Cendant Corp. reported quarterly mortgage production sunk by almost one-third, and cited uncertainty surrounding the spinoff of its mortgage operations as part of the reason for the fallout.
The franchise conglomerate closed a total $12.7 billion in loans during the third quarter -- down from $17.6 billion the previous quarter and way off the $27.6 billion reported a year ago, according to its latest earnings announcement.
The average servicing loan portfolio was $140.2 billion at the end of the third quarter, up 12% from the same period last year.
The New York-headquartered company said last quarter's mortgage servicing revenue of $283 million "decreased due to lower production revenues resulting from the industrywide decline in mortgage refinancing volumes, as expected, and also, we believe, due to the temporary uncertainty created by our July announcement that we were considering strategic alternatives for the mortgage business."
Such effects were partially offset by a $206 million increase in net revenues from mortgage servicing activities, driven by the yearly increase in the average size of the servicing portfolio, substantially lower amortization and an increase in the value of its servicing asset, net of hedging activity, the company added.
Market speculation and other announcements by the franchiser lead to its announcement earlier this month that it would distribute the mortgage and fleet operations of PHH Corp., currently a Cendant subsidiary, to shareholders. The spin-off is expected to take place next quarter.