PHH Corp. has reportedly lost another major mortgage servicing rights (MSR) contract.
According to an article in the Philadelphia Business Journal, HSBC has decided to sell about 139,000 mortgages currently serviced by PHH to a buyer that does not intend to retain PHH as a subservicer.
This will eliminate about 29% of PHH’s mortgage subservicing portfolio, according to the report.
In a filing with the Securities and Exchange Commission, Mount Laurel, N.J.-based PHH said the loss of business would reduce its pre-tax earnings by approximately $10 million on an annualized basis.
HSBC will continue to outsource some of its origination business with PHH, according to the article. It may also retain a portion of the subservicing portfolio not subject to the sale.
This is the second major contract that PHH has lost so far this year. In April, Merrill Lynch Home Loans, a division of Bank of America Corp., decided to insource its subservicing, resulting in PHH’s servicing volume decreasing 26%.
Earlier this month, PHH reported a $12 million second-quarter loss; however, this was an improvement compared with the $30 million loss suffered in the first quarter.
PHH is currently fighting a $109 million penalty in federal court imposed last year by the Consumer Financial Protection Bureau for allegedly taking illegal kickbacks from mortgage insurers.
According to the article in the Philadelphia Business Journal, a federal appeals court is expected to soon render an opinion in that case.