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PHH Purchase Production Probably Lower in Q4

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Quarterly business was modestly higher at PHH Mortgage. New loan applications point to a decline ahead, though, for purchase production. Losses and delinquency worsened for the mortgage lender.

Third-quarter mortgage production was 25,633 home loans closed for $9.885 billion, parent-PHH Corp. reported.

Business move up from the 24,573 residential loans funded for $9.294 billion during the prior three-month period.

For the nine months ended Sept. 30, PHH originated 70,643 loans for $26.563 billion.

But PHH couldn’t overcome the industry-wide year-over-year slump, with business falling a by a third compared to the third-quarter 2013.

Fee-based closings accounted for nearly two-thirds of third-quarter 2014 activity.

By origination channel, retail-private label services represented $7.0 billion, while retail-real estate production was $2.6 billion and wholesale-correspondent activity was $0.3 billion.

Applications taken in the latest period were $11.4 billion, down from $12.8 billion the prior period and pointing to a fourth-quarter slowdown. 

But refinance applications were unchanged at $4.8 billion.

It was purchase production that was down — by $1.3 billion from the prior period to $6.5 billion.

Interest rate lock commitments were also lower, declining to $1.8 billion from $2.0 billion in the second quarter.

Losses from mortgage production edged up to $28 million from the second quarter’s $27 million. The rise was “primarily due to a lower gain on mortgage loans, primarily driven by a 10 percent sequential quarter decline in interest rate lock commitments expected to close, partially offset by growth in mortgage fees from a 6 percent sequential quarter increase in total closings and lower allocated interest expense,” the report said.

Production losses also worsened from $16 million a year earlier.

The owned mortgage servicing portfolio was 756,090 units for $120.868 billion..

The servicing portfolio was reduced from 778,108 loans for $125.181 billion at the end of June and $132.899 billion as of Sept. 30, 2013.

PHH additionally reported a subservicing portfolio of 408,294 loans for $105.168 billion.

Delinquency of at least 30 days, excluding foreclosures and real estate owned, was 3.11 percent as of the end of September based on unpaid principal balance.

The past-due rate worsened from 3.06 percent three months earlier.

Thirty-day delinquency was down, however, from 3.34 percent as of the same point in 2013.

Servicing income swung to a $71 million loss from a $10 million second-quarter profit and widened from a $28 million loss a year earlier.

After receiving 192 repurchase and indemnification requests in the third quarter, PHH finished the period with $64 million in outstanding demands.

Company-wide income before income taxes was a $129 million loss, widening from $21 million three months prior and $101 twelve months prior.

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