While first-quarter home lending activity at PHH Mortgage almost broke even with the prior three months, servicing was down. The company-wide earnings, however, finished back in the black.
Altogether, PHH funded 22,540 loans at $9.352 billion, according to first-quarter earnings information provided by parent company PHH Corp.
Mortgage originations almost broke even with the 25,533 residential loans closed for $9.398 billion in last year’s fourth quarter.
Lending volume was much higher than the same quarter last year, with 20,437 loans originated for $7.384 billion.
Retail originations made up $9.066 billion of the first-quarter total, while wholesale/correspondent contributed $0.286 billion.
Fee-based closings contributed 67 percent to recent mortgage production.
New applications jumped $4.245 billion from the prior three months to $15.176 billion.
Interest rate lock commitments, which are another upcoming business indicator, rose to $2.135 billion from $1.603 billion at the end of the fourth-quarter 2014.
PHH Chief Executive Officer and President Glenn Messina said the lender “signed and revised agreements with clients representing approximately 50 percent of our 2014 total private label closing volume.”
As well, the company report said it anticipated completing negotiations for approximately 30 percent of total private-label services volume by the end of the second quarter.
As of March 31, PHH serviced 697,090 mortgage loans for others at $111.260 billion.
The third-party servicing portfolio fell from the 712,643 loans serviced for $113.849 billion as of Dec. 31, 2014, and shrank further from the 794,648 loans at $128.813 billion at the end of March a year ago.
“The year-over-year slight decrease in our total loan servicing portfolio primarily reflects the declines in our capitalized servicing portfolio and a sale of delinquent GNMA portfolio, which transferred in the first quarter of 2015 that was partially offset by an increase in our subservicing UPB,” the earnings report stated.
The Mt. Laurel, New Jersey-based entity also sub-serviced 426,538 loans at $112.934 billion as of the end of the first quarter.
From Dec. 31 last year, the delinquency rate of at least 30 days was lowered by 64 basis points to 2.37 percent on the last day ended March this year. At the end of March in 2014, the rate was much higher at 5.11 percent.
Though the mortgage production segment reported a $19 million dollar loss for the first three months of 2015, earnings were less in the red compared to the $26 million and $60 million losses documented last year in the fourth and first quarters, respectively.
“The $7 million improvement in segment loss during the first quarter 2015 compared to the fourth quarter 2014 was primarily due to a $18 million increase in gain on loans held for sale,” the report said.
The lender’s servicing business turned in a $57 profit million dollar for the recent earnings period, which was a huge turn-around from the $13 million loss in the three months that ended 2014 and the $29 million loss in the three months that began 2014.
According to PHH’s earnings report, the servicing business profit was due to “favorable market-related fair value adjustment to our mortgage servicing rights.”
“The sequential improvement in segment results was also driven by a decrease in total expenses resulting from lower provisions for legal and regulatory contingencies that was partially offset by higher repurchase and foreclosure-related charges,” the report stated.
On a company-wide level, income from continuing operations before income taxes also climbed to a $31 million profit from a $41 million loss in the prior three months and a $93 million loss in the same period last year. The adjusted first-quarter 2014 amount was originally documented as a $71 million loss.
“Provided the market and interest rate conditions materialize as expected, and the successful execution of our re-engineering actions, we anticipate reporting positive for the second half of 2015, excluding one-time items,” Messina said.
