Though quarterly originations softened at Ditech Holding Corp., an increase is underway for the current period. The servicing portfolio continued to shrink, as did reverse mortgage headcount. Losses subsided, but liquidity remains a huge concern.
During the three months ended mid-2018, the loss before income taxes came to $40 million, the Fort Washington, Pennsylvania-based firm disclosed in it second-quarter earnings report.
Losses at Ditech were cut from $93 million previously reported by predecessor Walter Investment Management Corp. for the same-three months last year.
Earnings, however, swung from previously reported $467 million first-quarter 2018 profit.
Loan originations totaled $2.679 billion including $2.609 billion in forward production and $0.070 billion in reverse mortgage lending. Business was off from $2.851 billion in the first quarter and tumbled from $4.288 billion in the second-quarter 2017.
On the forward portion of originations, consumer production accounted for $0.946 billion, wholesale lending made up $0.197 billion, and correspondent acquisitions came to $1.465 billion. Refinance share widened to 48.7 percent from an upwardly revised 48.0 percent one year earlier.
Locked volume was $2.8 billion, soaring from just $1.5 billion in the first quarter and suggesting that business during the current quarter is stronger than it was in the second quarter.
In the six months ended June 30, Ditech closed a total of $5.530 billion in loans secured by single-family properties.
As of June 30, Ditech serviced 879,913 loans with a collective unpaid principal balance of $102.950 billion — including $84.102 billion in forward mortgages and $18.848 billion in reverse mortgages.
Servicing stood at 939,856 loans for $110.720 billion the prior quarter and 1,165,921 loans for $138.295 billion a year prior.
Delinquency of at least 30 days ended the first-half 2018 at 8.68 percent, improving from 9.86 percent at the midpoint of last year.
Headcount ended June at 3,600 people, a hundred fewer employees than three months prior and 800 fewer employees than a year prior.
Ditech noted that its staffing in the reverse mortgage segment ended June at 500 employees, 200 fewer than as of mid-2017.
Ditech warned that it continues to forecast reductions in liquidity. These may become more challenging if there is further deterioration due to required repayment terms and restrictive covenants of a term loan, recurring operating losses and negative cash flows from certain segments — including unforeseen increased collateral posting requirements.
Ditech said it is taking numerous steps to maintain liquidity, but it also warned, “If the company fails to renew or to comply with the terms of a facility that results in an event of default or breach of covenant without obtaining a waiver or amendment, the company may be subject to cross default provisions with other indebtedness, termination of future funding, enforcement of liens against assets securing the respective facility, acceleration of outstanding obligations, or other adverse actions.”
