After engaging in a court-supervised sale process for the stock and assets of Reverse Mortgage Solutions (RMS), parent company Ditech Holding Corporation has notified the presiding bankruptcy court that the bidders for both RMS and Ditech’s forward mortgage business have been successful, according to a report at Bankrupt Company News. This has resulted in the cancellation of an auction for the assets that was scheduled to take place on July 11.
“Further to the Court’s bidding procedures order, [Ditech] notified the Court that, absent any further qualified bids […] a pair of designated stalking horse bidders had been named as successful bidders in respect of the Debtors’ Forward Business and Reverse Business segments, respectively,” the report reads. “A sale hearing remains scheduled for August 7, 2019.”
RMS will be acquired by Washington, D.C.-based Mortgage Assets Management, LLC, a company that oversees portfolios of mortgage servicing rights. The forward mortgage servicing and origination business, Ditech Financial LLC, will be acquired by real estate investment firm New Residential.
The price being offered for RMS is estimated at $762.4 million and is based on unaudited March 2019 financial statements, according to Bankrupt Company News. $616 million of that figure would be used to repay debtor-in-possession (DIP) financing.
When Mortgage Assets Management and New Residential were designated as the stalking horse bidders for the Ditech’s mortgage businesses, RMS President Jeff Baker wrote a letter posted to the company’s website assuring existing reverse mortgage servicing customers that the sale process would not affect customers’ reverse mortgages, nor their scheduled or unscheduled draw processes.
This follows a continually unfolding odyssey of issues that have afflicted Ditech, and by extension, RMS. RMD first learned that Ditech’s assets, including RMS, were up for auction on June 5. In May, 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.
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.