MOUNT LAUREL, N.J. - (07/26/06) -- PHH Corp., now the largest mortgagebank for credit unions, said it has discovered more accountingproblems which will require it to restate earnings reported beforelast year's spin-off from Cendant Corp., and prevent it fromreporting its second quarter earnings on time. An internal audithas determined that the company's financial reports from 2001through Sept. 2005 cannot be relied on because of material errors,and the audit reports of Deloite & Touche LLP, the company'spublic accounting firm, may also not be relied on for thoseperiods. The company reported earlier it expects to report a lossfor fiscal 2005 and the first quarter of 2006. PHH, by virtue ofacquiring CUNA Mutuals mortgage banking operations, nowcontrols the largest mortgage portfolio in the credit unionmovement, with almost $10 billion worth of mortgages originatedthrough credit unions, and relationships with 1,000 credit unions.The company is the countrys 11th largest mortgage bank, witha portfolio more than $140 billion.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
April 18 -
Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
April 18 -
Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
April 18