Ditech Holding Corporation (NYSE: DHCP), parent company of Reverse Mortgage Solutions, continues to undergo a strategic review with uncertain outcomes, despite posting an increase in revenue in the third quarter, including across its reverse mortgage business, according to quarterly earnings, filed last week.
The company’s reverse mortgage segment logged $30.4 million in revenue, an increase of $21.4 million over the same period from the prior year. Expenses outweighed revenue at $33.1 million, an increase of $2.3 million over the prior year quarter, partially attributed in the filing to an $8.5 million increase in interest expense.
Earlier this month, Ditech was delisted from the New York Stock Exchange following multiple warnings that stemmed from its failure to meet the NYSE listing standard, which requires companies to maintain at least $15 million in average global market capitalization over a consecutive 30-day trading period.
Additionally, the release stated that the company and its financial and legal advisors began discussions with, “certain of its corporate debt holders and their advisors regarding potential strategic transactions that may involve implementation through an in-court supervised Chapter 11 process. The potential for an in-court supervised Chapter 11 process in order to implement a strategic transaction raises substantial doubt about the Company’s ability to continue as a going concern.”
“There can be no assurance that the Strategic Review will result in any transaction, nor can there be any assurance that any transaction the Company does execute will result in any value being delivered to the Company’s existing stockholders,” the release continued.
Earlier this year, the company now primarily known as Ditech emerged from bankruptcy with its current branding after having previously done business under the name Walter Investment Management Corporation. Walter acquired Reverse Mortgage Solutions in 2012. In 2017, when Walter decided to stop originating Home Equity Conversion Mortgages, RMS turned to servicing only and closed its retail channel.
Written by Chris Clow