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SEC Filings

424B1
DITECH HOLDING CORP filed this Form 424B1 on 09/16/1997
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Mortgage Loan, thus decreasing the volume of Mortgage Loans originated by
third-parties. This could have an adverse effect on the Company's net interest
spread during the accumulation of Mortgage Loans held for sale and on the net
interest spread on Mortgage Loans held for long-term investment which are
financed through reverse repurchase agreements. If short-term interest rates
exceed long-term interest rates, there could also be a negative effect on the
Company's net interest spread. See "Business -- Risk Management -- Interest Rate
Risk Management."
 
     Financial Impact on Net Interest Income.  Some Mortgage Assets held by the
Company for long-term investment may have adjustable interest rates or
pass-through rates based on short-term interest rates. The Company's short-term
borrowings generally will bear interest at fixed rates and have maturities of
less than one year. However, certain of these borrowings will include variable
rates. Consequently, changes in short-term interest rates may affect the
Company's net interest income. ARMs owned by the Company or mortgage-backed
securities backed by ARMs will be subject to periodic interest rate adjustments
based on an index such as the CMT Index or LIBOR. Interest rates on the
Company's borrowings may also be based on short-term indices. If any of the
Company's Mortgage Assets are financed with borrowings that bear interest based
on an index different from that used for the related Mortgage Assets, so-called
"basis" interest rate risk will arise. In that event, if the index used for the
Mortgage Assets is a "lagging" index that reflects market interest rate changes
on a delayed basis, and the rate on the related borrowings reflects market rate
changes more rapidly, the Company's net interest income will be adversely
affected in periods of increasing market interest rates. If the Company utilizes
short-term debt financing to originate or acquire fixed rate mortgages or
mortgage-backed securities or issues adjustable rate mortgage-backed securities
backed by fixed rate mortgages, the Company may also be subject to interest rate
risks. See "Business -- Risk Management -- Interest Rate Risk Management."
 
     Impact of Periodic and Life Caps on Net Interest Margin.  Some Mortgage
Assets will also be subject to periodic rate adjustments that may be less
frequent than the adjustments in rates on the borrowings or financings utilized
by the Company. Accordingly, in a period of increasing interest rates, the
Company could experience a decrease in net interest income or a net loss because
the interest rates on the Company's borrowings could adjust faster than the
interest rates on the ARMs or mortgage-backed securities backed by ARMs held in
the Investment Portfolio. Moreover, ARMs are typically subject to periodic and
lifetime interest rate caps, which limit the amount the interest rate can change
during a given period. The Company's short-term borrowings will not be subject
to similar restrictions. Hence, in a period of increasing interest rates, the
Company could also experience a decrease in net interest income or a net loss in
the absence of effective hedging because the interest rates on borrowings could
increase without limitation, while the interest rates on the Company's ARMs and
mortgage-backed securities backed by ARMs would be limited by caps. Further,
some ARMs may be subject to periodic payment caps that result in some portion of
the interest accruing on the ARMs being deferred and added to the principal
outstanding. This could result in receipt by the Company of less cash on its
ARMs than is required to pay interest on the related borrowings, which will not
have such payment caps. The Company expects that the net effect of these factors
will be to lower the Company's net interest income or cause a net loss during
periods of rising interest rates. No assurance can be given as to the amount or
timing of changes in interest rates or their effect on the Company's Mortgage
Assets held for long-term investment or net interest income. If the Company
utilizes short-term debt financing to originate or acquire fixed rate mortgages
or mortgage-backed securities or issues adjustable rate mortgage-backed
securities backed by fixed rate mortgages, the Company may also be subject to
interest rate risks.
 
     Impact on Derivative Securities Held For Investment.  Rising interest rates
may have a negative effect, in particular, on the yield of any mortgage-backed
securities in the Investment Portfolio purchased at a premium in connection with
the Company's hedging activities. If the Company were required to dispose of any
such mortgage-backed securities during a period of rising interest rates, a loss
could be incurred. Lower long-term rates of interest may negatively affect the
yield on servicing fees receivable and on Mortgage Assets purchased at a premium
in connection with the Company's hedging activities. In certain low interest
rate environments, the Company may not fully recoup any initial investment in
such securities or investments.
 
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