Ditech may pay $257,000, add oversight to settle stockholder lawsuit
Ditech Holding Corp. is proposing to pay $257,000 and improve governance to settle a stockholder lawsuit alleging that a lack of oversight allowed improprieties to occur in several mortgage-related business lines.
A hearing on the proposed settlement of the case, which was filed by stockholder Michael Vacek Jr., is set for Jan. 31, 2019 in U.S. District Court in the Eastern District of Pennsylvania. The company's headquarters are in Fort Washington, Pa.
In the lawsuit against the company and several of its current and former board members, Vacek alleges breach of fiduciary duties, unjust enrichment and waste of corporate assets related to government claims and settlements involving its origination, underwriting and appraisal units, among other things.
Vacek's allegations also center on financial reporting concerns involving aspects of its default servicing business. These include foreclosure tax liens, foreclosure-related advances, processing and oversight of loans in bankruptcy, adjustments of reserves, and valuation allowances on deferred tax-asset balances.
In addition to Ditech, plaintiffs in the lawsuit include George Awad, Daniel Beltzman and Neal Goldman, who are all current Ditech board members. Also named in the lawsuit are former board members Michael Bhaskaran, William Meurer, Alvaro de Molina, Vadim Perelman and Anthony Renzi. Renzi previously was the CEO of Ditech's predecessor, Walter Investment Management.
Ditech recently warned that it might return to bankruptcy even though its financial results have been improving. The warning followed the New York Stock Exchange's delisting of the company after a prolonged decline in its trading price. It has explored options that could include a sale.