Ditech Financial LLC has agreed to pay Capital One NA an inducement fee of $36.5 million in return for Capital One assuming the company's obligation to exercise cleanup calls for eight different asset-backed securitization deals.
The agreement with Capital One was reached Oct. 10 and helps resolve Ditech's mandatory obligation to exercise the cleanup calls related to separate GreenPoint Credit Manufactured Housing Contract Trusts.
As of June 30, Ditech's parent company, Walter Investment Management Corp., estimated that the company's remaining cleanup call obligations tied to the trusts were $72.0 million, $253.3 million and $63.1 million for 2017, 2018 and 2019, respectively. Under the agreement, Ditech will not be obligated to exercise or fund the calls.
The company's current obligations to reimburse Capital One for certain losses tied to the trusts were terminated and replaced with a new obligation to reimburse the company for losses related to the trusts exceeding $17.0 million in total for the eight trusts from July 1 through the individual call dates. Capital One also agreed to repay the company for certain outstanding advances made related to the trusts, up to an aggregate amount of about $6.4 million for the eight trusts.
The agreement comes about two months after Walter Investment Management said it was considering a prepackaged reorganization plan under Chapter 11 of the bankruptcy code. At the time, Walter Investment said it might be unable to maintain sufficient liquidity or resolve certain mandatory cleanup calls.