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    News Release

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    Ditech Holding Corporation Announces Second Quarter 2018 Highlights And Financial Results
    - Reported second quarter 2018 net loss of $40.5 million
    - Reduced general and administrative and compensation expenses by $35.5 million, or 16%, as compared to second quarter 2017
    -Reduced corporate debt by $48.4 million as compared to first quarter 2018
    - Introduced extended business hours

    FORT WASHINGTON, Pa., Aug. 9, 2018 /PRNewswire/ -- Ditech Holding Corporation (NYSE: DHCP) today announced a net loss for the quarter ended June 30, 2018 of $40.5 million, compared to a net loss of $94.3 million for the quarter ended June 30, 2017. Adjusted Loss was $46.9 million in the current quarter as compared to an Adjusted Loss of $19.8 million in the prior year quarter.

    The current quarter also included MSR valuation gains of $31.6 million, as compared to MSR valuation losses of $34.8 million in the corresponding prior year quarter. Net non-cash reverse fair value losses increased $13.6 million in the three months ended June 30, 2018 as compared to the same period of 2017 due primarily to valuation model assumption adjustments for buyout loans and changes in market pricing during 2018.

    "In the second quarter, we made progress refining our strategy and executing initiatives aimed at improving operational efficiencies, enhancing our customer experience and growing market share. We worked to introduce new technology solutions, including a digital point-of-sale system, and evaluated options to introduce additional robotics and automation capabilities to our originations and servicing segments. We also began to execute on a strategy to improve execution and pricing within our originations segment and strengthened our ability to identify opportunities in our existing portfolio to help us address adverse market conditions," said Tom Marano, Chief Executive Officer and President. "Our second quarter performance did not meet our expectations, and we are continuing to take actions that we believe will help the Company return to sustained profitability."

    Second Quarter 2018 Financial and Operating Overview

    Highlights ($ in thousands):


    For the Three Months
    Ended June 30, 2018


    For the Three Months
    Ended June 30, 2017

    Servicing Portfolio (average):





    Owned MSR


    $

    78,688,616



    $

    108,856,686


    Subserviced UPB


    102,740,804



    109,020,458


    Total serviced UPB


    $

    181,429,420



    $

    217,877,144







    Funded Volume:





    Refinanced - HARP


    $

    409,948



    $

    799,078


    Refinanced - Other


    861,415



    1,215,946


    Purchased


    1,337,669



    2,180,890


    Total Funded Volume


    $

    2,609,032



    $

    4,195,914







    Delinquency rate - 30 days past due


    8.68

    %


    9.86

    %

    Reverse Ginnie Mae Buyouts Volume


    $

    466,093



    $

    283,917


    Securitized Volume


    65,616



    113,713


    Total revenues for the second quarter of 2018 were $198.5 million, a decrease of $10.3 million as compared to the prior year quarter, primarily due to decreases of $27.3 million in net gains on sale of loans, $10.0 million in interest income and $9.6 million in net fair value gains (losses) on reverse loans and related HMBS obligations, partially offset by an increase of $38.8 million in net servicing revenue and fees. The decrease in net gains on sales of loans was primarily due to an overall lower volume of locked loans. The increase to net servicing revenue and fees was driven by the change in fair value of servicing rights related to changes in valuation inputs and other assumptions, partially offset by lower servicing fees due primarily to the reduction in our owned MSR portfolio and continued runoff of the overall servicing portfolio.

    Total expenses for the second quarter of 2018 were $251.7 million, a decrease of $40.9 million as compared to the prior year quarter. This decrease was primarily driven by a decrease in salaries and benefits of $18.3 million and a decrease in general and administrative expenses totaling $17.2 million. The decrease in general and administrative expenses resulted primarily from decreases of $6.9 million in legal fees related to litigation and regulatory costs, $5.4 million in costs related to our debt restructure initiative in 2017, $3.9 million in advance loss provision due to lower Fannie Mae escrow requirements, $2.6 million in purchased services, $2.1 million in professional fees and $1.5 million in curtailment-related accruals, offset in part by $6.2 million in amortization of the Clean-up Call Agreement inducement fee in 2018 and $5.2 million in higher loan servicing expense due primarily to higher VA buydowns and loans moving into foreclosure related to a seasoning portfolio. In addition, we had a decrease of $4.9 million resulting from accretion recorded during the second quarter of 2018 related to fresh start accounting adjustments for advances, which is not comparable to the second quarter of 2017. The decline in salaries and benefits expenses was due primarily to a decrease in compensation and benefits from lower average headcount driven by site closures and various organizational changes.

    The Company is dependent on its ability to secure market financing from third parties on acceptable terms and to renew, replace or resize existing financing facilities as they expire. Continued growth in reverse Ginnie Mae buyout loan activity in the Reverse Mortgage segment will require us to continue to seek additional financing or to otherwise sell or securitize reverse Ginnie Mae buyout assets.

    Second Quarter 2018 Segment Results

    Results for the Company's segments are presented below. Effective January 1, 2018, the Company no longer allocates corporate overhead, including depreciation and amortization, to its operating segments. These amounts are now included in the Corporate and Other non-reportable segment. Prior year balances have been restated to conform to current year presentation.

    Servicing

    The Servicing segment serviced approximately 1.5 million accounts with a UPB of $178.4 billion as of June 30, 2018.

    The Servicing segment reported pre-tax income of $50.5 million for the second quarter of 2018, an increase of $84.4 million compared to the prior year quarter. During the second quarter of 2018, the segment generated revenue of $148.1 million, an increase of $30.6 million as compared to the prior year quarter, primarily due to $70.2 million in favorable fair value changes to our MSR, partially offset by $30.6 million in lower servicing fees due primarily to the reduction in our owned MSR portfolio and continued runoff of the overall servicing portfolio.

    Total expenses in the Servicing segment for the second quarter of 2018 were $100.8 million, a decrease of $49.9 million as compared to the prior year quarter, driven by $19.3 million in lower general and administrative expenses and $15.3 million in lower salaries and benefits. The decrease in general and administrative expenses was primarily due to  decreases of $6.3 million in legal fees related to litigation and regulatory costs, $3.9 million in advance loss provision due to lower Fannie Mae escrow requirements, $2.2 million in professional fees due to transitioning bankruptcy work in-house, $1.9 million in float interest expense due to the sale of MSR, and $1.6 million in certain purchased services related to a smaller portfolio, offset in part by $5.2 million in higher loan servicing expense due in part to higher VA buydowns and loans moving into foreclosure related to a seasoning portfolio. In addition, we had a decrease of $4.9 million resulting from accretion recorded during the second quarter of 2018 related to fresh start accounting adjustments for advances, which is not comparable to the second quarter of 2017. The decline in salaries and benefits resulted primarily from a lower average headcount and a decrease in severance related to restructuring initiatives in 2017. Current quarter expenses included $4.8 million of interest expense and $3.2 million of depreciation and amortization.

    Adjusted earnings improved $8.2 million for the second quarter of 2018 as compared to the prior year quarter due to lower general and administrative expenses, salaries and benefits and realization of expected cash flows, offset in part by lower servicing fees and interest income on loans.

    Originations

    The Originations segment funded total UPB volume of $2.6 billion for the second quarter of 2018, a decrease of $1.6 billion as compared to the prior year quarter. The recapture rate(1) was 17% for the current quarter.

    The Originations segment reported $8.4 million of pre-tax loss for the second quarter of 2018 as compared to pre-tax income of $23.8 million for the second quarter of 2017, which represents a decrease of $32.2 million. During the second quarter of 2018, this segment generated revenue of $47.8 million, a decrease of $32.7 million from the prior year quarter. Net gains on sales of loans decreased $28.5 million as compared to the prior year quarter, primarily due to an overall lower volume of locked loans as well as a lower day one margin due to pricing decreases in both the consumer and correspondent channels.

    Total expenses in the Originations segment for the second quarter of 2018 were $56.3 million, a decrease of $0.5 million compared to the prior year quarter. Current quarter interest expense was $7.5 million and depreciation and amortization was $4.4 million.

    Adjusted earnings declined by $30.5 million for the second quarter of 2018 as compared to the prior year quarter due to the revenue decline previously discussed.

    Reverse Mortgage

    The Reverse Mortgage segment serviced 98,895 accounts with a UPB of $18.8 billion at June 30, 2018, which includes UPB of $9.0 billion related to on-balance sheet loans and real estate owned. During the quarter, the business securitized $65.6 million of previously unfunded commitments and related fees.

    The Reverse Mortgage segment reported $29.6 million of pre-tax loss for the second quarter of 2018 as compared to pre-tax loss of $13.6 million in the prior year quarter. During the second quarter of 2018, this segment generated revenue of $5.8 million, a decrease of $9.6 million from the prior year quarter. Net non-cash fair value losses increased $13.6 million due primarily to the valuation model assumption adjustments for buyout loans and changes in market pricing during 2018. Net interest income on reverse loans and HMBS related obligations increased $6.3 million primarily due to an increase in buyouts. In addition, we had a $1.0 million decline in servicing revenue and fees.

    Total expenses in the Reverse Mortgage segment for the second quarter of 2018 were $35.4 million, an increase of $6.4 million from the prior year quarter. The increase in total expenses was driven by a $9.7 million increase in interest expense due primarily to higher average borrowings on master repurchase agreements as a result of higher buyout loan levels, and a higher average cost of debt related to the interest rate on the Exit Warehouse Facilities.

    Pre-tax loss increased $16.0 million to $29.6 million and adjusted loss worsened by $2.7 million to a loss of $3.9 million for the second quarter of 2018 as compared to the prior year quarter primarily due to higher interest expense and a decrease in net fair value gains on reverse loans and related HMBS obligations, partially offset by the decline in salaries and benefits.

    Corporate and Other Non-Reportable Segment

    The Corporate and Other Non-Reportable segment reported $52.7 million of pre-tax loss for the second quarter of 2018, a decrease in loss of $16.3 million as compared to the prior year quarter. Other net fair value gains (losses) increased $11.9 million driven by an increase in the LIBOR rate for loans and bonds related to the Non-Residual Trusts during 2018 and negative assumption change impacts in the conditional default rate during 2017. Additionally, there were other gains of $7.2 million in connection with our counterparty under the Clean-up Call Agreement having fulfilled its obligation for the mandatory clean-up call of one of the remaining Non-Residual Trusts, resulting in the subsequent deconsolidation of the trust. This gain is offset by the amortization of the inducement fee recorded in general and administrative expenses during the period.

    Interest expense decreased $3.1 million for the second quarter of 2018 as compared to the prior year quarter primarily as a result of the extinguishment of the Senior Notes and Convertible Notes in connection with the Chapter 11 bankruptcy, offset in part by higher interest rates on post-bankruptcy debt.

    About Ditech Holding Corporation

    Ditech Holding Corporation is an independent servicer and originator of mortgage loans and servicer of reverse mortgage loans. Based in Fort Washington, Pennsylvania, we have approximately 3,600 employees and service a diverse loan portfolio. For more information about Ditech Holding Corporation, please visit our website at www.ditechholding.com. The information on our website is not a part of this release.

    This press release and the accompanying reconciliations include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the reconciliations as well as "Non-GAAP Financial Measures" at the end of this press release.

    The terms "Ditech Holding," the "Company," "we," "us" and "our" as used throughout this report refer to Ditech Holding Corporation (Successor) and its consolidated subsidiaries after the Effective Date, and/or Walter Investment Management Corp. (Predecessor) and its consolidated subsidiaries prior to the Effective Date. We use certain acronyms and terms throughout this release that are defined in the Glossary of Terms in Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018.

    (1) Recapture rate represents the percent of voluntary UPB payoffs during the period refinanced into new loans by Ditech.  This metric excludes payoffs on non-marketable portfolios, payoffs under $20K UPB, or payoffs prior to 60 days after boarding.

    Disclaimer and Cautionary Note Regarding Forward-Looking Statements

    Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as "believes," "anticipates," "expects," "intends," "plans," "projects," "estimates," "assumes," "may," "should," "will," "seeks," "targets," or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, and our actual results, performance or achievements could differ materially from future results, performance or achievements expressed in these forward-looking statements. These forward-looking statements are based on our current beliefs, intentions and expectations. These statements are not guarantees or indicative of future performance, nor should any conclusions be drawn or assumptions be made as to any potential outcome of any changes in our strategy. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described below and in more detail under the caption "Risk Factors" in our filings with the SEC.

    In particular (but not by way of limitation), the following important factors, risks and uncertainties could affect our future results, performance and achievements and could cause actual results, performance and achievements to differ materially from those expressed in the forward-looking statements:

    • our ability to operate our business in compliance with existing and future laws, rules, regulations and contractual commitments affecting our business, including those relating to the origination and servicing of residential loans, default servicing and foreclosure practices, the management of third-party assets and the insurance industry, and changes to, and/or more stringent enforcement of, such laws, rules, regulations and contracts;
    • scrutiny of our industry by, and potential enforcement actions by, federal and state authorities;
    • the substantial resources (including senior management time and attention) we devote to, and the significant compliance costs we incur in connection with, regulatory compliance and regulatory examinations and inquiries, and any consumer redress, fines, penalties or similar payments we make in connection with resolving such matters;
    • uncertainties relating to interest curtailment obligations and any related financial and litigation exposure (including exposure relating to false claims);
    • potential costs and uncertainties, including the effect on future revenues, associated with and arising from litigation, regulatory investigations and other legal proceedings, and uncertainties relating to the reaction of our key counterparties to the announcement of any such matters;
    • our dependence on U.S. GSEs and agencies (especially Fannie Mae, Freddie Mac and Ginnie Mae) and their residential loan programs and our ability to maintain relationships with, and remain qualified to participate in programs sponsored by, such entities, our ability to satisfy various existing or future GSE, agency and other capital, net worth, liquidity and other financial requirements applicable to our business, and our ability to remain qualified as a GSE and agency approved seller, servicer or component servicer, including the ability to continue to comply with the GSEs' and agencies' respective residential loan selling and servicing guides;
    • uncertainties relating to the status and future role of GSEs and agencies, and the effects of any changes to the origination and/or servicing requirements of the GSEs, agencies or various regulatory authorities or the servicing compensation structure for mortgage servicers pursuant to programs of GSEs, agencies or various regulatory authorities;
    • our ability to maintain our loan servicing, loan origination or collection agency licenses, or any other licenses necessary to operate our businesses, or changes to, or our ability to comply with, our licensing requirements;
    • our ability to comply with the terms of the stipulated orders resolving allegations arising from an FTC and CFPB investigation of Ditech Financial and a CFPB investigation of RMS;
    • operational risks inherent in the mortgage servicing and mortgage originations businesses, including our ability to comply with the various contracts to which we are a party, and reputational risks;
    • risks related to the significant amount of senior management turnover and employee reductions recently experienced by us;
    • risks related to our substantial levels of indebtedness, including our ability to comply with covenants contained in our debt agreements or obtain any necessary waivers or amendments, generate sufficient cash to service such indebtedness and refinance such indebtedness on favorable terms, or at all, as well as our ability to incur substantially more debt;
    • our ability to renew advance financing facilities or warehouse facilities on favorable terms, or at all, and maintain adequate borrowing capacity under such facilities;
    • our ability to maintain or grow our residential loan servicing or subservicing business and our mortgage loan originations business;
    • risks related to the concentration of our subservicing portfolio and the ability of our subservicing clients to terminate us as subservicer;
    • our ability to achieve our strategic initiatives, particularly our ability to: enter into new subservicing arrangements; improve servicing performance; successfully develop our originations capabilities; and execute and realize planned operational improvements and efficiencies;
    • the success of our business strategy in returning us to sustained profitability;
    • uncertainties related to the Board's review of strategic alternatives;
    • changes in prepayment rates and delinquency rates on the loans we service or subservice;
    • the ability of Fannie Mae, Freddie Mac and Ginnie Mae, as well as our other clients and credit owners, to transfer or otherwise terminate our servicing or subservicing rights, with or without cause;
    • a downgrade of, or other adverse change relating to, or our ability to improve, our servicer ratings or credit ratings;
    • our ability to collect reimbursements for servicing advances and earn and timely receive incentive payments and ancillary fees on our servicing portfolio;
    • our ability to collect indemnification payments and enforce repurchase obligations relating to mortgage loans we purchase from our correspondent clients and our ability to collect in a timely manner indemnification payments relating to servicing rights we purchase from prior servicers;
    • local, regional, national and global economic trends and developments in general, and local, regional and national real estate and residential mortgage market trends in particular, including the volume and pricing of home sales and uncertainty regarding the levels of mortgage originations and prepayments;
    • uncertainty as to the volume of originations activity we can achieve and the effects of the expiration of HARP, which is scheduled to occur on December 31, 2018, including uncertainty as to the number of "in-the-money" accounts we may be able to refinance and uncertainty as to what type of product or government program will be introduced, if any, to replace HARP;
    • risks associated with the reverse mortgage business, including changes to reverse mortgage programs operated by FHA, HUD or Ginnie Mae, our ability to accurately estimate interest curtailment liabilities, our ability to fund HECM repurchase obligations, our ability to assign repurchased HECM loans to HUD, our ability to fund principal additions on our HECM loans, and our ability to securitize our HECM tails;
    • our ability to realize all anticipated benefits of past, pending or potential future acquisitions or joint venture investments;
    • the effects of competition on our existing and potential future business, including the impact of competitors with greater financial resources and broader scopes of operation;
    • changes in interest rates and the effectiveness of any hedge we may employ against such changes;
    • risks and potential costs associated with technology and cybersecurity, including: the risks of technology failures and of cyber-attacks against us or our vendors; our ability to adequately respond to actual or attempted cyber-attacks; and our ability to implement adequate internal security measures and protect confidential borrower information;
    • risks and potential costs associated with the implementation of new or more current technology, such as MSP, the use of vendors (including offshore vendors) or the transfer of our servers or other infrastructure to new data center facilities;
    • our ability to comply with evolving and complex accounting rules, many of which involve significant judgment and assumptions;
    • risks related to our deferred tax assets, including the risk of an "ownership change" under Section 382 of the Code;
    • our ability to maintain the listing of our common stock and warrants on the NYSE;
    • our ability to continue as a going concern;
    • uncertainties regarding impairment charges relating to other intangible assets;
    • risks associated with one or more material weaknesses identified in our internal controls over financial reporting, including the timing, expense and effectiveness of our remediation plans;
    • our ability to implement and maintain effective internal controls over financial reporting and disclosure controls and procedures;
    • our ability to manage potential conflicts of interest relating to our relationship with WCO; and
    • risks related to our relationship with Walter Energy and uncertainties arising from or relating to its bankruptcy filings and liquidation proceedings, including potential liability for any taxes, interest and/or penalties owed by the Walter Energy consolidated group for the full or partial tax years during which certain of our former subsidiaries were a part of such consolidated group and certain other tax risks allocated to us in connection with our spin-off from Walter Energy.

    All of the above factors, risks and uncertainties are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors, risks and uncertainties emerge from time to time, and it is not possible for our management to predict all such factors, risks and uncertainties.

    Although we believe that the assumptions underlying the forward-looking statements (including those relating to our outlook) contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements included herein may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as otherwise required under the federal securities laws. If we were in any particular instance to update or correct a forward-looking statement, investors and others should not conclude that we would make additional updates or corrections thereafter except as otherwise required under the federal securities laws.

    In addition, this release may contain statements of opinion or belief concerning market conditions and similar matters. In certain instances, those opinions and beliefs could be based upon general observations by members of our management, anecdotal evidence and/or our experience in the conduct of our business, without specific investigation or statistical analyses. Therefore, while such statements reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views and such views may not be shared by all who are involved in those industries or markets.

     

    Ditech Holding Corporation and Subsidiaries

    Consolidated Statements of Comprehensive Income (Loss)

    (Unaudited)

    (in thousands, except per share data)












    Successor



    Predecessor


    Successor



    Predecessor


    For the Three
    Months Ended
    June 30, 2018



    For the Three
    Months Ended
    June 30, 2017


    For the Period
    From February
    10, 2018 Through
    June 30, 2018



    For the Period
    From January
    1, 2018 Through
    February 9, 2018


    For the Six
    Months Ended
    June 30, 2017

    REVENUES












    Net servicing revenue and fees

    $

    130,097




    $

    91,321



    $

    178,452




    $

    128,685



    $

    204,508


    Net gains on sales of loans

    43,202




    70,545



    71,720




    27,963



    144,901


    Net fair value gains (losses) on reverse loans and related HMBS obligations

    (1,738)




    7,872



    (849)




    10,576



    22,574


    Interest income on loans

    471




    10,489



    847




    3,387



    21,469


    Insurance revenue











    3,963


    Other revenues

    26,496




    28,560



    39,573




    16,662



    56,657


    Total revenues

    198,528




    208,787



    289,743




    187,273



    454,072














    EXPENSES












    General and administrative

    100,324




    117,544



    154,849




    50,520



    249,171


    Salaries and benefits

    82,802




    101,071



    129,584




    40,408



    209,028


    Interest expense

    58,384




    60,884



    88,280




    38,756



    121,294


    Depreciation and amortization

    8,384




    10,042



    13,078




    3,810



    20,974


    Goodwill and intangible assets impairment

    1,000






    10,960







    Other expenses, net

    842




    3,054



    644




    229



    5,837


    Total expenses

    251,736




    292,595



    397,395




    133,723



    606,304














    OTHER GAINS (LOSSES)












    Reorganization items and fresh start accounting adjustments






    (110)




    464,563




    Other net fair value gains (losses)

    6,995




    (8,105)



    7,589




    3,740



    (3,022)


    Net losses on extinguishment of debt

    (1,207)




    (709)



    (1,207)




    (864)



    (709)


    Gain on sale of business




    7








    67,734


    Other

    7,199






    7,199







    Total other gains (losses)

    12,987




    (8,807)



    13,471




    467,439



    64,003














    Income (loss) before income taxes

    (40,221)




    (92,615)



    (94,181)




    520,989



    (88,229)


    Income tax expense (benefit)

    249




    1,694



    438




    (18)



    1,572


    Net income (loss)

    $

    (40,470)




    $

    (94,309)



    $

    (94,619)




    $

    521,007



    $

    (89,801)














    Comprehensive income (loss)

    $

    (40,381)




    $

    (94,314)



    $

    (94,523)




    $

    521,007



    $

    (89,823)














    Net income (loss)

    $

    (40,470)




    $

    (94,309)



    $

    (94,619)




    $

    521,007



    $

    (89,801)


    Basic earnings (loss) per common and common equivalent share

    $

    (8.60)




    $

    (2.58)



    $

    (20.81)




    $

    13.94



    $

    (2.46)


    Diluted earnings (loss) per common and common equivalent share

    $

    (8.60)




    $

    (2.58)



    $

    (20.81)




    $

    13.92



    $

    (2.46)


    Weighted-average common and common equivalent shares outstanding — basic

    4,707




    36,536



    4,546




    37,374



    36,475


    Weighted-average common and common equivalent shares outstanding — diluted

    4,707




    36,536



    4,546




    37,424



    36,475


     

     

    Ditech Holding Corporation and Subsidiaries

    Consolidated Balance Sheets

    (in thousands, except share and per share data)









    Successor



    Predecessor



    June 30, 2018



    December 31, 2017

    ASSETS


    (unaudited)




    Cash and cash equivalents


    $

    218,608




    $

    285,969


    Restricted cash and cash equivalents


    96,853




    112,826


    Residential loans at amortized cost, net (includes $924 and $6,347 in allowance for loan
      losses at June 30, 2018 and December 31, 2017, respectively)


    329,671




    985,454


    Residential loans at fair value


    10,394,781




    10,725,232


    Receivables, net (includes $2,143 and $5,608 at fair value at June 30, 2018 and
      December 31, 2017, respectively)


    111,764




    124,344


    Servicer and protective advances, net (includes $11,054 and $164,225 in allowance for
      uncollectible advances at June 30, 2018 and December 31, 2017, respectively)


    563,296




    813,433


    Servicing rights, net (includes $633,125 and $714,774 at fair value at June 30, 2018 and
      December 31, 2017, respectively)


    689,194




    773,251


    Goodwill





    47,747


    Intangible assets, net


    36,233




    8,733


    Premises and equipment, net


    75,584




    50,213


    Deferred tax assets, net


    777




    1,400


    Other assets (includes $21,105 and $29,394 at fair value at June 30, 2018 and
      December 31, 2017, respectively)


    311,421




    235,595


    Total assets


    $

    12,828,182




    $

    14,164,197








    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)






    Payables and accrued liabilities (includes $5,463 and $1,282 at fair value at June 30, 2018
      and December 31, 2017, respectively)


    $

    792,866




    $

    994,493


    Servicer payables


    116,622




    116,779


    Servicing advance liabilities


    304,920




    483,462


    Warehouse borrowings


    1,378,575




    1,085,198


    Corporate debt


    1,215,266




    1,214,663


    Mortgage-backed debt (includes $633,244 and $348,682 at fair value at June 30, 2018
      and December 31, 2017, respectively)


    633,244




    735,882


    HMBS related obligations at fair value


    8,294,703




    9,175,128


    Deferred tax liabilities, net


    748




    848


    Total liabilities not subject to compromise


    12,736,944




    13,806,453


    Liabilities subject to compromise





    806,937


    Total liabilities


    12,736,944




    14,613,390








    Stockholders' equity (deficit):






    Preferred stock, $0.01 par value per share (Successor and Predecessor):






    Authorized - 10,000,000 shares, including 100,000 shares of mandatorily convertible
      preferred stock (Successor) and 10,000,000 shares (Predecessor)






    Issued and outstanding - 95,778 shares at June 30, 2018 (Successor) and 0 shares at
      December 31, 2017 (Predecessor) (liquidation preference $98,421)


    1





    Common stock, $0.01 par value per share:






    Authorized - 90,000,000 shares (Successor and Predecessor)






    Issued and outstanding - 4,825,987 shares at June 30, 2018 (Successor) and 37,373,616
      shares at December 31, 2017 (Predecessor)


    48




    374


    Additional paid-in capital


    185,712




    598,193


    Accumulated deficit


    (94,619)




    (1,048,817)


    Accumulated other comprehensive income


    96




    1,057


    Total stockholders' equity (deficit)


    91,238




    (449,193)


    Total liabilities and stockholders' equity (deficit)


    $

    12,828,182




    $

    14,164,197


    Non-GAAP Financial Measures

    We manage our company in three reportable segments: Servicing, Originations and Reverse Mortgage. We evaluate the performance of our business segments through the following measures: income (loss) before income taxes and Adjusted Earnings (Loss). Management considers Adjusted Earnings (Loss) to be important in the evaluation of our business segments and of the company as a whole, as well as for allocating capital resources to our segments. Adjusted Earnings (Loss) is a supplemental metric utilized by management to assess the underlying key drivers and operational performance of the continuing operations of the business. In addition, analysts, investors, and creditors may use these measures when analyzing our operating performance. Adjusted Earnings (Loss) is not a presentation made in accordance with GAAP and our use of this measure and terms may vary from other companies in our industry.

    Adjusted Earnings (Loss) is defined as income (loss) before income taxes, plus changes in fair value due to changes in valuation inputs and other assumptions; goodwill and intangible assets impairment, if any; a portion of the provision for curtailment expense, net of expected third-party recoveries, if applicable; share-based compensation expense or benefit; non-cash interest expense; exit costs; estimated settlements and costs for certain legal and regulatory matters; fair value to cash adjustments for reverse loans; and select other cash and non-cash adjustments primarily including severance, gain or loss on extinguishment of debt, the net impact of the Residual and Non-Residual Trusts, transaction costs, reorganization items and certain non-recurring costs, as applicable. Adjusted Earnings (Loss) excludes unrealized changes in fair value of MSR that are based on projections of expected future cash flows and prepayments. Adjusted Earnings (Loss) includes both cash and non-cash gains from mortgage loan origination activities. Non-cash gains are net of non-cash charges or reserves provided. Adjusted Earnings (Loss) includes cash generated from reverse mortgage origination activities for the periods during which we were originating reverse mortgages. Adjusted Earnings (Loss) may from time to time also include other adjustments, as applicable based upon facts and circumstances, consistent with the intent of providing investors with a supplemental means of evaluating our operating performance.

    Adjusted Earnings (Loss) should not be considered as an alternative to (i) net income (loss) or any other performance measures determined in accordance with GAAP or (ii) operating cash flows determined in accordance with GAAP. Adjusted Earnings (Loss) has important limitations as an analytical tool, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Some of the limitations of this metric are:

    • Adjusted Earnings (Loss) does not reflect cash expenditures for long-term assets and other items that have been and will be incurred, future requirements for capital expenditures or contractual commitments;
    • Adjusted Earnings (Loss) does not reflect changes in, or cash requirements for, our working capital needs;
    • Adjusted Earnings (Loss) does not reflect certain tax payments that represent reductions in cash available to us;
    • Adjusted Earnings (Loss) does not reflect non-cash compensation that is and will remain a key element of our overall long-term incentive compensation package;
    • Adjusted Earnings (Loss) does not reflect the change in fair value due to changes in valuation inputs and other assumptions;

    Because of these limitations, Adjusted Earnings (Loss) should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted Earnings (Loss) only as a supplement.

     

    Ditech Holding Corporation and Subsidiaries

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Three Months Ended June 30, 2018

    (in thousands)
















    Servicing


    Originations


    Reverse
    Mortgage


    Corporate
    and Other


    Eliminations


    Total
    Consolidated

    REVENUES













    Net servicing revenue and fees


    $

    125,625



    $



    $

    6,022



    $

    17



    $

    (1,567)



    $

    130,097


    Net gains on sales of loans


    450



    42,412







    340



    43,202


    Net fair value losses on reverse loans and related HMBS obligations






    (1,738)







    (1,738)


    Interest income on loans


    459



    12









    471


    Other revenues


    21,532



    5,420



    1,508



    211



    (2,175)



    26,496


    Total revenues


    148,066



    47,844



    5,792



    228



    (3,402)



    198,528















    EXPENSES













    General and administrative


    58,648



    17,178



    10,102



    17,798



    (3,402)



    100,324


    Salaries and benefits


    34,965



    26,248



    9,229



    12,360





    82,802


    Interest expense


    4,819



    7,492



    13,996



    32,077





    58,384


    Depreciation and amortization


    3,194



    4,354



    473



    363





    8,384


    Intangible assets impairment




    1,000









    1,000


    Other expenses, net


    (804)





    1,640



    6





    842


    Total expenses


    100,822



    56,272



    35,440



    62,604



    (3,402)



    251,736















    OTHER GAINS (LOSSES)













    Other net fair value gains


    3,269







    3,726





    6,995


    Net losses on extinguishment of debt








    (1,207)





    (1,207)


    Other








    7,199





    7,199


    Total other gains


    3,269







    9,718





    12,987


    Income (loss) before income taxes


    50,513



    (8,428)



    (29,648)



    (52,658)





    (40,221)















    Adjustments to income (loss) before income taxes













    Changes in fair value due to changes in valuation inputs and other assumptions


    (33,260)











    (33,260)


    Fair value to cash adjustment to reverse loans






    25,604







    25,604


    Non-cash interest expense


    526











    526


    Intangible assets impairment




    1,000









    1,000


    Exit costs


    1,326



    832



    107



    674





    2,939


    Transaction costs


    75







    1,048





    1,123


    Share-based compensation expense








    1,373





    1,373


    Other


    (4,001)



    234



    84



    (2,318)





    (6,001)


    Total adjustments


    (35,334)



    2,066



    25,795



    777





    (6,696)


    Adjusted Earnings (Loss)


    $

    15,179



    $

    (6,362)



    $

    (3,853)



    $

    (51,881)



    $



    $

    (46,917)


     

     

    Ditech Holding Corporation and Subsidiaries

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Three Months Ended June 30, 2017

    (in thousands)
















    Servicing


    Originations


    Reverse
    Mortgage


    Corporate
    and Other


    Eliminations


    Total
    Consolidated

    REVENUES













    Net servicing revenue and fees


    $

    86,648



    $



    $

    7,083



    $



    $

    (2,410)



    $

    91,321


    Net gains (losses) on sales of loans


    (997)



    70,910







    632



    70,545


    Net fair value gains on reverse loans and related HMBS obligations






    7,872







    7,872


    Interest income on loans


    10,477



    12









    10,489


    Other revenues


    21,298



    9,598



    454



    200



    (2,990)



    28,560


    Total revenues


    117,426



    80,520



    15,409



    200



    (4,768)



    208,787















    EXPENSES













    General and administrative (1)


    77,909



    19,445



    9,905



    15,053



    (4,768)



    117,544


    Salaries and benefits


    50,226



    28,030



    12,459



    10,356





    101,071


    Interest expense


    12,860



    8,599



    4,288



    35,137





    60,884


    Depreciation and amortization  (1)


    8,362



    662



    837



    181





    10,042


    Other expenses, net


    1,327





    1,554



    173





    3,054


    Total expenses


    150,684



    56,736



    29,043



    60,900



    (4,768)



    292,595















    OTHER GAINS (LOSSES)













    Other net fair value gains (losses)


    111







    (8,216)





    (8,105)


    Net losses on extinguishment of debt


    (709)











    (709)


    Gain on sale of business


    7











    7


    Total other losses


    (591)







    (8,216)





    (8,807)


    Income (loss) before income taxes


    (33,849)



    23,784



    (13,634)



    (68,916)





    (92,615)















    Adjustments to income (loss) before income taxes













    Changes in fair value due to changes in valuation inputs and other assumptions


    33,017











    33,017


    Fair value to cash adjustment to reverse loans






    12,039







    12,039


    Non-cash interest expense


    22







    2,742





    2,764


    Exit costs (1)


    4,443



    284



    509



    862





    6,098


    Transaction costs


    2,158







    6,928





    9,086


    Share-based compensation expense (1)


    13



    32



    2



    434





    481


    Gain on sale of business


    (7)











    (7)


    Other (1)


    1,191



    82



    (50)



    8,108





    9,331


    Total adjustments


    40,837



    398



    12,500



    19,074





    72,809


    Adjusted Earnings (Loss)


    $

    6,988



    $

    24,182



    $

    (1,134)



    $

    (49,842)



    $



    $

    (19,806)


    __________

    (1)

    Effective January 1, 2018, the Company no longer allocates corporate overhead, including depreciation and amortization, to its operating segments. These amounts are now included in the Corporate and Other non-reportable segment. Prior year balances have been restated to conform to current year presentation.

     

    Ditech Holding Corporation and Subsidiaries

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Six Months Ended June 30, 2018

    (in thousands)
















    Servicing


    Originations


    Reverse
    Mortgage


    Corporate
    and Other


    Eliminations


    Total
    Consolidated

    REVENUES













    Net servicing revenue and fees


    $

    299,094



    $



    $

    11,338



    $

    23



    $

    (3,318)



    $

    307,137


    Net gains on sales of loans


    955



    97,963







    765




    99,683


    Net fair value gains on reverse loans and related HMBS obligations






    9,727








    9,727


    Interest income on loans


    4,211



    23










    4,234


    Other revenues


    46,225



    11,184



    2,770



    465



    (4,409)




    56,235


    Total revenues


    350,485



    109,170



    23,835



    488



    (6,962)



    477,016















    EXPENSES













    General and administrative


    121,004



    38,400



    17,905



    35,022



    (6,962)



    205,369


    Salaries and benefits


    72,023



    54,179



    19,670



    24,120





    169,992


    Interest expense


    17,113



    21,032



    32,287



    56,604





    127,036


    Depreciation and amortization


    7,955



    7,444



    978



    511





    16,888


    Goodwill and intangible assets impairment


    1,000



    9,960









    10,960


    Other expenses, net


    (2,078)





    2,868



    83





    873


    Total expenses


    217,017



    131,015



    73,708



    116,340



    (6,962)



    531,118















    OTHER GAINS (LOSSES)













    Reorganization items and fresh start accounting adjustments


    (14,588)



    9,612



    7,423



    462,006





    464,453


    Other net fair value gains


    3,380







    7,949





    11,329


    Net losses on extinguishment of debt








    (2,071)





    (2,071)


    Other








    7,199





    7,199


    Total other gains (losses)


    (11,208)



    9,612



    7,423



    475,083





    480,910


    Income (loss) before income taxes


    122,260



    (12,233)



    (42,450)



    359,231





    426,808















    Adjustments to income (loss) before income taxes













    Reorganization items and fresh start accounting adjustments


    14,588



    (9,612)



    (7,423)



    (462,006)





    (464,453)


    Changes in fair value due to changes in valuation inputs and other assumptions


    (110,887)











    (110,887)


    Fair value to cash adjustment to reverse loans






    37,010







    37,010


    Non-cash interest expense


    4,954



    6,579



    7,146







    18,679


    Goodwill and intangible assets impairment


    1,000



    9,960









    10,960


    Exit costs


    2,676



    886



    394



    1,288





    5,244


    Transaction costs


    182







    2,070





    2,252


    Share-based compensation expense


    13



    14



    4



    1,880





    1,911


    Other


    (1,775)



    663



    371



    (1,993)





    (2,734)


    Total adjustments


    (89,249)



    8,490



    37,502



    (458,761)





    (502,018)


    Adjusted Earnings (Loss)


    $

    33,011



    $

    (3,743)



    $

    (4,948)



    $

    (99,530)



    $



    $

    (75,210)


     

     

    Ditech Holding Corporation and Subsidiaries

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Six Months Ended June 30, 2017

    (in thousands)
















    Servicing


    Originations


    Reverse
    Mortgage


    Corporate
    and Other


    Eliminations


    Total
    Consolidated

    REVENUES













    Net servicing revenue and fees


    $

    195,189



    $



    $

    14,591



    $



    $

    (5,272)



    $

    204,508


    Net gains (losses) on sales of loans


    (1,317)



    144,614







    1,604




    144,901


    Net fair value gains on reverse loans and related HMBS obligations






    22,574








    22,574


    Interest income on loans


    21,445



    24










    21,469


    Insurance revenue


    3,963












    3,963


    Other revenues


    45,926



    16,690



    737



    710



    (7,406)




    56,657


    Total revenues


    265,206



    161,328



    37,902



    710



    (11,074)



    454,072















    EXPENSES













    General and administrative (1)


    168,556



    42,895



    16,369



    32,425



    (11,074)



    249,171


    Salaries and benefits


    101,609



    58,733



    25,988



    22,698





    209,028


    Interest expense


    26,393



    17,999



    6,679



    70,223





    121,294


    Depreciation and amortization  (1)


    17,161



    1,589



    1,863



    361





    20,974


    Other expenses, net


    2,681





    2,653



    503





    5,837


    Total expenses


    316,400



    121,216



    53,552



    126,210



    (11,074)



    606,304















    OTHER GAINS (LOSSES)













    Other net fair value losses


    (1,318)







    (1,704)





    (3,022)


    Net losses on extinguishment of debt


    (709)











    (709)


    Gain on sale of business


    67,734











    67,734


    Total other gains (losses)


    65,707







    (1,704)





    64,003


    Income (loss) before income taxes


    14,513



    40,112



    (15,650)



    (127,204)





    (88,229)















    Adjustments to income (loss) before income taxes













    Changes in fair value due to changes in valuation inputs and other assumptions


    40,414











    40,414


    Fair value to cash adjustment to reverse loans






    15,378







    15,378


    Non-cash interest expense


    1,535







    5,413





    6,948


    Exit costs (1)


    4,637



    491



    1,187



    1,654





    7,969


    Transaction costs


    4,331







    9,963





    14,294


    Share-based compensation expense (benefit) (1)


    268



    (110)



    166



    1,022





    1,346


    Gain on sale of business


    (67,734)











    (67,734)


    Other (1)


    1,606



    225



    (72)



    7,053





    8,812


    Total adjustments


    (14,943)



    606



    16,659



    25,105





    27,427


    Adjusted Earnings (Loss)


    $

    (430)



    $

    40,718



    $

    1,009



    $

    (102,099)



    $



    $

    (60,802)


    __________

    (1)

    Effective January 1, 2018, the Company no longer allocates corporate overhead, including depreciation and amortization, to its operating segments. These amounts are now included in the Corporate and Other non-reportable segment. Prior year balances have been restated to conform to current year presentation.

     

    Cision View original content:http://www.prnewswire.com/news-releases/ditech-holding-corporation-announces-second-quarter-2018-highlights-and-financial-results-300694676.html

    SOURCE Ditech Holding Corporation

    Jason Harbes, CFA, Director of Investor Relations, 813.421.7694, investorrelations@ditech.com

     

     

     

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