Yesterday we reported that Ditech was still awaiting a decision on its proposed bankruptcy plan. Today, a federal judge has officially denied the "free and clear" plan.
"In his written decision, Judge Garrity contends that the proposed reorganization plan does not provide sufficient ability for borrowers to 'assert rights of recoupment' against Ditech, nor does it satisfy the requirements of the Bankruptcy code while demonstrating that it is 'fair and equitable' to consumers holding claims against the company," according to Reverse Mortgage Daily.
"The greatest scrutiny surrounding the bankruptcy plan was primarily focused on the forward mortgage servicing business. In the past 12 months, over 4,000 homeowners have filed complaints with federal agencies concerning the loan servicer, including allegations that it failed to credit legitimate payments which led to improper foreclosures."
Ditech was also against providing its borrowers with damages as they filed for bankruptcy. It's also not the first time the company has run into legal and financial issues, casting a larger cloud over its current situation.
To learn more about the Ditech bankruptcy filing, click on the image above.