PHH Corp. reported a profit of $13 million in the fourth quarter, but posted a loss of $127 million for the full year.
The company's core earnings, a measurement which among other things removes changes in the fair value of derivatives related to mortgage servicing rights, were $55 million for the quarter. For the full year, the company said using the core earnings measure, it had a profit of $182 million.
These results are the final measure of the performance of former CEO Jerome Selitto, who was replaced just after the start of the year by Glen Messina.
Investors apparently like what they see, as in late morning trading on Tuesday PHH is up $1.21 over its previous close, to $14.10.
Messina said in the earnings release, "We have taken decisive actions to significantly improve our liquidity, which combined with these strategies, should put us in a strong position to retire both our 2012 and 2013 debt maturities and to pursue opportunities to maximize value. While some of these actions, combined with lower expected mortgage industry origination volumes, may have a negative impact on our 2012 earnings, we believe our narrowed and deliberate growth strategy and focus on operational excellence, customer satisfaction, and liquidity will result ultimately in a more profitable, less volatile and better capitalized company."
In the fourth quarter, the mortgage originations business earned $86 million for the Mt. Laurel, N.J.-based company, but its mortgage servicing business lost $90 million. PHH's fleet management business contributed $19 million to the bottom line.
Included in the mortgage servicing loss was $68 million in market-related and credit-related adjustments to its MSRs. The company said the costs of implementing HARP 2.0 and increased assumptions of foreclosure-related costs made up $20 million of that total. PHH has a $182 billion MSR portfolio, up 10% from Dec. 31, 2009.
PHH closed $16 billion of mortgage loans in the quarter, of which 65% came through the retail channel and 35% through the third party channels. This is up 23% over the third quarter, as refinancings continued to build. For the year, PHH did $52 billion, split 69% from retail and 31% TPO.