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10-K
DITECH HOLDING CORP filed this Form 10-K on 04/16/2019
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The Company had previously identified two material weaknesses in internal control over financial reporting that were described in Management's Report on Internal Control Over Financial Reporting, which was included in the Company's Form 10-K for the year ended December 31, 2017, together with various corrective actions that are being undertaken in order to remediate the material weaknesses. As of December 31, 2018, the Company has concluded that the material weakness related to the data extraction from the servicing system for MSR valuation has been remediated. The material weakness originally identified in 2016 relating to the operational processes within transaction level processing of Ditech Financial default servicing over foreclosure related advances has been remediated. Additionally, management designed and implemented controls over property preservation; however, the controls did not operate as intended and could not be tested, resulting in management concluding that the controls were not operating effectively as of December 31, 2018. Based on this, the material weakness relating to operational processes within the transaction level processing of Ditech Financial default servicing over property preservation has not been remediated. Therefore, the Company’s Chief Executive Officer and its Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its Chief Executive Officer and its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
Other than with respect to the matters outlined above, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended December 31, 2018 covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Remediation of the Material Weakness in Internal Control Over Financial Reporting
Management with the oversight of its Audit Committee, has taken the following actions in the design and operating effectiveness of its internal control over financial reporting in an effort to remediate the material weaknesses over Ditech Financial operational processes:
Ditech Financial operational processes over foreclosure related advances:
Management designed and implemented key controls to remediate the material weakness.
Management validated the key controls for design effectiveness via walkthrough procedures noting design effectiveness.
Tested key controls identified within the process flow narratives for the purpose of validating operating effectiveness noting operating effectiveness.
Based on testing of key controls, the material weakness has been remediated.
Ditech Financial operational processes over property preservation:
Management documented the process over property preservation identifying the key controls in the process that impact financial reporting.
Management designed and implemented key controls to remediate the material weakness.
Management could not test the controls as the controls did not operate as intended, concluding that the controls were not operating effectively as of December 31, 2018.
Based on the inability to test key controls, the material weakness has not been remediated.
MSR Valuation:
Management designed, documented, and implemented control procedures related to the review of the query logic utilized to extract data from the servicing system.
Management validated the data extraction for use in MSR fair valuation noting completeness and accuracy at December 31, 2018.
Management performed MSR portfolio valuation reconciliations noting completeness and accuracy.
Management performed loan level report testing noting completeness and accuracy.
Based on the aforementioned testing performed, the material weakness has been remediated.

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