What are Ditech Holding's Business Segments?
Our Servicing segment performs collections of post charge-off or foreclosure
deficiency balances for itself and on behalf of third-party securitization trusts
and other asset owners. The third-party fee we earn is based on a percentage
of our collections or a percentage of the unpaid principal balance. We recognize
revenues associated with our on-balance sheet charged-off loan portfolio through
its change in fair value.
Our Originations segment revenue, which is primarily gains on sales of loans,
is impacted by interest rates and the volume of loans locked. The margins earned
by our Originations segment are impacted by our cost to originate the loans
including underwriting, fulfillment and lead costs. We generally sell our originated
and purchased mortgage loans to third parties while retaining the servicing
rights.
Reverse Mortgage - Our Reverse Mortgage segment primarily focuses on the origination
or purchase, securitization and servicing of reverse loans. Reverse loan originations
are generally conducted through our consumer direct, consumer retail, wholesale
and correspondent lending origination channels.
Our Reverse Mortgage segment receives cash proceeds at the time reverse loans
are securitized. We securitize substantially all our reverse loans through the
Ginnie Mae II MBS program into HMBS. Based upon the structure of the Ginnie
Mae II MBS program, we determined that we have not met all of the requirements
for sale accounting, and as such, we account for these transfers as secured
borrowings. Under this accounting treatment, the reverse loans remain on the
consolidated balance sheet as residential loans. The segment earns net revenue
on the net fair value gains on reverse loans and the related HMBS obligations.
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