More than 4,000 homeowners have complained to federal agencies in the past year about Ditech Financial LLC, including allegations that the bankrupt mortgage servicer failed to properly credit payments and wrongly foreclosed on their homes, Bloomberg News reported. A federal judge today is slated to decide whether Ditech can sell its mortgage servicing business “free and clear” of these consumer claims as part of $1 billion deal in its bankruptcy plan. Consumer advocates say if Bankruptcy Judge <b>James L. Garrity Jr.</b> approves the deal, it would be difficult or impossible for homeowners to correct what they say are errors related to their loans. People would even be permanently stripped of claims or defenses that would help them save their homes from wrongful foreclosures, the New York Attorney General’s office wrote in its objection to the sales. The New York AG contends that some homeowners are facing foreclosure because of potential errors by Ditech, in which the firm misapplied or refused to record payments that they made, misrepresented the amounts they owed or failed to acknowledge tax payment plans that would bring their accounts up to date.
