In its first quarterly earnings call after emerging from Chapter 11 bankruptcy protection, Ditech Holding Corporation (NYSE: DHCP) rolled out several initiatives related to its reverse mortgage servicing operation.
The company’s Reverse Mortgage Solutions subsidiary logged revenues of $18 million for the first quarter, a dip of $4.5 million from the same time last year. Ditech’s Home Equity Conversion Mortgage servicing arm also saw a 73.2% increase in buyouts of reverse loans, which totaled $391.7 million for the quarter — “representing a large financing need for the company,” according to Ditech’s earnings presentation.
That works out to a $12.8 million pre-tax loss for Ditech’s reverse servicing arm.
Management additionally cautioned that the company’s overall net income of $467 million for the quarter was due in part to Ditech’s recent bankruptcy proceedings.
“While this is certainly positive news, it is important to recognize that our net income includes $464.5 million of gains relating to our reorganization and fresh-start accounting adjustments,” recently appointed CEO Thomas Marano said on the company’s first-quarter earnings call with shareholders and analysts on Wednesday.
Ditech represents the latest incarnation of Walter Investment Management Corporation, the former RMS parent that filed for bankruptcy in December. After a brief delay, the process was complete in February, though the company hit another snag when it failed to file its 10-Q report on time — prompting the New York Stock Exchange to issue a delisting warning late last month.
CFO Jerry Lombardo blamed the delay on the new fresh-start accounting in the wake of the bankruptcy.
“In connection with the finalization of the company’s fresh-start accounting work, complex tax matters arose that needed to be analyzed by the company and its advisors prior to releasing its first quarter earnings,” Lombardo said on the call. “This tax matter has been resolved, and I want to thank our investors and other interested parties for being patient with us as we worked diligently to file our 10-Q.”
RMS finalized a new warehouse loan to pay for a mandatory Ginnie Mae securitization repurchase back in April, Lombardo said — a recurring issue that Ditech plans to ease with whole loan sales and new financing structures.
“We will also continue to work with industry peers and HUD in an effort to accelerate the timeline to process claims and on team reimbursement from HUD for insured loans,” Marano said. “Additionally, we will work to automate processes and enhance the control and efficiencies of our reverse segment to reduce our cost to service.”
Written by Alex Spanko