Ditech Holding Corp. returned to profitability in the first quarter, benefiting from accounting adjustments related to its emergence from bankruptcy protection in February.
The Fort Washington, Pa.-based company reported net income of $466.9 million, compared with a net loss of $426.9 million in the fourth quarter — when the holding company still operated under the name Walter Investment Management Corp. — and restated net income of $4.5 million for the first quarter of 2017.
The first-quarter results were delayed because Ditech applied fresh-start accounting following the bankruptcy exit and needed additional time to complete its financial closing procedures for the period.
Much of its first-quarter profits came from a $464.5 million gain due to fresh-start accounting adjustments applied prior to emerging from bankruptcy effective Feb. 10. For the period from the start of the year until Feb. 9, Ditech had net income of $521 million with total revenue of $187.3 million and total expenses of $133.7 million.
But starting on Feb. 10 through the end of the quarter, Ditech lost $54.1 million. Total expenses were $145.7 million while total revenue was $91.2 million.
Servicing was the bright spot for Ditech in the first quarter, with pretax income of $71.7 million, up from $48.3 million for the same period last year.
But its origination business had a pretax loss of $3.8 million, compared with pretax income of $16.3 million. Gain-on-sale income fell to $56.5 million from $75.4 million in the first quarter of 2017. Ditech funded $2.76 billion in the period, down from $5 billion one year prior.
"We are focused on improving our originations segment and reducing our reliance on refinancing activity," Thomas Marano, Ditech's chairman, president and CEO, said in a press release. "Additionally, we are laser focused on reducing costs across all of our business lines and expanding our purchase money origination volume in an effort to become profitable in 2018."
Marano became chairman of the company after it emerged from bankruptcy in February and added the CEO and president titles in April.
Ditech's reverse mortgage business had a pretax loss of $12.8 million, compared with a pretax loss of $2 million one year prior.