PHH Corporation said that mortgage-related losses drove the financial company into the red during the third quarter. A consolidated net loss of $38 million was driven largely by losses of $113 million in the company's mortgage production segment and a loss of $2 milion in the company's mortgage servicing business. PHH Mortgage absorbed $79 million in losses on the sale of mortgage loans, while also taking $89 million in write downs on loans held for sale. The company's servicing portfolio at $166.9 billion, including subservicing, while its delinquency rate registered a relatively low 2.6 percent of unpaid principal balance. From the company's press statement, a mention that the company's mortgage business will not be profitable in 2007:
Terry Edwards, president and chief executive officer, stated, “During the third quarter, our mortgage origination business experienced slowing volumes as disruptions in the credit markets reverberated throughout the industry. Earnings were negatively impacted by declines in the market value of scratch and dent loans, prime closed-end seconds, jumbo prime, conforming ARMs, and Alt-A products—the majority of which were either sold in the third quarter or are committed to be sold or securitized in the fourth quarter of 2007. We have adjusted our pricing on new mortgage products to reflect the current environment. We expect a decline in overall originations in 2008 and will incur severance and facility shut-down costs in the fourth quarter of 2007 as we adjust headcount to our revised origination forecasts for 2008. Given our results through the nine months ended September 30, 2007 combined with lowered expectations for the fourth quarter of 2007 due to industry weakness and our expected severance and facility shut-down costs, we do not expect our combined mortgage segments to be profitable for the year ended December 31, 2007.
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