Ditech Holding is one giant step closer to selling off its forward and reverse mortgage businesses after a federal bankruptcy court judge approved the company’s plan to sell to New Residential Investment and Mortgage Assets Management.

Earlier this year, Ditech agreed to sell its forward mortgage originations and servicing businesses to New Residential and the stock and assets of its reverse mortgage business, Reverse Mortgage Solutions, to Mortgage Assets Management.

And this week, the United States Bankruptcy Court for the Southern District of New York approved the sale of both companies, setting the stage for the sales to go through later this year.

According to Ditech, New Residential has agreed to acquire “substantially all of the assets” of the company’s forward mortgage servicing and originations business, Ditech Financial.

“We are glad that the Court has approved the agreement and that we can proceed with the closing of this acquisition,” said Michael Nierenberg, chairman, chief executive officer and president of New Residential.

“As part of this acquisition, we are adding a number of very talented personnel to our servicing, origination and corporate functions and we are very excited to welcome them to our family,” Nierenberg added. “From the beginning we have been focused on achieving an outcome that is in the best interest of the long-term strategy of our Company and our shareholders, and believe that today’s confirmation from the Court allows us to move forward with executing our vision.”

Under the agreement, New Residential will purchase Ditech’s forward Fannie Mae, Ginnie Mae and non-agency mortgage servicing rights, the servicer advance receivables related to those MSRs and other net assets involved with the forward origination and servicing businesses.

Additionally, New Residential agreed to take over certain Ditech office spaces and make employment offers to a “number” of Ditech employees.

The final purchase price for Ditech Financial will be determined at the closing of the acquisition based on the tangible book value of the related assets, subject to certain agreed upon adjustments, New Residential said.

Additionally, Mortgage Assets agreed to acquire “certain stock and assets” associated with Ditech’s reverse mortgage business, Reverse Mortgage Solutions, and to maintain the current operations of RMS as a wholly-owned subsidiary.

The move to sell came after years of financial trouble that saw Ditech, the nonbank formerly known as Walter Investment Management, file for Chapter 11 bankruptcy twice in 14 months.

It all began in 2017 when the company filed for bankruptcy after a long string of financial losses. The company completed a restructuring plan that eliminated $800 million in corporate debt and changed its name, emerging from bankruptcy a year later.

But that was apparently not enough to set the company on solid ground, as it filed for Chapter 11 again just 14 months later. This time, it included its subsidiaries, Ditech Financial and Reverse Mortgage Solutions, in its restructuring plan.

At the time, Ditech said it was considering “strategic alternatives” that could include selling off some of the company’s assets, changing the company’s business model, or selling the company. In the end, Ditech chose the latter.

But the move to sell wasn’t without some stumbles.

After announcing its plans to sell off its reverse and forward businesses, Bank of America,which has a reverse mortgage servicing agreement with Reverse Mortgage Solutions, objected to the deal, claiming that it “threatens to abandon the thousands of elderly borrowers” whose reverse mortgages are being serviced by RMS.

According to Bank of America’s objection, the sale does not uphold its agreement with RMS, which stipulates that RMS provide Bank of America with extensive lead time to establish other arrangements for the servicing of its reverse mortgage borrowers should RMS no longer be able to handle the business.

Once an originator of reverse mortgages, Bank of America exited the HECM business in 2011, subsequently selling off the servicing rights of its reverse loans to RMS.

 in 2011, subsequently selling off the servicing rights of its reverse loans to RMS.

Eventually, a “Committee of Consumer Creditors” was formed to “protect the rights of borrowers” who had legal claims against Ditech and RMS.

The Consumer Creditors’ Committee also disagreed with Ditech’s and RMS’s original bankruptcy plan because it did not “sufficiently protect borrowers’ rights.”

Ditech and RMS then worked with the committee to develop a bankruptcy plan that would allow Ditech to sell the companies, while also protecting borrowers’ rights.

The parties eventually agreed to a settlement that provides for $10 million to be set aside for borrowers with allowed legal claims against Ditech and RMS. Borrowers are also able to sue “other third parties or the new owners” if they choose to.

With that settlement agreed to and approval from the court, the sales can now move forward. According to New Residential, it expects the deals to close in the fourth quarter of this year.

Until the acquisition closes, Ditech Financial and RMS will continue to operate as part of Ditech Holding and service their existing customers.

“With the Court’s approval and confirmation of our plan, we are able to move forward with these value-maximizing transactions and achieve the best path forward for our stakeholders, including homeowners,” said Thomas Marano, chairman of the board and chief executive officer of Ditech Holding. “I would like to thank all of our employees for their hard work and dedication to serving our customers throughout this process.”