Ditech Bankruptcy Liquidation Plan In Trouble As New York AG Investigates Shady RMS Servicing Practices
The New York Attorney General has filed a brief in the Ditech bankruptcy case. AG Letitia James objected to the Ditech bankruptcy liquidation plan. She argues that the plan will strip homeowners of their rights.
James also argues that Ditech and Reverse Mortgage Solutions are using bankruptcy protection to circumvent statutory protections for homeowners.
The brief also states said that the Ditech has more than 880 foreclosure actions pending in New York. This includes 642 forward and 239 reverse mortgages. The current Ditech bankruptcy liquidation plan threatens to sweep these homeowners’ claims and defenses under the rug.
The brief also claims that Ditech is the subject of numerous consumer complaints. 83 New York homeowners have filed complaints against Ditech and Reverse Mortgage Solutions with the Federal Trade Commission alleging servicer abuses. The current Ditech bankruptcy liquidation plan would be extinguished.
James also stated in a release issued by her office:
Bankruptcy Court should never be used as a tool to unjustly oust New Yorkers from their homes. Ditech’s action is an illegal attempt to strip hundreds of homeowners of their legitimate claims and eviscerate New York’s carefully created foreclosure process.
The attorney general also said her office is currently investigating RMS. Ditech plans to sell RMS to Mortgage Assets Management.
In the brief, James also says her office has an open investigation into RMS’ servicing practices following multiple complaints. The complaints focus on unnecessary foreclosures mostly related to RMS’ early payment of property taxes.
However, the attorney general’s office provided no other details regarding the investigation in its release. A follow-up story will run when more details come to light.