable to the underlying loans’ historical and projected performance. This obligation is included in Other liabilities on the consolidated balance sheets. Based on our estimates, the Company expects to incur undiscounted losses of approximately $21.1 million related to repurchases over the remaining life of these securitizations. The Company repurchased $1.9 million and $2.4 million of unpaid principal balances during the six months ended June 30, 2011 and 2010, respectively. The Company recorded $0.4 million and $0.1 million of impairment charges related to this liability for the six months ended June 30, 2011 and 2010, respectively. Additionally, the Company recorded $0.8 million of interest expense related to this liability for each of the six months ended June 30, 2011 and 2010, respectively. Actual performance may differ from this estimate in the future.

Unit based incentive plans

          GTH issued phantom and other profit sharing units through various long-term incentive plans that provide for participants to share in a percentage of eligible distributions made by GTH upon achievement of certain performance based conditions. The phantom plan does not meet the criteria to be accounted for as an equity award and therefore the compensation expense related to the phantom plan is based on the fair value of the award as of the consolidated balance sheet dates. For both 2011 and 2010, GTH used a five-year vesting and performance period to determine the amount of expense to record for the current period. The year ended December 31, 2010 represents year three of the five-year vesting and performance period. The fair value of the award is based on the value of GTH and its subsidiaries which was determined using a projected cash flow model.

          The Company recorded its allocable share of this expense through Salaries and benefits, with an offset to Members’ equity, in the form of a capital contribution, of $28.8 million and $2.5 million for the six months ended June 30, 2011 and 2010, respectively. The allocation was based on the Company’s cash flows as a percentage of the total cash flows of GTH. The liability for payments under the phantom plan is recorded on the consolidated balance sheets of GTH as they have sole responsibility for payment.

          GTH’s profit sharing units are accounted for as equity awards. Compensation expense for the award is recorded based on the fair value of the award at grant date. The fair value at grant date is recorded into compensation expense over the estimated performance period of the award. The

20

GTCS Holdings LLC
Notes to Consolidated Financial Statements
(Unaudited)

accumulated compensation expense recorded by the Company was not material as of June 30, 2011 or 2010.

Litigation

          The Company and its affiliates are from time to time engaged in various matters of litigation. While the ultimate liability with respect to these litigation matters and claims cannot be determined at this time, the Company believes that damages, if any, and other amounts relating to pending matters are not likely to be material to its consolidated financial statements. Accordingly, the Company has not established reserves for these various matters of litigation.

Subsequent events

          Subsequent events have been evaluated through August 26, 2011, which is the date the consolidated financial statements were available to be issued.

          On July 1, 2011, Walter Investment Management Corp. completed the purchase of 100% of the membership interests in the Company for aggregate consideration of approximately $1.1 billion.

21

EX-99.4 5 b87904exv99w4.htm EX-99.4

Exhibit 99.4

Unaudited Pro Forma Condensed Combined Financial Statements

On July 1, 2011, Walter Investment Management Corp., or the Company, acquired 100% of the outstanding membership interests, the Acquisition, in GTCS Holdings, LLC, or Green Tree, for consideration transferred of $1,052.7 million, which included cash of $737.7 million to the owners of Green Tree, cash to settle Green Tree’s secured credit facility of $274.8 million and the issuance of 1,812,532 shares of Company common stock with a fair value of $40.2 million to the owners of Green Tree. The Acquisition was made pursuant to the Membership Interest Purchase Agreement, dated as of March 25, 2011, by and among the Company and GTH, LLC.

In order to partially fund the Acquisition, on July 1, 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 the Term Loans. In addition, on July 1, 2011, the Company entered into a $45 million senior secured revolving credit facility, or the Revolver. The Acquisition and the Term Loans are collectively referred to as the Transaction.

The unaudited pro forma condensed combined financial statements and accompanying notes present the impact of the Transaction (since the pro forma accounts for the Term Loans) on the Company’s financial position and results of operations under the acquisition method of accounting which is more fully described in the notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet as of June 30, 2011 combines the historical interim condensed consolidated balance sheet of the Company as of June 30, 2011 with the historical condensed consolidated balance sheet of Green Tree as of June 30, 2011, giving effect to the Transaction as if it had occurred on June 30, 2011. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2011 and the year ended December 31, 2010 combine the historical interim condensed consolidated statement of income of the Company for the six months ended June 30, 2011 with the historical interim condensed consolidated statement of income of Green Tree for the six months ended June 30, 2011, and the historical consolidated statement of income of the Company for the year ended December 31, 2010 with the historical consolidated statement of income of Green Tree for the year ended December 31, 2010, giving effect to the Transaction as if it had been completed on January 1, 2010. The historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are directly attributable to the Transaction and factually supportable and, with respect to the statements of operations, are expected to have a continuing impact on the combined results.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes. In addition, the unaudited pro forma condensed combined financial statements were derived from and should be read in conjunction with the:

• audited historical consolidated financial statements of the Company as of and for the year ended December 31, 2010 and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010;

• audited historical consolidated financial statements of Green Tree and the related notes as of and for the year ended December 31, 2010 included within this report as exhibit 99.1;

• audited historical consolidated financial statements of Green Tree and the related notes as of and for the year ended December 31, 2009 included within this report as exhibit 99.2

• unaudited historical interim condensed consolidated financial statements of the Company as of and for the six months ended June 30, 2011 and the related notes included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011; and

• unaudited historical interim condensed consolidated financial statements of Green Tree as of and for the six months ended June 30, 2011 and the related notes included within this report as exhibit 99.3.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Transaction been effective during the periods presented or the results that may be obtained by the combined company in the future. The unaudited pro forma condensed combined financial statements as of and for the periods presented do not reflect future events that may occur after the Transaction, including, but not limited to, synergies or revenue enhancements arising from the Acquisition. Future results may vary significantly from the results reflected in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles, or U.S. GAAP, and reflect changes to acquired assets and assumed liabilities to record their estimated fair values, which are based on certain estimates and assumptions. The Company’s management believes that the pro forma adjustments give appropriate effect

to the assumptions used and are properly applied in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements and purchase price allocations have been prepared based on available information and preliminary estimates and assumptions that management believes are reasonable. However, the allocation of purchase price has not been finalized and the actual adjustments to our condensed combined financial statements will depend on a number of factors, including the finalization of asset and liability valuations. Accordingly, there can be no assurance that the final allocation of purchase price will not differ from the preliminary allocation reflected in the unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2011

(in thousands)

										Pro Forma			Condensed Pro Forma
	Historical									Adjustments			Combined
						Walter - After
	Walter		Reclassification			Reclassification		Green Tree
Assets:
Cash and cash equivalents	$	289,947	$	—		$	289,947	$	51,850	$	(294,099	) A	$	47,698
Restricted cash and cash equivalents		53,591		—			53,591		179,405		(69,365	) B		163,631
Premises and equipment, net		—		1,945	O		1,945		15,219		117,596	C		134,760
Receivables, net		1,287		731	O		2,018		235,801		(10,271	) D		227,548
Servicing advances and receivables, net		8,979		(8,979	)   O		—		—		—			—
Residential loans, net		1,632,887		—			1,632,887		729,195		—			2,362,082
Subordinate security		1,844		(1,844	)   O		—		—		—			—
Real estate owned, net		56,244		(56,244	)   O		—		—		—			—
Servicing rights		—		—			—		207,466		71,486	E		278,952
Servicer and protective advances, net		—		8,248	O		8,248		82,610		(7,337	) D		83,521
Intangible assets, net		—		—			—		46,876		109,929	F		156,805
Deferred debt issuance costs		23,949		(23,949	)   O		—		—		—			—
Deferred income tax asset, net		222		—			222		—		(222	) P		—
Goodwill		—		—			—		22,596		458,807	F		481,403
Other assets		4,151		80,092	O		84,243		23,846		14,688	G		122,777
Total Assets	$	2,073,101	$	—		$	2,073,101	$	1,594,864	$	391,212		$	4,059,177
Liabilities:
Accounts payable and other accrued liabilities	$	43,493	$	9,386	O	$	52,879	$	124,722	$	29,182	H/I	$	206,783
Deferred income tax liabilities, net		—		—			—		11,006		69,785	I		80,791
Debt and collateralized borrowings		—		—			—		329,012		485,417	J		814,429
Mortgage-backed debt		1,463,357		—			1,463,357		861,674		—			2,325,031
Accrued interest		9,386		(9,386	)   O		—		—		—			—
Payable to the trust/investor		—		—			—		162,042		(70,835	)B		91,207
Total Liabilities		1,516,236		—			1,516,236		1,488,456		513,549			3,518,241
Equity:
Preferred stock		—		—			—		—		—			—
Common stock		259		—			259		—		18	K		277
Additional paid-in-capital		128,702		—			128,702		—		40,202	K		168,904
Retained earnings		426,931		—			426,931		—		(56,149	) I		370,782
Accumulated other comprehensive income		973		—			973		—		—			973
Equity		—		—			—		106,408		(106,408	) K		—
Total Equity		556,865		—			556,865		106,408		(122,337	)		540,936
Total Liabilities & Equity	$	2,073,101	$	—		$	2,073,101	$	1,594,864	$	391,212		$	4,059,177

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2011

(in thousands, except per share data)

													Pro Forma			Condensed Pro
	Historical												Adjustments			Forma Combined
							Walter - After
	Walter			Reclassification			reclassification			GreenTree
Revenues:
Interest income	$	83,384		$	—		$	83,384		$	267		$	778	J	$	84,429
Premium revenue		4,169			(4,169	) O		—			—			—			—
Servicing revenue and fees		6,247			—			6,247			139,324			—			145,571
Change in fair value of assets related to VIEs		—			—			—			165,461			(125,307	)L		40,154
Insurance revenue		—			4,169	O		4,169			31,247			—			35,416
Other income		1,283			—			1,283			24,675			(1,120	)N		24,838
Total revenues		95,083			—			95,083			360,974			(125,649	)		330,408
Expenses:
Interest expense		42,053			—			42,053			19,438			35,404	J		96,895
Provision for loan losses		1,500			—			1,500			—			—			1,500
Claims expense		2,950			(2,950	) O		—			—			—			—
Salaries and benefits		17,724			—			17,724			103,643			—			121,367
Legal and professional		14,222			(14,222	) O		—			—			—			—
Occupancy		931			(931	) O		—			—			—			—
Technology and communication		1,946			(1,946	) O		—			—			—			—
General and administrative		7,692			17,099	O		24,791			32,744			(12,340	)J/M		45,195
Change in fair value of liablities related to VIEs		—			—			—			146,496			(108,744	)L		37,752
Depreciation and amortization		360			—			360			10,841			43,044	C/E/F		54,245
Real estate owned expenses, net		5,542			(5,542	) O		—			—			—			—
Other expenses, net		—			8,492	O		8,492			2,662			—			11,154
Total expenses		94,920			—			94,920			315,824			(42,636	)		368,108
Income (loss) before income taxes		163			—			163			45,150			(83,013	)		(37,700	)
Income tax (expense) benefit		(68	)		—			(68	)		(6,457	)		20,855	I		14,330
Net income (loss)	$	95		$	—		$	95		$	38,693		$	(62,158	)	$	(23,370	)
Weighted-average shares outstanding
Basic								26,621,326						1,812,532			28,433,858
Diluted (1)								26,749,597						1,812,532			28,433,858
Earnings (loss) per share
Basic							$	0.00								$	(0.82	)
Diluted							$	0.00								$	(0.82	)

(1) Potentially dilutive securities consisting of stock options for the six months ended June 30, 2011, were excluded from the combined per share calculation above, because of their antidilutive effect.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010

(in thousands, except per share data)

													Pro Forma			Condensed Pro
	Historical												Adjustments			Forma Combined
							Walter - After
	Walter			Reclassification			reclassification			Green Tree
Revenues:
Interest income	$	166,188		$	—		$	166,188		$	400		$	9,919	J	$	176,507
Premium revenue		9,163			(9,163	) O		—			—			—			—
Servicing revenue and fees		2,267			—			2,267			271,367			—			273,634
Change in fair value of assets related to VIEs		—			—			—			97,367			(18,817	)L		78,550
Insurance revenue		—			9,163	O		9,163			62,752			—			71,915
Gain on mortgage-backed debt extinguishment		4,258			(4,258	) O		—			—			—			—
Other income		3,299			4,258	O		7,557			41,345			(1,945	)L		46,957
Total revenues		185,175			—			185,175			473,231			(10,843	)		647,563
Expenses:
Interest expense		81,729			—			81,729			42,629			72,689	J		197,047
Provision for loan losses		6,526			—			6,526			—			—			6,526
Claims expense		2,319			(2,319	) O		—			—			—			—
Salaries and benefits		27,495			—			27,495			147,769			—			175,264
Legal and professional		4,037			(4,037	) O		—			—			—			—
Occupancy		1,490			(1,490	) O		—			—			—			—
Technology and communication		2,955			(2,955	) O		—			—			—			—
General and administrative		13,377			8,482	O		21,859			68,122			(252	)J		89,729
Change in fair value of liabilities related to VIEs		—			—			—			94,978			(21,055	)L		73,923
Depreciation and amortization		383			—			383			19,179			85,298	C/E/F		104,860
Real estate owned expenses, net		6,519			(6,519	) O		—			—			—			—
Other expenses, net		—			8,838	O		8,838			18,005			(12,258	)N		14,585
Total expenses		146,830			—			146,830			390,682			124,422			661,934
Income (loss) before income taxes		38,345			—			38,345			82,549			(135,265	)		(14,371	)
Income tax (expense) benefit		(1,277	)		—			(1,277	)		(11,427	)		18,156	I		5,452
Net income (loss)	$	37,068		$	—		$	37,068		$	71,122		$	(117,109	)	$	(8,919	)
Weighted-average shares outstanding
Basic								26,431,853						1,812,532			28,244,385
Diluted (1)								26,521,311						1,812,532			28,244,385
Earnings (loss) per share
Basic							$	1.38								$	(0.32	)
Diluted							$	1.38								$	(0.32	)

(1) Potentially dilutive securities consisting of stock options for the twelve months ended December 31, 2010, were excluded from the combined per share calculation above, because of their antidilutive effect.

1. Description of Transaction

On July 1, 2011, the Company acquired all of the outstanding membership interests of Green Tree. Green Tree, based in St. Paul, Minnesota, is a fee-based business services company which provides high-touch, third-party servicing of credit-sensitive consumer loans. The acquisition of Green Tree increases the Company’s ability to provide specialty servicing and to generate recurring fee-for-service revenues from an asset-light platform which also provides the Company with diversified revenue streams from complementary businesses. As a result of the Acquisition, the Company will no longer qualify as a Real Estate Investment Trust, or REIT. The results of operations for Green Tree will be combined with those of the Company beginning on July 1, 2011, the date of acquisition.

The table below details the estimated fair value of the consideration transferred in connection with the Acquisition (in millions):

Cash to owners of Green Tree (1)	$	737.7
Cash to settle Green Tree secured credit facility (1) (2)		274.8
Company common stock (3) (1,812,532 shares at $22.19 per share)		40.2
Total estimated purchase consideration	$	1,052.7

(1)	The cash portion of the Acquisition was funded through cash on hand and debt issuances as discussed below. Cash on hand was largely generated by monetizing existing corporate assets as discussed below.
(2)	Simultaneously with the closing of the Acquisition, the Company paid off $275 million of Green Tree secured debt.
(3)	The fair value of the 1.8 million common shares issued was determined based on an average of the high/low price of the Company’s share price on July 1, 2011, the date of the Acquisition.

In order to partially fund the Acquisition, on July 1, 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 Term Loans. In addition, on July 1, 2011, the Company entered into a $45 million senior secured revolving credit facility, or Revolver. The Company’s obligations under the Term Loans and Revolver are guaranteed by certain of the Company’s subsidiaries and are secured by substantially all assets of certain subsidiaries. These agreements contain customary events of default and covenants, including among others, covenants that restrict the Company’s 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. These agreements also include certain financial covenants that must be maintained. The Acquisition and the Term Loans are collectively referred to as the Transaction.

The Company incurred expenses related to the Acquisition of approximately $12.2 million during the six months ended June 30, 2011, which are included in legal and professional expenses.

2. Basis of Presentation

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting and were derived from the historical financial statements of the Company and Green Tree. The unaudited pro forma condensed combined financial statements include historical amounts as of and for the six months ended June 30, 2011 and for the year ended December 31, 2010, for the Company and Green Tree. The unaudited pro forma condensed combined financial statements give effect to the Transaction as if it had occurred (i) on June 30, 2011 for purposes of the unaudited pro forma condensed combined balance sheet and (ii) on January 1, 2010 for purposes of the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2011 and for the year ended December 31, 2010.

The unaudited pro forma condensed combined financial statements are presented in accordance with the requirements of Article 11 of Regulation S-X published by the U.S. Securities and Exchange Commission.

The acquisition method of accounting requires, among other things, that the consideration transferred be measured at fair value at the acquisition date and that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. Accordingly, the assets acquired and liabilities assumed will be

recorded as of the acquisition date at their respective fair values and added to those of the Company’s historical values. The financial statements and reported results of operations of the Company issued after completion of the Acquisition will reflect these values. Prior periods will not be retroactively restated to reflect the historical financial position or results of operations of Green Tree.

The pro forma adjustments reflecting the Transaction under the acquisition method of accounting are based on certain estimates and assumptions. The Company’s management believes that its assumptions provide a reasonable basis for presenting all of the significant effects of the Transaction and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial statements.

In addition, and as a result of the Transaction, the Company changed the presentation of its financial statements to a presentation that better reflects the ongoing combined operations. The Company believes this new presentation will be more meaningful to an investor. As such, certain reclassification adjustments have been made to the Company’s historical financial statements.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Transaction been effective during the periods presented or the results that may be obtained by the combined company in the future.

3. Purchase Price Allocation

The purchase consideration of $1,052.7 million was allocated to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. A preliminary allocation of the purchase cost has been made to major categories of assets and liabilities in the accompanying unaudited pro forma condensed combined financial statements based on management’s estimates. The final purchase price allocation is dependent on, among other things, the finalization of asset and liability valuations. As of this date, only a preliminary valuation has been completed to estimate the fair values of the assets acquired and liabilities assumed and the related allocation of purchase price. The total estimated purchase price, calculated as described above, has been allocated to the assets acquired and liabilities assumed based on preliminary estimates of their fair values. A final determination of these fair values will reflect consideration of a final valuation. Any final adjustment will change the allocations of purchase price, which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma condensed combined financial statements, including a change to goodwill and a change to the amortization of tangible and identifiable intangible assets. The actual allocation of purchase cost and its effect on results of operations may differ significantly from the pro forma amounts included herein. The excess of the purchase cost over the net tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill.

The preliminary allocation of the purchase consideration is as follows (in millions):

Total Estimated Purchase Consideration (Note 1)	$	1,052.7
Preliminary Allocation of Purchase Price:
Cash and cash equivalents	$	22.0
Restricted cash		110.0
Premises and equipment		132.8
Receivables		225.5
Residential loans		729.2
Servicing rights		279.0
Servicer and protective advances		75.3
Intangible assets		156.8
Goodwill		481.4

Other assets		13.3
Total assets acquired	$	2,225.3
Accounts payable and other accrued liabilities	$	119.1
Collateralized borrowings		66.3
Bonds payable related to consolidated variable interests		861.7
Deferred income tax liabilities		34.3
Payable to the Trust/Investor		91.2
Total liabilities assumed	$	1,172.6
Estimated fair value of net assets acquired	$	1,052.7

4. Pro Forma Adjustments

The unaudited pro forma condensed combined financial statements give effect to the Transaction described in Note 1, as if it had occurred on June 30, 2011 for purposes of the unaudited pro forma condensed combined balance sheet and January 1, 2010 for purposes of the unaudited pro forma condensed combined statements of operations. The unaudited pro forma condensed combined statements of operations do not include any material non-recurring charges that arose as a result of the Transaction. Adjustments in the unaudited pro forma condensed combined financial statements are as follows:

A) Represents cash paid to the owners of Green Tree and cash paid to settle Green Tree’s secured credit facility in conjunction with the Acquisition as well as Green Tree cash activity offset by net proceeds from the Term Loans. The table below details this cash activity (in millions):

Issuance of Term Loans, net of discount	$	748.2
Cash to owners of Green Tree		(737.7	)
Cash to settle Green Tree secured credit facility		(274.8	)
Distribution of excess cash		(29.8	)
Net cash activity	$	(294.1	)

B)	This adjustment primarily reflects the removal of Green Tree’s escrow cash and the related escrow liability in the amount of $70.8 million, as a result of conforming accounting policies.
C)	Premises and equipment acquired in the Acquisition was stepped-up by $117.6 million to fair market value at June 30, 2011. This adjustment will be depreciated on the straight line basis over the remaining useful life of the respective assets, which ranges from 3 years to 7 years. The incremental depreciation expense related to the fair market value adjustment approximates $7.7 million and $17.6 million for the six month period ended June 30, 2011 and the year ended December 31, 2010, respectively, and is reflected in depreciation and amortization expense in the statement of operations.
D)	Adjustment is to recognize the balances at fair value under the acquisition method of accounting.
E)	Represents adjustment to incorporate the value of servicing and sub-servicing contracts for acquisition accounting, which previously had not been recognized in the value of mortgage servicing rights. The pro forma adjustment of $71.5 million were amortized based on expected cash flows in proportion to and over the life of net servicing income. Incremental amortization expense recorded for the transactions was $25.6 million and $50.7 million for the six month period ended June 30, 2011 and the year ended December 31, 2010, respectively, and is reflected in depreciation and amortization expense in the statement of operations.

F)	Represents adjustment to record the customer relationship intangible asset fair values of the asset receivables management, or ARM, and insurance agency businesses, and the institutional relationships.
	The pro forma adjustment of $109.9 million was amortized based on the estimated revenue streams from the customer relationships associated with the insurance agency and ARM business through 2030. Incremental amortization expense recorded for the transaction was $9.7 million and $17.0 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively, and is reflected in depreciation and amortization expense in the statement of operations.
	In addition, as a result of the Acquisition, Green Tree’s historical goodwill was derecognized and the amount of goodwill resulting from the purchase of Green Tree by the Company, which has an indefinite life, was recognized in the estimated amount of $481.4 million.
G)	This adjustment primarily reflects the recognition of deferred debt issuance costs related to the Term Loans of $25.4 million and the write-off of $11.5 million of unamortized debt issuance costs related to the Green Tree secured credit facility, which was settled simultaneously with the closing of the Acquisition.
H)	This adjustment primarily reflects the amount of accrued debt issuance costs of $25.4 million offset by an adjustment to record other liabilities to fair value.
I)	This adjustment reflects the impact of income taxes on the combined company and includes:

• As a result of the Acquisition, the Company will no longer qualify as a REIT; therefore, the Company recorded an increase to the deferred tax liability of $46.5 million as well as a current tax payable of $8.6 million and a corresponding reduction to retained earnings at June 30, 2011. The pro forma combined statement of operations does not reflect the impact of this increase as this amount is directly attributable to the transaction and is not expected to have a continuing impact on the Company’s operations.

• As a result of certain purchase price entries that were pushed down to taxable entities within the consolidated Green Tree entity, the Company recorded a $23.3 million deferred tax liability at June 30, 2011.

• Because the Company no longer qualifies as a REIT, the Company has included a pro forma adjustment for estimated income tax expense based on an estimated statutory tax rate of 38%.

J)	The $485.4 million adjustment to debt and collateralized borrowings on the pro forma combined balance sheet represents the issuance of the Term Loans with an aggregate face value of $765 million and discount of $16.8 million offset by the settlement of the Green Tree secured credit facility with a carrying amount of $262.7 million.
	As described in Item G above, the Company recognized deferred debt issuance costs related to the Term Loans of $25.4 million and wrote-off $11.5 million of unamortized debt issuance costs related to the Green Tree secured credit facility. The new debt issuance costs of $25.4 million will be amortized using the effective interest method. The amount of pro forma amortization of debt issuance costs associated with the Term Loans is $3.1 million and $6.1 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively. Note that the pro forma combined statement of operations does not reflect the $11.5 million impact of the write-off of the deferred debt issuance costs as the amount is directly related to the Transaction and is not expected to have a continuing impact on operations.
	The pro forma interest expense includes an adjustment to reflect the interest associated with the $500 million first lien term loan at a rate of LIBOR +6.25% and for the $250 million second lien term loan at a rate of LIBOR +11.00% as well as the amortization of the Term Loans discount. The amount of pro forma interest expense recorded is $37.1 million for the six months ended June 30, 2011 and $72.7 million for the year ended December 31, 2010. An increase of 0.125% per annum related to the interest rate on borrowings made under the Term Loans would increase pro forma interest expense by approximately $0.5 million for the six months ended June 30, 2011 and $1.0 million for the year ended December 31, 2010.
	The pro forma adjustments to interest expense include the impact of the monetization of unencumbered assets, which was completed for the purpose of the Acquisition. The amount of the adjustment is to increase interest expense by $8.5 million and $23.9 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively, as well as increase interest income by

$.8 million and $9.9 million for the same periods, respectively. There were also adjustments to decrease the general and administrative expense of $0.3 million for the six months ended June 30, 2011 and $0.5 million for the year ended December 31, 2010 in order to remove the impact of the legal and professional costs associated with the monetization of the unencumbered assets.

Finally, the pro forma interest expense adjustments eliminate the historical interest expense that Green Tree recorded for its secured credit facility, which was paid off simultaneously with the closing of the Acquisition. The interest expense that was eliminated was $15.4 million for the six months ended June 30, 2011 and $33.7 million for the year ended December 31, 2010.

K)	This adjustment reflects the elimination of the historical equity accounts of Green Tree and the issuance of 1,812,532 shares (at a par value of $0.01) of the Company’s common stock at a price of $22.19 per share.
L)	This adjustment represents changes to cash flow projections used in the valuations due to changes in market conditions as of the date of acquisition.
M)	During the six months ended June 30, 2011, the Company incurred acquisition-related transaction costs consisting primarily of investment banking and legal fees of $12.2 million. This amount is reflected in the Company’s unaudited historical interim condensed consolidated statement of operations for the six months ended June 30, 2011 within general and administrative expenses. A pro forma adjustment has been made to eliminate $12.2 million of these costs and the related tax benefit of $4.6 million from the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2011 due to their non-recurring nature.
N)	This adjustment eliminates the impact of the change in fair value of servicing rights as they are now recorded at amortized cost.
O)	In order to better reflect the financial results of the combined companies, the subordinate security, real estate owned, net and deferred debt issuance costs have been reclassified to other assets while premises and equipment which were previously reported as other assets has been reclassified as a separate line item in the combined condensed balance sheet. Servicing fee receivables, which have historically been presented as servicing advances and receivables, net have been reclassified to receivables, net while servicing advances are now presented with servicer and protective advances, net. Accrued interest has been presented in accounts payable and other accrued liabilities. Premium revenue has been reclassified to insurance revenue. Legal and professional, occupancy and technology and communications expenses have been presented as general and administrative expenses while claims expense and real estate owned expenses, net have been reclassified to other expenses. Finally, gain on mortgage-backed debt extinguishment has been reclassified to other income.
P)	Reclassification to conform to the ongoing operations of the combined company.

5. Pro Forma Loss Per Share

The following table sets forth the computation of unaudited pro forma basic and diluted loss per share (in thousands, except for per share information):

	Six Months Ended June 30, 2011								Year ended December 31, 2010
	Loss			Shares		Per share amount			Loss			Shares		Per share amount
Loss per basic share	$	(23,370	)		28,434	$	(0.82	)	$	(8,919	)		28,244	$	(0.32	)
Loss per diluated share	$	(23,370	)		28,434	$	(0.82	)	$	(8,919	)		28,244	$	(0.32	)

Shares utilized in the calculation of pro forma basic and diluted loss per share are as follows:

	Six months ended		Year ended
	June 30, 2011		December 31, 2010
Weighted-average shares outstanding, basic		26,621,326		26,431,853
Shares issued in the transaction		1,812,532		1,812,532
Total		28,433,858		28,244,385
Weighted-average shares outstanding, diluted		26,621,326		26,431,853
Shares issued in the transaction		1,812,532		1,812,532
Total		28,433,858		28,244,385

Potentially dilutive securities consisting of stock options issued prior to the Acquisition were excluded from the per share calculations above for the six months ended June 30, 2011 and twelve months ended December 31, 2010 because their effect was antidilutive.

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EX-99.4

Exhibit 99.4

Unaudited Pro Forma Condensed Combined Financial Statements

On July 1, 2011, Walter Investment Management Corp., or the Company, acquired 100% of the outstanding membership interests, the Acquisition, in GTCS Holdings, LLC, or Green Tree, for consideration transferred of $1,052.7 million, which included cash of $737.7 million to the owners of Green Tree, cash to settle Green Tree’s secured credit facility of $274.8 million and the issuance of 1,812,532 shares of Company common stock with a fair value of $40.2 million to the owners of Green Tree. The Acquisition was made pursuant to the Membership Interest Purchase Agreement, dated as of March 25, 2011, by and among the Company and GTH, LLC.

In order to partially fund the Acquisition, on July 1, 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 the Term Loans. In addition, on July 1, 2011, the Company entered into a $45 million senior secured revolving credit facility, or the Revolver. The Acquisition and the Term Loans are collectively referred to as the Transaction.

The unaudited pro forma condensed combined financial statements and accompanying notes present the impact of the Transaction (since the pro forma accounts for the Term Loans) on the Company’s financial position and results of operations under the acquisition method of accounting which is more fully described in the notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet as of June 30, 2011 combines the historical interim condensed consolidated balance sheet of the Company as of June 30, 2011 with the historical condensed consolidated balance sheet of Green Tree as of June 30, 2011, giving effect to the Transaction as if it had occurred on June 30, 2011. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2011 and the year ended December 31, 2010 combine the historical interim condensed consolidated statement of income of the Company for the six months ended June 30, 2011 with the historical interim condensed consolidated statement of income of Green Tree for the six months ended June 30, 2011, and the historical consolidated statement of income of the Company for the year ended December 31, 2010 with the historical consolidated statement of income of Green Tree for the year ended December 31, 2010, giving effect to the Transaction as if it had been completed on January 1, 2010. The historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are directly attributable to the Transaction and factually supportable and, with respect to the statements of operations, are expected to have a continuing impact on the combined results.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes. In addition, the unaudited pro forma condensed combined financial statements were derived from and should be read in conjunction with the:

• audited historical consolidated financial statements of the Company as of and for the year ended December 31, 2010 and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010;

• audited historical consolidated financial statements of Green Tree and the related notes as of and for the year ended December 31, 2010 included within this report as exhibit 99.1;

• audited historical consolidated financial statements of Green Tree and the related notes as of and for the year ended December 31, 2009 included within this report as exhibit 99.2

• unaudited historical interim condensed consolidated financial statements of the Company as of and for the six months ended June 30, 2011 and the related notes included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011; and

• unaudited historical interim condensed consolidated financial statements of Green Tree as of and for the six months ended June 30, 2011 and the related notes included within this report as exhibit 99.3.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Transaction been effective during the periods presented or the results that may be obtained by the combined company in the future. The unaudited pro forma condensed combined financial statements as of and for the periods presented do not reflect future events that may occur after the Transaction, including, but not limited to, synergies or revenue enhancements arising from the Acquisition. Future results may vary significantly from the results reflected in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles, or U.S. GAAP, and reflect changes to acquired assets and assumed liabilities to record their estimated fair values, which are based on certain estimates and assumptions. The Company’s management believes that the pro forma adjustments give appropriate effect

to the assumptions used and are properly applied in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements and purchase price allocations have been prepared based on available information and preliminary estimates and assumptions that management believes are reasonable. However, the allocation of purchase price has not been finalized and the actual adjustments to our condensed combined financial statements will depend on a number of factors, including the finalization of asset and liability valuations. Accordingly, there can be no assurance that the final allocation of purchase price will not differ from the preliminary allocation reflected in the unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2011

(in thousands)

										Pro Forma			Condensed Pro Forma
	Historical									Adjustments			Combined
						Walter - After
	Walter		Reclassification			Reclassification		Green Tree
Assets:
Cash and cash equivalents	$	289,947	$	—		$	289,947	$	51,850	$	(294,099	) A	$	47,698
Restricted cash and cash equivalents		53,591		—			53,591		179,405		(69,365	) B		163,631
Premises and equipment, net		—		1,945	O		1,945		15,219		117,596	C		134,760
Receivables, net		1,287		731	O		2,018		235,801		(10,271	) D		227,548
Servicing advances and receivables, net		8,979		(8,979	)   O		—		—		—			—
Residential loans, net		1,632,887		—			1,632,887		729,195		—			2,362,082
Subordinate security		1,844		(1,844	)   O		—		—		—			—
Real estate owned, net		56,244		(56,244	)   O		—		—		—			—
Servicing rights		—		—			—		207,466		71,486	E		278,952
Servicer and protective advances, net		—		8,248	O		8,248		82,610		(7,337	) D		83,521
Intangible assets, net		—		—			—		46,876		109,929	F		156,805
Deferred debt issuance costs		23,949		(23,949	)   O		—		—		—			—
Deferred income tax asset, net		222		—			222		—		(222	) P		—
Goodwill		—		—			—		22,596		458,807	F		481,403
Other assets		4,151		80,092	O		84,243		23,846		14,688	G		122,777
Total Assets	$	2,073,101	$	—		$	2,073,101	$	1,594,864	$	391,212		$	4,059,177
Liabilities:
Accounts payable and other accrued liabilities	$	43,493	$	9,386	O	$	52,879	$	124,722	$	29,182	H/I	$	206,783
Deferred income tax liabilities, net		—		—			—		11,006		69,785	I		80,791
Debt and collateralized borrowings		—		—			—		329,012		485,417	J		814,429
Mortgage-backed debt		1,463,357		—			1,463,357		861,674		—			2,325,031
Accrued interest		9,386		(9,386	)   O		—		—		—			—
Payable to the trust/investor		—		—			—		162,042		(70,835	)B		91,207
Total Liabilities		1,516,236		—			1,516,236		1,488,456		513,549			3,518,241
Equity:
Preferred stock		—		—			—		—		—			—
Common stock		259		—			259		—		18	K		277
Additional paid-in-capital		128,702		—			128,702		—		40,202	K		168,904
Retained earnings		426,931		—			426,931		—		(56,149	) I		370,782
Accumulated other comprehensive income		973		—			973		—		—			973
Equity		—		—			—		106,408		(106,408	) K		—
Total Equity		556,865		—			556,865		106,408		(122,337	)		540,936
Total Liabilities & Equity	$	2,073,101	$	—		$	2,073,101	$	1,594,864	$	391,212		$	4,059,177

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2011

(in thousands, except per share data)

													Pro Forma			Condensed Pro
	Historical												Adjustments			Forma Combined
							Walter - After
	Walter			Reclassification			reclassification			GreenTree
Revenues:
Interest income	$	83,384		$	—		$	83,384		$	267		$	778	J	$	84,429
Premium revenue		4,169			(4,169	) O		—			—			—			—
Servicing revenue and fees		6,247			—			6,247			139,324			—			145,571
Change in fair value of assets related to VIEs		—			—			—			165,461			(125,307	)L		40,154
Insurance revenue		—			4,169	O		4,169			31,247			—			35,416
Other income		1,283			—			1,283			24,675			(1,120	)N		24,838
Total revenues		95,083			—			95,083			360,974			(125,649	)		330,408
Expenses:
Interest expense		42,053			—			42,053			19,438			35,404	J		96,895
Provision for loan losses		1,500			—			1,500			—			—			1,500
Claims expense		2,950			(2,950	) O		—			—			—			—
Salaries and benefits		17,724			—			17,724			103,643			—			121,367
Legal and professional		14,222			(14,222	) O		—			—			—			—
Occupancy		931			(931	) O		—			—			—			—
Technology and communication		1,946			(1,946	) O		—			—			—			—
General and administrative		7,692			17,099	O		24,791			32,744			(12,340	)J/M		45,195
Change in fair value of liablities related to VIEs		—			—			—			146,496			(108,744	)L		37,752
Depreciation and amortization		360			—			360			10,841			43,044	C/E/F		54,245
Real estate owned expenses, net		5,542			(5,542	) O		—			—			—			—
Other expenses, net		—			8,492	O		8,492			2,662			—			11,154
Total expenses		94,920			—			94,920			315,824			(42,636	)		368,108
Income (loss) before income taxes		163			—			163			45,150			(83,013	)		(37,700	)
Income tax (expense) benefit		(68	)		—			(68	)		(6,457	)		20,855	I		14,330
Net income (loss)	$	95		$	—		$	95		$	38,693		$	(62,158	)	$	(23,370	)
Weighted-average shares outstanding
Basic								26,621,326						1,812,532			28,433,858
Diluted (1)								26,749,597						1,812,532			28,433,858
Earnings (loss) per share
Basic							$	0.00								$	(0.82	)
Diluted							$	0.00								$	(0.82	)

(1) Potentially dilutive securities consisting of stock options for the six months ended June 30, 2011, were excluded from the combined per share calculation above, because of their antidilutive effect.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010

(in thousands, except per share data)

													Pro Forma			Condensed Pro
	Historical												Adjustments			Forma Combined
							Walter - After
	Walter			Reclassification			reclassification			Green Tree
Revenues:
Interest income	$	166,188		$	—		$	166,188		$	400		$	9,919	J	$	176,507
Premium revenue		9,163			(9,163	) O		—			—			—			—
Servicing revenue and fees		2,267			—			2,267			271,367			—			273,634
Change in fair value of assets related to VIEs		—			—			—			97,367			(18,817	)L		78,550
Insurance revenue		—			9,163	O		9,163			62,752			—			71,915
Gain on mortgage-backed debt extinguishment		4,258			(4,258	) O		—			—			—			—
Other income		3,299			4,258	O		7,557			41,345			(1,945	)L		46,957
Total revenues		185,175			—			185,175			473,231			(10,843	)		647,563
Expenses:
Interest expense		81,729			—			81,729			42,629			72,689	J		197,047
Provision for loan losses		6,526			—			6,526			—			—			6,526
Claims expense		2,319			(2,319	) O		—			—			—			—
Salaries and benefits		27,495			—			27,495			147,769			—			175,264
Legal and professional		4,037			(4,037	) O		—			—			—			—
Occupancy		1,490			(1,490	) O		—			—			—			—
Technology and communication		2,955			(2,955	) O		—			—			—			—
General and administrative		13,377			8,482	O		21,859			68,122			(252	)J		89,729
Change in fair value of liabilities related to VIEs		—			—			—			94,978			(21,055	)L		73,923
Depreciation and amortization		383			—			383			19,179			85,298	C/E/F		104,860
Real estate owned expenses, net		6,519			(6,519	) O		—			—			—			—
Other expenses, net		—			8,838	O		8,838			18,005			(12,258	)N		14,585
Total expenses		146,830			—			146,830			390,682			124,422			661,934
Income (loss) before income taxes		38,345			—			38,345			82,549			(135,265	)		(14,371	)
Income tax (expense) benefit		(1,277	)		—			(1,277	)		(11,427	)		18,156	I		5,452
Net income (loss)	$	37,068		$	—		$	37,068		$	71,122		$	(117,109	)	$	(8,919	)
Weighted-average shares outstanding
Basic								26,431,853						1,812,532			28,244,385
Diluted (1)								26,521,311						1,812,532			28,244,385
Earnings (loss) per share
Basic							$	1.38								$	(0.32	)
Diluted							$	1.38								$	(0.32	)

(1) Potentially dilutive securities consisting of stock options for the twelve months ended December 31, 2010, were excluded from the combined per share calculation above, because of their antidilutive effect.

1. Description of Transaction

On July 1, 2011, the Company acquired all of the outstanding membership interests of Green Tree. Green Tree, based in St. Paul, Minnesota, is a fee-based business services company which provides high-touch, third-party servicing of credit-sensitive consumer loans. The acquisition of Green Tree increases the Company’s ability to provide specialty servicing and to generate recurring fee-for-service revenues from an asset-light platform which also provides the Company with diversified revenue streams from complementary businesses. As a result of the Acquisition, the Company will no longer qualify as a Real Estate Investment Trust, or REIT. The results of operations for Green Tree will be combined with those of the Company beginning on July 1, 2011, the date of acquisition.

The table below details the estimated fair value of the consideration transferred in connection with the Acquisition (in millions):

Cash to owners of Green Tree (1)	$	737.7
Cash to settle Green Tree secured credit facility (1) (2)		274.8
Company common stock (3) (1,812,532 shares at $22.19 per share)		40.2
Total estimated purchase consideration	$	1,052.7

(1)	The cash portion of the Acquisition was funded through cash on hand and debt issuances as discussed below. Cash on hand was largely generated by monetizing existing corporate assets as discussed below.
(2)	Simultaneously with the closing of the Acquisition, the Company paid off $275 million of Green Tree secured debt.
(3)	The fair value of the 1.8 million common shares issued was determined based on an average of the high/low price of the Company’s share price on July 1, 2011, the date of the Acquisition.

In order to partially fund the Acquisition, on July 1, 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 Term Loans. In addition, on July 1, 2011, the Company entered into a $45 million senior secured revolving credit facility, or Revolver. The Company’s obligations under the Term Loans and Revolver are guaranteed by certain of the Company’s subsidiaries and are secured by substantially all assets of certain subsidiaries. These agreements contain customary events of default and covenants, including among others, covenants that restrict the Company’s 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. These agreements also include certain financial covenants that must be maintained. The Acquisition and the Term Loans are collectively referred to as the Transaction.

The Company incurred expenses related to the Acquisition of approximately $12.2 million during the six months ended June 30, 2011, which are included in legal and professional expenses.

2. Basis of Presentation

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting and were derived from the historical financial statements of the Company and Green Tree. The unaudited pro forma condensed combined financial statements include historical amounts as of and for the six months ended June 30, 2011 and for the year ended December 31, 2010, for the Company and Green Tree. The unaudited pro forma condensed combined financial statements give effect to the Transaction as if it had occurred (i) on June 30, 2011 for purposes of the unaudited pro forma condensed combined balance sheet and (ii) on January 1, 2010 for purposes of the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2011 and for the year ended December 31, 2010.

The unaudited pro forma condensed combined financial statements are presented in accordance with the requirements of Article 11 of Regulation S-X published by the U.S. Securities and Exchange Commission.

The acquisition method of accounting requires, among other things, that the consideration transferred be measured at fair value at the acquisition date and that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. Accordingly, the assets acquired and liabilities assumed will be

recorded as of the acquisition date at their respective fair values and added to those of the Company’s historical values. The financial statements and reported results of operations of the Company issued after completion of the Acquisition will reflect these values. Prior periods will not be retroactively restated to reflect the historical financial position or results of operations of Green Tree.

The pro forma adjustments reflecting the Transaction under the acquisition method of accounting are based on certain estimates and assumptions. The Company’s management believes that its assumptions provide a reasonable basis for presenting all of the significant effects of the Transaction and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial statements.

In addition, and as a result of the Transaction, the Company changed the presentation of its financial statements to a presentation that better reflects the ongoing combined operations. The Company believes this new presentation will be more meaningful to an investor. As such, certain reclassification adjustments have been made to the Company’s historical financial statements.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Transaction been effective during the periods presented or the results that may be obtained by the combined company in the future.

3. Purchase Price Allocation

The purchase consideration of $1,052.7 million was allocated to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. A preliminary allocation of the purchase cost has been made to major categories of assets and liabilities in the accompanying unaudited pro forma condensed combined financial statements based on management’s estimates. The final purchase price allocation is dependent on, among other things, the finalization of asset and liability valuations. As of this date, only a preliminary valuation has been completed to estimate the fair values of the assets acquired and liabilities assumed and the related allocation of purchase price. The total estimated purchase price, calculated as described above, has been allocated to the assets acquired and liabilities assumed based on preliminary estimates of their fair values. A final determination of these fair values will reflect consideration of a final valuation. Any final adjustment will change the allocations of purchase price, which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma condensed combined financial statements, including a change to goodwill and a change to the amortization of tangible and identifiable intangible assets. The actual allocation of purchase cost and its effect on results of operations may differ significantly from the pro forma amounts included herein. The excess of the purchase cost over the net tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill.

The preliminary allocation of the purchase consideration is as follows (in millions):

Total Estimated Purchase Consideration (Note 1)	$	1,052.7
Preliminary Allocation of Purchase Price:
Cash and cash equivalents	$	22.0
Restricted cash		110.0
Premises and equipment		132.8
Receivables		225.5
Residential loans		729.2
Servicing rights		279.0
Servicer and protective advances		75.3
Intangible assets		156.8
Goodwill		481.4

Other assets		13.3
Total assets acquired	$	2,225.3
Accounts payable and other accrued liabilities	$	119.1
Collateralized borrowings		66.3
Bonds payable related to consolidated variable interests		861.7
Deferred income tax liabilities		34.3
Payable to the Trust/Investor		91.2
Total liabilities assumed	$	1,172.6
Estimated fair value of net assets acquired	$	1,052.7

4. Pro Forma Adjustments

The unaudited pro forma condensed combined financial statements give effect to the Transaction described in Note 1, as if it had occurred on June 30, 2011 for purposes of the unaudited pro forma condensed combined balance sheet and January 1, 2010 for purposes of the unaudited pro forma condensed combined statements of operations. The unaudited pro forma condensed combined statements of operations do not include any material non-recurring charges that arose as a result of the Transaction. Adjustments in the unaudited pro forma condensed combined financial statements are as follows:

A) Represents cash paid to the owners of Green Tree and cash paid to settle Green Tree’s secured credit facility in conjunction with the Acquisition as well as Green Tree cash activity offset by net proceeds from the Term Loans. The table below details this cash activity (in millions):

Issuance of Term Loans, net of discount	$	748.2
Cash to owners of Green Tree		(737.7	)
Cash to settle Green Tree secured credit facility		(274.8	)
Distribution of excess cash		(29.8	)
Net cash activity	$	(294.1	)

B)	This adjustment primarily reflects the removal of Green Tree’s escrow cash and the related escrow liability in the amount of $70.8 million, as a result of conforming accounting policies.
C)	Premises and equipment acquired in the Acquisition was stepped-up by $117.6 million to fair market value at June 30, 2011. This adjustment will be depreciated on the straight line basis over the remaining useful life of the respective assets, which ranges from 3 years to 7 years. The incremental depreciation expense related to the fair market value adjustment approximates $7.7 million and $17.6 million for the six month period ended June 30, 2011 and the year ended December 31, 2010, respectively, and is reflected in depreciation and amortization expense in the statement of operations.
D)	Adjustment is to recognize the balances at fair value under the acquisition method of accounting.
E)	Represents adjustment to incorporate the value of servicing and sub-servicing contracts for acquisition accounting, which previously had not been recognized in the value of mortgage servicing rights. The pro forma adjustment of $71.5 million were amortized based on expected cash flows in proportion to and over the life of net servicing income. Incremental amortization expense recorded for the transactions was $25.6 million and $50.7 million for the six month period ended June 30, 2011 and the year ended December 31, 2010, respectively, and is reflected in depreciation and amortization expense in the statement of operations.

F)	Represents adjustment to record the customer relationship intangible asset fair values of the asset receivables management, or ARM, and insurance agency businesses, and the institutional relationships.
	The pro forma adjustment of $109.9 million was amortized based on the estimated revenue streams from the customer relationships associated with the insurance agency and ARM business through 2030. Incremental amortization expense recorded for the transaction was $9.7 million and $17.0 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively, and is reflected in depreciation and amortization expense in the statement of operations.
	In addition, as a result of the Acquisition, Green Tree’s historical goodwill was derecognized and the amount of goodwill resulting from the purchase of Green Tree by the Company, which has an indefinite life, was recognized in the estimated amount of $481.4 million.
G)	This adjustment primarily reflects the recognition of deferred debt issuance costs related to the Term Loans of $25.4 million and the write-off of $11.5 million of unamortized debt issuance costs related to the Green Tree secured credit facility, which was settled simultaneously with the closing of the Acquisition.
H)	This adjustment primarily reflects the amount of accrued debt issuance costs of $25.4 million offset by an adjustment to record other liabilities to fair value.
I)	This adjustment reflects the impact of income taxes on the combined company and includes:

• As a result of the Acquisition, the Company will no longer qualify as a REIT; therefore, the Company recorded an increase to the deferred tax liability of $46.5 million as well as a current tax payable of $8.6 million and a corresponding reduction to retained earnings at June 30, 2011. The pro forma combined statement of operations does not reflect the impact of this increase as this amount is directly attributable to the transaction and is not expected to have a continuing impact on the Company’s operations.

• As a result of certain purchase price entries that were pushed down to taxable entities within the consolidated Green Tree entity, the Company recorded a $23.3 million deferred tax liability at June 30, 2011.

• Because the Company no longer qualifies as a REIT, the Company has included a pro forma adjustment for estimated income tax expense based on an estimated statutory tax rate of 38%.

J)	The $485.4 million adjustment to debt and collateralized borrowings on the pro forma combined balance sheet represents the issuance of the Term Loans with an aggregate face value of $765 million and discount of $16.8 million offset by the settlement of the Green Tree secured credit facility with a carrying amount of $262.7 million.
	As described in Item G above, the Company recognized deferred debt issuance costs related to the Term Loans of $25.4 million and wrote-off $11.5 million of unamortized debt issuance costs related to the Green Tree secured credit facility. The new debt issuance costs of $25.4 million will be amortized using the effective interest method. The amount of pro forma amortization of debt issuance costs associated with the Term Loans is $3.1 million and $6.1 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively. Note that the pro forma combined statement of operations does not reflect the $11.5 million impact of the write-off of the deferred debt issuance costs as the amount is directly related to the Transaction and is not expected to have a continuing impact on operations.
	The pro forma interest expense includes an adjustment to reflect the interest associated with the $500 million first lien term loan at a rate of LIBOR +6.25% and for the $250 million second lien term loan at a rate of LIBOR +11.00% as well as the amortization of the Term Loans discount. The amount of pro forma interest expense recorded is $37.1 million for the six months ended June 30, 2011 and $72.7 million for the year ended December 31, 2010. An increase of 0.125% per annum related to the interest rate on borrowings made under the Term Loans would increase pro forma interest expense by approximately $0.5 million for the six months ended June 30, 2011 and $1.0 million for the year ended December 31, 2010.
	The pro forma adjustments to interest expense include the impact of the monetization of unencumbered assets, which was completed for the purpose of the Acquisition. The amount of the adjustment is to increase interest expense by $8.5 million and $23.9 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively, as well as increase interest income by

$.8 million and $9.9 million for the same periods, respectively. There were also adjustments to decrease the general and administrative expense of $0.3 million for the six months ended June 30, 2011 and $0.5 million for the year ended December 31, 2010 in order to remove the impact of the legal and professional costs associated with the monetization of the unencumbered assets.

Finally, the pro forma interest expense adjustments eliminate the historical interest expense that Green Tree recorded for its secured credit facility, which was paid off simultaneously with the closing of the Acquisition. The interest expense that was eliminated was $15.4 million for the six months ended June 30, 2011 and $33.7 million for the year ended December 31, 2010.

K)	This adjustment reflects the elimination of the historical equity accounts of Green Tree and the issuance of 1,812,532 shares (at a par value of $0.01) of the Company’s common stock at a price of $22.19 per share.
L)	This adjustment represents changes to cash flow projections used in the valuations due to changes in market conditions as of the date of acquisition.
M)	During the six months ended June 30, 2011, the Company incurred acquisition-related transaction costs consisting primarily of investment banking and legal fees of $12.2 million. This amount is reflected in the Company’s unaudited historical interim condensed consolidated statement of operations for the six months ended June 30, 2011 within general and administrative expenses. A pro forma adjustment has been made to eliminate $12.2 million of these costs and the related tax benefit of $4.6 million from the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2011 due to their non-recurring nature.
N)	This adjustment eliminates the impact of the change in fair value of servicing rights as they are now recorded at amortized cost.
O)	In order to better reflect the financial results of the combined companies, the subordinate security, real estate owned, net and deferred debt issuance costs have been reclassified to other assets while premises and equipment which were previously reported as other assets has been reclassified as a separate line item in the combined condensed balance sheet. Servicing fee receivables, which have historically been presented as servicing advances and receivables, net have been reclassified to receivables, net while servicing advances are now presented with servicer and protective advances, net. Accrued interest has been presented in accounts payable and other accrued liabilities. Premium revenue has been reclassified to insurance revenue. Legal and professional, occupancy and technology and communications expenses have been presented as general and administrative expenses while claims expense and real estate owned expenses, net have been reclassified to other expenses. Finally, gain on mortgage-backed debt extinguishment has been reclassified to other income.
P)	Reclassification to conform to the ongoing operations of the combined company.

5. Pro Forma Loss Per Share

The following table sets forth the computation of unaudited pro forma basic and diluted loss per share (in thousands, except for per share information):

	Six Months Ended June 30, 2011								Year ended December 31, 2010
	Loss			Shares		Per share amount			Loss			Shares		Per share amount
Loss per basic share	$	(23,370	)		28,434	$	(0.82	)	$	(8,919	)		28,244	$	(0.32	)
Loss per diluated share	$	(23,370	)		28,434	$	(0.82	)	$	(8,919	)		28,244	$	(0.32	)

Shares utilized in the calculation of pro forma basic and diluted loss per share are as follows:

	Six months ended		Year ended
	June 30, 2011		December 31, 2010
Weighted-average shares outstanding, basic		26,621,326		26,431,853
Shares issued in the transaction		1,812,532		1,812,532
Total		28,433,858		28,244,385
Weighted-average shares outstanding, diluted		26,621,326		26,431,853
Shares issued in the transaction		1,812,532		1,812,532
Total		28,433,858		28,244,385

Potentially dilutive securities consisting of stock options issued prior to the Acquisition were excluded from the per share calculations above for the six months ended June 30, 2011 and twelve months ended December 31, 2010 because their effect was antidilutive.