Dive Brief:

• Bank of America joined a growing list of groups objecting to mortgage servicer Ditech Holdings' plan to sell its reverse mortgage business amid its second bankruptcy filing in the past two years. The average age of people holding the reverse mortgages is 81, and the loan is a primary source of income for many of them, court documents show. "Any interruption in the servicing of these reverse mortgage loans could have severe consequences for these borrowers," the bank said in its filing. Bank of America owns the loans.

• New York Attorney General Letitia James filed a brief to prevent Ditech’s bankruptcy filing. "Bankruptcy Court should never be used as a tool to unjustly oust New Yorkers from their homes," James said in a press release Tuesday. The company has more than 880 foreclosure actions pending across the state. The Justice Department's U.S. Trustee Program has appointed the Consumer Creditors' Committee to represent affected homeowners.

• The objection marks a turnabout for Bank of America, which has paid more than $50 billion through 2014 to settle claims related to subpar mortgages, often connected to its 2008 purchase of Countrywide Financial.

Dive Insight:

Bank of America and Ditech have an entangled history. Ditech's predecessor, Walter Investment Management, bought servicing rights for a Bank of America portfolio of more than 650,000 loans in 2013. The bank recently agreed to pay Ditech $7.6 million to settle a dispute over expenses connected to that deal.

Servicing a reverse mortgage is more complicated than for a conventional home loan, the bank's filing shows. Beyond handling borrowers' requests for money, the process also involves paying taxes and insurance and communicating with heirs when a borrower dies. And Ditech's Reverse Mortgage Solutions has been the only point of contact some borrowers have had on the mortgage for years, the filing shows.

The bank said it has tried to ensure those services are maintained. But without a new contract, borrowers may wind up with loans that aren't serviced properly or funded in a timely way. Ditech "should not be allowed to walk away from this protected class of borrowers," the bank said.

A confirmation hearing on the bankruptcy plan is slated for Aug. 7.

Complaints from borrowers mounted this year, when Ditech tried to reach agreements to sell its businesses. Some homeowners sued and attorneys general from Colorado, Washington, Nevada, Iowa, Oregon and New York objected to Ditech's bankruptcy plan.

"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," James said.