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SEC Filings

424B1
DITECH HOLDING CORP filed this Form 424B1 on 09/16/1997
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     If HCHI fails to satisfy one or both of the 75% of income test or 95% of
income test for any year, it may nevertheless qualify as a REIT for such year if
it is entitled to relief under certain provisions of the Code. These relief
provisions will generally be available if HCHI's failure to meet such tests was
due to reasonable cause and not due to willful neglect, HCHI attaches a schedule
of the sources of its income to its federal income tax return, and any incorrect
income on the schedule was not due to fraud with intent to evade tax. It is not
possible to state whether in all circumstances HCHI would be entitled to the
benefit of the relief provisions. Even if the relief provisions apply and HCHI
retains its status as a REIT, a 100% tax would be imposed on an amount equal to
(i) the gross income attributable to the greater of the amount by which HCHI
failed to comply with the 75% of income test or the 95% of income test
multiplied by (ii) a fraction intended to reflect HCHI's profitability. There
can be no assurance that HCHI will always be able to maintain compliance with
the gross income tests for REIT qualification despite its periodic monitoring
procedures. Moreover, there are no comparable relief provisions which could
mitigate the consequences of a failure to satisfy the 30% of income limit. See
"-- Termination or Revocation of REIT Status."
 
     Distributions.  HCHI must distribute dividends (other than capital gain
dividends) to its stockholders each year in an amount at least equal to (i) the
sum of (a) 95% of its "REIT taxable income" determined without regard to the
dividends paid deduction and by excluding its net capital gain (see "-- Taxation
of HCHI") and (b) 95% of the excess of the net income, if any, from foreclosure
property over the tax imposed on such income by the Code, minus (ii) the excess
of the sum of certain "excess non-cash income" over 5% of its "REIT taxable
income" (the "95% distribution test"). In addition, if HCHI recognizes any
Built-In Gain upon the disposition of any Built-In Gain Asset during its
Recognition Period (see "-- Taxation of HCHI"), HCHI will be required, pursuant
to Treasury Regulations which have not yet been promulgated, to distribute at
least 95% of the Built-In Gain (after tax), if any, it recognizes on the
disposition of such asset. Such distributions must be made in the taxable year
to which they relate (although a dividend that is declared in October, November
or December of any calendar year and payable to shareholders of record on a
specified date in such a month will be deemed to be paid not later than December
31 of such year if actually paid during January of the following year) or, at
the election of HCHI if declared before the timely filing of HCHI's tax return
for such year (specifying the dollar amount of such distribution) and paid not
later than the first regular dividend payment after such declaration, in the
following taxable year. See "Dividend Policy and Distributions." Distributions
declared with respect to a prior year before the timely filing of HCHI's tax
return for such year and paid not later than the first regular dividend payment
date after such declaration are taxable to holders of Common Stock (other than
certain tax-exempt entities, as discussed below) in the year in which paid, even
if such distributions relate to the prior year for purposes of the 95%
distribution test. The amount distributed must not be preferential (e.g., each
holder of shares of Common Stock must receive the same distribution per share).
To the extent that HCHI does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its "REIT taxable income," as
adjusted, it will be subject to tax on the undistributed portion at ordinary and
capital gain corporate tax rates. Furthermore, if HCHI should fail to distribute
during each calendar year at least the sum of (i) 85% of its REIT ordinary
income for such year, (ii) 95% of its REIT capital gain net income for such year
and (iii) any undistributed taxable income from prior periods, it would be
subject to a 4% excise tax on the excess of such required distributions over the
amounts actually distributed.
 
     HCHI intends to make timely distributions to its stockholders in amounts
sufficient to meet the 95% distribution requirement. It is possible, however,
that HCHI from time to time may not have sufficient cash or other liquid assets
to meet these distribution requirements due to timing differences between (i)
the actual receipt of income and actual payment of deductible expenses and (ii)
the inclusion of such income and deduction of such expenses in arriving at its
taxable income. For instance, HCHI may realize income without a corresponding
cash payment, as in the case of original issue discount on a loan or REMIC
interest or accrued interest on a defaulted loan. In the event that HCHI
recognizes income without the corresponding cash payment, HCHI may have to sell
assets, borrow (or cause HCP or HCMC to sell assets or borrow) or declare a
taxable stock dividend in order to comply with the 95% distribution test.
 
     The IRS has ruled that if a REIT's dividend reinvestment plan ("DRP")
allows stockholders of the REIT to elect to have cash distributions reinvested
in shares of the REIT at a purchase price equal to at least
 
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