PHH Rejects Bid to Spin Off Mortgage Operations

MOUNT LAUREL, N.J. – PHH Corp. said it has rejected a proposal by a private equity firm to spin off the leading mortgage bank for credit unions, rather than sell the whole company. As a result, shareholders are scheduled to vote Sept. 26 on the sale of the company to GE Capital, which then will sell the mortgage operations, including the former CUNA Mutual Mortgage Corp., to The Blackstone Group for $5 billion. A private equity fund called Pennant Capital, which has acquired a 9% stake in PHH, said a better deal for shareholders would be the spin-off of the mortgage operation, the nation’s 11th-largest mortgage originator, as a separately traded company. PHH, which has had a vibrant relationship with credit unions for more than a decade, became the largest mortgage bank for credit unions in October 2005 when it acquired CUNA Mutual’s mortgage operations, which included servicing on 250,000 residential mortgages valued at $12 billion, and relationships with as many as 2,000 credit unions.