PHH remains in compliance with Ocwen deal's financial conditions
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.
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.