Reverse Mortgage Solutions (RMS), the reverse mortgage servicing business owned by Ditech Holding Corporation, has been put up for auction by its parent company, RMD has learned. The auction comes as Ditech attempts to find its way back to financial solvency after a second bankruptcy filing earlier this year.
According to a filing made in the bankruptcy court of the Southern District of New York on April 23, the court approved “bidding procedures in connection with the sale or disposition of substantially all of [Ditech’s] assets, and granting other and related relief.”
While not specifically listed, sources close to the situation have confirmed to RMD that RMS is among the assets up for auction.
The original deadline for bidding on Ditech’s mortgage servicing businesses was May 31, but a later court filing made last week extended the deadline to June 21 at 4:00 pm Eastern time.
This follows a continually unfolding odyssey of financial problems that have afflicted Ditech, and by extension, RMS. Last month, Ditech was officially deregistered from the New York Stock Exchange, which suspended the requirement for it to make additional filings with the Securities and Exchange Commission (SEC), further clouding its financial status.
In April, it was revealed that a loophole in Ditech’s bankruptcy proceedings invited scrutiny from both consumer advocacy groups and the Department of Justice. In the midst of the financial difficulties that Ditech is embroiled in, RMS seems to be relatively insulated from the larger problems of its parent company, at least from an operational perspective.
After the January closure of a Ditech facility in Minnesota, an RMS company spokesperson told RMD that operations related to reverse mortgages would be unaffected.
According to a February filing with the Securities and Exchange Commission, Ditech also secured financing from its debtor-in-possession (DIP) facilities, allowing some of its subsidiaries – including RMS – to gain access to portions of up to $1.9 billion in available financing.
Although they experienced a jump in revenue after the delisting notice the company received in November, it did little to stem the tide of difficulties the company is facing.
Earlier in 2018, Ditech emerged from its first bankruptcy filing after having previously done business under the name Walter Investment Management Corporation.
Walter acquired Reverse Mortgage Solutions in 2012 and Security One Lending in 2013, and in 2017, Walter decided to stop originating Home Equity Conversion Mortgages (HECMs). RMS then turned to servicing only, and closed its retail channel.