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PHH Corporation Message Board

  • citiccgirl citiccgirl Oct 26, 2012 1:04 PM Flag

    PHH reoirting Oct 30th The high bid for the business shows the valuation for mortgage servicing right. While it can be debated whether or not OCN overpaid for the business, the gain on sale spreads for originators remain extremely attractive moving forward. So this is a positive for upcoming earnings reports from PHH.

    24-Oct-12 14:14 ET

    PHH

    PHH Corp Follow Up to 12:18 comment

    There were a few questions on why PHH was a winner in the deal. The comments were from a Sterne Agee analyst and likely a follow up to a Barron's story from September 26 discussing similar views (Click here for story).

    The general belief, from our understanding is that it is positive for PHH as the high bid for the business shows the valuation for mortgage servicing right. While it can be debated whether or not OCN overpaid for the business, the gain on sale spreads for originators remain extremely attractive moving forward. So this is a positive for upcoming earnings reports from PHH.

    There is also the aspect of PHH being a takeover candidate. Tthe ResCap business was generally viewed as the 'last big' potential MSR portfolio up for sale. OCN and NSM have been buying portfolios from banks across the board as the two units scramble to build business via acquisition. Prior to the ResCap deal, OCN had just purchased Wilbur Ross' mortgage servicing business for $750 mln. So, with a lack of deals in the future, there is some speculation that M&A activity will be the next direction for companies.

    -- Some quick color on the NSM/OCN impact. NSM was the 'stalking horse' for this bid which means it will be entitled to a break up fee. THe amount is unknown but it is expected to be in the $24-72 mln range. A small consolation prize but still worth noting. WIth the deal OCN is now approx 3x the size of NSM. If NSM had won the auction it would have been of equal size to OCN

    Sentiment: Strong Buy

 
PHH
23.14-0.41(-1.74%)Nov 21 4:03 PMEST

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