After losing a chunk of outsourcing business earlier this year from its largest client, PHH Corp.’s operating subsidiary will lose the rest of the client’s business.
In April, Merrill Lynch Home Loans advised PHH Mortgage Corp. that it planned to handle new applications and originations for some products in-house.
Merrill Lynch, a subsidiary of Bank of America, N.A., additionally indicated that it had significantly reduced its volume forecast for the remainder of this year.
The move away from PHH”s private-label services was scheduled for April 25.
PHH had previously revealed that Merrill Lynch was its largest PLS client.
The partial loss of the Merrill Lynch business, which was responsible for 26 percent of PHH’s overall 2015 production, worked out to around 5 percent of last year’s total PHH originations — which totaled more than $40 billion.
PHH disclosed Tuesday in a Securities and Exchange filing that it will lose the remainder of Merrill Lynch’s business.
According to the
Mount Laurel, New Jersey-based company, it received written notice on Sept. 27 from BofA that the bank would exercise its right to terminate without cause.
The termination takes place on March 31, 2017.
In today’s SEC filing, PHH noted that
the prior notice from BofA indicated that an estimated 60 percent of Merrill Lynch’s volume based on 2015 activity was expected to insourced.
“The company estimates Merrill Lynch originations will contribute approximately $45 million of pre-tax earnings for fiscal year 2016 based on the company’s estimate of Merrill Lynch loan closing volume for 2016,” PHH stated. “The company is taking actions to reduce its facilities footprint and intends to take actions to realign operating costs in response to the loss of Merrill Lynch production volume, including by re-allocating excess originations capacity to portfolio retention efforts and to clients other than Merrill Lynch.”
