|
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 31, 2015
|
|
OR
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from _______to_______
|
|
MARYLAND
(State or other jurisdiction of
incorporation or organization)
|
|
52-0551284
(I.R.S. Employer
Identification Number)
|
|
|
|
3000 LEADENHALL ROAD
MT. LAUREL, NEW JERSEY
(Address of principal executive offices)
|
|
08054
(Zip Code)
|
|
|
TITLE OF EACH CLASS
|
|
NAME OF EACH EXCHANGE
ON WHICH REGISTERED
|
|
|
Common Stock, par value $0.01 per share
|
|
The New York Stock Exchange
|
|
|
|
|
|
Page
|
|
|
||
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
||
|
|||
|
|
|
|
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
|
|
||
|
|||
|
|
|
|
|
|
||
|
|
•
|
our expectations related to our future earnings and profitability;
|
•
|
the execution of our strategic priorities, and our expectations regarding future operating benefits from the achievement of those priorities, including benefits expected from amendments to our private label agreements and from expense reduction actions;
|
•
|
potential acquisitions, dispositions, partnerships, joint ventures and changes in product offerings;
|
•
|
future origination volumes and loan margins in the mortgage industry;
|
•
|
our expectations regarding the impacts of the shift in our volume to a greater mix of subserviced loans, including the impacts on our earnings and potential benefits to our capital structure;
|
•
|
our expectations of the impacts of regulatory changes on our business, including servicing costs and compensation reform, and any impacts to our origination and servicing processes;
|
•
|
our expectations around future losses from representation and warranty claims, and associated reserves and provisions;
|
•
|
our assessment of legal and regulatory proceedings and the associated impact on our financial statements; and
|
•
|
the impact of the adoption of recently issued accounting pronouncements on our financial statements.
|
•
|
our ability to achieve our strategic priorities and implement changes to meet our operational and financial objectives;
|
•
|
the effects of market volatility or macroeconomic changes and financial market regulations on the availability and cost of our financing arrangements and the value of our assets;
|
•
|
the effects of changes in current interest rates on our business, the value of our mortgage servicing rights and our financing costs;
|
•
|
our decisions regarding the use of derivatives and hedge strategies related to our mortgage servicing rights;
|
•
|
the impact of changes in the U.S. financial condition and fiscal and monetary policies, or any actions taken or to be taken by the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System on the credit markets and the U.S. economy;
|
•
|
the effects on our business of any further declines in the volume of U.S. home sales and home prices, due to adverse economic changes or otherwise;
|
•
|
the effects of any significant adverse changes in the underwriting criteria or existence or programs of government-sponsored entities, including Fannie Mae and Freddie Mac, including any changes caused by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other actions of the federal government;
|
•
|
the ability to maintain our status as a government sponsored entity-approved seller and servicer, including the ability to continue to comply with the respective selling and servicing guides;
|
•
|
the effects of changes in, or our failure to comply with, laws and regulations, including mortgage- and real estate-related laws and regulations and those that we are exposed to through our private label relationships, changes in the status of government sponsored-entities and changes in state, federal and foreign tax laws and accounting standards;
|
•
|
the effects of the outcome or resolutions of any inquiries, investigations or appeals related to our mortgage origination or servicing activities, any litigation related to our mortgage origination or servicing activities, or any related fines, penalties and increased costs, and the associated impact on our liquidity;
|
•
|
the ability to maintain our relationships with our existing clients, including our ability to comply with any changes in the terms of certain private label client agreements and any related service level agreements, and to establish relationships with new clients;
|
•
|
the effects of any declines in origination volumes sourced from our private label client relationships, driven by our clients actions, business strategies or otherwise;
|
•
|
the effects of competition in our business, including the impact of consolidation within the industry in which we operate and competitors with greater financial resources and broader product lines;
|
•
|
the inability or unwillingness of any of the counterparties to our significant customer contracts, hedging agreements, or financing arrangements to perform their respective obligations under such contracts, or to renew on terms favorable to us;
|
•
|
the impacts of our credit ratings, including the impact on our cost of capital and ability to access the debt markets, as well as on our current or potential customers’ assessment of our long-term stability;
|
•
|
the ability to obtain or renew financing on acceptable terms, if at all, to finance our mortgage loans held for sale, servicing advances, or to fund our growth strategies;
|
•
|
the ability to operate within the limitations imposed by our financing arrangements and to maintain or generate the amount of cash required to service our indebtedness and operate our business;
|
•
|
any failure to comply with covenants or asset eligibility requirements under our financing arrangements; and
|
•
|
the effects of any failure in or breach of our technology infrastructure, or those of our outsource providers, or any failure to implement changes to our information systems in a manner sufficient to comply with applicable laws, regulations and our contractual obligations.
|
Item 1. Business
|
|
Overview
|
Segments
|
•
|
Retail - Private Label (
75%
in
2015
compared to
72%
in
2014
):
We offer complete mortgage outsourcing solutions to wealth management firms, regional banks and community banks, including Merrill Lynch Home Loans, a division of Bank of America, National Association, Morgan Stanley Private Bank, N.A. and HSBC Bank USA which represented
26%
,
20%
, and
11%
respectively, of our total mortgage loan originations for the year ended
December 31, 2015
.
|
•
|
Retail - Real Estate (
22%
in
2015
compared to
24%
in
2014
):
Our real estate channel is primarily supported by our relationship with Realogy, which represented
21%
of our mortgage originations for the year ended
December 31, 2015
, and is more fully described below.
|
•
|
Wholesale/Correspondent (
3%
in
2015
compared to
4%
in
2014
):
We purchase closed mortgage loans from community banks, credit unions, mortgage brokers and mortgage bankers, and also acquire mortgage loans from mortgage brokers that receive applications from and qualify the borrowers.
|
Legal and Regulatory Environment
|
•
|
the Gramm-Leach-Bliley Act, which requires us to maintain privacy regarding certain consumer data in our possession and to periodically communicate with consumers on privacy matters;
|
•
|
the Fair Debt Collection Practices Act, which regulates the timing and content of debt collection communications;
|
•
|
the Truth in Lending Act, or TILA, and Regulation Z, which requires certain disclosures be made to mortgagors regarding the terms of their mortgage loans;
|
•
|
the Real Estate Settlement Procedures Act, or RESPA, and Regulation X, which require, among other things, certain disclosures to mortgagors regarding the costs of mortgage loans, the administration of escrow accounts, the transferring of mortgage loans, lender-placed insurance and other customer communications;
|
•
|
the TILA-RESPA Integrated Mortgage Disclosure Rule, or TRID, which mandates specific origination and settlement documents and processes;
|
•
|
the Fair Credit Reporting Act, which regulates the use and reporting of information related to the credit history of consumers;
|
•
|
the Equal Credit Opportunity Act and Regulation B, which prohibit discrimination on the basis of age, race and certain other characteristics in the extension of credit;
|
•
|
the Homeowners Protection Act, which requires, among other things, the cancellation of private mortgage insurance once certain equity levels are reached;
|
•
|
the Home Mortgage Disclosure Act and Regulation C, which require reporting of certain public loan data; and
|
•
|
the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics.
|
Competition
|
Employees
|
Trademarks and Intellectual Property
|
Seasonality
|
Inflation
|
Available Information
|
Item 1A. Risk Factors
|
Legal and Regulatory Risks
|
•
|
loss of our approvals to engage in our origination and servicing businesses and/or other limitations on our ability to originate or service loans;
|
•
|
government investigations and enforcement actions;
|
•
|
litigation;
|
•
|
an inability to execute on our business strategy;
|
•
|
required payments of fines, penalties, settlements or judgments;
|
•
|
the loss of client relationships, including our private label and subservicing agreements, and/or our agreements with Realogy; and/or
|
•
|
inability to fund our business, or otherwise operate our business.
|
Risks Related to Our Business
|
•
|
we materially breach any representation, warranty, covenant or other agreement contained in the Strategic Relationship Agreement or certain other related agreements, including, without limitation to, our confidentiality agreements in the PHH Home Loans Operating Agreement, the PHH Home Loans Trademark License Agreement, and the Strategic Relationship Agreement, and our non-competition agreements in the Strategic Relationship Agreement that is not cured following any applicable notice or cure period;
|
•
|
we become subject to any regulatory order or governmental proceeding that prevents or materially impairs PHH Home Loans’ ability to originate mortgage loans for any period of time (which order or proceeding is not generally applicable to companies in the mortgage lending business) in a manner that adversely affects the value of one or more of the quarterly distributions to be paid by PHH Home Loans pursuant to the PHH Home Loans Operating Agreement;
|
•
|
PHH Home Loans fails to make scheduled distributions pursuant to the PHH Home Loans Operating Agreement; or
|
•
|
there is a change in control of us, PHH Broker Partner Corporation or any other affiliate of ours involving certain competitors or other specified parties.
|
Risks Related to Our Strategies
|
Liquidity Risks
|
Risks Related to Our Common Stock
|
▪
|
the “business combinations” statute which prohibits transactions between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder becomes an interested stockholder and
|
▪
|
the “control share” acquisition statute which provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter.
|
Other Risks
|
Item 1B. Unresolved Staff Comments
|
Item 2. Properties
|
Item 3. Legal Proceedings
|
Item 4. Mine Safety Disclosures
|
|
Stock Price
|
||||||
For the 2015 Quarters Ended:
|
High
|
|
Low
|
||||
March 31, 2015
|
$
|
25.61
|
|
|
$
|
22.42
|
|
June 30, 2015
|
27.83
|
|
|
24.09
|
|
||
September 30, 2015
|
26.38
|
|
|
13.78
|
|
||
December 31, 2015
|
18.68
|
|
|
13.25
|
|
||
|
|
|
|
||||
For the 2014 Quarters Ended:
|
|
|
|
||||
March 31, 2014
|
$
|
27.13
|
|
|
$
|
23.44
|
|
June 30, 2014
|
26.02
|
|
|
20.98
|
|
||
September 30, 2014
|
24.84
|
|
|
22.13
|
|
||
December 31, 2014
|
24.71
|
|
|
21.66
|
|
Restrictions on Share-Related Payments
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Period
|
|
Total number of shares purchased
|
|
Average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs
(1)
|
|
Approximate dollar value of shares that may yet be purchased under the plan or program
|
||||||
October 1, 2015 to October 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
250,000,000
|
|
November 1, 2015 to November 30, 2015
|
|
1,737,119
|
|
|
16.35
|
|
|
1,737,119
|
|
|
221,600,543
|
|
||
December 1, 2015 to December 31, 2015
|
|
3,104,148
|
|
|
15.54
|
|
|
3,104,148
|
|
|
173,357,846
|
|
||
Total
|
|
4,841,267
|
|
|
$
|
15.83
|
|
|
4,841,267
|
|
|
$
|
173,357,846
|
|
|
(1)
|
On June 26, 2014, our Board of Directors authorized up to
$450 million
in share repurchases, including
$200 million
of accelerated stock repurchases which completed in March 2015, and up to
$250 million
in open market purchases. The authorization for open market purchases extends to December 31, 2016.
|
Item 6. Selected Financial Data
|
|
Year Ended and As of December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(In millions, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Origination and other loan fees
|
$
|
284
|
|
|
$
|
231
|
|
|
$
|
307
|
|
|
$
|
346
|
|
|
$
|
295
|
|
Gain on loans held for sale, net
|
298
|
|
|
264
|
|
|
575
|
|
|
942
|
|
|
567
|
|
|||||
Loan servicing income
|
394
|
|
|
448
|
|
|
436
|
|
|
449
|
|
|
456
|
|
|||||
Change in value of mortgage servicing rights, net of related derivatives
|
(158
|
)
|
|
(238
|
)
|
|
(6
|
)
|
|
(502
|
)
|
|
(736
|
)
|
|||||
Net interest expense
|
(46
|
)
|
|
(88
|
)
|
|
(115
|
)
|
|
(121
|
)
|
|
(87
|
)
|
|||||
Other income
|
18
|
|
|
22
|
|
|
3
|
|
|
12
|
|
|
73
|
|
|||||
Net revenues
|
790
|
|
|
639
|
|
|
1,200
|
|
|
1,126
|
|
|
568
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total expenses
|
1,003
|
|
|
923
|
|
|
1,060
|
|
|
1,140
|
|
|
857
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income attributable to PHH Corporation
|
(145
|
)
|
|
81
|
|
|
135
|
|
|
34
|
|
|
(127
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic (loss) earnings per share attributable to PHH Corporation
|
$
|
(2.62
|
)
|
|
$
|
1.47
|
|
|
$
|
2.36
|
|
|
$
|
0.60
|
|
|
$
|
(2.26
|
)
|
Diluted (loss) earnings per share attributable to PHH Corporation
|
(2.62
|
)
|
|
1.47
|
|
|
2.06
|
|
|
0.60
|
|
|
(2.26
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
906
|
|
|
$
|
1,259
|
|
|
$
|
1,126
|
|
|
$
|
758
|
|
|
$
|
392
|
|
Mortgage loans held for sale
|
743
|
|
|
915
|
|
|
834
|
|
|
2,174
|
|
|
2,658
|
|
|||||
Mortgage servicing rights
|
880
|
|
|
1,005
|
|
|
1,279
|
|
|
1,022
|
|
|
1,209
|
|
|||||
Total assets
|
3,652
|
|
|
4,296
|
|
|
8,853
|
|
|
9,605
|
|
|
9,779
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unsecured debt
|
$
|
615
|
|
|
$
|
831
|
|
|
$
|
1,249
|
|
|
$
|
1,156
|
|
|
$
|
1,339
|
|
Asset-backed debt
|
743
|
|
|
908
|
|
|
775
|
|
|
1,941
|
|
|
2,457
|
|
|||||
Total liabilities
|
2,304
|
|
|
2,725
|
|
|
7,163
|
|
|
8,043
|
|
|
8,318
|
|
|||||
PHH Corporation stockholders’ equity
|
1,318
|
|
|
1,545
|
|
|
1,666
|
|
|
1,526
|
|
|
1,442
|
|
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
▪
|
Overview
|
▪
|
Results of Operations
|
▪
|
Risk Management
|
▪
|
Liquidity and Capital Resources
|
▪
|
Contractual Obligations
|
▪
|
Off-Balance Sheet Arrangements and Guarantees
|
▪
|
Critical Accounting Policies and Estimates
|
▪
|
Recently Issued Accounting Pronouncements
|
OVERVIEW
|
Executive Summary
|
•
|
PLS Contract Amendments:
In the fourth quarter of 2015, we completed the amendments to our PLS contracts which results in more favorable economics. We expect to begin to realize the full benefits of the amendments in the second quarter of 2016.
|
•
|
Expense Reductions:
As of December 31, 2015, we have substantially completed our cost reduction actions that are expected to generate up to $150 million in annualized operating benefits. These expense actions focused on our organizational structure redesign, facilities management, implementing process improvements in both origination and servicing operations and consolidating our vendor relationships.
|
•
|
Return of Capital to Shareholders:
In 2015, we completed the $200 million accelerated share repurchase programs in the first quarter, and in the fourth quarter, we began executing $100 million of open market share repurchases, which were completed in January 2016.
|
1.
|
Returning to profitability through: (i) driving organic growth in our most profitable channels, which include our PHH Home Loans joint venture, loan retention within our capitalized servicing portfolio and subservicing; (ii) managing our operating and capital expenditures; and (iii) executing acquisitions to build retail capabilities.
|
2.
|
Operationalize the requirements of our revised PLS contracts, including implementing the process and program governance changes resulting from the revised contracts. These efforts will be prioritized over the addition of new private label client opportunities, so that we may adequately assess the incremental costs associated with adding new client programs.
|
3.
|
Preserving our balance sheet strength by maintaining a liquidity cushion to weather the dynamic and uncertain environment and to support our remaining growth and re-engineering initiatives. As a result, we do not expect to engage in further share repurchase activity at the present time.
|
4.
|
Resolving our legacy legal and regulatory matters.
|
RESULTS OF OPERATIONS
|
Continuing Operations
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions, except per share data)
|
||||||||||
Net revenues
|
$
|
790
|
|
|
$
|
639
|
|
|
$
|
1,200
|
|
Total expenses
|
1,003
|
|
|
923
|
|
|
1,060
|
|
|||
(Loss) income from continuing operations before income taxes
|
(213
|
)
|
|
(284
|
)
|
|
140
|
|
|||
Income tax (benefit) expense
|
(82
|
)
|
|
(99
|
)
|
|
42
|
|
|||
(Loss) income from continuing operations, net of tax
|
(131
|
)
|
|
(185
|
)
|
|
98
|
|
|||
Less: net income attributable to noncontrolling interest
|
14
|
|
|
6
|
|
|
29
|
|
|||
Net (loss) income from continuing operations attributable to PHH Corporation
|
$
|
(145
|
)
|
|
$
|
(191
|
)
|
|
$
|
69
|
|
|
|
|
|
|
|
||||||
(Loss) earnings per share from continuing operations:
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
(2.62
|
)
|
|
$
|
(3.47
|
)
|
|
$
|
1.21
|
|
Diluted
|
$
|
(2.62
|
)
|
|
$
|
(3.47
|
)
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Origination and other loan fees
|
$
|
284
|
|
|
$
|
231
|
|
|
$
|
307
|
|
Gain on loans held for sale, net
|
298
|
|
|
264
|
|
|
575
|
|
|||
Loan servicing income
|
394
|
|
|
448
|
|
|
436
|
|
|||
Change in fair value of mortgage servicing rights, net of related derivatives
|
(158
|
)
|
|
(238
|
)
|
|
(6
|
)
|
|||
Net interest expense
|
(46
|
)
|
|
(88
|
)
|
|
(115
|
)
|
|||
Other income
|
18
|
|
|
22
|
|
|
3
|
|
|||
Net revenues
|
$
|
790
|
|
|
$
|
639
|
|
|
$
|
1,200
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Salaries and related expenses
|
$
|
323
|
|
|
$
|
358
|
|
|
$
|
425
|
|
Commissions
|
79
|
|
|
78
|
|
|
110
|
|
|||
Loan origination expenses
|
91
|
|
|
85
|
|
|
109
|
|
|||
Foreclosure and repossession expenses
|
51
|
|
|
56
|
|
|
61
|
|
|||
Professional and third-party service fees
|
171
|
|
|
127
|
|
|
111
|
|
|||
Technology equipment and software expenses
|
37
|
|
|
37
|
|
|
33
|
|
|||
Occupancy and other office expenses
|
50
|
|
|
51
|
|
|
50
|
|
|||
Depreciation and amortization
|
18
|
|
|
23
|
|
|
23
|
|
|||
Other operating expenses:
|
|
|
|
|
|
||||||
Loss on early debt retirement
|
30
|
|
|
24
|
|
|
54
|
|
|||
Legal and regulatory reserves
|
78
|
|
|
28
|
|
|
(3
|
)
|
|||
Other
|
75
|
|
|
56
|
|
|
87
|
|
|||
Total expenses
|
$
|
1,003
|
|
|
$
|
923
|
|
|
$
|
1,060
|
|
Discontinued Operations
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in millions, except per share data)
|
||||||
Net revenues
|
$
|
820
|
|
|
$
|
1,642
|
|
Total expenses
|
774
|
|
|
1,541
|
|
||
Income before income taxes
(1)
|
46
|
|
|
101
|
|
||
Income tax expense
(1)
|
15
|
|
|
35
|
|
||
Gain from sale of discontinued operations, net of tax
|
241
|
|
|
—
|
|
||
Income from discontinued operations, net of tax
|
$
|
272
|
|
|
$
|
66
|
|
|
|
|
|
||||
Earnings per share from discontinued operations:
|
|
|
|
|
|
||
Basic
|
$
|
4.94
|
|
|
$
|
1.15
|
|
Diluted
|
$
|
4.94
|
|
|
$
|
1.01
|
|
(1)
|
Represents the results of the Fleet business.
|
Mortgage Production Segment
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
($ In millions)
|
||||||||||
Closings:
|
|
|
|
|
|
|
|
|
|||
Saleable to investors
|
$
|
13,218
|
|
|
$
|
12,389
|
|
|
$
|
25,675
|
|
Fee-based
|
27,386
|
|
|
23,572
|
|
|
26,692
|
|
|||
Total
|
$
|
40,604
|
|
|
$
|
35,961
|
|
|
$
|
52,367
|
|
|
|
|
|
|
|
||||||
Purchase
|
$
|
20,169
|
|
|
$
|
20,105
|
|
|
$
|
19,141
|
|
Refinance
|
20,435
|
|
|
15,856
|
|
|
33,226
|
|
|||
Total
|
$
|
40,604
|
|
|
$
|
35,961
|
|
|
$
|
52,367
|
|
|
|
|
|
|
|
||||||
Retail - PLS
|
$
|
30,436
|
|
|
$
|
26,015
|
|
|
$
|
35,136
|
|
Retail - Real Estate
|
8,752
|
|
|
8,593
|
|
|
12,221
|
|
|||
Total retail
|
39,188
|
|
|
34,608
|
|
|
47,357
|
|
|||
Wholesale/correspondent
|
1,416
|
|
|
1,353
|
|
|
5,010
|
|
|||
Total
|
$
|
40,604
|
|
|
$
|
35,961
|
|
|
$
|
52,367
|
|
|
|
|
|
|
|
||||||
Retail - PLS (units)
|
58,587
|
|
|
54,105
|
|
|
89,137
|
|
|||
Retail - Real Estate (units)
|
32,428
|
|
|
34,131
|
|
|
50,158
|
|
|||
Total retail (units)
|
91,015
|
|
|
88,236
|
|
|
139,295
|
|
|||
Wholesale/correspondent (units)
|
6,199
|
|
|
5,940
|
|
|
22,166
|
|
|||
Total (units)
|
97,214
|
|
|
94,176
|
|
|
161,461
|
|
|||
|
|
|
|
|
|
||||||
Applications:
|
|
|
|
|
|
|
|
|
|||
Saleable to investors
|
$
|
18,047
|
|
|
$
|
16,895
|
|
|
$
|
29,851
|
|
Fee-based
|
33,593
|
|
|
28,696
|
|
|
28,973
|
|
|||
Total
|
$
|
51,640
|
|
|
$
|
45,591
|
|
|
$
|
58,824
|
|
|
|
|
|
|
|
||||||
Retail - PLS
|
$
|
38,672
|
|
|
$
|
32,810
|
|
|
$
|
38,954
|
|
Retail - Real Estate
|
10,845
|
|
|
10,727
|
|
|
14,135
|
|
|||
Total retail
|
49,517
|
|
|
43,537
|
|
|
53,089
|
|
|||
Wholesale/correspondent
|
2,123
|
|
|
2,054
|
|
|
5,735
|
|
|||
Total
|
$
|
51,640
|
|
|
$
|
45,591
|
|
|
$
|
58,824
|
|
|
|
|
|
|
|
||||||
Retail - PLS (units)
|
76,106
|
|
|
68,258
|
|
|
97,932
|
|
|||
Retail - Real Estate (units)
|
40,165
|
|
|
42,123
|
|
|
57,897
|
|
|||
Total retail (units)
|
116,271
|
|
|
110,381
|
|
|
155,829
|
|
|||
Wholesale/correspondent (units)
|
9,181
|
|
|
9,015
|
|
|
25,227
|
|
|||
Total (units)
|
125,452
|
|
|
119,396
|
|
|
181,056
|
|
|||
|
|
|
|
|
|
||||||
Other:
|
|
|
|
|
|
|
|
|
|||
IRLCs expected to close
|
$
|
7,199
|
|
|
$
|
7,262
|
|
|
$
|
15,387
|
|
Total loan margin on IRLCs (in basis points)
|
310
|
|
|
282
|
|
|
344
|
|
|||
Loans sold
|
$
|
13,630
|
|
|
$
|
12,555
|
|
|
$
|
27,242
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Origination and other loan fees
|
$
|
284
|
|
|
$
|
231
|
|
|
$
|
307
|
|
Gain on loans held for sale, net
|
298
|
|
|
264
|
|
|
575
|
|
|||
Net interest expense:
|
|
|
|
|
|
|
|
||||
Interest income
|
40
|
|
|
38
|
|
|
63
|
|
|||
Secured interest expense
|
(24
|
)
|
|
(26
|
)
|
|
(52
|
)
|
|||
Unsecured interest expense
|
(21
|
)
|
|
(51
|
)
|
|
(75
|
)
|
|||
Net interest expense
|
(5
|
)
|
|
(39
|
)
|
|
(64
|
)
|
|||
Other income
|
9
|
|
|
9
|
|
|
3
|
|
|||
Net revenues
|
586
|
|
|
465
|
|
|
821
|
|
|||
|
|
|
|
|
|
||||||
Salaries and related expenses
|
213
|
|
|
231
|
|
|
317
|
|
|||
Commissions
|
79
|
|
|
78
|
|
|
110
|
|
|||
Loan origination expenses
|
91
|
|
|
85
|
|
|
109
|
|
|||
Professional and third-party service fees
|
34
|
|
|
34
|
|
|
39
|
|
|||
Technology equipment and software expenses
|
3
|
|
|
3
|
|
|
4
|
|
|||
Occupancy and other office expenses
|
31
|
|
|
31
|
|
|
34
|
|
|||
Depreciation and amortization
|
11
|
|
|
12
|
|
|
13
|
|
|||
Other operating expenses
|
157
|
|
|
126
|
|
|
144
|
|
|||
Total expenses
|
619
|
|
|
600
|
|
|
770
|
|
|||
(Loss) income before income taxes
|
(33
|
)
|
|
(135
|
)
|
|
51
|
|
|||
Less: net income attributable to noncontrolling interest
|
14
|
|
|
6
|
|
|
29
|
|
|||
Segment (loss) profit
|
$
|
(47
|
)
|
|
$
|
(141
|
)
|
|
$
|
22
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Gain on loans held for sale, net:
|
|
|
|
|
|
|
|
|
|||
Gain on loans
|
$
|
256
|
|
|
$
|
227
|
|
|
$
|
482
|
|
Change in fair value of Scratch and Dent and certain non-conforming mortgage loans
|
(1
|
)
|
|
(12
|
)
|
|
(21
|
)
|
|||
Economic hedge results
|
43
|
|
|
49
|
|
|
114
|
|
|||
Total change in fair value of mortgage loans and related derivatives
|
42
|
|
|
37
|
|
|
93
|
|
|||
Total
|
$
|
298
|
|
|
$
|
264
|
|
|
$
|
575
|
|
|
|
|
|
|
|
||||||
Salaries and related expenses:
|
|
|
|
|
|
|
|
|
|||
Salaries, benefits and incentives
|
$
|
196
|
|
|
$
|
221
|
|
|
$
|
294
|
|
Contract labor and overtime
|
17
|
|
|
10
|
|
|
23
|
|
|||
Total
|
$
|
213
|
|
|
$
|
231
|
|
|
$
|
317
|
|
|
|
|
|
|
|
||||||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|||
Corporate overhead allocation
|
$
|
131
|
|
|
$
|
98
|
|
|
$
|
101
|
|
Other expenses
|
26
|
|
|
28
|
|
|
43
|
|
|||
Total
|
$
|
157
|
|
|
$
|
126
|
|
|
$
|
144
|
|
Mortgage Servicing Segment
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
($ In millions)
|
||||||||||
Total Loan Servicing Portfolio:
|
|
|
|
|
|
||||||
Unpaid Principal Balance
|
$
|
226,259
|
|
|
$
|
227,272
|
|
|
$
|
226,837
|
|
|
|
|
|
|
|
||||||
Number of loans in owned portfolio (units)
|
642,379
|
|
|
712,643
|
|
|
824,992
|
|
|||
Number of subserviced loans (units)
|
450,295
|
|
|
446,381
|
|
|
390,070
|
|
|||
Total number of loans serviced (units)
|
1,092,674
|
|
|
1,159,024
|
|
|
1,215,062
|
|
|||
|
|
|
|
|
|
||||||
Capitalized Servicing Portfolio:
|
|
|
|
|
|
||||||
Unpaid Principal Balance
|
$
|
98,990
|
|
|
$
|
112,686
|
|
|
$
|
129,145
|
|
Capitalized servicing rate
|
0.89
|
%
|
|
0.89
|
%
|
|
0.99
|
%
|
|||
Capitalized servicing multiple
|
3.1
|
|
|
3.1
|
|
|
3.4
|
|
|||
Weighted-average servicing fee (in basis points)
|
29
|
|
|
29
|
|
|
29
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Total Loan Servicing Portfolio:
|
|
|
|
|
|
||||||
Average Portfolio UPB
|
$
|
225,787
|
|
|
$
|
226,438
|
|
|
$
|
210,379
|
|
|
|
|
|
|
|
||||||
Capitalized Servicing Portfolio:
|
|
|
|
|
|
||||||
Average Portfolio UPB
|
105,343
|
|
|
123,090
|
|
|
134,028
|
|
|||
Payoffs and principal curtailments
|
19,092
|
|
|
18,463
|
|
|
33,328
|
|
|||
Sales
|
3,445
|
|
|
6,929
|
|
|
40
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Net loan servicing income:
|
|
|
|
|
|
|
|
|
|||
Loan servicing income
|
$
|
394
|
|
|
$
|
448
|
|
|
$
|
436
|
|
Change in fair value of mortgage servicing rights
|
(187
|
)
|
|
(320
|
)
|
|
13
|
|
|||
Net derivative gain (loss) related to mortgage servicing rights
|
29
|
|
|
82
|
|
|
(19
|
)
|
|||
Net loan servicing income
|
236
|
|
|
210
|
|
|
430
|
|
|||
Net interest expense:
|
|
|
|
|
|
|
|
|
|||
Interest income
|
4
|
|
|
4
|
|
|
7
|
|
|||
Secured interest expense
|
(11
|
)
|
|
(9
|
)
|
|
(7
|
)
|
|||
Unsecured interest expense
|
(34
|
)
|
|
(44
|
)
|
|
(51
|
)
|
|||
Net interest expense
|
(41
|
)
|
|
(49
|
)
|
|
(51
|
)
|
|||
Other income
|
3
|
|
|
2
|
|
|
—
|
|
|||
Net revenues
|
198
|
|
|
163
|
|
|
379
|
|
|||
Salaries and related expenses
|
56
|
|
|
60
|
|
|
53
|
|
|||
Foreclosure and repossession expenses
|
51
|
|
|
56
|
|
|
61
|
|
|||
Professional and third-party service fees
|
28
|
|
|
31
|
|
|
24
|
|
|||
Technology equipment and software expenses
|
16
|
|
|
16
|
|
|
14
|
|
|||
Occupancy and other office expenses
|
16
|
|
|
17
|
|
|
13
|
|
|||
Depreciation and amortization
|
2
|
|
|
2
|
|
|
1
|
|
|||
Other operating expenses
|
160
|
|
|
84
|
|
|
58
|
|
|||
Total expenses
|
329
|
|
|
266
|
|
|
224
|
|
|||
Segment (loss) profit
|
$
|
(131
|
)
|
|
$
|
(103
|
)
|
|
$
|
155
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Loan servicing income:
|
|
|
|
|
|
|
|
|
|||
Servicing fees from capitalized portfolio
|
$
|
304
|
|
|
$
|
357
|
|
|
$
|
395
|
|
Subservicing fees
|
70
|
|
|
59
|
|
|
42
|
|
|||
Late fees and other ancillary servicing revenue
|
35
|
|
|
47
|
|
|
57
|
|
|||
Curtailment interest paid to investors
|
(15
|
)
|
|
(15
|
)
|
|
(39
|
)
|
|||
Net reinsurance loss
|
—
|
|
|
—
|
|
|
(19
|
)
|
|||
Total
|
$
|
394
|
|
|
$
|
448
|
|
|
$
|
436
|
|
|
|
|
|
|
|
||||||
Changes in fair value of mortgage servicing rights:
|
|
|
|
|
|
|
|
||||
Actual prepayments of the underlying mortgage loans
|
$
|
(129
|
)
|
|
$
|
(110
|
)
|
|
$
|
(217
|
)
|
Actual receipts of recurring cash flows
|
(40
|
)
|
|
(45
|
)
|
|
(46
|
)
|
|||
Market-related fair value adjustments
|
(18
|
)
|
|
(165
|
)
|
|
276
|
|
|||
Total
|
$
|
(187
|
)
|
|
$
|
(320
|
)
|
|
$
|
13
|
|
|
|
|
|
|
|
||||||
Other operating expenses:
|
|
|
|
|
|
|
|
||||
Corporate overhead allocation
|
$
|
44
|
|
|
$
|
33
|
|
|
$
|
24
|
|
Repurchase and foreclosure-related charges
|
6
|
|
|
(2
|
)
|
|
7
|
|
|||
Legal and regulatory reserves
|
78
|
|
|
27
|
|
|
—
|
|
|||
Other expenses
|
32
|
|
|
26
|
|
|
27
|
|
|||
Total
|
$
|
160
|
|
|
$
|
84
|
|
|
$
|
58
|
|
Other
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Net revenues
|
$
|
6
|
|
|
$
|
11
|
|
|
$
|
—
|
|
Salaries and related expenses
|
54
|
|
|
67
|
|
|
55
|
|
|||
Professional and third-party service fees
|
109
|
|
|
62
|
|
|
48
|
|
|||
Technology equipment and software expenses
|
18
|
|
|
18
|
|
|
15
|
|
|||
Occupancy and other office expenses
|
3
|
|
|
3
|
|
|
3
|
|
|||
Depreciation and amortization
|
5
|
|
|
9
|
|
|
9
|
|
|||
Other operating expenses:
|
|
|
|
|
|
||||||
Loss on early debt retirement
|
30
|
|
|
24
|
|
|
54
|
|
|||
Other
|
11
|
|
|
5
|
|
|
7
|
|
|||
Total expenses before allocation
|
230
|
|
|
188
|
|
|
191
|
|
|||
Corporate overhead allocation:
|
|
|
|
|
|
||||||
Mortgage Production segment
|
(131
|
)
|
|
(98
|
)
|
|
(101
|
)
|
|||
Mortgage Servicing segment
|
(44
|
)
|
|
(33
|
)
|
|
(24
|
)
|
|||
Total expenses
|
55
|
|
|
57
|
|
|
66
|
|
|||
|
|
|
|
|
|
||||||
Net loss before income taxes
|
$
|
(49
|
)
|
|
$
|
(46
|
)
|
|
$
|
(66
|
)
|
RISK MANAGEMENT
|
Interest Rate Risk
|
Consumer Credit Risk
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
($ In millions)
|
||||||||||
Balance, beginning of period
|
$
|
93
|
|
|
$
|
142
|
|
|
$
|
191
|
|
Realized losses
(1)
|
(19
|
)
|
|
(65
|
)
|
|
(73
|
)
|
|||
Increase (decrease) in reserves due to:
|
|
|
|
|
|
|
|||||
Change in assumptions
|
6
|
|
|
6
|
|
|
7
|
|
|||
New loan sales
|
9
|
|
|
10
|
|
|
17
|
|
|||
Balance, end of period
|
$
|
89
|
|
|
$
|
93
|
|
|
$
|
142
|
|
|
|
|
|
|
|
||||||
Repurchase and indemnification requests received (number of loans)
|
460
|
|
|
936
|
|
|
3,241
|
|
(1)
|
For 2014, realized losses include
$12 million
that was paid to Fannie Mae related to the resolution agreement and Change in assumptions includes an
$8 million
provision for estimated losses related to the sale of existing MSRs.
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Loan repurchase and indemnification liability
|
$
|
62
|
|
|
$
|
63
|
|
Adjustment to value for real estate owned
|
17
|
|
|
16
|
|
||
Allowance for probable foreclosure losses
|
10
|
|
|
14
|
|
||
Total
|
$
|
89
|
|
|
$
|
93
|
|
•
|
we do not service all of the loans for which we have provided representations and warranties;
|
•
|
uncertainty related to loss exposure to loans from origination years where the Agencies have substantially completed or resolved their file reviews; and
|
•
|
uncertainty related to losses associated with loans with defects that were excluded from the resolution agreement with Fannie Mae.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Agency Invested
|
|
Private Invested
|
|
Total
(4)
|
|
Agency Invested
|
|
Private Invested
|
|
Total
(4)
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Claim pending
(1)
|
$
|
12
|
|
|
$
|
3
|
|
|
$
|
15
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
16
|
|
Appealed
(2)
|
15
|
|
|
7
|
|
|
22
|
|
|
16
|
|
|
7
|
|
|
23
|
|
||||||
Open to review
(3)
|
9
|
|
|
11
|
|
|
20
|
|
|
13
|
|
|
9
|
|
|
22
|
|
||||||
Total
|
$
|
36
|
|
|
$
|
21
|
|
|
$
|
57
|
|
|
$
|
42
|
|
|
$
|
19
|
|
|
$
|
61
|
|
(1)
|
Claim pending status represents loans that have completed the review process where we have agreed with the representation and warranty breach and are pending final execution.
|
(2)
|
Appealed status represents loans that have completed the review process where we have disagreed with the representation and warranty breach and are pending response from the claimant. Based on claims received and appealed during the year ended
December 31, 2015
that have been resolved, we were successful in refuting approximately
90%
of claims appealed.
|
(3)
|
Open to review status represents loans where we have not completed our review process. We appealed approximately
65%
of claims received and reviewed during the year ended
December 31, 2015
.
|
(4)
|
Investors may make repurchase demands based on unresolved mortgage insurance rescission notices. In these cases, the total unresolved requests balance includes certain loans that are currently subject to both an outstanding repurchase demand and an unresolved mortgage insurance rescission notice.
|
Counterparty and Concentration Risk
|
Liquidity Risk
|
Operational Risk
|
•
|
Risk and control self-assessments to evaluate key control design and operating effectiveness, and determine if control enhancements are necessary;
|
•
|
Operational event reporting and tracking which provides information about operational breakdowns and the root cause, as well as the status of efforts to remediate;
|
•
|
Third party risk oversight which provides a framework to assess and monitor the level of risk and complexity of third party relationships; and
|
•
|
An independent assessment by Internal Audit of the design and effectiveness of our key controls, regulatory compliance and reporting.
|
LIQUIDITY AND CAPITAL RESOURCES
|
Cash Flows
|
•
|
$360 million to $410 million for identified contingencies, including amounts related to mortgage loan repurchases and legal and regulatory matters;
|
•
|
$25 million to $50 million cash reserves for mortgage-related interest rate risk management activities; and
|
•
|
$100 million to $125 million minimum for working capital needs.
|
|
Year Ended
December 31,
|
|
|
||||||||
|
2015
|
|
2014
(1)
|
|
Change
|
||||||
|
(In millions)
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
$
|
121
|
|
|
$
|
(11
|
)
|
|
$
|
132
|
|
Investing activities
|
62
|
|
|
489
|
|
|
(427
|
)
|
|||
Financing activities
|
(536
|
)
|
|
(464
|
)
|
|
(72
|
)
|
|||
Net (decrease) increase in Cash and cash equivalents
|
$
|
(353
|
)
|
|
$
|
14
|
|
|
$
|
(367
|
)
|
(1)
|
Our cash flows the year ended December 31, 2014 include six months of activity related to the Fleet business.
|
Debt
|
|
Balance
|
|
Collateral
(1)
|
||||
|
(In millions)
|
||||||
Warehouse facilities
|
$
|
632
|
|
|
$
|
668
|
|
Servicing advance facility
|
111
|
|
|
170
|
|
||
Unsecured debt
|
615
|
|
|
—
|
|
||
Total
|
$
|
1,358
|
|
|
$
|
838
|
|
(1)
|
Assets held as collateral are not available to pay our general obligations.
|
•
|
market demand for mortgage-backed securities and liquidity in the secondary mortgage market;
|
•
|
lenders' interest in providing warehouse lines;
|
•
|
the quality and eligibility of assets underlying the arrangements;
|
•
|
our ability to negotiate terms acceptable to us;
|
•
|
our ability to access the asset-backed debt market, including creditor assessment of our credit risk;
|
•
|
our ability to maintain a sufficient level of eligible assets or credit enhancements;
|
•
|
our ability to access the secondary market for mortgage loans; and
|
•
|
our ability to comply with certain financial covenants.
|
|
Balance
|
|
Total
Capacity
|
|
Available
Capacity
(1)
|
|
Maturity
Date
|
|||||||
|
|
|
(In millions)
|
|
|
|
|
|
||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Committed facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Fannie Mae
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
12/13/16
|
|
Wells Fargo Bank, N.A.
|
245
|
|
|
450
|
|
|
205
|
|
|
4/1/16
|
|
|||
Bank of America, N.A.
|
218
|
|
|
400
|
|
|
182
|
|
|
12/16/16
|
|
|||
Credit Suisse First Boston Mortgage Capital LLC
|
169
|
|
|
250
|
|
|
81
|
|
|
6/17/16
|
|
|||
Committed warehouse facilities
|
632
|
|
|
1,600
|
|
|
968
|
|
|
|
|
|||
Uncommitted facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Fannie Mae
|
—
|
|
|
2,500
|
|
|
2,500
|
|
|
n/a
|
|
|||
Credit Suisse First Boston Mortgage Capital LLC
|
—
|
|
|
325
|
|
|
325
|
|
|
n/a
|
|
|||
Total
|
$
|
632
|
|
|
$
|
4,425
|
|
|
$
|
3,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Off-Balance Sheet Gestation Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Uncommitted facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||
JP Morgan Chase Bank, N.A.
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
250
|
|
|
n/a
|
|
(1)
|
Capacity is dependent upon maintaining compliance with the terms, conditions, and covenants of the respective agreements and may be further limited by asset eligibility requirements.
|
|
Balance
|
|
Total
Capacity
|
|
Available
Capacity
(1)
|
|
Maturity
Date
|
|||||||
|
|
|
(In millions)
|
|
|
|
|
|
||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|||
PSART Servicing Advance facility
|
$
|
111
|
|
|
$
|
155
|
|
|
$
|
44
|
|
|
6/15/17
|
(2)
|
Subservicing advance liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Client-funded amounts
|
314
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||
Total
|
$
|
425
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Capacity is dependent upon maintaining compliance with the terms, conditions, and covenants of the respective agreements and may be further limited by asset eligibility requirements.
|
(2)
|
The facility has a revolving period through June 15, 2016, after which the facility goes into amortization. The maturity date of June 15, 2017 presented above represents the final repayment date of the amortizing notes.
|
•
|
the eligibility of servicing advance receivables underlying the arrangement and our ability to recover advances in a timely and efficient manner;
|
•
|
maintaining our role as servicer of the underlying mortgage assets; and
|
•
|
our ability to comply with certain financial and other covenants, the breach of which could result in the ability of the noteholders to terminate their commitment to fund new advances through the purchase of additional notes, an increased pace of amortization for the notes and/or an event of default.
|
•
|
market demand for ABS, specifically demand for ABS collateralized by mortgage receivables;
|
•
|
our ability to service in accordance with applicable guidelines and the quality of our servicing, both of which will impact noteholders’ willingness to commit to financing for an additional 364 days; and
|
•
|
our ability to negotiate terms acceptable to us.
|
•
|
the creditworthiness of our subservicing clients and their ability to fund and/or reimburse the servicing advances; and
|
•
|
our adherence to the applicable servicing guidelines when making the advances.
|
|
Balance
|
|
Balance
at Maturity
|
|
Maturity
Date
|
|||||
|
(In millions)
|
|
|
|
||||||
6% Convertible notes due in 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
06/15/17
|
(1)
|
7.375% Term notes due in 2019
|
275
|
|
|
275
|
|
|
09/01/19
|
|
||
6.375% Term notes due in 2021
|
340
|
|
|
340
|
|
|
08/15/21
|
|
||
Total
|
$
|
615
|
|
|
$
|
615
|
|
|
|
|
(1)
|
After the completion of the exchange offer, an insignificant amount of notes remain.
|
|
Senior
Debt
|
|
Short-Term
Debt
|
Moody’s Investors Service
|
Ba3
|
|
NP
|
Standard & Poors
|
B+
|
|
B
|
CONTRACTUAL OBLIGATIONS
|
|
Less than
1 year
|
|
1 -3 years
|
|
3-5 years
|
|
More than
5 years
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Warehouse facilities
(1)
|
$
|
632
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
632
|
|
Servicing advance facility
(1) (2)
|
111
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|||||
Unsecured debt
|
—
|
|
|
—
|
|
|
275
|
|
|
340
|
|
|
615
|
|
|||||
Interest expense on Unsecured debt
|
42
|
|
|
84
|
|
|
63
|
|
|
22
|
|
|
211
|
|
|||||
Operating leases
(3)
|
18
|
|
|
32
|
|
|
26
|
|
|
24
|
|
|
100
|
|
|||||
Purchase commitments
|
34
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||
Loan repurchase agreements
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
|
$
|
852
|
|
|
$
|
118
|
|
|
$
|
364
|
|
|
$
|
386
|
|
|
$
|
1,720
|
|
(1)
|
The table above excludes future cash payments related to interest expense on our warehouse facilities, servicing advance facility and capital leases, which totaled $23 million for 2015. Interest is calculated on most of our debt obligations based on variable rates referenced to LIBOR.
|
(2)
|
Maturities of the Servicing advance facility represent estimated payments based on the expected cash inflows of the receivables. The contractual final repayment date of the facility is June 15, 2017.
|
(3)
|
Excludes $10 million of minimum sublease income due in the future under noncancelable subleases.
|
OFF-BALANCE SHEET ARRANGEMENTS AND GUARANTEES
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
|
•
|
Mortgage servicing rights. See "—Mortgage Servicing Rights" below.
|
•
|
Certain non-conforming Mortgage loans held for sale, including Scratch and Dent (loans with origination flaws or performance issues) and second lien loans. We value these loans based upon either a collateral-based valuation model or a discounted cash flow model. As the market for these loans is not liquid, we utilize assumptions in the valuation that reflect our best estimate of the current market which may include spreads from collateral values in recent transactions.
|
•
|
Interest rate lock commitments ("IRLCs"). As there is a lack of an observable market for trading IRLCs, fair value is based upon the estimated fair value of the underlying mortgage loan, adjusted for: (i) estimated costs to complete and originate the loan and (ii) an adjustment to reflect the estimated percentage of commitments that will result in a closed mortgage loan, which can vary based on the age of the underlying commitment and changes in mortgage interest rates.
|
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
|
Interest Rate Risk
|
|
Change in Fair Value
|
||||||||||||||||||||||
|
Down
100 bps
|
|
Down
50 bps
|
|
Down
25 bps
|
|
Up
25 bps
|
|
Up
50 bps
|
|
Up
100 bps
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Mortgage pipeline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage loans held for sale
|
$
|
12
|
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
(5
|
)
|
|
$
|
(10
|
)
|
|
$
|
(21
|
)
|
Interest rate lock commitments
(1)
|
17
|
|
|
12
|
|
|
6
|
|
|
(8
|
)
|
|
(17
|
)
|
|
(37
|
)
|
||||||
Forward loan sale commitments
(1)
|
(30
|
)
|
|
(21
|
)
|
|
(11
|
)
|
|
12
|
|
|
26
|
|
|
53
|
|
||||||
Option contracts
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
6
|
|
||||||
Total Mortgage pipeline
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
MSRs and related derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage servicing rights
|
(230
|
)
|
|
(109
|
)
|
|
(53
|
)
|
|
48
|
|
|
92
|
|
|
165
|
|
||||||
Derivatives related to MSRs
(1)
|
174
|
|
|
75
|
|
|
35
|
|
|
(28
|
)
|
|
(55
|
)
|
|
(99
|
)
|
||||||
Total MSRs and related derivatives
|
(56
|
)
|
|
(34
|
)
|
|
(18
|
)
|
|
20
|
|
|
37
|
|
|
66
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unsecured term debt
|
(23
|
)
|
|
(12
|
)
|
|
(6
|
)
|
|
6
|
|
|
11
|
|
|
22
|
|
||||||
Total, net
|
$
|
(80
|
)
|
|
$
|
(47
|
)
|
|
$
|
(24
|
)
|
|
$
|
26
|
|
|
$
|
49
|
|
|
$
|
89
|
|
(1)
|
Included in Other assets or Other liabilities in the Consolidated Balance Sheets.
|
Item 8. Financial Statements and Supplementary Data
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
10
.
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
|
Schedules:
|
|
|||
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
REVENUES
|
|
|
|
|
|
|
|
|
|||
Origination and other loan fees
|
$
|
284
|
|
|
$
|
231
|
|
|
$
|
307
|
|
Gain on loans held for sale, net
|
298
|
|
|
264
|
|
|
575
|
|
|||
Net loan servicing income:
|
|
|
|
|
|
|
|
|
|||
Loan servicing income
|
394
|
|
|
448
|
|
|
436
|
|
|||
Change in fair value of mortgage servicing rights
|
(187
|
)
|
|
(320
|
)
|
|
13
|
|
|||
Net derivative gain (loss) related to mortgage servicing rights
|
29
|
|
|
82
|
|
|
(19
|
)
|
|||
Net loan servicing income
|
236
|
|
|
210
|
|
|
430
|
|
|||
Net interest expense:
|
|
|
|
|
|
|
|
|
|||
Interest income
|
44
|
|
|
42
|
|
|
70
|
|
|||
Secured interest expense
|
(35
|
)
|
|
(35
|
)
|
|
(59
|
)
|
|||
Unsecured interest expense
|
(55
|
)
|
|
(95
|
)
|
|
(126
|
)
|
|||
Net interest expense
|
(46
|
)
|
|
(88
|
)
|
|
(115
|
)
|
|||
Other income
|
18
|
|
|
22
|
|
|
3
|
|
|||
Net revenues
|
790
|
|
|
639
|
|
|
1,200
|
|
|||
|
|
|
|
|
|
||||||
EXPENSES
|
|
|
|
|
|
|
|
|
|||
Salaries and related expenses
|
323
|
|
|
358
|
|
|
425
|
|
|||
Commissions
|
79
|
|
|
78
|
|
|
110
|
|
|||
Loan origination expenses
|
91
|
|
|
85
|
|
|
109
|
|
|||
Foreclosure and repossession expenses
|
51
|
|
|
56
|
|
|
61
|
|
|||
Professional and third-party service fees
|
171
|
|
|
127
|
|
|
111
|
|
|||
Technology equipment and software expenses
|
37
|
|
|
37
|
|
|
33
|
|
|||
Occupancy and other office expenses
|
50
|
|
|
51
|
|
|
50
|
|
|||
Depreciation and amortization
|
18
|
|
|
23
|
|
|
23
|
|
|||
Other operating expenses
|
183
|
|
|
108
|
|
|
138
|
|
|||
Total expenses
|
1,003
|
|
|
923
|
|
|
1,060
|
|
|||
(Loss) income from continuing operations before income taxes
|
(213
|
)
|
|
(284
|
)
|
|
140
|
|
|||
Income tax (benefit) expense
|
(82
|
)
|
|
(99
|
)
|
|
42
|
|
|||
(Loss) income from continuing operations, net of tax
|
(131
|
)
|
|
(185
|
)
|
|
98
|
|
|||
Income from discontinued operations, net of tax
|
—
|
|
|
272
|
|
|
66
|
|
|||
Net (loss) income
|
(131
|
)
|
|
87
|
|
|
164
|
|
|||
Less: net income attributable to noncontrolling interest
|
14
|
|
|
6
|
|
|
29
|
|
|||
Net (loss) income attributable to PHH Corporation
|
$
|
(145
|
)
|
|
$
|
81
|
|
|
$
|
135
|
|
|
|
|
|
|
|
||||||
Basic (loss) earnings per share:
|
|
|
|
|
|
||||||
From continuing operations
|
$
|
(2.62
|
)
|
|
$
|
(3.47
|
)
|
|
$
|
1.21
|
|
From discontinued operations
|
—
|
|
|
4.94
|
|
|
1.15
|
|
|||
Total attributable to PHH Corporation
|
$
|
(2.62
|
)
|
|
$
|
1.47
|
|
|
$
|
2.36
|
|
|
|
|
|
|
|
||||||
Diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|||
From continuing operations
|
$
|
(2.62
|
)
|
|
$
|
(3.47
|
)
|
|
$
|
1.05
|
|
From discontinued operations
|
—
|
|
|
4.94
|
|
|
1.01
|
|
|||
Total attributable to PHH Corporation
|
$
|
(2.62
|
)
|
|
$
|
1.47
|
|
|
$
|
2.06
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net (loss) income
|
$
|
(131
|
)
|
|
$
|
87
|
|
|
$
|
164
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|||
Currency translation adjustment
|
—
|
|
|
(22
|
)
|
|
(14
|
)
|
|||
Change in unfunded pension liability, net
|
1
|
|
|
(5
|
)
|
|
5
|
|
|||
Change in unrealized gains on available-for-sale securities, net
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
1
|
|
|
(27
|
)
|
|
(10
|
)
|
|||
Total comprehensive (loss) income
|
(130
|
)
|
|
60
|
|
|
154
|
|
|||
Less: comprehensive income attributable to noncontrolling interest
|
14
|
|
|
6
|
|
|
29
|
|
|||
Comprehensive (loss) income attributable to PHH Corporation
|
$
|
(144
|
)
|
|
$
|
54
|
|
|
$
|
125
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
906
|
|
|
$
|
1,259
|
|
Restricted cash
|
47
|
|
|
56
|
|
||
Mortgage loans held for sale
|
743
|
|
|
915
|
|
||
Accounts receivable, net
|
81
|
|
|
123
|
|
||
Servicing advances, net
|
691
|
|
|
694
|
|
||
Mortgage servicing rights
|
880
|
|
|
1,005
|
|
||
Property and equipment, net
|
47
|
|
|
36
|
|
||
Other assets
|
257
|
|
|
208
|
|
||
Total assets
(1)
|
$
|
3,652
|
|
|
$
|
4,296
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
|
|
||
Accounts payable and accrued expenses
|
$
|
251
|
|
|
$
|
244
|
|
Subservicing advance liabilities
|
314
|
|
|
347
|
|
||
Debt
|
1,358
|
|
|
1,739
|
|
||
Deferred taxes
|
182
|
|
|
262
|
|
||
Loan repurchase and indemnification liability
|
62
|
|
|
63
|
|
||
Other liabilities
|
137
|
|
|
70
|
|
||
Total liabilities
(1)
|
2,304
|
|
|
2,725
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
|
||
|
|
|
|
||||
EQUITY
|
|
|
|
|
|
||
Preferred stock, $0.01 par value; 1,090,000 shares authorized; none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 273,910,000 shares authorized;
55,007,983 shares issued and outstanding at December 31, 2015;
51,143,723 shares issued and outstanding at December 31, 2014
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
911
|
|
|
989
|
|
||
Retained earnings
|
416
|
|
|
566
|
|
||
Accumulated other comprehensive loss
(2)
|
(10
|
)
|
|
(11
|
)
|
||
Total PHH Corporation stockholders’ equity
|
1,318
|
|
|
1,545
|
|
||
Noncontrolling interest
|
30
|
|
|
26
|
|
||
Total equity
|
1,348
|
|
|
1,571
|
|
||
Total liabilities and equity
|
$
|
3,652
|
|
|
$
|
4,296
|
|
(1)
|
The Consolidated Balance Sheets include assets of variable interest entities which can be used only to settle the obligations and liabilities of variable interest entities which creditors or beneficial interest holders do not have recourse to PHH Corporation and subsidiaries as follows:
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
80
|
|
|
$
|
85
|
|
Restricted cash
|
18
|
|
|
23
|
|
||
Mortgage loans held for sale
|
389
|
|
|
378
|
|
||
Accounts receivable, net
|
5
|
|
|
8
|
|
||
Servicing advances, net
|
157
|
|
|
155
|
|
||
Property and equipment, net
|
1
|
|
|
1
|
|
||
Other assets
|
12
|
|
|
8
|
|
||
Total assets
|
$
|
662
|
|
|
$
|
658
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
|
|
||
Accounts payable and accrued expenses
|
$
|
14
|
|
|
$
|
16
|
|
Debt
|
456
|
|
|
443
|
|
||
Other liabilities
|
6
|
|
|
11
|
|
||
Total liabilities
|
$
|
476
|
|
|
$
|
470
|
|
(2)
|
Includes amounts recorded related to the Company's defined benefit pension plan, net of income tax benefits of
$6 million
as of both December 31, 2015 and 2014. During the year ended December 31, 2015, there were
no
amounts reclassified out of Accumulated other comprehensive loss. During the year ended December 31, 2014, upon the disposition of the Fleet business, the Company realized a
$22 million
currency translation gain and reclassified the amount to Income from discontinued operations, net of tax.
|
|
PHH Corporation Stockholders’ Equity
|
|
|
|
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Beginning Balance
|
56,975,991
|
|
|
$
|
1
|
|
|
$
|
1,127
|
|
|
$
|
372
|
|
|
$
|
26
|
|
|
$
|
36
|
|
|
$
|
1,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
135
|
|
|
(10
|
)
|
|
29
|
|
|
154
|
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
(41
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Stock issued under share-based payment plans
|
289,526
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Recognition of deferred taxes related to Convertible notes
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Balance at December 31, 2013
|
57,265,517
|
|
|
$
|
1
|
|
|
$
|
1,142
|
|
|
$
|
507
|
|
|
$
|
16
|
|
|
$
|
24
|
|
|
$
|
1,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|
(27
|
)
|
|
6
|
|
|
60
|
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Stock issued under share-based payment plans (includes $6 of excess tax benefit)
|
840,901
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||
Repurchase of Common stock
|
(6,962,695
|
)
|
|
—
|
|
|
(178
|
)
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
(200
|
)
|
||||||
Conversion of Convertible notes
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
Recognition of deferred taxes related to Convertible notes
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Balance at December 31, 2014
|
51,143,723
|
|
|
$
|
1
|
|
|
$
|
989
|
|
|
$
|
566
|
|
|
$
|
(11
|
)
|
|
$
|
26
|
|
|
$
|
1,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
1
|
|
|
14
|
|
|
(130
|
)
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Stock issued under share-based payment plans
|
204,126
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Repurchase of Common stock
|
(6,415,519
|
)
|
|
(1
|
)
|
|
(72
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(78
|
)
|
||||||
Conversion of Convertible notes
|
10,075,653
|
|
|
1
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
||||||
Recognition of deferred taxes related to Convertible notes
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Balance at December 31, 2015
|
55,007,983
|
|
|
$
|
1
|
|
|
$
|
911
|
|
|
$
|
416
|
|
|
$
|
(10
|
)
|
|
$
|
30
|
|
|
$
|
1,348
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Net (loss) income
|
$
|
(131
|
)
|
|
$
|
87
|
|
|
$
|
164
|
|
Adjustments to reconcile Net (loss) income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|||
Net gain on sale of business
|
—
|
|
|
(241
|
)
|
|
—
|
|
|||
Capitalization of originated mortgage servicing rights
|
(101
|
)
|
|
(97
|
)
|
|
(244
|
)
|
|||
Net loss on mortgage servicing rights and related derivatives
|
158
|
|
|
238
|
|
|
6
|
|
|||
Vehicle depreciation
|
—
|
|
|
596
|
|
|
1,211
|
|
|||
Depreciation and amortization
|
18
|
|
|
28
|
|
|
33
|
|
|||
Loss on early extinguishment of debt
|
30
|
|
|
24
|
|
|
54
|
|
|||
Origination of mortgage loans held for sale
|
(13,512
|
)
|
|
(12,612
|
)
|
|
(25,914
|
)
|
|||
Proceeds on sale of and payments from mortgage loans held for sale
|
13,965
|
|
|
12,784
|
|
|
27,837
|
|
|||
Net gain on interest rate lock commitments, mortgage loans held for sale and related derivatives
|
(297
|
)
|
|
(230
|
)
|
|
(527
|
)
|
|||
Net change in deferred income taxes
|
(70
|
)
|
|
(96
|
)
|
|
64
|
|
|||
Other adjustments and changes in other assets and liabilities, net
|
61
|
|
|
(492
|
)
|
|
25
|
|
|||
Net cash provided by (used in) operating activities
|
121
|
|
|
(11
|
)
|
|
2,709
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Net cash received (paid) on derivatives related to mortgage servicing rights
|
35
|
|
|
70
|
|
|
(23
|
)
|
|||
Proceeds on sale of mortgage servicing rights
|
47
|
|
|
67
|
|
|
1
|
|
|||
Purchases of property and equipment
|
(31
|
)
|
|
(15
|
)
|
|
(32
|
)
|
|||
Decrease (increase) in restricted cash
|
9
|
|
|
(87
|
)
|
|
67
|
|
|||
Proceeds from sale of business, net of cash transferred and transaction costs
|
—
|
|
|
1,096
|
|
|
—
|
|
|||
Purchases of certificates of deposit
|
—
|
|
|
(250
|
)
|
|
—
|
|
|||
Proceeds from maturities of certificates of deposit
|
—
|
|
|
250
|
|
|
—
|
|
|||
Investment in vehicles
|
—
|
|
|
(850
|
)
|
|
(1,722
|
)
|
|||
Proceeds on sale of investment vehicles
|
—
|
|
|
201
|
|
|
409
|
|
|||
Purchases of restricted investments
|
—
|
|
|
—
|
|
|
(85
|
)
|
|||
Proceeds from sales and maturities of restricted investments
|
—
|
|
|
—
|
|
|
205
|
|
|||
Other, net
|
2
|
|
|
7
|
|
|
3
|
|
|||
Net cash provided by (used in) investing activities
|
62
|
|
|
489
|
|
|
(1,177
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from secured borrowings
|
17,213
|
|
|
18,254
|
|
|
43,342
|
|
|||
Principal payments on secured borrowings
|
(17,378
|
)
|
|
(18,065
|
)
|
|
(44,443
|
)
|
|||
Proceeds from unsecured borrowings
|
—
|
|
|
—
|
|
|
350
|
|
|||
Principal payments on unsecured borrowings
|
(245
|
)
|
|
(435
|
)
|
|
(288
|
)
|
|||
Cash tender premiums for convertible debt
|
(30
|
)
|
|
—
|
|
|
—
|
|
|||
Issuances of Common stock
|
2
|
|
|
10
|
|
|
3
|
|
|||
Repurchase of Common stock
|
(77
|
)
|
|
(200
|
)
|
|
—
|
|
|||
Cash paid for debt issuance costs
|
(7
|
)
|
|
(21
|
)
|
|
(29
|
)
|
|||
Distributions to noncontrolling interest
|
(10
|
)
|
|
(4
|
)
|
|
(41
|
)
|
|||
Other, net
|
(4
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|||
Net cash used in financing activities
|
(536
|
)
|
|
(464
|
)
|
|
(1,112
|
)
|
|||
Effect of changes in exchange rates on Cash and cash equivalents
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net (decrease) increase in Cash and cash equivalents
|
$
|
(353
|
)
|
|
$
|
14
|
|
|
$
|
416
|
|
Cash and cash equivalents at beginning of period
|
1,259
|
|
|
1,245
|
|
|
829
|
|
|||
Less: Cash balance of discontinued operations at end of period
|
—
|
|
|
—
|
|
|
(119
|
)
|
|||
Cash and cash equivalents at end of period
|
$
|
906
|
|
|
$
|
1,259
|
|
|
$
|
1,126
|
|
1. Summary of Significant Accounting Policies
|
Capitalized software
|
3 to 5 years
|
Furniture, fixtures and equipment
|
3 to 7 years
|
Capital leases
|
Lesser of the remaining lease term or 5 years
|
Leasehold improvements
|
Lesser of the remaining lease term or 20 years
|
2. Discontinued Operations
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(In millions)
|
||||||
Net revenues
(1)
|
$
|
820
|
|
|
$
|
1,642
|
|
Total expenses
(1)
|
774
|
|
|
1,541
|
|
||
Income before income taxes
(1)
|
46
|
|
|
101
|
|
||
Income tax expense
(1)
|
15
|
|
|
35
|
|
||
Gain from sale of discontinued operations, net of tax
|
241
|
|
|
—
|
|
||
Income from discontinued operations, net of tax
|
$
|
272
|
|
|
$
|
66
|
|
(1)
|
Represents the results of the Fleet business.
|
3. Earnings Per Share
|
▪
|
outstanding stock-based compensation awards representing shares from restricted stock units and stock options; and
|
▪
|
stock assumed to be issued related to convertible notes.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions, except share and per share data)
|
||||||||||
(Loss) income from continuing operations, net of tax
|
$
|
(131
|
)
|
|
$
|
(185
|
)
|
|
$
|
98
|
|
Less: net income attributable to noncontrolling interest
|
14
|
|
|
6
|
|
|
29
|
|
|||
Net (loss) income from continuing operations attributable to PHH Corporation
|
(145
|
)
|
|
(191
|
)
|
|
69
|
|
|||
Income from discontinued operations, net of tax
|
—
|
|
|
272
|
|
|
66
|
|
|||
Net (loss) income attributable to PHH Corporation
|
$
|
(145
|
)
|
|
$
|
81
|
|
|
$
|
135
|
|
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding — basic
|
55,201,713
|
|
|
55,001,300
|
|
|
57,357,339
|
|
|||
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
|
|||
Share-based payment arrangements
(1)
|
—
|
|
|
—
|
|
|
230,584
|
|
|||
Conversion of debt securities
|
—
|
|
|
—
|
|
|
8,271,597
|
|
|||
Weighted-average common shares outstanding — diluted
(2)
|
55,201,713
|
|
|
55,001,300
|
|
|
65,859,520
|
|
|||
|
|
|
|
|
|
||||||
Basic (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|||
From continuing operations
|
$
|
(2.62
|
)
|
|
$
|
(3.47
|
)
|
|
$
|
1.21
|
|
From discontinued operations
|
—
|
|
|
4.94
|
|
|
1.15
|
|
|||
Total attributable to PHH Corporation
|
$
|
(2.62
|
)
|
|
$
|
1.47
|
|
|
$
|
2.36
|
|
|
|
|
|
|
|
||||||
Diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|||
From continuing operations
|
$
|
(2.62
|
)
|
|
$
|
(3.47
|
)
|
|
$
|
1.05
|
|
From discontinued operations
|
—
|
|
|
4.94
|
|
|
1.01
|
|
|||
Total attributable to PHH Corporation
|
$
|
(2.62
|
)
|
|
$
|
1.47
|
|
|
$
|
2.06
|
|
(1)
|
Represents incremental shares from restricted stock units and stock options.
|
(2)
|
For the years ended
December 31, 2015
and
2014
, the Company had a net loss from continuing operations attributable to PHH Corporation and, as a result, there were no potentially dilutive securities included in the denominator for computing dilutive earnings per share.
|
(1)
|
For the year ended
December 31, 2015
, excludes
429,144
shares that are contingently issuable for which the contingency has not been met.
|
4. Transfers and Servicing of Mortgage Loans
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Balance, beginning of period
|
$
|
112,686
|
|
|
$
|
129,145
|
|
|
$
|
140,381
|
|
Additions
|
8,841
|
|
|
8,933
|
|
|
22,132
|
|
|||
Payoffs and curtailments
|
(19,092
|
)
|
|
(18,463
|
)
|
|
(33,328
|
)
|
|||
Sales
|
(3,445
|
)
|
|
(6,929
|
)
|
|
(40
|
)
|
|||
Balance, end of period
|
$
|
98,990
|
|
|
$
|
112,686
|
|
|
$
|
129,145
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Balance, beginning of period
|
$
|
1,005
|
|
|
$
|
1,279
|
|
|
$
|
1,022
|
|
Additions
|
101
|
|
|
97
|
|
|
244
|
|
|||
Sales
|
(39
|
)
|
|
(51
|
)
|
|
—
|
|
|||
Changes in fair value due to:
|
|
|
|
|
|
|
|
|
|||
Realization of expected cash flows
|
(169
|
)
|
|
(155
|
)
|
|
(263
|
)
|
|||
Changes in market inputs or assumptions used in the valuation model
|
(18
|
)
|
|
(165
|
)
|
|
276
|
|
|||
Balance, end of period
|
$
|
880
|
|
|
$
|
1,005
|
|
|
$
|
1,279
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Servicing fees from capitalized portfolio
|
$
|
304
|
|
|
$
|
357
|
|
|
$
|
395
|
|
Late fees
|
15
|
|
|
17
|
|
|
18
|
|
|||
Other ancillary servicing revenue
|
20
|
|
|
30
|
|
|
39
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Proceeds from new loan sales or securitizations
|
$
|
9,075
|
|
|
$
|
9,226
|
|
|
$
|
22,618
|
|
Servicing fees from capitalized portfolio
(1)
|
304
|
|
|
357
|
|
|
395
|
|
|||
Repurchases of previously sold loans
(2)
|
(128
|
)
|
|
(64
|
)
|
|
(114
|
)
|
|||
Servicing advances
(3)
|
(2,083
|
)
|
|
(1,963
|
)
|
|
(1,460
|
)
|
|||
Repayment of servicing advances
(3)
|
2,086
|
|
|
1,935
|
|
|
1,361
|
|
(1)
|
Excludes late fees and other ancillary servicing revenue.
|
(2)
|
Excludes indemnification payments to investors and insurers of the related mortgage loans and for 2015 includes purchases of repurchase eligible loans.
|
(3)
|
Outstanding servicing advance receivables are presented in Servicing advances, net in the Consolidated Balance Sheets, except for advances related to loans in foreclosure or real estate owned, which are included in Other assets.
|
5. Derivatives
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Notional amounts:
|
|
|
|
|
|
||
Interest rate lock commitments expected to close
|
$
|
1,048
|
|
|
$
|
1,185
|
|
Forward delivery commitments
|
2,468
|
|
|
3,893
|
|
||
Option contracts
|
125
|
|
|
213
|
|
||
MSR-related agreements
|
3,945
|
|
|
4,013
|
|
|
December 31, 2015
|
||||||||||||||
|
Gross Assets
|
|
Offsetting
Payables
|
|
Cash Collateral
Received
|
|
Net Amount
|
||||||||
|
(In millions)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
MSR-related agreements
|
27
|
|
|
—
|
|
|
(23
|
)
|
|
4
|
|
||||
Derivative assets subject to netting
|
29
|
|
|
(2
|
)
|
|
(23
|
)
|
|
4
|
|
||||
Not subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate lock commitments
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Forward delivery commitments
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Derivative assets not subject to netting
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Total derivative assets
|
$
|
51
|
|
|
$
|
(2
|
)
|
|
$
|
(23
|
)
|
|
$
|
26
|
|
|
Gross Liabilities
|
|
Offsetting
Receivables
|
|
Cash Collateral
Received
|
|
Net Amount
|
||||||||
|
(In millions)
|
||||||||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
|
$
|
2
|
|
Total derivative liabilities
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
|
$
|
2
|
|
|
December 31, 2014
|
||||||||||||||
|
Gross Assets
|
|
Offsetting
Payables
|
|
Cash Collateral
Received
|
|
Net Amount
|
||||||||
|
(In millions)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
MSR-related agreements
|
66
|
|
|
(2
|
)
|
|
(56
|
)
|
|
8
|
|
||||
Derivative assets subject to netting
|
68
|
|
|
(4
|
)
|
|
(56
|
)
|
|
8
|
|
||||
Not subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate lock commitments
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Forward delivery commitments
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Derivative assets not subject to netting
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
||||
Total derivative assets
|
$
|
93
|
|
|
$
|
(4
|
)
|
|
$
|
(56
|
)
|
|
$
|
33
|
|
|
Gross Liabilities
|
|
Offsetting
Receivables
|
|
Cash Collateral
Paid
|
|
Net Amount
|
||||||||
|
(In millions)
|
||||||||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
9
|
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
2
|
|
Not subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Total derivative liabilities
|
$
|
14
|
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
7
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Gain on loans held for sale, net:
|
|
|
|
|
|
|
|
|
|||
Interest rate lock commitments
|
$
|
261
|
|
|
$
|
309
|
|
|
$
|
475
|
|
Forward delivery commitments
|
(7
|
)
|
|
(89
|
)
|
|
234
|
|
|||
Option contracts
|
(2
|
)
|
|
(4
|
)
|
|
16
|
|
|||
Net derivative gain (loss) related to mortgage servicing rights:
|
|
|
|
|
|
|
|
|
|||
MSR-related agreements
|
29
|
|
|
82
|
|
|
(19
|
)
|
6. Property and Equipment, Net
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Capitalized software
|
$
|
131
|
|
|
$
|
119
|
|
Furniture, fixtures and equipment
|
32
|
|
|
54
|
|
||
Capital leases
|
9
|
|
|
23
|
|
||
Leasehold improvements
|
24
|
|
|
11
|
|
||
|
196
|
|
|
207
|
|
||
Less: Accumulated depreciation and amortization
|
(149
|
)
|
|
(171
|
)
|
||
Total
|
$
|
47
|
|
|
$
|
36
|
|
7. Other Assets
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Repurchase eligible loans
(1)
|
$
|
104
|
|
|
$
|
53
|
|
Equity method investments
|
32
|
|
|
34
|
|
||
Derivatives
|
26
|
|
|
33
|
|
||
Mortgage loans in foreclosure, net
|
24
|
|
|
32
|
|
||
Income taxes receivable
|
23
|
|
|
2
|
|
||
Real estate owned, net
|
21
|
|
|
21
|
|
||
Deferred financing costs
|
13
|
|
|
19
|
|
||
Other
|
14
|
|
|
14
|
|
||
Total
|
$
|
257
|
|
|
$
|
208
|
|
|
(1)
|
Repurchase eligible loans represent certain mortgage loans sold pursuant to Government National Mortgage Association programs where the Company, as servicer, has the unilateral option to repurchase the loan if certain criteria are met, including if a loan is greater than
90
days delinquent and where it has been determined that there is more than a trivial benefit from exercising the repurchase option. Regardless of whether the repurchase option has been exercised, the Company must recognize eligible loans within Other assets and a corresponding repurchase liability within Accounts payable and accrued expenses in the Consolidated Balance Sheets.
|
8. Accounts Payable and Accrued Expenses
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Repurchase eligible loans
|
$
|
104
|
|
|
$
|
53
|
|
Accounts payable
|
76
|
|
|
69
|
|
||
Accrued payroll and benefits
|
38
|
|
|
84
|
|
||
Accrued servicing related expenses
|
17
|
|
|
22
|
|
||
Accrued interest
|
16
|
|
|
16
|
|
||
Total
|
$
|
251
|
|
|
$
|
244
|
|
9. Other Liabilities
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Accrual for legal and regulatory matters (Note 14)
|
$
|
105
|
|
|
$
|
29
|
|
Pension and other post-employment benefits liability
|
11
|
|
|
11
|
|
||
Liability for income tax contingencies
|
9
|
|
|
9
|
|
||
Derivatives
|
2
|
|
|
7
|
|
||
Other
|
10
|
|
|
14
|
|
||
Total
|
$
|
137
|
|
|
$
|
70
|
|
10. Debt and Borrowing Arrangements
|
|
December 31, 2015
|
|
December 31, 2014
|
|||||||||||
|
Balance
|
|
Interest
Rate
(1)
|
|
Available
Capacity
(2)
|
|
Balance
|
|||||||
|
(In millions)
|
|||||||||||||
Committed warehouse facilities
|
$
|
632
|
|
|
2.5
|
%
|
|
$
|
968
|
|
|
$
|
800
|
|
Uncommitted warehouse facilities
|
—
|
|
|
—
|
|
|
2,825
|
|
|
—
|
|
|||
Servicing advance facility
|
111
|
|
|
2.3
|
%
|
|
44
|
|
|
108
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Convertible notes due in 2017
(3)
|
—
|
|
|
6.0
|
%
|
|
n/a
|
|
|
216
|
|
|||
Term notes due in 2019
|
275
|
|
|
7.375
|
%
|
|
n/a
|
|
|
275
|
|
|||
Term notes due in 2021
|
340
|
|
|
6.375
|
%
|
|
n/a
|
|
|
340
|
|
|||
Unsecured credit facilities
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|||
Unsecured debt
|
615
|
|
|
|
|
|
|
|
|
831
|
|
|||
Total
|
$
|
1,358
|
|
|
|
|
|
|
|
|
$
|
1,739
|
|
|
(1)
|
Interest rate shown represents the stated interest rate of outstanding borrowings as of the respective date, which may differ from the effective rate due to the amortization of premiums, discounts and issuance costs. Warehouse facilities and the Servicing advance facility are variable-rate. Rate shown for Warehouse facilities represents the weighted-average rate of current outstanding borrowings.
|
(2)
|
Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements, including asset-eligibility requirements.
|
(3)
|
As of December 31, 2015, after completion of the exchange offers, an insignificant amount of notes remain. As of December 31, 2014, balance is net of unamortized discount of
$29 million
.
|
|
Warehouse
Facilities
|
|
Servicing
Advance
Facility
|
||||
|
(In millions)
|
||||||
Restricted cash
|
$
|
7
|
|
|
$
|
13
|
|
Servicing advances
|
—
|
|
|
157
|
|
||
Mortgage loans held for sale (unpaid principal balance)
|
661
|
|
|
—
|
|
||
Total
|
$
|
668
|
|
|
$
|
170
|
|
|
Warehouse
Facilities
|
|
Servicing
Advance
Facility
(1)
|
|
Unsecured
Debt
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Within one year
|
$
|
632
|
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
743
|
|
Between one and two years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Between two and three years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Between three and four years
|
—
|
|
|
—
|
|
|
275
|
|
|
275
|
|
||||
Between four and five years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
340
|
|
|
340
|
|
||||
|
$
|
632
|
|
|
$
|
111
|
|
|
$
|
615
|
|
|
$
|
1,358
|
|
|
(1)
|
Maturities of the Servicing advance facility represent estimated payments based on the expected cash inflows of the receivables.
|
Mortgage Warehouse Debt
|
Servicing Advance Facility
|
Unsecured Debt
|
Debt Covenants
|
11. Pension and Other Post-Employment Benefits
|
|
Pension Benefits
|
|
Other Post-Employment
Benefits
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In millions)
|
||||||||||||||
Benefit obligation
|
$
|
47
|
|
|
$
|
50
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Fair value of plan assets
|
37
|
|
|
40
|
|
|
—
|
|
|
—
|
|
||||
Unfunded status recognized in Other liabilities
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized in Accumulated other comprehensive income
|
$
|
16
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
12. Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
—
|
|
|
$
|
(461
|
)
|
|
$
|
—
|
|
State
|
(1
|
)
|
|
(31
|
)
|
|
(5
|
)
|
|||
Income tax contingencies:
|
|
|
|
|
|
|
|
|
|||
Change in income tax contingencies
|
—
|
|
|
6
|
|
|
—
|
|
|||
Interest and penalties
|
—
|
|
|
1
|
|
|
—
|
|
|||
Total current income tax benefit
|
(1
|
)
|
|
(485
|
)
|
|
(5
|
)
|
|||
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
(79
|
)
|
|
373
|
|
|
40
|
|
|||
State
|
(2
|
)
|
|
13
|
|
|
7
|
|
|||
Total deferred income tax (benefit) expense
|
(81
|
)
|
|
386
|
|
|
47
|
|
|||
Income tax (benefit) expense
|
$
|
(82
|
)
|
|
$
|
(99
|
)
|
|
$
|
42
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||
Accrued liabilities, provisions for losses and deferred income
|
$
|
102
|
|
|
$
|
72
|
|
Federal loss carryforwards and credits
|
24
|
|
|
—
|
|
||
State loss carryforwards and credits
|
39
|
|
|
32
|
|
||
Other
|
—
|
|
|
5
|
|
||
Gross deferred tax assets
|
165
|
|
|
109
|
|
||
Valuation allowance
|
(46
|
)
|
|
(35
|
)
|
||
Deferred tax assets, net of valuation allowance
|
119
|
|
|
74
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
|
||
Mortgage servicing rights
|
297
|
|
|
336
|
|
||
Other
|
4
|
|
|
—
|
|
||
Deferred tax liabilities
|
301
|
|
|
336
|
|
||
Net deferred tax liability
|
$
|
182
|
|
|
$
|
262
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
(Loss) income from continuing operations before income taxes
|
$
|
(213
|
)
|
|
$
|
(284
|
)
|
|
$
|
140
|
|
Statutory federal income tax rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|||
Income taxes computed at statutory federal rate
|
$
|
(75
|
)
|
|
$
|
(99
|
)
|
|
$
|
49
|
|
State and local income taxes, net of federal tax benefits
|
(14
|
)
|
|
(12
|
)
|
|
7
|
|
|||
Liabilities for income tax contingencies
|
—
|
|
|
7
|
|
|
—
|
|
|||
Changes in rate and apportionment factors
|
3
|
|
|
1
|
|
|
(5
|
)
|
|||
Changes in valuation allowance
|
10
|
|
|
5
|
|
|
2
|
|
|||
Nondeductible expenses
|
6
|
|
|
—
|
|
|
1
|
|
|||
Noncontrolling interest
|
(5
|
)
|
|
(2
|
)
|
|
(11
|
)
|
|||
Other
|
(7
|
)
|
|
1
|
|
|
(1
|
)
|
|||
Income tax (benefit) expense
|
$
|
(82
|
)
|
|
$
|
(99
|
)
|
|
$
|
42
|
|
Effective tax rate
|
(38.4
|
)%
|
|
(35.1
|
)%
|
|
29.8
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
Balance, beginning of period
|
$
|
11
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Activity related to tax positions taken during the current year
|
—
|
|
|
7
|
|
|
—
|
|
|||
Activity related to tax positions taken during prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance, end of period
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
4
|
|
13. Credit Risk
|
•
|
Consumer credit risk
—through mortgage banking activities as a result of originating and servicing residential mortgage loans
|
•
|
Counterparty credit risk
—through derivative transactions, sales agreements and various mortgage loan origination and servicing agreements
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Loan Servicing Portfolio Composition
|
|
|
|
|
|
||
Owned
|
$
|
99,869
|
|
|
$
|
113,849
|
|
Subserviced
|
126,390
|
|
|
113,423
|
|
||
Total
|
$
|
226,259
|
|
|
$
|
227,272
|
|
|
|
|
|
||||
Conventional loans
|
$
|
197,971
|
|
|
$
|
195,184
|
|
Government loans
|
24,087
|
|
|
27,720
|
|
||
Home equity lines of credit
|
4,201
|
|
|
4,368
|
|
||
Total
|
$
|
226,259
|
|
|
$
|
227,272
|
|
|
|
|
|
||||
Weighted-average interest rate
|
3.8
|
%
|
|
3.9
|
%
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
||||||||
|
Number of
Loans
|
|
Unpaid
Balance
|
|
Number of
Loans
|
|
Unpaid
Balance
|
||||
Portfolio Delinquency
(1)
|
|
|
|
|
|
|
|
|
|
|
|
30 days
|
2.22
|
%
|
|
1.55
|
%
|
|
2.43
|
%
|
|
1.75
|
%
|
60 days
|
0.44
|
|
|
0.30
|
|
|
0.58
|
|
|
0.41
|
|
90 or more days
|
0.82
|
|
|
0.62
|
|
|
1.13
|
|
|
0.85
|
|
Total
|
3.48
|
%
|
|
2.47
|
%
|
|
4.14
|
%
|
|
3.01
|
%
|
Foreclosure/real estate owned
(2)
|
1.74
|
%
|
|
1.51
|
%
|
|
2.22
|
%
|
|
2.04
|
%
|
(1)
|
Represents portfolio delinquencies as a percentage of the total number of loans and the total unpaid balance of the portfolio.
|
(2)
|
As of
December 31, 2015
and
2014
, the total servicing portfolio included
15,487
and
21,456
of loans in foreclosure with an unpaid principal balance of
$3.0 billion
and
$4.1 billion
, respectively.
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
(1)
|
||||
|
(In millions)
|
||||||
Balance, beginning of period
|
$
|
93
|
|
|
$
|
142
|
|
Realized losses
|
(19
|
)
|
|
(65
|
)
|
||
Increase in reserves due to:
|
|
|
|
|
|
||
Changes in assumptions
|
6
|
|
|
6
|
|
||
New loan sales
|
9
|
|
|
10
|
|
||
Balance, end of period
|
$
|
89
|
|
|
$
|
93
|
|
(1)
|
Realized losses includes
$12 million
that was paid to Fannie Mae related to a resolution agreement and Changes in assumptions includes an
$8 million
provision for estimated losses related to the sale of MSRs for certain highly delinquent government insured loans.
|
•
|
uncertainty related to loss exposure to loans from origination years where the Agencies have substantially completed or resolved their file reviews; and
|
•
|
uncertainty related to losses associated with loans with defects that were excluded from the resolution agreement with Fannie Mae (includes loans with certain title defects or violations of law that were originated and delivered prior to July 1, 2012).
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Mortgage loans in foreclosure and related advances
|
$
|
34
|
|
|
$
|
46
|
|
Allowance for probable foreclosure losses
|
(10
|
)
|
|
(14
|
)
|
||
Mortgage loans in foreclosure, net
|
$
|
24
|
|
|
$
|
32
|
|
|
|
|
|
||||
Real estate owned and related advances
|
$
|
38
|
|
|
$
|
37
|
|
Adjustment to value for real estate owned
|
(17
|
)
|
|
(16
|
)
|
||
Real estate owned, net
|
$
|
21
|
|
|
$
|
21
|
|
14. Commitments and Contingencies
|
|
Future Minimum
Operating Lease
Payments
(1)
|
|
Purchase
Commitments
|
||||
|
(In millions)
|
||||||
2016
|
$
|
18
|
|
|
$
|
34
|
|
2017
|
17
|
|
|
2
|
|
||
2018
|
15
|
|
|
—
|
|
||
2019
|
13
|
|
|
—
|
|
||
2020
|
13
|
|
|
—
|
|
||
Thereafter
|
24
|
|
|
—
|
|
||
Total
|
$
|
100
|
|
|
$
|
36
|
|
(1)
|
Excludes
$10 million
of minimum sublease income due in the future under noncancelable subleases.
|
15. Stock-Related Matters
|
a)
|
Restrictions under the Company’s senior note indentures from making a share-related payment if, after giving effect to the payment, the debt to tangible equity ratio calculated as of the most recently completed month end exceeds
6
to 1; however, even if such ratio is exceeded, the Company may declare or pay any dividend or make a share-related payment so long as the Company’s corporate ratings are equal to or better than: Baa3 from Moody’s Investors Service and BBB- from Standard & Poor’s (in each case on stable outlook or better); and
|
b)
|
Limitations in the amount of share-related payments that can be distributed by the Company due to maintaining compliance with the financial covenants contained in certain subsidiaries’ mortgage warehouse funding agreements, including but not limited to: (i) the maintenance of net worth of at least
$1.0 billion
on the last day of each fiscal quarter; and (ii) a ratio of indebtedness to tangible net worth of no greater than
4.5
to 1.
|
16. Stock-Based Compensation
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
(In millions)
|
|
|
||||||
Stock-based compensation expense for equity awards
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
9
|
|
Stock-based compensation expense for liability awards
|
2
|
|
|
4
|
|
|
—
|
|
|||
Income tax benefit related to stock-based compensation expense
|
(4
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|||
Stock-based compensation expense, net of income taxes
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
5
|
|
|
Number of
Options
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
(In years)
|
|
Aggregate
Intrinsic
Value
(In millions)
|
|||||
Outstanding at January 1, 2015
|
1,297,181
|
|
|
$
|
18.16
|
|
|
|
|
|
|
|
Exercised
|
(127,508
|
)
|
|
19.44
|
|
|
|
|
|
|
||
Forfeited or expired
|
(91,797
|
)
|
|
20.74
|
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
1,077,876
|
|
|
$
|
17.79
|
|
|
6.5
|
|
$
|
1
|
|
Exercisable at December 31, 2015
|
869,202
|
|
|
$
|
16.79
|
|
|
6.4
|
|
$
|
1
|
|
Stock options vested and expected to vest
|
1,077,686
|
|
|
$
|
17.79
|
|
|
7.2
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
|
|
2013
|
Expected life (in years)
|
|
6.5
|
Risk-free interest rate
|
|
1.14%
|
Expected volatility
|
|
52.3%
|
Dividend yield
|
|
—
|
|
Number of
RSUs
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|||
Performance-based & market-based RSUs
(1)
|
|
|
|
|
|
|
Outstanding at January 1, 2015
(2)
|
742,246
|
|
|
$
|
8.41
|
|
Granted
|
166,541
|
|
|
18.67
|
|
|
Forfeited
|
(30,542
|
)
|
|
9.36
|
|
|
Converted
|
(28,136
|
)
|
|
7.28
|
|
|
Cancelled due to non-achievement of performance or market condition
|
(420,965
|
)
|
|
6.73
|
|
|
Outstanding at December 31, 2015
|
429,144
|
|
|
$
|
14.04
|
|
RSUs expected to be converted into shares of Common stock
|
429,048
|
|
|
$
|
14.04
|
|
|
|
|
|
|||
Service-based RSUs
|
|
|
|
|
|
|
Outstanding at January 1, 2015
(2)
|
300,488
|
|
|
$
|
22.76
|
|
Granted
(3)
|
126,156
|
|
|
21.61
|
|
|
Converted
|
(78,772
|
)
|
|
22.84
|
|
|
Outstanding at December 31, 2015
|
347,872
|
|
|
$
|
22.33
|
|
RSUs expected to be converted into shares of Common stock
|
341,890
|
|
|
$
|
22.32
|
|
(1)
|
The performance criteria impact the number of awards that may vest. The number of RSUs related to these performance-based awards represents the expected number to be earned.
|
(2)
|
The prior year presentation included
148,023
unvested Performance and market-based RSUs and
284,370
unvested Service-based RSUs, which were originally to be paid in PHH Common stock that, as a result of the sale of Fleet business, will be settled in cash pursuant to certain provisions of the original settlement terms of the agreements. These awards were reclassified out of the opening balances and are in the Liability awards section below.
|
(3)
|
Includes
42,890
RSUs earned by non-employee Directors for services rendered as members of the Board of Directors.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Grant date stock price
|
$
|
24.24
|
|
|
$
|
22.93
|
|
|
$
|
22.28
|
|
Risk-free interest rate
|
0.94
|
%
|
|
0.94
|
%
|
|
0.42
|
%
|
|||
Expected volatility
|
30.2
|
%
|
|
35.3
|
%
|
|
38.6
|
%
|
|||
Dividend yield
|
—
|
|
|
—
|
|
|
—
|
|
17. Fair Value Measurements
|
|
December 31, 2015
|
||||||||||||||||||
|
Level
One
|
|
Level
Two
|
|
Level
Three
|
|
Cash
Collateral
and Netting
|
|
Total
|
||||||||||
|
|
|
|
|
(In millions)
|
|
|
|
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage loans held for sale
|
$
|
—
|
|
|
$
|
704
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
743
|
|
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
880
|
|
|
—
|
|
|
880
|
|
|||||
Other assets—Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|||||
Forward delivery commitments
|
—
|
|
|
3
|
|
|
—
|
|
|
(2
|
)
|
|
1
|
|
|||||
MSR-related agreements
|
—
|
|
|
27
|
|
|
—
|
|
|
(23
|
)
|
|
4
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other liabilities—Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Forward delivery commitments
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
December 31, 2014
|
||||||||||||||||||
|
Level
One
|
|
Level
Two
|
|
Level
Three
|
|
Cash
Collateral
and Netting
|
|
Total
|
||||||||||
|
|
|
|
|
(In millions)
|
|
|
|
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage loans held for sale
|
$
|
—
|
|
|
$
|
873
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
915
|
|
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
1,005
|
|
|
—
|
|
|
1,005
|
|
|||||
Other assets—Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|||||
Forward delivery commitments
|
—
|
|
|
5
|
|
|
—
|
|
|
(2
|
)
|
|
3
|
|
|||||
MSR-related agreements
|
—
|
|
|
66
|
|
|
—
|
|
|
(58
|
)
|
|
8
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other liabilities—Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Forward delivery commitments
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
7
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||
|
Total
|
|
Loans 90 days or
more past due and
on non-accrual
status
|
|
Total
|
|
Loans 90 days or
more past due and
on non-accrual
status
|
||||||||
|
(In millions)
|
||||||||||||||
Carrying amount
|
$
|
743
|
|
|
$
|
9
|
|
|
$
|
915
|
|
|
$
|
13
|
|
Aggregate unpaid principal balance
|
738
|
|
|
11
|
|
|
903
|
|
|
17
|
|
||||
Difference
|
$
|
5
|
|
|
$
|
(2
|
)
|
|
$
|
12
|
|
|
$
|
(4
|
)
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
First mortgages:
|
|
|
|
|
|
||
Conforming
|
$
|
616
|
|
|
$
|
761
|
|
Non-conforming
|
88
|
|
|
111
|
|
||
Total first mortgages
|
704
|
|
|
872
|
|
||
Second lien
|
4
|
|
|
5
|
|
||
Scratch and Dent
|
35
|
|
|
37
|
|
||
Other
|
—
|
|
|
1
|
|
||
Total
|
$
|
743
|
|
|
$
|
915
|
|
|
Year Ended December 31,
|
||||
|
2015
|
|
2014
|
||
Initial capitalization rate of additions to MSRs
|
1.14
|
%
|
|
1.09
|
%
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||
Capitalization servicing rate
|
0.89
|
%
|
|
0.89
|
%
|
Capitalization servicing multiple
|
3.1
|
|
|
3.1
|
|
Weighted-average servicing fee (in basis points)
|
29
|
|
|
29
|
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||
Weighted-average prepayment speed (CPR)
|
9.1
|
%
|
|
11.5
|
%
|
Option adjusted spread, in basis points (OAS)
|
977
|
|
|
865
|
|
Weighted-average delinquency rate
|
5.3
|
%
|
|
5.0
|
%
|
|
December 31, 2015
|
||||||||||
|
Weighted-
Average
Prepayment
Speed
|
|
Option
Adjusted
Spread
|
|
Weighted-
Average
Delinquency
Rate
|
||||||
|
(In millions)
|
||||||||||
Impact on fair value of 10% adverse change
|
$
|
(33
|
)
|
|
$
|
(41
|
)
|
|
$
|
(21
|
)
|
Impact on fair value of 20% adverse change
|
(64
|
)
|
|
(78
|
)
|
|
(43
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2015
|
|
2014
|
||||||||||||||||||||
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Balance, beginning of period
|
$
|
42
|
|
|
$
|
1,005
|
|
|
$
|
22
|
|
|
$
|
49
|
|
|
$
|
1,279
|
|
|
$
|
22
|
|
Realized and unrealized gains (losses)
|
6
|
|
|
(187
|
)
|
|
261
|
|
|
(3
|
)
|
|
(320
|
)
|
|
309
|
|
||||||
Purchases
|
28
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
||||||
Issuances
|
5
|
|
|
101
|
|
|
—
|
|
|
3
|
|
|
97
|
|
|
—
|
|
||||||
Settlements
|
(43
|
)
|
|
(39
|
)
|
|
(262
|
)
|
|
(53
|
)
|
|
(51
|
)
|
|
(309
|
)
|
||||||
Transfers into Level Three
|
38
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level Three
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
||||||
Balance, end of period
|
$
|
39
|
|
|
$
|
880
|
|
|
$
|
21
|
|
|
$
|
42
|
|
|
$
|
1,005
|
|
|
$
|
22
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Gain on loans held for sale, net:
|
|
|
|
|
|
||
Mortgage loans held for sale
|
$
|
1
|
|
|
$
|
(8
|
)
|
Interest rate lock commitments
|
261
|
|
|
309
|
|
||
Change in fair value of mortgage servicing rights:
|
|
|
|
|
|
||
Mortgage servicing rights
|
(187
|
)
|
|
(320
|
)
|
||
Interest income:
|
|
|
|
|
|
||
Mortgage loans held for sale
|
5
|
|
|
5
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Gain on loans held for sale, net
|
$
|
17
|
|
|
$
|
17
|
|
Change in fair value of mortgage servicing rights
|
(18
|
)
|
|
(165
|
)
|
18. Variable Interest Entities
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||
|
PHH Home
Loans
|
|
Servicing
Advance
Receivables
Trust
|
|
PHH Home
Loans
|
|
Servicing
Advance
Receivables
Trust
|
||||||||
|
(In millions)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
82
|
|
|
$
|
—
|
|
Restricted cash
|
5
|
|
|
13
|
|
|
3
|
|
|
20
|
|
||||
Mortgage loans held for sale
|
389
|
|
|
—
|
|
|
378
|
|
|
—
|
|
||||
Accounts receivable, net
|
5
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||
Servicing advances, net
|
—
|
|
|
157
|
|
|
—
|
|
|
155
|
|
||||
Property and equipment, net
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Other assets
|
11
|
|
|
1
|
|
|
8
|
|
|
—
|
|
||||
Total assets
|
$
|
491
|
|
|
$
|
171
|
|
|
$
|
480
|
|
|
$
|
175
|
|
Assets held as collateral
(1)
|
$
|
361
|
|
|
$
|
170
|
|
|
$
|
353
|
|
|
$
|
175
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||
Accounts payable and accrued expenses
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
Debt
|
345
|
|
|
111
|
|
|
335
|
|
|
108
|
|
||||
Other liabilities
|
6
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Total liabilities
(2)
|
$
|
365
|
|
|
$
|
111
|
|
|
$
|
361
|
|
|
$
|
108
|
|
(1)
|
Represents amounts not available to pay the Company’s general obligations. See Note 10, “Debt and Borrowing Arrangements” for further information.
|
(2)
|
Excludes intercompany payables.
|
|
Net income (loss)
(1)
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
PHH Home Loans
|
$
|
28
|
|
|
$
|
16
|
|
|
$
|
43
|
|
Servicing Advance Receivables Trust
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
PHH Corporation
Investment
(2)
|
|
Intercompany
receivable
(2)
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In millions)
|
||||||||||||||
PHH Home Loans
|
$
|
57
|
|
|
$
|
57
|
|
|
$
|
14
|
|
|
$
|
14
|
|
Servicing Advance Receivables Trust
|
69
|
|
|
72
|
|
|
—
|
|
|
—
|
|
(1)
|
Includes adjustments for the elimination of intercompany transactions.
|
(2)
|
Amounts are eliminated in the Consolidated Balance Sheets.
|
19. Related Party Transactions
|
20. Segment Information
|
▪
|
Mortgage Production
— provides mortgage loan origination services and sells mortgage loans.
|
▪
|
Mortgage Servicing
— performs servicing activities for loans originated by PHH Mortgage and mortgage servicing rights purchased from others, and acts as a subservicer for certain clients that own the underlying mortgage servicing rights.
|
|
Total Assets
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Mortgage Production segment
|
$
|
1,036
|
|
|
$
|
1,209
|
|
Mortgage Servicing segment
|
1,802
|
|
|
1,924
|
|
||
Other
|
814
|
|
|
1,163
|
|
||
Total
|
$
|
3,652
|
|
|
$
|
4,296
|
|
|
Net Revenues
|
|
Segment Profit (Loss)
(2)
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Mortgage Production segment
|
$
|
586
|
|
|
$
|
465
|
|
|
$
|
821
|
|
|
$
|
(47
|
)
|
|
$
|
(141
|
)
|
|
$
|
22
|
|
Mortgage Servicing segment
|
198
|
|
|
163
|
|
|
379
|
|
|
(131
|
)
|
|
(103
|
)
|
|
155
|
|
||||||
Other
(1)
|
6
|
|
|
11
|
|
|
—
|
|
|
(49
|
)
|
|
(46
|
)
|
|
(66
|
)
|
||||||
Total
|
$
|
790
|
|
|
$
|
639
|
|
|
$
|
1,200
|
|
|
$
|
(227
|
)
|
|
$
|
(290
|
)
|
|
$
|
111
|
|
(1)
|
Net results for Other includes the pre-tax loss on the early repayment of certain unsecured debt obligations which were not allocated to the reportable segments which totaled
$30 million
,
$24 million
and
$54 million
for
2015
,
2014
and
2013
, respectively.
|
(2)
|
The following is a reconciliation of Income or loss from continuing operations before income taxes to Segment profit or loss:
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In millions)
|
||||||||||
(Loss) income from continuing operations before income taxes
|
$
|
(213
|
)
|
|
$
|
(284
|
)
|
|
$
|
140
|
|
Less: net income attributable to noncontrolling interest
|
14
|
|
|
6
|
|
|
29
|
|
|||
Segment (loss) profit
|
$
|
(227
|
)
|
|
$
|
(290
|
)
|
|
$
|
111
|
|
|
Interest Income
|
|
Interest Expense
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Mortgage Production segment
|
$
|
40
|
|
|
$
|
38
|
|
|
$
|
63
|
|
|
$
|
45
|
|
|
$
|
77
|
|
|
$
|
127
|
|
Mortgage Servicing segment
|
4
|
|
|
4
|
|
|
7
|
|
|
45
|
|
|
53
|
|
|
58
|
|
||||||
Total
|
$
|
44
|
|
|
$
|
42
|
|
|
$
|
70
|
|
|
$
|
90
|
|
|
$
|
130
|
|
|
$
|
185
|
|
21. Selected Quarterly Financial Data—(unaudited)
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
2015 |
|
June 30,
2015 |
|
September 30,
2015 |
|
December 31,
2015 |
||||||||
|
(In millions, except per share data)
|
||||||||||||||
Net revenues
|
$
|
261
|
|
|
$
|
237
|
|
|
$
|
169
|
|
|
$
|
123
|
|
Income (loss) from continuing operations before income taxes
|
31
|
|
|
(74
|
)
|
|
(87
|
)
|
|
(83
|
)
|
||||
Net income (loss)
|
23
|
|
|
(56
|
)
|
|
(47
|
)
|
|
(51
|
)
|
||||
Net income (loss) attributable to PHH Corporation
|
21
|
|
|
(62
|
)
|
|
(50
|
)
|
|
(54
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to PHH Corporation:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.40
|
|
|
$
|
(1.20
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(0.92
|
)
|
Diluted
|
$
|
0.34
|
|
|
$
|
(1.20
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(0.92
|
)
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
2014 |
|
June 30,
2014 |
|
September 30,
2014 |
|
December 31,
2014 |
||||||||
|
(In millions, except per share data)
|
||||||||||||||
Net revenues
|
$
|
111
|
|
|
$
|
196
|
|
|
$
|
152
|
|
|
$
|
180
|
|
Loss from continuing operations before income taxes
|
(93
|
)
|
|
(21
|
)
|
|
(129
|
)
|
|
(41
|
)
|
||||
Net (loss) income
|
(44
|
)
|
|
(55
|
)
|
|
218
|
|
|
(32
|
)
|
||||
Net (loss) income attributable to PHH Corporation
|
(42
|
)
|
|
(59
|
)
|
|
215
|
|
|
(33
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
From continuing operations
|
$
|
(1.01
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(1.64
|
)
|
|
$
|
(0.62
|
)
|
From discontinued operations
|
0.28
|
|
|
(0.79
|
)
|
|
5.64
|
|
|
(0.04
|
)
|
||||
Total attributable to PHH Corporation
|
$
|
(0.73
|
)
|
|
$
|
(1.02
|
)
|
|
$
|
4.00
|
|
|
$
|
(0.66
|
)
|
Diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
From continuing operations
|
$
|
(1.01
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(1.64
|
)
|
|
$
|
(0.62
|
)
|
From discontinued operations
|
0.28
|
|
|
(0.79
|
)
|
|
5.64
|
|
|
(0.04
|
)
|
||||
Total attributable to PHH Corporation
|
$
|
(0.73
|
)
|
|
$
|
(1.02
|
)
|
|
$
|
4.00
|
|
|
$
|
(0.66
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
REVENUES
|
|
|
|
|
|
|
|
|
|||
Other income
|
$
|
6
|
|
|
$
|
11
|
|
|
$
|
—
|
|
Interest income
|
3
|
|
|
—
|
|
|
—
|
|
|||
Net revenues
|
9
|
|
|
11
|
|
|
—
|
|
|||
EXPENSES
|
|
|
|
|
|
|
|
|
|||
Salaries and related expenses
|
54
|
|
|
67
|
|
|
55
|
|
|||
Interest expense
|
58
|
|
|
95
|
|
|
126
|
|
|||
Depreciation and amortization
|
5
|
|
|
9
|
|
|
9
|
|
|||
Professional and third-party service fees
|
109
|
|
|
62
|
|
|
48
|
|
|||
Technology equipment and software expenses
|
18
|
|
|
18
|
|
|
15
|
|
|||
Other operating expenses
|
44
|
|
|
32
|
|
|
64
|
|
|||
Total expenses before allocations
|
288
|
|
|
283
|
|
|
317
|
|
|||
Corporate overhead allocations to subsidiaries
|
(175
|
)
|
|
(131
|
)
|
|
(125
|
)
|
|||
Unsecured interest expense allocation to subsidiaries
|
(55
|
)
|
|
(95
|
)
|
|
(126
|
)
|
|||
Total expenses
|
58
|
|
|
57
|
|
|
66
|
|
|||
Loss before income taxes and equity in (loss) earnings of subsidiaries
|
(49
|
)
|
|
(46
|
)
|
|
(66
|
)
|
|||
Income tax benefit
|
(23
|
)
|
|
(13
|
)
|
|
(25
|
)
|
|||
Loss before equity in (loss) earnings of subsidiaries
|
(26
|
)
|
|
(33
|
)
|
|
(41
|
)
|
|||
Equity in (loss) earnings of subsidiaries, excluding discontinued operations
|
(119
|
)
|
|
(158
|
)
|
|
110
|
|
|||
(Loss) income from continuing operations, net of tax
|
(145
|
)
|
|
(191
|
)
|
|
69
|
|
|||
Income from discontinued operations, net of tax
|
—
|
|
|
272
|
|
|
66
|
|
|||
Net (loss) income
|
$
|
(145
|
)
|
|
$
|
81
|
|
|
$
|
135
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|||
Currency translation adjustment
|
—
|
|
|
(22
|
)
|
|
(14
|
)
|
|||
Change in unfunded pension liability, net
|
1
|
|
|
(5
|
)
|
|
5
|
|
|||
Change in unrealized gains on available-for-sale securities, net
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
1
|
|
|
(27
|
)
|
|
(10
|
)
|
|||
Total comprehensive (loss) income
|
$
|
(144
|
)
|
|
$
|
54
|
|
|
$
|
125
|
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
745
|
|
|
$
|
1,115
|
|
Restricted cash
|
10
|
|
|
9
|
|
||
Accounts receivable, net
|
5
|
|
|
5
|
|
||
Due from subsidiaries
|
273
|
|
|
248
|
|
||
Investment in subsidiaries
|
881
|
|
|
1,000
|
|
||
Property and equipment, net
|
12
|
|
|
10
|
|
||
Other assets
|
76
|
|
|
74
|
|
||
Total assets
|
$
|
2,002
|
|
|
$
|
2,461
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
|
|
||
Accounts payable and accrued expenses
|
$
|
50
|
|
|
$
|
65
|
|
Debt
|
615
|
|
|
831
|
|
||
Other liabilities
|
19
|
|
|
20
|
|
||
Total liabilities
|
684
|
|
|
916
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
EQUITY
|
|
|
|
|
|
||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
911
|
|
|
989
|
|
||
Retained earnings
|
416
|
|
|
566
|
|
||
Accumulated other comprehensive loss
|
(10
|
)
|
|
(11
|
)
|
||
Total PHH Corporation stockholders’ equity
|
1,318
|
|
|
1,545
|
|
||
Total liabilities and equity
|
$
|
2,002
|
|
|
$
|
2,461
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
||||||
Net cash used in operating activities
|
$
|
(19
|
)
|
|
$
|
(522
|
)
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Net decrease (increase) in amounts due from subsidiaries
|
10
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(8
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|||
Decrease (increase) in restricted cash
|
(1
|
)
|
|
1
|
|
|
13
|
|
|||
Proceeds from sale of business, net of transaction costs
|
—
|
|
|
1,369
|
|
|
—
|
|
|||
Purchases of certificates of deposit
|
—
|
|
|
(250
|
)
|
|
—
|
|
|||
Proceeds from maturities of certificates of deposit
|
—
|
|
|
250
|
|
|
—
|
|
|||
Dividends from consolidated subsidiaries
|
—
|
|
|
—
|
|
|
106
|
|
|||
Net cash provided by investing activities
|
1
|
|
|
1,365
|
|
|
115
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Net cash (used in) provided by consolidated subsidiaries
|
—
|
|
|
(69
|
)
|
|
175
|
|
|||
Proceeds from unsecured borrowings
|
—
|
|
|
—
|
|
|
350
|
|
|||
Principal payments on unsecured borrowings
|
(245
|
)
|
|
(435
|
)
|
|
(288
|
)
|
|||
Cash tender premiums for convertible debt
|
(30
|
)
|
|
—
|
|
|
—
|
|
|||
Issuances of Common stock
|
2
|
|
|
10
|
|
|
3
|
|
|||
Repurchase of Common stock
|
(77
|
)
|
|
(200
|
)
|
|
—
|
|
|||
Cash paid for debt issuance costs
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||
Other, net
|
(2
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|||
Net cash (used in) provided by financing activities
|
(352
|
)
|
|
(697
|
)
|
|
226
|
|
|||
Net (decrease) increase in Cash and cash equivalents
|
(370
|
)
|
|
146
|
|
|
335
|
|
|||
Cash and cash equivalents at beginning of period
|
1,115
|
|
|
969
|
|
|
634
|
|
|||
Cash and cash equivalents at end of period
|
$
|
745
|
|
|
$
|
1,115
|
|
|
$
|
969
|
|
|
|
PHH Corporation and
Subsidiaries
|
|
PHH Corporation
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Deferred tax valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, beginning of period
|
$
|
35
|
|
|
$
|
26
|
|
|
$
|
30
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
6
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Charged to costs and expenses
|
10
|
|
|
5
|
|
|
2
|
|
|
6
|
|
|
2
|
|
|
—
|
|
||||||
Charged to other accounts
|
1
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Reductions
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
||||||
Balance, end of period
|
$
|
46
|
|
|
$
|
35
|
|
|
$
|
26
|
|
|
$
|
11
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A. Controls and Procedures
|
DISCLOSURE CONTROLS AND PROCEDURES
|
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
|
Item 9B. Other Information
|
Item 10. Directors, Executive Officers and Corporate Governance
|
Item 11. Executive Compensation
|
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13. Certain Relationships and Related Transactions, and Director Independence
|
Item 14. Principal Accounting Fees and Services
|
Item 15. Exhibits
|
|
PHH CORPORATION
|
|
|
|
|
|
By:
|
/s/ GLEN A. MESSINA
|
|
|
Name: Glen A. Messina
|
|
|
Title: President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ GLEN A. MESSINA
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 26, 2016
|
Glen A. Messina
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT B. CROWL
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
February 26, 2016
|
Robert B. Crowl
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL R. BOGANSKY
|
|
Senior Vice President, Controller
(Principal Accounting Officer)
|
|
February 26, 2016
|
Michael R. Bogansky
|
|
|
|
|
|
|
|
|
|
/s/ JAMES O. EGAN
|
|
Non-Executive Chairman of the Board of Directors
|
|
February 26, 2016
|
James O. Egan
|
|
|
|
|
|
|
|
|
|
/s/ JANE D. CARLIN
|
|
Director
|
|
February 26, 2016
|
Jane D. Carlin
|
|
|
|
|
|
|
|
|
|
/s/ THOMAS P. GIBBONS
|
|
Director
|
|
February 26, 2016
|
Thomas P. Gibbons
|
|
|
|
|
|
|
|
|
|
/s/ ALLAN Z. LOREN
|
|
Director
|
|
February 26, 2016
|
Allan Z. Loren
|
|
|
|
|
|
|
|
|
|
/s/ GREGORY J. PARSEGHIAN
|
|
Director
|
|
February 26, 2016
|
Gregory J. Parseghian
|
|
|
|
|
|
|
|
|
|
/s/ CHARLES P. PIZZI
|
|
Director
|
|
February 26, 2016
|
Charles P. Pizzi
|
|
|
|
|
|
|
|
|
|
/s/ DEBORAH M. REIF
|
|
Director
|
|
February 26, 2016
|
Deborah M. Reif
|
|
|
|
|
|
|
|
|
|
/s/ CARROLL R. WETZEL, JR.
|
|
Director
|
|
February 26, 2016
|
Carroll R. Wetzel, Jr.
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
2.1
|
|
Stock Purchase Agreement, dated as of June 2, 2014, between PHH Corporation and Element Financial Corporation (Certain of the schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but the Company undertakes to furnish a copy of the schedules or similar attachments to the Securities and Exchange Commission upon request.)
|
|
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on June 3, 2014.
|
|
|
|
|
|
2.2
|
|
Amendment No. 1, dated as of July 7, 2014, to the Stock Purchase Agreement, dated as of June 2, 2014, between PHH Corporation and Element Financial Corporation.
|
|
Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on July 7, 2014.
|
|
|
|
|
|
3.1
|
|
Amended and Restated Articles of Incorporation, as amended and supplemented through June 12, 2013.
|
|
Filed herewith.
|
|
|
|
|
|
3.2
|
|
Amended and Restated By-Laws, as amended through December 17, 2015.
|
|
Filed herewith.
|
|
|
|
|
|
4.1
|
|
Specimen common stock certificate.
|
|
Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2004 filed on March 15, 2005.
|
|
|
|
|
|
4.2
|
|
See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Articles of Incorporation, as amended and supplemented, and the Amended and Restated By-Laws, as amended, of the registrant defining the rights of holders of common stock of the registrant.
|
|
Incorporated by reference to Exhibit 3.1 filed herewith and Exhibit 3.2 filed herewith.
|
|
|
|
|
|
4.3
|
|
Indenture, dated as of January 17, 2012, between PHH Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee.
|
|
Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on January 17, 2012.
|
|
|
|
|
|
4.3.1
|
|
First Supplemental Indenture, dated as of January 17, 2012, between PHH Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee.
|
|
Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on January 17, 2012.
|
|
|
|
|
|
4.3.2
|
|
Form of 6.00% Convertible Senior Note due 2017.
|
|
Incorporated by reference to Exhibit A of Exhibit 4.2 to our Current Report on Form 8-K filed on January 17, 2012.
|
|
|
|
|
|
4.3.3
|
|
Second Supplemental Indenture, dated as of August 23, 2012, between PHH Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee.
|
|
Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on August 23, 2012.
|
|
|
|
|
|
4.3.4
|
|
Form of 7.375% Senior Note due 2019.
|
|
Incorporated by reference to Exhibit A of Exhibit 4.2 to our Current Report on Form 8-K filed on August 23, 2012.
|
|
|
|
|
|
4.3.5
|
|
Third Supplemental Indenture, dated as of August 20, 2013, between PHH Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee.
|
|
Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on August 20, 2013.
|
|
|
|
|
|
4.3.6
|
|
Form of 6.375% Senior Note due 2021.
|
|
Incorporated by reference to Exhibit A of Exhibit 4.2 to our Current Report on Form 8-K filed on August 20, 2013.
|
|
|
|
|
|
10.1
|
|
Form of Indemnification Agreement for Directors and Officers.
|
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on December 21, 2015.
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
10.2†
|
|
PHH Corporation Unanimous Written Consent of the Board of Directors effective August 18, 2010.
|
|
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 20, 2010.
|
|
|
|
|
|
10.3†
|
|
PHH Corporation Management Incentive Plan.
|
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 6, 2010.
|
|
|
|
|
|
10.3.1†
|
|
Form of PHH Corporation Management Incentive Plan Award Notice.
|
|
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on April 6, 2010.
|
|
|
|
|
|
10.4†
|
|
Amended and Restated 2005 Equity and Incentive Plan (as amended and restated through June 17, 2009).
|
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 22, 2009.
|
|
|
|
|
|
10.4.1†
|
|
First Amendment to the PHH Corporation Amended and Restated 2005 Equity and Incentive Plan, effective August 18, 2010.
|
|
Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on August 20, 2010.
|
|
|
|
|
|
10.4.2†
|
|
Form of PHH Corporation 2005 Equity and Incentive Plan Non-Qualified Stock Option Agreement, as amended.
|
|
Incorporated by reference to Exhibit 10.28 to our Quarterly Report on Form 10-Q for the period ended March 31, 2005 filed on May 16, 2005.
|
|
|
|
|
|
10.4.3†
|
|
Form of PHH Corporation 2005 Equity and Incentive Plan Non-Qualified Stock Option Conversion Award Agreement.
|
|
Incorporated by reference to Exhibit 10.29 to our Quarterly Report on Form 10-Q for the period ended March 31, 2005 filed on May 16, 2005.
|
|
|
|
|
|
10.4.4†
|
|
Form of PHH Corporation 2005 Equity and Incentive Plan Non-Qualified Stock Option Award Agreement, as revised June 28, 2005.
|
|
Incorporated by reference to Exhibit 10.36 to our Quarterly Report on Form 10-Q for the period ended June 30, 2005 filed on August 12, 2005.
|
|
|
|
|
|
10.4.5†
|
|
Form of PHH Corporation 2005 Equity and Incentive Plan Restricted Stock Unit Award Agreement, as revised June 28, 2005.
|
|
Incorporated by reference to Exhibit 10.37 to our Quarterly Report on Form 10-Q for the period ended June 30, 2005 filed on August 12, 2005.
|
|
|
|
|
|
10.4.6†
|
|
Form of 2011 Non-Qualified Stock Option Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on November 18, 2011.
|
|
|
|
|
|
10.4.7†
|
|
Form of February 2012 Non-Qualified Stock Option Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on February 24, 2012.
|
|
|
|
|
|
10.4.8†
|
|
Form of February 2012 Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on February 24, 2012.
|
|
|
|
|
|
10.4.9†
|
|
Form of September 2012 Performance Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on October 3, 2012.
|
|
|
|
|
|
10.4.10†
|
|
Form of September 2012 Non-Qualified Stock Option Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed on October 3, 2012.
|
|
|
|
|
|
10.4.11†
|
|
Form of 2014 Performance Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.7.12 to our Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 26, 2014.
|
|
|
|
|
|
10.4.12†
|
|
Form of 2014 Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.7.13 to our Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 26, 2014.
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
10.5†
|
|
Form of 2012 Restrictive Covenant Agreement.
|
|
Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 3, 2012.
|
|
|
|
|
|
10.6†
|
|
PHH Corporation 2014 Equity and Incentive Plan
|
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 29, 2014.
|
|
|
|
|
|
10.7†
|
|
Resolutions terminating the PHH Corporation 2014 Non-Employee Director Compensation Program.
|
|
Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.8†
|
|
PHH Corporation Equity Compensation Program for Non-Employee Directors.
|
|
Incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K for the year ended December 31, 2014 filed on February 27, 2015.
|
|
|
|
|
|
10.9†
|
|
Form of 2014 Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.10†
|
|
Form of September 2014 Restricted Stock Unit Award Notice and Agreement, as amended.
|
|
Incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K for the year ended December 31, 2014 filed on February 27, 2015
|
|
|
|
|
|
10.11†
|
|
Form of October 2014 Performance Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.12†
|
|
Form of October 2014 Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.13†
|
|
Form of 2014 Restrictive Covenant Agreement.
|
|
Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.14.1†
|
|
Form of Amendment, dated as of July 11, 2014, to the Restricted Stock Unit Award Agreements.
|
|
Incorporated by reference to Exhibit 10.7.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.14.2†
|
|
Form of Amendment, dated as of July 11, 2014, to the Non-Qualified Stock Option Award Agreements.
|
|
Incorporated by reference to Exhibit 10.7.2 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014 filed on November 5, 2014.
|
|
|
|
|
|
10.15†
|
|
PHH Corporation Tier I Severance Pay Plan.
|
|
Incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed on October 3, 2012.
|
|
|
|
|
|
10.16†
|
|
PHH Corporation Tier II Severance Pay Plan.
|
|
Incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K for the year ended December 31, 2014 filed on February 27, 2015.
|
|
|
|
|
|
10.17
|
|
Underwriting Agreement, dated August 9, 2012, by and between PHH Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several Underwriters.
|
|
Incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed on August 14, 2012.
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
10.17.1
|
|
Underwriting Agreement, dated August 6, 2013, by and between PHH Corporation and J.P. Morgan Securities LLC, as representative of the several Underwriters.
|
|
Incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed on August 12, 2013.
|
|
|
|
|
|
10.18
†
|
|
Form of 2015 Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended March 31, 2015 filed on May 7, 2015.
|
|
|
|
|
|
10.19†
|
|
Form of 2015 Performance Restricted Stock Unit Award Notice and Agreement.
|
|
Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended March 31, 2015 filed on May 7, 2015.
|
|
|
|
|
|
10.20
|
|
Offer to Exchange 6.00% Convertible Senior Notes Due 2017.
|
|
Incorporated by reference to Exhibit 99.(a)(1)(A) to our Tender Offer Statement on Schedule TO filed on May 6, 2015.
|
|
|
|
|
|
10.21
|
|
Form of Letter of Transmittal regarding Offer to Exchange.
|
|
Incorporated by reference to Exhibit 99.(a)(1)(B) to our Tender Offer Statement on Schedule TO filed on May 6, 2015.
|
|
|
|
|
|
10.22
|
|
Form of Letter to DTC Participants regarding Offer to Exchange.
|
|
Incorporated by reference to Exhibit 99.(a)(1)(C) to our Tender Offer Statement on Schedule TO filed on May 6, 2015.
|
|
|
|
|
|
10.23
|
|
Form of letter to Clients regarding Offer to Exchange for use by brokers, dealers, commercial banks, trust companies and other nominees.
|
|
Incorporated by reference to Exhibit 99.(a)(1)(D) to our Tender Offer Statement on Schedule TO filed on May 6, 2015.
|
|
|
|
|
|
10.24
|
|
Form of Notice of Voluntary Offering Instructions regarding Offer to Exchange.
|
|
Incorporated by reference to Exhibit 99.(a)(1)(E) to our Tender Offer Statement on Schedule TO filed on May 6, 2015.
|
|
|
|
|
|
10.25‡‡
|
|
Amended and Restated Limited Liability Company Operating Agreement of PHH Home Loans, LLC, dated January 31, 2005, as amended by Amendment No. 1 to Operating Agreement, dated May 12, 2005, and by Amendment No. 2 to Operating Agreement, dated March 31, 2006.
|
|
Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2015 filed on November 5, 2015.
|
|
|
|
|
|
10.26‡‡
|
|
Strategic Relationship Agreement, dated January 31, 2005, by and among Realogy Services Group LLC (f/k/a Cendant Real Estate Services Group, LLC), Realogy Services Venture Partner LLC (successor to Cendant Real Estate Services Venture Partner, Inc.), PHH Corporation, PHH Mortgage Corporation, PHH Broker Partner Corporation and PHH Home Loans, LLC, as amended by Amendment No. 1 to the Strategic Relationship Agreement, dated May 12, 2005, and by the Amended and Restated Amendment No. 2 to the Strategic Relationship Agreement, dated October 21, 2015.
|
|
Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended September 30, 2015 filed on November 5, 2015.
|
|
|
|
|
|
10.27
|
|
Letter Agreement between Fannie Mae and PHH Mortgage Corporation dated December 14, 2015.
|
|
Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on December 14, 2015.
|
|
|
|
|
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
Filed herewith.
|
|
|
|
|
|
21
|
|
Subsidiaries of the Registrant.
|
|
Filed herewith.
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
Filed herewith.
|
|
|
|
|
|
24
|
|
Powers of Attorney
|
|
Incorporated by reference to the signature page to this Annual Report on Form 10-K.
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
|
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
Filed herewith.
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith.
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Eric J. Bock
|
|
By:
|
|
/s/ Richard A. Smith
|
|
|
|
|
|
|
|
|
|
|
|
Name: Eric J. Bock
Title: Secretary
|
|
|
|
Name: Richard A. Smith
Title: President
|
|
|
|
|
|
[
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
|
|
|
|
|
Printed Name:
|
|
|
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Printed Name:
|
|
|
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WITNESS:
|
|
PHH CORPORATION
|
||
|
|
|
|
|
/s/ William F. Brown
|
|
By:
|
|
/s/ Terence W. Edwards
|
|
|
|
|
|
William F. Brown, Secretary
|
|
|
|
Terence W. Edwards, Chief Executive
Officer
|
|
|
|
|
|
|
|
|
||
|
/s/ Terence W. Edwards
|
|
||
|
Terence W. Edwards, Chief Executive
|
|
||
|
Officer
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Earnings available to cover fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) income from continuing operations before income taxes
|
$
|
(213
|
)
|
|
$
|
(284
|
)
|
|
$
|
140
|
|
|
$
|
(14
|
)
|
|
$
|
(289
|
)
|
Adjustments for equity method investments
|
—
|
|
|
1
|
|
|
(3
|
)
|
|
2
|
|
|
(2
|
)
|
|||||
Fixed charges
|
97
|
|
|
137
|
|
|
192
|
|
|
218
|
|
|
207
|
|
|||||
Total
|
$
|
(116
|
)
|
|
$
|
(146
|
)
|
|
$
|
329
|
|
|
$
|
206
|
|
|
$
|
(84
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
(1)
|
$
|
90
|
|
|
$
|
130
|
|
|
$
|
185
|
|
|
$
|
212
|
|
|
$
|
201
|
|
Estimated interest portion of net rental expense
(2)
|
7
|
|
|
7
|
|
|
7
|
|
|
6
|
|
|
6
|
|
|||||
Total
|
$
|
97
|
|
|
$
|
137
|
|
|
$
|
192
|
|
|
$
|
218
|
|
|
$
|
207
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
(3)
|
—
|
|
|
—
|
|
|
1.71
|
|
|
—
|
|
|
—
|
|
|||||
Coverage deficiencies
|
$
|
213
|
|
|
$
|
283
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
291
|
|
Name of Subsidiary
|
|
Jurisdiction of
Incorporation
or Formation
|
Atrium Insurance Corporation
|
|
NY
|
Atrium Reinsurance Corporation
|
|
VT
|
Long Island Mortgage Group, Inc.
|
|
NY
|
NE Moves Mortgage, LLC
|
|
MA
|
Pacific Access Mortgage, LLC
|
|
HI
|
PHH Broker Partner Corporation
|
|
MD
|
PHH Canadian Holdings, Inc.
|
|
DE
|
PHH Corporate Services, Inc.
|
|
DE
|
PHH de Brasil Paricopaceos Ltda.
|
|
Brazil
|
PHH Home Loans, LLC (dba Cartus Home Loans; Coldwell Banker Home Loans; ERA Home Loans; PHH Home Mortgage LLC; Sunbelt Lending Services)
|
|
DE
|
PHH Mortgage Capital LLC
|
|
DE
|
PHH Mortgage Corporation (dba Burnet Mortgage Services; Century 21 Mortgage; Coldwell Banker Mortgage; ERA Mortgage; Instamortgage.com; MortgageSave.com; MortgageQuestions.com; Mortgage Service Center; PHH Mortgage Services)
|
|
NJ
|
PHH Servicer Advance Funding Depositor, LLC
|
|
DE
|
PHH Servicer Advance Receivables Trust 2013-1
|
|
DE
|
PHH Services B.V.
|
|
Netherlands
|
RMR Financial, LLC (dba Axiom Financial; Axiom Residential Lending; First Capital; Mortgage California; Princeton Capital; Rocky Mountain Mortgage Loans)
|
|
CA
|
Speedy Title & Appraisal Review Services LLC
|
|
DE
|
|
By:
|
/s/ Glen A. Messina
|
|
|
Glen A. Messina
|
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Robert B. Crowl
|
|
|
Robert B. Crowl
|
|
|
Executive Vice President and Chief Financial Officer
|
|
By:
|
/s/ Glen A. Messina
|
|
|
Glen A. Messina
|
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Robert B. Crowl
|
|
|
Robert B. Crowl
|
|
|
Executive Vice President and Chief Financial Officer
|