PHH Corporation Tumbles 16%, Company Withdraws Prior Guidance

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Shares of
PHH CorporationPHH
plunged more than 16 percent on Monday after the company
withdrew
its prior financial guidance and announced changes to its private label client relationship. PHH said that Merrill Lynch Home Loans indicated its intent to move the origination of new applications for certain mortgage loan products to its internal operations by the end of the month. The company noted that decision could represent a reduction of approximately 20 percent of Merrill Lynch's 2015 loan closing dollar volume, or approximately 5 percent of PHH's total 2015 loan closing dollar volume. In addition, Merrill Lynch informed the company it plans to in-source its sub-servicing portfolio by the end of calendar year, 2016. The sub-servicing accounted for approximately $40 billion in unpaid principal balance, or 32 percent of the company's sub servicing portfolio. Following the announcement, PHH decided to withdraw its prior earnings guidance for the full fiscal year 2016. The company added that it will not provide further earnings guidance until the completion of a previously announced review of strategic alternatives. Glen A. Messina, president and CEO of PHH Corporation, said, "While we are disappointed with these changes, we intend to take appropriate measures to adjust our operations and incorporate these developments in our review of strategic options. We believe these decisions reflect the broader dynamics in our industry, including higher compliance and other costs associated with a more onerous regulatory environment. We remain focused on implementing the priorities we laid out for 2016 and the evaluation of all options, including capital structure and deployment alternatives, to maximize value for shareholders."
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Posted In: NewsGlen MessinaMerrill Lynch Home LoansMortgagesPHH
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