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Phh Corporation Provides Update Regarding Its Private Label Business

The following excerpt is from the company's SEC filing.

Withdraws Previously Disclosed Earnings Guidance for Full-year 2016

Mount Laurel, NJ April 11, 2016 - PHH Corporation (NYSE: PHH) (PHH or the Company) announced today changes to certain of its Private Label client relationships.

Merrill Lynch Home Loans, a division of Bank of America, National Association (Merrill Lynch), has indicated its intent to move the origination of new applications for certain mortgage loan products to its internal operations effective April 25, 2016, and has significantly reduced its volume forecast for the remainder of 2016. The Company estimates that on an annualized basis this change could represent a reduction of approximately 20% of Merrill Lynchs 2015 loan closing dollar volume or approximately 5% of PHHs 2015 loan closing dollar volume. As previously disclosed, Merrill Lynchs total loan closing volume accounted for approximately 26% of PHHs overall volume in 2015. There can be no assurances that the remaining Merrill Lynch origination activity with PHH will not also be subject to change during the remainder of 2016 or beyond.

In addition, Merrill Lynch has informed the Company that it intends to insource its sub-servicing portfolio no later than the sub-servicing contract expiration date of December 31, 2016. Merrill Lynchs sub-servicing accounted for approximately $40 billion in unpaid principal balance, or 32% of the Companys sub-servicing portfolio and 18% of its total servicing portfolio, in each case as of December 31, 2015.

Glen A. Messina, president and CEO of PHH Corporation, said, While we are disappointed with these changes, we intend to take appropriate measures to adjust our operations and incorporate these developments in our review of strategic options. We believe these decisions reflect the broader dynamics in our industry, including higher compliance and other costs associated with a more onerous regulatory environment. We remain focused on implementing the priorities we laid out for 2016 and the evaluation of all options, including...