PHH Corp. said Tuesday that the top-10 mortgage lender and servicer never used robo-signers to process foreclosures, as some of its rivals did.
"We're just not processing the kind of volume like our competition," PHH's chief executive, Jerry Selitto, said in an interview. "People are not signing hundreds of affidavits a day. That's just not the workload that we have in our shop."
After receiving several inquires about its foreclosure processes, including from regulators, PHH, of Mount Laurel, N.J., did review its procedures and determined not to impose a foreclosure moratorium.
However, the company has tweaked its processes "in an abundance of caution," said Luke Hayden, head of PHH's mortgage unit, in an interview.
"We are not refiling any paperwork," he said. "It really comes down to literally printing off screenshots of the file information from the system and sticking it in the mortgage loan file so we can be clear that the affidavit is correctly reflecting the information from the system."
PHH said roughly 1.7% of the first mortgages it services are in foreclosure, totaling fewer than 17,000 loans. About 60% of those loans are concentrated in states where foreclosures are handled by the courts, Hayden said.
Borrowers in foreclosure are, on average, more than 12 months behind on payments.
Though it's unlikely, if a nationwide foreclosure moratorium were to occur, Selitto estimated it would cost PHH more than $8 million in servicer advances a month. Its liquidity position is such that it would be able to withstand the additional costs, he said.
Selitto's comments Tuesday echoed a press release from PHH last month in which it said it did not have any problems with its foreclosure processes, after it received numerous inquiries following the revelation of procedural defects at Ally Financial Inc.'s GMAC Mortgage, JPMorgan Chase & Co., Bank of America Corp. and others.
Selitto said he doesn't believe the problems in the industry run any deeper than procedural defects. "I don't think anyone has raised any issues that lenders are foreclosing on the wrong properties or the wrong borrowers," he said.
In reporting its third-quarter results Tuesday, PHH said it closed $12.7 billion of residential loans during the period, up 26% from the second quarter. Purchase volume was 42% of third-quarter originations, down from 61% in the second quarter and 50% a year earlier. Citing a solid pipeline, PHH raised its guidance for full-year production volume to $45 billion from $39 billion.
The net loss for the quarter was $8 million, or 14 cents per share, compared with a loss of $52 million, or 94 cents per share, a year earlier. Both periods were impacted by a change in the fair value of mortgage servicing rights because of a drop in interest rates.
Excluding the effect from changes in MSR values, third-quarter core earnings were $109 million, or $1.96 per share, up from $19 million, or 36 cents per share, in the third quarter of 2009. Net revenue rose 13%, to $572 million.
PHH's mortgage unit ranks seventh among residential lenders, and ninth in servicing, according to National Mortgage News. PHH also owns a fleet management business.