PHH Slips Into the Red

MOUNT LAUREL, N.J. – PHH Corp., the parent of the biggest mortgage bank for credit unions, reported a slight loss last night for its second quarter of $1 million, or two cents a share. The loss comes amidst continuing troubles in the mortgage industry and as the company prepares to be taken over. The takeover, in which PHH will be sold to GE Capital for $1.8 billion, then GE Capital will sell the mortgage business to private equity fund The Blackstone Group, is being contested by the company’s largest shareholder, Pennant Capital, which owns a 9% PHH stake. Pennant see greater benefits in spinning off the mortgage business, which includes relationships with more than 2,000 credit unions, most of them acquired with the 2005 acquisition of CUNA Mutual Group’s mortgage business. For the second quarter PHH reported an increase in derivative losses hedging its $165 billion mortgage portfolio to $207 million, and a rise in mortgage delinquencies to 2.66%, from 2.25% for the same period a year ago. Second quarter revenues rose 4% to $610 million. For the first two quarters, PHH reported a 6% rise in revenues, to $1.2 billion, and net income of $1 million, or a penny a share.