PHH Gets Lender Forbearance

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MOUNT LAUREL, N.J. - (06/13/06) – PHH Corp., the largest mortgagebank for credit unions, announced Monday its lenders have agreed towaive numerous covenants on its debt while the company continues tostruggle with its accounting after last year’s spin-off fromCendant Corp. The company reported it continues to review severalmajor accounting issues related to the spin-off, including theclassification of $239 million as goodwill impairment in the firstquarter of 2005 as a result of the spin-off; the allocation andvaluation of $25 million in deferred tax assets and net operatingcarryforwards related to the spin-off; the reevaluation of $21million of intangibles related to trademarks and customer lists;and several others. Because the company has been unable to produceaudited financial statements, its lenders have extended until Sept.30 certain covenants on its revolving credit agreements. PHH is thelargest provider of mortgage lending for credit unions by virtue oflast year’s acquisition of CUNA Mutual Mortgage and its 1,000credit union relationships. The company’s $160 billionmortgage servicing portfolio makes it one of the top 15 mortgagecompanies in the country.

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