PHH Corp. in Mount Laurel, N.J., said its loan closing dollar volume will decrease this year, after Bank of America's Merrill Lynch announced plans to withdraw business from the firm.
As a result of the announcements, PHH withdrew its previously issued earnings guidance for this year, according to a Monday news release. PHH is scheduled to release first-quarter earnings on May 5.
Merrill Lynch Home Loans informed PHH that it will move the origination of certain mortgage products in-house, starting April 25. PHH estimated the move could reduce about 20% of Merrill's 2015 loan closing dollar volume or about 5% of PHH's total 2015 loan closing dollar volume. Merrill's total loan closing volume represented about a quarter of PHH's overall volume last year.
Additionally, PHH warned that Merrill's remaining origination activity with PHH could be reduced this year or beyond.
Merrill also told PHH that it will bring in-house its subservicing portfolio by Dec. 31. The portfolio represented about $40 billion of PHH's unpaid principal balance, or about 32% of its subservicing portfolio and 18% of its total servicing portfolio.
Glen Messina, PHH's chief executive, said he was "disappointed" with Merrill's changes.
"We believe these decisions reflect the broader dynamics in our industry, including higher compliance and other costs associated with a more onerous regulatory environment," Messina said in the release.
Separately, Morgan Stanley Private Bank exercised an option to extend origination services with PHH through October 2017. PHH and Morgan Stanley are also in talks about an extension of their agreement beyond October 2017.
