PHH Corporation operates as a non-bank mortgage originator and servicer of the U.S. residential mortgage loans. The company, through its wholly-owned subsidiary, PHH Mortgage Corporation and its subsidiaries (collectively, ‘PHH Mortgage’), provides outsourced mortgage banking services to various clients, including financial institutions and real estate brokers throughout the U.S.; and is focused on originating, selling, servicing, and subservicing residential mortgage loans. Segments The company’s business activities are organized and presented in two segments, Mortgage Production and Mortgage Servicing. Mortgage Production This segment provides private-label mortgage services to financial institutions and real estate brokers. The company provides fee-based mortgage loan origination services and engages in the origination and sale of mortgage loans into the secondary market. PHH Mortgage sells all saleable mortgage loans that it originates to secondary market investors, which include various institutional investors, and initially retains the servicing rights on mortgage loans sold. The company sources mortgage loans through its retail and wholesale/correspondent platforms. Within its retail platform, the company operates through two principal business channels, such as private label and real estate. Retail - Private Label: The company offers complete mortgage outsourcing solutions to wealth management firms, regional banks and community banks, including Merrill Lynch Home Loans, a division of Bank of America, National Association; Morgan Stanley Private Bank, N.A.; and HSBC Bank USA, which represented 26%, 20%, and 11% respectively, of the company’s total mortgage loan originations for the year ended December 31, 2015. Retail – Real Estate: The company’s real estate channel is primarily supported by its relationship with Realogy, which represented 21% of its mortgage originations for the year ended December 31, 2015. Wholesale/Correspondent: The company purchases closed mortgage loans from community banks, credit unions, mortgage brokers and mortgage bankers; and also acquires mortgage loans from mortgage brokers that receive applications from and qualify the borrowers. This segment includes PHH Home Loans, LLC (together with its subsidiaries, ‘PHH Home Loans’), which is a joint venture that the company maintains with Realogy Corporation. The company owns 50.1% of PHH Home Loans through its subsidiaries and Realogy owns the remaining 49.9% through their affiliates. The company has the exclusive right to use the Century 21, Coldwell Banker, ERA and Sotheby’s brand names in marketing its mortgage loan products through PHH Home Loans and other arrangements that the company has with Realogy. PHH Home Loans originates and sells loans primarily sourced through real estate brokers associated with NRT Incorporated, Realogy’s owned real estate brokerage business. NRT Incorporated is the owner and operator of residential real estate brokerages in the U.S. and Realogy is a franchisor of residential real estate brands. In this channel, the company also works with Cartus Corporation, Realogy’s relocation business, to provide mortgage loans to employees of Cartus’ clients. Cartus offers outsourced corporate relocation services. Mortgage Servicing This segment services mortgage loans originated by PHH Mortgage and acts as a subservicer for certain clients that own the underlying servicing rights. The company services loans on behalf of the owners of the underlying mortgage. The company principally generates revenue in this segment through contractual fees earned from the company’s servicing rights, which are a stated percentage of the unpaid principal balance of current, performing loans, or from its subservicing agreements, which are typically a stated fee per loan. In circumstances where the company owns the right to service a mortgage loan, the company recognizes a mortgage servicing right asset. Regulation The company’s loan origination and servicing activities are primarily regulated at the state level by state licensing authorities and administrative agencies, with additional oversight from the Bureau of Consumer Financial Protection. The company is also subject to periodic reviews and audits from the Federal Housing Finance Authority, Fannie Mae, Freddie Mac, Ginnie Mae, the U.S. Department of Housing and Urban Development, various investors and regulators of its clients. In addition to state licensing requirements, the company is required to comply with various federal consumer protection and other laws, including but not limited to, the Gramm-Leach-Bliley Act; the Fair Debt Collection Practices Act; the Truth in Lending Act (TILA) and Regulation Z; the Real Estate Settlement Procedures Act (RESPA) and Regulation X; the TILA-RESPA Integrated Mortgage Disclosure Rule; the Fair Credit Reporting Act; the Equal Credit Opportunity Act and Regulation B; the Homeowners Protection Act; the Home Mortgage Disclosure Act and Regulation C; and the Fair Housing Act. Seasonality Purchase activity in the company’s Mortgage Production segment is subject to seasonal trends that reflect the pattern in the national housing market. Home sales typically rise during the spring and summer seasons and decline during the fall and winter seasons. This seasonality typically causes fluctuations in the company’s Mortgage Production segment results. Competition Some of the company’s major competitors are large banks, which include Wells Fargo Home Mortgage; Chase Home Finance; Bank of America, National Association; and CitiMortgage. The company competes with Quicken Loans; Ocwen Financial Corporation; Nationstar Mortgage Holdings, Inc; and PennyMac Financial Services, among others. History PHH Corporation was founded in 1946. The company was incorporated in 1953 as a Maryland corporation.
phh corp (PHH:New York)
3000 Leadenhall Road
Mount Laurel, NJ 08054
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