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After a Year of Ups and Downs, Green Tree Announces Merger

handshakeGreen Tree Servicing is merging with Ditech Mortgage Corp., fulfilling an announcement initially made in February. According to an announcement on Thursday from Green Tree, the merge will be effective August 31, 2015.

Green Tree's parent company, Walter Investment Management Corp., will merge Green Tree with Ditech, another company owned by Walter Investment to form ditech, a Walter company.

"By combining forces, we can give you access to a broader variety of home financing products and improved customer service through a single point of contact," Green Tree said in their announcement.

According to Green Tree's announcement, the full legal name of the company will be Ditech Financial, LLC.

Green Tree assures its customers that although the company will operate under a new name, the company will remain the same and provide quality services.

"Combining our companies and changing our name to ditech, a Walter company is a recommitment to you, our borrowers, to provide excellent customer service and a promise to support you as partners in sustainable home ownership," Green Tree said in the "Frequently Asked Questions" section of their website.

In February, Walter Investment announced the merger for the first time in its full year and fourth quarter 2014 operational highlights and financial results.

"By consolidating our Green Tree and Ditech brands under the name "Ditech, a Walter Company" and enhancing focus on the use of technology, we will drive efficiencies through the reduction of duplicative functions and cost structures and become a stronger, more unified end-to-end mortgage company," said Mark J. O'Brien, Walter Investment's chairman and CEO.

He added, "As a diversified mortgage operation consolidated under one name we will be well-positioned to take advantage of sector opportunities and leverage our core capabilities to provide high quality service to our consumers and clients and deliver value to our shareholders."

Walter Investment also noted in their report that the merge would provide the company with savings opportunities and will increase efficiencies.

"Additional cost-savings opportunities of at least $35.0 million have been identified with approximately $25.0 million expected to be realized in 2015 related to capturing opportunities for enhanced benefits from shared services, the consolidation of Green Tree Servicing and Ditech in the second half 2015 and a significant acceleration of automation efforts which will increase efficiencies company-wide," O'Brien said. 

Green Tree's overall servicer health has received both praise as well as some negative criticism from the industry this year.

National Mortgage Settlement (NMS) Monitor Joseph A. Smith released a Compliance Update, reviewing Green Tree's servicer performance on June 30, 2015. According to the update, Green Tree’s internal review group (IRG) and the Professional Firms appointed by the Monitor found no evidence of fails in any of the metrics tested in the third and fourth quarters of 2014.

“I am pleased to see that the servicers are adhering to the NMS’s servicing rules, which aim to give borrowers better experiences,” Smith said.

However, in April 2015, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) took action against Green Tree Servicing, LLC, for mistreating mortgage borrowers who were trying to save their homes from foreclosure.

The CFPB determined that Green Tree "failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers."

Green Tree agreed to pay $48 million in restitution to victims, and a $15 million civil money penalty for its illegal actions.

“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” said Richard Cordray, CFPB director. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”

In response to the CFPB's action, Mark O'Brien, chairman and CEO of Walter Investment said that the agreement was "in the best interest of Green Tree, our consumers, our clients and our shareholders."

"As a company, we have been and continue to be committed to properly serving homeowners and helping them remain in their homes," O'Brien said "We continue to develop and deploy best practices in our servicing operations and believe these standards will serve us well as we partner with our consumers to support them in their goal to achieve sustainable homeownership."

O'Brien added, "With this settlement, the company and our employees will maintain our focus on the continuous improvement of our procedures and practices which will benefit all consumers and all stakeholders. We will continue to work closely with regulators, clients and other constituencies to ensure that we maintain the significant alignment of interests that exists in the mortgage servicing industry."

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.

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