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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MARYLAND
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52-0551284
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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3000 LEADENHALL ROAD
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08054
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MT. LAUREL, NEW JERSEY
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(Zip Code)
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(Address of principal executive offices)
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TABLE OF CONTENTS
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Page
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▪
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our expectations related to our actions and their outcomes resulting from our strategic review, including the timing of any such actions, our estimates of transaction proceeds, operating losses and exit costs, the amount, timing and our expected use of any proceeds, and any other anticipated impacts on our results, client and counterparty relationships, debt arrangements, employee relations or expected value to shareholders;
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▪
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our projected financial results and expected capital structure for the remaining business after executing the actions resulting from our strategic review, based on our assessment of the market for subservicing and portfolio retention services, our business strategy and our competitive position;
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our expectations related to any future strategic actions after completion of the contemplated actions resulting from the strategic review;
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the method, amounts and timing of any capital returns to shareholders;
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the potential results of our subservicing business development efforts;
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anticipated future origination volumes and loan margins in the mortgage industry;
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our expectations of the impacts of regulatory changes on our business;
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our assessment of legal and regulatory proceedings and the associated impact on our financial statements and liquidity position;
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our expectations around future losses from representation and warranty claims, and associated reserves and provisions; and
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the impact of the adoption of recently issued accounting pronouncements on our financial statements.
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the effects of our strategic actions, and any associated transactions, on our business, management resources, customer, counterparty and employee relationships, capital structure and financial position;
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▪
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our ability to execute and complete the actions resulting from our strategic review and implement changes to meet our operational and financial objectives, including (i) restructuring our remaining business and shared services platform; (ii) achieving our growth objectives and assumptions; and (iii) resolving our legacy legal and regulatory matters;
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▪
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any failure to execute any portion of the remaining sales of MSRs under our existing agreements, or realize estimated proceeds from the transactions, which may be driven by the following reasons, among other factors: (i) not receiving required regulatory, investor, agency, private loan investor and/or client (originations source) approvals for any portion of the sale portfolio; (ii) changes in the composition of the portfolio and related servicing advances outstanding on each sale date; and (iii) not meeting any other conditions precedent to closing, as defined in the respective agreements;
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▪
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any failure to execute the sale of certain remaining assets of PHH Home Loans and its subsidiaries, or realize estimated proceeds from the transactions, which may be driven by the following reasons, among other factors: (i) not receiving required regulatory and agency approvals; and (ii) not meeting any other conditions precedent to closing, as defined in the respective agreements;
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▪
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available excess cash from our strategic actions is dependent upon a variety of factors, including the execution of the sale of our remaining MSRs, the monetization of our investment in PHH Home Loans, the successful completion of our PLS exit activities at a certain total expense, the resolution of our outstanding legal and regulatory matters and the successful completion of other restructuring and capital management activities, including any unsecured debt repayments, in accordance with our assumptions;
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▪
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the effects of any termination of our subservicing agreements by any of our largest subservicing clients or on a material portion of our subservicing portfolio;
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the effects of market volatility or macroeconomic changes and financial market regulations on the availability and cost of our financing arrangements, the value of our assets and the housing market;
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the effects of changes in current interest rates on our business, the value of our mortgage servicing rights and our financing costs;
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the impact of changes in U.S. financial conditions 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;
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▪
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the effects of any significant adverse changes in the underwriting criteria or the existence or programs of government-sponsored entities, such as 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;
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▪
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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, our ability to operationalize changes necessary to comply with updates to such guides and programs and our ability to maintain the required minimum capital;
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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 until the complete exit from this business channel;
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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;
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the ability to maintain our relationships with our existing clients, including our ability to comply with the terms of our private label and subservicing client agreements and any related service level agreements;
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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, if at all;
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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;
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the ability to obtain or renew financing on acceptable terms, if at all, to finance our mortgage loans held for sale and servicing advances;
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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;
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any failure to comply with covenants or asset eligibility requirements under our financing arrangements; and
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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.
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Item 1. Financial Statements
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2017
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2016
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2017
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2016
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REVENUES
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Origination and other loan fees
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$
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33
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$
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75
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$
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114
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$
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215
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Gain on loans held for sale, net
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35
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87
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129
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212
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Loan servicing income, net
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35
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39
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96
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138
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Net interest expense
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(10
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)
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(7
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)
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(23
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)
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(23
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)
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Other income
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28
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3
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31
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8
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Net revenues
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121
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197
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347
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550
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EXPENSES
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Salaries and related expenses
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62
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86
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223
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268
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Commissions
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13
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19
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38
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49
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Loan origination expenses
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9
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18
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27
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52
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Foreclosure and repossession expenses
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4
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10
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16
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26
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Professional and third-party service fees
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25
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35
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92
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111
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Technology equipment and software expenses
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9
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10
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27
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30
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Occupancy and other office expenses
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8
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11
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26
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35
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Depreciation and amortization
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4
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4
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11
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13
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Exit and disposal costs
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8
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—
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49
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—
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Other operating expenses
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57
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33
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104
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64
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Total expenses
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199
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226
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613
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648
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Loss before income taxes
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(78
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)
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(29
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)
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(266
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)
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(98
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)
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Income tax benefit
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(36
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)
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(8
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)
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(103
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)
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(38
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)
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Net loss
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(42
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)
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(21
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)
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(163
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)
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(60
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)
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Less: net income attributable to noncontrolling interest
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13
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6
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5
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9
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Net loss attributable to PHH Corporation
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$
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(55
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)
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$
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(27
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)
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$
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(168
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)
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$
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(69
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)
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Basic and Diluted loss per share attributable to PHH Corporation
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$
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(1.14
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)
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$
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(0.50
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)
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$
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(3.25
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)
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$
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(1.28
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)
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2017
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2016
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2017
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2016
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Net loss
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$
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(42
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)
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$
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(21
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)
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$
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(163
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)
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$
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(60
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)
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Other comprehensive income, net of tax:
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Change in unfunded pension liability, net
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—
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1
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—
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1
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Total other comprehensive income, net of tax
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—
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1
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—
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1
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Total comprehensive loss
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(42
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)
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(20
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)
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(163
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)
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(59
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)
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Less: comprehensive income attributable to noncontrolling interest
|
13
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|
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6
|
|
|
5
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|
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9
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Comprehensive loss attributable to PHH Corporation
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$
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(55
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)
|
|
$
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(26
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)
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|
$
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(168
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)
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$
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(68
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)
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|
September 30,
2017 |
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December 31,
2016 |
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ASSETS
|
|
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Cash and cash equivalents
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$
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494
|
|
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$
|
906
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Restricted cash
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52
|
|
|
57
|
|
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Mortgage loans held for sale
|
590
|
|
|
683
|
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Accounts receivable, net
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94
|
|
|
66
|
|
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Servicing advances, net
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413
|
|
|
628
|
|
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Mortgage servicing rights
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500
|
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|
690
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Property and equipment, net
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24
|
|
|
36
|
|
||
Deferred taxes, net
|
80
|
|
|
—
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Other assets
|
54
|
|
|
109
|
|
||
Total assets
(1)
|
$
|
2,301
|
|
|
$
|
3,175
|
|
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LIABILITIES
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|
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Accounts payable and accrued expenses
|
$
|
218
|
|
|
$
|
193
|
|
Subservicing advance liabilities
|
228
|
|
|
290
|
|
||
Mortgage servicing rights secured liability
|
440
|
|
|
—
|
|
||
Debt, net
|
653
|
|
|
1,262
|
|
||
Deferred taxes, net
|
—
|
|
|
101
|
|
||
Loan repurchase and indemnification liability
|
38
|
|
|
49
|
|
||
Other liabilities
|
86
|
|
|
157
|
|
||
Total liabilities
(1)
|
1,663
|
|
|
2,052
|
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||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
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Redeemable noncontrolling interest (Note 1 and Note 13)
|
44
|
|
|
33
|
|
||
|
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EQUITY
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|
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Preferred stock, $0.01 par value; 1,090,000 shares authorized;
none issued or outstanding
|
—
|
|
|
—
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|
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Common stock, $0.01 par value; 273,910,000 shares authorized;
32,543,288 shares issued and outstanding at September 30, 2017;
53,599,433 shares issued and outstanding at December 31, 2016
|
—
|
|
|
1
|
|
||
Additional paid-in capital
|
558
|
|
|
885
|
|
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Retained earnings
|
46
|
|
|
214
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Accumulated other comprehensive loss
(2)
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(10
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)
|
|
(10
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)
|
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Total PHH Corporation stockholders’ equity
|
594
|
|
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1,090
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Total liabilities and equity
|
$
|
2,301
|
|
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$
|
3,175
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(1)
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The Condensed Consolidated Balance Sheets include assets and liabilities of variable interest entities which can be used only to settle the obligations and liabilities of the variable interest entities which creditors or beneficial interest holders do not have recourse to PHH Corporation and subsidiaries. These assets and liabilities are as follows:
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September 30,
2017 |
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December 31,
2016 |
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ASSETS
|
|
|
|
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Cash and cash equivalents
|
$
|
60
|
|
|
$
|
67
|
|
Restricted cash
|
18
|
|
|
24
|
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Mortgage loans held for sale
|
239
|
|
|
350
|
|
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Accounts receivable, net
|
17
|
|
|
9
|
|
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Servicing advances, net
|
80
|
|
|
150
|
|
||
Property and equipment, net
|
—
|
|
|
1
|
|
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Other assets
|
7
|
|
|
12
|
|
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Total assets
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$
|
421
|
|
|
$
|
613
|
|
|
|
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LIABILITIES
|
|
|
|
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|
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Accounts payable and accrued expenses
|
$
|
14
|
|
|
$
|
11
|
|
Debt
|
258
|
|
|
399
|
|
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Other liabilities
|
6
|
|
|
5
|
|
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Total liabilities
|
$
|
278
|
|
|
$
|
415
|
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(2)
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Includes amounts recorded related to the Company’s defined benefit pension plan, net of income tax benefits of
$6 million
as of both
September 30, 2017
and
December 31, 2016
. During both the
three and nine
months ended
September 30, 2017
and
September 30, 2016
, there were no amounts reclassified out of Accumulated other comprehensive loss.
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PHH Corporation Stockholders’ Equity
|
|
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Total
Equity
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Redeemable Noncontrolling Interest
|
|||||||||||||||
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Shares
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Amount
|
|
|
|
|
|
||||||||||||||||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Balance at December 31, 2016
|
$
|
1,090
|
|
|
53,599,433
|
|
|
$
|
1
|
|
|
$
|
885
|
|
|
$
|
214
|
|
|
$
|
(10
|
)
|
|
|
$
|
33
|
|
Total comprehensive (loss) income
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|
—
|
|
|
|
5
|
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(22
|
)
|
||||||
Adjustment to redemption value of noncontrolling interest (Note 13)
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
|
28
|
|
||||||
Stock compensation expense
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Reclassification of stock awards
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Stock issued under share-based payment plans
|
(1
|
)
|
|
157,283
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Repurchase of Common stock
|
(301
|
)
|
|
(21,213,428
|
)
|
|
(1
|
)
|
|
(300
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Balance at September 30, 2017
|
$
|
594
|
|
|
32,543,288
|
|
|
$
|
—
|
|
|
$
|
558
|
|
|
$
|
46
|
|
|
$
|
(10
|
)
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at December 31, 2015
|
$
|
1,316
|
|
|
55,007,983
|
|
|
$
|
1
|
|
|
$
|
909
|
|
|
$
|
416
|
|
|
$
|
(10
|
)
|
|
|
$
|
32
|
|
Total comprehensive (loss) income
|
(68
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
1
|
|
|
|
9
|
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(3
|
)
|
||||||
Adjustment to redemption value of noncontrolling interest (Note 13)
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
|
(1
|
)
|
||||||
Stock compensation expense
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Stock issued under share-based payment plans (includes $9 benefit from excess tax shortfall)
|
(9
|
)
|
|
86,354
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Repurchase of Common stock
|
(23
|
)
|
|
(1,508,772
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Balance at September 30, 2016
|
$
|
1,223
|
|
|
53,585,565
|
|
|
$
|
1
|
|
|
$
|
884
|
|
|
$
|
347
|
|
|
$
|
(9
|
)
|
|
|
$
|
37
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(163
|
)
|
|
$
|
(60
|
)
|
Adjustments to reconcile Net loss to net cash provided by operating activities:
|
|
|
|
|
|
||
Capitalization of originated mortgage servicing rights
|
(28
|
)
|
|
(45
|
)
|
||
Change in fair value of mortgage servicing rights and related derivatives
|
93
|
|
|
133
|
|
||
Change in fair value of mortgage servicing rights secured liability
|
(27
|
)
|
|
—
|
|
||
Loss on early extinguishment of debt
|
34
|
|
|
—
|
|
||
Gain on PHH Home Loans asset sales
|
(28
|
)
|
|
—
|
|
||
Origination of mortgage loans held for sale
|
(5,689
|
)
|
|
(7,848
|
)
|
||
Proceeds on sale of and payments from mortgage loans held for sale
|
5,992
|
|
|
8,029
|
|
||
Net gain on interest rate lock commitments, mortgage loans held for sale and related derivatives
|
(182
|
)
|
|
(219
|
)
|
||
Depreciation and amortization
|
11
|
|
|
13
|
|
||
Deferred income tax benefit
|
(181
|
)
|
|
(75
|
)
|
||
Other adjustments and changes in other assets and liabilities, net
|
165
|
|
|
92
|
|
||
Net cash (used in) provided by operating activities
|
(3
|
)
|
|
20
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Net cash (paid) received on derivatives related to mortgage servicing rights
|
(45
|
)
|
|
121
|
|
||
Proceeds on sale of mortgage servicing rights
|
122
|
|
|
7
|
|
||
Proceeds on sale of servicing advances
|
31
|
|
|
—
|
|
||
Proceeds from PHH Home Loans asset sales
|
28
|
|
|
—
|
|
||
Purchases of property and equipment
|
(1
|
)
|
|
(13
|
)
|
||
Decrease (increase) in restricted cash
|
5
|
|
|
(3
|
)
|
||
Other, net
|
—
|
|
|
5
|
|
||
Net cash provided by investing activities
|
140
|
|
|
117
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from secured borrowings
|
7,408
|
|
|
9,301
|
|
||
Principal payments on secured borrowings
|
(7,527
|
)
|
|
(9,319
|
)
|
||
Proceeds from mortgage servicing rights secured liability
|
420
|
|
|
—
|
|
||
Principal payments on unsecured borrowings
|
(496
|
)
|
|
—
|
|
||
Cash tender premiums for debt extinguishment
|
(28
|
)
|
|
—
|
|
||
Repurchase of common stock
|
(301
|
)
|
|
(23
|
)
|
||
Cash paid for debt issuance costs
|
(2
|
)
|
|
(3
|
)
|
||
Distributions to noncontrolling interest
|
(22
|
)
|
|
(3
|
)
|
||
Other, net
|
(1
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(549
|
)
|
|
(47
|
)
|
||
|
|
|
|
||||
Net (decrease) increase in Cash and cash equivalents
|
(412
|
)
|
|
90
|
|
||
Cash and cash equivalents at beginning of period
|
906
|
|
|
906
|
|
||
Cash and cash equivalents at end of period
|
$
|
494
|
|
|
$
|
996
|
|
1. Summary of Significant Accounting Policies
|
•
|
Accounting for income taxes.
The Company recognized all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of income and applied this provision prospectively. The tax effects were treated as discrete items to calculate the effective tax rate and resulted in
$2 million
of income tax expense during the
nine months ended September 30, 2017
.
|
•
|
Forfeiture rates.
The Company elected to account for forfeitures as they occur and applied this provision using a modified retrospective approach. The impact to opening retained earnings was not significant.
|
•
|
Statement of Cash Flows.
On a retrospective basis, the Company classified cash paid by an employer when directly withholding shares for tax withholding purposes as a financing activity which totaled
$1 million
during the
nine months ended September 30, 2017
. The amount of tax withholding was not significant for the
nine months ended September 30, 2016
. In addition, on a prospective basis, the Company will classify excess tax benefits as an operating activity which did not have an impact to the statement of cash flows.
|
•
|
In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers.” The core principle requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. The FASB has issued several amendments to provide additional clarification and implementation instructions relating to (i) principal versus agent considerations, (ii) identifying performance obligations and licensing, (iii) narrow-scope improvements and practical expedients and (iv) technical corrections and improvements. These updates are to be applied retrospectively to all prior periods presented or through a cumulative adjustment in the year of adoption, and are effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted.
|
•
|
In March 2017, the FASB issued ASU 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This update changes the income statement presentation of defined benefit plan expense by requiring the service cost component to be presented in the same line item as other compensation costs and all other components (including interest cost, amortization of prior service cost, settlements, etc.) to be presented separately from the service cost component. This update is effective for the first interim and annual periods beginning after December 15, 2017, with early adoption permitted. At adoption, this update will be applied retrospectively. The Company's defined benefit pension plan and the other post-employment benefits plan are frozen, wherein the plans only accrue additional benefits for a very limited number of employees. As a result, the Company does not expect the adoption of this update to have a significant impact on its financial statements.
|
•
|
In May 2017, the FASB issued ASU 2017-09, "Scope of Modification Accounting." This update clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. This update is effective for the first interim and annual periods beginning after December 15, 2017, with early adoption permitted. At adoption, this update will be applied prospectively. The Company does not expect the adoption of this update to have a significant impact on its financial statements.
|
2. Exit Costs
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Non-Cash Charges & Impairments
(1)
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Costs incurred in current year:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Second quarter
|
4
|
|
|
—
|
|
|
8
|
|
|
(4
|
)
|
|
8
|
|
|||||
Third quarter
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
|
11
|
|
|
4
|
|
|
8
|
|
|
(4
|
)
|
|
19
|
|
|||||
Cumulative costs recognized in prior year
|
22
|
|
|
—
|
|
|
4
|
|
|
15
|
|
|
41
|
|
|||||
Estimate of remaining costs
|
5
|
|
|
18
|
|
|
7
|
|
|
—
|
|
|
30
|
|
|||||
Total
|
$
|
38
|
|
|
$
|
22
|
|
|
$
|
19
|
|
|
$
|
11
|
|
|
$
|
90
|
|
(1)
|
During the second quarter of 2017, the Company recorded
$4 million
to reverse previously accrued liabilities associated with the Jacksonville facility.
|
|
Mortgage Production
|
|
Other
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
Costs incurred in current year:
|
|
|
|
|
|
||||||
First quarter
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
8
|
|
Second quarter
|
7
|
|
|
1
|
|
|
8
|
|
|||
Third quarter
|
1
|
|
|
2
|
|
|
3
|
|
|||
|
15
|
|
|
4
|
|
|
19
|
|
|||
Cumulative costs recognized in prior year
|
33
|
|
|
8
|
|
|
41
|
|
|||
Estimate of remaining costs
|
27
|
|
|
3
|
|
|
30
|
|
|||
Total
|
$
|
75
|
|
|
$
|
15
|
|
|
$
|
90
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Non-Cash Charges & Impairments
(1)
|
|
Total
(2)
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Costs incurred in current year:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Second quarter
|
4
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
8
|
|
|||||
Third quarter
|
4
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|||||
|
25
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
30
|
|
|||||
Cumulative costs recognized in prior year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Estimate of remaining costs
|
5
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
8
|
|
|||||
Total
|
$
|
30
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
38
|
|
(1)
|
During the second quarter of 2017, the Company recorded a
$2 million
impairment for an equity method investment.
|
(2)
|
Exit Costs related to Reorganization include amounts attributable to noncontrolling interest, representing
$5 million
of Costs incurred during the
nine months ended September 30, 2017
, and
$8 million
of expected Total program costs. Refer to
Note 13, 'Variable Interest Entities'
for further information regarding agreements to sell certain assets of PHH Home Loans and its subsidiaries and exit the Real Estate channel.
|
|
Mortgage Production
|
|
Mortgage Servicing
|
|
Other
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Costs incurred in current year:
|
|
|
|
|
|
|
|
||||||||
First quarter
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
17
|
|
Second quarter
|
3
|
|
|
—
|
|
|
5
|
|
|
8
|
|
||||
Third quarter
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
|
14
|
|
|
2
|
|
|
14
|
|
|
30
|
|
||||
Cumulative costs recognized in prior year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Estimate of remaining costs
|
6
|
|
|
1
|
|
|
1
|
|
|
8
|
|
||||
Total
|
$
|
20
|
|
|
$
|
3
|
|
|
$
|
15
|
|
|
$
|
38
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||
|
Severance and Termination Benefits
|
|
Facility Exit Costs
|
|
Contract Termination & Other Costs
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Balance, beginning of period
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
25
|
|
Charges
|
36
|
|
|
6
|
|
|
9
|
|
|
51
|
|
||||
Paid
|
(9
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|
(17
|
)
|
||||
Adjustments
(1)
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Balance, end of period
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
64
|
|
(1)
|
This adjustment represents previously accrued amounts of existing retention and incentive awards for exiting employees that will be paid out upon termination and other non-cash charges.
|
3. Earnings Per Share
|
•
|
the repurchase of
2,450,466
common shares for
$34 million
under an open market program during the
nine months ended September 30, 2017
, of which
689,502
common shares for
$10 million
were repurchased during the
three months ended September 30, 2017
;
|
•
|
the repurchase of
18,762,962
common shares for
$267 million
under a modified "Dutch auction" self-tender offer during September 2017; and
|
•
|
the repurchase of
1,508,772
common shares under an open market program during January 2016.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions, except share and per share data)
|
||||||||||||||
Net loss attributable to PHH Corporation
|
$
|
(55
|
)
|
|
$
|
(27
|
)
|
|
$
|
(168
|
)
|
|
$
|
(69
|
)
|
Weighted-average common shares outstanding — basic & diluted
|
48,210,099
|
|
|
53,578,044
|
|
|
51,724,911
|
|
|
53,616,403
|
|
||||
Basic and Diluted loss per share attributable to PHH Corporation
|
$
|
(1.14
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(3.25
|
)
|
|
$
|
(1.28
|
)
|
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive securities excluded from the computation of diluted shares:
|
|
|
|
|
|
|
|
||||||||
Outstanding stock-based compensation awards
(1)
|
1,006,213
|
|
|
1,971,055
|
|
|
1,006,213
|
|
|
1,971,055
|
|
|
|
|
|
|
|
|
|
(1)
|
For the
three and nine
months ended
September 30, 2017
, excludes
52,698
shares that are contingently issuable for which the contingency has not been met.
|
4. Servicing Activities
|
|
September 30,
2017 |
|
December 31,
2016 |
||||||||||||
|
Fair Value
|
|
UPB
|
|
Fair Value
|
|
UPB
|
||||||||
|
(In millions)
|
||||||||||||||
Capitalized MSRs owned
|
$
|
60
|
|
|
$
|
8,906
|
|
|
$
|
690
|
|
|
$
|
84,657
|
|
Capitalized MSRs under secured borrowing arrangements and subserviced
(1)
|
440
|
|
|
51,465
|
|
|
—
|
|
|
—
|
|
||||
Total capitalized MSRs
|
$
|
500
|
|
|
$
|
60,371
|
|
|
$
|
690
|
|
|
$
|
84,657
|
|
Subserviced
|
|
|
90,354
|
|
|
|
|
89,170
|
|
||||||
Other owned servicing
|
|
|
757
|
|
|
|
|
815
|
|
||||||
Total
|
|
|
$
|
151,482
|
|
|
|
|
$
|
174,642
|
|
(1)
|
Accounted for as a secured borrowing arrangement. Refer to
Note 1, 'Summary of Significant Accounting Policies'
for additional information.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Servicing fees from capitalized portfolio
(1)
|
$
|
22
|
|
|
$
|
67
|
|
|
$
|
125
|
|
|
$
|
204
|
|
Subservicing fees
|
17
|
|
|
17
|
|
|
38
|
|
|
53
|
|
||||
Late fees and other ancillary revenue
|
6
|
|
|
9
|
|
|
21
|
|
|
27
|
|
||||
Loss on sale of MSRs
|
(3
|
)
|
|
—
|
|
|
(16
|
)
|
|
(2
|
)
|
||||
Curtailment interest paid to investors
|
—
|
|
|
(4
|
)
|
|
(6
|
)
|
|
(11
|
)
|
||||
Loan servicing income
|
42
|
|
|
89
|
|
|
162
|
|
|
271
|
|
||||
Change in fair value of MSRs, net of related derivatives
(2)
|
(35
|
)
|
|
(50
|
)
|
|
(93
|
)
|
|
(133
|
)
|
||||
Change in fair value of MSRs secured liability
|
28
|
|
|
—
|
|
|
27
|
|
|
—
|
|
||||
Loan servicing income, net
|
$
|
35
|
|
|
$
|
39
|
|
|
$
|
96
|
|
|
$
|
138
|
|
(1)
|
Servicing fees from capitalized portfolio include
$14 million
and
$15 million
related to the estimated yield on capitalized MSRs treated as a secured borrowing arrangement for the
three and nine months ended
September 30, 2017
, respectively. This is fully offset by the
MSRs secured interest expense
included within Net interest expense.
|
(2)
|
Net of derivative losses of
$4 million
and derivative gains of
$139 million
for the
three and nine months ended
September 30, 2016
, respectively. Derivative gains for the
three and nine months ended
September 30, 2017
were not significant.
|
|
September 30, 2017
|
||||||
|
UPB
|
|
Fair Value
|
||||
|
(In millions)
|
||||||
MSR commitments:
|
|
|
|
||||
New Residential Investment Corp.
|
$
|
6,430
|
|
|
$
|
38
|
|
Other counterparties
|
548
|
|
|
5
|
|
||
MSRs capitalized under secured borrowing arrangements and subserviced
|
51,465
|
|
|
440
|
|
||
Non-committed
|
1,928
|
|
|
17
|
|
||
Total MSRs
|
$
|
60,371
|
|
|
$
|
500
|
|
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
||||||
|
MSRs Owned
|
|
MSRs Secured Asset
|
||||||||
|
(In millions)
|
||||||||||
Balance, beginning of period
|
$
|
84,657
|
|
|
$
|
98,990
|
|
|
$
|
—
|
|
Additions from loans sold with servicing retained
|
2,543
|
|
|
4,476
|
|
|
—
|
|
|||
Payoffs and curtailments
|
(7,249
|
)
|
|
(14,102
|
)
|
|
(2,494
|
)
|
|||
Sales that have been derecognized
|
(17,086
|
)
|
|
(742
|
)
|
|
—
|
|
|||
Sales accounted for as secured borrowing
|
(53,959
|
)
|
|
—
|
|
|
53,959
|
|
|||
Balance, end of period
|
$
|
8,906
|
|
|
$
|
88,622
|
|
|
$
|
51,465
|
|
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
||||||
|
MSRs Owned
|
|
MSRs Secured Asset
|
||||||||
|
(In millions)
|
||||||||||
Balance, beginning of period
|
$
|
690
|
|
|
$
|
880
|
|
|
$
|
—
|
|
Additions from loans sold with servicing retained
|
28
|
|
|
45
|
|
|
—
|
|
|||
Sales that have been derecognized
|
(125
|
)
|
|
(8
|
)
|
|
—
|
|
|||
Sales accounted for as secured borrowing
|
(467
|
)
|
|
—
|
|
|
467
|
|
|||
Changes in fair value due to:
|
|
|
|
|
|
||||||
Realization of expected cash flows
|
(57
|
)
|
|
(98
|
)
|
|
(21
|
)
|
|||
Changes in market inputs or assumptions used in the valuation model
|
(9
|
)
|
|
(174
|
)
|
|
(6
|
)
|
|||
Balance, end of period
|
$
|
60
|
|
|
$
|
645
|
|
|
$
|
440
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
(In millions)
|
||||||
Proceeds from new loan sales or securitizations
|
$
|
2,685
|
|
|
$
|
4,647
|
|
Servicing fees from capitalized portfolio
(1)
|
115
|
|
|
229
|
|
||
Purchases of previously sold loans
(2)
|
(20
|
)
|
|
(232
|
)
|
||
Servicing advances
(3)
|
(847
|
)
|
|
(1,217
|
)
|
||
Repayment of servicing advances
(3)
|
1,058
|
|
|
1,241
|
|
(1)
|
Includes servicing fees, late fees and other ancillary servicing revenue in which the Company has continuing involvement.
|
(2)
|
Includes purchases of repurchase eligible loans and excludes indemnification payments to investors and insurers of the related mortgage loans.
|
(3)
|
Outstanding servicing advance receivables are presented in Servicing advances, net in the
Condensed Consolidated Balance Sheets
, except for advances related to loans in foreclosure or real estate owned, which are included in Other assets. Repayment of servicing advances includes the
$66 million
received for advances from sales of MSRs executed in the
nine months ended September 30, 2017
.
|
5. Derivatives
|
▪
|
Forward delivery commitments
— Related to interest rate and price risk for mortgage loans held for sale and interest rate lock commitments
|
▪
|
Option contracts
— Related to interest rate and price risk for mortgage loans held for sale and interest rate lock commitments
|
▪
|
MSR-related agreements
— Related to interest rate risk for mortgage servicing rights.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
Interest rate lock commitments
|
$
|
689
|
|
|
$
|
862
|
|
Forward delivery commitments
|
1,279
|
|
|
2,104
|
|
||
Option contracts
|
75
|
|
|
120
|
|
||
MSR-related agreements
(1)
|
—
|
|
|
260
|
|
(1)
|
In the fourth quarter of 2016, the Company significantly reduced its MSR-related derivative hedge coverage as a result of the MSR sale agreements that fix the prices the Company expects to realize at future transfer dates. The remaining MSR-related derivatives were settled during the
nine months ended September 30, 2017
. For further discussion of the MSR sale agreements, see
Note 4, 'Servicing Activities'
.
|
|
September 30, 2017
|
||||||||||||||
|
Gross Assets
|
|
Offsetting
Payables
|
|
Cash Collateral
|
|
Net Amount
|
||||||||
|
(In millions)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Not subject to master netting arrangements:
|
|
|
|
|
|
|
|
||||||||
Interest rate lock commitments
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Total derivative assets
|
$
|
14
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
13
|
|
|
Gross Liabilities
|
|
Offsetting
Receivables
|
|
Cash Collateral
|
|
Net Amount
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
Total derivative liabilities
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
|
December 31, 2016
|
||||||||||||||
|
Gross Assets
|
|
Offsetting
Payables
|
|
Cash Collateral
Paid
|
|
Net Amount
|
||||||||
|
(In millions)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
13
|
|
|
$
|
(43
|
)
|
|
$
|
31
|
|
|
$
|
1
|
|
MSR-related agreements
|
19
|
|
|
(22
|
)
|
|
4
|
|
|
1
|
|
||||
Option contracts
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Derivative assets subject to netting
|
33
|
|
|
(66
|
)
|
|
35
|
|
|
2
|
|
||||
Not subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate lock commitments
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
||||
Forward delivery commitments
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Derivative assets not subject to netting
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||
Total derivative assets
|
$
|
52
|
|
|
$
|
(66
|
)
|
|
$
|
35
|
|
|
$
|
21
|
|
|
Gross Liabilities
|
|
Offsetting
Receivables |
|
Cash Collateral
Received |
|
Net Amount
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subject to master netting arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward delivery commitments
|
$
|
4
|
|
|
$
|
(10
|
)
|
|
$
|
11
|
|
|
$
|
5
|
|
MSR-related agreements
|
65
|
|
|
(55
|
)
|
|
2
|
|
|
12
|
|
||||
Option contracts
|
—
|
|
|
(1
|
)
|
|
2
|
|
|
1
|
|
||||
Derivative liabilities subject to netting
|
69
|
|
|
(66
|
)
|
|
15
|
|
|
18
|
|
||||
Total derivative liabilities
|
$
|
69
|
|
|
$
|
(66
|
)
|
|
$
|
15
|
|
|
$
|
18
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Gain on loans held for sale, net:
|
|
|
|
|
|
|
|
||||||||
Interest rate lock commitments
|
$
|
62
|
|
|
$
|
100
|
|
|
$
|
175
|
|
|
$
|
278
|
|
Forward delivery commitments
|
(6
|
)
|
|
(6
|
)
|
|
(11
|
)
|
|
(41
|
)
|
||||
Option contracts
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Loan servicing income, net:
|
|
|
|
|
|
|
|
|
|
||||||
MSR-related agreements
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
139
|
|
6. Other Assets
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
Real estate owned, net
(1)
|
$
|
21
|
|
|
$
|
16
|
|
Derivatives (Note 5)
|
13
|
|
|
21
|
|
||
Prepaid expenses
|
10
|
|
|
11
|
|
||
Equity method investments
|
7
|
|
|
10
|
|
||
Repurchase eligible loans
(2)
|
1
|
|
|
13
|
|
||
Mortgage loans in foreclosure, net
(3)
|
—
|
|
|
21
|
|
||
Income taxes receivable
|
—
|
|
|
14
|
|
||
Other
|
2
|
|
|
3
|
|
||
Total
|
$
|
54
|
|
|
$
|
109
|
|
(1)
|
As of
September 30, 2017
and
December 31, 2016
, Real estate owned is net of Adjustment to value for real estate owned of
$19 million
and
$14 million
, respectively.
|
(2)
|
Repurchase eligible loans represent certain mortgage loans sold pursuant to GNMA 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
Condensed Consolidated Balance Sheets
.
|
(3)
|
As of
September 30, 2017
, the balance of Mortgage loans in foreclosure is not significant since a majority of the loans and associated reserves have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. As of
December 31, 2016
, Mortgage loans in foreclosure is net of Allowance for probable foreclosure losses of
$10 million
.
|
7. Accounts Payable and Accrued Expenses
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
Exit cost liability (Note 2)
|
$
|
64
|
|
|
$
|
25
|
|
Income taxes payable (Note 10)
|
50
|
|
|
—
|
|
||
Accrued payroll and benefits
|
47
|
|
|
50
|
|
||
Accounts payable
|
41
|
|
|
77
|
|
||
Accrued servicing related expenses
|
12
|
|
|
12
|
|
||
Repurchase eligible loans (Note 6)
|
1
|
|
|
13
|
|
||
Accrued interest and other
|
3
|
|
|
16
|
|
||
Total
|
$
|
218
|
|
|
$
|
193
|
|
8. Other Liabilities
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
Legal and regulatory matters (Note 11)
|
$
|
58
|
|
|
$
|
114
|
|
Pension and other post-employment benefits
|
11
|
|
|
11
|
|
||
Income tax contingencies
|
8
|
|
|
8
|
|
||
Liability to deliver MSRs (Note 12)
|
2
|
|
|
—
|
|
||
Derivatives (Note 5)
|
1
|
|
|
18
|
|
||
Other
|
6
|
|
|
6
|
|
||
Total
|
$
|
86
|
|
|
$
|
157
|
|
9. Debt and Borrowing Arrangements
|
|
September 30, 2017
|
|
December 31,
2016 |
|||||||||||
|
Balance
|
|
Interest
Rate (1) |
|
Available
Capacity
(2)
|
|
Balance
|
|||||||
|
(In millions)
|
|||||||||||||
Committed warehouse facilities
|
$
|
405
|
|
|
3.4
|
%
|
|
$
|
195
|
|
|
$
|
556
|
|
Uncommitted warehouse facilities
|
78
|
|
|
2.9
|
%
|
|
222
|
|
|
—
|
|
|||
Servicing advance facility
|
52
|
|
|
3.2
|
%
|
|
13
|
|
|
99
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Term notes due in 2019
|
97
|
|
|
7.375
|
%
|
|
n/a
|
|
|
275
|
|
|||
Term notes due in 2021
|
22
|
|
|
6.375
|
%
|
|
n/a
|
|
|
340
|
|
|||
Unsecured credit facilities
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|||
Unsecured debt, face value
|
119
|
|
|
|
|
|
|
|
|
615
|
|
|||
Debt issuance costs
|
(1
|
)
|
|
|
|
|
|
(8
|
)
|
|||||
Unsecured debt, net
|
118
|
|
|
|
|
|
|
607
|
|
|||||
Total
|
$
|
653
|
|
|
|
|
|
|
|
|
$
|
1,262
|
|
(1)
|
Interest rate shown represents the stated interest rate of outstanding borrowings, 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.
|
|
Warehouse
Facilities
|
|
Servicing
Advance
Facility
|
|
Subservicing Advance Liabilities
(1)
|
|
MSRs Secured Liability
(2)
|
||||||||
|
(In millions)
|
||||||||||||||
Restricted cash
|
$
|
6
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Servicing advances
|
—
|
|
|
80
|
|
|
228
|
|
|
—
|
|
||||
Mortgage loans held for sale (unpaid principal balance)
|
502
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
—
|
|
|
440
|
|
||||
Total
|
$
|
508
|
|
|
$
|
94
|
|
|
$
|
228
|
|
|
$
|
440
|
|
(1)
|
Under the terms of certain subservicing arrangements, the subservicing counterparty is required to fund servicing advances for their respective portfolios of subserviced loans. A subservicing advance liability is recorded for cash received from the counterparty to fund advances and is repaid to the counterparty upon the collection of the mortgage servicing advance receivables.
|
(2)
|
Represents MSRs that are accounted for as a secured borrowing arrangement. Refer to
Note 1, 'Summary of Significant Accounting Policies'
for additional information.
|
|
Warehouse
Facilities
|
|
Servicing
Advance
Facility
|
|
Unsecured
Debt
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Within one year
|
$
|
483
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
535
|
|
Between one and two years
|
—
|
|
|
—
|
|
|
97
|
|
|
97
|
|
||||
Between two and three years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Between three and four years
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
||||
Between four and five years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
483
|
|
|
$
|
52
|
|
|
$
|
119
|
|
|
$
|
654
|
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Interest income
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
30
|
|
|
$
|
32
|
|
Secured interest expense
|
(6
|
)
|
|
(8
|
)
|
|
(19
|
)
|
|
(24
|
)
|
||||
MSRs secured interest expense
(1)
|
(14
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
||||
Unsecured interest expense
|
—
|
|
|
(10
|
)
|
|
(19
|
)
|
|
(31
|
)
|
||||
Net interest expense
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
|
$
|
(23
|
)
|
|
$
|
(23
|
)
|
(1)
|
MSRs secured interest expense
is the estimated yield on the
MSRs secured liability
as a result of the secured borrowing arrangement, as discussed in
Note 4, 'Servicing Activities'
.
MSRs secured interest expense
fully offsets the estimated yield on capitalized MSRs treated as a secured borrowing arrangement, which is included within Loan servicing income, net.
|
10. Income Taxes
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||
Federal loss carryforwards
|
$
|
23
|
|
|
$
|
23
|
|
State loss carryforwards and credits
|
37
|
|
|
39
|
|
||
Accrued legal and regulatory matters
|
23
|
|
|
46
|
|
||
Reserves and allowances
|
31
|
|
|
36
|
|
||
Exit cost liability
|
26
|
|
|
10
|
|
||
Other accrued liabilities
|
12
|
|
|
24
|
|
||
Gross deferred tax assets
|
152
|
|
|
178
|
|
||
Valuation allowance
|
(48
|
)
|
|
(44
|
)
|
||
Deferred tax assets, net of valuation allowance
|
104
|
|
|
134
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
|
||
Mortgage servicing rights
|
20
|
|
|
234
|
|
||
Other
|
4
|
|
|
1
|
|
||
Deferred tax liabilities
|
24
|
|
|
235
|
|
||
Net deferred tax asset (liability)
|
$
|
80
|
|
|
$
|
(101
|
)
|
(i)
|
state and local income taxes determined by the mix of income or loss from the operations by entity and state income tax jurisdiction;
|
(ii)
|
the net increase in the valuation allowance was driven by certain cumulative non net operating loss deferred tax assets for which state and federal valuation allowance is warranted, partially offset by a decrease in the valuation allowance due to state taxable income generated during the
three and nine months ended
September 30, 2017
; and
|
(iii)
|
tax benefits related to income attributable to noncontrolling interests for which no taxes are provided.
|
(i)
|
state and local income taxes determined by the mix of income or loss from the operations by entity and state income tax jurisdiction;
|
(ii)
|
a decrease in the valuation allowance driven by the utilization of state tax losses;
|
(iii)
|
an increase in nondeductible expenses related to legal and regulatory matters; and
|
(iv)
|
tax benefits related to income attributable to noncontrolling interests for which no taxes are provided.
|
11. Commitments and Contingencies
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
(In millions)
|
||||||
Balance, beginning of period
|
$
|
73
|
|
|
$
|
89
|
|
Realized losses
|
(18
|
)
|
|
(17
|
)
|
||
Transfer of reserves
(1)
|
(7
|
)
|
|
—
|
|
||
Increase in reserves due to:
|
|
|
|
|
|
||
Changes in assumptions
|
7
|
|
|
10
|
|
||
New loan sales
|
2
|
|
|
5
|
|
||
Balance, end of period
|
$
|
57
|
|
|
$
|
87
|
|
(1)
|
During the
nine months ended September 30, 2017
, certain loans and associated reserves of Mortgage loans in foreclosure have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
Loan repurchase and indemnification liability
|
$
|
38
|
|
|
$
|
49
|
|
Adjustment to value for real estate owned
|
19
|
|
|
14
|
|
||
Allowance for probable foreclosure losses
|
—
|
|
|
10
|
|
||
Total
|
$
|
57
|
|
|
$
|
73
|
|
12. Fair Value Measurements
|
|
September 30, 2017
|
||||||||||||||||||
|
Level
One
|
|
Level
Two
|
|
Level
Three
|
|
Cash
Collateral
and Netting
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage loans held for sale
|
$
|
—
|
|
|
$
|
545
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
590
|
|
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
500
|
|
|||||
Other assets—Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|||||
Forward delivery commitments
|
—
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage servicing rights secured liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
440
|
|
|
$
|
—
|
|
|
$
|
440
|
|
Other liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Derivative liabilities—Forward delivery commitments
|
—
|
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|||||
Liability to deliver MSRs
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
December 31, 2016
|
||||||||||||||||||
|
Level
One
|
|
Level
Two
|
|
Level
Three
|
|
Cash
Collateral
and Netting
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage loans held for sale
|
$
|
—
|
|
|
$
|
636
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
683
|
|
Mortgage servicing rights
|
—
|
|
|
—
|
|
|
690
|
|
|
—
|
|
|
690
|
|
|||||
Other assets—Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|||||
Forward delivery commitments
|
—
|
|
|
14
|
|
|
—
|
|
|
(12
|
)
|
|
2
|
|
|||||
MSR-related agreements
|
—
|
|
|
19
|
|
|
—
|
|
|
(18
|
)
|
|
1
|
|
|||||
Option contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other liabilities—Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Forward delivery commitments
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
5
|
|
MSR-related agreements
|
—
|
|
|
65
|
|
|
—
|
|
|
(53
|
)
|
|
12
|
|
|||||
Option contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Total
|
|
Loans 90 days or
more past due and
on non-accrual
status
(1)
|
|
Total
|
|
Loans 90 days or
more past due and
on non-accrual
status
|
||||||||
|
(In millions)
|
||||||||||||||
Carrying amount
|
$
|
590
|
|
|
$
|
19
|
|
|
$
|
683
|
|
|
$
|
7
|
|
Aggregate unpaid principal balance
|
606
|
|
|
38
|
|
|
687
|
|
|
10
|
|
||||
Difference
|
$
|
(16
|
)
|
|
$
|
(19
|
)
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
(1)
|
As of
September 30, 2017
, the majority of Mortgage loans in foreclosure and associated reserves have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In millions)
|
||||||
First mortgages:
|
|
|
|
|
|
||
Conforming
|
$
|
473
|
|
|
$
|
531
|
|
Non-conforming
|
72
|
|
|
105
|
|
||
Total first mortgages
|
545
|
|
|
636
|
|
||
Second lien
|
1
|
|
|
3
|
|
||
Scratch and Dent
|
44
|
|
|
44
|
|
||
Total
|
$
|
590
|
|
|
$
|
683
|
|
|
Nine Months Ended
September 30, |
||||
|
2017
|
|
2016
|
||
Initial capitalization rate of additions to MSRs owned
|
1.10
|
%
|
|
1.00
|
%
|
|
September 30,
2017 |
|
December 31,
2016 |
||
MSRs Owned
|
|
|
|
||
Capitalization servicing rate
|
0.67
|
%
|
|
0.82
|
%
|
Capitalization servicing multiple
|
2.3
|
|
|
2.9
|
|
Weighted-average servicing fee (in basis points)
|
29
|
|
|
28
|
|
Weighted-average life (years)
|
6.0
|
|
|
6.3
|
|
|
September 30,
2017 |
|
MSRs Under Secured Borrowing Arrangement
|
|
|
Capitalization servicing rate
|
0.85
|
%
|
Capitalization servicing multiple
|
3.2
|
|
Weighted-average servicing fee (in basis points)
|
27
|
|
Weighted-average life (years)
|
5.8
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||
MSRs Owned
|
|
|
|
||
Weighted-average prepayment speed (CPR)
|
8.4
|
%
|
|
9.2
|
%
|
Option adjusted spread, in basis points (OAS)
|
490
|
|
|
1,430
|
|
Weighted-average delinquency rate
|
12.0
|
%
|
|
5.1
|
%
|
|
September 30,
2017 |
|
MSRs Under Secured Borrowing Arrangement
|
|
|
Weighted-average prepayment speed (CPR)
|
10.5
|
%
|
Option adjusted spread, in basis points (OAS)
|
988
|
|
Weighted-average delinquency rate
|
3.8
|
%
|
|
September 30, 2017
|
||||||||||
|
Weighted-
Average
Prepayment
Speed
|
|
Option
Adjusted
Spread
|
|
Weighted-
Average
Delinquency
Rate
|
||||||
|
(In millions)
|
||||||||||
MSRs Owned
|
|
||||||||||
Impact on fair value of 10% adverse change
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
Impact on fair value of 20% adverse change
|
(5
|
)
|
|
(4
|
)
|
|
(9
|
)
|
|||
|
|
|
|
|
|
||||||
MSRs Under Secured Borrowing Arrangement
(1)
|
|
|
|
|
|
||||||
Impact on fair value of 10% adverse change
|
$
|
(16
|
)
|
|
$
|
(20
|
)
|
|
$
|
(6
|
)
|
Impact on fair value of 20% adverse change
|
(30
|
)
|
|
(38
|
)
|
|
(12
|
)
|
(1)
|
During 2017, the Company sold MSRs to New Residential, which have been accounted for as a secured borrowing and have a fair value of
$440 million
as of
September 30, 2017
. Accordingly, the MSRs remained on the balance sheet with the proceeds from sale recognized as
MSRs secured liability
. Any changes in fair value of this secured borrowing are expected to fully offset within MSRs secured asset and
MSRs secured liability
.
|
|
September 30,
2017 |
|
Weighted-average prepayment speed (CPR)
|
10.5
|
%
|
Option adjusted spread, in basis points (OAS)
|
988
|
|
Weighted-average delinquency rate
|
3.8
|
%
|
|
Three Months Ended
September 30, 2017 |
|
Three Months Ended
September 30, 2016 |
||||||||||||||||||||||||||||
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MSRs Secured Liability
|
|
Liability to Deliver MSRs
|
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
||||||||||||||||
|
(In millions)
|
||||||||||||||||||||||||||||||
Balance, beginning of period
|
$
|
32
|
|
|
$
|
555
|
|
|
$
|
16
|
|
|
$
|
(114
|
)
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
679
|
|
|
$
|
39
|
|
Purchases, Issuances, Sales and Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchases
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||||||
Issuances
|
2
|
|
|
10
|
|
|
—
|
|
|
(354
|
)
|
|
—
|
|
|
2
|
|
|
15
|
|
|
—
|
|
||||||||
Sales
|
(3
|
)
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(3
|
)
|
|
—
|
|
||||||||
Settlements
|
(2
|
)
|
|
—
|
|
|
(65
|
)
|
|
14
|
|
|
1
|
|
|
(4
|
)
|
|
—
|
|
|
(92
|
)
|
||||||||
|
(1
|
)
|
|
(20
|
)
|
|
(65
|
)
|
|
(340
|
)
|
|
1
|
|
|
(5
|
)
|
|
12
|
|
|
(92
|
)
|
||||||||
Realized and unrealized gains (losses) included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gain on loans held for sale, net
|
(6
|
)
|
|
—
|
|
|
62
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
100
|
|
||||||||
Loan servicing income, net
|
—
|
|
|
(35
|
)
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
||||||||
Net interest expense
|
1
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
(5
|
)
|
|
(35
|
)
|
|
62
|
|
|
14
|
|
|
(3
|
)
|
|
—
|
|
|
(46
|
)
|
|
100
|
|
||||||||
Transfers into Level Three
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||||||
Transfers out of Level Three
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||||||
Balance, end of period
|
$
|
45
|
|
|
$
|
500
|
|
|
$
|
13
|
|
|
$
|
(440
|
)
|
|
$
|
(2
|
)
|
|
$
|
45
|
|
|
$
|
645
|
|
|
$
|
47
|
|
|
Nine Months Ended
September 30, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||||||||||||||||||||||||
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
|
MSRs Secured Liability
|
|
Liability to Deliver MSRs
|
|
MLHS
|
|
MSRs
|
|
IRLCs,
net
|
||||||||||||||||
|
(In millions)
|
||||||||||||||||||||||||||||||
Balance, beginning of period
|
$
|
47
|
|
|
$
|
690
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
880
|
|
|
$
|
21
|
|
Purchases, Issuances, Sales and Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchases
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||||||
Issuances
|
5
|
|
|
28
|
|
|
—
|
|
|
(467
|
)
|
|
—
|
|
|
5
|
|
|
45
|
|
|
—
|
|
||||||||
Sales
|
(20
|
)
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
(8
|
)
|
|
—
|
|
||||||||
Settlements
|
(11
|
)
|
|
—
|
|
|
(180
|
)
|
|
15
|
|
|
1
|
|
|
(9
|
)
|
|
—
|
|
|
(252
|
)
|
||||||||
|
(19
|
)
|
|
(97
|
)
|
|
(180
|
)
|
|
(452
|
)
|
|
1
|
|
|
(13
|
)
|
|
37
|
|
|
(252
|
)
|
||||||||
Realized and unrealized gains (losses) included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gain on loans held for sale, net
|
(6
|
)
|
|
—
|
|
|
175
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
278
|
|
||||||||
Loan servicing income, net
|
—
|
|
|
(93
|
)
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
(272
|
)
|
|
—
|
|
||||||||
Net interest expense
|
2
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||||
|
(4
|
)
|
|
(93
|
)
|
|
175
|
|
|
12
|
|
|
(3
|
)
|
|
2
|
|
|
(272
|
)
|
|
278
|
|
||||||||
Transfers into Level Three
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
||||||||
Transfers out of Level Three
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
||||||||
Balance, end of period
|
$
|
45
|
|
|
$
|
500
|
|
|
$
|
13
|
|
|
$
|
(440
|
)
|
|
$
|
(2
|
)
|
|
$
|
45
|
|
|
$
|
645
|
|
|
$
|
47
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Gain on loans held for sale, net
|
$
|
8
|
|
|
$
|
42
|
|
|
$
|
7
|
|
|
$
|
43
|
|
Loan servicing income, net
|
(3
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|
(174
|
)
|
13. Variable Interest Entities
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
PHH Home
Loans
|
|
Servicing
Advance
Receivables
Trust
|
|
PHH Home
Loans
|
|
Servicing
Advance
Receivables
Trust
|
||||||||
|
(In millions)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
—
|
|
Restricted cash
|
4
|
|
|
14
|
|
|
5
|
|
|
19
|
|
||||
Mortgage loans held for sale
|
239
|
|
|
—
|
|
|
350
|
|
|
—
|
|
||||
Accounts receivable, net
|
17
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Servicing advances, net
|
—
|
|
|
80
|
|
|
—
|
|
|
150
|
|
||||
Property and equipment, net
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Other assets
|
7
|
|
|
—
|
|
|
11
|
|
|
1
|
|
||||
Total assets
|
$
|
327
|
|
|
$
|
94
|
|
|
$
|
443
|
|
|
$
|
170
|
|
Assets held as collateral
|
$
|
218
|
|
|
$
|
94
|
|
|
$
|
320
|
|
|
$
|
169
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
Debt
|
206
|
|
|
52
|
|
|
300
|
|
|
99
|
|
||||
Other liabilities
|
6
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Total liabilities
(1)
|
$
|
226
|
|
|
$
|
52
|
|
|
$
|
316
|
|
|
$
|
99
|
|
(1)
|
Excludes intercompany payables.
|
14. Segment Information
|
▪
|
Mortgage Production
— provides mortgage loan origination services and sells mortgage loans.
|
▪
|
Mortgage Servicing
— performs servicing activities for loans originated by the Company and mortgage servicing rights purchased from others, and acts as a subservicer for certain clients that own the underlying mortgage servicing rights.
|
|
Total Assets
|
||||||
|
September 30,
2017 |
|
December 31, 2016
|
||||
|
(In millions)
|
||||||
Mortgage Production segment
|
$
|
803
|
|
|
$
|
913
|
|
Mortgage Servicing segment
|
1,010
|
|
|
1,428
|
|
||
Other
|
488
|
|
|
834
|
|
||
Total
|
$
|
2,301
|
|
|
$
|
3,175
|
|
|
Net Revenues
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Mortgage Production segment
|
$
|
98
|
|
|
$
|
168
|
|
|
$
|
276
|
|
|
$
|
443
|
|
Mortgage Servicing segment
|
23
|
|
|
29
|
|
|
71
|
|
|
107
|
|
||||
Total
|
$
|
121
|
|
|
$
|
197
|
|
|
$
|
347
|
|
|
$
|
550
|
|
|
Segment (Loss) Profit
(1)
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Mortgage Production segment
|
$
|
(18
|
)
|
|
$
|
22
|
|
|
$
|
(84
|
)
|
|
$
|
9
|
|
Mortgage Servicing segment
|
(37
|
)
|
|
(52
|
)
|
|
(114
|
)
|
|
(106
|
)
|
||||
Other
|
(36
|
)
|
|
(5
|
)
|
|
(73
|
)
|
|
(10
|
)
|
||||
Total
|
$
|
(91
|
)
|
|
$
|
(35
|
)
|
|
$
|
(271
|
)
|
|
$
|
(107
|
)
|
(1)
|
The following is a reconciliation of Loss before income taxes to Segment loss:
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Loss before income taxes
|
$
|
(78
|
)
|
|
$
|
(29
|
)
|
|
$
|
(266
|
)
|
|
$
|
(98
|
)
|
Less: net income attributable to noncontrolling interest
|
13
|
|
|
6
|
|
|
5
|
|
|
9
|
|
||||
Segment loss
|
$
|
(91
|
)
|
|
$
|
(35
|
)
|
|
$
|
(271
|
)
|
|
$
|
(107
|
)
|
15. Subsequent Events
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
▪
|
Executive Summary
|
▪
|
Asset Sales and Exit Programs
|
▪
|
Results of Operations
|
▪
|
Risk Management
|
▪
|
Liquidity and Capital Resources
|
▪
|
Critical Accounting Policies and Estimates
|
▪
|
Recently Issued Accounting Pronouncements
|
EXECUTIVE SUMMARY
|
ASSET SALES AND EXIT PROGRAMS
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
MSR Fair Value
|
|
UPB
|
|
Servicing Advances
|
|
MSR Fair Value
|
|
UPB
|
|
Servicing Advances
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
MSR Commitments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
New Residential
|
$
|
38
|
|
|
$
|
6,430
|
|
|
$
|
145
|
|
|
$
|
579
|
|
|
$
|
69,937
|
|
|
$
|
286
|
|
Lakeview
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
13,369
|
|
|
14
|
|
||||||
Other counterparties
|
5
|
|
|
548
|
|
|
—
|
|
|
2
|
|
|
158
|
|
|
—
|
|
||||||
Total
|
$
|
43
|
|
|
$
|
6,978
|
|
|
$
|
145
|
|
|
$
|
678
|
|
|
$
|
83,464
|
|
|
$
|
300
|
|
•
|
Subservicing Agreement.
We entered into a subservicing agreement with New Residential in connection with our MSR Sale Agreement, which covers all units sold to New Residential for an initial period of three years, subject to certain early transfer and termination provisions. This subservicing relationship became effective upon the initial delivery of MSRs to New Residential on June 16, 2017.
|
•
|
Portfolio Defense Agreement.
In connection with the initial delivery of MSRs to New Residential on June 16, 2017, we entered into the MSR Portfolio Defense Agreement with New Residential, pursuant to which we will be entitled, subject to compliance with the terms of the agreement, to seek to refinance loans subserviced on behalf of New Residential as part of our Portfolio Retention services. Under this agreement, we have agreed to sell the MSR with respect to loans originated under this program to New Residential.
|
•
|
Secured Borrowing Accounting.
Our accounting evaluation of the New Residential MSR Sale agreement and related agreements concluded that New Residential has not acquired all ownership rewards since the terms of the subservicing contract limit New Residential's ability to terminate the contract within the first three years. Therefore, our transfer of MSRs to New Residential did not qualify for sale accounting under GAAP, and we will record the transactions as a secured borrowing. Upon the receipt of cash for MSRs transferred to New Residential, we recognized a
Mortgage servicing rights secured liability
on our balance sheet, and we continued to recognize the MSR asset. Future changes in the
Mortgage servicing rights secured liability
are expected to fully offset future changes in the related MSR asset, including changes in fair value. See further information about the presentation in the 'Selected Income Statement Data' tables within "Results of Operations
—
Mortgage Servicing Segment".
|
|
Exit Program Costs
|
|
Cash Outflows
|
||||||||||||||||
|
PLS Exit
|
|
Reorganization
|
|
Total
|
|
Payments To Date
(1)
|
|
Future Outflows
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Cash Exit Costs by Segment - Q3 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage Production segment
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
|
|
|
||||
Mortgage Servicing segment
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||||
Other
|
2
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|||||||
Recognized in Q3 2017
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
8
|
|
|
|
|
|
||||
Recognized in prior periods
|
46
|
|
|
23
|
|
|
69
|
|
|
|
|
|
|||||||
Estimate of remaining costs
|
30
|
|
|
6
|
|
|
36
|
|
|
|
|
|
|||||||
Cash exit program expenditures
|
$
|
79
|
|
|
$
|
34
|
|
|
$
|
113
|
|
|
$
|
(18
|
)
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-cash charges and impairments
|
11
|
|
|
4
|
|
|
|
|
|
|
|
||||||||
Exit costs attributed to Noncontrolling interest
|
—
|
|
|
(8
|
)
|
|
|
|
|
|
|
||||||||
Total
|
$
|
90
|
|
|
$
|
30
|
|
|
|
|
|
|
|
(1)
|
Cash outflows as presented above exclude the transfer of
$5 million
to Restricted cash related to a letter of credit posted in connection with the March 31, 2017 transaction with LenderLive.
|
RESULTS OF OPERATIONS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions, except per share data)
|
||||||||||||||
Net revenues
|
$
|
121
|
|
|
$
|
197
|
|
|
$
|
347
|
|
|
$
|
550
|
|
Total expenses
|
199
|
|
|
226
|
|
|
613
|
|
|
648
|
|
||||
Loss before income taxes
|
(78
|
)
|
|
(29
|
)
|
|
(266
|
)
|
|
(98
|
)
|
||||
Income tax benefit
|
(36
|
)
|
|
(8
|
)
|
|
(103
|
)
|
|
(38
|
)
|
||||
Net loss
|
(42
|
)
|
|
(21
|
)
|
|
(163
|
)
|
|
(60
|
)
|
||||
Less: net income attributable to noncontrolling interest
|
13
|
|
|
6
|
|
|
5
|
|
|
9
|
|
||||
Net loss attributable to PHH Corporation
|
$
|
(55
|
)
|
|
$
|
(27
|
)
|
|
$
|
(168
|
)
|
|
$
|
(69
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted loss per share attributable to PHH Corporation
|
$
|
(1.14
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(3.25
|
)
|
|
$
|
(1.28
|
)
|
•
|
$25 million
in operating losses related to the exit of our PLS channel;
|
•
|
$8 million
in Exit and disposal costs related to all of our exit and restructuring activities;
|
•
|
$16 million
in transaction and related expenses from the MSRs sold primarily to New Residential and Lakeview; and
|
•
|
$34 million
of Loss on early debt retirement to extinguish a majority of our unsecured debt.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Origination and other loan fees
|
$
|
33
|
|
|
$
|
75
|
|
|
$
|
114
|
|
|
$
|
215
|
|
Gain on loans held for sale, net
|
35
|
|
|
87
|
|
|
129
|
|
|
212
|
|
||||
Loan servicing income
|
42
|
|
|
89
|
|
|
162
|
|
|
271
|
|
||||
Change in fair value of MSRs asset and secured liability, net of related derivatives
|
(7
|
)
|
|
(50
|
)
|
|
(66
|
)
|
|
(133
|
)
|
||||
Net interest expense
|
(10
|
)
|
|
(7
|
)
|
|
(23
|
)
|
|
(23
|
)
|
||||
Other income
|
28
|
|
|
3
|
|
|
31
|
|
|
8
|
|
||||
Net revenues
|
$
|
121
|
|
|
$
|
197
|
|
|
$
|
347
|
|
|
$
|
550
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Salaries and related expenses
|
$
|
62
|
|
|
$
|
86
|
|
|
$
|
223
|
|
|
$
|
268
|
|
Commissions
|
13
|
|
|
19
|
|
|
38
|
|
|
49
|
|
||||
Loan origination expenses
|
9
|
|
|
18
|
|
|
27
|
|
|
52
|
|
||||
Foreclosure and repossession expenses
|
4
|
|
|
10
|
|
|
16
|
|
|
26
|
|
||||
Professional and third-party service fees
|
25
|
|
|
35
|
|
|
92
|
|
|
111
|
|
||||
Technology equipment and software expenses
|
9
|
|
|
10
|
|
|
27
|
|
|
30
|
|
||||
Occupancy and other office expenses
|
8
|
|
|
11
|
|
|
26
|
|
|
35
|
|
||||
Depreciation and amortization
|
4
|
|
|
4
|
|
|
11
|
|
|
13
|
|
||||
Exit and disposal costs
|
8
|
|
|
—
|
|
|
49
|
|
|
—
|
|
||||
Other operating expenses:
|
|
|
|
|
|
|
|
||||||||
Legal and regulatory reserves
|
2
|
|
|
11
|
|
|
24
|
|
|
16
|
|
||||
Loss on early debt retirement
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
||||
Other
|
21
|
|
|
22
|
|
|
46
|
|
|
48
|
|
||||
Total expenses
|
$
|
199
|
|
|
$
|
226
|
|
|
$
|
613
|
|
|
$
|
648
|
|
Mortgage Production Segment
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||
|
Exiting
|
|
Remaining
|
|
|
||||||||||
|
PLS
(1)
|
|
Real Estate
|
|
Portfolio Retention
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Origination and other loan fees
|
$
|
88
|
|
|
$
|
24
|
|
|
$
|
2
|
|
|
$
|
114
|
|
Gain on loans held for sale, net
|
(5
|
)
|
|
108
|
|
|
26
|
|
|
129
|
|
||||
Net interest income
|
1
|
|
|
1
|
|
|
2
|
|
|
4
|
|
||||
Other income
|
1
|
|
|
28
|
|
|
—
|
|
|
29
|
|
||||
Net revenues
|
$
|
85
|
|
|
$
|
161
|
|
|
$
|
30
|
|
|
$
|
276
|
|
|
|
|
|
|
|
|
|
||||||||
Total Closings
|
$
|
10,775
|
|
|
$
|
4,708
|
|
|
$
|
812
|
|
|
$
|
16,295
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||
|
Exiting
|
|
Remaining
|
|
|
||||||||||
|
PLS & Wholesale
(1)
|
|
Real Estate
|
|
Portfolio Retention
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Origination and other loan fees
|
$
|
186
|
|
|
$
|
27
|
|
|
$
|
2
|
|
|
$
|
215
|
|
Gain on loans held for sale, net
|
17
|
|
|
147
|
|
|
48
|
|
|
212
|
|
||||
Net interest income
|
4
|
|
|
3
|
|
|
1
|
|
|
8
|
|
||||
Other income
|
6
|
|
|
1
|
|
|
1
|
|
|
8
|
|
||||
Net revenues
|
$
|
213
|
|
|
$
|
178
|
|
|
$
|
52
|
|
|
$
|
443
|
|
|
|
|
|
|
|
|
|
||||||||
Total Closings
|
$
|
22,046
|
|
|
$
|
5,598
|
|
|
$
|
700
|
|
|
$
|
28,344
|
|
(1)
|
Portfolio Retention has historically been included in our disclosed PLS channel data. These amounts exclude Portfolio Retention, which is displayed separately. Wholesale was also included in the
nine
months ended
September 30, 2016
; however, we exited the platform during the second quarter of 2016.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
($ In millions)
|
||||||||||||||
Closings:
|
|
|
|
|
|
|
|
|
|
||||||
Saleable to investors
|
$
|
1,894
|
|
|
$
|
2,759
|
|
|
$
|
5,663
|
|
|
$
|
7,594
|
|
Fee-based
|
3,050
|
|
|
7,258
|
|
|
10,632
|
|
|
20,750
|
|
||||
Total
|
$
|
4,944
|
|
|
$
|
10,017
|
|
|
$
|
16,295
|
|
|
$
|
28,344
|
|
|
|
|
|
|
|
|
|
||||||||
Purchase
|
$
|
3,059
|
|
|
$
|
4,421
|
|
|
$
|
9,283
|
|
|
$
|
12,748
|
|
Refinance
|
1,885
|
|
|
5,596
|
|
|
7,012
|
|
|
15,596
|
|
||||
Total
|
$
|
4,944
|
|
|
$
|
10,017
|
|
|
$
|
16,295
|
|
|
$
|
28,344
|
|
|
|
|
|
|
|
|
|
||||||||
Retail - PLS
|
$
|
3,298
|
|
|
$
|
7,853
|
|
|
$
|
11,587
|
|
|
$
|
22,161
|
|
Retail - Real Estate
|
1,646
|
|
|
2,137
|
|
|
4,708
|
|
|
5,598
|
|
||||
Total retail
|
4,944
|
|
|
9,990
|
|
|
16,295
|
|
|
27,759
|
|
||||
Wholesale/correspondent
|
—
|
|
|
27
|
|
|
—
|
|
|
585
|
|
||||
Total
|
$
|
4,944
|
|
|
$
|
10,017
|
|
|
$
|
16,295
|
|
|
$
|
28,344
|
|
|
|
|
|
|
|
|
|
||||||||
Retail - PLS (units)
|
5,140
|
|
|
13,590
|
|
|
19,142
|
|
|
38,718
|
|
||||
Retail - Real Estate (units)
|
5,503
|
|
|
7,379
|
|
|
15,929
|
|
|
19,928
|
|
||||
Total retail (units)
|
10,643
|
|
|
20,969
|
|
|
35,071
|
|
|
58,646
|
|
||||
Wholesale/correspondent (units)
|
—
|
|
|
107
|
|
|
—
|
|
|
2,298
|
|
||||
Total (units)
|
10,643
|
|
|
21,076
|
|
|
35,071
|
|
|
60,944
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Applications:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Saleable to investors
|
$
|
2,436
|
|
|
$
|
4,136
|
|
|
$
|
7,953
|
|
|
$
|
11,580
|
|
Fee-based
|
3,241
|
|
|
8,217
|
|
|
11,623
|
|
|
25,720
|
|
||||
Total
|
$
|
5,677
|
|
|
$
|
12,353
|
|
|
$
|
19,576
|
|
|
$
|
37,300
|
|
|
|
|
|
|
|
|
|
||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
||||
IRLCs expected to close
|
$
|
784
|
|
|
$
|
1,199
|
|
|
$
|
2,073
|
|
|
$
|
3,685
|
|
Total loan margin on IRLCs (in basis points)
|
299
|
|
|
388
|
|
|
307
|
|
|
342
|
|
||||
Loans sold
|
$
|
1,940
|
|
|
$
|
2,954
|
|
|
$
|
5,782
|
|
|
$
|
7,804
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Origination and other loan fees
|
$
|
33
|
|
|
$
|
75
|
|
|
$
|
114
|
|
|
$
|
215
|
|
Gain on loans held for sale, net
|
35
|
|
|
87
|
|
|
129
|
|
|
212
|
|
||||
Net interest income
|
2
|
|
|
3
|
|
|
4
|
|
|
8
|
|
||||
Other income
|
28
|
|
|
3
|
|
|
29
|
|
|
8
|
|
||||
Net revenues
|
98
|
|
|
168
|
|
|
276
|
|
|
443
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses
|
35
|
|
|
53
|
|
|
131
|
|
|
167
|
|
||||
Commissions
|
13
|
|
|
19
|
|
|
38
|
|
|
49
|
|
||||
Loan origination expenses
|
9
|
|
|
18
|
|
|
27
|
|
|
52
|
|
||||
Professional and third-party service fees
|
8
|
|
|
6
|
|
|
20
|
|
|
17
|
|
||||
Technology equipment and software expenses
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Occupancy and other office expenses
|
5
|
|
|
6
|
|
|
16
|
|
|
20
|
|
||||
Depreciation and amortization
|
2
|
|
|
2
|
|
|
5
|
|
|
7
|
|
||||
Exit and disposal costs
|
6
|
|
|
—
|
|
|
29
|
|
|
—
|
|
||||
Other operating expenses
|
24
|
|
|
35
|
|
|
86
|
|
|
110
|
|
||||
Total expenses
|
103
|
|
|
140
|
|
|
355
|
|
|
425
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(Loss) income before income taxes
|
(5
|
)
|
|
28
|
|
|
(79
|
)
|
|
18
|
|
||||
Less: net income attributable to noncontrolling interest
|
13
|
|
|
6
|
|
|
5
|
|
|
9
|
|
||||
Segment (loss) profit
|
$
|
(18
|
)
|
|
$
|
22
|
|
|
$
|
(84
|
)
|
|
$
|
9
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Gain on loans held for sale, net:
|
|
|
|
|
|
|
|
|
|
||||||
Gain on loans
|
$
|
33
|
|
|
$
|
75
|
|
|
$
|
118
|
|
|
$
|
181
|
|
Change in fair value of Scratch and Dent and certain non-conforming mortgage loans
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|
(3
|
)
|
||||
Economic hedge results
|
8
|
|
|
12
|
|
|
17
|
|
|
34
|
|
||||
Total change in fair value of mortgage loans and related derivatives
|
2
|
|
|
12
|
|
|
11
|
|
|
31
|
|
||||
Total
|
$
|
35
|
|
|
$
|
87
|
|
|
$
|
129
|
|
|
$
|
212
|
|
|
|
|
|
|
|
|
|
||||||||
Net interest income:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
17
|
|
|
$
|
24
|
|
Secured interest expense
|
(4
|
)
|
|
(5
|
)
|
|
(13
|
)
|
|
(16
|
)
|
||||
Total
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, benefits and incentives
|
$
|
34
|
|
|
$
|
48
|
|
|
$
|
127
|
|
|
$
|
153
|
|
Contract labor and overtime
|
1
|
|
|
5
|
|
|
4
|
|
|
14
|
|
||||
Total
|
$
|
35
|
|
|
$
|
53
|
|
|
$
|
131
|
|
|
$
|
167
|
|
|
|
|
|
|
|
|
|
||||||||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate overhead allocation
|
$
|
21
|
|
|
$
|
28
|
|
|
$
|
72
|
|
|
$
|
92
|
|
Other expenses
|
3
|
|
|
7
|
|
|
14
|
|
|
18
|
|
||||
Total
|
$
|
24
|
|
|
$
|
35
|
|
|
$
|
86
|
|
|
$
|
110
|
|
Mortgage Servicing Segment
|
|
Three Months Ended September 30, 2017
|
||||||||||
|
Owned Servicing
|
|
Subservicing
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
Servicing fees
|
$
|
8
|
|
|
$
|
17
|
|
|
$
|
25
|
|
MSR prepayments and receipts of recurring cash flows
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
MSR market-related adjustments, net
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Other
|
(4
|
)
|
|
9
|
|
|
5
|
|
|||
Net revenues
|
$
|
(3
|
)
|
|
$
|
26
|
|
|
$
|
23
|
|
|
|
|
|
|
|
||||||
Average number of loans serviced (units)
|
59,341
|
|
|
650,275
|
|
|
709,616
|
|
|
Three Months Ended September 30, 2016
|
||||||||||
|
Owned Servicing
|
|
Subservicing
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
Servicing fees
|
$
|
67
|
|
|
$
|
17
|
|
|
$
|
84
|
|
MSR prepayments and receipts of recurring cash flows
|
(37
|
)
|
|
—
|
|
|
(37
|
)
|
|||
MSR market-related adjustments, net
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|||
Other
|
(8
|
)
|
|
3
|
|
|
(5
|
)
|
|||
Net revenues
|
$
|
9
|
|
|
$
|
20
|
|
|
$
|
29
|
|
|
|
|
|
|
|
||||||
Average number of loans serviced (units)
|
480,111
|
|
|
596,008
|
|
|
1,076,119
|
|
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
($ In millions)
|
||||||
Total Loan Servicing Portfolio:
|
|
|
|
||||
Conventional loans
|
$
|
140,515
|
|
|
$
|
200,592
|
|
Government loans
|
9,344
|
|
|
23,415
|
|
||
Home equity lines of credit
|
1,623
|
|
|
3,876
|
|
||
Total Unpaid Principal Balance
|
$
|
151,482
|
|
|
$
|
227,883
|
|
|
|
|
|
||||
Number of loans in owned portfolio (units)
|
45,677
|
|
|
588,700
|
|
||
Number of subserviced loans (units)
(1)
|
648,108
|
|
|
475,877
|
|
||
Total number of loans serviced (units)
|
693,785
|
|
|
1,064,577
|
|
||
|
|
|
|
||||
Weighted-average interest rate
|
3.9
|
%
|
|
3.8
|
%
|
||
|
|
|
|
||||
Portfolio delinquency
|
|
|
|
||||
% of UPB - 30 days or more past due
|
2.34
|
%
|
|
2.24
|
%
|
||
% of UPB - Foreclosure, REO and Bankruptcy
|
1.55
|
%
|
|
1.75
|
%
|
||
Units - 30 days or more past due
|
3.30
|
%
|
|
3.22
|
%
|
||
Units - Foreclosure, REO and Bankruptcy
|
2.08
|
%
|
|
2.19
|
%
|
||
|
|
|
|
||||
Total Capitalized Servicing Portfolio:
|
|
|
|
||||
Unpaid Principal Balance of capitalized MSRs owned
|
$
|
8,906
|
|
|
$
|
88,622
|
|
Unpaid Principal Balance of capitalized MSRs in secured borrowing arrangement
(2)
|
51,465
|
|
|
—
|
|
||
Total Unpaid Principal Balance of capitalized servicing portfolio
|
$
|
60,371
|
|
|
$
|
88,622
|
|
|
|
|
|
||||
Capitalized servicing rate
|
0.83
|
%
|
|
0.73
|
%
|
||
Capitalized servicing multiple
|
3.0
|
|
|
2.6
|
|
||
Weighted-average servicing fee (in basis points)
|
27
|
|
|
28
|
|
(1)
|
For September 30, 2017, includes
376,551
units of New Residential subserviced loans that are accounted for as a secured borrowing arrangement based on our evaluation of the New Residential MSR sale agreement. Refer to "Asset Sales and Exit Programs" for additional information.
|
(2)
|
Represents MSRs sold to New Residential during 2017 that are accounted for as a secured borrowing arrangement. Refer to "
—
Asset Sales and Exit Programs" for additional information.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Total Loan Servicing Portfolio:
|
|
|
|
|
|
|
|
||||||||
Average Portfolio UPB
|
$
|
156,887
|
|
|
$
|
229,969
|
|
|
$
|
162,735
|
|
|
$
|
230,479
|
|
|
|
|
|
|
|
|
|
||||||||
Owned Capitalized Servicing Portfolio:
(1)
|
|
|
|
|
|
|
|
||||||||
Average Portfolio UPB
|
$
|
21,842
|
|
|
$
|
90,655
|
|
|
$
|
53,964
|
|
|
$
|
94,213
|
|
Payoffs and principal curtailments
|
614
|
|
|
5,335
|
|
|
7,249
|
|
|
14,102
|
|
||||
Sales
|
4,570
|
|
|
246
|
|
|
17,086
|
|
|
742
|
|
(1)
|
For 2017, balances exclude MSRs sold to New Residential that are accounted for as a secured borrowing arrangement. Refer to "
—
Asset Sales and Exit Programs" for additional information.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Loan servicing income, net
|
$
|
35
|
|
|
$
|
39
|
|
|
$
|
96
|
|
|
$
|
138
|
|
Net interest expense
|
(12
|
)
|
|
(10
|
)
|
|
(27
|
)
|
|
(31
|
)
|
||||
Other income
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Net revenues
|
23
|
|
|
29
|
|
|
71
|
|
|
107
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Salaries and related expenses
|
14
|
|
|
17
|
|
|
46
|
|
|
54
|
|
||||
Foreclosure and repossession expenses
|
4
|
|
|
10
|
|
|
16
|
|
|
26
|
|
||||
Professional and third-party service fees
|
10
|
|
|
9
|
|
|
25
|
|
|
27
|
|
||||
Technology equipment and software expenses
|
4
|
|
|
4
|
|
|
11
|
|
|
12
|
|
||||
Occupancy and other office expenses
|
2
|
|
|
4
|
|
|
8
|
|
|
13
|
|
||||
Depreciation and amortization
|
1
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Exit and disposal costs
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Other operating expenses
|
25
|
|
|
37
|
|
|
75
|
|
|
79
|
|
||||
Total expenses
|
60
|
|
|
81
|
|
|
185
|
|
|
213
|
|
||||
Segment loss
|
$
|
(37
|
)
|
|
$
|
(52
|
)
|
|
$
|
(114
|
)
|
|
$
|
(106
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Loan servicing income, net:
|
|
|
|
|
|
|
|
||||||||
Loan servicing income:
|
|
|
|
|
|
|
|
|
|
||||||
Servicing fees from capitalized portfolio
|
$
|
8
|
|
|
$
|
67
|
|
|
$
|
110
|
|
|
$
|
204
|
|
Subservicing fees
|
17
|
|
|
17
|
|
|
38
|
|
|
53
|
|
||||
MSR yield on secured asset
(1)
|
14
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Late fees and other ancillary servicing revenue
|
6
|
|
|
9
|
|
|
21
|
|
|
27
|
|
||||
Loss on sale of MSRs
|
(3
|
)
|
|
—
|
|
|
(16
|
)
|
|
(2
|
)
|
||||
Curtailment interest paid to investors
|
—
|
|
|
(4
|
)
|
|
(6
|
)
|
|
(11
|
)
|
||||
Loan servicing income
|
$
|
42
|
|
|
$
|
89
|
|
|
$
|
162
|
|
|
$
|
271
|
|
Changes in fair value of owned mortgage servicing rights:
|
|
|
|
|
|
|
|
|
|||||||
Actual prepayments of the underlying mortgage loans
|
$
|
(3
|
)
|
|
$
|
(31
|
)
|
|
$
|
(40
|
)
|
|
$
|
(79
|
)
|
Actual receipts of recurring cash flows
|
(1
|
)
|
|
(6
|
)
|
|
(17
|
)
|
|
(19
|
)
|
||||
Market-related fair value adjustments
|
(3
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|
(174
|
)
|
||||
Changes in fair value of owned MSR asset
|
(7
|
)
|
|
(46
|
)
|
|
(66
|
)
|
|
(272
|
)
|
||||
Change in fair value of MSRs secured asset
(2)
|
(28
|
)
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
||||
Change in fair value of MSRs secured liability
(2)
|
28
|
|
|
—
|
|
|
27
|
|
|
—
|
|
||||
Net derivative (loss) gain related to MSRs
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
139
|
|
||||
Total
|
$
|
35
|
|
|
$
|
39
|
|
|
$
|
96
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
||||||||
Net interest expense:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
13
|
|
|
$
|
8
|
|
Secured interest expense
|
(2
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
MSRs secured interest expense
(1)
|
(14
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
||||
Unsecured interest expense
|
—
|
|
|
(10
|
)
|
|
(19
|
)
|
|
(31
|
)
|
||||
Total
|
$
|
(12
|
)
|
|
$
|
(10
|
)
|
|
$
|
(27
|
)
|
|
$
|
(31
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Corporate overhead allocation
|
$
|
8
|
|
|
$
|
13
|
|
|
$
|
27
|
|
|
$
|
40
|
|
Repurchase and foreclosure-related charges
|
5
|
|
|
7
|
|
|
7
|
|
|
10
|
|
||||
Legal and regulatory reserves
|
2
|
|
|
11
|
|
|
24
|
|
|
16
|
|
||||
Other expenses
|
10
|
|
|
6
|
|
|
17
|
|
|
13
|
|
||||
Total
|
$
|
25
|
|
|
$
|
37
|
|
|
$
|
75
|
|
|
$
|
79
|
|
(1)
|
Related to the secured borrowing treatment of the 2017 sales of MSRs to New Residential, income in MSR yield on secured asset fully offsets the expense in
MSRs secured interest expense
.
|
(2)
|
Related to the secured borrowing treatment of the 2017 sales of MSRs to New Residential, the decrease to Change in fair value for MSRs secured asset fully offsets the increase to
Change in fair value of MSRs secured liability
. For both the
three and nine months ended
September 30, 2017
, Changes in fair value of the secured asset and liability include offsetting
$15 million
in Actual prepayments of the underlying mortgage loans and
$6 million
in Actual receipts of recurring cash flows, with the remaining change consisting of Market-related fair value adjustments.
|
Other
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Salaries and related expenses
|
$
|
13
|
|
|
$
|
16
|
|
|
$
|
46
|
|
|
$
|
47
|
|
Professional and third-party service fees
|
7
|
|
|
20
|
|
|
47
|
|
|
67
|
|
||||
Technology equipment and software expenses
|
4
|
|
|
5
|
|
|
13
|
|
|
15
|
|
||||
Occupancy and other office expenses
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Depreciation and amortization
|
1
|
|
|
2
|
|
|
4
|
|
|
4
|
|
||||
Exit and disposal costs
|
2
|
|
|
—
|
|
|
18
|
|
|
—
|
|
||||
Other operating expenses:
|
|
|
|
|
|
|
|
||||||||
Loss on early debt retirement
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
||||
Other
|
3
|
|
|
2
|
|
|
8
|
|
|
7
|
|
||||
Total expenses before allocation
|
65
|
|
|
46
|
|
|
172
|
|
|
142
|
|
||||
Corporate overhead allocation:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage Production segment
|
(21
|
)
|
|
(28
|
)
|
|
(72
|
)
|
|
(92
|
)
|
||||
Mortgage Servicing segment
|
(8
|
)
|
|
(13
|
)
|
|
(27
|
)
|
|
(40
|
)
|
||||
Total expenses
|
36
|
|
|
5
|
|
|
73
|
|
|
10
|
|
||||
Net loss before income taxes
|
$
|
(36
|
)
|
|
$
|
(5
|
)
|
|
$
|
(73
|
)
|
|
$
|
(10
|
)
|
RISK MANAGEMENT
|
Interest Rate Risk
|
Consumer Credit Risk
|
Counterparty and Concentration Risk
|
•
|
29%
through the Real Estate channel, from our relationships with Realogy and its affiliates;
|
•
|
28%
through our PLS relationship with Morgan Stanley Private Bank, N.A. ("Morgan Stanley"); and
|
•
|
13%
through our PLS relationship with HSBC Bank USA ("HSBC").
|
LIQUIDITY AND CAPITAL RESOURCES
|
•
|
$700 million of cash inflows realized from our asset sales, which includes $686 million from our sales of MSRs plus sale or collection of related advances and $14 million of net inflows from our HL asset sales;
|
•
|
$222 million of cash outflows incurred related to our business exits, transactions and legacy legal matters, including $95 million related to our PLS operating losses, reengineering and exit programs, $47 million of costs for MSR transactions and strategic review professional fees, and we have paid $80 million in legal and regulatory settlements;
|
•
|
$301 million
returned to our shareholders through share repurchases (see detail below); and
|
•
|
$524 million
aggregate paid to complete a debt tender offer for
$496 million
principal of our term notes. After the tender, note principal of
$119 million
remains outstanding.
|
|
Total Assets
|
|
Collateral for Asset-backed Borrowing Arrangements
|
|
Sale
Commitments
|
|
Other
|
|
Unencumbered Assets
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
494
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
494
|
|
Restricted cash
|
52
|
|
|
20
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|||||
Mortgage loans held for sale
|
590
|
|
|
502
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|||||
Accounts receivable, net
|
94
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|||||
Servicing advances, net
|
413
|
|
|
80
|
|
|
65
|
|
|
228
|
|
|
40
|
|
|||||
Mortgage servicing rights
|
500
|
|
|
—
|
|
|
43
|
|
|
440
|
|
|
17
|
|
|||||
Property and equipment, net
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||
Deferred taxes, net
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|||||
Other assets
|
54
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
53
|
|
|||||
Total assets
|
$
|
2,301
|
|
|
$
|
602
|
|
|
$
|
108
|
|
|
$
|
781
|
|
|
$
|
810
|
|
•
|
Restricted cash represents letters of credit, funds received for pending mortgage closings, and other contractual arrangements.
|
•
|
Servicing advances represent the balance of Servicing advance liabilities for advances funded by our subservicing clients, as discussed below under "—Debt—Servicing Advance Funding Arrangements".
|
•
|
MSRs represent amounts under secured borrowing arrangements where we have recognized a liability for MSRs transferred to a third party that does not meet the criteria for sale accounting. See further discussion in
Note 1, 'Summary of Significant Accounting Policies' in the accompanying Notes to Condensed Consolidated Financial Statements
.
|
•
|
Deferred taxes represent the future tax asset generated upon reversal of the differences between the tax basis and book basis of certain of the Company's assets.
|
Cash Flows
|
|
Nine Months Ended
September 30, |
|
|
||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
|
(In millions)
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
$
|
(3
|
)
|
|
$
|
20
|
|
|
$
|
(23
|
)
|
Investing activities
|
140
|
|
|
117
|
|
|
23
|
|
|||
Financing activities
|
(549
|
)
|
|
(47
|
)
|
|
(502
|
)
|
|||
Net (decrease) increase in Cash and cash equivalents
|
$
|
(412
|
)
|
|
$
|
90
|
|
|
$
|
(502
|
)
|
Debt
|
|
Outstanding Balance
|
|
Collateral
(1)
|
||||
|
(In millions)
|
||||||
Warehouse facilities
|
$
|
483
|
|
|
$
|
508
|
|
Servicing advance facility
|
52
|
|
|
94
|
|
||
Unsecured debt, net
|
118
|
|
|
—
|
|
||
Total
|
$
|
653
|
|
|
$
|
602
|
|
(1)
|
Assets held as collateral are not available to pay our general obligations.
|
|
Total
Capacity
|
|
Outstanding Balance
|
|
Available
Capacity
(1)
|
|
Maturity
Date
|
||||||
|
(In millions)
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|||
Committed facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Wells Fargo Bank, N.A.
|
$
|
350
|
|
|
$
|
223
|
|
|
$
|
127
|
|
|
12/1/2017
|
Bank of America, N.A.
|
150
|
|
|
120
|
|
|
30
|
|
|
12/29/2017
|
|||
Barclays Bank PLC
|
100
|
|
|
62
|
|
|
38
|
|
|
1/31/2018
|
|||
Committed warehouse facilities
|
600
|
|
|
405
|
|
|
195
|
|
|
|
|||
Uncommitted facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Fannie Mae
|
200
|
|
|
78
|
|
|
122
|
|
|
n/a
|
|||
Barclays Bank PLC
|
100
|
|
|
—
|
|
|
100
|
|
|
n/a
|
|||
Total
|
$
|
900
|
|
|
$
|
483
|
|
|
$
|
417
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Off-Balance Sheet Gestation Facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Uncommitted facilities:
|
|
|
|
|
|
|
|
|
|
|
|||
JP Morgan Chase Bank, N.A.
|
$
|
150
|
|
|
$
|
—
|
|
|
$
|
150
|
|
|
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.
|
|
Total
Capacity
|
|
Outstanding Balance
|
|
Available
Capacity
(1)
|
|
Maturity
Date
|
||||||
|
(In millions)
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|||
Servicing Advance Receivables Trust
(2)
|
$
|
65
|
|
|
$
|
52
|
|
|
$
|
13
|
|
|
3/15/2018
|
Subservicing advance liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||
Client-funded amounts
|
n/a
|
|
|
228
|
|
|
n/a
|
|
|
n/a
|
|||
Total
|
|
|
|
$
|
280
|
|
|
|
|
|
|
(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)
|
On September 8, 2017, the aggregate maximum principal amount of the facility was reduced by
$35 million
to
$65 million
at our request.
|
|
Balance at Maturity
(1)
|
|
Outstanding Balance
|
|
Maturity
Date
|
|||||
|
(In millions)
|
|
|
|
||||||
7.375% Term notes due in 2019
|
$
|
97
|
|
|
$
|
97
|
|
|
9/1/2019
|
|
6.375% Term notes due in 2021
|
22
|
|
|
21
|
|
|
8/15/2021
|
|
||
Total
|
$
|
119
|
|
|
$
|
118
|
|
|
0
|
|
(1)
|
On June 19, 2017, we commenced tender offers to purchase for cash any and all of the Senior Notes due in 2019 and 2021. On July 3, 2017, we repaid
$178 million
of the 2019 Notes and
$318 million
of the 2021 Notes for an aggregate
$524 million
in cash, plus accrued interest. On July 17, 2017, upon expiration of the tender offer, the amount of notes repaid was not significant. We recognized a loss of
$34 million
in Other Operating Expenses in the
Condensed Consolidated Statements of Operations
related to this debt retirement during the three and nine months ended September 30, 2017.
|
|
Senior
Debt
|
|
Short-Term
Debt
|
Moody’s Investors Service
|
B1
|
|
NP
|
Standard & Poor's Rating Services
|
B-
|
|
N/A
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
|
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|
Item 3. 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
|
$
|
11
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
(9
|
)
|
|
$
|
(20
|
)
|
Interest rate lock commitments
(1)
|
9
|
|
|
7
|
|
|
4
|
|
|
(5
|
)
|
|
(10
|
)
|
|
(23
|
)
|
||||||
Forward delivery commitments
(1)
|
(22
|
)
|
|
(14
|
)
|
|
(8
|
)
|
|
9
|
|
|
18
|
|
|
40
|
|
||||||
Option contracts
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
4
|
|
||||||
Total Mortgage pipeline
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
MSRs and related secured liability
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage servicing rights owned
(2)
|
(16
|
)
|
|
(8
|
)
|
|
(4
|
)
|
|
3
|
|
|
6
|
|
|
11
|
|
||||||
Mortgage servicing rights secured asset
(3)
|
(132
|
)
|
|
(63
|
)
|
|
(30
|
)
|
|
27
|
|
|
52
|
|
|
93
|
|
||||||
MSRs secured liability
(3)
|
132
|
|
|
63
|
|
|
30
|
|
|
(27
|
)
|
|
(52
|
)
|
|
(93
|
)
|
||||||
Total MSRs and related secured liability
|
(16
|
)
|
|
(8
|
)
|
|
(4
|
)
|
|
3
|
|
|
6
|
|
|
11
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unsecured term debt
|
(3
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
3
|
|
||||||
Total, net
|
$
|
(21
|
)
|
|
$
|
(9
|
)
|
|
$
|
(5
|
)
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
15
|
|
(1)
|
Included in Other assets or Other liabilities in the
Condensed Consolidated Balance Sheets
.
|
(2)
|
During 2017, we ended our MSR-related derivative hedge coverage as a result of our sale agreement with New Residential that fixes the prices we expect to realize at future transfer dates. We do not expect changes in interest rates to substantially impact the fair value of owned MSRs since our determination of fair value at
September 30, 2017
considers the committed pricing of MSR sale agreements, which is for the majority of our remaining owned MSRs. For further discussion of those agreements and other requirements that must be met to complete such sales, see
Note 4, 'Servicing Activities' in the accompanying Notes to Condensed Consolidated Financial Statements
.
|
(3)
|
During 2017, we sold a substantial amount of MSRs to New Residential. These transfers were accounted for as a secured borrowing, and accordingly, the MSRs remained on the balance sheet with the recognition of an offsetting
MSRs secured liability
, which has a fair value of
$440 million
as of
September 30, 2017
. The interest rate sensitivity of this secured borrowing is reflected within Mortgage servicing rights secured asset and
MSRs secured liability
, and any changes in fair value are expected to fully offset.
|
Item 4. Controls and Procedures
|
DISCLOSURE CONTROLS AND PROCEDURES
|
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
|
Item 1. Legal Proceedings
|
Item 1A. Risk Factors
|
Risks Related to our Strategies
|
Risks Related to our Common Stock
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total number of shares purchased
|
|
Average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs
|
|
Approximate dollar value of shares that may yet be purchased under the plan or program
|
||||||
July 1, 2017 to July 31, 2017
(1)
|
|
574,129
|
|
|
$
|
13.98
|
|
|
574,129
|
|
|
$
|
268,015,384
|
|
August 1, 2017 to August 31, 2017
(1)
|
|
115,373
|
|
|
13.86
|
|
|
115,373
|
|
|
266,416,268
|
|
||
September 1, 2017 to September 30, 2017
(2)
|
|
18,762,962
|
|
|
14.25
|
|
|
18,762,962
|
|
|
—
|
|
||
Total
|
|
19,452,464
|
|
|
$
|
14.24
|
|
|
19,452,464
|
|
|
$
|
—
|
|
(1)
|
On May 3, 2017, our Board of Directors authorized up to
$100 million
in open market purchases. On July 27, 2017, our Board of Directors authorized an increase in share repurchases of our common stock from
$100 million
to up to
$300 million
in the aggregate. We repurchased
689,502
shares through open market repurchases during July and early August 2017.
|
(2)
|
On August 11, 2017, we announced the commencement of a modified "Dutch auction” self-tender offer to purchase up to
$266 million
of our common stock. We elected to exercise our right to purchase up to an additional 2% of its outstanding shares without amending or extending the tender offer. We repurchased
18,762,962
shares through this tender offer on September 15, 2017.
|
Item 3. Defaults Upon Senior Securities
|
Item 4. Mine Safety Disclosures
|
Item 5. Other Information
|
Item 6. Exhibits
|
|
PHH CORPORATION
|
|
|
|
|
|
By:
|
/s/ Robert B. Crowl
|
|
|
Robert B. Crowl
|
|
|
President and Chief Executive Officer
|
|
|
|
|
By:
|
/s/ Michael R. Bogansky
|
|
|
Michael R. Bogansky
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
Exhibit No.
|
|
Description
|
|
Incorporation by Reference
|
|
|
|
|
|
|
|
Filed herewith.
|
||
|
|
|
|
|
|
|
Filed herewith.
|
||
|
|
|
|
|
|
|
Filed herewith.
|
||
|
|
|
|
|
|
|
Filed herewith.
|
||
|
|
|
|
|
|
|
Furnished herewith.
|
||
|
|
|
|
|
|
|
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.
|
†
|
Management or compensatory plan or arrangement required to be filed pursuant to Item 601(b)(10) of Regulation S-K.
|
**
|
Confidential treatment has been granted for certain portions of this Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, which portions are omitted and filed separately with the SEC.
|
|
By:
|
/s/ Robert B. Crowl
|
|
|
Robert B. Crowl
|
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Michael R. Bogansky
|
|
|
Michael R. Bogansky
|
|
|
Senior Vice President and Chief Financial Officer
|
|
By:
|
/s/ Robert B. Crowl
|
|
|
Robert B. Crowl
|
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Michael R. Bogansky
|
|
|
Michael R. Bogansky
|
|
|
Senior Vice President and Chief Financial Officer
|