ditech returning to the mortgage market in a big way
Second act for former subprime lender leverages brand awareness
A company that was once a poster child for pre-crash subprime lending is getting its second act, hoping to leverage its high-profile brand name and get back into the national mortgage market as a major player.
Ditech Mortgage Corp. is launching a new three-pronged approach to staking out territory with direct consumer lending, retail lending and correspondent lending with their 600-plus institutional partners. (In all nonformal references, the company goes with a lower-case spelling.)
ditech is one of the better-known brands thanks to its heavy consumer advertising in the first half of the 2000s – remember the “Lost another loan to ditech!” ads?
ditech, which hasn’t been in the news in nearly five years, will also be developing co-branded and joint-ventures with financial institutions that want to offer mortgages.
“One of the great ironies of the real estate industry is that buying a home is one of life’s most joyful and memorable experiences – but getting a mortgage loan can be anything but,” said Patti Cook, president of DT Holdings, parent company of ditech. “ditech’s goal is to change all of that, by becoming a trusted partner that our customers can count on.”
Headquartered in Fort Washington, Penn., ditech will pursue a different business model than its predecessor, which was primarily a direct-to-consumer provider.
ditech was known as a leader in subprime. The bulk of the mortgages were interest-only, low-documentation subprimes, and ditech was a pioneer in offering 125% loans allowing the borrower to borrow more than the sale price.
When the bubble broke in 2006, it brought big losses for both ditech and for those who invested in the mortgage-backed securities.
This new ditech was formed from the assets from the GMACRescap estate, purchased by Walter Investment Management Corp. (WAC)/Greentree Originations in November 2012, and sources tell HousingWire that the new ownership is going all in on taking advantage of the ditech brand and the clean slate afforded by resurrecting the company from the near-dead.
This puts ditech in the unique position of having a clean slate on their customer operation and experience side, while at the same time working with the benefits of an established brand.
According to Cook, ditech conducted extensive research around what consumers most want in a home-lending partner.
“The fact that the ditech brand was so recognizable and highly regarded convinced us that this was the name under which we wanted to do business,” Cook said.
ditech’s first focus will be on partnering with financial institutions that want to provide mortgage and refinance loans to their customers.
The ditech brand originated in 1995, the name coming from a combination of “Direct” and “Technology.”
“This is a brand that has been in the home-lending business for years and is now associated with an established mortgage banking operation with a national presence,” said Marianne Mainardi, Chief Operating Officer (COO) of ditech. “Many of our employees have logged decades of service with us. That translates into deep experience and expertise for our partners and customers.”