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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Phh Corp | NYSE:PHH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 11.00 | 0 | 01:00:00 |
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MARYLAND
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52-0551284
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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3000 LEADENHALL ROAD
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08054
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MT. LAUREL, NEW JERSEY
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(Zip Code)
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(Address of principal executive offices)
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TABLE OF CONTENTS
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Page
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▪
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our expectations related to our strategic actions, their outcomes or the timing of any such actions, including our proposed Merger with Ocwen Financial Corporation ("Ocwen"), our estimates of transaction proceeds, operating losses and exit costs, the amount, timing and our expected use of any proceeds, and any other anticipated impacts on our results, client and counterparty relationships, debt arrangements, employee relations or expected value to shareholders;
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▪
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our projected financial results and expected capital structure for the remaining business after executing our strategic actions based on our assessment of the market for subservicing and portfolio retention services, our business strategy, our competitive position and our ability to execute;
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▪
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the method, amounts and timing of any capital returns to shareholders;
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▪
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the potential results of our subservicing business development efforts and actions to improve portfolio retention results;
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▪
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anticipated future origination volumes and loan margins in the mortgage industry;
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▪
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our expectations of the impacts of regulatory changes on our business;
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▪
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our assessment of legal and regulatory proceedings, other contingencies and reserves, and the associated impact on our financial statements and liquidity position; and
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▪
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the impact of the adoption of recently issued accounting pronouncements on our financial statements.
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▪
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the effects of our strategic actions, and any associated transactions, on our business, management resources, customer, counterparty and employee relationships, capital structure and financial position;
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▪
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our ability to execute and complete our remaining strategic actions and implement changes to meet our operational and financial objectives, including (i) restructuring our shared services platform; (ii) achieving our growth objectives and assumptions and (iii) meeting all of the closing conditions and completing our proposed Merger with Ocwen;
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▪
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any failure to execute any portion of the sales of private MSRs under our existing agreements, or realize estimated proceeds from the transactions, which may be driven by the following reasons, among other factors: (i) not receiving required private loan investor, trustees and/or client (originations source) approvals; (ii) changes in the composition of the portfolio and related servicing advances outstanding on each sale date; and (iii) not meeting any other conditions precedent to closing, as defined in the respective agreements;
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▪
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available excess cash from our strategic actions is dependent upon a variety of factors, including the execution of the sale of our private MSRs, the resolution of our outstanding legal and regulatory matters and the successful completion of other restructuring and capital management activities, including any unsecured debt repayments, in accordance with our assumptions;
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▪
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the effects of any significant reduction in subservicing units, whether by termination of our subservicing agreements or by transfers of units out of our portfolio, by any of our largest subservicing clients on a material portion of our subservicing portfolio;
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▪
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the ability to maintain our relationships with our existing clients, including our ability to comply with the terms of our private label and subservicing client agreements and any related service level agreements;
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▪
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the inability or unwillingness of any of the counterparties to our significant customer contracts, hedging agreements, or financing arrangements to perform their respective obligations under such contracts, or to renew on terms favorable to us, if at all;
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▪
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the effects of market volatility or macroeconomic changes and financial market regulations on the availability and cost of our financing arrangements, the value of our assets and the housing market;
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▪
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the effects of changes in current interest rates on our business, the value of our mortgage servicing rights and our financing costs;
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▪
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the impact of changes in U.S. financial conditions and fiscal and monetary policies, or any actions taken or to be taken by the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System on the credit markets and the U.S. economy;
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▪
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the effects of any significant adverse changes in the underwriting criteria or the existence or programs of government-sponsored entities, such as Fannie Mae and Freddie Mac, including any changes caused by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other actions of the federal government;
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▪
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the ability to maintain our status as a government sponsored entity-approved seller and servicer, including the ability to continue to comply with the respective selling and servicing guides, our ability to operationalize changes necessary to comply with updates to such guides and programs and our ability to maintain the required minimum capital;
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▪
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the effects of changes in, or our failure to comply with, laws and regulations, including mortgage- and real estate-related laws and regulations and those that we are exposed to through our private label relationships until the complete exit from this business channel;
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▪
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the effects of the outcome or resolutions of any inquiries, investigations or appeals related to our mortgage origination or servicing activities, any litigation related to our mortgage origination or servicing activities, or any related fines, penalties and increased costs, and the associated impact on our liquidity;
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▪
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the ability to obtain or renew financing on acceptable terms, if at all, to finance our mortgage loans held for sale and servicing advances;
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▪
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the ability to operate within the limitations imposed by our financing arrangements and to maintain or generate the amount of cash required to service our indebtedness and operate our business;
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▪
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any failure to comply with covenants or asset eligibility requirements under our financing arrangements; and
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▪
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the effects of any failure in or breach of our technology infrastructure, or those of our outsource providers, or any failure to implement changes to our information systems in a manner sufficient to comply with applicable laws, regulations and our contractual obligations.
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Item 1. Financial Statements
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|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
453
|
|
|
$
|
509
|
|
Restricted cash
|
41
|
|
|
33
|
|
||
Mortgage loans held for sale
|
55
|
|
|
103
|
|
||
Accounts receivable, net
|
58
|
|
|
73
|
|
||
Servicing advances, net
|
302
|
|
|
356
|
|
||
Mortgage servicing rights
|
483
|
|
|
476
|
|
||
Property and equipment, net
|
18
|
|
|
22
|
|
||
Other assets
|
28
|
|
|
25
|
|
||
Assets related to discontinued operations (Note 8)
|
4
|
|
|
214
|
|
||
Total assets
(1)
|
$
|
1,442
|
|
|
$
|
1,811
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
|
|
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Accounts payable and accrued expenses
|
$
|
67
|
|
|
$
|
98
|
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Subservicing advance liabilities
|
194
|
|
|
232
|
|
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Mortgage servicing rights secured liability
|
437
|
|
|
419
|
|
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Mortgage warehouse and advance facilities
|
59
|
|
|
117
|
|
||
Unsecured debt, net
|
118
|
|
|
118
|
|
||
Loan repurchase and indemnification liability
|
27
|
|
|
29
|
|
||
Other liabilities
|
42
|
|
|
46
|
|
||
Liabilities related to discontinued operations (Note 8)
|
9
|
|
|
199
|
|
||
Total liabilities
(1)
|
953
|
|
|
1,258
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
|
|
|
|
||||
EQUITY
|
|
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|
|
|
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Preferred stock, $0.01 par value; 1,090,000 shares authorized;
none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 273,910,000 shares authorized;
32,577,256 shares issued and outstanding at June 30, 2018;
32,547,258 shares issued and outstanding at December 31, 2017
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
566
|
|
|
565
|
|
||
Retained deficit
|
(68
|
)
|
|
(3
|
)
|
||
Accumulated other comprehensive loss
(2)
|
(9
|
)
|
|
(9
|
)
|
||
Total PHH Corporation stockholders’ equity
|
489
|
|
|
553
|
|
||
Total liabilities and equity
|
$
|
1,442
|
|
|
$
|
1,811
|
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(1)
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The Condensed Consolidated Balance Sheets include assets and liabilities of variable interest entities which can be used only to settle the obligations and liabilities of the variable interest entities which creditors or beneficial interest holders do not have recourse to PHH Corporation and subsidiaries. Refer to
Note 12, 'Variable Interest Entities'
for information about PHH Home Loans, LLC, whose assets and liabilities are part of the Company's discontinued operations, and as of
June 30, 2018
is no longer a variable interest entity. The following assets and liabilities relate solely to risks associated with the Company's ongoing involvement in Servicing Advance Receivables Trust:
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June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
Restricted cash
|
$
|
10
|
|
|
$
|
10
|
|
Servicing advances, net
|
46
|
|
|
56
|
|
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Total assets
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$
|
56
|
|
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$
|
66
|
|
Assets held as collateral
|
$
|
56
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$
|
66
|
|
|
|
|
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||||
LIABILITIES
|
|
|
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|
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Mortgage warehouse and advance facilities
|
$
|
20
|
|
|
$
|
32
|
|
Total liabilities
|
$
|
20
|
|
|
$
|
32
|
|
(2)
|
Includes amounts recorded related to the Company’s defined benefit pension plan, net of income tax benefits of
$6 million
as of both
June 30, 2018
and
December 31, 2017
. During both the
three and six
months ended
June 30, 2018
and
June 30, 2017
, there were no amounts reclassified out of Accumulated other comprehensive loss.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
|
|
||||||
Loan servicing income, net
|
$
|
40
|
|
|
$
|
28
|
|
|
$
|
83
|
|
|
$
|
61
|
|
Gain on loans held for sale, net
|
5
|
|
|
9
|
|
|
10
|
|
|
21
|
|
||||
Origination and other loan fees
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Net interest expense
|
(11
|
)
|
|
(6
|
)
|
|
(25
|
)
|
|
(14
|
)
|
||||
Other income
|
—
|
|
|
—
|
|
|
15
|
|
|
2
|
|
||||
Total net revenues
|
35
|
|
|
31
|
|
|
85
|
|
|
71
|
|
||||
|
|
|
|
|
|
|
|
||||||||
EXPENSES
|
|
|
|
|
|
|
|
|
|||||||
Salaries and related expenses
|
28
|
|
|
36
|
|
|
60
|
|
|
72
|
|
||||
Foreclosure and repossession expenses
|
3
|
|
|
5
|
|
|
6
|
|
|
12
|
|
||||
Professional and third-party service fees
|
16
|
|
|
22
|
|
|
34
|
|
|
53
|
|
||||
Technology equipment and software expenses
|
7
|
|
|
7
|
|
|
14
|
|
|
14
|
|
||||
Occupancy and other office expenses
|
6
|
|
|
6
|
|
|
12
|
|
|
11
|
|
||||
Depreciation and amortization
|
2
|
|
|
3
|
|
|
5
|
|
|
7
|
|
||||
Exit and disposal costs
|
—
|
|
|
4
|
|
|
—
|
|
|
13
|
|
||||
Other operating expenses
|
9
|
|
|
23
|
|
|
16
|
|
|
41
|
|
||||
Total expenses
|
71
|
|
|
106
|
|
|
147
|
|
|
223
|
|
||||
Loss from continuing operations before income taxes
|
(36
|
)
|
|
(75
|
)
|
|
(62
|
)
|
|
(152
|
)
|
||||
Income tax expense (benefit)
|
1
|
|
|
(33
|
)
|
|
1
|
|
|
(57
|
)
|
||||
Loss from continuing operations, net of tax
|
(37
|
)
|
|
(42
|
)
|
|
(63
|
)
|
|
(95
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
2
|
|
|
(8
|
)
|
|
(2
|
)
|
|
(26
|
)
|
||||
Net loss
|
(35
|
)
|
|
(50
|
)
|
|
(65
|
)
|
|
(121
|
)
|
||||
Less: net loss attributable to noncontrolling interest from discontinued operations
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Net loss attributable to PHH Corporation
|
$
|
(35
|
)
|
|
$
|
(46
|
)
|
|
$
|
(65
|
)
|
|
$
|
(113
|
)
|
Comprehensive loss attributable to PHH Corporation
|
$
|
(35
|
)
|
|
$
|
(46
|
)
|
|
$
|
(65
|
)
|
|
$
|
(113
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
$
|
(1.11
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(1.92
|
)
|
|
$
|
(1.77
|
)
|
From discontinued operations
|
0.04
|
|
|
(0.08
|
)
|
|
(0.08
|
)
|
|
(0.34
|
)
|
||||
Total attributable to PHH Corporation
|
$
|
(1.07
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
(2.00
|
)
|
|
$
|
(2.11
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted
|
32,668,668
|
|
|
53,342,256
|
|
|
32,657,107
|
|
|
53,511,445
|
|
|
PHH Corporation Stockholders’ Equity
|
|
|
||||||||||||||||||||||||
|
Total
Equity
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained (Deficit) Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Redeemable Noncontrolling Interest
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at December 31, 2017
|
$
|
553
|
|
|
32,547,258
|
|
|
$
|
—
|
|
|
$
|
565
|
|
|
$
|
(3
|
)
|
|
$
|
(9
|
)
|
|
|
$
|
—
|
|
Total comprehensive loss
|
(65
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
|
—
|
|
||||||
Stock compensation expense
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Stock issued under share-based payment plans
|
—
|
|
|
29,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Balance at June 30, 2018
|
$
|
489
|
|
|
32,577,256
|
|
|
$
|
—
|
|
|
$
|
566
|
|
|
$
|
(68
|
)
|
|
$
|
(9
|
)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at December 31, 2016
|
$
|
1,090
|
|
|
53,599,433
|
|
|
$
|
1
|
|
|
$
|
885
|
|
|
$
|
214
|
|
|
$
|
(10
|
)
|
|
|
$
|
33
|
|
Total comprehensive loss
|
(113
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
|
(8
|
)
|
||||||
Adjustment to redemption value of noncontrolling interest
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
|
7
|
|
||||||
Stock compensation expense
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Reclassification of stock awards
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Stock issued under share-based payment plans
|
(1
|
)
|
|
110,550
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Repurchase of Common stock
|
(24
|
)
|
|
(1,760,964
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Balance at June 30, 2017
|
$
|
946
|
|
|
51,949,019
|
|
|
$
|
1
|
|
|
$
|
854
|
|
|
$
|
101
|
|
|
$
|
(10
|
)
|
|
|
$
|
32
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(65
|
)
|
|
$
|
(121
|
)
|
Adjustments to reconcile Net loss to net cash provided by operating activities:
|
|
|
|
|
|
||
Capitalization of originated mortgage servicing rights
|
(3
|
)
|
|
(18
|
)
|
||
Change in fair value of mortgage servicing rights and related derivatives
|
(13
|
)
|
|
58
|
|
||
Change in fair value of mortgage servicing rights secured liability
|
18
|
|
|
1
|
|
||
Origination of mortgage loans held for sale
|
(417
|
)
|
|
(3,791
|
)
|
||
Proceeds on sale of and payments from mortgage loans held for sale
|
646
|
|
|
3,977
|
|
||
Net gain on interest rate lock commitments, mortgage loans held for sale and related derivatives
|
(13
|
)
|
|
(121
|
)
|
||
Depreciation and amortization
|
5
|
|
|
7
|
|
||
Deferred income tax benefit
|
—
|
|
|
(90
|
)
|
||
Other adjustments and changes in other assets and liabilities, net
|
(50
|
)
|
|
148
|
|
||
Net cash provided by operating activities
|
108
|
|
|
50
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Net cash paid on derivatives related to mortgage servicing rights
|
—
|
|
|
(45
|
)
|
||
Proceeds on sale of mortgage servicing rights
|
9
|
|
|
91
|
|
||
Proceeds on sale of servicing advances
|
—
|
|
|
11
|
|
||
Purchases of property and equipment
|
(2
|
)
|
|
—
|
|
||
Net cash provided by investing activities
|
7
|
|
|
57
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from secured borrowings
|
722
|
|
|
4,463
|
|
||
Principal payments on secured borrowings
|
(914
|
)
|
|
(4,533
|
)
|
||
Proceeds from mortgage servicing rights secured liability
|
8
|
|
|
102
|
|
||
Repurchase of common stock
|
—
|
|
|
(24
|
)
|
||
Cash used to acquire mandatorily redeemable noncontrolling interest
|
(19
|
)
|
|
—
|
|
||
Other, net
|
—
|
|
|
(2
|
)
|
||
Net cash (used in) provided by financing activities
|
(203
|
)
|
|
6
|
|
||
|
|
|
|
||||
Net (decrease) increase in Cash, cash equivalents and restricted cash
|
(88
|
)
|
|
113
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
583
|
|
|
963
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
495
|
|
|
$
|
1,076
|
|
Cash, cash equivalents and restricted cash at end of period - continuing operations
|
$
|
494
|
|
|
$
|
1,000
|
|
Cash, cash equivalents and restricted cash at end of period - discontinued operations
|
$
|
1
|
|
|
$
|
76
|
|
1. Summary of Significant Accounting Policies
|
|
June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Cash and cash equivalents
|
$
|
453
|
|
|
$
|
940
|
|
Restricted cash
(1)
|
41
|
|
|
60
|
|
||
Assets related to discontinued operations
|
1
|
|
|
76
|
|
||
Total Cash, cash equivalents and restricted cash
|
$
|
495
|
|
|
$
|
1,076
|
|
(1)
|
Represents amounts specifically designated to repay debt, provide additional collateral to support certain obligations with Fannie Mae, to provide over-collateralization within warehouse facilities and the servicing advance facility and to support letters of credit.
|
Accounting Standard Update
|
|
ASU 2017-09
|
Stock Compensation: Scope of Modification Accounting
|
ASU 2017-07
|
Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
ASU 2017-05
|
Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets
|
ASU 2017-01
|
Business Combinations: Clarifying the Definition of a Business
|
ASU 2016-15
|
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
|
ASU 2016-01
|
Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities
|
2. Earnings Per Share
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions, except share and per share data)
|
||||||||||||||
Loss from continuing operations, net of tax
|
$
|
(37
|
)
|
|
$
|
(42
|
)
|
|
$
|
(63
|
)
|
|
$
|
(95
|
)
|
Income (loss) from discontinued operations attributable to PHH Corporation, net of tax
|
2
|
|
|
(4
|
)
|
|
(2
|
)
|
|
(18
|
)
|
||||
Net loss attributable to PHH Corporation
|
$
|
(35
|
)
|
|
$
|
(46
|
)
|
|
$
|
(65
|
)
|
|
$
|
(113
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding—basic & diluted
(1) (2)
|
32,668,668
|
|
|
53,342,256
|
|
|
32,657,107
|
|
|
53,511,445
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
$
|
(1.11
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(1.92
|
)
|
|
$
|
(1.77
|
)
|
From discontinued operations
|
0.04
|
|
|
(0.08
|
)
|
|
(0.08
|
)
|
|
(0.34
|
)
|
||||
Total attributable to PHH Corporation
|
$
|
(1.07
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
(2.00
|
)
|
|
$
|
(2.11
|
)
|
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive securities excluded from the computation of diluted shares:
|
|
|
|
|
|
|
|
||||||||
Outstanding stock-based compensation awards
(3)
|
224,448
|
|
|
1,098,464
|
|
|
224,448
|
|
|
1,098,464
|
|
(1)
|
For the
three and six
months ended
June 30, 2017
, includes the reduction of
1,760,964
shares repurchased pursuant to an open market repurchase program during May 2017 and June 2017.
|
(2)
|
For the
three months ended June 30, 2018
, the Company had a net loss from continuing operations and, as a result, there were no potentially dilutive securities included in the denominator for computing dilutive earnings per share.
|
(3)
|
For the
three and six
months ended
June 30, 2018
, excludes
62,201
shares that are contingently issuable for which the contingency has not been met.
|
3. Revenues
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Mortgage Servicing Segment
|
|
Mortgage Production Segment
|
|
|
|
|
||||||||||||
|
Subservicing
|
|
Owned Servicing
|
|
Portfolio Retention
|
|
Total Continuing Operations
|
|
Discontinued Operations
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Loan servicing income
|
$
|
26
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
—
|
|
Changes in fair value of MSRs and secured liability
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||
Origination and other loan fees
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|||||
Gain on loans held for sale, net
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
1
|
|
|||||
Net interest expense
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|||||
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total net revenues
(1)
|
$
|
26
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
35
|
|
|
$
|
2
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Mortgage Servicing Segment
|
|
Mortgage Production Segment
|
|
|
|
|
||||||||||||
|
Subservicing
|
|
Owned Servicing
|
|
Portfolio Retention
|
|
Total Continuing Operations
|
|
Discontinued Operations
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Loan servicing income
|
$
|
50
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
88
|
|
|
$
|
—
|
|
Changes in fair value of MSRs and secured liability
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||||
Origination and other loan fees
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|||||
Gain on loans held for sale, net
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
2
|
|
|||||
Net interest expense
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|||||
Other income
(2)
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
4
|
|
|||||
Total net revenues
(1)
|
$
|
50
|
|
|
$
|
23
|
|
|
$
|
12
|
|
|
$
|
85
|
|
|
$
|
9
|
|
(1)
|
During the
three and six
months ended
June 30, 2018
discontinued operations includes
$1 million
and
$5 million
, respectively, of revenue that was accounted for under ASC 606 as discussed below. During both the
three and six
months ended
June 30, 2018
, Subservicing includes
$2 million
of revenue that was accounted for under ASC 606, which primarily related to certain ancillary fees associated with subservicing contracts that are recognized over the term of the contract.
|
(2)
|
During the
six months ended June 30, 2018
, Other income within the Mortgage Servicing segment includes a
$15 million
gain related to a settlement with an insurance carrier for certain claims related to the Company's previously disclosed legal and regulatory settlements. Refer to
Note 11, 'Commitments and Contingencies'
for additional information.
|
•
|
Origination and other loan fees.
The Company provided origination and fulfillment services to PLS clients under Origination Assistance Agreements ("OAA") through March 31, 2018, and the origination assistance fees associated with fee-based closings under these agreements are subject to the new revenue standard. The services performed under the OAA represent a stand-ready obligation, and the Company has applied the practical expedient to recognize revenue in the amount it has the right to invoice, which occurs at the time the loan is originated and funded. The right to invoice practical expedient is consistent with the historical accounting treatment of origination assistance fees in prior periods. During the six months ended
June 30, 2018
, within revenues from discontinued operations, Origination and other loans fees includes
$2 million
of origination assistance fees that were accounted for under ASC 606.
|
•
|
Other income.
In connection with the exit of the PLS business, the Company is contractually required to provide certain transition support services to its clients, which includes the return of records and loan document images. The Company is entitled to certain transition support fees associated with these services, and the fees are recognized upon the transfer of control of the records and loan document images to the customer. During the
three and six
months ended
June 30, 2018
, within revenues from discontinued operations, Other income includes
$1 million
and
$3 million
, respectively, of transition support fees that were accounted for under ASC 606.
|
4. Servicing Activities
|
|
June 30,
2018 |
|
December 31,
2017 |
||||||||||||
|
Fair Value
|
|
UPB
|
|
Fair Value
|
|
UPB
|
||||||||
|
(In millions)
|
||||||||||||||
Capitalized MSRs owned
|
$
|
46
|
|
|
$
|
7,121
|
|
|
$
|
57
|
|
|
$
|
8,592
|
|
Capitalized MSRs under secured borrowing arrangements and subserviced
|
437
|
|
|
45,770
|
|
|
419
|
|
|
49,193
|
|
||||
Total capitalized MSRs
|
$
|
483
|
|
|
$
|
52,891
|
|
|
$
|
476
|
|
|
$
|
57,785
|
|
Subserviced
|
|
|
75,810
|
|
|
|
|
89,844
|
|
||||||
Other servicing
|
|
|
323
|
|
|
|
|
526
|
|
||||||
Total
|
|
|
$
|
129,024
|
|
|
|
|
$
|
148,155
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Servicing fees from capitalized portfolio
|
$
|
6
|
|
|
$
|
48
|
|
|
$
|
12
|
|
|
$
|
102
|
|
Subservicing fees
|
16
|
|
|
10
|
|
|
33
|
|
|
21
|
|
||||
MSR yield on secured asset
(1)
|
13
|
|
|
1
|
|
|
27
|
|
|
1
|
|
||||
Late fees and other ancillary revenue
|
10
|
|
|
6
|
|
|
18
|
|
|
15
|
|
||||
Loss on sale of MSRs and related costs
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(13
|
)
|
||||
Curtailment interest paid to investors
|
—
|
|
|
(3
|
)
|
|
(1
|
)
|
|
(6
|
)
|
||||
Loan servicing income
|
44
|
|
|
58
|
|
|
88
|
|
|
120
|
|
||||
Change in fair value of MSRs, net of related derivatives
(2)
|
(10
|
)
|
|
(29
|
)
|
|
13
|
|
|
(58
|
)
|
||||
Change in fair value of MSRs secured liability
|
6
|
|
|
(1
|
)
|
|
(18
|
)
|
|
(1
|
)
|
||||
Loan servicing income, net
|
$
|
40
|
|
|
$
|
28
|
|
|
$
|
83
|
|
|
$
|
61
|
|
(1)
|
Amounts are related to the secured borrowing treatment of the MSR sales to New Residential. The income from the MSR yield on secured asset is fully offset by the implied interest cost recognized on the MSRs secured liability within Net interest expense. Refer to
Note 9, 'Debt and Borrowing Arrangements'
for additional information on the components of Net interest expense.
|
(2)
|
There was no MSR derivative activity during the
three and six months ended
June 30, 2018
. MSR derivative gains during the
three and six months ended
June 30, 2017
were not significant.
|
|
Six Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
MSRs Owned
|
|
MSRs Secured Asset
|
||||||||||||
|
(In millions)
|
||||||||||||||
Balance, beginning of period
|
$
|
8,592
|
|
|
$
|
84,657
|
|
|
$
|
49,193
|
|
|
$
|
—
|
|
Additions from loans sold with servicing retained
|
871
|
|
|
1,605
|
|
|
—
|
|
|
—
|
|
||||
Payoffs and curtailments
|
(744
|
)
|
|
(6,649
|
)
|
|
(4,027
|
)
|
|
(80
|
)
|
||||
Sales that have been derecognized
|
(994
|
)
|
|
(12,516
|
)
|
|
—
|
|
|
—
|
|
||||
Sales accounted for as secured borrowing
|
(604
|
)
|
|
(13,164
|
)
|
|
604
|
|
|
13,164
|
|
||||
Balance, end of period
|
$
|
7,121
|
|
|
$
|
53,933
|
|
|
$
|
45,770
|
|
|
$
|
13,084
|
|
|
Six Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
MSRs Owned
|
|
MSRs Secured Asset
|
||||||||||||
|
(In millions)
|
||||||||||||||
Balance, beginning of period
|
$
|
57
|
|
|
$
|
690
|
|
|
$
|
419
|
|
|
$
|
—
|
|
Additions from loans sold with servicing retained
|
3
|
|
|
18
|
|
|
—
|
|
|
—
|
|
||||
Sales that have been derecognized
|
(9
|
)
|
|
(95
|
)
|
|
—
|
|
|
—
|
|
||||
Sales accounted for as secured borrowing
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
113
|
|
||||
Changes in fair value due to:
|
|
|
|
|
|
|
|
||||||||
Realization of expected cash flows
|
(4
|
)
|
|
(53
|
)
|
|
(37
|
)
|
|
—
|
|
||||
Changes in market inputs or assumptions used in the valuation model
|
(1
|
)
|
|
(6
|
)
|
|
55
|
|
|
1
|
|
||||
Balance, end of period
|
$
|
46
|
|
|
$
|
441
|
|
|
$
|
437
|
|
|
$
|
114
|
|
|
June 30, 2018
|
||||||
|
UPB
|
|
Fair Value
|
||||
|
(In millions)
|
||||||
MSR commitments:
|
|
|
|
||||
New Residential
|
$
|
5,257
|
|
|
$
|
30
|
|
Other counterparties
|
14
|
|
|
—
|
|
||
MSRs capitalized under secured borrowing arrangements and subserviced
|
45,770
|
|
|
437
|
|
||
Non-committed
|
1,850
|
|
|
16
|
|
||
Total MSRs
|
$
|
52,891
|
|
|
$
|
483
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Proceeds from new loan sales or securitizations
|
$
|
584
|
|
|
$
|
1,651
|
|
Servicing fees from capitalized portfolio
(1)
|
29
|
|
|
104
|
|
||
Purchases of previously sold loans
(2)
|
(2
|
)
|
|
(15
|
)
|
||
Servicing advances
(3)
|
(244
|
)
|
|
(627
|
)
|
||
Repayment of servicing advances
(3)
|
301
|
|
|
782
|
|
(1)
|
Includes servicing fees, late fees and other ancillary servicing revenue in which the Company has continuing involvement.
|
(2)
|
Includes purchases of repurchase eligible loans and excludes indemnification payments to investors and insurers of the related mortgage loans.
|
(3)
|
Outstanding servicing advance receivables are presented in Servicing advances, net in the
Condensed Consolidated Balance Sheets
, except for advances related to loans in foreclosure or real estate owned, which are included in Other assets. During the six months ended June 30, 2018, repayment of servicing advances for advances associated with sales of MSRs were not significant. During the
six months ended June 30, 2017
, repayment of servicing advances included
$21 million
received for advances associated with sales of MSRs.
|
5. Derivatives
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Interest rate lock commitments
|
$
|
51
|
|
|
$
|
139
|
|
Forward delivery commitments
|
126
|
|
|
614
|
|
6. Fair Value Measurements
|
|
June 30, 2018
|
||||||||||||||||||
|
Level
One
|
|
Level
Two
|
|
Level
Three
|
|
Cash
Collateral
and Netting
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage loans held for sale
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
55
|
|
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
483
|
|
|
—
|
|
|
483
|
|
|||||
Other assets—Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Assets related to discontinued operations
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage servicing rights secured liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
437
|
|
|
$
|
—
|
|
|
$
|
437
|
|
Other liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liability to deliver MSRs
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
December 31, 2017
|
||||||||||||||||||
|
Level
One
|
|
Level
Two
|
|
Level
Three
|
|
Cash
Collateral
and Netting
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage loans held for sale
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
103
|
|
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
476
|
|
|
—
|
|
|
476
|
|
|||||
Other assets—Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Assets related to discontinued operations
|
—
|
|
|
167
|
|
|
1
|
|
|
—
|
|
|
168
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage servicing rights secured liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
419
|
|
Other liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liability to deliver MSRs
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Total
|
|
Loans 90 days or
more past due and
on non-accrual
status
|
|
Total
|
|
Loans 90 days or
more past due and
on non-accrual
status
|
||||||||
|
(In millions)
|
||||||||||||||
Carrying amount
|
$
|
55
|
|
|
$
|
1
|
|
|
$
|
103
|
|
|
$
|
1
|
|
Aggregate unpaid principal balance
|
55
|
|
|
1
|
|
|
103
|
|
|
2
|
|
||||
Difference
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
||
Initial capitalization rate of additions to MSRs owned
|
1.12
|
%
|
|
1.14
|
%
|
|
June 30,
2018 |
|
December 31,
2017 |
||
MSRs Owned
|
|
|
|
||
Capitalization servicing rate
|
0.65
|
%
|
|
0.67
|
%
|
Capitalization servicing multiple
|
2.2
|
|
|
2.3
|
|
Weighted-average servicing fee (in basis points)
|
29
|
|
|
29
|
|
Weighted-average life (years)
|
4.7
|
|
|
5.7
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||
MSRs Under Secured Borrowing Arrangement
|
|
|
|
||
Capitalization servicing rate
|
0.95
|
%
|
|
0.85
|
%
|
Capitalization servicing multiple
|
3.6
|
|
|
3.2
|
|
Weighted-average servicing fee (in basis points)
|
27
|
|
|
27
|
|
Weighted-average life (years)
|
5.9
|
|
|
5.6
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||
MSRs Owned
|
|
|
|
||
Weighted-average prepayment speed (CPR)
|
13.2
|
%
|
|
9.2
|
%
|
Option adjusted spread, in basis points (OAS)
|
736
|
|
|
393
|
|
Weighted-average delinquency rate
|
11.8
|
%
|
|
12.4
|
%
|
|
June 30,
2018 |
|
December 31,
2017 |
||
MSRs Under Secured Borrowing Arrangement
|
|
|
|
||
Weighted-average prepayment speed (CPR)
|
9.9
|
%
|
|
11.2
|
%
|
Option adjusted spread, in basis points (OAS)
|
861
|
|
|
928
|
|
Weighted-average delinquency rate
|
4.0
|
%
|
|
4.0
|
%
|
|
June 30, 2018
|
||||||||||
|
Weighted-
Average
Prepayment
Speed
|
|
Option
Adjusted
Spread
|
|
Weighted-
Average
Delinquency
Rate
|
||||||
|
(In millions)
|
||||||||||
MSRs Owned
|
|
||||||||||
Impact on fair value of 10% adverse change
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Impact on fair value of 20% adverse change
|
(5
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|||
|
|
|
|
|
|
||||||
MSRs Under Secured Borrowing Arrangement
|
|
|
|
|
|
||||||
Impact on fair value of 10% adverse change
|
$
|
(15
|
)
|
|
$
|
(18
|
)
|
|
$
|
(5
|
)
|
Impact on fair value of 20% adverse change
|
(29
|
)
|
|
(35
|
)
|
|
(9
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||
Weighted-average prepayment speed (CPR)
|
9.9
|
%
|
|
11.2
|
%
|
Option adjusted spread, in basis points (OAS)
|
861
|
|
|
928
|
|
Weighted-average delinquency rate
|
4.0
|
%
|
|
4.0
|
%
|
|
Three Months Ended
June 30, 2018 |
|
Three Months Ended
June 30, 2017 |
||||||||||||||||||||||||||||||||
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MSRs Secured Liability
|
|
Liability to Deliver MSRs
|
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MSRs Secured Liability
|
||||||||||||||||||
|
(In millions)
|
|
|
||||||||||||||||||||||||||||||||
Balance, beginning of period
|
$
|
8
|
|
|
$
|
496
|
|
|
$
|
3
|
|
|
$
|
(443
|
)
|
|
$
|
(1
|
)
|
|
$
|
32
|
|
|
$
|
596
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Purchases, Issuances, Sales and Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Purchases
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
7
|
|
|
—
|
|
|
(113
|
)
|
|||||||||
Sales
|
(4
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|||||||||
Settlements
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
13
|
|
|
1
|
|
|
(6
|
)
|
|
—
|
|
|
(7
|
)
|
|
1
|
|
|||||||||
|
(3
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
13
|
|
|
1
|
|
|
(2
|
)
|
|
(12
|
)
|
|
(7
|
)
|
|
(112
|
)
|
|||||||||
Realized and unrealized gains (losses) included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Gain on loans held for sale, net
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|||||||||
Change in fair value of MSRs
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||||
Net interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||||
|
—
|
|
|
(10
|
)
|
|
4
|
|
|
(7
|
)
|
|
(1
|
)
|
|
—
|
|
|
(29
|
)
|
|
7
|
|
|
(2
|
)
|
|||||||||
Transfers into Level Three
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Transfers out of Level Three
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Balance, end of period
|
$
|
5
|
|
|
$
|
483
|
|
|
$
|
2
|
|
|
$
|
(437
|
)
|
|
$
|
(1
|
)
|
|
$
|
32
|
|
|
$
|
555
|
|
|
$
|
4
|
|
|
$
|
(114
|
)
|
|
Six Months Ended
June 30, 2018 |
|
Six Months Ended
June 30, 2017 |
||||||||||||||||||||||||||||||||
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MSRs Secured Liability
|
|
Liability to Deliver MSRs
|
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MSRs Secured Liability
|
||||||||||||||||||
|
(In millions)
|
|
|
||||||||||||||||||||||||||||||||
Balance, beginning of period
|
$
|
9
|
|
|
$
|
476
|
|
|
$
|
4
|
|
|
$
|
(419
|
)
|
|
$
|
(2
|
)
|
|
$
|
47
|
|
|
$
|
690
|
|
|
$
|
9
|
|
|
$
|
—
|
|
Purchases, Issuances, Sales and Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Purchases
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Issuances
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
18
|
|
|
—
|
|
|
(113
|
)
|
|||||||||
Sales
|
(9
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(95
|
)
|
|
—
|
|
|
—
|
|
|||||||||
Settlements
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
27
|
|
|
3
|
|
|
(9
|
)
|
|
—
|
|
|
(24
|
)
|
|
1
|
|
|||||||||
|
(5
|
)
|
|
(6
|
)
|
|
(9
|
)
|
|
27
|
|
|
3
|
|
|
(18
|
)
|
|
(77
|
)
|
|
(24
|
)
|
|
(112
|
)
|
|||||||||
Realized and unrealized gains (losses) included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Gain on loans held for sale, net
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|||||||||
Change in fair value of MSRs
|
—
|
|
|
13
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||||
Net interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||||
|
—
|
|
|
13
|
|
|
7
|
|
|
(45
|
)
|
|
(2
|
)
|
|
1
|
|
|
(58
|
)
|
|
19
|
|
|
(2
|
)
|
|||||||||
Transfers into Level Three
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Transfers out of Level Three
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Balance, end of period
|
$
|
5
|
|
|
$
|
483
|
|
|
$
|
2
|
|
|
$
|
(437
|
)
|
|
$
|
(1
|
)
|
|
$
|
32
|
|
|
$
|
555
|
|
|
$
|
4
|
|
|
$
|
(114
|
)
|
7. Exit Costs
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Non-Cash Charges & Impairments
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Costs incurred in current year:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Second quarter
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Cumulative costs recognized in prior years
|
34
|
|
|
6
|
|
|
17
|
|
|
11
|
|
|
68
|
|
|||||
Estimate of remaining costs
(1)
|
—
|
|
|
16
|
|
|
2
|
|
|
—
|
|
|
18
|
|
|||||
Total
|
$
|
34
|
|
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
11
|
|
|
$
|
88
|
|
(1)
|
The Company expects to incur substantially all of the remaining exit costs during the remainder of 2018, a significant portion of which relate to facility costs that are dependent upon the timing of when we vacate certain facilities.
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Non-Cash Charges & Impairments
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Costs incurred in current year:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Second quarter
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|||||
Cumulative costs recognized in prior years
|
30
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
35
|
|
|||||
Estimate of remaining costs
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total Exit and disposal costs
|
32
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
38
|
|
|||||
Less: Exit and disposal costs related to discontinued operations
(1)
|
19
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
25
|
|
|||||
Total Exit and disposal costs related to continuing operations
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
(1)
|
Amounts include the estimate of remaining program costs.
|
|
Continuing Operations
|
|
|
|
|
||||||||||
|
Mortgage Servicing Segment
|
|
Other
|
|
Discontinued Operations
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Costs incurred in current year:
|
|
|
|
|
|
|
|
||||||||
First quarter
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Second quarter
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Cumulative costs recognized in prior years
|
2
|
|
|
11
|
|
|
22
|
|
|
35
|
|
||||
Estimate of remaining costs
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total
|
$
|
2
|
|
|
$
|
11
|
|
|
$
|
25
|
|
|
$
|
38
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Balance, beginning of period
|
$
|
43
|
|
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
53
|
|
Charges
|
1
|
|
|
—
|
|
|
3
|
|
|
4
|
|
||||
Paid
|
(30
|
)
|
|
(1
|
)
|
|
(10
|
)
|
|
(41
|
)
|
||||
Balance, end of period
|
$
|
14
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Balance, beginning of period
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
25
|
|
Charges
|
29
|
|
|
6
|
|
|
8
|
|
|
43
|
|
||||
Paid
|
(1
|
)
|
|
(6
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Adjustments
(1)
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Balance, end of period
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
65
|
|
(1)
|
This adjustment represents previously accrued amounts of existing retention and incentive awards for exiting employees that will be paid out upon termination.
|
8. Discontinued Operations
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Net revenues
|
$
|
2
|
|
|
$
|
81
|
|
|
$
|
9
|
|
|
$
|
155
|
|
Total expenses
|
—
|
|
|
90
|
|
|
11
|
|
|
192
|
|
||||
Loss before income taxes
|
2
|
|
|
(9
|
)
|
|
(2
|
)
|
|
(37
|
)
|
||||
Income tax benefit
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(11
|
)
|
||||
Net loss
|
2
|
|
|
(8
|
)
|
|
(2
|
)
|
|
(26
|
)
|
||||
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Income (loss) from discontinued operations attributable to PHH Corporation, net of tax
|
$
|
2
|
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(18
|
)
|
|
June 30,
2018 |
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
33
|
|
Restricted cash
|
1
|
|
|
8
|
|
||
Mortgage loans held for sale
|
3
|
|
|
167
|
|
||
Accounts receivable, net
|
—
|
|
|
5
|
|
||
Other assets
|
—
|
|
|
1
|
|
||
Total assets related to discontinued operations
|
$
|
4
|
|
|
$
|
214
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
8
|
|
|
$
|
43
|
|
Mortgage warehouse and advance facilities
|
1
|
|
|
135
|
|
||
Mandatorily redeemable noncontrolling interest
|
—
|
|
|
20
|
|
||
Other liabilities
|
—
|
|
|
1
|
|
||
Total liabilities related to discontinued operations
|
$
|
9
|
|
|
$
|
199
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Capitalization of originated mortgage servicing rights
|
$
|
(2
|
)
|
|
$
|
(10
|
)
|
Origination of mortgage loans held for sale
|
(52
|
)
|
|
(3,185
|
)
|
||
Proceeds on sale of and payments from mortgage loans held for sale
|
208
|
|
|
3,226
|
|
||
Net gain on interest rate lock commitments, mortgage loans held for sale and related derivatives
|
(1
|
)
|
|
(100
|
)
|
||
Deferred income tax benefit
|
—
|
|
|
(11
|
)
|
9. Debt and Borrowing Arrangements
|
|
June 30, 2018
|
|
December 31,
2017 |
|||||||||||
|
Balance
|
|
Interest
Rate (1) |
|
Available
Capacity (2) |
|
Balance
|
|||||||
|
(In millions)
|
|||||||||||||
Committed warehouse facilities
|
$
|
36
|
|
|
4.3
|
%
|
|
$
|
63
|
|
|
$
|
67
|
|
Uncommitted warehouse facilities
|
3
|
|
|
—
|
|
|
222
|
|
|
18
|
|
|||
Servicing advance facility
|
20
|
|
|
3.8
|
%
|
|
5
|
|
|
32
|
|
|||
Mortgage warehouse and advance facilities
|
59
|
|
|
|
|
|
|
117
|
|
|||||
|
|
|
|
|
|
|
|
|||||||
Term notes due in 2019
|
97
|
|
|
7.375
|
%
|
|
n/a
|
|
|
97
|
|
|||
Term notes due in 2021
|
22
|
|
|
6.375
|
%
|
|
n/a
|
|
|
22
|
|
|||
Unsecured credit facilities
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|||
Unsecured debt, face value
|
119
|
|
|
|
|
|
|
|
|
119
|
|
|||
Debt issuance costs
|
(1
|
)
|
|
|
|
|
|
(1
|
)
|
|||||
Unsecured debt, net
|
118
|
|
|
|
|
|
|
118
|
|
|||||
Total
|
$
|
177
|
|
|
|
|
|
|
|
|
$
|
235
|
|
(1)
|
Interest rate shown represents the stated interest rate of outstanding borrowings, which may differ from the effective rate due to the amortization of premiums, discounts and issuance costs. Warehouse facilities and the servicing advance facility are variable-rate. Rate shown for Warehouse facilities represents the weighted-average rate of current outstanding borrowings.
|
(2)
|
Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements, including asset-eligibility requirements. Available capacity has been reduced by amounts that have been drawn related to discontinued operations, as detailed in
Note 8, 'Discontinued Operations'
.
|
|
Warehouse
Facilities
|
|
Servicing
Advance
Facility
|
|
Subservicing Advance Liabilities
(1)
|
|
MSRs Secured Liability
(2)
|
||||||||
|
(In millions)
|
||||||||||||||
Restricted cash
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Servicing advances
|
—
|
|
|
46
|
|
|
194
|
|
|
—
|
|
||||
Mortgage loans held for sale (unpaid principal balance)
|
40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
—
|
|
|
437
|
|
||||
Total
|
$
|
40
|
|
|
$
|
56
|
|
|
$
|
194
|
|
|
$
|
437
|
|
(1)
|
Under the terms of certain subservicing arrangements, the subservicing counterparty is required to fund servicing advances for their respective portfolios of subserviced loans. A subservicing advance liability is recorded for cash received from the counterparty to fund advances and is repaid to the counterparty upon the collection of the mortgage servicing advance receivables.
|
(2)
|
Represents MSRs that are accounted for as a secured borrowing arrangement.
|
|
Warehouse
Facilities
|
|
Servicing
Advance
Facility
|
|
Unsecured
Debt
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Within one year
|
$
|
39
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
59
|
|
Between one and two years
|
—
|
|
|
—
|
|
|
97
|
|
|
97
|
|
||||
Between two and three years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Between three and four years
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
||||
Between four and five years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
39
|
|
|
$
|
20
|
|
|
$
|
119
|
|
|
$
|
178
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Interest income
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
13
|
|
Secured interest expense
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(7
|
)
|
||||
MSRs secured interest expense
(1)
|
(13
|
)
|
|
(1
|
)
|
|
(27
|
)
|
|
(1
|
)
|
||||
Unsecured interest expense
|
—
|
|
|
(9
|
)
|
|
(1
|
)
|
|
(19
|
)
|
||||
Net interest expense
|
$
|
(11
|
)
|
|
$
|
(6
|
)
|
|
$
|
(25
|
)
|
|
$
|
(14
|
)
|
(1)
|
MSRs secured interest expense
is the implied interest cost on the
MSRs secured liability
.
MSRs secured interest expense
fully offsets the estimated yield on capitalized MSRs treated as a secured borrowing arrangement, which is included within Loan servicing income, net.
|
10. Income Taxes
|
11. Commitments and Contingencies
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Balance, beginning of period
|
$
|
40
|
|
|
$
|
73
|
|
Realized losses
|
(4
|
)
|
|
(13
|
)
|
||
Increase (decrease) in reserves due to:
|
|
|
|
|
|
||
Changes in assumptions
|
(1
|
)
|
|
2
|
|
||
New loan sales
|
—
|
|
|
1
|
|
||
Balance, end of period
|
$
|
35
|
|
|
$
|
63
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(In millions)
|
||||||
Loan repurchase and indemnification liability
|
$
|
27
|
|
|
$
|
29
|
|
Adjustment to value for real estate owned
|
6
|
|
|
9
|
|
||
Allowance for probable foreclosure losses
|
2
|
|
|
2
|
|
||
Total
|
$
|
35
|
|
|
$
|
40
|
|
12. Variable Interest Entities
|
|
|
|
|
|
|
13. Segment Information
|
▪
|
Mortgage Servicing
— acts as a subservicer for clients that own the underlying mortgage servicing rights and performs servicing activities for owned mortgage servicing rights.
|
▪
|
Mortgage Production
— provides portfolio origination retention services to subservicing clients and sells the related mortgage loans in the secondary market.
|
|
Total Assets
|
||||||
|
June 30,
2018 |
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
Mortgage Servicing segment
|
$
|
861
|
|
|
$
|
919
|
|
Mortgage Production segment
|
103
|
|
|
191
|
|
||
Other
|
474
|
|
|
487
|
|
||
Assets related to discontinued operations
|
4
|
|
|
214
|
|
||
Total
|
$
|
1,442
|
|
|
$
|
1,811
|
|
|
Net Revenues
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Mortgage Servicing segment
|
$
|
29
|
|
|
$
|
21
|
|
|
$
|
73
|
|
|
$
|
48
|
|
Mortgage Production segment
|
6
|
|
|
10
|
|
|
12
|
|
|
23
|
|
||||
Total
|
$
|
35
|
|
|
$
|
31
|
|
|
$
|
85
|
|
|
$
|
71
|
|
|
Segment Loss
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Mortgage Servicing segment
|
$
|
(21
|
)
|
|
$
|
(43
|
)
|
|
$
|
(27
|
)
|
|
$
|
(77
|
)
|
Mortgage Production segment
|
(14
|
)
|
|
(7
|
)
|
|
(30
|
)
|
|
(15
|
)
|
||||
Other
|
(1
|
)
|
|
(25
|
)
|
|
(5
|
)
|
|
(60
|
)
|
||||
Total
|
$
|
(36
|
)
|
|
$
|
(75
|
)
|
|
$
|
(62
|
)
|
|
$
|
(152
|
)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
▪
|
Executive Summary
|
▪
|
Results of Operations
|
▪
|
Risk Management
|
▪
|
Liquidity and Capital Resources
|
▪
|
Critical Accounting Policies and Estimates
|
▪
|
Recently Issued Accounting Pronouncements
|
EXECUTIVE SUMMARY
|
RESULTS OF OPERATIONS
|
Continuing Operations
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions, except per share data)
|
||||||||||||||
Net revenues
|
$
|
35
|
|
|
$
|
31
|
|
|
$
|
85
|
|
|
$
|
71
|
|
Total expenses
|
71
|
|
|
106
|
|
|
147
|
|
|
223
|
|
||||
Loss from continuing operations before income taxes
|
(36
|
)
|
|
(75
|
)
|
|
(62
|
)
|
|
(152
|
)
|
||||
Income tax expense (benefit)
|
1
|
|
|
(33
|
)
|
|
1
|
|
|
(57
|
)
|
||||
Loss from continuing operations, net of tax
|
$
|
(37
|
)
|
|
$
|
(42
|
)
|
|
$
|
(63
|
)
|
|
$
|
(95
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic & Diluted loss per share from continuing operations
|
$
|
(1.11
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(1.92
|
)
|
|
$
|
(1.77
|
)
|
•
|
Lower mortgage production revenue due to higher relative interest rates, which drove lower demand for refinance loans;
|
•
|
Lower unsecured debt interest expense related to the capital actions taken in 2017 to reduce our unsecured debt levels; and
|
•
|
Lower shared-service infrastructure costs associated with our headcount reductions and operational efficiencies.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Loan servicing income, net
|
$
|
40
|
|
|
$
|
28
|
|
|
$
|
83
|
|
|
$
|
61
|
|
Gain on loans held for sale, net
|
5
|
|
|
9
|
|
|
10
|
|
|
21
|
|
||||
Origination and other loan fees
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Net interest expense
|
(11
|
)
|
|
(6
|
)
|
|
(25
|
)
|
|
(14
|
)
|
||||
Other income
|
—
|
|
|
—
|
|
|
15
|
|
|
2
|
|
||||
Net revenues
|
$
|
35
|
|
|
$
|
31
|
|
|
$
|
85
|
|
|
$
|
71
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Salaries and related expenses
|
$
|
28
|
|
|
$
|
36
|
|
|
$
|
60
|
|
|
$
|
72
|
|
Foreclosure and repossession expenses
|
3
|
|
|
5
|
|
|
6
|
|
|
12
|
|
||||
Professional and third-party service fees
|
16
|
|
|
22
|
|
|
34
|
|
|
53
|
|
||||
Technology equipment and software expenses
|
7
|
|
|
7
|
|
|
14
|
|
|
14
|
|
||||
Occupancy and other office expenses
|
6
|
|
|
6
|
|
|
12
|
|
|
11
|
|
||||
Depreciation and amortization
|
2
|
|
|
3
|
|
|
5
|
|
|
7
|
|
||||
Exit and disposal costs
|
—
|
|
|
4
|
|
|
—
|
|
|
13
|
|
||||
Other operating expenses:
|
|
|
|
|
|
|
|
||||||||
Legal and regulatory reserves
|
2
|
|
|
13
|
|
|
3
|
|
|
22
|
|
||||
Other
|
7
|
|
|
10
|
|
|
13
|
|
|
19
|
|
||||
Total expenses
|
$
|
71
|
|
|
$
|
106
|
|
|
$
|
147
|
|
|
$
|
223
|
|
Discontinued Operations
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Net revenues
|
$
|
2
|
|
|
$
|
81
|
|
|
$
|
9
|
|
|
$
|
155
|
|
Total expenses
(1)
|
—
|
|
|
90
|
|
|
11
|
|
|
192
|
|
||||
Loss before income taxes
|
2
|
|
|
(9
|
)
|
|
(2
|
)
|
|
(37
|
)
|
||||
Income tax benefit
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(11
|
)
|
||||
Net loss
|
2
|
|
|
(8
|
)
|
|
(2
|
)
|
|
(26
|
)
|
||||
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Income (loss) from discontinued operations attributable to PHH Corporation, net of tax
|
$
|
2
|
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic & Diluted earnings (loss) per share from discontinued operations
|
$
|
0.04
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.34
|
)
|
(1)
|
Includes exit and disposal costs of $12 million for the
three months ended June 30, 2017
, and $4 million and $28 million for the
six months ended June 30, 2018
and 2017, respectively. Exit and disposal costs for the
three months ended June 30, 2018
were not significant.
|
Mortgage Servicing Segment
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Owned Servicing
|
|
Subservicing
|
|
Total
|
|
Owned Servicing
|
|
Subservicing
|
|
Total
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Loan servicing income
(1)
|
$
|
18
|
|
|
$
|
26
|
|
|
$
|
44
|
|
|
$
|
38
|
|
|
$
|
50
|
|
|
$
|
88
|
|
Changes in fair value of MSRs and secured liability
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Net interest expense
(1)
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
||||||
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||||
Total net revenues
|
$
|
3
|
|
|
$
|
26
|
|
|
$
|
29
|
|
|
$
|
23
|
|
|
$
|
50
|
|
|
$
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average number of loans serviced (units)
|
37,251
|
|
|
588,309
|
|
|
625,560
|
|
|
39,069
|
|
|
604,260
|
|
|
643,329
|
|
(1)
|
For Owned Servicing, the amounts reflect the secured borrowing treatment of the MSR sales to New Residential. For the
three and six months ended
June 30, 2018
, within Loan servicing income, there is
$13 million
and
$27 million
, respectively of income from the MSR yield on secured asset that is fully offset by the implied interest cost recognized on the MSRs secured liability within Net interest expense.
|
AS
|
Three Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||
|
Owned Servicing
|
|
Subservicing
|
|
Total
|
|
Owned Servicing
|
|
Subservicing
|
|
Total
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Loan servicing income
|
$
|
47
|
|
|
$
|
11
|
|
|
$
|
58
|
|
|
$
|
97
|
|
|
$
|
23
|
|
|
$
|
120
|
|
Changes in fair value of MSRs and secured liability
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|
(59
|
)
|
|
—
|
|
|
(59
|
)
|
||||||
Net interest (income) expense
|
(8
|
)
|
|
1
|
|
|
(7
|
)
|
|
(17
|
)
|
|
2
|
|
|
(15
|
)
|
||||||
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Total net revenues
|
$
|
9
|
|
|
$
|
12
|
|
|
$
|
21
|
|
|
$
|
21
|
|
|
$
|
27
|
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average number of loans serviced (units)
|
454,437
|
|
|
287,895
|
|
|
742,332
|
|
|
491,230
|
|
|
278,426
|
|
|
769,656
|
|
|
June 30,
|
||||||
|
2018
|
|
2017
|
||||
|
($ In millions)
|
||||||
Total Loan Servicing Portfolio:
|
|
|
|
||||
Conventional loans
|
$
|
119,429
|
|
|
$
|
147,043
|
|
Government loans
|
8,310
|
|
|
11,001
|
|
||
Home equity lines of credit
|
1,285
|
|
|
1,719
|
|
||
Total Unpaid Principal Balance
|
$
|
129,024
|
|
|
$
|
159,763
|
|
|
|
|
|
||||
Number of loans in owned portfolio (units)
|
35,667
|
|
|
379,231
|
|
||
Number of subserviced loans (units)
(1)
|
550,942
|
|
|
351,109
|
|
||
Total number of loans serviced (units)
|
586,609
|
|
|
730,340
|
|
||
|
|
|
|
||||
Weighted-average interest rate
|
3.9
|
%
|
|
3.8
|
%
|
||
|
|
|
|
||||
Total Portfolio Delinquency:
|
|
|
|
||||
% of UPB - 30 days or more past due
|
2.27
|
%
|
|
1.98
|
%
|
||
% of UPB - Foreclosure, REO and Bankruptcy
|
1.46
|
%
|
|
1.61
|
%
|
||
Units - 30 days or more past due
|
3.23
|
%
|
|
2.83
|
%
|
||
Units - Foreclosure, REO and Bankruptcy
|
1.97
|
%
|
|
2.12
|
%
|
||
|
|
|
|
||||
Total Capitalized Servicing Portfolio:
|
|
|
|
||||
Unpaid Principal Balance of capitalized MSRs owned
|
$
|
7,121
|
|
|
$
|
53,933
|
|
Unpaid Principal Balance of capitalized MSRs in secured borrowing arrangement
(1)
|
45,770
|
|
|
13,084
|
|
||
Total Unpaid Principal Balance of capitalized servicing portfolio
|
$
|
52,891
|
|
|
$
|
67,017
|
|
|
|
|
|
||||
Capitalized servicing rate
|
0.91
|
%
|
|
0.83
|
%
|
||
Capitalized servicing multiple
|
3.4
|
|
|
3.0
|
|
||
Weighted-average servicing fee (in basis points)
|
27
|
|
|
27
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Total Loan Servicing Portfolio:
|
|
|
|
|
|
|
|
||||||||
Average Portfolio UPB
|
$
|
138,199
|
|
|
$
|
161,645
|
|
|
$
|
142,032
|
|
|
$
|
165,652
|
|
|
|
|
|
|
|
|
|
||||||||
Owned Capitalized Servicing Portfolio:
(1)
|
|
|
|
|
|
|
|
||||||||
Average Portfolio UPB
|
$
|
7,485
|
|
|
$
|
66,351
|
|
|
$
|
7,871
|
|
|
$
|
72,316
|
|
Payoffs and principal curtailments
|
397
|
|
|
3,190
|
|
|
744
|
|
|
6,649
|
|
||||
Sales
|
473
|
|
|
2,200
|
|
|
1,598
|
|
|
12,516
|
|
(1)
|
Reflects the shift in our servicing portfolio to subserviced loans which began in the second quarter of 2017 as we sold MSRs to New Residential and continued functioning as subservicer. The MSRs sold to New Residential have been accounted for as a secured borrowing arrangement.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Loan servicing income, net
|
$
|
40
|
|
|
$
|
28
|
|
|
$
|
83
|
|
|
$
|
61
|
|
Net interest expense
|
(11
|
)
|
|
(7
|
)
|
|
(25
|
)
|
|
(15
|
)
|
||||
Other income
|
—
|
|
|
—
|
|
|
15
|
|
|
2
|
|
||||
Total net revenues
|
29
|
|
|
21
|
|
|
73
|
|
|
48
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses
|
14
|
|
|
15
|
|
|
29
|
|
|
32
|
|
||||
Foreclosure and repossession expenses
|
3
|
|
|
5
|
|
|
6
|
|
|
12
|
|
||||
Professional and third-party service fees
|
7
|
|
|
8
|
|
|
13
|
|
|
15
|
|
||||
Technology equipment and software expenses
|
4
|
|
|
4
|
|
|
7
|
|
|
7
|
|
||||
Occupancy and other office expenses
|
4
|
|
|
3
|
|
|
8
|
|
|
6
|
|
||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Exit and disposal costs
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Other operating expenses
|
18
|
|
|
29
|
|
|
36
|
|
|
50
|
|
||||
Total expenses
|
50
|
|
|
64
|
|
|
100
|
|
|
125
|
|
||||
Segment loss
|
$
|
(21
|
)
|
|
$
|
(43
|
)
|
|
$
|
(27
|
)
|
|
$
|
(77
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Loan servicing income, net:
|
|
|
|
|
|
|
|
||||||||
Loan servicing income:
|
|
|
|
|
|
|
|
|
|
||||||
Subservicing fees
|
$
|
16
|
|
|
$
|
10
|
|
|
$
|
33
|
|
|
$
|
21
|
|
Servicing fees from capitalized portfolio
|
6
|
|
|
48
|
|
|
12
|
|
|
102
|
|
||||
MSR yield on secured asset
(1)
|
13
|
|
|
1
|
|
|
27
|
|
|
1
|
|
||||
Late fees and other ancillary servicing revenue
|
10
|
|
|
6
|
|
|
18
|
|
|
15
|
|
||||
Loss on sale of MSRs
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(13
|
)
|
||||
Curtailment interest paid to investors
|
—
|
|
|
(3
|
)
|
|
(1
|
)
|
|
(6
|
)
|
||||
Total Loan servicing income
|
$
|
44
|
|
|
$
|
58
|
|
|
$
|
88
|
|
|
$
|
120
|
|
Changes in fair value of owned mortgage servicing rights:
|
|
|
|
|
|
|
|
|
|||||||
Actual prepayments of the underlying mortgage loans
|
$
|
(2
|
)
|
|
$
|
(18
|
)
|
|
$
|
(3
|
)
|
|
$
|
(37
|
)
|
Actual receipts of recurring cash flows
|
—
|
|
|
(8
|
)
|
|
(1
|
)
|
|
(16
|
)
|
||||
Market-related fair value adjustments
|
(2
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(6
|
)
|
||||
Total Changes in fair value of owned MSR asset
|
(4
|
)
|
|
(30
|
)
|
|
(5
|
)
|
|
(59
|
)
|
||||
Change in fair value of MSRs secured asset
|
(6
|
)
|
|
1
|
|
|
18
|
|
|
1
|
|
||||
Change in fair value of MSRs secured liability
|
6
|
|
|
(1
|
)
|
|
(18
|
)
|
|
(1
|
)
|
||||
Total
|
$
|
40
|
|
|
$
|
28
|
|
|
$
|
83
|
|
|
$
|
61
|
|
|
|
|
|
|
|
|
|
||||||||
Net interest expense:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
9
|
|
Secured interest expense
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
||||
MSRs secured interest expense
(1)
|
(13
|
)
|
|
(1
|
)
|
|
(27
|
)
|
|
(1
|
)
|
||||
Unsecured interest expense
|
—
|
|
|
(9
|
)
|
|
(1
|
)
|
|
(19
|
)
|
||||
Total
|
$
|
(11
|
)
|
|
$
|
(7
|
)
|
|
$
|
(25
|
)
|
|
$
|
(15
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Corporate overhead allocation
|
$
|
14
|
|
|
$
|
10
|
|
|
$
|
30
|
|
|
$
|
19
|
|
Repurchase and foreclosure-related charges
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
||||
Legal and regulatory reserves
|
2
|
|
|
13
|
|
|
3
|
|
|
22
|
|
||||
Other expenses
|
2
|
|
|
3
|
|
|
4
|
|
|
7
|
|
||||
Total
|
$
|
18
|
|
|
$
|
29
|
|
|
$
|
36
|
|
|
$
|
50
|
|
(1)
|
Amounts are related to the secured borrowing treatment of the MSR sales to New Residential. The income from the MSR yield on secured asset is fully offset by the implied interest cost recognized on the MSRs secured liability within Net interest expense.
|
Mortgage Production Segment
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
($ In millions)
|
||||||||||||||
Closings:
|
|
|
|
|
|
|
|
|
|
||||||
Refinance
|
$
|
132
|
|
|
$
|
136
|
|
|
$
|
328
|
|
|
$
|
566
|
|
Purchase
|
16
|
|
|
18
|
|
|
28
|
|
|
27
|
|
||||
Total Unpaid Principal Balance
|
$
|
148
|
|
|
$
|
154
|
|
|
$
|
356
|
|
|
$
|
593
|
|
|
|
|
|
|
|
|
|
||||||||
Number of loans funded (units)
|
831
|
|
|
895
|
|
|
1,927
|
|
|
3,295
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Locked Volume:
|
|
|
|
|
|
|
|
||||||||
IRLCs expected to close
|
$
|
131
|
|
|
$
|
176
|
|
|
$
|
283
|
|
|
$
|
389
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Origination and other loan fees
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Gain on loans held for sale, net
|
5
|
|
|
9
|
|
|
10
|
|
|
21
|
|
||||
Net interest income
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total net revenues
|
6
|
|
|
10
|
|
|
12
|
|
|
23
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses
|
6
|
|
|
7
|
|
|
14
|
|
|
15
|
|
||||
Professional and third-party service fees
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
||||
Occupancy and other office expenses
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
||||
Depreciation and amortization
|
1
|
|
|
1
|
|
|
1
|
|
|
3
|
|
||||
Other operating expenses
|
11
|
|
|
5
|
|
|
21
|
|
|
12
|
|
||||
Total expenses
|
20
|
|
|
17
|
|
|
42
|
|
|
38
|
|
||||
Segment loss
|
$
|
(14
|
)
|
|
$
|
(7
|
)
|
|
$
|
(30
|
)
|
|
$
|
(15
|
)
|
Other
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Salaries and related expenses
|
$
|
8
|
|
|
$
|
14
|
|
|
$
|
17
|
|
|
$
|
25
|
|
Professional and third-party service fees
|
8
|
|
|
12
|
|
|
18
|
|
|
34
|
|
||||
Technology equipment and software expenses
|
3
|
|
|
3
|
|
|
7
|
|
|
7
|
|
||||
Occupancy and other office expenses
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Depreciation and amortization
|
1
|
|
|
2
|
|
|
3
|
|
|
3
|
|
||||
Exit and disposal costs
|
—
|
|
|
4
|
|
|
—
|
|
|
11
|
|
||||
Other operating expenses
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Total expenses before allocation
|
22
|
|
|
37
|
|
|
49
|
|
|
84
|
|
||||
Corporate overhead allocation:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage Servicing segment
|
(14
|
)
|
|
(10
|
)
|
|
(30
|
)
|
|
(19
|
)
|
||||
Mortgage Production segment
|
(7
|
)
|
|
(2
|
)
|
|
(14
|
)
|
|
(5
|
)
|
||||
Total expenses
|
1
|
|
|
25
|
|
|
5
|
|
|
60
|
|
||||
Net loss before income taxes
|
$
|
(1
|
)
|
|
$
|
(25
|
)
|
|
$
|
(5
|
)
|
|
$
|
(60
|
)
|
RISK MANAGEMENT
|
LIQUIDITY AND CAPITAL RESOURCES
|
•
|
$29 million of proceeds related to the monetization the residual net assets of PHH Home Loans and the release of cash for our general use from a change in the entity's status as a variable interest entity;
|
•
|
$17 million related to the sales of MSRs and receipt of document holdback amounts from prior sales; and
|
•
|
$15 million
related to an insurance settlement with one of our insurance carriers for certain previously disclosed legal settlements.
|
•
|
$42 million related to our exit activities and direct PLS operating losses;
|
•
|
$19 million to complete the purchase of Realogy's membership interest in PHH Home Loans; and
|
•
|
$11 million that was moved to Restricted cash, primarily related to a pending legal and regulatory settlement.
|
|
Total Assets
|
|
Collateral for Asset-backed Borrowing Arrangements
|
|
Sale
Commitments
|
|
Other
|
|
Unencumbered Assets
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
453
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
453
|
|
Restricted cash
|
41
|
|
|
10
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|||||
Mortgage loans held for sale
|
55
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Accounts receivable, net
|
58
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|||||
Servicing advances, net
|
302
|
|
|
46
|
|
|
48
|
|
|
194
|
|
|
14
|
|
|||||
Mortgage servicing rights
|
483
|
|
|
—
|
|
|
30
|
|
|
437
|
|
|
16
|
|
|||||
Property and equipment, net
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Other assets
|
28
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
27
|
|
|||||
Assets related to discontinued operations
|
4
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|||||
Total assets
|
$
|
1,442
|
|
|
$
|
97
|
|
|
$
|
78
|
|
|
$
|
664
|
|
|
$
|
603
|
|
•
|
Restricted cash represents letters of credit, funds received for pending mortgage closings, and other contractual arrangements.
|
•
|
Servicing advances represent the balance of Servicing advance liabilities for advances funded by our subservicing clients, as discussed below under "—Debt—Servicing Advance Funding Arrangements".
|
•
|
MSRs represent amounts under secured borrowing arrangements where we have recognized a liability for MSRs transferred to a third party that does not meet the criteria for sale accounting.
|
Cash Flows
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
|
(In millions)
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
$
|
108
|
|
|
$
|
50
|
|
|
$
|
58
|
|
Investing activities
|
7
|
|
|
57
|
|
|
(50
|
)
|
|||
Financing activities
|
(203
|
)
|
|
6
|
|
|
(209
|
)
|
|||
Net (decrease) increase in Cash, cash equivalents and restricted cash
|
$
|
(88
|
)
|
|
$
|
113
|
|
|
$
|
(201
|
)
|
Debt
|
|
Outstanding Balance
|
|
Collateral
(1)
|
||||
|
(In millions)
|
||||||
Warehouse facilities
|
$
|
39
|
|
|
$
|
40
|
|
Servicing advance facility
|
20
|
|
|
56
|
|
||
Unsecured debt, net
|
118
|
|
|
—
|
|
||
Total
|
$
|
177
|
|
|
$
|
96
|
|
(1)
|
Assets held as collateral are not available to pay our general obligations.
|
|
Total
Capacity
|
|
Outstanding Balance
|
|
Available
Capacity
(1)
|
|
Maturity
Date
|
||||||
|
(In millions)
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|||
Committed facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Barclays Bank PLC
|
$
|
50
|
|
|
$
|
13
|
|
|
$
|
36
|
|
|
10/29/2018
|
Wells Fargo Bank, N.A.
|
50
|
|
|
23
|
|
|
27
|
|
|
10/2/2018
|
|||
Committed warehouse facilities
|
100
|
|
|
36
|
|
|
63
|
|
|
|
|||
Uncommitted facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Fannie Mae
|
200
|
|
|
3
|
|
|
197
|
|
|
n/a
|
|||
Barclays Bank PLC
|
25
|
|
|
—
|
|
|
25
|
|
|
n/a
|
|||
Total
|
$
|
325
|
|
|
$
|
39
|
|
|
$
|
285
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Off-Balance Sheet Gestation Facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Uncommitted facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
JP Morgan Chase Bank, N.A.
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
n/a
|
(1)
|
Capacity is dependent upon maintaining compliance with the terms, conditions, and covenants of the respective agreements and may be further limited by asset eligibility requirements. Available capacity has been reduced by amounts that have been drawn related to discontinued operations, as detailed in
Note 8, 'Discontinued Operations' in the accompanying Notes to Condensed Consolidated Financial Statements
.
|
|
Total
Capacity |
|
Outstanding Balance
|
|
Available
Capacity
(1)
|
|
Maturity
Date
|
||||||
|
(In millions)
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|||
Servicing Advance Receivables Trust
|
$
|
25
|
|
|
$
|
20
|
|
|
$
|
5
|
|
|
10/15/2018
|
Subservicing advance liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Client-funded amounts
|
n/a
|
|
|
194
|
|
|
n/a
|
|
|
n/a
|
|||
Total
|
|
|
|
$
|
214
|
|
|
|
|
|
|
(1)
|
Capacity is dependent upon maintaining compliance with the terms, conditions, and covenants of the respective agreements and may be further limited by asset eligibility requirements.
|
|
Outstanding Balance
|
|
Balance at Maturity
|
|
Maturity
Date
|
||||
|
(In millions)
|
|
|
||||||
7.375% Term notes due in 2019
|
$
|
97
|
|
|
$
|
97
|
|
|
9/1/2019
|
6.375% Term notes due in 2021
|
21
|
|
|
22
|
|
|
8/15/2021
|
||
Total
|
$
|
118
|
|
|
$
|
119
|
|
|
0
|
OFF-BALANCE SHEET ARRANGEMENTS AND GUARANTEES
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
|
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
Interest Rate Risk
|
|
Change in Fair Value
|
||||||||||||||||||||||
|
Down
100 bps
|
|
Down
50 bps
|
|
Down
25 bps
|
|
Up
25 bps
|
|
Up
50 bps
|
|
Up
100 bps
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Mortgage pipeline
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage loans held for sale
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Interest rate lock commitments
(1)
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
||||||
Forward delivery commitments
(1)
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
1
|
|
|
2
|
|
|
4
|
|
||||||
Total Mortgage pipeline
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
MSRs and related secured liability
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage servicing rights owned
|
(10
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
2
|
|
|
4
|
|
|
8
|
|
||||||
Mortgage servicing rights secured asset
(2)
|
(87
|
)
|
|
(41
|
)
|
|
(20
|
)
|
|
19
|
|
|
36
|
|
|
66
|
|
||||||
MSRs secured liability
(2)
|
87
|
|
|
41
|
|
|
20
|
|
|
(19
|
)
|
|
(36
|
)
|
|
(66
|
)
|
||||||
Total MSRs and related secured liability
|
(10
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
2
|
|
|
4
|
|
|
8
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unsecured term debt
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||||
Total, net
|
$
|
(12
|
)
|
|
$
|
(6
|
)
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
9
|
|
(1)
|
Included in Other assets or Other liabilities in the
Condensed Consolidated Balance Sheets
.
|
(2)
|
The MSRs sold to New Residential are accounted for as a secured borrowing. Any changes in fair value are expected to fully offset between the MSRs secured asset and MSRs secured liability.
|
Item 4. Controls and Procedures
|
DISCLOSURE CONTROLS AND PROCEDURES
|
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
|
Item 1. Legal Proceedings
|
Item 1A. Risk Factors
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. Defaults Upon Senior Securities
|
Item 4. Mine Safety Disclosures
|
Item 5. Other Information
|
Item 6. Exhibits
|
|
PHH CORPORATION
|
|
|
|
|
|
By:
|
/s/ Robert B. Crowl
|
|
|
Robert B. Crowl
|
|
|
President and Chief Executive Officer
|
|
|
|
|
By:
|
/s/ Michael R. Bogansky
|
|
|
Michael R. Bogansky
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
31.1
|
|
|
Filed herewith.
|
|
|
|
|
|
|
31.2
|
|
|
Filed herewith.
|
|
|
|
|
|
|
32.1
|
|
|
Filed herewith.
|
|
|
|
|
|
|
32.2
|
|
|
Filed herewith.
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Filed herewith.
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed herewith.
|
1 Year Phh Chart |
1 Month Phh Chart |
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