PHH Production Up, Earnings Off

$13.1 billion 2nd quarter production
By MortgageDaily.com staff
8/12/2005

Reversing three consecutive quarters of falling production, PHH Corp.'s latest quarterly fundings took off. But net income took a hit from rising interest rates.

The parent of PHH Mortgage announced it closed $13.1 billion in mortgages during the second quarter, up from $9.4 billion in the prior quarter but way off the $17.6 billion a year earlier -- when the company still operated under the Cendant umbrella. The year-over-year decline was attributed to "lower refinance activity and the loss of Fleet Bank and USAA as previously reported."

The Mount Laurel, N.J.-based lender's production market share edged up to 1.7% from 1.45% in the first quarter, according to PHH's earnings announcement.

Purchase loans reportedly represented $9.2 billion of the latest production and refinances the rest.

The $146.7 billion servicing portfolio as of the end of the latest three-month period had a weighted-average note rate of 5.6% and total delinquency of 2.60%, PHH reported.

Second quarter net income of $18 million was off 75% from a year ago, the announcement said.

The results reflected a $17 million loss resulting from PHH's risk management activities related to interest rate lock commitments and mortgage loans held for sale. Declines in interest rates and widening ARM spreads during the second quarter were the main drivers of the loss, which included a $6 million deduction related to timing differences associated with the application of SFAS No. 133 that is expected to benefit the third quarter, PHH said.

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