PHH CORP (Form: 8-K, Received: 07/05/2017 07:30:41)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 30, 2017

PHH CORPORATION

(Exact name of registrant as specified in its charter)

MARYLAND	1-7797	52-0551284
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

3000 Leadenhall Road

Mt. Laurel, New Jersey 08054

(Address of principal executive offices, including zip code)

(856) 917-1744

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 1.01. Entry into a Material Definitive Agreement.

See the disclosure in Item 8.01 regarding the Fourth Supplemental Indenture (as defined below), and the Fifth Supplemental Indenture (as defined below), which disclosure is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On July 3, 2017, PHH Corporation (the “Company”) closed the sale, effective July 1, 2017, of substantially all of the Fannie Mae portion (the “Fannie Mae MSR Portfolio”) of PHH Mortgage’s portfolio of mortgage servicing rights (“MSRs”) as of October 31, 2016 (excluding the Ginnie Mae MSRs that were part of the sale transaction announced in November 2016, the “MSR Portfolio”), to New Residential Mortgage LLC (“New Residential”) under the Agreement for the Purchase and Sale of Servicing Rights, dated December 28, 2016, by and between New Residential and PHH Mortgage Corporation (“PHH Mortgage”) and, for the limited purposes set forth therein, the Company (the “Sale Agreement”), together with the servicing advances related to the Fannie Mae MSR Portfolio. The Company sold the Fannie Mae MSR Portfolio, together with all servicing advances related to the Fannie Mae MSR Portfolio, for total proceeds of approximately $333.1 million, of which approximately $309.6 million was attributable to the purchase price for the Fannie Mae MSR Portfolio and approximately $23.5 million was attributable to the related servicing advances. The purchase price paid is net of an approximately $17.2 million holdback to address potential indemnification claims by New Residential and an approximately $17.2 million holdback to address any mortgage loan document deficiencies, in each case subject to release in accordance with the Sale Agreement.

PHH Mortgage will subservice the approximately 302,000 mortgage loans included in the Fannie Mae MSR Portfolio on behalf of New Residential pursuant to the Subservicing Agreement, dated December 28, 2016 and amended as of June 16, 2017, by and between PHH Mortgage and New Residential, and such mortgage loans will also be subject to the MSR Portfolio Defense Agreement dated as of June 16, 2017 by and between PHH Mortgage and New Residential.

The sale of the Fannie Mae MSR Portfolio, together with the sale of the Freddie Mac portion of the MSR Portfolio previously disclosed in the Company’s Current Report on Form 8-K filed with the United States Securities and Exchange Commission on June 19, 2017, represent an aggregate MSR fair value of $456 million and servicing advances of $32 million, in each case as of March 31, 2017. Following such sales, there remains $98 million in MSR fair value and $249 million in servicing advances, in each case as of March 31, 2017, committed for sale pursuant to the Sale Agreement. There can be no assurance that the sales of the remaining balance of the MSR Portfolio contemplated by the Sale Agreement will close as contemplated, if at all.

The Company and PHH Mortgage are parties to the Sale Agreement with New Residential, in addition to the above-referenced Subservicing Agreement and MSR Portfolio Defense Agreement. There are no other pre-existing relationships between New Residential and the Company.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Departure of Kathryn M. Ruggieri; Appointment of Kathleen A. Williamson

As previously disclosed in the Company’s Current Report on Form 8-K filed with the United States Securities and Exchange Commission on March 30, 2017, Kathryn M. Ruggieri stepped down from her position as the Company’s Chief Human Resources Officer effective June 30, 2017. Prior to her termination of employment, Ms. Ruggieri entered into a separation letter that describes the benefits to which she will be entitled in connection with her departure, which include, subject to her execution of a general release agreement, termination without cause benefits under the Company’s Amended and Restated Tier I Severance Plan (in its current form, as described in the Form 8-K filed by the Company on May 25, 2016), and full vesting of her outstanding equity awards, subject to all applicable performance and settlement provisions. Ms. Ruggieri is also subject to a twelve (12) month restrictive covenant agreement, which contains non-compete and non-solicit provisions.

Effective July 1, 2017, Kathleen A. Williamson, age 56, formerly Senior Vice President, Human Resources and Managing Business Partner of PHH Mortgage, was appointed Senior Vice President and Chief Human Resources Officer of the Company. Prior to joining PHH Mortgage in 2013, Ms. Williamson served as Principal at Williamson Performance Partners, LLC, a human resources consulting firm she founded. From 2002 to 2012, Ms. Williamson held roles of increasing responsibility at Campbell Soup Company, including Director, Human Resources Business Partner and Director, Organizational Change Management.

Ms. Williamson is eligible to participate in the PHH Corporation 2014 Equity and Incentive Plan, pursuant to which Ms. Williamson has been granted, and may in the future be granted, certain long-term incentive compensation awards, as well as the PHH Corporation Management Incentive Plan, pursuant to which Ms. Williamson has been granted, and may in the future be granted, certain annual cash incentive awards. Ms. Williamson is also eligible to participate in the Company’s benefits plans as in effect from time to time and to receive perquisites similar to those provided to the Company’s other senior officers as approved by the Human Capital and Compensation Committee from time to time.

Item 8.01 Other Events.

On July 3, 2017, the Company issued a press release announcing that it had received the requisite consents in its cash tender offers (the “Tender Offers”) and consent solicitations (the “Consent Solicitations”) made pursuant to the offer to purchase and consent solicitation statement dated June 19, 2017 (the “Offer to Purchase and Consent Solicitation Statement”) to execute (i) the Fourth Supplemental Indenture, dated as of July 3, 2017 (the “Fourth Supplemental Indenture”), among the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), to the indenture governing the Company’s 7.375% Senior Notes due 2019 (CUSIP No. 693320AR4) (the “2019 Notes”), and (ii) the Fifth Supplemental Indenture, dated as of July 3, 2017 (the “Fifth Supplemental Indenture” and, together with the Fourth Supplemental Indenture, the “Supplemental Indentures”), among the Company and the Trustee, to the indenture governing the Company’s 6.375% Senior Notes due 2021 (CUSIP No. 693320AS2) (the “2021 Notes” and, together with the 2019 Notes, the “Notes”).

The Early Tender Deadline for the Tender Offers and Consents Solicitations was 5:00 p.m., New York City time, on June 30, 2017 (the “Early Tender Deadline”). As of the Early Tender Deadline, (i) $ 177,454,000 aggregate principal amount of 2019 Notes had been validly tendered and not withdrawn, which represented approximately 64.53% of the outstanding aggregate principal amount of the 2019 Notes, and (ii) $318,407,000 aggregate principal amount of 2021 Notes had been validly tendered and not withdrawn, which represented approximately 93.65% of the outstanding aggregate principal amount of the 2021 Notes. On July 3, 2017, the Company accepted for purchase and payment all of the Notes that were validly tendered and not withdrawn on or prior to the Early Tender Deadline.

The Supplemental Indentures were executed on July 3, 2017, and became operative upon payment by the Company with respect to the Notes on such date. The Supplemental Indentures eliminate or modify substantially all of the restrictive covenants as well as certain events of default and other provisions contained in each of the indentures governing the Notes, give effect to the consent to the Sales (as defined in the Offer to Purchase and Consent Solicitation Statement) and waive any potential default that may occur resulting from the Sales. A copy of the Fourth Supplemental Indenture is attached hereto as Exhibit 4.1 and is incorporated herein by reference. A copy of the Fifth Supplemental Indenture is attached hereto as Exhibit 4.2 and is incorporated herein by reference.

A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference .

The Company has certain relationships and engages in various transactions with the Trustee and its affiliates (collectively, “BNY Mellon”), including financial services, commercial banking and other transactions. In addition to functioning as the indenture trustee with respect to the Notes, BNY Mellon has functioned, and continues to function, as the custodian for the Company’s mortgage loan files. These transactions were entered into in the ordinary course of business upon terms substantially the same as those prevailing at the time for comparable transactions. BNY Mellon has received, or may in the future receive, customary fees for these transactions.

Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are the dealer managers in connection with the Tender Offers and the Consent Solicitations. The dealer managers have engaged in, and may in the future engage in, investment banking, commercial banking and other commercial dealings in the ordinary course of business with the Company or its affiliates. The dealer managers have received, or may in the future receive, customary fees and commissions for these transactions.

Item 9.01 Financial Statements and Exhibits.

(b) Pro forma financial information .

Unaudited pro forma financial information of the Company giving effect to the disposition of the Fannie Mae MSR Portfolio is included in Exhibit 99.2 filed herewith and incorporated by reference into this Item 9.01.

(d) Exhibits .

Exhibit No.		Description
4.1		Fourth Supplemental Indenture, dated as of July 3, 2017, among PHH Corporation, as issuer and The Bank of New York Mellon Trust Company, N.A., as trustee.

4.2		Fifth Supplemental Indenture, dated as of July 3, 2017, among PHH Corporation, as issuer and The Bank of New York Mellon Trust Company, N.A., as trustee.

99.1		PHH Corporation press release dated July 3, 2017.

99.2		Unaudited pro forma financial information of PHH Corporation.

Forward-Looking Statements

Certain statements in this Current Report on Form 8-K are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward looking-statements are not based on historical facts but instead represent only our current beliefs regarding future events. All forward-looking statements are, by their nature, subject to risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in such forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Such statements may be identified by words such as “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.”

You should understand that forward-looking statements are not guarantees of performance or results and are preliminary in nature. You should consider the areas of risk described under the heading “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the U.S. Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in connection with any forward-looking statements that may be made by us or our businesses generally. Such periodic reports are available in the “Investors” section of our website at http://www.phh.com and are also available at http://www.sec.gov. Except for our ongoing obligations to disclose material information under the federal securities laws, applicable stock exchange listing standards and unless otherwise required by law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements or to report the occurrence or non-occurrence of anticipated or unanticipated events.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PHH CORPORATION

By:	/s/ William Brown
	Name:	William Brown
	Title:	Senior Vice President, General Counsel and Corporate Secretary

Dated: July 5, 2017

EXHIBIT INDEX

Exhibit No.		Description

4.1		Fourth Supplemental Indenture, dated as of July 3, 2017, among PHH Corporation, as issuer and The Bank of New York Mellon Trust Company, N.A., as trustee.

4.2		Fifth Supplemental Indenture, dated as of July 3, 2017, among PHH Corporation, as issuer and The Bank of New York Mellon Trust Company, N.A., as trustee.

99.1		PHH Corporation press release dated July 3, 2017.

99.2		Unaudited pro forma financial information of PHH Corporation.

Exhibit 4.1

PHH CORPORATION,

as Issuer

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

FOURTH SUPPLEMENTAL INDENTURE

Dated as of July 3, 2017

INDENTURE

Dated as of January 17, 2012

7.375% Senior Notes due 2019

TABLE OF CONTENTS

		Page

ARTICLE 1
CAPITALIZED TERMS

Section 1.01	Definitions	3

ARTICLE II
AMENDMENTS

Section 2.01	Amendments to the Indenture	3

ARTICLE III
CONSENT AND WAIVER

Section 3.01	Consent	4
Section 3.02	Waiver of Defaults	4

ARTICLE IV
MISCELLANEOUS

Section 4.01	Ratification of Indenture; Fourth Supplemental Indenture Part of Indenture	4
Section 4.02	Governing Law	5
Section 4.03	Certain Trustee Matters	5
Section 4.04	Successors	5
Section 4.05	Severability	5
Section 4.06	Counterparts	6
Section 4.07	Effect of Headings	6
Section 4.08	Entire Agreement	6
Section 4.09	No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders	6
Section 4.10	No Adverse Interpretation Of Other Agreements	6

THIS FOURTH SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), is dated as of July 3, 2017, between PHH CORPORATION , a corporation duly organized and existing under the laws of the State of Maryland (the “ Company ”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. , as trustee (the “ Trustee ”).

RECITALS OF THE COMPANY

WHEREAS, the Company and the Trustee have previously entered into that certain Indenture, dated as of January 17, 2012 (the “ Base Indenture ”), by and between the Company and the Trustee, that provides for the issuance from time to time of the Company’s debt securities; and

WHEREAS, pursuant to Section 201 of the Base Indenture, the Company and the Trustee established the terms of that certain series of senior unsecured debt securities entitled the “7.375% Senior Notes due 2019” (the “ Notes ”) pursuant to the Second Supplemental Indenture to the Base Indenture (the “ Second Supplemental Indenture ” and the Base Indenture, as supplemented by the Second Supplemental Indenture with respect to the Notes, the “ Indenture ”), dated as of August 23, 2012, between the Company and the Trustee; and

WHEREAS, pursuant to the Offer to Purchase and Consent Solicitation Statement of the Company, dated as of June 19, 2017, and any amendments, modifications or supplements thereto (the “ Offer to Purchase and Consent Solicitation Statement ”), the Company has (a) offered to purchase for cash any and all outstanding Notes (the “ Tender Offer ”) and (b) requested that holders of the Notes deliver their consents (the “ Consent Solicitation ”) to (i) eliminate or modify substantially all of the restrictive covenants as well as certain events of default and other provisions contained in the Indenture, (ii) consent to any and all of the transactions relating to or contemplated by the Sales (as defined below), and (iii) waive any potential Default or Event of Default that may have occurred, or that may arise under the Indenture, directly or indirectly, resulting from the Sales, including if the Sales constitute all or substantially all of the Company’s assets; and

WHEREAS, Section 9.02 of the Indenture provides that the Company and the Trustee may amend certain provisions of the Indenture or the Notes with the consent of the holders of a majority in principal amount of the Notes then outstanding; and

WHEREAS, pursuant to the Consent Solicitation, holders of at least a majority in principal amount of the Notes have duly consented to the proposed amendments, waivers and consents set forth in this Fourth Supplemental Indenture in accordance with Section 9.02 of the Indenture; and

WHEREAS, all acts and requirements necessary to make this Fourth Supplemental Indenture a legal, valid and binding obligation of the Company have been done; and

WHEREAS, the board of directors of the Company has authorized and approved the execution and delivery of this Fourth Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, and for the equal and proportionate benefit of the holders of the Notes, the Company and the Trustee hereby agree as follows:

ARTICLE 1
CAPITALIZED TERMS

Section 1.01 Definitions . Section 1.02 of the Indenture is hereby amended by adding the following definition. Except as otherwise expressly provided herein, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

“ Sales ” means the following sales of certain of the Company’s assets:

· the sale (the “MSR Sale”) of the Company’s portfolio of MSRs as of October 31, 2016 (excluding the Company’s Ginnie Mae MSRs that were part of a sale transaction with Lakeview Loan Servicing, LLC announced in November 2016 (the “MSR Portfolio”)), together with all servicing advances related to the MSR Portfolio, to New Residential Mortgage LLC; and

· the sale (the “Home Loans Sale”) of certain assets and liabilities of PHH Home Loans, LLC to Guaranteed Rate Affinity, LLC.

The terms of the MSR Sale are set forth in the agreement for the purchase and sale of servicing rights, dated as of December 28, 2016, and the terms of the Home Loans Sale are set forth in the asset purchase agreement dated as of February 15, 2017, and the JV interests purchase agreement dated as of February 15, 2017.

ARTICLE II
AMENDMENTS

Section 2.01 Amendments to the Indenture .

(i) The Indenture is hereby amended to delete Section 3.02 (Repurchase of Notes upon a Change of Control), Section 4.02 (Existence), Section 4.03 (Payment of Taxes and other Claims), Section 4.04 (Maintenance of Properties and Insurance), Section 4.05 (Limitation on Subsidiary Debt), Section 4.06 (Limitation on Restricted Payments), Section 4.07 (Limitation on Liens), Section 4.08 (Financial Reports), Section 4.09 (Debt/Tangible Equity Ratio) and clauses (iii)(2), (3) and (4) of Section 5.02(a) (Consolidation, Merger or Sale of Assets) in their entirety and all references thereto contained in the Indenture in their entirety;

(ii) The failure to comply with the terms of any of the Sections of the Indenture set forth in clause (i) above shall no longer constitute a Default

or an Event of Default under the Indenture with respect to the Notes and shall no longer have any other consequence under the Indenture with respect to the Notes;

(iii) The Indenture is hereby amended to delete clauses (iii) and (iv) of Section 6.02(a) (Events of Default) in their entirety and, solely with respect to the Material Subsidiaries, clauses (v) and (vi) of Section 6.02(a) (Events of Default) in their entirety and all references thereto contained in Section 6.02(a) and elsewhere in the Indenture in their entirety, and the occurrence of the events described in clauses (iii) and (iv) of Section 6.02(a) and, solely with respect to the Material Subsidiaries, clauses (v) and (vi) of Section 6.02(a) shall no longer constitute Events of Default with respect to the Notes and shall no longer have any other consequences under the Indenture with respect to the Notes;

(iv) All definitions set forth in Section 101 of the Base Indenture and Section 1.02 of the Second Supplemental Indenture that relate to defined terms used solely in the Sections deleted pursuant to the terms of this Fourth Supplemental Indenture are no longer applicable to the Notes; and

(v) All references to Sections of the Indenture amended by this Fourth Supplemental Indenture shall be to such Sections as amended by this Fourth Supplemental Indenture.

ARTICLE III
CONSENT AND WAIVER

Section 3.01 Consent . Any and all of the transactions relating to or contemplated by the Sales are hereby irrevocably consented to in all respects.

Section 3.02 Waiver of Defaults . Any and all Defaults, Events of Default or other defaults that may have occurred, or that may arise under the Indenture, directly or indirectly, resulting from the Sales, including if the Sales constitute all or substantially all of the Company’s assets, are hereby irrevocably waived in all respects.

ARTICLE IV
MISCELLANEOUS

Section 4.01 Ratification of Indenture; Fourth Supplemental Indenture Part of Indenture .

(i) This Fourth Supplemental Indenture shall be effective and binding immediately upon its execution by the Company and the Trustee, and thereupon this Fourth Supplemental Indenture shall form a part of the Indenture for all purposes. In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this Fourth Supplemental Indenture, then the terms and conditions of this Fourth Supplemental Indenture shall prevail.

(ii) Notwithstanding an earlier execution date, the provisions of this Fourth Supplemental Indenture (including the amendments, waivers and consents), shall not become operative until the time of payment or deposit (the “ operative date ”) with DTC by the Company of an amount of money sufficient to pay for all Notes validly tendered and accepted pursuant to the Tender Offer and Consent Solicitation and to pay all early tender premiums required under the Tender Offer and Consent Solicitation, following the receipt of the Requisite Consents (as defined in the Offer to Purchase and Consent Solicitation Statement).

(iii) The Notes include certain of the foregoing provisions from the Indenture. Upon the operative date of this Fourth Supplemental Indenture, every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound hereby, and such provisions from the Notes shall be deemed deleted or amended as applicable.

(iv) If the Tender Offer and Consent Solicitation is terminated or withdrawn, or the Notes are not accepted for payment for any reason, this Fourth Supplemental Indenture will not become operative. In that case, the amendments to the Indenture effected by the Fourth Supplemental Indenture will be deemed to be revoked retroactive to the date of the Fourth Supplemental Indenture, and the Indenture will remain in its current form.

(v) Except as modified and amended by this Fourth Supplemental Indenture, all provisions of the Indenture shall remain in full force and effect.

Section 4.02 Governing Law . This Fourth Supplemental Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 4.03 Certain Trustee Matters . The Recitals of the Company contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Fourth Supplemental Indenture or the Notes or the proper authorization or the due execution hereof or thereof by the Company.

Section 4.04 Successors . All the covenants, stipulations, promises and agreements in this Fourth Supplemental Indenture and the Notes shall bind the Company’s successors and assigns whether so expressed or not.

Section 4.05 Severability . To the extent permitted by applicable law, in case any one or more of the provisions contained in this Fourth Supplemental Indenture or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Fourth Supplemental Indenture or of the Notes.

Section 4.06 Counterparts . This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 4.07 Effect of Headings . The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

Section 4.08 Entire Agreement . This Fourth Supplemental Indenture, together with the Indenture as amended hereby and the Notes, contains the entire agreement of the parties with respect to the Notes, and supersedes all other representations, warranties, agreements and understandings between the parties hereto and thereto, oral or otherwise, with respect to the matters contained herein and therein.

Section 4.09 No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders . No director, officer, employee, incorporator, member or stockholder of the Company or any Subsidiary Guarantor, as such, will have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, any Note Guarantee or the Indenture or for any claim based on, in respect of, or by reason of, such obligations. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 4.10 No Adverse Interpretation Of Other Agreements . The Indenture may not be used to interpret another indenture or loan or debt agreement of the Company or any Subsidiary of the Company and no such indenture or loan or debt agreement may be used to interpret the Indenture.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed as of the day and year first above written.

	PHH CORPORATION


	By:	/s/Hugo Arias
		Hugo Arias
		Sr. Vice President & Treasurer


	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.


	By:	/s/Karen Yu

[Signature Page of Fourth Supplemental Indenture]

Exhibit 4.2

PHH CORPORATION,

as Issuer

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

FIFTH SUPPLEMENTAL INDENTURE

Dated as of July 3, 2017

INDENTURE

Dated as of January 17, 2012

6.375% Senior Notes due 2021

TABLE OF CONTENTS

ARTICLE 1
CAPITALIZED TERMS

		Page

Section 1.01	Definitions	3

ARTICLE II
AMENDMENTS

Section 2.01	Amendments to the Indenture	3

ARTICLE III
CONSENT AND WAIVER

Section 3.01	Consent	4
Section 3.02	Waiver of Defaults	4

ARTICLE IV
MISCELLANEOUS

Section 4.01	Ratification of Indenture; Fifth Supplemental Indenture Part of Indenture	4
Section 4.02	Governing Law	5
Section 4.03	Certain Trustee Matters	5
Section 4.04	Successors	5
Section 4.05	Severability	5
Section 4.06	Counterparts	5
Section 4.07	Effect of Headings	6
Section 4.08	Entire Agreement	6
Section 4.09	No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders	6
Section 4.10	No Adverse Interpretation Of Other Agreements	6

THIS FIFTH SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), is dated as of July 3, 2017, between PHH CORPORATION , a corporation duly organized and existing under the laws of the State of Maryland (the “ Company ”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. , as trustee (the “ Trustee ”).

RECITALS OF THE COMPANY

WHEREAS, pursuant to Section 201 of the Base Indenture, the Company and the Trustee established the terms of that certain series of senior unsecured debt securities entitled the “6.375% Senior Notes due 2021” (the “ Notes ”) pursuant to the Third Supplemental Indenture to the Base Indenture (the “ Third Supplemental Indenture ” and the Base Indenture, as supplemented by the Third Supplemental Indenture with respect to the Notes, the “ Indenture ”), dated as of August 20, 2013, between the Company and the Trustee; and

WHEREAS, pursuant to the Consent Solicitation, holders of at least a majority in principal amount of the Notes have duly consented to the proposed amendments, waivers and consents set forth in this Fifth Supplemental Indenture in accordance with Section 9.02 of the Indenture; and

WHEREAS, all acts and requirements necessary to make this Fifth Supplemental Indenture a legal, valid and binding obligation of the Company have been done; and

WHEREAS, the board of directors of the Company has authorized and approved the execution and delivery of this Fifth Supplemental Indenture.

ARTICLE 1
CAPITALIZED TERMS

Section 4.11 Definitions . Section 1.02 of the Indenture is hereby amended by adding the following definition. Except as otherwise expressly provided herein, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

“ Sales ” means the following sales of certain of the Company’s assets:

· the sale (the “Home Loans Sale”) of certain assets and liabilities of PHH Home Loans, LLC to Guaranteed Rate Affinity, LLC.

ARTICLE V
AMENDMENTS

Section 5.01 Amendments to the Indenture .

(ii) The failure to comply with the terms of any of the Sections of the Indenture set forth in clause (i) above shall no longer constitute a Default or an Event of Default under the Indenture with respect to the Notes and shall no longer have any other consequence under the Indenture with respect to the Notes;

(iv) All definitions set forth in Section 101 of the Base Indenture and Section 1.02 of the Third Supplemental Indenture that relate to defined terms used solely in the Sections deleted pursuant to the terms of this Fifth Supplemental Indenture are no longer applicable to the Notes; and

(v) All references to Sections of the Indenture amended by this Fifth Supplemental Indenture shall be to such Sections as amended by this Fifth Supplemental Indenture.

ARTICLE VI
CONSENT AND WAIVER

Section 6.01 Consent . Any and all of the transactions relating to or contemplated by the Sales are hereby irrevocably consented to in all respects.

Section 6.02 Waiver of Defaults . Any and all Defaults, Events of Default or other defaults that may have occurred, or that may arise under the Indenture, directly or indirectly, resulting from the Sales, including if the Sales constitute all or substantially all of the Company’s assets, are hereby irrevocably waived in all respects.

ARTICLE VII
MISCELLANEOUS

Section 7.01 Ratification of Indenture; Fifth Supplemental Indenture Part of Indenture .

(i) This Fifth Supplemental Indenture shall be effective and binding immediately upon its execution by the Company and the Trustee, and thereupon this Fifth Supplemental Indenture shall form a part of the Indenture for all purposes. In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this Fifth Supplemental Indenture, then the terms and conditions of this Fifth Supplemental Indenture shall prevail.

(ii) Notwithstanding an earlier execution date, the provisions of this Fifth Supplemental Indenture (including the amendments, waivers and consents), shall not become operative until the time of payment or deposit (the “ operative date ”) with DTC by the Company of an amount of money sufficient to pay for all Notes validly tendered and accepted pursuant to the Tender Offer and Consent Solicitation and to pay all early tender premiums required under the Tender Offer and Consent Solicitation, following the receipt of the Requisite Consents (as defined in the Offer to Purchase and Consent Solicitation Statement).

(iii) The Notes include certain of the foregoing provisions from the Indenture. Upon the operative date of this Fifth Supplemental Indenture, every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound hereby, and such provisions from the Notes shall be deemed deleted or amended as applicable.

(iv) If the Tender Offer and Consent Solicitation is terminated or withdrawn, or the Notes are not accepted for payment for any reason, this Fifth Supplemental Indenture will not become operative. In that case, the amendments to the Indenture effected by the Fifth Supplemental Indenture will be deemed to be revoked retroactive to the date of the Fifth Supplemental Indenture, and the Indenture will remain in its current form.

(v) Except as modified and amended by this Fifth Supplemental Indenture, all provisions of the Indenture shall remain in full force and effect.

Section 7.02 Governing Law . This Fifth Supplemental Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 7.03 Certain Trustee Matters . The Recitals of the Company contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Fifth Supplemental Indenture or the Notes or the proper authorization or the due execution hereof or thereof by the Company.

Section 7.04 Successors . All the covenants, stipulations, promises and agreements in this Fifth Supplemental Indenture and the Notes shall bind the Company’s successors and assigns whether so expressed or not.

Section 7.05 Severability . To the extent permitted by applicable law, in case any one or more of the provisions contained in this Fifth Supplemental Indenture or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Fifth Supplemental Indenture or of the Notes.

Section 7.06 Counterparts . This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 7.07 Effect of Headings . The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

Section 7.08 Entire Agreement . This Fifth Supplemental Indenture, together with the Indenture as amended hereby and the Notes, contains the entire agreement of the parties with respect to the Notes, and supersedes all other representations, warranties, agreements and understandings between the parties hereto and thereto, oral or otherwise, with respect to the matters contained herein and therein.

Section 7.09 No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders . No director, officer, employee, incorporator, member or stockholder of the Company or any Subsidiary Guarantor, as such, will have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, any Note Guarantee or the Indenture or for any claim based on, in respect of, or by reason of, such obligations. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 7.10 No Adverse Interpretation Of Other Agreements . The Indenture may not be used to interpret another indenture or loan or debt agreement of the Company or any Subsidiary of the Company and no such indenture or loan or debt agreement may be used to interpret the Indenture.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed as of the day and year first above written.

	PHH CORPORATION


	By:	/s/Hugo Arias
		Hugo Arias
		Sr. Vice President & Treasurer


	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

	By:	/s/Karen Yu

[Signature Page of Fifth Supplemental Indenture]

Exhibit 99.1

PHH Corporation Announces Results of Tender Offers and Consent Solicitations as of the Early Tender Deadline

MOUNT LAUREL, N.J.—July 3, 2017—PHH Corporation (NYSE: PHH) (“PHH” or the “Company”) today announced results as of the Early Tender Deadline (as defined below) of its previously announced cash tender offers (the “Offers”) and consent solicitations (the “Consent Solicitations”), with respect to any and all of its outstanding 7.375% Senior Notes Due 2019 (the “2019 Notes”) and 6.375% Senior Notes Due 2021 (the “2021 Notes” and, together with the 2019 Notes, the “Notes”) and the entry into the Supplemental Indentures (as defined below) with respect to the Notes.

The Offers and the Consent Solicitations are described in and were made pursuant to the terms and conditions set forth in the offer to purchase and consent solicitation statement dated June 19, 2017 (the “Offer to Purchase and Consent Solicitation Statement”). Capitalized terms used in this release and not defined herein have the meanings given them in the Offer to Purchase and Consent Solicitation Statement.

As of 5:00 p.m., New York City time, on June 30, 2017 (the “Early Tender Deadline”), (i) $177,454,000 aggregate principal amount of the 2019 Notes had been validly tendered and not withdrawn, which represented approximately 64.53% of the outstanding aggregate principal amount of the 2019 Notes, and (ii) $318,407,000 aggregate principal amount of the 2021 Notes had been validly tendered and not withdrawn, which represented approximately 93.65% of the outstanding aggregate principal amount of the 2021 Notes. On July 3, 2017, the Company accepted for purchase and payment all of the Notes that were validly tendered and not withdrawn on or prior to the Early Tender Deadline.

Following receipt of the consent of the holders of at least a majority in aggregate principal amount of the outstanding 2019 Notes, on July 3, 2017, the Company executed a fourth supplemental indenture to the indenture governing the 2019 Notes (the “2019 Supplemental Indenture”), and following receipt of the consent of the holders of at least a majority in aggregate principal amount of the outstanding 2021 Notes, on July 3, 2017, the Company executed a fifth supplemental indenture to the indenture governing the 2021 Notes (the “2021 Supplemental Indenture” and, together with the 2019 Supplemental Indenture, the “Supplemental Indentures”). The Supplemental Indentures reflect the Proposed Actions (as defined in the Offer to Purchase and Consent Solicitation Statement), which eliminate or modify substantially all of the restrictive covenants as well as certain events of default and other provisions contained in each of the indentures governing the Notes, give effect to the consent to the Sales (as defined in the Offer to Purchase and Consent Solicitation Statement) and waive any potential default that may occur resulting from the Sales. The Supplemental Indentures will become operative upon payment by the Company with respect to the Notes, which is expected to be the date hereof. The Supplemental Indentures will bind all holders of the Notes, including those that do not give their consent.

Holders of Notes who tendered their 2019 Notes on or prior to the Early Tender Deadline will receive $1,100.00 per $1,000 principal amount of the 2019 Notes validly tendered (which included the early tender payment of $30.00 per $1,000 principal amount of the 2019 Notes), plus any accrued and unpaid interest from the most recent interest payment date for the 2019 Notes to, but not including, July 3, 2017. Holders of Notes who tendered their 2021 Notes on or prior to the Early Tender Deadline will receive $1,031.88 per $1,000 principal amount of the 2021 Notes validly tendered (which included the early tender payment of $30.00 per $1,000 principal amount of the 2021 Notes), plus any accrued and unpaid interest from the most recent interest payment date for the 2021 Notes to, but not including, July 3, 2017. The Company will settle the transactions on the date hereof.

Holders who validly tender their 2019 Notes after the Early Tender Deadline, but on or prior to 11:59 p.m., New York City time, on July 17, 2017, unless extended or earlier terminated by the Company (the “Expiration Date”), shall receive the tender offer consideration equal to $1,070.00 per $1,000 principal amount of the 2019 Notes, plus any accrued and unpaid interest on the 2019 Notes from the most recent interest payment date for the 2019 Notes to, but not including, the payment date for such Notes. Holders who validly tender their 2021 Notes after the Early Tender Deadline, but on or prior to the Expiration Date, shall receive the tender offer consideration equal to $1,001.88 per $1,000 principal amount of the 2021 Notes, plus any accrued and unpaid interest on the 2021 Notes from the most recent interest payment date for the 2021 Notes to, but not including, the payment date for such Notes.

The Consent Solicitations remain open for the submission of consents by holders of the Notes until the Expiration Date. Notes tendered pursuant to the Offers and the Consent Solicitations may no longer be withdrawn because the withdrawal rights expired on the date hereof when the Supplemental Indentures were executed. Subject to applicable law, the Company may extend, amend or terminate an Offer and Consent Solicitation.

Citigroup Global Markets Inc. (“Citigroup”) and Credit Suisse Securities (USA) LLC (“Credit Suisse”) are the Dealer Managers in connection with the Offers and the Consent Solicitations. For additional information regarding the terms of the Offers and the Consent Solicitations, please contact: Citigroup at (800) 558-3745 (toll free) or (212) 723-6106 (collect) or Credit Suisse at (800) 820-1653 (toll free) or (212) 325-2476 (collect). Requests for documents may be directed to Global Bondholder Services Corporation, which is acting as the information agent and tender agent for the Offers and the Consent Solicitations, at (866) 470-4200 (toll-free).

This press release does not constitute a Consent Solicitation and shall not be deemed a solicitation of consents with respect to any other securities of the Company.

About PHH Corporation

Headquartered in Mount Laurel, New Jersey, PHH Corporation is a leading provider of end-to-end mortgage solutions through its subsidiary, PHH Mortgage. Its outsourcing model and proven expertise, combined with a strong commitment to operational excellence and customer service, has enabled PHH Mortgage to become one of the largest non-bank originators and servicers of residential mortgages in the United States. PHH Mortgage provides mortgage solutions for the real estate market and financial institutions, and offers home financing directly to consumers. For additional information, please visit www.phh.com.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward looking-statements are not based on historical facts but instead represent only our current beliefs regarding future events. All forward-looking statements are, by their nature, subject to risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in such forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Such statements may be identified by words such as “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.”

You should understand that forward-looking statements are not guarantees of performance or results and are preliminary in nature. You should consider the areas of risk described under the heading “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in connection with any forward-looking statements that may be made by us or our businesses generally. Such periodic reports are available in the “Investors” section of our website at http://www.phh.com and are also available at http://www.sec.gov. Except for our ongoing obligations to disclose material information under the federal securities laws, applicable stock exchange listing standards and unless otherwise required by law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements or to report the occurrence or non-occurrence of anticipated or unanticipated events.

PHH Corporation
Investors
Hugo Arias, (856) 917-0108
hugo.arias@phh.com
or
Media
Dico Akseraylian, (856) 917-0066
dico.akseraylian@phh.com

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Overview

On May 31, 2017, our stockholders approved the sale of substantially all of our assets through the execution of the sale of our Mortgage servicing rights (MSRs) to New Residential (NRZ). We began executing the sales of our MSRs with the initial delivery on June 16, 2017 of a portfolio of Freddie Mac MSRs and continuing with the delivery of a portfolio of Fannie Mae MSRs on July 3, 2017 and effective as of July 1, 2017 (collectively the “Executed MSR Transfers” ) . The Fannie Mae delivery constitutes the completion of the disposition of a significant portion of our assets, and the pro forma statements contained herein give effect to both Executed MSR Sales, as each of these transactions has not previously been presented in our financial statements.

The following table outlines key financial information about our total MSRs as of March 31, 2017, including data specific to the Executed MSR Transfers:

As of March 31, 2017

($ In millions)

	UPB		MSR Fair Value		Servicing Advance Receivables		Total Estimated Proceeds (3)		Loans (# of units)
New Residential Commitments:
June 16, 2017 Transfer	$	13,164	$	112	$	8	$	120	81,091
July 3, 2017 Transfer	39,749		344		24		368		302,017
Executed MSR Transfers—total	52,913		456		32		488		383,108
Remaining NRZ commitments (1)	14,080		98		249		347		68,752
New Residential Commitments—total	$	66,993	$	554	$	281	$	835	451,860

Other MSR commitments(2)	2,756		19
Non-committed MSRs	2,059		23
Total MSRs	$	71,808	$	596

(1) The Remaining NRZ commitments of MSRs and Servicing Advances under the NRZ Sale Agreement (as defined below)are based on the Portfolio composition as of March 31, 2017 and assuming all investor and origination source consents are received. The final proceeds are dependent on a number of factors, including the amount and type of consents received, the composition of the portfolio and related servicing advances outstanding on each sale date. There can be no assurances whether, or when, sale transactions related to the remaining commitments will close, or that we will receive the total amount of estimated proceeds.

(2) Other MSR commitments include $18 million of MSR fair value committed to Lakeview Loan Servicing, LLC and $1 million of MSR fair value committed to other counterparties. On May 2, 2017, we completed the sale of $7 million of MSRs fair value to Lakeview under these commitments, leaving $11 million of MSR fair value remaining committed to Lakeview.

(3) Total estimated proceeds is not reduced for amounts of holdback, as outlined in the NRZ Sale Agreement (as defined below) to address indemnification claims by New Residential and to address mortgage loan document deficiencies. Holdback for the Executed MSR Transfers is $46 million in total, as of the respective transfer dates.

The unaudited pro forma consolidated financial information of PHH Corporation is being presented to give effect only to the Executed MSR Transfers to NRZ. The sales of the Remaining NRZ commitments and Other MSR commitments were not included in the proforma adjustments.

Sale Agreement Background

Pursuant to an agreement dated as of December 28, 2016 (the “NRZ Sale Agreement”), we have committed to sell our portfolio of MSRs as of October 31, 2016 (excluding the GNMA MSRs that were committed to be sold to Lakeview Loan Servicing, LLC), together with all servicing advances related to the MSR Portfolio, to New Residential Mortgage LLC . Based on the MSR Portfolio composition as of March 31, 2017, $554 million of our MSR fair value (or 93% of our $596 million total MSR asset) is committed under the NRZ Sale Agreement. Further, we have commitments to sell $281 million of servicing advance receivables to New Residential related to this population.

In connection with the execution of the NRZ Sale Agreement, PHH Mortgage and New Residential entered into a Subservicing Agreement, which became effective on June 16, 2017 upon the initial sale date of the MSRs. Pursuant to the Subservicing Agreement, PHH Mortgage will be retained by New Residential as a subservicer for the MSR Portfolio, which as of March 31, 2017 consisted of 452 thousand mortgage loans, for an initial period of three years. The Subservicing Agreement is subject to certain transfer and termination provisions.

Accounting Treatment

For sales of MSRs pursuant to the NRZ Sale Agreement, we will recognize cash proceeds from the legal sale and transfer of the MSRs; however, as illustrated in the pro forma financial statements, we expect to record the transactions as a secured borrowing with the pledge of collateral under accounting principles generally accepted in the United States of America. As a result, we expect to recognize an increase in Cash received from each transfer, offset by a reduction in Servicing advance receivables and the recognition of a liability for Secured borrowing. In future periods, the Change in fair value of the transferred MSR asset accounted for as collateral pledged under a secured borrowing arrangement is expected to be substantially offset by the Change in fair value of the related Secured borrowing liability, as we expect to elect to account for that liability at fair value.

As of March 31, 2017, our MSR asset was recorded at fair value with the assessment of value incorporating the pricing associated with the NRZ Sale Agreement. Therefore, there is no expected gain or loss on the MSR Sale as of that date; however, we expect to recognize a loss of up to $32 million related to transaction costs and retained risk on these Executed MSR Transfers, which is included in our estimate of losses of up to $40 million in total for all MSR sales under the NRZ Sale Agreement. After the execution of the MSR Sale transactions, we expect to continue to operate as a servicer and we will continue to recognize results from servicing in our financial information.

Pro Forma Consolidated Financial Information

The following unaudited pro forma consolidated financial information of PHH Corporation was derived from our historical consolidated financial statements and is being presented to give effect to the Executed MSR Transfers.

The unaudited pro forma condensed consolidated statements of operations reflect the Executed MSR Transfers as if those actions occurred at the beginning of the earliest period presented. The unaudited pro forma condensed consolidated balance sheet reflects the Executed MSR Transfers as if they occurred on March 31, 2017. The pro forma statements do not give any effect to the utilization of cash proceeds, transaction costs and retained risk, the delivery of any other MSRs committed to New Residential or any other counterparty, and certain other events and transactions. See below under “Other Events and Transactions” for further discussion of items not included in pro forma adjustments .

See above under “Accounting Treatment” and the footnotes accompanying the pro forma financial information for further explanation of the accounting for the transactions and the pro forma adjustments. The unaudited pro forma financial statements should be read in conjunction with our historical financial statements as filed in our Form 10-K for the year ended December 31, 2016 and our Form 10-Q for the three months ended March 31, 2017.

The unaudited pro forma financial information is provided for informational purposes only and is not intended to reflect what the actual financial position or results of operations of the Company would have been had the disposition occurred on the dates indicated, nor is it necessarily indicative of our future financial position or results of operations. The pro forma adjustments are based upon the best information available and certain assumptions that management believes to be reasonable in the circumstances. There can be no assurance that such information and assumptions will not change from those reflected in the pro forma financial statements and the accompanying notes.

Other Events or Transactions

We have announced the conclusions and outcomes from our strategic review initiated in 2016, including certain actions that are pending execution. We evaluated all other transactions and events that we expect to significantly affect our business, and have included discussion below of these events that were not included in our pro forma adjustments.

Use of Proceeds and Other expected cash flows

In connection with the MSR sales and the disposition of a significant portion of our assets, on June 19, 2017, we announced the commencement of tender offers and consent solicitations for any and all of the $615 million outstanding principal of our senior unsecured notes pursuant to the existing terms of the bond indentures. On July 3, 2017, we announced the results of the early tender deadline, and have repaid $496 million aggregate principal of our senior unsecured notes for consideration of $509 million, plus $27 million for early tender payments and accrued and unpaid interest. The tender offer and consent solicitations remain open until the July 17, 2017 expiration date, and, we cannot estimate the probable amount of total senior unsecured notes which may ultimately be retired. We recognized $42 million of Unsecured interest expense in 2016 related to our total senior unsecured notes.

As of March 31, 2017, we have identified other expected uses of our cash over the next 18 months which include the following estimated outflows:

· $173 million related to the exit of the PLS business, including expected operating losses and costs to complete the exit;

· $40 million for costs associated with re-engineering and transitioning our business; and

· $46 million for payment of MSR transaction costs and strategic review advisory, legal and professional fees.

Further, we intend to maintain excess cash to cover contingencies, which include $121 million related to our legal and regulatory reserves, and excess cash to cover other contingencies, including mortgage loan repurchases, reasonably possible losses for legal and regulatory matters in excess of reserves, and MSR sale agreement indemnifications.

Home Loans Transactions

In February 2017, the Company announced it has entered into agreements to sell certain assets of PHH Home Loans and its subsidiaries, including its mortgage origination and processing centers and the majority of its employees. PHH Home Loans is a joint venture between the Company and Realogy Corporation, which provides mortgage origination services for brokers associated with brokerages owned or franchised by Realogy Corporation, and represented substantially all of our Real Estate channel, and 20% of the Company’s total mortgage production volume (based on dollars) for the three months ended March 31, 2017. After the completion of these transactions, the Company would no longer operate through its Real Estate channel.

Agreements related to these intended transactions include:

Asset sale transactions. On February 15, 2017, the Company entered into an agreement to sell certain assets of our PHH Home Loans joint venture to Guaranteed Rate Affinity, LLC, which is a newly formed joint venture formed by subsidiaries of Realogy Holdings Corp. and Guaranteed Rate, Inc.

JV Interests Purchase. In connection with the asset sale agreement, PHH entered into an agreement to purchase Realogy’s 49.9% ownership interests in the PHH Home Loans joint venture, for an amount equal to their interest in the residual equity of PHH Home Loans after the final closing of the Asset sale transactions.

The execution of these transactions is subject to closing conditions as set forth in the agreements. At the completion of the above described transactions, we expect to receive or pay amounts to resolve the remaining assets and liabilities of the PHH Home Loans legal entity. If consummated, we would expect to close this transaction by the end of 2017 and estimate that we will receive net proceeds of $92 million in connection with these transactions.

PLS Business Exit

In November 2016, we announced our intentions to exit the private label services (PLS) channel. We have begun to execute our plans to exit PLS, which we believe will be substantially complete by the first quarter of 2018. For the year ended December 31, 2016, the PLS channel represented 79% of our total closing volume (based on dollars).

We incurred $49 million of Exit and disposal costs and $25 million of operating losses through March 31, 2017 related to the exit of PLS, and we expect to incur up to $56 million of additional exit costs and pre-tax operating losses of $95 million over the next twelve months while we implement the exit from this channel. In total, we estimate we may have a cash outflow of $220 million related to the PLS exit costs and operating losses.

PHH 2.0 / Reorganization

As announced in February 2017, we intend to operate as a smaller business that is focused on subservicing and portfolio retention services. To execute this reorganization, we estimate that we will incur costs of $30 million to $40 million (pre-tax) as part of our program to re-engineer our business, which includes $10 million of costs to complete our Home Loans Transactions and actions to reduce our shared-services overhead costs. While we have targeted total annual shared services expenses of $75 million for ‘PHH 2.0’, compared to the $220 million of total shared services expenses recognized in 2016, those cost reduction actions and all other actions to result in our standalone subservicing and portfolio retention business have not yet been executed.

PHH Corporation and Subsidiaries

Unaudited Pro Forma Consolidated Balance Sheets

($ In millions)

	As of March 31, 2017
	As Reported		MSR Sale (1)		MSR sale- related cash outflows (2)			Pro Forma (3)
ASSETS
Cash and cash equivalents	$	936	$	488	$	(179	)	$	1,245	(4)
Restricted cash	64		—		—			64
Mortgage loans held for sale	471		—		—			471
Accounts receivable, net	61		—		—			61
Servicing advances, net	599		—		—			599
Mortgage servicing rights	596		—		—			596
Property and equipment, net	32		—		—			32
Deferred taxes, net	—		—		92			92
Other assets	92		—		—			92
Total assets	$	2,851	$	488	$	(87	)	$	3,252

LIABILITIES AND EQUITY
Accounts payable and accrued expenses	$	185	$	—	$	—		$	185
Subservicing advance liabilities	271		32		—			303
Debt, net	1,083		—		(18		)	1,065		(4)
MSR financing, at fair value	—		456		—			456
Deferred taxes, net	69		—		(69		)	—
Loan repurchase and indemnification liability	43		—		—			43
Other liabilities	149		—		—			149
Total liabilities	1,800		488		(87		)	2,201

PHH Corporation stockholders’ equity	1,024		—		—			1,024
Noncontrolling interest	27		—		—			27
Total equity	1,051		—		—			1,051
Total liabilities and equity	$	2,851	$	488	$	(87	)	$	3,252

Footnotes to Pro Forma Balance Sheets

(1) MSR Sale : As of March 31, 2017, our MSR asset was recorded at fair value with the assessment of value incorporating the pricing associated with the NRZ Sale Agreement. Therefore, there is no expected gain or loss on these MSR Sales as of that date; however, we expect to recognize a loss of up to $32 million related to transaction costs and retained risk on these Executed MSR Transfers which was not included in the pro forma adjustments presented. The proforma adjustment for Cash received does not include adjustment for amounts of holdback to address indemnification claims by New Residential and to address mortgage loan document deficiencies. Holdback for these Executed MSR Transfers is $46 million in total, as of the respective transfer dates; the estimate of transaction costs and retained risk discussed previously includes our estimate of loss for holdback collectability.

While we will receive the cash proceeds for the Servicing advance receivables, directly after transferring the receivables to New Residential, we would assume the management of the receivables due to our continuing role as subservicer for the portfolio. Therefore, the pro forma adjustments reflect the continued recognition the Subservicing advance receivables for these loans; however, the receivables would be funded by New Residential, and a Subservicing advance liability will be recognized related to their funding of that asset.

The pro forma adjustments do not include adjustment for any future MSR sales executed under the NRZ Sale Agreement, or the execution of any MSR sales to other counterparties. See “ Overview ” for further discussion of those commitments and related financial information.

(2) MSR sale-related cash outflows : As direct outcomes of these MSR sales, we will experience cash outflows related to the repayment of borrowings under our PHH Servicing Advance Receivables Trust (“PSART”) debt facility, as borrowings of that facility are secured by the advance receivables, and cash outflows related to the deferred tax liability related to MSRs. Expected cash outflows include $18 million repayment of PSART for the portion of the advances that had been funded by that facility and $161 million payment for realization of our Deferred tax liability related to the MSRs. The Deferred Tax amount is shown separately above to effect the reclassification of our net deferred position from liability to asset, as $69 million to reduce the Deferred tax net liability to zero and $92 million increase to Deferred tax asset position.

In addition, see “ Other Events or Transactions ” in the introduction to these pro forma statements for discussion of our intended use of proceeds to repay our senior unsecured notes, which is not included in the pro forma adjustments for MSR sale-related cash outflows.

(3) See “ Other Events or Transactions ” in the introduction to these pro forma statements for discussion of other significant events or transactions impacting our business, including other MSR sale commitments, for which pro forma adjustments were not presented herein.

(4) Cash Outflows for Debt Repayment : Cash and cash equivalents as presented does not include a pro forma adjustment with respect to the repayment of our senior unsecured notes.

In connection with the MSR sales and the disposition of a significant portion of our assets, on June 19, 2017, we announced the commencement of tender offers and consent solicitations for any and all of the $615 million outstanding principal of our senior unsecured notes pursuant to the existing terms of the bond indentures. On July 3, 2017, we announced the results of the early tender deadline, and have repaid $496 million aggregate principal of our senior unsecured notes for consideration of $509 million, plus $15 million for early tender payments and $12 million of accrued and unpaid interest, for $536 million total cash outflows. We expect to recognize a pre-tax loss of $28 million in connection with the debt repayment.

The tender offer and consent solicitations remain open until the July 17, 2017 expiration date, and, we cannot estimate the probable amount of total senior unsecured notes which may ultimately be retired.

PHH Corporation and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statement of Operations

($ In millions, except per share amounts)

	Three Months Ended March 31, 2017
	As Reported			Income from Capitalized MSRs (1)(3)			Income from Subservicing (2)(3)			Pro Forma (4)
REVENUES
Origination and other loan fees	$	44		$	—		$	—		$	44
Gain on loans held for sale, net	42			—			—			42
Net loan servicing income:
Loan servicing income	62			(42		)	25			45
Change in fair value of MSRs	(29		)	21			—			(8		)
Net derivative gain related to MSRs	—			—			—			—
Net loan servicing income	33			(21		)	25			37
Net interest expense	(7		)	1			(14		)	(20		)
Other income	2			—			—			2
Net revenues	114			(20		)	11			105

EXPENSES
Salaries and related expenses	86			—			—			86
Commissions	11			—			—			11
Loan origination expenses	9			—			—			9
Foreclosure and repossession expenses	7			—			—			7
Professional and third-party service fees	37			—			—			37
Technology equipment and software expenses	9			—			—			9
Occupancy and other office expenses	9			—			—			9
Depreciation and amortization	4			—			—			4
Exit and disposal costs	25			—			—			25
Other operating expenses	22			—			—			22
Total expenses	219			—			—			219
Loss before income taxes	(105		)	(20		)	11			(114		)
Income tax benefit	(34		)	(8		)	4			(38		)
Net loss	(71		)	(12		)	7			(76		)
Less: net income attributable to noncontrolling interest	(4		)	—			—			(4		)
Net loss attributable to PHH Corporation	$	(67	)	$	(12	)	$	7		$	(72	)

Basic and diluted loss per share attributable to PHH Corporation	$	(1.26	)	$	(0.22	)	$	0.13		$	(1.35	)
Weighted-average common shares outstanding—Basic and diluted	53,682,514

(Continued)

	Year Ended December 31, 2016
				Executed MSR Transfers						Other Events
	As Reported			Income from Capitalized MSRs (1)(3)			Income from Subservicing (2)(3)			Income related to February Lakeview Transfer (5)			Pro Forma (4)
REVENUES
Origination and other loan fees	$	280		$	—		$	—		$	—		$	280
Gain on loans held for sale, net	262			—			—			—			262
Net loan servicing income:										—
Loan servicing income	353			(174		)	100			(34		)	245
Change in fair value of MSRs	(238		)	149			—			29			(60		)
Net derivative gain related to MSRs	10			(6		)	—			—			4
Net loan servicing income	125			(31		)	100			(5		)	189
Net interest expense	(32		)	3			(55		)	—			(84		)
Other (loss) income	(13		)	—			—			—			(13		)
Net revenues	622			(28		)	45			(5		)	634

EXPENSES
Salaries and related expenses	345			—			—			—			345
Commissions	64			—			—			—			64
Loan origination expenses	64			—			—			—			64
Foreclosure and repossession expenses	35			—			—			—			35
Professional and third-party service fees	156			—			—			—			156
Technology equipment and software expenses	42			—			—			—			42
Occupancy and other office expenses	47			—			—			—			47
Depreciation and amortization	16			—			—			—			16
Exit and disposal costs	41			—			—			—			41
Other operating expenses	116			—			—			—			116
Total expenses	926			—			—			—			926
Loss before income taxes	(304		)	(28		)	45			(5		)	(292		)
Income tax benefit	(111		)	(11		)	18			(2		)	(106		)
Net loss	(193		)	(17		)	27			(3		)	(186		)
Less: net income attributable to noncontrolling interest	9			—			—			—			9
Net loss attributable to PHH Corporation	$	(202	)	$	(17	)	$	27		$	(3	)	$	(195	)

Basic and diluted loss per share attributable to PHH Corporation	$	(3.77	)	$	(0.32	)	$	0.50		$	(0.06	)	$	(3.65	)
Weighted-average common shares outstanding—Basic and diluted	53,627,170

Footnotes to Pro Forma Condensed Consolidated Statements of Operations

(1) Income from Capitalized MSRs: The Pro forma adjustment for the elimination of income from capitalized MSRs specific to the portfolios of MSRs in the Executed MSR Transfers includes:

· the elimination of Loan servicing income related to the portfolio of MSRs in the Executed MSR Transfers. Below is a schedule presenting the as reported total Loan servicing income for 2016 and the first quarter of 2017, summarizing the amount attributable to Capitalized Servicing activities and revenue from the existing subservicing portfolio, which will remain with the Company and was not subject to pro forma adjustment. The historical income from capitalized servicing was reduced by the ratio of MSR UPB sold to NRZ versus the capitalized UPB for the respective period, as the fees earned from capitalized servicing are driven by the underlying portfolio UPB.

	Year Ended December 31, 2016								Three Months Ended March 31, 2017
	Cap. Servicing			Sub- Servicing		Total			Cap. Servicing			Sub- Servicing		Total
	(In millions)
Servicing fees	$	266		$	67	$	333		$	54		$	11	$	65
Late fees and other ancillary revenue	29			10		39			6			1		7
Curtailment interest paid to investors	(16		)	—		(16		)	(3		)	—		(3		)
Subtotal	$	279		$	77	$	356		$	57		$	12	$	69
Loss on MSR Sales(a)						(3		)						(7		)
Total Loan servicing income						$	353							$	62

Ratio of MSRs Sold to NRZ(b)	62		%						74		%
Pro-Forma Adjustment	$	174							$	42

(a) Losses realized on MSR sales are normally presented within Late fees and other ancillary revenue in our financial information. For calculation of the pro forma adjustment, those losses on MSR sales were excluded from that revenue in the table above, as the Executed MSR Transfers will not impact those amounts.

(b) Ratio of MSRs sold to NRZ is based on the UPB of the Executed Transfers of $52.9 billion against the ending capitalized servicing portfolio UPB of $84.7 billion and $71.8 billion for the year ended December 31, 2016 and the three months ended March 31, 2017, respectively.

· Change in fair value of MSRs includes both the MSR market-related adjustments and MSR related cash flows. The elimination of Change in fair value of MSRs was based on the ratio of MSRs sold to NRZ, as outlined above; and

· a reduction in Net interest expense related to the estimated reduction of borrowings on our ‘PSART’ Servicing advance Debt facility related to the Executed MSR Transfers. Under substantially all of our subservicing arrangements, including the agreement with New Residential with respect to this MSR Sale portfolio, our Subservicing clients fund Servicing advance receivables on their portfolio (which is recognized within Subservicing advance liabilities in our Consolidated Balance Sheets). For subservicing arrangements, we would not incur interest expense related to the future funding of Servicing advance receivables.

(2) Income from Subservicing: As discussed further under “ Sale Agreement Background ” in the introduction to these pro forma statements, PHH Mortgage will be retained by New Residential as a subservicer for the MSR Portfolio.

The pro forma adjustment for Income from subservicing includes an estimate within Loan servicing income for the Subservicing fee revenue and Late fees and other ancillary servicing revenue, related to the 383 thousand loan units transferred in the Executed MSR Transfers. Actual revenues received from subservicing may vary from our expectations, due to run-off of the transferred portfolio resulting in a reduction of units that will be subject to the Subservicing Agreement.

The MSR Sale will result in Secured borrowing accounting, where we continue to record the MSR asset on the Balance sheet, with MSR financing debt recognized for the cash received under the NRZ Sale Agreement. We expect to elect fair value accounting treatment for the MSR financing debt. We expect the future amounts recorded to effect Secured borrowing accounting, including changes recognized to reduce the MSR assets and MSR financing debt, and the Change in fair value of each instrument, to have no net impact to our results of operations. The pro forma adjustment column for Income from Subservicing includes $55 million and $14 million for the year ended December 31, 2016 and three months ended March 31, 2017, respectively, within each of Loan servicing income and Net interest expense related to the estimated yield on the MSR asset and interest expense on the Secured borrowing debt.

(3) Expenses: The pro forma adjustment columns presenting the elimination of income related to capitalized MSRs and addition of Subservicing unit revenue do not reflect any adjustments to our expenses as the units that will be serviced under the subservicing arrangement with New Residential were included in our Total servicing portfolio for the periods presented, and our costs associated with servicing the loans would be substantially the same when subservicing as when we owned the MSRs. Furthermore, we do not expect there to be any significant change in our servicing operations, employee base, or per-unit direct cost as a result of the MSR Sale.

(4) Other: The pro forma statements were prepared to illustrate only the isolated and measurable effects of the proposed transactions. The adjustments to the statements do not include a number of significant nonrecurring expenditures associated with our strategic review and other costs that we would not expect to occur in our future operations.

These significant nonrecurring expenditures which had a negative impact to our results include:

	Year Ended December 31, 2016		Three Months Ended March 31, 2017
	(In millions, and pre-tax)
Costs related to our Strategic review and re-engineering programs that recognized primarily within Professional fees, as those programs were substantially complete with the announcement of our strategic conclusions in February 2017	$	60	$	17
Exit and disposal costs, related to Reengineering our shared services functions and related to our exit of the PLS business	41		25
Impairment of our equity-method investment in Speedy Title and Appraisal Services (‘STARS’), recorded within Other income (loss), which is primarily driven by forecasted decrease in volumes due to our exit of the PLS business	23		1
	$	124	$	43

In addition, see “Other Events or Transactions” in the introduction to these pro forma statements for discussion of other significant events or transactions impacting our business for which pro forma adjustments were not presented herein.

(5) Income related to Lakeview February MSR Transfer: In November 2016, the Company entered into an agreement to sell substantially all of its Ginnie Mae (“GNMA”) MSRs and related advances to Lakeview Loan Servicing, LLC (“Lakeview”). On February 2, 2017, the initial sale of GNMA MSRs under this agreement was completed, representing $10.2 billion of unpaid principal balance, $74 million of MSR fair value, and $11 million of Servicing advances with total expected proceeds of $85 million from the initial transfer.

For the pro forma financial information for the year ended December 31, 2016, an adjustment is presented to reduce our Net Loan servicing income for the portions of Loan servicing fees and Changes in value of MSRs (including payoffs, realized cash flows and changes in value) attributable to the population of MSRs transferred to Lakeview in February. This adjustment was required only to the 2016 financial information as the transfer was executed within the first quarter of 2016 and the financial impact for that period is not significant.

On May 2, 2017, an additional sale of GNMA MSRs to Lakeview was completed, representing $1 billion of unpaid principal balance, $7 million of MSR fair value, and $1 million of Servicing advances (as of March 31, 2017). The proforma adjustments do not give effect to this transfer for either period as the financial impact is not significant.