PHH Mortgage Slumps On AccountingIssues

NEW YORK - (03/14/06) – Shares in PHH Corp., thebiggest mortgage bank for credit unions, declined 11% last weekafter the company announced it would indefinitely postpone itsannual report. The company announced Thursday that accountingissues related to last year’s spin-off from marketingconglomerate Cendant Corp. will cause it to delay its financialreport for fiscal 2005, including the fourth quarter, when thecompany acquired CUNA Mutual Group’s credit union mortgageportfolio. Immediately after the announcement, Fitch Ratings placedthe debt of PHH on ratings watch negative. The agency said it isconcerned with the unknown duration of the delay, the eventualoutcome of the audit, and PHH's "depth of accounting expertise."PHH shares closed at $25.64 on the NYSE Monday, unchanged from lastFriday. PHH, by virtue of acquiring CUNA Mutual’s mortgagebanking operations, now controls the largest mortgage portfolio inthe credit union movement, with almost $10 billion worth ofmortgages and relationships with 1,000 credit unions. The companyis the country’s 11th largest mortgage bank, with a portfoliomore than $140 billion.