A Sale Near for PHH?

PHH Corp. here, the nation's 10th largest servicer, has adopted a policy of not entering into "employment agreements" with any of its executives or workers, a move that some industry executives say could be a precursor to a sale.

The company, the parent of PHH Mortgage, announced the change in a filing with the Securities and Exchange Comm-ission in early March.

As Mortgage Servicing News went to press, the company had not returned several telephone calls.

One mortgage executive familiar with PHH - formerly known as Cendant Mortgage - said venture capital firms are looking at the company. "Not having management contracts will make it easier to sell," said the executive, requesting his name not be used.

PHH's CEO, Terry Edwards, had a three-year contract with the company, but he too agreed to terminate it and continue to serve at the private-label lender on an "at-will" basis.

One investment banking veteran, requesting his name not be used, said it is "highly unusual" for a lender as large as PHH (formerly known as Cendant Mortgage) to do away with management contracts.

The company services about $145 billion in residential loans. It is the second-largest non-depository mortgage banker in the U.S. (GMAC Mortgage, Horsham, Pa., is the largest.)

PHH's spin-off from its former parent, Cendant Corp. of New York, was effective Feb. 1. Last year, prior to going public, the company was for sale but could not come to terms with any bidders.

Sources said that at one point Cendant Corp. was hoping to get between $1.7 billion and $2 billion for the company. PHH, which includes a corporate fleet business, currently has a market capitalization of about $1.2 billion.

The largest private-label funder in the U.S., PHH has a client list that includes Merrill Lynch, Mellon Bank and others.

Meanwhile, as interest rates continue to tick upwards, more bulk servicing packages are coming to market.

At press time, Countrywide Servicing Exchange, Pasadena, Calif., was offering two bulk packages - one for $1.3 billion and another for $1.4 billion. Both portfolios represent Fannie Mae/Freddie Mac product.

Also, Hanover Trade, Edison, N.J., is offering a $313 million package of bulk servicing rights.

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