Servicing Hedge Challenges PHH
PHH Corp., which is in the midst of an accounting review, released un-audited first-quarter performance measures last month, including what the company's CEO described as "disappointing" mortgage results related to mortgage servicing, among other issues.
Moreover, PHH Corp. has not completed its financial statements for last year and does not expect to be ready to file its second-quarter 2006 statements on time either, the company said last week.
Terry Edwards, president and CEO of PHH, said mortgage results suffered due to "industrywide margin pressure, loan origination volume declines and increased costs to hedge the servicing portfolio."
During the first quarter, PHH reported total mortgage closings of $9.24 billion, down slightly from $9.42 billion in the first quarter of last year.
The company's mortgage loan servicing portfolio grew to $156 billion as of March 31, up about 8% from a total of $143.5 billion as of March 31, 2004.
On the positive side, he said PHH has signed five new outsource clients for mortgage services, including Citizens Bank of Michigan, Columbia State Bank, Arizona Federal Credit Union and TD Banknorth. PHH estimates that the annual origination volume from its new clients is about $3 billion.
Mr. Edwards said in the company news release that PHH was pleased with the performance of its fleet management division, which includes leased vehicles, maintenance cards, fuel cards and accident management services.
PHH said that some of its accounting adjustments resulted from its February 2005 spin-off from the Cendant Corp. as a separate, publicly traded company. But the company said other accounting issues that are not related to the spin-off also are under review.
AT A GLANCE: PHH's Servicing Portfolio
Volume at 3/31/06 $158 Billion
Volume at 3/31/05 $146 Billion
12-Month Growth Rate 8%
Servicing Market Share 1.87%
SOURCE: MSN/Quarterly Data Report (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com