PHH narrows 3Q loss as mortgage closings surge
PHH Corp. (PHH) narrowed its loss in the third quarter to $2 million, or 14 cents a share, from $80 million, or 94 cents a share, a year earlier, as mortgage closings increased. Revenue for the three months ended Sept. 30 rose to $572 million from $507 million in the comparable period in 2009. The mortgage-production segment of the Mt. Laurel, N.J.-based company reported third-quarter income of $161 million, while the servicing segment lost $194 million for a combined loss in the mortgage-services unit of $34 million. "Mortgage closings were $12.7 billion for the quarter, up 26% over second quarter 2010," said President and CEO Jerry Selitto. Total mortgage closings were up 41% over the year-ago period. "Our pipeline of interest rate lock commitments provides positive momentum going into the fourth quarter," Selitto said. "With closings for the first nine months of the year at $30.6 billion and a robust pipeline of interest rate lock commitments, we are revising our guidance for production volume for the full year from $39 billion to approximately $45 billion." PHH said it had a greater mix of refinance closings during the period, as well as an $8.8 billion, or 160% increase, in interest rate lock commitments expected to close during the third quarter. The trend of higher margins on mortgage loans continued from the second quarter, although margins have begun to soften in the fourth quarter. On the servicing side, PHH said delinquency rates began to stabilize during the third quarter, favorably impacting the credit-related change in value of its mortgage-servicing rights. The firm’s average loan servicing portfolio grew 5% to $8 billion, as additions to the servicing portfolio exceeded actual prepayments. Foreclosure costs decreased to $8 million from $25 million a year earlier due to the timing of loan repurchases and indemnifications, and the related impact on loss provisions. For the first nine months of the year, PHH reported a loss of $133 million, or $2.39 a share, compared to a profit of $56 million, or $1.03 per share, for the first nine months of 2009. Write to Kerry Curry.