Quarterly residential loan originations picked up at PHH Mortgage. While the company cut its losses, delinquency rose and the servicing portfolio declined.
Before income taxes, the Mount Laurel, New Jersey-based organization had a $20 million loss for the period that started on April 1 and ended on June 30.
Those details, along with numerous other operational and financial results, were provided by parent PHH Corp. in its second-quarter 2016 earnings report.
Earnings weren’t as bad as the $49 million first-quarter loss. There was also an improvement compared to the $74 million second-quarter 2015 loss.
Reflected in the latest results were a negative $12 million in fair-value adjustments, worsening from $10 million in the first quarter and swinging from a positive $85 million in the year-earlier period.
Mortgage production during the three months ended June 30, 2016, totaled 22,200 loans for $10.372 billion.
Business climbed from
17,668 loans funded for $7.955 billion in the first quarter.
But loan volume sank from 28,466 mortgages originated for $12.073 billion in the second-quarter 2015.
Second-quarter 2016 lending activity included $2.120 billion in retail business, $0.297 billion in third-party lending and $7.955 billion in private-label services.
The report indicated that the private-label services model needs to be
simpler, more standardized, lower cost and priced lower. A long-term transition is needed to achieve profitability at lower volume.
“While we are pleased with the improvement in our results, we continue to see a trend by Merrill Lynch to insource a significant portion of their mortgage production volume,” PHH President and Chief Executive Officer Glen A. Messina stated in the report. “In the past week, Merrill Lynch has advised us of their intention to insource additional volume that would result in total volume reductions representing approximately 60 percent of their total 2015 loan closing dollar volume.
“We are taking appropriate actions to reallocate capacity to growth opportunities and reduce expenses as necessary.”
From Jan. 1 through June 30 of this year, total home lending amounted to 39,868 units for $18.327 billion.
New loan applications, which inched up to $12.6 billion in the most-recent period from $12.3 billion in the first quarter, don’t suggest much change in third-quarter volume. Same goes for interest-rate lock commitments, which rose to $1.3 billion from $1.2 billion.
The report indicated that PHH completed its exit from correspondent lending.
As of the close of the first-half 2016, PHH serviced 609,976 mortgages for $93.674 billion for third parties.
The portfolio was reduced from 628,104 loans for $97.084 billion as of March 31, 2016, and 675,587 loans for $106.200 billion as of June 30, 2015.
An additional 486,596 loans for $138.067 billion were sub-serviced as of the most-recent date.
The home lender said it is evaluating its best option to reduce its mortgage-servicing rights.
Delinquency of at least
30 days, excluding foreclosures and real estate owned, was 2.21 percent, worsening from 2.09 at the end of March. But loan performance improved from 2.47 percent as of mid-2015.
The foreclosure-REO rate was 1.37 percent as of the latest date.
“We intend to continue running our business in a manner consistent with preserving the value of our balance sheet,” PHH stated.
