PHH Corporation (PHH) reported a third-quarter net income attributable to it of $215 million or $4.00 per basic share, including a gain from the sale of discontinued operations of $303 million, net of tax.
In addition, it posted a net loss from continuing operations attributable to PHH Corporation of $88 million or $1.64 per basic share.
Net loss from continuing operations includes a $40 million pre-tax unfavorable market-related fair value adjustment to their mortgage servicing rights.
This excludes a $303 million gain on the sale of its fleet management business.
In June, the company decided the company decided to agree to a sale of its fleet management business to Element Financial Corporation for approximately $1.4 billion in cash since its mortgage business wasn’t performing and it was dragging down the company’s earnings.
“I am pleased with the progress we have made in executing our capital and operating initiatives to re-engineer and grow our business,” said Glen Messina, president and CEO of PHH Corporation.
“We remain focused on our re-engineering efforts, which we expect to deliver up to $225 million in annualized operating benefits driven by expense reduction actions and achieving our Private Label contract renegotiation objectives,” he added. “We expect to generate an aggregate of $175 million of the annualized operating benefits from expense reduction actions, the majority of which is expected to be realized in the next 12 months.”
Mortgage production segment loss in the third quarter of 2014 was $28 million, compared to a segment loss of $27million in the second quarter of 2014 and a segment loss of $22 million in the third quarter of 2013.
The company noted that this was primarily due to a lower gain on mortgage loans, primarily driven by a 10% sequential quarter decline in Interest Rate Lock Commitments expected to close, partially offset by growth in Mortgage Fees from a 6% sequential quarter increase in total closings and lower allocated interest expense.
Also down, total third quarter 2014 mortgage closings were $9.9 billion, up 6% from the second quarter of 2014 and down 33% from the third quarter of 2013.
Additionally, mortgage servicing segment loss in the third quarter of 2014 was $71 million, compared to a segment profit of $10 million in the second quarter of 2014 and a segment loss of $28 million in the third quarter of 2013.