After having a “free-and-clear” sale of both its forward and reverse mortgage servicing businesses rejected in bankruptcy court late last month, Ditech Holding Corporation has announced its intention to modify its bankruptcy plan to achieve a consensual resolution with its legal opponents.
This means that Ditech will submit a new bankruptcy plan to the court while intending to fulfill its intended sale transactions of the servicing businesses, including Reverse Mortgage Solutions (RMS).
“Ditech Holding will modify the Plan to address issues raised by the Court regarding the handling of certain consumer claims and satisfy a number of legal and evidentiary requirements,” the company said in a press release announcing its intentions.
Ditech also fully intends to seek approval for both its revised reorganization strategy, and its mortgage servicing sales to both New Residential Investment Corp. for its forward business, Ditech Financial LLC, and to Mortgage Assets Management, LLC for RMS, its reverse business.
“The Company intends to seek Court approval of the Plan, including its previously announced asset purchase agreement with New Residential Investment Corp. and stock and asset purchase agreement with Mortgage Assets Management, LLC and its affiliate, at a hearing currently scheduled for Wednesday, September 25, 2019.”
Ditech also specifies that until all of the associated transactions close, both Ditech Financial and RMS will continue to operating and “serving customers as normal” as parts of Ditech Holding Corporation.
“We are pleased to have reached this consensual resolution with the Consumer Creditors Committee, which addresses the issues raised by the Court and represents an important step toward completing the court-supervised sale process,” said Thomas F. Marano, Chairman of the Board and Chief Executive Officer of Ditech Holding in a company press release.
The sale of the mortgage servicing businesses continue to be in Ditech’s best interests, and will be pursued, Marano adds.
“We continue to believe these value-maximizing transactions are in the best interest of all our stakeholders, including homeowners, and we look forward to submitting our amended Plan to the Court. I would like to thank all of our employees for their continued hard work and commitment to supporting our customers throughout this process,” he said.
Affected customers are encouraged to find more details on Ditech’s restructuring webpage, or by calling the Company’s Restructuring Hotline, toll-free at 1-866-486-4809.
Ditech was served a setback in its attempted financial reorganization when a New York Bankruptcy Court judge denied the company’s proposed bankruptcy plan. This follows a continually unfolding odyssey of legal and financial issues that have afflicted Ditech, and by extension, RMS. Most recently, Ditech objected to paying borrower damages in the interim prior to the bankruptcy court’s decision.
Creditors and individual borrowers mounted an effort in court earlier this month in an attempt to halt the sale of Ditech’s forward and reverse mortgage business “free and clear” of existing legal obligations. New Residential related that Ditech’s legal complications had the possibility of delaying the timetable of the purchase of its forward business, though New Residential’s CEO related confidence that the sale would go through as planned.