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SEC Filings

10-K
DITECH HOLDING CORP filed this Form 10-K on 04/16/2019
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Transactions with NRM
NRM Flow and Bulk Agreement
On August 8, 2016, our subsidiary, Ditech Financial, and NRM executed the NRM Flow and Bulk Agreement whereby we agreed to sell to NRM all of our right, title and interest in mortgage servicing rights with respect to a pool of mortgage loans, with subservicing retained. The NRM Flow and Bulk Agreement provides that, from time to time, we may sell additional MSR to NRM in bulk or as originated or acquired on a flow basis, subject in each case to the parties agreeing on price and certain other terms.
On January 17, 2018, we agreed to sell to NRM MSR relating to mortgage loans having an aggregate unpaid principal balance of approximately $11.3 billion as of such sale date, with subservicing retained, and received approximately $90.4 million in cash proceeds from NRM as partial consideration for this MSR sale. We used 80% of such cash proceeds to repay borrowings under the 2013 Credit Agreement and used the remaining cash proceeds for general corporate purposes. During June 2018, under an agreement similar to the NRM Flow and Bulk Agreement, we agreed to sell to New Penn Financial, which became an affiliate of NRM when acquired by NRM on July 3, 2018, MSR relating to mortgage loans having an aggregate unpaid principal balance of approximately $4.7 billion as of the sale date, with servicing released, and received approximately $56.7 million in cash proceeds from NRM as partial consideration for the MSR sale. Since entering into the NRM Flow and Bulk Agreement and through December 31, 2018, in various bulk transactions under the NRM Flow and Bulk Agreement and a similar agreement, we have sold MSR to NRM relating to mortgage loans having an aggregate unpaid principal balance of $75.8 billion as of the applicable closing dates of such transactions. As of December 31, 2018, we have received $397.1 million in cash proceeds relating to such sales, which proceeds do not include certain holdback amounts relating to such sales that are expected to be paid to us over time. For the year ended December 31, 2018, we received $34.5 million in cash proceeds relating to these holdback amounts and at December 31, 2018 and 2017 had a servicing rights holdback receivable, net from NRM of $10.8 million and $31.3 million, respectively, which is recorded in receivables, net on the consolidated balance sheets.
We also transferred MSR to NRM under flow transactions relating to mortgage loans consisting entirely of co-issue loans with an aggregate unpaid principal balance of $3.6 billion and $469.5 million for the period from February 10, 2018 through December 31, 2018 and the period from January 1, 2018 through February 9, 2018, respectively. For the year ended December 31, 2017, we transferred MSR to NRM under flow transactions relating to mortgage loans with an aggregate unpaid principal balance of $7.6 billion, which included co-issue loans with an aggregate unpaid principal balance of $6.4 billion. These transfers included recapture activities of generally non-NRM portfolio serviced loans with an aggregate unpaid balance of $1.6 billion and $236.9 million for the period from February 10, 2018 through December 31, 2018 and the period from January 1, 2018 through February 9, 2018, respectively. In addition, these transfers generated revenues of $44.1 million, $3.8 million and $61.8 million for the period from February 10, 2018 through December 31, 2018, the period from January 1, 2018 through February 9, 2018 and the year ended December 31, 2017, respectively, which are recorded in net gains on sales of loans on the consolidated statements of comprehensive income (loss).
NRM Subservicing Agreement
On August 8, 2016, we entered into the NRM Subservicing Agreement whereby we act as subservicer for the mortgage loans whose MSR are sold to NRM under the NRM Flow and Bulk Agreement and for other mortgage loans as may be agreed upon by us and NRM from time to time, in exchange for a subservicing fee. Under the NRM Subservicing Agreement and a related agreement, we perform all daily servicing obligations on behalf of NRM, including collecting payments from borrowers and offering refinancing options to borrowers for purposes of minimizing portfolio runoff. On January 17, 2018, Ditech Financial and NRM executed a Side Letter Agreement pursuant to which, among other things, certain provisions of the NRM Subservicing Agreement were amended and/or waived. On June 28, 2018, Ditech Financial and NRM executed an additional Side Letter Agreement, pursuant to which, among other things, NRM agreed to use commercially reasonable efforts to add additional loans to the NRM Subservicing Agreement for us to subservice.
On January 17, 2019, we received a notice from NRM initiating the process of termination under the NRM Subservicing Agreement. Any termination of the NRM Subservicing Agreement would not be effective until a servicing transfer has been completed in accordance with applicable requirements. We are reviewing the grounds for termination in consultation with our stakeholders and are considering all of our options with respect thereto including legal rights and remedies. We are proceeding with our strategic alternative efforts assuming there is not an ongoing subservicing relationship with NRM. Our plans are not contingent on any continuing relationship with NRM.

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