Attorney General Letitia James objects to mortgage servicer’s unlawful attempt to strip away rights of homeowners

Attorney General Letitia James

Attorney General Letitia James has taken action against Ditech Holding Corporation by filing a brief in the U.S. Bankruptcy Court for the Southern District of New York, opposing the mortgage servicer’s attempted end-run around statutory protections for homeowners.

“Bankruptcy court should never be used as a tool to unjustly oust New Yorkers from their homes,” said James. “Ditech’s action is an illegal attempt to strip hundreds of homeowners of their legitimate claims and eviscerate New York’s carefully created foreclosure process. Housing is a right, and we will continue to use every legal tool at our disposal to stand up for homeowners and to protect their rights.”

Ditech has more than 880 active foreclosure actions pending across New York state. Homeowners organized the Consumer Creditors Committee to ensure that the courts do not permit the company to sweep their rights under the rug. Homeowners are demanding that their claims and defenses — which include significant money damages — not be extinguished in bankruptcy court.

James — in support of the Consumer Creditors’ Committee — is filing the objection to ensure that vulnerable homeowners, who were victims of predatory lending and mortgage servicing abuses, including seniors with reverse mortgages, can assert their rights under the protections of New York’s robust judicial foreclosure process.

In addition to filing this motion, the Office of the New York State Attorney General currently has an open investigation into Reverse Mortgage Solutions, a reverse mortgage servicer that is owned by Ditech.

This past March, James took a similar action when a building owner in Manhattan attempted to flout rent regulation laws and displace tenants.

The objection is being handled by Assistant Attorneys General Elena González, Elizabeth M. Lynch, and Sarah Trombley of the Bureau of Consumer Frauds and Protection, under the supervision of Bureau Chief Jane M. Azia, as well as Enid Nagler Stuart, Special Bankruptcy Counsel for the Litigation Bureau. The Bureau of Consumer Frauds and Protection is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo, and the Litigation Bureau is overseen by Chief Deputy Attorney for State Counsel Orelia Merchant.

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