An FBR Capital Markets Corp. analyst raised his fourth-quarter profit estimate for PHH Corp., saying rising interest rates during the period probably generated an $80 million fair-value gain on mortgage servicing rights.

"PHH is a unique mortgage bank in that the company does not hedge its MSR, which adds a lot of volatility to earnings," the analyst, Paul Miller, wrote in a note to clients Thursday. Miller wrote that he now expects PHH to post a profit of 86 cents a share, 10 cents more than his previous estimate.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.