PHH Corp. reported lower earnings from its mortgage production business for the first quarter as it expanded its retail lending activities.
The Mount Laurel, N.J, company said net income from originations totaled $45 million, down 62% from a year ago. The profit decline is due to “lower interest rate lock commitments expected to close and greater operating expenses from the expansion of our retail volumes,” PHH said in its earnings release.
Loan closings totaled $13.3 billion in the first quarter, down 5% from the first quarter of 2012. Retail production is up 20% from a year ago and comprised 87% of total originations in the first quarter.
On the servicing side,
As of March 31, PHH had a $136.8 billion (UPB) servicing portfolio, up 9% from a year ago.
“We believe we are appropriately positioned in our mortgage business for a rising interest rate environment by being in both origination and servicing,” said PHH president and chief executive Glen Messina.
“We intend to scale our mortgage production costs to be consistent with expected volumes, our commitment to high customer service levels, and the rapidly changing regulatory environment,” the CEO added.
The company noted in its press release that it assumed $47 billion in subservicing from HSBC in the second quarter. During 2Q13, PHH “commenced originations and servicing under our private-label arrangement with HSBC.”
