States Fight Ditech Plan to Return $113 Million to Borrowers

At least a dozen states are opposing a proposal from the administrator winding down bankrupt mortgage servicing company Ditech Holding Corp. to return some $113 million to borrowers because they say it would circumvent their laws on unclaimed property.

The states eventually will get at least some of those funds in any event, a group of four states said Tuesday in a filing with the U.S. Bankruptcy Court for the Southern District of New York.

“There is no reason to allow the Plan Administrator to circumvent those laws through a lengthy, potentially unlawful process that will take 180 days and ...