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.