Merrill Lynch will be taking more of its mortgage originations business in house and away from PHH Corp.
PHH disclosed this in its second quarter results, when it announced a $12 million net loss in the second quarter, which is an improvement over the $62 million loss for the same period last year.
However, the company's financials could face a bigger hit going forward as Merrill Lynch, a Bank of America subsidiary which previously announced it was
"When combined with Merrill Lynch's previously disclosed insourcing decisions, we may now be faced with a total volume reduction of approximately 60% of Merrill Lynch's dollar closing volumes based on 2015 originations.
"During the second quarter Merrill Lynch application units were down by approximately 30% compared to the same quarter last year. Merrill Lynch has forecasted cumulative volume reductions, is expected to have a negative impact to pretax earnings of approximately $13 million for the second half of 2016, and $44 million annualized before any mitigating actions such as cost reductions or volume enhancement initiatives," said PHH President and CEO Glenn Messina during a conference call.
PHH made $13 million on the origination business in the second quarter, up from $3 million one year ago. It originated $10.4 billion, a decrease of 14% from the second quarter of 2015, which led to a $12 million decrease in net origination revenue. However total expenses in the segment declined by $19 million.
The servicing business lost $33 million, which was an improvement over the $46 million loss recorded in the second quarter of 2015.
As for the