PHH Corp. recorded a $71 million writedown on its mortgage servicing assets for the first quarter, which crimped profits.
The Mount Laurel, N.J., mortgage company reported Friday that its net income for the quarter fell 93%, to $2 million, or 4 cents a share.
The servicing business posted a loss of $118 million, canceling out the mortgage production segment’s $113 million profit.
PHH originated $8.9 billion of loans in the first quarter, 11% less than a year earlier, but margins improved. Terry Edwards, its president and chief executive, said the mortgage production business “had its strongest quarter” since PHH’s 2005 spinoff from Cendant Corp. and “experienced increased refinance volumes.” PHH expects this to continue through the summer months, he said. Only 29% of PHH’s first-quarter volume was from home purchases.
But refis drove the servicing asset writedown and forced PHH to take a $92 million reduction in the value of its servicing rights, which the company does not hedge.