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PHH Mortgage said it will no longer accept new FHA Streamline refinancings from correspondent lenders unless it is already servicing the loan, according to a memo provided to National Mortgage News.
June 19 -
HSBC's U.S. bank will transfer roughly $52 billion of residential servicing rights to PHH Corp., which also will absorb two-thirds of its mortgage work force. No money will change hands in the transaction, HSBC said.
May 7 -
Mortgage lender PHH has been scrambling to reassure investors of its funding and cash positions in the wake of an S&P downgrade and the departure of its former CEO, Jerome Selitto.
February 8
PHH, the parent company of the nation's largest nonbank mortgage lender, lost $57 million in the second quarter and signaled its intention to reduce its presence in the correspondent lending channel, where it ranks seventh nationwide.
The Mount Laurel, N.J., company blamed its performance on "elevated foreclosure" related reserves and a charge tied to termination of an "inactive" mortgage reinsurance agreement. It is also suffering from increased buyback requests from Fannie Mae and Freddie Mac.
In its 2Q earnings statement company GEO Glen Messina referred to "our planned decrease in correspondent loan originations." No other color was offered on the decision.
According to figures compiled by National Mortgage News and the Quarterly Data Report, PHH actually grew its correspondent purchases by 12% in the first quarter.
Although mortgage-related charges were at the heart of its loss, PHH's origination division earned $78 million in 2Q, a 212% improvement from the same period a year earlier. But its servicing operation lost $196 million after suffering writedowns on this volatile asset.
PHH Mortgage funded $12.8 billion in home loans during 2Q, a 35% improvement form the first quarter.
As for its servicing woes, the company said, "The changes in the fair value of our MSR and related derivatives includes $145 million in market-related negative fair value adjustments on our mortgage servicing rights and $60 million in prepayments and receipts of recurring cash flows, primarily attributable to a decrease in mortgage interest rates, partially offset by $2 million in net derivative gains."
It added: "Foreclosure-related charges during the second quarter of 2012 were down from $65 million in the first quarter 2012, but still high relative to $24 million in the second quarter 2011. The continued elevated levels of foreclosure-related charges were reflective of a significant increase in repurchase requests, primarily from the GSEs."
PHH Mortgage is the nation's largest private-label mortgage originator. The publicly traded company also manages a large fleet business.
