B of A Terminates Origination Agreement with PHH

Bank of America has ended its agreement with PHH Corp. that saw the Mount Laurel, N.J.-based company perform private-label originations for Merrill Lynch.

PHH received written notice on Sept. 27 that the bank would exercise its right to terminate the agreement without cause. The end of the contract will be effective as of March 31, 2017, according to a regulatory filing posted Tuesday.

Bank of America also has the contractual right to request termination and transition assistance services for up to 12 months following the March 31 termination date.

PHH estimates the Merrill Lynch origination business will contribute $45 million of pretax earnings for fiscal year 2016, per its estimate of loan closing volume for 2016 it said in the filing. PHH is working to reduce its facilities footprint and will make an effort to realign operating costs in response to the loss of Merrill Lynch production volume.

Earlier this year, Bank of America said it planned to withdraw the Merrill Lynch origination and subservicing business from PHH. Then, the company indicated in its second-quarter results that Bank of America would insource much of Merrill Lynch's origination volume. At that time, PHH signaled that it believed Bank of America eventually would take more of its origination activity in-house in the future.

PHH also announced in late August that it would lose nearly a third of its subservicing portfolio after HSBC Bank sold the mortgage servicing rights on 139,000 loans to an undisclosed recipient who did not plan to use PHH as a subservicer.