PHH remains in compliance with Ocwen deal's financial conditions

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PHH Corp. remained above the adjusted net worth and cash requirements for the company's proposed acquisition by Ocwen to take place, even though it lost $35 million in the second quarter.

PHH had stockholders' equity of $489 million as of June 30, and any adjustments to calculate the adjusted net worth requirement set by the merger agreement were immaterial, the company said in a press release. The proscribed amount for the second quarter under the agreement was $434 million; PHH was allowed to be $47.5 million below that mark.

The company ended the quarter with cash and cash equivalents of $453 million. The proscribed amount for Ocwen to terminate the deal was $338 million of cash on hand.

For the second quarter, PHH's net loss from continuing operations was $37 million. In the same period last year, PHH had a net loss of $46 million and a net loss from continuing operations of $42 million.

Its second-quarter 2017 loss included charges related from its business shift to subservicing and a $13 million pretax provision for a legal settlement.

In the first quarter, PHH lost $30 million. Ocwen reported a $30 million net loss for the second quarter due to expenses related to the merger.

The mortgage servicing business lost $21 million during the quarter, an improvement from the $43 million loss for the same period last year.

PHH currently services 586,609 loans representing $129 billion of unpaid principal balance. This includes 550,942 loans in its subservicing portfolio.

However, current subservicing clients representing 22% of those units are transferring those loans to other subservicers. Of the approximately 140,000 units involved, 45,000 were transferred during the second quarter.

PHH only originates loans on a portfolio defense basis. For its continuing mortgage production business, it lost $14 million during the quarter, up from a $7 million loss one year prior.

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