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The race for the exits is intensifying among big banks that purchase mortgages from correspondent lenders, creating liquidity issues for loan originators and radically reshaping mortgage servicing.
January 30 -
PHH, the nation's largest private mortgage company, has been notified by the Consumer Financial Protection Bureau that it is the subject of an investigation into potentially improper reinsurance payments.
January 10 -
PHH Corp., the largest non-bank lender, abruptly replaced chief executive officer Jerome Selitto with chief operating officer Glen A. Messina on Wednesday, weeks after a failed bond offering and an S&P downgrade.
January 4
PHH Corp. will cut back on correspondent lending, sell non-core assets and reverse its drive for market share in the mortgage business to alleviate investors' liquidity concerns, new chief executive Glen A. Messina said Tuesday.
Messina, who was
The mortgage lender and fleet operator has been scrambling to reassure investors of its funding and cash positions
PHH also is being
The pullback in correspondent lending is directly related to PHH's near-term focus on hoarding cash. Messina said during the call that loans originated with minor defects take up capacity on PHH's balance sheet because they typically are not eligible for warehouse financing.
"We are focused on cash consumption rather than total volume in this channel," Messina said. "We anticipate reducing cash consumption by at least 50% relative to 2011."
PHH, the largest non-bank mortgage lender, posted a fourth-quarter profit Tuesday of $13 million, compared with $181 million a year earlier. But it swung to a $127 million loss in 2011, versus a profit of $48 million in 2010, due in part to changes in the fair value of its mortgage servicing rights. The company also had a $21 million fourth-quarter charge for foreclosure-related costs and implementation of the government's Home Affordable Refinancing Program.
Messina also said PHH is in active negotiations with Fannie Mae on proposed amendments to about $3 billion in financing arrangements. He wants to repay its 2012 and 2013 debt maturities sometime this year.
Though PHH captured 4% of the mortgage market in the fourth quarter, Messina said that going forward "setting a market share target" was not consistent with the company's near-term focus on liquidity and cash. PHH will no longer provide market share guidance, he said, nor will be "driving the business toward this goal."