Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | PHH CORP | |
Entity Central Index Key | 77,776 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding (in shares) | 32,547,258 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUES | ||||
Origination and other loan fees | $ 33 | $ 75 | $ 114 | $ 215 |
Gain on loans held for sale, net | 35 | 87 | 129 | 212 |
Loan servicing income, net | 35 | 39 | 96 | 138 |
Net interest expense | (10) | (7) | (23) | (23) |
Other income | 28 | 3 | 31 | 8 |
Net revenues | 121 | 197 | 347 | 550 |
EXPENSES | ||||
Salaries and related expenses | 62 | 86 | 223 | 268 |
Commissions | 13 | 19 | 38 | 49 |
Loan origination expenses | 9 | 18 | 27 | 52 |
Foreclosure and repossession expenses | 4 | 10 | 16 | 26 |
Professional and third-party service fees | 25 | 35 | 92 | 111 |
Technology equipment and software expenses | 9 | 10 | 27 | 30 |
Occupancy and other office expenses | 8 | 11 | 26 | 35 |
Depreciation and amortization | 4 | 4 | 11 | 13 |
Exit and disposal costs | 8 | 0 | 49 | 0 |
Other operating expenses | 57 | 33 | 104 | 64 |
Total expenses | 199 | 226 | 613 | 648 |
Loss before income taxes | (78) | (29) | (266) | (98) |
Income tax benefit | (36) | (8) | (103) | (38) |
Net loss | (42) | (21) | (163) | (60) |
Less: net income attributable to noncontrolling interest | 13 | 6 | 5 | 9 |
Net loss attributable to PHH Corporation | $ (55) | $ (27) | $ (168) | $ (69) |
Basic and Diluted loss per share attributable to PHH Corporation (in usd per share) | $ (1.14) | $ (0.50) | $ (3.25) | $ (1.28) |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (42) | $ (21) | $ (163) | $ (60) |
Other comprehensive income, net of tax: | ||||
Change in unfunded pension liability, net | 0 | 1 | 0 | 1 |
Total other comprehensive income, net of tax | 0 | 1 | 0 | 1 |
Total comprehensive loss | (42) | (20) | (163) | (59) |
Less: comprehensive income attributable to noncontrolling interest | 13 | 6 | 5 | 9 |
Comprehensive loss attributable to PHH Corporation | $ (55) | $ (26) | $ (168) | $ (68) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
ASSETS | |||
Cash and cash equivalents | $ 494 | $ 906 | |
Restricted cash | 52 | 57 | |
Mortgage loans held for sale | 590 | 683 | |
Accounts receivable, net | 94 | 66 | |
Servicing advances, net | 413 | 628 | |
Mortgage servicing rights | 500 | 690 | |
Property and equipment, net | 24 | 36 | |
Deferred taxes, net | 80 | 0 | |
Other assets | 54 | 109 | |
Total assets | [1] | 2,301 | 3,175 |
LIABILITIES | |||
Accounts payable and accrued expenses | 218 | 193 | |
Subservicing advance liabilities | 228 | 290 | |
Mortgage servicing rights secured liability | 440 | 0 | |
Debt, net | 653 | 1,262 | |
Deferred taxes, net | 0 | 101 | |
Loan repurchase and indemnification liability | 38 | 49 | |
Other liabilities | 86 | 157 | |
Total liabilities | [1] | 1,663 | 2,052 |
Commitments and contingencies (Note 11) | |||
Redeemable noncontrolling interest (Note 1 and Note 13) | 44 | 33 | |
EQUITY | |||
Preferred stock, $0.01 par value; 1,090,000 shares authorized; none issued or outstanding | 0 | 0 | |
Common stock, $0.01 par value; 273,910,000 shares authorized; 32,543,288 shares issued and outstanding at September 30, 2017; 53,599,433 shares issued and outstanding at December 31, 2016 | 0 | 1 | |
Additional paid-in capital | 558 | 885 | |
Retained earnings | 46 | 214 | |
Accumulated other comprehensive loss | [2] | (10) | (10) |
Total PHH Corporation stockholders’ equity | 594 | 1,090 | |
Total liabilities and equity | 2,301 | 3,175 | |
Variable Interest Entity | |||
ASSETS | |||
Cash and cash equivalents | 60 | 67 | |
Restricted cash | 18 | 24 | |
Mortgage loans held for sale | 239 | 350 | |
Accounts receivable, net | 17 | 9 | |
Servicing advances, net | 80 | 150 | |
Property and equipment, net | 0 | 1 | |
Other assets | 7 | 12 | |
Total assets | 421 | 613 | |
LIABILITIES | |||
Accounts payable and accrued expenses | 14 | 11 | |
Debt, net | 258 | 399 | |
Other liabilities | 6 | 5 | |
Total liabilities | $ 278 | $ 415 | |
[1] | The Condensed Consolidated Balance Sheets include assets and liabilities of variable interest entities which can be used only to settle the obligations and liabilities of the variable interest entities which creditors or beneficial interest holders do not have recourse to PHH Corporation and subsidiaries. These assets and liabilities are as follows: September 30, 2017 December 31, 2016ASSETS Cash and cash equivalents$60 $67Restricted cash18 24Mortgage loans held for sale239 350Accounts receivable, net17 9Servicing advances, net80 150Property and equipment, net— 1Other assets7 12Total assets$421 $613 LIABILITIES Accounts payable and accrued expenses$14 $11Debt258 399Other liabilities6 5Total liabilities$278 $415 | ||
[2] | Includes amounts recorded related to the Company’s defined benefit pension plan, net of income tax benefits of $6 million as of both September 30, 2017 and December 31, 2016. During both the three and nine months ended September 30, 2017 and September 30, 2016, there were no amounts reclassified out of Accumulated other comprehensive loss. |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
EQUITY | |||||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||
Preferred stock, shares authorized (in shares) | 1,090,000 | 1,090,000 | 1,090,000 | ||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | ||
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized (in shares) | 273,910,000 | 273,910,000 | 273,910,000 | ||
Common stock, shares issued (in shares) | 32,543,288 | 32,543,288 | 53,599,433 | ||
Common stock, shares outstanding (in shares) | 32,543,288 | 32,543,288 | 53,599,433 | ||
Pension adjustment, income tax benefit | $ 6,000,000 | $ 6,000,000 | $ 6,000,000 | ||
Amounts reclassified out of accumulated other comprehensive loss | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Millions | Total | Redeemable Noncontrolling Interest | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning Balance at Dec. 31, 2015 | $ 1,316 | $ 1 | $ 909 | $ 416 | $ (10) | |
Beginning Balance (in shares) at Dec. 31, 2015 | 55,007,983 | |||||
PHH Corporation Stockholders’ Equity | ||||||
Total comprehensive (loss) income | (68) | (69) | 1 | |||
Total comprehensive (loss) income | (59) | |||||
Adjustment to redemption value of noncontrolling interest (Note 13) | 1 | 1 | ||||
Stock compensation expense | 6 | 6 | ||||
Stock issued under share-based payment plans | (9) | (9) | ||||
Stock issued under share-based payment plans (in shares) | 86,354 | |||||
Repurchase of Common stock | (23) | (23) | ||||
Repurchase of Common stock (in shares) | (1,508,772) | |||||
Ending Balance at Sep. 30, 2016 | 1,223 | $ 1 | 884 | 347 | (9) | |
Ending Balance (in shares) at Sep. 30, 2016 | 53,585,565 | |||||
Beginning Balance at Dec. 31, 2015 | $ 32 | |||||
Redeemable Noncontrolling Interest | ||||||
Total comprehensive (loss) income | 9 | |||||
Distributions to noncontrolling interest | (3) | |||||
Adjustment to redemption value of noncontrolling interest (Note 13) | (1) | |||||
Ending Balance at Sep. 30, 2016 | 37 | |||||
Beginning Balance at Dec. 31, 2016 | $ 1,090 | $ 1 | 885 | 214 | (10) | |
Beginning Balance (in shares) at Dec. 31, 2016 | 53,599,433 | 53,599,433 | ||||
PHH Corporation Stockholders’ Equity | ||||||
Total comprehensive (loss) income | $ (168) | (168) | ||||
Total comprehensive (loss) income | (163) | |||||
Adjustment to redemption value of noncontrolling interest (Note 13) | (28) | (28) | ||||
Stock compensation expense | 6 | 6 | ||||
Reclassification of stock awards | (4) | (4) | ||||
Stock issued under share-based payment plans | (1) | (1) | ||||
Stock issued under share-based payment plans (in shares) | 157,283 | |||||
Repurchase of Common stock | (301) | $ (1) | (300) | |||
Repurchase of Common stock (in shares) | (21,213,428) | |||||
Ending Balance at Sep. 30, 2017 | $ 594 | $ 0 | $ 558 | $ 46 | $ (10) | |
Ending Balance (in shares) at Sep. 30, 2017 | 32,543,288 | 32,543,288 | ||||
Beginning Balance at Dec. 31, 2016 | $ 33 | 33 | ||||
Redeemable Noncontrolling Interest | ||||||
Total comprehensive (loss) income | 5 | |||||
Distributions to noncontrolling interest | (22) | |||||
Adjustment to redemption value of noncontrolling interest (Note 13) | 28 | |||||
Ending Balance at Sep. 30, 2017 | $ 44 | $ 44 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Parenthetical) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Benefit from excess tax shortfall | $ 9 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (163) | $ (60) |
Adjustments to reconcile Net loss to net cash provided by operating activities: | ||
Capitalization of originated mortgage servicing rights | (28) | (45) |
Change in fair value of mortgage servicing rights and related derivatives | 93 | 133 |
Change in fair value of mortgage servicing rights secured liability | (27) | 0 |
Loss on early extinguishment of debt | 34 | 0 |
Gain on PHH Home Loans asset sales | (28) | 0 |
Origination of mortgage loans held for sale | (5,689) | (7,848) |
Proceeds on sale of and payments from mortgage loans held for sale | 5,992 | 8,029 |
Net gain on interest rate lock commitments, mortgage loans held for sale and related derivatives | (182) | (219) |
Depreciation and amortization | 11 | 13 |
Deferred income tax benefit | (181) | (75) |
Other adjustments and changes in other assets and liabilities, net | 165 | 92 |
Net cash (used in) provided by operating activities | (3) | 20 |
Cash flows from investing activities: | ||
Net cash (paid) received on derivatives related to mortgage servicing rights | (45) | 121 |
Proceeds on sale of mortgage servicing rights | 122 | 7 |
Proceeds on sale of servicing advances | 31 | 0 |
Proceeds from PHH Home Loans asset sales | 28 | 0 |
Purchases of property and equipment | (1) | (13) |
Decrease (increase) in restricted cash | 5 | (3) |
Other, net | 0 | 5 |
Net cash provided by investing activities | 140 | 117 |
Cash flows from financing activities: | ||
Proceeds from secured borrowings | 7,408 | 9,301 |
Principal payments on secured borrowings | (7,527) | (9,319) |
Proceeds from mortgage servicing rights secured liability | 420 | 0 |
Principal payments on unsecured borrowings | (496) | 0 |
Cash tender premiums for debt extinguishment | (28) | 0 |
Repurchase of common stock | (301) | (23) |
Cash paid for debt issuance costs | (2) | (3) |
Distributions to noncontrolling interest | (22) | (3) |
Other, net | (1) | 0 |
Net cash used in financing activities | (549) | (47) |
Net (decrease) increase in Cash and cash equivalents | (412) | 90 |
Cash and cash equivalents at beginning of period | 906 | 906 |
Cash and cash equivalents at end of period | $ 494 | $ 996 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Nature of Operations PHH Corporation and subsidiaries (collectively, “PHH” or the “Company”) operates in two business segments: Mortgage Production, which provides mortgage loan origination services and sells mortgage loans, and Mortgage Servicing, which performs servicing activities for originated and purchased loans, and acts as a subservicer for certain clients that own the underlying mortgage servicing rights. During 2016, the Company entered into an agreement to sell substantially all of its existing mortgage servicing rights ("MSRs") to New Residential Investment Corp. (“New Residential”), and a number of sales under this agreement were completed during the second and third quarters of 2017. The Company has determined that New Residential has not acquired all ownership rewards since the terms of the subservicing contract limit New Residential’s ability to terminate the contract within the first three years. As a result, while there was a legal true sale of the MSRs from the Company to New Residential, the Company accounted for such sale of servicing rights as a secured borrowing. Under this accounting treatment, the MSRs transferred to New Residential remain on the Condensed Consolidated Balance Sheets and the proceeds from the sale are recognized as a Mortgage servicing rights secured liability . The Company elected to record the MSRs secured liability at fair value consistent with the related MSR asset. Changes in fair value including the market-related fair value adjustments and actual prepayments of the underlying mortgage loan and receipts of recurring cash flows, and the estimated yield on the related MSR asset, are recorded in Loan servicing income, net in the Condensed Consolidated Statements of Operations. Implied interest cost on the MSRs secured liability is recorded in Net interest expense in the Condensed Consolidated Statements of Operations which offsets the estimated yield on the MSR asset, both of which represent non-cash amounts. Proceeds from the sale of these MSRs are included in financing activities in the Condensed Consolidated Statements of Cash Flows. Refer to Note 4, 'Servicing Activities' and Note 12, 'Fair Value Measurements' for further information. Basis of Consolidation The Condensed Consolidated Financial Statements include the accounts and transactions of PHH and its subsidiaries, as well as entities in which the Company directly or indirectly has a controlling interest and variable interest entities of which the Company is the primary beneficiary. PHH Home Loans, LLC (“PHH Home Loans”) and its subsidiaries are consolidated within the Condensed Consolidated Financial Statements and the ownership interest of Realogy Services Venture Partner LLC, a subsidiary of Realogy Holdings Corp. ("Realogy") is presented as a redeemable noncontrolling interest. In February 2017, the Company announced it has entered into agreements to sell certain assets of PHH Home Loans and its subsidiaries, including its mortgage origination and processing centers and the majority of its employees. Refer to Note 13, 'Variable Interest Entities' for further information on the sale transactions. Intercompany balances and transactions have been eliminated from the Condensed Consolidated Financial Statements . During the third quarter of 2017, the Company identified an error in the balance sheet presentation and measurement of Redeemable noncontrolling interests. Realogy’s ownership interests in PHH Home Loans have previously been reported as a Noncontrolling interest and presented as a component of Total equity; however, the Company has determined the balance should have been presented as a Redeemable noncontrolling interest within Mezzanine equity. This presentation reflects Realogy’s right, beginning on February 1, 2015, to require that the Company purchase all of Realogy’s interest in PHH Home Loans upon two years notice at fair value, as outlined in the PHH Home Loans Operating Agreement. In addition, since the redemption value of the Redeemable noncontrolling interest exceeded the historical carrying amount, the correction also includes an adjustment to Additional paid-in capital to re-measure the Redeemable noncontrolling interest at its redemption value. While the Redeemable noncontrolling interest is adjusted to the redemption value at the end of each reporting period, the Company continues to allocate Realogy its portion of income or loss and distributions for each period. See Note 19, 'Variable Interest Entities' in the Company’s 2016 Form 10-K for further discussion of Realogy's termination rights and the related agreements. The Company has evaluated the materiality of this error on its prior period financial statements from a quantitative and qualitative perspective. Management has concluded that the error was not material to any prior annual or interim period or the trend of financial results; therefore, amendments to previously filed reports are not required. The Company has corrected the error for all prior periods presented by revising the Condensed Consolidated Financial Statements appearing herein. Periods not presented herein will be revised, as applicable, in future filings. The impact of this revision to the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Equity was a reduction to Total equity of $32 million , $37 million and $33 million as of December 31, 2015, September 30, 2016 and December 31, 2016 , respectively, with an offsetting increase to amounts presented as a Redeemable noncontrolling interest within Mezzanine equity. The reduction to Total equity included a decrease to amounts reported as Additional paid-in capital of $2 million , $1 million and $2 million as of December 31, 2015, September 30, 2016 and December 31, 2016 , respectively. There was no effect to reported totals for assets, liabilities, cash flows or net loss. Refer to Note 13, 'Variable Interest Entities' for further information. Unaudited Interim Financial Information The Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In management’s opinion, the unaudited Condensed Consolidated Financial Statements contain all adjustments, which include normal and recurring adjustments, necessary for a fair presentation of the financial position and results of operations for the interim periods presented. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s 2016 Form 10-K. Unless otherwise noted and except for share and per share data, dollar amounts presented within these Notes to Condensed Consolidated Financial Statements are in millions. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions include, but are not limited to, those related to the valuation of mortgage servicing rights and the related secured liability , mortgage loans held for sale and other financial instruments, the estimation of liabilities for commitments and contingencies, mortgage loan repurchases and indemnifications and the determination of certain income tax assets and liabilities and associated valuation allowances. Actual results could differ from those estimates. Accounting Pronouncements Adopted During the Period In March 2016, the FASB issued ASU 2016-06, “Contingent Put and Call Options in Debt Instruments.” This update clarified that in assessing whether an embedded contingent put or call option is clearly and closely related to the debt host, an entity is only required to perform a specific four-step decision sequence and is no longer required to assess whether the contingency for exercising the option is indexed to interest rate or credit risk. The Company adopted this update on January 1, 2017 using a modified retrospective approach, and there was no impact to the financial statements or disclosures. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting." This update simplified several aspects of the accounting for share-based payment transactions, including accounting for income taxes, the classification of awards as either equity or liabilities and the classification of excess tax benefits and payments for tax withholdings on the statement of cash flows. The Company adopted this update on January 1, 2017 using either a prospective, modified retrospective or retrospective approach, depending on the area of change with the more significant provisions described below: • Accounting for income taxes. The Company recognized all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of income and applied this provision prospectively. The tax effects were treated as discrete items to calculate the effective tax rate and resulted in $2 million of income tax expense during the nine months ended September 30, 2017 . • Forfeiture rates. The Company elected to account for forfeitures as they occur and applied this provision using a modified retrospective approach. The impact to opening retained earnings was not significant. • Statement of Cash Flows. On a retrospective basis, the Company classified cash paid by an employer when directly withholding shares for tax withholding purposes as a financing activity which totaled $1 million during the nine months ended September 30, 2017 . The amount of tax withholding was not significant for the nine months ended September 30, 2016 . In addition, on a prospective basis, the Company will classify excess tax benefits as an operating activity which did not have an impact to the statement of cash flows. In October 2016, the FASB issued ASU 2016-17, "Interests Held through Related Parties That Are under Common Control." This update required an entity to include indirect interest held through related parties that are under common control on a proportionate basis when evaluating if a reporting entity is the primary beneficiary of a variable interest entity. The Company adopted this update on January 1, 2017 using a retrospective approach. This adoption did not change any of the Company's consolidation conclusions, and there was no impact to the financial statements or disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company’s consolidated financial statements and disclosures, from those included in the Company’s 2016 Form 10-K, except for the following: Effective for the First Quarter of 2018 • In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers.” The core principle requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. The FASB has issued several amendments to provide additional clarification and implementation instructions relating to (i) principal versus agent considerations, (ii) identifying performance obligations and licensing, (iii) narrow-scope improvements and practical expedients and (iv) technical corrections and improvements. These updates are to be applied retrospectively to all prior periods presented or through a cumulative adjustment in the year of adoption, and are effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The Company has reviewed the scope of the guidance and determined that a majority of the Company's revenue streams associated with origination and servicing activities are not within the scope of the standard because the standard does not apply to revenue on contracts accounted for under ASC 860, "Transfers and Servicing of Financial Assets" or ASC 825, "Financial Instruments". However, the Company has identified select revenue streams that are within scope of the revenue standard, including origination assistance fees associated with fee-based closings in our private label channel, and certain ancillary fees associated with subservicing contracts such as boarding and deboarding fees. While there may be some impact on revenue recognition, at this time, the Company currently does not expect the adoption of this guidance to have a material impact on the consolidated financial statements or result in a significant transition adjustment upon adoption; however, the Company continues to evaluate other potential effects this guidance may have including, changes in footnote requirements and the impact to internal controls. The amount of in-scope revenue streams associated with our private label channel are expected to continue to decrease as the Company completes the exit of this business during 2018. The Company will adopt this standard using a modified retrospective approach in the first quarter of 2018 with a cumulative effect adjustment to retained earnings. • In March 2017, the FASB issued ASU 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This update changes the income statement presentation of defined benefit plan expense by requiring the service cost component to be presented in the same line item as other compensation costs and all other components (including interest cost, amortization of prior service cost, settlements, etc.) to be presented separately from the service cost component. This update is effective for the first interim and annual periods beginning after December 15, 2017, with early adoption permitted. At adoption, this update will be applied retrospectively. The Company's defined benefit pension plan and the other post-employment benefits plan are frozen, wherein the plans only accrue additional benefits for a very limited number of employees. As a result, the Company does not expect the adoption of this update to have a significant impact on its financial statements. • In May 2017, the FASB issued ASU 2017-09, "Scope of Modification Accounting." This update clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. This update is effective for the first interim and annual periods beginning after December 15, 2017, with early adoption permitted. At adoption, this update will be applied prospectively. The Company does not expect the adoption of this update to have a significant impact on its financial statements. |
Exit Costs
Exit Costs | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Exit Costs | 2. Exit Costs PLS Exit In November 2016, the Company announced its plan to exit the private label solutions ("PLS") business within the Mortgage Production segment. This business channel provides end-to-end origination services to financial institution clients, and represented 79% of the Company's total mortgage production volume (based on dollars) for the year ended December 31, 2016. Due to elevated operating losses, increasing regulatory and client customization costs and a shrinking market for financial institution origination services, the Company determined the exit of the business was necessary. The Company expects that it will be in a position to substantially exit this channel by the first quarter of 2018, subject to transition support requirements. The following is a summary of expenses incurred to date for the PLS exit program within Exit and disposal costs in the Condensed Consolidated Statements of Operations , including an estimate of remaining and total program costs: Nine Months Ended September 30, 2017 Severance and Termination Benefits Facility Exit Costs Contract Termination & Other Costs Non-Cash Charges & Impairments (1) Total (In millions) Costs incurred in current year: First quarter $ 4 $ 4 $ — $ — $ 8 Second quarter 4 — 8 (4 ) 8 Third quarter 3 — — — 3 11 4 8 (4 ) 19 Cumulative costs recognized in prior year 22 — 4 15 41 Estimate of remaining costs 5 18 7 — 30 Total $ 38 $ 22 $ 19 $ 11 $ 90 ______________ (1) During the second quarter of 2017, the Company recorded $4 million to reverse previously accrued liabilities associated with the Jacksonville facility. The following is a summary of the PLS program costs by segment as of September 30, 2017 : Mortgage Production Other Total (In millions) Costs incurred in current year: First quarter $ 7 $ 1 $ 8 Second quarter 7 1 8 Third quarter 1 2 3 15 4 19 Cumulative costs recognized in prior year 33 8 41 Estimate of remaining costs 27 3 30 Total $ 75 $ 15 $ 90 Reorganization In February 2017, as an outcome of its strategic review, the Company announced its intention to operate as a smaller business that is focused on subservicing and portfolio retention services. Costs estimated for this Reorganization exit program, which are presented separately from the PLS exit program, include severance, acceleration of existing retention and incentive awards and other costs to execute the reorganization and change the focus of the Company's operations. The Company expects it will incur the remaining exit costs through the first quarter of 2018. The following is a summary of expenses incurred to date for the Reorganization exit program within Exit and disposal costs in the Condensed Consolidated Statements of Operations , including an estimate of remaining and total program costs: Nine Months Ended September 30, 2017 Severance and Termination Benefits Facility Exit Costs Contract Termination & Other Costs Non-Cash Charges & Impairments (1) Total (2) (In millions) Costs incurred in current year: First quarter $ 17 $ — $ — $ — $ 17 Second quarter 4 2 — 2 8 Third quarter 4 — 1 — 5 25 2 1 2 30 Cumulative costs recognized in prior year — — — — — Estimate of remaining costs 5 1 — 2 8 Total $ 30 $ 3 $ 1 $ 4 $ 38 ______________ (1) During the second quarter of 2017, the Company recorded a $2 million impairment for an equity method investment. (2) Exit Costs related to Reorganization include amounts attributable to noncontrolling interest, representing $5 million of Costs incurred during the nine months ended September 30, 2017 , and $8 million of expected Total program costs. Refer to Note 13, 'Variable Interest Entities' for further information regarding agreements to sell certain assets of PHH Home Loans and its subsidiaries and exit the Real Estate channel. The following is a summary of the Reorganization program costs by segment as of September 30, 2017 : Mortgage Production Mortgage Servicing Other Total (In millions) Costs incurred in current year: First quarter $ 6 $ 2 $ 9 $ 17 Second quarter 3 — 5 8 Third quarter 5 — — 5 14 2 14 30 Cumulative costs recognized in prior year — — — — Estimate of remaining costs 6 1 1 8 Total $ 20 $ 3 $ 15 $ 38 Exit Cost Liability The Company's Exit cost liability is included in Accounts payable and accrued expenses within the Condensed Consolidated Balance Sheets . A summary of the aggregate activity for both the PLS exit program and the Reorganization exit program is as follows: Nine Months Ended September 30, 2017 Severance and Termination Benefits Facility Exit Costs Contract Termination & Other Costs Total (In millions) Balance, beginning of period $ 22 $ — $ 3 $ 25 Charges 36 6 9 51 Paid (9 ) (6 ) (2 ) (17 ) Adjustments (1) 5 — — 5 Balance, end of period $ 54 $ — $ 10 $ 64 ______________ (1) This adjustment represents previously accrued amounts of existing retention and incentive awards for exiting employees that will be paid out upon termination and other non-cash charges. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 3. Earnings Per Share Basic earnings or loss per share attributable to PHH Corporation was computed by dividing Net income or loss attributable to PHH Corporation by the weighted-average number of shares outstanding during the period. Diluted earnings or loss per share attributable to PHH Corporation was computed by dividing Net income or loss attributable to PHH Corporation by the weighted-average number of shares outstanding during the period, assuming all potentially dilutive common shares were issued. In the nine months ended September 30, 2017, the Company's Board of Directors authorized share repurchases of our common stock of up to $300 million . As part of that authorization, on August 11, 2017, the Company announced the commencement of a modified “Dutch auction” self-tender offer to purchase shares of its common stock for an aggregate amount of up to $266 million in cash representing the remaining authorized amount, with the right to purchase an additional 2% of its outstanding shares for an additional purchase price. Any shares received under the share repurchase program are retired upon receipt and reported as a reduction of shares issued and outstanding as of each settlement date, and the cash paid is recorded as a reduction of stockholders' equity in the Condensed Consolidated Balance Sheets . Weighted-average common shares outstanding includes the following activity: • the repurchase of 2,450,466 common shares for $34 million under an open market program during the nine months ended September 30, 2017 , of which 689,502 common shares for $10 million were repurchased during the three months ended September 30, 2017 ; • the repurchase of 18,762,962 common shares for $267 million under a modified "Dutch auction" self-tender offer during September 2017; and • the repurchase of 1,508,772 common shares under an open market program during January 2016. The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method excludes the effect of any contingently issuable securities where the contingency has not been met and excludes the effect of securities that would be anti-dilutive. Anti-dilutive securities may include: (i) outstanding stock-based compensation awards representing shares from restricted stock units and stock options and (ii) stock assumed to be issued related to convertible notes. The following table summarizes the calculations of basic and diluted earnings or loss per share attributable to PHH Corporation and anti-dilutive securities excluded from the computation of diluted shares for the periods indicated: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions, except share and per share data) Net loss attributable to PHH Corporation $ (55 ) $ (27 ) $ (168 ) $ (69 ) Weighted-average common shares outstanding — basic & diluted 48,210,099 53,578,044 51,724,911 53,616,403 Basic and Diluted loss per share attributable to PHH Corporation $ (1.14 ) $ (0.50 ) $ (3.25 ) $ (1.28 ) Anti-dilutive securities excluded from the computation of diluted shares: Outstanding stock-based compensation awards (1) 1,006,213 1,971,055 1,006,213 1,971,055 ——————— (1) For the three and nine months ended September 30, 2017 , excludes 52,698 shares that are contingently issuable for which the contingency has not been met. |
Servicing Activities
Servicing Activities | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Servicing Activities | 4. Servicing Activities Total Servicing Portfolio The following table summarizes the total servicing portfolio, which consists of loans associated with capitalized MSRs owned and secured, loans held for sale, and the portfolio associated with loans subserviced for others: September 30, December 31, Fair Value UPB Fair Value UPB (In millions) Capitalized MSRs owned $ 60 $ 8,906 $ 690 $ 84,657 Capitalized MSRs under secured borrowing arrangements and subserviced (1) 440 51,465 — — Total capitalized MSRs $ 500 $ 60,371 $ 690 $ 84,657 Subserviced 90,354 89,170 Other owned servicing 757 815 Total $ 151,482 $ 174,642 ——————— (1) Accounted for as a secured borrowing arrangement. Refer to Note 1, 'Summary of Significant Accounting Policies' for additional information. Loan Servicing Income, Net The following table summarizes the components of Loan servicing income, net: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Servicing fees from capitalized portfolio (1) $ 22 $ 67 $ 125 $ 204 Subservicing fees 17 17 38 53 Late fees and other ancillary revenue 6 9 21 27 Loss on sale of MSRs (3 ) — (16 ) (2 ) Curtailment interest paid to investors — (4 ) (6 ) (11 ) Loan servicing income 42 89 162 271 Change in fair value of MSRs, net of related derivatives (2) (35 ) (50 ) (93 ) (133 ) Change in fair value of MSRs secured liability 28 — 27 — Loan servicing income, net $ 35 $ 39 $ 96 $ 138 ____________________ (1) Servicing fees from capitalized portfolio include $14 million and $15 million related to the estimated yield on capitalized MSRs treated as a secured borrowing arrangement for the three and nine months ended September 30, 2017 , respectively. This is fully offset by the MSRs secured interest expense included within Net interest expense. (2) Net of derivative losses of $4 million and derivative gains of $139 million for the three and nine months ended September 30, 2016 , respectively. Derivative gains for the three and nine months ended September 30, 2017 were not significant. Sales of MSRs While the Company has historically retained MSRs on its balance sheet from the majority of its loan sales, the Company has entered into contracts to sell substantially all of its existing MSR assets in a series of transactions as part of the conclusions reached from the strategic review process. If the sales of these MSRs are completed, the Company does not anticipate retaining a significant amount of capitalized MSRs owned in the future. The final proceeds the Company may receive from each MSR sale are dependent on the portfolio composition and market conditions at each transfer date and are also dependent upon the extent to which consent is received from the GSEs, private loan investors, PLS clients and other origination sources. The following table summarizes the Company's MSRs and its commitments under sale agreements, based on the portfolio as of September 30, 2017 : September 30, 2017 UPB Fair Value (In millions) MSR commitments: New Residential Investment Corp. $ 6,430 $ 38 Other counterparties 548 5 MSRs capitalized under secured borrowing arrangements and subserviced 51,465 440 Non-committed 1,928 17 Total MSRs $ 60,371 $ 500 In addition, the Company has commitments to transfer approximately $145 million of Servicing advances to the counterparties of these agreements (based on the September 30, 2017 portfolio). For the three and nine months ended September 30, 2017 , the Company received $31 million and $122 million , respectively, in cash from sales of MSRs that have been removed from the Condensed Consolidated Balance Sheets . For the three and nine months ended September 30, 2017 , the Company received an additional $318 million and $420 million in cash from sales of MSRs that have been accounted for as a secured borrowing arrangement. As of September 30, 2017 , the Company has recorded $42 million in Accounts receivable, net related to holdback from executed MSR sales and transfers, to address indemnification claims and mortgage loan document deficiencies. Lakeview/GNMA Portfolio. In November 2016, the Company entered into an agreement to sell substantially all of its Ginnie Mae ("GNMA") MSRs and related advances to Lakeview Loan Servicing, LLC ("Lakeview"). On February 2, 2017, the initial sale of GNMA MSRs under this agreement was completed, representing $10.2 billion of unpaid principal balance, $74 million of MSR fair value, and $11 million of Servicing advances with total expected proceeds of $85 million from the initial transfer. On May 2, 2017 , an additional sale of GNMA MSRs was completed, representing $1.0 billion of unpaid principal balance, $7 million of MSR fair value, and $1 million of Servicing advances with total expected proceeds of $8 million from this transfer. On August 2, 2017, the final transfer under this agreement was completed, representing $2.0 billion of unpaid principal balance, $12 million of MSR fair value, and $2 million of Servicing advances with total expected proceeds of $14 million . New Residential. On December 28, 2016, the Company entered into an agreement to sell substantially all of its portfolio of MSRs and related advances, excluding the GNMA MSRs sold to Lakeview, to New Residential Mortgage LLC ("New Residential"), a wholly-owned subsidiary of New Residential Investment Corporation. On June 16, 2017, the sale of substantially all of the committed Freddie Mac MSRs under this agreement was completed, representing $13.2 billion of unpaid principal balance, $113 million of MSR fair value, and $8 million of Servicing advances with total expected proceeds of $121 million . On July 3, 2017, the sale of substantially all of the committed Fannie Mae MSRs under this agreement was completed, representing $39.5 billion of unpaid principal balance, $342 million of MSR fair value, and $24 million of Servicing advances with total expected proceeds of $366 million . During September 2017, two additional sales of Fannie Mae and Freddie Mac MSRs under this agreement were completed, representing $1.3 billion of unpaid principal balance, $12 million of MSR fair value, and $1 million of Servicing advances with total expected proceeds of $13 million . All of the preceding sales with New Residential have been accounted for as a secured borrowing arrangement, which is further described in Note 12, 'Fair Value Measurements' . The consummation of substantially all of the remaining MSRs and related advances contemplated by this sale agreement is subject to the approvals of multiple counterparties, including origination sources, investors and trustees, as well as other customary closing requirements. In connection with the agreement, the Company entered into a subservicing agreement with New Residential, pursuant to which the Company will subservice the loans sold in this transaction for an initial period of three years, subject to certain transfer and termination provisions, which includes 377,000 units as of September 30, 2017 as part of the secured borrowing arrangement. Additionally, there are 30,000 units in the owned portfolio that are committed to sell to New Residential as of September 30, 2017 . Other counterparties. Commitments to sell MSRs to other counterparties may include: (i) agreements to sell a portion of the Company's newly-created MSRs to third parties through flow-sale agreements, where the Company will have continuing involvement as a subservicer; (ii) agreements to sell a portion of MSRs to clients that were the origination source of the MSRs that were previously part of the New Residential commitments; and (iii) agreements for small portfolio sales of existing MSRs, consistent with its intention to not retain a significant amount of MSRs in the future. For the nine months ended September 30, 2017 , $31 million of MSR fair value was sold to other counterparties. In addition to the commitments presented on the table above, as of September 30, 2017 , the Company had commitments to sell MSRs through third-party flow sales related to $31 million of the unpaid principal balance of Mortgage loans held for sale and Interest rate lock commitments that are expected to result in closed loans. Mortgage Servicing Rights The activity in the total loan servicing portfolio unpaid principal balance associated with capitalized mortgage servicing rights consisted of: Nine Months Ended Nine Months Ended 2017 2016 2017 MSRs Owned MSRs Secured Asset (In millions) Balance, beginning of period $ 84,657 $ 98,990 $ — Additions from loans sold with servicing retained 2,543 4,476 — Payoffs and curtailments (7,249 ) (14,102 ) (2,494 ) Sales that have been derecognized (17,086 ) (742 ) — Sales accounted for as secured borrowing (53,959 ) — 53,959 Balance, end of period $ 8,906 $ 88,622 $ 51,465 The activity in total capitalized MSRs consisted of: Nine Months Ended Nine Months Ended 2017 2016 2017 MSRs Owned MSRs Secured Asset (In millions) Balance, beginning of period $ 690 $ 880 $ — Additions from loans sold with servicing retained 28 45 — Sales that have been derecognized (125 ) (8 ) — Sales accounted for as secured borrowing (467 ) — 467 Changes in fair value due to: Realization of expected cash flows (57 ) (98 ) (21 ) Changes in market inputs or assumptions used in the valuation model (9 ) (174 ) (6 ) Balance, end of period $ 60 $ 645 $ 440 Sales of Mortgage Loans Residential mortgage loans are sold through one of the following methods: (i) sales to or pursuant to programs sponsored by Fannie Mae, Freddie Mac and the Government National Mortgage Association (collectively, the "Agencies") or (ii) sales to private investors. The Company may have continuing involvement in mortgage loans sold by retaining MSRs and/or recourse obligations, as discussed further in Note 11, 'Commitments and Contingencies' . The following table sets forth information regarding cash flows relating to loan sales in which the Company has continuing involvement: Nine Months Ended 2017 2016 (In millions) Proceeds from new loan sales or securitizations $ 2,685 $ 4,647 Servicing fees from capitalized portfolio (1) 115 229 Purchases of previously sold loans (2) (20 ) (232 ) Servicing advances (3) (847 ) (1,217 ) Repayment of servicing advances (3) 1,058 1,241 ____________________ (1) Includes servicing fees, late fees and other ancillary servicing revenue in which the Company has continuing involvement. (2) Includes purchases of repurchase eligible loans and excludes indemnification payments to investors and insurers of the related mortgage loans. (3) Outstanding servicing advance receivables are presented in Servicing advances, net in the Condensed Consolidated Balance Sheets , except for advances related to loans in foreclosure or real estate owned, which are included in Other assets. Repayment of servicing advances includes the $66 million received for advances from sales of MSRs executed in the nine months ended September 30, 2017 . During the three and nine months ended September 30, 2017 , pre-tax gains of $44 million and $139 million , respectively, related to the sale or securitization of residential mortgage loans were recognized in Gain on loans held for sale, net in the Condensed Consolidated Statements of Operations . During the three and nine months ended September 30, 2016 , pre-tax gains of $77 million and $185 million , respectively, related to the sale or securitization of residential mortgage loans were recognized in Gain on loans held for sale, net in the Condensed Consolidated Statements of Operations . |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | 5. Derivatives Derivative instruments and the risks they manage are as follows: ▪ Forward delivery commitments — Related to interest rate and price risk for mortgage loans held for sale and interest rate lock commitments ▪ Option contracts — Related to interest rate and price risk for mortgage loans held for sale and interest rate lock commitments ▪ MSR-related agreements — Related to interest rate risk for mortgage servicing rights. Derivative instruments are recorded in Other assets and Other liabilities in the Condensed Consolidated Balance Sheets . The Company does not have any derivative instruments designated as hedging instruments. The following table summarizes the gross notional amount of derivatives: September 30, December 31, (In millions) Interest rate lock commitments $ 689 $ 862 Forward delivery commitments 1,279 2,104 Option contracts 75 120 MSR-related agreements (1) — 260 ______________ (1) In the fourth quarter of 2016, the Company significantly reduced its MSR-related derivative hedge coverage as a result of the MSR sale agreements that fix the prices the Company expects to realize at future transfer dates. The remaining MSR-related derivatives were settled during the nine months ended September 30, 2017 . For further discussion of the MSR sale agreements, see Note 4, 'Servicing Activities' . The following tables present the balances of outstanding derivative instruments on a gross basis and the application of counterparty and collateral netting: September 30, 2017 Gross Assets Offsetting Payables Cash Collateral Net Amount (In millions) ASSETS Subject to master netting arrangements: Forward delivery commitments $ 1 $ (1 ) $ — $ — Not subject to master netting arrangements: Interest rate lock commitments 13 — — 13 Total derivative assets $ 14 $ (1 ) $ — $ 13 Gross Liabilities Offsetting Receivables Cash Collateral Net Amount LIABILITIES Subject to master netting arrangements: Forward delivery commitments $ 2 $ (1 ) $ — $ 1 Total derivative liabilities $ 2 $ (1 ) $ — $ 1 December 31, 2016 Gross Assets Offsetting Payables Cash Collateral Paid Net Amount (In millions) ASSETS Subject to master netting arrangements: Forward delivery commitments $ 13 $ (43 ) $ 31 $ 1 MSR-related agreements 19 (22 ) 4 1 Option contracts 1 (1 ) — — Derivative assets subject to netting 33 (66 ) 35 2 Not subject to master netting arrangements: Interest rate lock commitments 18 — — 18 Forward delivery commitments 1 — — 1 Derivative assets not subject to netting 19 — — 19 Total derivative assets $ 52 $ (66 ) $ 35 $ 21 Gross Liabilities Offsetting Cash Collateral Net Amount LIABILITIES Subject to master netting arrangements: Forward delivery commitments $ 4 $ (10 ) $ 11 $ 5 MSR-related agreements 65 (55 ) 2 12 Option contracts — (1 ) 2 1 Derivative liabilities subject to netting 69 (66 ) 15 18 Total derivative liabilities $ 69 $ (66 ) $ 15 $ 18 The following table summarizes the gains (losses) recorded in the Condensed Consolidated Statements of Operations for derivative instruments: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Gain on loans held for sale, net: Interest rate lock commitments $ 62 $ 100 $ 175 $ 278 Forward delivery commitments (6 ) (6 ) (11 ) (41 ) Option contracts — — (1 ) (1 ) Loan servicing income, net: MSR-related agreements — (4 ) — 139 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2017 | |
Other Assets [Abstract] | |
Other Assets | 6. Other Assets Other assets consisted of: September 30, December 31, (In millions) Real estate owned, net (1) $ 21 $ 16 Derivatives (Note 5) 13 21 Prepaid expenses 10 11 Equity method investments 7 10 Repurchase eligible loans (2) 1 13 Mortgage loans in foreclosure, net (3) — 21 Income taxes receivable — 14 Other 2 3 Total $ 54 $ 109 ______________ (1) As of September 30, 2017 and December 31, 2016 , Real estate owned is net of Adjustment to value for real estate owned of $19 million and $14 million , respectively. (2) Repurchase eligible loans represent certain mortgage loans sold pursuant to GNMA programs where the Company, as servicer, has the unilateral option to repurchase the loan if certain criteria are met, including if a loan is greater than 90 days delinquent and where it has been determined that there is more than a trivial benefit from exercising the repurchase option. Regardless of whether the repurchase option has been exercised, the Company must recognize eligible loans within Other assets and a corresponding repurchase liability within Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets . (3) As of September 30, 2017 , the balance of Mortgage loans in foreclosure is not significant since a majority of the loans and associated reserves have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. As of December 31, 2016 , Mortgage loans in foreclosure is net of Allowance for probable foreclosure losses of $10 million . |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Accounts Payable and Accrued Expenses | 7. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of: September 30, December 31, (In millions) Exit cost liability (Note 2) $ 64 $ 25 Income taxes payable (Note 10) 50 — Accrued payroll and benefits 47 50 Accounts payable 41 77 Accrued servicing related expenses 12 12 Repurchase eligible loans (Note 6) 1 13 Accrued interest and other 3 16 Total $ 218 $ 193 |
Other Liabilities
Other Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | 8. Other Liabilities Other liabilities consisted of: September 30, December 31, (In millions) Legal and regulatory matters (Note 11) $ 58 $ 114 Pension and other post-employment benefits 11 11 Income tax contingencies 8 8 Liability to deliver MSRs (Note 12) 2 — Derivatives (Note 5) 1 18 Other 6 6 Total $ 86 $ 157 |
Debt and Borrowing Arrangements
Debt and Borrowing Arrangements | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt and Borrowing Arrangements | 9. Debt and Borrowing Arrangements The following table summarizes the components of Debt: September 30, 2017 December 31, Balance Interest (1) Available Capacity (2) Balance (In millions) Committed warehouse facilities $ 405 3.4 % $ 195 $ 556 Uncommitted warehouse facilities 78 2.9 % 222 — Servicing advance facility 52 3.2 % 13 99 Term notes due in 2019 97 7.375 % n/a 275 Term notes due in 2021 22 6.375 % n/a 340 Unsecured credit facilities — — 3 — Unsecured debt, face value 119 615 Debt issuance costs (1 ) (8 ) Unsecured debt, net 118 607 Total $ 653 $ 1,262 ______________ (1) Interest rate shown represents the stated interest rate of outstanding borrowings, which may differ from the effective rate due to the amortization of premiums, discounts and issuance costs. Warehouse facilities and the servicing advance facility are variable-rate. Rate shown for warehouse facilities represents the weighted-average rate of current outstanding borrowings. (2) Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements, including asset-eligibility requirements. Assets pledged as collateral or funded by subservicing clients that are not available to pay the Company’s general obligations as of September 30, 2017 consisted of: Warehouse Facilities Servicing Advance Facility Subservicing Advance Liabilities (1) MSRs Secured Liability (2) (In millions) Restricted cash $ 6 $ 14 $ — $ — Servicing advances — 80 228 — Mortgage loans held for sale (unpaid principal balance) 502 — — — Mortgage servicing rights — — — 440 Total $ 508 $ 94 $ 228 $ 440 ______________ (1) Under the terms of certain subservicing arrangements, the subservicing counterparty is required to fund servicing advances for their respective portfolios of subserviced loans. A subservicing advance liability is recorded for cash received from the counterparty to fund advances and is repaid to the counterparty upon the collection of the mortgage servicing advance receivables. (2) Represents MSRs that are accounted for as a secured borrowing arrangement. Refer to Note 1, 'Summary of Significant Accounting Policies' for additional information. The following table provides the contractual debt maturities as of September 30, 2017 : Warehouse Facilities Servicing Advance Facility Unsecured Debt Total (In millions) Within one year $ 483 $ 52 $ — $ 535 Between one and two years — — 97 97 Between two and three years — — — — Between three and four years — — 22 22 Between four and five years — — — — Thereafter — — — — $ 483 $ 52 $ 119 $ 654 See Note 12, 'Fair Value Measurements' for the measurement of the fair value of Debt. Net Interest Expense The following table summarizes the components of Net interest expense: Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 2017 2016 2017 2016 (In millions) Interest income $ 10 $ 11 $ 30 $ 32 Secured interest expense (6 ) (8 ) (19 ) (24 ) MSRs secured interest expense (1) (14 ) — (15 ) — Unsecured interest expense — (10 ) (19 ) (31 ) Net interest expense $ (10 ) $ (7 ) $ (23 ) $ (23 ) _____________ (1) MSRs secured interest expense is the estimated yield on the MSRs secured liability as a result of the secured borrowing arrangement, as discussed in Note 4, 'Servicing Activities' . MSRs secured interest expense fully offsets the estimated yield on capitalized MSRs treated as a secured borrowing arrangement, which is included within Loan servicing income, net. Mortgage Warehouse Facilities The Company has entered into shorter term committed repurchase facilities with certain of its lenders to allow both the Company and the lender to continually evaluate facility needs and agreement terms during the execution of the Company's strategic actions and business changes. Upon expiration of these existing agreements, the Company expects to negotiate terms for repurchase facility commitments to meet its forecasted capacity needs and negotiate terms for covenants or conditions precedent to borrowing to support its intended strategic and capital actions. On March 27, 2017 , the committed mortgage repurchase facility of $100 million and the uncommitted mortgage repurchase facility of $100 million with Barclays Bank PLC were extended to July 31, 2017. On July 31, 2017, the committed and uncommitted mortgage repurchase facilities were extended to January 31, 2018. On March 31, 2017 , the committed mortgage repurchase facilities of $450 million with Wells Fargo Bank were extended to June 30, 2017. On June 30, 2017, the committed mortgage repurchase facilities were reduced by $100 million to $350 million at the Company's request, and the facilities were also extended to December 1, 2017, with a capacity decrease to $250 million on October 1, 2017 and to $200 million on November 1, 2017. On March 31, 2017 , the committed mortgage repurchase facility of $150 million with Fannie Mae expired and was not renewed by mutual agreement, and the uncommitted mortgage repurchase facility was increased to $2.0 billion . On April 30, 2017, the uncommitted mortgage repurchase facility was reduced by $1.8 billion to $200 million to better align capacity with anticipated needs. On March 31, 2017, the committed repurchase facility with Bank of America was reduced by $150 million to $200 million at the Company's request, and the facility was extended to June 30, 2017. On June 30, 2017, the $200 million committed repurchase facility was extended to September 29, 2017. On September 29, 2017, the committed repurchase facility was reduced by $50 million to $150 million at the Company's request, and the facility was extended to December 29, 2017. Servicing Advance Facility On June 15, 2017, PHH Service Advance Receivables Trust 2013-1 ("PSART"), an indirect, wholly-owned subsidiary of the Company, extended the revolving period and revised the final maturity date of the note purchase agreement with Wells Fargo Bank for the Series 2015-1 variable funding notes to March 15, 2018 and reduced the aggregate maximum principal amount by $55 million to $100 million . On September 8, 2017, at the Company's request, the aggregate maximum principal amount was reduced by $35 million to $65 million . The notes bear interest, payable monthly, based on LIBOR plus an agreed-upon margin. Unsecured Debt On June 19, 2017, the Company commenced a tender offer and consent solicitation to purchase for cash any and all of its outstanding Term Notes due in 2019 and due in 2021. The early tender offer included cash consideration of $1,100.00 for the 2019 Notes and $1,031.88 for the 2021 Notes for each $1,000 in principal amount (in dollars), plus accrued and unpaid interest. On July 3, 2017, $178 million of the 2019 Notes and $318 million of the 2021 Notes were tendered, and the Company repaid these notes for an aggregate $524 million in cash, plus accrued interest. On July 17, 2017, the tender offer expired with an insignificant amount of additional Term Notes being tendered. In connection with the tender offer, the Company recognized a loss of $34 million in Other Operating Expenses in the Condensed Consolidated Statements of Operations during the three and nine months ended September 30, 2017. Debt Covenants During 2017 , financial covenants in certain of the Company's committed mortgage repurchase facility agreements have been modified to reduce the minimum consolidated tangible net worth covenants to $450 million from $750 million , and to reduce the minimum committed mortgage warehouse financing capacity to $300 million from $750 million , which committed capacity must be provided by at least three warehouse lenders. In addition, the Company obtained amendments to certain negative covenants in its mortgage warehouse facilities and unsecured debt indentures to the extent necessary to permit the MSR sale transaction with New Residential and the sale of certain assets of PHH Home Loans. There were no other significant amendments to the terms of the debt covenants during the nine months ended September 30, 2017 . The Company was in compliance with all financial covenants related to its debt arrangements for the third quarter of 2017 . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes Deferred Taxes Deferred tax assets and liabilities represent the basis differences between assets and liabilities measured for financial reporting versus for income tax returns' purposes. The following table summarizes the significant components of deferred tax assets and liabilities: September 30, December 31, (In millions) Deferred tax assets: Federal loss carryforwards $ 23 $ 23 State loss carryforwards and credits 37 39 Accrued legal and regulatory matters 23 46 Reserves and allowances 31 36 Exit cost liability 26 10 Other accrued liabilities 12 24 Gross deferred tax assets 152 178 Valuation allowance (48 ) (44 ) Deferred tax assets, net of valuation allowance 104 134 Deferred tax liabilities: Mortgage servicing rights 20 234 Other 4 1 Deferred tax liabilities 24 235 Net deferred tax asset (liability) $ 80 $ (101 ) The deferred tax balance represent the future tax asset or liability generated upon reversal of the differences between the tax basis and book basis of certain of the Company's assets. Deferred liabilities related to the Company's MSRs arise due to differences in the timing of income recognition for accounting and tax purposes for certain servicing rights, which generate an associated basis difference between book and tax. The decrease in the MSR deferred tax liability during the nine months ended September 30, 2017 is a result of the Company's execution of the MSRs secured borrowing arrangement with New Residential that resulted in the sale of the Company's MSR portfolio for tax purposes generating taxable income and tax liability. Effective Tax Rate For the three and nine months ended September 30, 2017 , interim income tax benefits were recorded by applying a projected full-year effective income tax rate to the quarterly Loss before income taxes for results that are deemed to be reliably estimable. Certain items are considered not to be reliably estimable, and therefore, discrete year-to-date income tax provisions are recorded on those items. The resulting effective tax rate for the three and nine months ended September 30, 2017 were (45.8)% and (38.8)% , respectively. The difference between the Company’s effective tax rate and the statutory 35% rate was primarily due to: (i) state and local income taxes determined by the mix of income or loss from the operations by entity and state income tax jurisdiction; (ii) the net increase in the valuation allowance was driven by certain cumulative non net operating loss deferred tax assets for which state and federal valuation allowance is warranted, partially offset by a decrease in the valuation allowance due to state taxable income generated during the three and nine months ended September 30, 2017 ; and (iii) tax benefits related to income attributable to noncontrolling interests for which no taxes are provided. For the three and nine months ended September 30, 2016 , interim income tax benefits were recorded using the discrete effective tax rate method. Management believes the use of the discrete method for this period is more appropriate than applying the full-year effective tax rate method due to the actual results for the nine months ended September 30, 2016 compared to the expected results for the full year and the sensitivity of the effective tax rate to small changes in forecasted annual pre-tax income or loss. Under the discrete method, the Company determines the tax provision based upon actual results as if the interim period were a full-year period. The resulting effective tax rates for the three and nine months ended September 30, 2016 were (27.5)% and (39.1)% , respectively. The difference between the Company’s effective tax rate and the statutory 35% rate was primarily due to: (i) state and local income taxes determined by the mix of income or loss from the operations by entity and state income tax jurisdiction; (ii) a decrease in the valuation allowance driven by the utilization of state tax losses; (iii) an increase in nondeductible expenses related to legal and regulatory matters; and (iv) tax benefits related to income attributable to noncontrolling interests for which no taxes are provided. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Legal and Regulatory Matters The Company and its subsidiaries are routinely, and currently, defendants in various legal proceedings that arise in the ordinary course of PHH's business, including class actions and other private and civil litigation. These proceedings are generally based on alleged violations of consumer protection laws (including the Real Estate Settlement Procedures Act ("RESPA")), employment laws and contractual obligations. Similar to other mortgage loan originators and servicers, the Company and its subsidiaries are also routinely, and currently, subject to government and regulatory examinations, investigations and inquiries or other requests for information. The resolution of these various legal and regulatory matters may result in adverse judgments, fines, penalties, injunctions and other relief against the Company as well as monetary payments or other agreements and obligations. In particular, legal proceedings brought under RESPA and other federal or state consumer protection laws that are ongoing, or may arise from time to time, may include the award of treble and other damages substantially in excess of actual losses, attorneys' fees, costs and disbursements, and other consumer and injunctive relief. These proceedings and matters are at varying procedural stages and the Company may engage in settlement discussions on certain matters in order to avoid the additional costs of engaging in litigation. The outcome of legal and regulatory matters are difficult to predict or estimate and the ultimate time to resolve these matters may be protracted. In addition, the outcome of any legal proceeding or governmental and regulatory matter may affect the outcome of other pending legal proceedings or governmental and regulatory matters. A liability is established for legal and regulatory contingencies when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated. In light of the inherent uncertainties involved in litigation, legal proceedings and other governmental and regulatory matters, it is not always possible to determine a reasonable estimate of the amount of a probable loss, and the Company may estimate a range of possible loss for consideration in its estimates. The estimates are based upon currently available information and involve significant judgment taking into account the varying stages and inherent uncertainties of such matters. Accordingly, the Company’s estimates may change from time to time and such changes may be material to the consolidated financial results. As of September 30, 2017 , the Company’s recorded liability associated with legal and regulatory contingencies was $58 million and is presented in Other liabilities in the Condensed Consolidated Balance Sheets . Given the inherent uncertainties and status of the Company’s outstanding legal proceedings, the range of reasonably possible losses cannot be estimated for all matters. For matters where the Company can estimate the range, the Company believes reasonably possible losses in excess of the recorded liability are no t significant as of September 30, 2017 . There can be no assurance that the ultimate resolution of these matters will not result in losses in excess of the Company’s recorded liability, or in excess of the estimate of reasonably possible losses. As a result, the ultimate resolution of any particular legal matter, or matters, could be material to the Company’s results of operations or cash flows for the period in which such matter is resolved. The following are descriptions of the Company’s significant legal and regulatory matters. MMC Examination. The Company has undergone a regulatory examination by a multistate coalition of certain mortgage banking regulators (the “MMC”), and such regulators have alleged various violations of federal and state consumer protection and other laws related to the Company’s legacy mortgage servicing practices. In July 2015, the Company received a settlement proposal from the MMC, proposing payments to certain borrowers nationwide where foreclosure proceedings were either referred to a foreclosure attorney or completed during 2009 through 2012, as well as other consumer relief and administrative penalties. In addition, the proposal would require that the Company comply with national servicing standards, submit its servicing activities to monitoring for compliance, and other injunctive relief. In the fourth quarter of 2016, the Company entered into a consent order and paid a civil monetary penalty with the New York Department of Financial Services to close out New York's pending examination report findings, including New York findings stemming from the MMC examination. In the fourth quarter of 2017, the Company reached agreements in principle to close out findings from the MMC examination; however, the final documents have not been executed. As of September 30, 2017 , the Company included an estimate of probable losses in connection with the MMC matter in the recorded liability. HUD Subpoenas. The Company previously disclosed that it had received document subpoenas from the Office of Inspector General of the U.S. Department of Housing and Urban Development (“HUD”) requesting production of certain documents related to, among other things, the Company’s origination and underwriting process for loans insured by the Federal Housing Administration (“FHA”) during the period between January 1, 2006 and December 31, 2011. As part of the investigation, HUD has also requested documents related to a small sample of loans originated during this period. The Company also previously disclosed that this investigation could lead to a demand or claim under the False Claims Act, that the Company was cooperating in the investigation, and that the Company had engaged in substantive settlement discussions with the government towards resolving this matter. On August 8, 2017, the Company announced it reached a settlement of this matter with the U.S. Department of Justice for $65 million without any admission of liability, which amount was paid during the third quarter of 2017. CFPB Enforcement Action. In January 2014, the Bureau of Consumer Financial Protection (the “CFPB”) initiated an administrative proceeding alleging that the Company’s reinsurance activities, including its mortgage insurance premium ceding practices, have violated certain provisions of RESPA and other laws enforced by the CFPB. Through its reinsurance subsidiaries, the Company assumed risk in exchange for premiums ceded from primary mortgage insurance companies. In June 2015, the Director of the CFPB issued a final order requiring the Company to pay $109 million , based upon the gross reinsurance premiums the Company received on or after July 21, 2008. Subsequently, the Company filed an appeal to the United States Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). In October 2016, the Court of Appeals issued its decision, vacating the decision of the Director of the CFPB, and finding in favor of the Company’s arguments, among others, around the correct interpretations of Section 8 of RESPA, the applicability of prior HUD interpretations around captive re-insurance and the applicability of statute of limitations to administrative enforcement proceedings at the CFPB. The Court of Appeals remanded the case to the CFPB to determine the Company's compliance with provisions of RESPA specific to whether any mortgage insurers paid more than reasonable market value to the Company for reinsurance. The Company continues to believe that it has complied with RESPA and other laws applicable to its former mortgage reinsurance activities. In February 2017, the Court of Appeals granted the CFPB's request to rehear the case en banc and oral arguments took place in May 2017; however, the decision has not yet been issued. Given the nature of this matter and the current status, the Company cannot estimate the amount of possible loss, or a range of possible losses, if any, in connection with this matter. Other Subpoenas and Investigations. The Company previously disclosed that it had received document subpoenas from the U.S. Attorney’s Offices for the Eastern and Southern Districts of New York. The subpoenas requested production of certain documents related to, among other things: (i) foreclosure expenses that the Company incurred in connection with the foreclosure of loans insured or guaranteed by FHA, Fannie Mae or Freddie Mac and (ii) the origination and underwriting of loans sold pursuant to programs sponsored by Fannie Mae, Freddie Mac or Ginnie Mae. In addition, in October 2014, the Company received a document subpoena from the Office of the Inspector General of the Federal Housing Financing Agency (the “FHFA”) requesting production of certain documents related to, among other things, its origination, underwriting and quality control processes for loans sold to Fannie Mae and Freddie Mac. On August 8, 2017, the Company announced that, with respect to the investigations involving the U.S. Attorney’s Office for the Eastern District of New York and the Office of Inspector General of the FHFA, it reached a settlement of these matters with the U.S. Department of Justice, without any admission of liability, for $9.5 million , which was paid during the third quarter of 2017. There can be no assurance that claims or litigation will not arise from the inquiry of the U.S. Attorney’s Office for the Southern District of New York, or that damages and penalties, will not be incurred in connection with that matter. Lender-Placed Insurance. The Company is currently subject to pending litigation alleging that its servicing practices around lender-placed insurance were not in compliance with applicable laws. Through its mortgage subsidiary, the Company did have certain outsourcing arrangements for the purchase of lender-placed hazard insurance for borrowers whose coverage had lapsed. The Company believes that it has meritorious defenses to these allegations; however, in January 2017, the Company entered into an agreement to settle outstanding litigation relating to this matter and the court approved the settlement in July 2017. The Company paid a majority of the settlement costs during the third quarter of 2017, while the remaining expected losses yet to be paid are included in the recorded liability as of September 30, 2017 . Repurchase and Foreclosure-Related Reserves Repurchase and foreclosure-related reserves are maintained for probable losses related to repurchase and indemnification obligations and for on-balance sheet loans in foreclosure and real estate owned. A summary of the activity in repurchase and foreclosure-related reserves is as follows: Nine Months Ended 2017 2016 (In millions) Balance, beginning of period $ 73 $ 89 Realized losses (18 ) (17 ) Transfer of reserves (1) (7 ) — Increase in reserves due to: Changes in assumptions 7 10 New loan sales 2 5 Balance, end of period $ 57 $ 87 ______________ (1) During the nine months ended September 30, 2017 , certain loans and associated reserves of Mortgage loans in foreclosure have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. Repurchase and foreclosure-related reserves consist of the following: September 30, December 31, (In millions) Loan repurchase and indemnification liability $ 38 $ 49 Adjustment to value for real estate owned 19 14 Allowance for probable foreclosure losses — 10 Total $ 57 $ 73 Loan Repurchases and Indemnifications. The liability for loan repurchases and indemnifications represents management’s estimate of probable losses based on the best information available and requires the application of a significant level of judgment and the use of a number of assumptions including borrower performance, investor demand patterns, expected relief from the expiration of repurchase obligations, the expected success rate in defending against requests and estimated loss severities (adjusted for home price forecasts). In December 2016, the Company executed resolution agreements and paid Fannie Mae and Freddie Mac to resolve substantially all representation and warranty exposure related to the sale of mortgage loans that were originated and delivered prior to September 30, 2016 and November 30, 2016, respectively. The Company's remaining exposure to repurchase and indemnification claims consists primarily of estimates for claims from private investors, losses for specific non-performing loans where the Company believes it will be required to indemnify the investor and losses from government mortgage insurance programs. Given the inherent uncertainties involved in estimating losses associated with future repurchase and indemnification requests, there is a reasonable possibility that future losses may be in excess of the recorded liability. As of September 30, 2017 , the estimated amount of reasonably possible losses in excess of the recorded liability was $10 million . The maximum amount of losses cannot be estimated because the Company does not service all of the loans for which it has provided representations or warranties. As of September 30, 2017 , $53 million of loans have been identified in which the Company has full risk of loss or has identified a breach of representation and warranty provisions; 23% of which were at least 90 days delinquent (calculated based upon the unpaid principal balance of the loans). Off-Balance Sheet Arrangements and Guarantees Lease Arrangements. On February 8, 2017, the Company entered into an assignment with LenderLive Network, LLC ("LenderLive") of its Jacksonville, Florida facility lease. Under the terms of the original facility lease, PHH remains jointly and severally obligated with LenderLive for performance under the lease agreement. As of September 30, 2017 , the total amount of potential future lease payments under this guarantee is $14 million ; however, the Company does not believe any amount of loss under this guarantee is probable. During 2017, the Company entered into assignments with Guaranteed Rate Affinity, LLC ("GRA") for certain of PHH Home Loans' facility leases that were associated with the location transfers under the asset sale agreement. Refer to Note 13, 'Variable Interest Entities' for further information on the sale transactions. Under the terms of these original facility leases, PHH remains jointly and severally obligated with GRA for performance under certain lease agreements. As of September 30, 2017 , the total amount of potential future lease payments under these guarantees was not significant, and the Company does not believe any amount of loss under this guarantee is probable. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 12. Fair Value Measurements The Company updates the valuation of each instrument recorded at fair value on a quarterly basis, evaluating all available observable information, which may include current market prices or bids, recent trade activity, changes in the levels of market activity and benchmarking of industry data. The assessment also includes consideration of identifying the valuation approach that would be used currently by market participants. If it is determined that a change in valuation technique or its application is appropriate, or if there are other changes in availability of observable data or market activity, the current methodology will be analyzed to determine if a transfer between levels of the valuation hierarchy is appropriate. Such reclassifications are reported as transfers into or out of a level as of the beginning of the quarter that the change occurs. Other than the MSRs secured liability and Liability to deliver MSRs as discussed below, there has been no change in the valuation methodologies and classification pursuant to the valuation hierarchy during the nine months ended September 30, 2017 . The incorporation of counterparty credit risk did not have a significant impact on the valuation of assets and liabilities recorded at fair value as of September 30, 2017 or December 31, 2016 . Recurring Fair Value Measurements The following summarizes the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis: September 30, 2017 Level One Level Two Level Three Cash Collateral and Netting Total (In millions) ASSETS Mortgage loans held for sale $ — $ 545 $ 45 $ — $ 590 Mortgage servicing rights — — 500 — 500 Other assets—Derivative assets: Interest rate lock commitments — — 13 — 13 Forward delivery commitments — 1 — (1 ) — LIABILITIES Mortgage servicing rights secured liability $ — $ — $ 440 $ — $ 440 Other liabilities: Derivative liabilities—Forward delivery commitments — 2 — (1 ) 1 Liability to deliver MSRs — — 2 — 2 December 31, 2016 Level One Level Two Level Three Cash Collateral and Netting Total (In millions) ASSETS Mortgage loans held for sale $ — $ 636 $ 47 $ — $ 683 Mortgage servicing rights — — 690 — 690 Other assets—Derivative assets: Interest rate lock commitments — — 18 — 18 Forward delivery commitments — 14 — (12 ) 2 MSR-related agreements — 19 — (18 ) 1 Option contracts — 1 — (1 ) — LIABILITIES Other liabilities—Derivative liabilities: Forward delivery commitments $ — $ 4 $ — $ 1 $ 5 MSR-related agreements — 65 — (53 ) 12 Option contracts — — — 1 1 Significant inputs to the measurement of fair value and further information on the assets and liabilities measured at fair value are as follows: Mortgage Loans Held for Sale (“MLHS”). The Company has elected to record MLHS at fair value which is intended to better reflect the underlying economics and eliminate the operational complexities of risk management activities and hedge accounting requirements. The following table reflects the difference between the carrying amounts of MLHS measured at fair value and the aggregate unpaid principal amount that the Company is contractually entitled to receive at maturity: September 30, 2017 December 31, 2016 Total Loans 90 days or more past due and on non-accrual status (1) Total Loans 90 days or more past due and on non-accrual status (In millions) Carrying amount $ 590 $ 19 $ 683 $ 7 Aggregate unpaid principal balance 606 38 687 10 Difference $ (16 ) $ (19 ) $ (4 ) $ (3 ) ——————— (1) As of September 30, 2017 , the majority of Mortgage loans in foreclosure and associated reserves have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. The following table summarizes the components of MLHS: September 30, December 31, (In millions) First mortgages: Conforming $ 473 $ 531 Non-conforming 72 105 Total first mortgages 545 636 Second lien 1 3 Scratch and Dent 44 44 Total $ 590 $ 683 Mortgage Servicing Rights. MSRs are classified within Level Three of the valuation hierarchy due to the use of significant unobservable inputs and the inactive market for such assets. The fair value of MSRs is estimated based upon projections of expected future cash flows considering prepayment estimates, the Company’s historical prepayment rates, portfolio characteristics, interest rates based on interest rate yield curves, implied volatility and other economic factors. On a quarterly basis, assumptions used in estimating fair value are validated against a number of third-party sources, which may include peer surveys, MSR broker surveys, third-party valuations and other market-based sources. The September 30, 2017 determination of fair value includes calibration of our valuation model considering the pricing associated with the MSR agreements executed in the fourth quarter of 2016. See Note 4, 'Servicing Activities' for further discussion of the MSR sale commitments. The following tables summarize certain information regarding the initial and ending capitalization rate of MSRs: Nine Months Ended 2017 2016 Initial capitalization rate of additions to MSRs owned 1.10 % 1.00 % September 30, December 31, MSRs Owned Capitalization servicing rate 0.67 % 0.82 % Capitalization servicing multiple 2.3 2.9 Weighted-average servicing fee (in basis points) 29 28 Weighted-average life (years) 6.0 6.3 September 30, MSRs Under Secured Borrowing Arrangement Capitalization servicing rate 0.85 % Capitalization servicing multiple 3.2 Weighted-average servicing fee (in basis points) 27 Weighted-average life (years) 5.8 The significant assumptions used in estimating the fair value of MSRs were as follows (in annual rates): September 30, December 31, MSRs Owned Weighted-average prepayment speed (CPR) 8.4 % 9.2 % Option adjusted spread, in basis points (OAS) 490 1,430 Weighted-average delinquency rate 12.0 % 5.1 % September 30, MSRs Under Secured Borrowing Arrangement Weighted-average prepayment speed (CPR) 10.5 % Option adjusted spread, in basis points (OAS) 988 Weighted-average delinquency rate 3.8 % The following table summarizes the estimated change in the fair value of MSRs from adverse changes in the significant assumptions: September 30, 2017 Weighted- Average Prepayment Speed Option Adjusted Spread Weighted- Average Delinquency Rate (In millions) MSRs Owned Impact on fair value of 10% adverse change $ (3 ) $ (2 ) $ (4 ) Impact on fair value of 20% adverse change (5 ) (4 ) (9 ) MSRs Under Secured Borrowing Arrangement (1) Impact on fair value of 10% adverse change $ (16 ) $ (20 ) $ (6 ) Impact on fair value of 20% adverse change (30 ) (38 ) (12 ) ——————— (1) During 2017, the Company sold MSRs to New Residential, which have been accounted for as a secured borrowing and have a fair value of $440 million as of September 30, 2017 . Accordingly, the MSRs remained on the balance sheet with the proceeds from sale recognized as MSRs secured liability . Any changes in fair value of this secured borrowing are expected to fully offset within MSRs secured asset and MSRs secured liability . These sensitivities are hypothetical and presented for illustrative purposes only. Changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, this analysis does not assume any impact resulting from management’s intervention to mitigate these variations. The effect of a variation in a particular assumption is calculated without changing any other assumption, and the assumptions used in valuing the MSRs are independently aggregated. Although there are certain inter-relationships among the various key assumptions noted above, changes in one of the significant assumptions would not independently drive changes in the others. The modeled prepayment speed assumptions are highly dependent upon interest rates, which drive borrowers’ propensity to refinance; however, there are other factors that can influence borrower refinance activity. These factors include housing prices, the levels of home equity, underwriting standards and loan product characteristics. The OAS is a component of the discount rate used to present value the cash flows of the MSR asset and represents the spread over a base interest rate that equates the present value of cash flows of an asset to the market price of that asset. The weighted average delinquency rate is based on the current and projected credit characteristics of the capitalized servicing portfolio and is dependent on economic conditions, home equity and delinquency and default patterns. Mortgage Servicing Rights Secured Liability . The Company elected to record the MSRs secured liability at fair value consistent with the related MSR asset. The Company initially established the value of the MSRs secured liability based on the price at which the MSRs were sold. Thereafter, the carrying value is adjusted to fair value at each reporting date, and the changes in value of the MSR secured asset and liability are expected to offset in the Condensed Consolidated Statements of Operations . The Company records interest expense using the effective interest method based on the expected cash flows from the MSRs through the expected life of the underlying loans, which offsets the estimated yield on the MSR asset. The fair value of MSRs secured liability is classified within Level Three of the valuation hierarchy due to the use of significant unobservable inputs, which is consistent with the fair value methodology of the related MSR asset. The fair value of MSRs secured liability is estimated based upon projections of expected future cash flows of the underlying MSR asset. The cash flow assumptions and prepayment assumptions used in the model are based on various factors, including portfolio characteristics, interest rates based on interest rate yield curves, implied volatility and other economic factors. The significant assumptions used in estimating the fair value of MSRs secured liability were as follows (in annual rates): September 30, Weighted-average prepayment speed (CPR) 10.5 % Option adjusted spread, in basis points (OAS) 988 Weighted-average delinquency rate 3.8 % Derivative Instruments . Derivative instruments are classified within Level Two and Level Three of the valuation hierarchy. The average pull through percentage used in measuring the fair value of interest rate lock commitments ("IRLCs") as of September 30, 2017 and December 31, 2016 was 73% and 77% , respectively. The pull through percentage is considered a significant unobservable input and is estimated based on changes in pricing and actual borrower behavior using a historical analysis of loan closing and fallout data. Actual loan pull through is compared to the modeled estimates in order to evaluate this assumption each period based on current trends. Generally, a change in interest rates is accompanied by a directionally opposite change in the assumption used for the pull through percentage, and the impact to fair value of a change in pull through would be partially offset by the related change in price. Liability to Deliver MSRs. Under our portfolio defense agreements, upon the refinance by the Company of any mortgage loan subserviced by the Company for the contractual counterparty as servicing rights owner, the Company agreed to transfer the MSR with respect to such new mortgage loan to the counterparty on the terms set forth in that agreement. The Company elected to record the Liability to deliver MSRs at a fair value consistent with the related servicing value included within the related IRLC or MLHS. The fair value of Liability to deliver MSRs is classified within Level Three of the valuation hierarchy due to the use of significant unobservable inputs, which is consistent with the fair value methodology of the servicing rights within IRLCs. The Company initially established the value of the Liability to deliver MSRs based on the servicing value within the IRLC at inception. Thereafter, the carrying value of this liability is adjusted to fair value at each reporting date, and the changes in value are expected to offset changes in the associated servicing value within the IRLC or MLHS in the Condensed Consolidated Statements of Operations until the MSR is delivered to New Residential. Level Three Measurements Activity of assets and liabilities classified within Level Three of the valuation hierarchy consisted of: Three Months Ended Three Months Ended MLHS MSRs IRLCs, net MSRs Secured Liability Liability to Deliver MSRs MLHS MSRs IRLCs, net (In millions) Balance, beginning of period $ 32 $ 555 $ 16 $ (114 ) $ — $ 42 $ 679 $ 39 Purchases, Issuances, Sales and Settlements: Purchases 2 — — — — 3 — — Issuances 2 10 — (354 ) — 2 15 — Sales (3 ) (30 ) — — — (6 ) (3 ) — Settlements (2 ) — (65 ) 14 1 (4 ) — (92 ) (1 ) (20 ) (65 ) (340 ) 1 (5 ) 12 (92 ) Realized and unrealized gains (losses) included in: Gain on loans held for sale, net (6 ) — 62 — (3 ) — — 100 Loan servicing income, net — (35 ) — 28 — — (46 ) — Net interest expense 1 — — (14 ) — — — — (5 ) (35 ) 62 14 (3 ) — (46 ) 100 Transfers into Level Three 23 — — — — 13 — — Transfers out of Level Three (4 ) — — — — (5 ) — — Balance, end of period $ 45 $ 500 $ 13 $ (440 ) $ (2 ) $ 45 $ 645 $ 47 Nine Months Ended Nine Months Ended MLHS MSRs IRLCs, net MSRs Secured Liability Liability to Deliver MSRs MLHS MSRs IRLCs, net (In millions) Balance, beginning of period $ 47 $ 690 $ 18 $ — $ — $ 39 $ 880 $ 21 Purchases, Issuances, Sales and Settlements: Purchases 7 — — — — 11 — — Issuances 5 28 — (467 ) — 5 45 — Sales (20 ) (125 ) — — — (20 ) (8 ) — Settlements (11 ) — (180 ) 15 1 (9 ) — (252 ) (19 ) (97 ) (180 ) (452 ) 1 (13 ) 37 (252 ) Realized and unrealized gains (losses) included in: Gain on loans held for sale, net (6 ) — 175 — (3 ) — — 278 Loan servicing income, net — (93 ) — 27 — — (272 ) — Net interest expense 2 — — (15 ) — 2 — — (4 ) (93 ) 175 12 (3 ) 2 (272 ) 278 Transfers into Level Three 34 — — — — 33 — — Transfers out of Level Three (13 ) — — — — (16 ) — — Balance, end of period $ 45 $ 500 $ 13 $ (440 ) $ (2 ) $ 45 $ 645 $ 47 Transfers into Level Three generally represent mortgage loans held for sale with performance issues, origination flaws, or other characteristics that impact their salability in active secondary market transactions. During the three and nine months ended September 30, 2017 , transfers into Level Three also include certain of our foreclosure loan population and associated reserves pursuant to the Company's marketing of and intentions to sell those assets. Transfers out of Level Three represent Scratch and Dent loans that were foreclosed upon and loans that have been cured. Unrealized gains (losses) included in the Condensed Consolidated Statements of Operations related to assets and liabilities classified within Level Three of the valuation hierarchy that are included in the Condensed Consolidated Balance Sheets were as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Gain on loans held for sale, net $ 8 $ 42 $ 7 $ 43 Loan servicing income, net (3 ) (9 ) (9 ) (174 ) Fair Value of Other Financial Instruments As of September 30, 2017 and December 31, 2016 , all financial instruments were either recorded at fair value or the carrying value approximated fair value, with the exception of Debt. For financial instruments that were not recorded at fair value, such as Cash and cash equivalents, Restricted cash, Accounts receivable and Servicing advance receivables, the carrying value approximates fair value due to the short-term nature of such instruments. Debt. The total fair value of Debt as of September 30, 2017 and December 31, 2016 was $662 million and $1.3 billion , respectively, and is measured using Level Two inputs. As of September 30, 2017 , the fair value was estimated using the following valuation techniques: (i) $127 million was measured using a market based approach, considering the current market pricing of recent trades for the Company’s debt instruments; and (ii) $535 million was measured using observable spreads and terms for recent pricing of similar instruments. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2017 | |
Variable Interest Entities | |
Variable Interest Entities | 13. Variable Interest Entities Assets and liabilities of significant variable interest entities are included in the Condensed Consolidated Balance Sheets as follows: September 30, 2017 December 31, 2016 PHH Home Loans Servicing Advance Receivables Trust PHH Home Loans Servicing Advance Receivables Trust (In millions) ASSETS Cash and cash equivalents $ 60 $ — $ 67 $ — Restricted cash 4 14 5 19 Mortgage loans held for sale 239 — 350 — Accounts receivable, net 17 — 9 — Servicing advances, net — 80 — 150 Property and equipment, net — — 1 — Other assets 7 — 11 1 Total assets $ 327 $ 94 $ 443 $ 170 Assets held as collateral $ 218 $ 94 $ 320 $ 169 LIABILITIES Accounts payable and accrued expenses $ 14 $ — $ 11 $ — Debt 206 52 300 99 Other liabilities 6 — 5 — Total liabilities (1) $ 226 $ 52 $ 316 $ 99 ——————— (1) Excludes intercompany payables. PHH Home Loans PHH Home Loans is a joint venture between the Company and Realogy Holdings Corp. ("Realogy"), which provides mortgage origination services for brokers associated with brokerages owned or franchised by Realogy, and represented substantially all of the Real Estate channel, and 29% of the Company’s total mortgage production volume (based on dollars) for the nine months ended September 30, 2017 . In February 2017, the Company announced it had entered into agreements to sell certain assets of PHH Home Loans and its subsidiaries, including its mortgage origination and processing centers and the majority of its employees. Agreements related to these intended transactions include: Asset sale transactions. On February 15, 2017, the Company entered into an agreement to sell certain assets of the PHH Home Loans joint venture to Guaranteed Rate Affinity, LLC ("GRA"), which is a newly formed joint venture formed by subsidiaries of Realogy and Guaranteed Rate, Inc. During the third quarter of 2017, the Company completed the delivery of two of the five location transfers under the PHH Home Loans asset sale agreement, with a third transfer completed in October 2017. In connection with these asset sales, the Company received $28 million of proceeds and recognized $28 million of gain in Other income within the Condensed Consolidated Statements of Operations during the third quarter of 2017. Subsequent proceeds and gain related to the third transfer in October 2017 were $14 million . The Company's realized cash proceeds and income from these transactions are reduced by the noncontrolling interest holder's pro-rata share. The Company expects the remaining asset sales under this agreement to occur during the fourth quarter of 2017. JV Interests Purchase. In connection with the asset sale agreements, PHH entered into an agreement to purchase Realogy's 49.9% ownership interests in the PHH Home Loans joint venture, for an amount equal to their interest in the residual equity of PHH Home Loans after the final closing of the Asset sale transactions. At the completion of the above described transactions, the Company expects to receive or pay amounts to resolve the remaining assets and liabilities of the PHH Home Loans legal entity, and would no longer operate through its Real Estate channel. The Company estimates that it will receive total proceeds of $96 million in connection with these transactions, inclusive of the amounts received from asset sales through October 2017. In connection with these transactions, the Company recognized $4 million and $9 million of Exit and disposal costs for PHH Home Loans within the Reorganization exit program for the three and nine months ended September 30, 2017 , respectively. Refer to Note 2, 'Exit Costs' for additional information regarding the Reorganization exit program. Redeemable Noncontrolling Interest. As of December 31, 2016, Realogy's ownership interest in PHH Home Loans is presented as a Redeemable noncontrolling interest which reflects Realogy’s right, beginning on February 1, 2015, to require that the Company purchase all of their interest in PHH Home Loans, LLC upon two years notice at fair value, as outlined in the PHH Home Loans Operating Agreement (“2015 Put Option”). For all periods presented, the fair value of the 2015 Put Option was determined based upon an orderly liquidation of the entity due to the uncertainty of the cash flows associated with an income approach, specifically the impact from exercising the 2015 Put Option on the related operating and strategic relationship agreements. The resulting changes to the redemption value are recognized as an equity adjustment to Additional paid-in capital. Refer to Note 1, 'Summary of Significant Accounting Policies' for information regarding the correction of an immaterial error related to the prior classification and measurement of Realogy's ownership interests. As described above, during 2017, the Company entered into the JV Interests Purchase agreement with Realogy to acquire their membership interest based on the book value of the net equity of the JV, which is contingent upon the closing of all five asset sale transactions. During the third quarter of 2017, upon the delivery of the FNMA MSRs to New Residential and the satisfaction of other conditions to closing the initial delivery under the asset sale agreement with GRA, the contingent forward purchase agreement represented a redemption feature of the minority partner that became outside of the Company's sole control. The Company believes it is probable that the contingent forward purchase agreement will become redeemable upon completion of the final location transfer, which is expected to occur in the fourth quarter of 2017. As a result, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount to equal the redemption value at the end of each reporting period. The fair value of the JV Interest Purchase agreement was based upon Realogy's portion of the net assets of PHH Home Loans as of September 30, 2017 , which are primarily recorded at fair value (or approximated fair value). Since the redemption value of the forward purchase agreement is greater than the redemption value of the 2015 Put Option, the Company considered the JV Interests Purchase agreement in the measurement of the balance as of September 30, 2017 . During the nine months ended September 30, 2017 , the Company recognized an increase to the redemption value of the Redeemable noncontrolling interest of $28 million , with a corresponding decrease to Additional paid-in capital. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 14. Segment Information Operations are conducted through the following two reportable segments: ▪ Mortgage Production — provides mortgage loan origination services and sells mortgage loans. ▪ Mortgage Servicing — performs servicing activities for loans originated by the Company and mortgage servicing rights purchased from others, and acts as a subservicer for certain clients that own the underlying mortgage servicing rights. The Company's operations are located in the U.S. The heading Other includes expenses that are not allocated back to the two reportable segments, which may include Loss on early debt retirement, certain Exit and disposal costs and Professional and third-party service fees incurred related to the strategic review. Management evaluates the operating results of each of the reportable segments based upon Net revenues and Segment profit or loss, which is presented as the Income or loss before income tax expense or benefit and after Net income or loss attributable to noncontrolling interest. The Mortgage Production segment profit or loss excludes Realogy’s noncontrolling interest in the profit or loss of PHH Home Loans. Segment results were as follows: Total Assets September 30, December 31, 2016 (In millions) Mortgage Production segment $ 803 $ 913 Mortgage Servicing segment 1,010 1,428 Other 488 834 Total $ 2,301 $ 3,175 Net Revenues Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Mortgage Production segment $ 98 $ 168 $ 276 $ 443 Mortgage Servicing segment 23 29 71 107 Total $ 121 $ 197 $ 347 $ 550 Segment (Loss) Profit (1) Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Mortgage Production segment $ (18 ) $ 22 $ (84 ) $ 9 Mortgage Servicing segment (37 ) (52 ) (114 ) (106 ) Other (36 ) (5 ) (73 ) (10 ) Total $ (91 ) $ (35 ) $ (271 ) $ (107 ) ——————— (1) The following is a reconciliation of Loss before income taxes to Segment loss: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Loss before income taxes $ (78 ) $ (29 ) $ (266 ) $ (98 ) Less: net income attributable to noncontrolling interest 13 6 5 9 Segment loss $ (91 ) $ (35 ) $ (271 ) $ (107 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events See Note 13, 'Variable Interest Entities' for discussion of an additional PHH Home Loans location transfer on October 23, 2017. On November 5, 2017 , the Company's Board of Directors provided a new authorization for up to $100 million of share repurchases. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation The Condensed Consolidated Financial Statements include the accounts and transactions of PHH and its subsidiaries, as well as entities in which the Company directly or indirectly has a controlling interest and variable interest entities of which the Company is the primary beneficiary. PHH Home Loans, LLC (“PHH Home Loans”) and its subsidiaries are consolidated within the Condensed Consolidated Financial Statements and the ownership interest of Realogy Services Venture Partner LLC, a subsidiary of Realogy Holdings Corp. ("Realogy") is presented as a redeemable noncontrolling interest. In February 2017, the Company announced it has entered into agreements to sell certain assets of PHH Home Loans and its subsidiaries, including its mortgage origination and processing centers and the majority of its employees. Refer to Note 13, 'Variable Interest Entities' for further information on the sale transactions. Intercompany balances and transactions have been eliminated from the Condensed Consolidated Financial Statements . |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions include, but are not limited to, those related to the valuation of mortgage servicing rights and the related secured liability , mortgage loans held for sale and other financial instruments, the estimation of liabilities for commitments and contingencies, mortgage loan repurchases and indemnifications and the determination of certain income tax assets and liabilities and associated valuation allowances. Actual results could differ from those estimates. |
Accounting Pronouncements Adopted During the Period and Recently Issued Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Adopted During the Period In March 2016, the FASB issued ASU 2016-06, “Contingent Put and Call Options in Debt Instruments.” This update clarified that in assessing whether an embedded contingent put or call option is clearly and closely related to the debt host, an entity is only required to perform a specific four-step decision sequence and is no longer required to assess whether the contingency for exercising the option is indexed to interest rate or credit risk. The Company adopted this update on January 1, 2017 using a modified retrospective approach, and there was no impact to the financial statements or disclosures. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting." This update simplified several aspects of the accounting for share-based payment transactions, including accounting for income taxes, the classification of awards as either equity or liabilities and the classification of excess tax benefits and payments for tax withholdings on the statement of cash flows. The Company adopted this update on January 1, 2017 using either a prospective, modified retrospective or retrospective approach, depending on the area of change with the more significant provisions described below: • Accounting for income taxes. The Company recognized all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of income and applied this provision prospectively. The tax effects were treated as discrete items to calculate the effective tax rate and resulted in $2 million of income tax expense during the nine months ended September 30, 2017 . • Forfeiture rates. The Company elected to account for forfeitures as they occur and applied this provision using a modified retrospective approach. The impact to opening retained earnings was not significant. • Statement of Cash Flows. On a retrospective basis, the Company classified cash paid by an employer when directly withholding shares for tax withholding purposes as a financing activity which totaled $1 million during the nine months ended September 30, 2017 . The amount of tax withholding was not significant for the nine months ended September 30, 2016 . In addition, on a prospective basis, the Company will classify excess tax benefits as an operating activity which did not have an impact to the statement of cash flows. In October 2016, the FASB issued ASU 2016-17, "Interests Held through Related Parties That Are under Common Control." This update required an entity to include indirect interest held through related parties that are under common control on a proportionate basis when evaluating if a reporting entity is the primary beneficiary of a variable interest entity. The Company adopted this update on January 1, 2017 using a retrospective approach. This adoption did not change any of the Company's consolidation conclusions, and there was no impact to the financial statements or disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company’s consolidated financial statements and disclosures, from those included in the Company’s 2016 Form 10-K, except for the following: Effective for the First Quarter of 2018 • In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers.” The core principle requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. The FASB has issued several amendments to provide additional clarification and implementation instructions relating to (i) principal versus agent considerations, (ii) identifying performance obligations and licensing, (iii) narrow-scope improvements and practical expedients and (iv) technical corrections and improvements. These updates are to be applied retrospectively to all prior periods presented or through a cumulative adjustment in the year of adoption, and are effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The Company has reviewed the scope of the guidance and determined that a majority of the Company's revenue streams associated with origination and servicing activities are not within the scope of the standard because the standard does not apply to revenue on contracts accounted for under ASC 860, "Transfers and Servicing of Financial Assets" or ASC 825, "Financial Instruments". However, the Company has identified select revenue streams that are within scope of the revenue standard, including origination assistance fees associated with fee-based closings in our private label channel, and certain ancillary fees associated with subservicing contracts such as boarding and deboarding fees. While there may be some impact on revenue recognition, at this time, the Company currently does not expect the adoption of this guidance to have a material impact on the consolidated financial statements or result in a significant transition adjustment upon adoption; however, the Company continues to evaluate other potential effects this guidance may have including, changes in footnote requirements and the impact to internal controls. The amount of in-scope revenue streams associated with our private label channel are expected to continue to decrease as the Company completes the exit of this business during 2018. The Company will adopt this standard using a modified retrospective approach in the first quarter of 2018 with a cumulative effect adjustment to retained earnings. • In March 2017, the FASB issued ASU 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This update changes the income statement presentation of defined benefit plan expense by requiring the service cost component to be presented in the same line item as other compensation costs and all other components (including interest cost, amortization of prior service cost, settlements, etc.) to be presented separately from the service cost component. This update is effective for the first interim and annual periods beginning after December 15, 2017, with early adoption permitted. At adoption, this update will be applied retrospectively. The Company's defined benefit pension plan and the other post-employment benefits plan are frozen, wherein the plans only accrue additional benefits for a very limited number of employees. As a result, the Company does not expect the adoption of this update to have a significant impact on its financial statements. • In May 2017, the FASB issued ASU 2017-09, "Scope of Modification Accounting." This update clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. This update is effective for the first interim and annual periods beginning after December 15, 2017, with early adoption permitted. At adoption, this update will be applied prospectively. The Company does not expect the adoption of this update to have a significant impact on its financial statements. |
Commitments and Contingencies | A liability is established for legal and regulatory contingencies when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated. In light of the inherent uncertainties involved in litigation, legal proceedings and other governmental and regulatory matters, it is not always possible to determine a reasonable estimate of the amount of a probable loss, and the Company may estimate a range of possible loss for consideration in its estimates. The estimates are based upon currently available information and involve significant judgment taking into account the varying stages and inherent uncertainties of such matters. Accordingly, the Company’s estimates may change from time to time and such changes may be material to the consolidated financial results. |
Mortgage Servicing Rights Secured Liability | Mortgage Servicing Rights Secured Liability . The Company elected to record the MSRs secured liability at fair value consistent with the related MSR asset. The Company initially established the value of the MSRs secured liability based on the price at which the MSRs were sold. Thereafter, the carrying value is adjusted to fair value at each reporting date, and the changes in value of the MSR secured asset and liability are expected to offset in the Condensed Consolidated Statements of Operations . The Company records interest expense using the effective interest method based on the expected cash flows from the MSRs through the expected life of the underlying loans, which offsets the estimated yield on the MSR asset. |
Exit Costs (Tables)
Exit Costs (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | |
Schedule of exit cost liability | The Company's Exit cost liability is included in Accounts payable and accrued expenses within the Condensed Consolidated Balance Sheets . A summary of the aggregate activity for both the PLS exit program and the Reorganization exit program is as follows: Nine Months Ended September 30, 2017 Severance and Termination Benefits Facility Exit Costs Contract Termination & Other Costs Total (In millions) Balance, beginning of period $ 22 $ — $ 3 $ 25 Charges 36 6 9 51 Paid (9 ) (6 ) (2 ) (17 ) Adjustments (1) 5 — — 5 Balance, end of period $ 54 $ — $ 10 $ 64 ______________ (1) This adjustment represents previously accrued amounts of existing retention and incentive awards for exiting employees that will be paid out upon termination and other non-cash charges. |
PLS exit program | |
Restructuring Cost and Reserve [Line Items] | |
Summary of expenses incurred to date | The following is a summary of expenses incurred to date for the PLS exit program within Exit and disposal costs in the Condensed Consolidated Statements of Operations , including an estimate of remaining and total program costs: Nine Months Ended September 30, 2017 Severance and Termination Benefits Facility Exit Costs Contract Termination & Other Costs Non-Cash Charges & Impairments (1) Total (In millions) Costs incurred in current year: First quarter $ 4 $ 4 $ — $ — $ 8 Second quarter 4 — 8 (4 ) 8 Third quarter 3 — — — 3 11 4 8 (4 ) 19 Cumulative costs recognized in prior year 22 — 4 15 41 Estimate of remaining costs 5 18 7 — 30 Total $ 38 $ 22 $ 19 $ 11 $ 90 ______________ (1) During the second quarter of 2017, the Company recorded $4 million to reverse previously accrued liabilities associated with the Jacksonville facility. |
Summary of expenses incurred to date by segment | The following is a summary of the PLS program costs by segment as of September 30, 2017 : Mortgage Production Other Total (In millions) Costs incurred in current year: First quarter $ 7 $ 1 $ 8 Second quarter 7 1 8 Third quarter 1 2 3 15 4 19 Cumulative costs recognized in prior year 33 8 41 Estimate of remaining costs 27 3 30 Total $ 75 $ 15 $ 90 |
Reorganization | |
Restructuring Cost and Reserve [Line Items] | |
Summary of expenses incurred to date | The following is a summary of expenses incurred to date for the Reorganization exit program within Exit and disposal costs in the Condensed Consolidated Statements of Operations , including an estimate of remaining and total program costs: Nine Months Ended September 30, 2017 Severance and Termination Benefits Facility Exit Costs Contract Termination & Other Costs Non-Cash Charges & Impairments (1) Total (2) (In millions) Costs incurred in current year: First quarter $ 17 $ — $ — $ — $ 17 Second quarter 4 2 — 2 8 Third quarter 4 — 1 — 5 25 2 1 2 30 Cumulative costs recognized in prior year — — — — — Estimate of remaining costs 5 1 — 2 8 Total $ 30 $ 3 $ 1 $ 4 $ 38 ______________ (1) During the second quarter of 2017, the Company recorded a $2 million impairment for an equity method investment. (2) Exit Costs related to Reorganization include amounts attributable to noncontrolling interest, representing $5 million of Costs incurred during the nine months ended September 30, 2017 , and $8 million of expected Total program costs. Refer to Note 13, 'Variable Interest Entities' for further information regarding agreements to sell certain assets of PHH Home Loans and its subsidiaries and exit the Real Estate channel. |
Summary of expenses incurred to date by segment | The following is a summary of the Reorganization program costs by segment as of September 30, 2017 : Mortgage Production Mortgage Servicing Other Total (In millions) Costs incurred in current year: First quarter $ 6 $ 2 $ 9 $ 17 Second quarter 3 — 5 8 Third quarter 5 — — 5 14 2 14 30 Cumulative costs recognized in prior year — — — — Estimate of remaining costs 6 1 1 8 Total $ 20 $ 3 $ 15 $ 38 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of basic and diluted earnings or loss per share attributable to the entity | The following table summarizes the calculations of basic and diluted earnings or loss per share attributable to PHH Corporation and anti-dilutive securities excluded from the computation of diluted shares for the periods indicated: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions, except share and per share data) Net loss attributable to PHH Corporation $ (55 ) $ (27 ) $ (168 ) $ (69 ) Weighted-average common shares outstanding — basic & diluted 48,210,099 53,578,044 51,724,911 53,616,403 Basic and Diluted loss per share attributable to PHH Corporation $ (1.14 ) $ (0.50 ) $ (3.25 ) $ (1.28 ) Anti-dilutive securities excluded from the computation of diluted shares: Outstanding stock-based compensation awards (1) 1,006,213 1,971,055 1,006,213 1,971,055 ——————— (1) For the three and nine months ended September 30, 2017 , excludes 52,698 shares that are contingently issuable for which the contingency has not been met. |
Servicing Activities (Tables)
Servicing Activities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Schedule of total servicing portfolio | The following table summarizes the total servicing portfolio, which consists of loans associated with capitalized MSRs owned and secured, loans held for sale, and the portfolio associated with loans subserviced for others: September 30, December 31, Fair Value UPB Fair Value UPB (In millions) Capitalized MSRs owned $ 60 $ 8,906 $ 690 $ 84,657 Capitalized MSRs under secured borrowing arrangements and subserviced (1) 440 51,465 — — Total capitalized MSRs $ 500 $ 60,371 $ 690 $ 84,657 Subserviced 90,354 89,170 Other owned servicing 757 815 Total $ 151,482 $ 174,642 ——————— (1) Accounted for as a secured borrowing arrangement. Refer to Note 1, 'Summary of Significant Accounting Policies' for additional information. |
Summary of components of loan servicing income, net | The following table summarizes the components of Loan servicing income, net: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Servicing fees from capitalized portfolio (1) $ 22 $ 67 $ 125 $ 204 Subservicing fees 17 17 38 53 Late fees and other ancillary revenue 6 9 21 27 Loss on sale of MSRs (3 ) — (16 ) (2 ) Curtailment interest paid to investors — (4 ) (6 ) (11 ) Loan servicing income 42 89 162 271 Change in fair value of MSRs, net of related derivatives (2) (35 ) (50 ) (93 ) (133 ) Change in fair value of MSRs secured liability 28 — 27 — Loan servicing income, net $ 35 $ 39 $ 96 $ 138 ____________________ (1) Servicing fees from capitalized portfolio include $14 million and $15 million related to the estimated yield on capitalized MSRs treated as a secured borrowing arrangement for the three and nine months ended September 30, 2017 , respectively. This is fully offset by the MSRs secured interest expense included within Net interest expense. (2) Net of derivative losses of $4 million and derivative gains of $139 million for the three and nine months ended September 30, 2016 , respectively. Derivative gains for the three and nine months ended September 30, 2017 were not significant. |
Schedule of MSRs committed under sale agreements | The following table summarizes the Company's MSRs and its commitments under sale agreements, based on the portfolio as of September 30, 2017 : September 30, 2017 UPB Fair Value (In millions) MSR commitments: New Residential Investment Corp. $ 6,430 $ 38 Other counterparties 548 5 MSRs capitalized under secured borrowing arrangements and subserviced 51,465 440 Non-committed 1,928 17 Total MSRs $ 60,371 $ 500 |
Schedule of activity in loan servicing portfolio associated with capitalized servicing rights | The activity in the total loan servicing portfolio unpaid principal balance associated with capitalized mortgage servicing rights consisted of: Nine Months Ended Nine Months Ended 2017 2016 2017 MSRs Owned MSRs Secured Asset (In millions) Balance, beginning of period $ 84,657 $ 98,990 $ — Additions from loans sold with servicing retained 2,543 4,476 — Payoffs and curtailments (7,249 ) (14,102 ) (2,494 ) Sales that have been derecognized (17,086 ) (742 ) — Sales accounted for as secured borrowing (53,959 ) — 53,959 Balance, end of period $ 8,906 $ 88,622 $ 51,465 |
Schedule of activity in capitalized MSRs | The activity in total capitalized MSRs consisted of: Nine Months Ended Nine Months Ended 2017 2016 2017 MSRs Owned MSRs Secured Asset (In millions) Balance, beginning of period $ 690 $ 880 $ — Additions from loans sold with servicing retained 28 45 — Sales that have been derecognized (125 ) (8 ) — Sales accounted for as secured borrowing (467 ) — 467 Changes in fair value due to: Realization of expected cash flows (57 ) (98 ) (21 ) Changes in market inputs or assumptions used in the valuation model (9 ) (174 ) (6 ) Balance, end of period $ 60 $ 645 $ 440 |
Schedule of cash flows relating to loan sales in which the Company has continuing involvement | The following table sets forth information regarding cash flows relating to loan sales in which the Company has continuing involvement: Nine Months Ended 2017 2016 (In millions) Proceeds from new loan sales or securitizations $ 2,685 $ 4,647 Servicing fees from capitalized portfolio (1) 115 229 Purchases of previously sold loans (2) (20 ) (232 ) Servicing advances (3) (847 ) (1,217 ) Repayment of servicing advances (3) 1,058 1,241 ____________________ (1) Includes servicing fees, late fees and other ancillary servicing revenue in which the Company has continuing involvement. (2) Includes purchases of repurchase eligible loans and excludes indemnification payments to investors and insurers of the related mortgage loans. (3) Outstanding servicing advance receivables are presented in Servicing advances, net in the Condensed Consolidated Balance Sheets , except for advances related to loans in foreclosure or real estate owned, which are included in Other assets. Repayment of servicing advances includes the $66 million received for advances from sales of MSRs executed in the nine months ended September 30, 2017 . |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of gross notional amount of derivatives | The following table summarizes the gross notional amount of derivatives: September 30, December 31, (In millions) Interest rate lock commitments $ 689 $ 862 Forward delivery commitments 1,279 2,104 Option contracts 75 120 MSR-related agreements (1) — 260 ______________ (1) In the fourth quarter of 2016, the Company significantly reduced its MSR-related derivative hedge coverage as a result of the MSR sale agreements that fix the prices the Company expects to realize at future transfer dates. The remaining MSR-related derivatives were settled during the nine months ended September 30, 2017 . For further discussion of the MSR sale agreements, see Note 4, 'Servicing Activities' . |
Schedule of outstanding derivative instruments on a gross basis and the application of counterparty and collateral netting | The following tables present the balances of outstanding derivative instruments on a gross basis and the application of counterparty and collateral netting: September 30, 2017 Gross Assets Offsetting Payables Cash Collateral Net Amount (In millions) ASSETS Subject to master netting arrangements: Forward delivery commitments $ 1 $ (1 ) $ — $ — Not subject to master netting arrangements: Interest rate lock commitments 13 — — 13 Total derivative assets $ 14 $ (1 ) $ — $ 13 Gross Liabilities Offsetting Receivables Cash Collateral Net Amount LIABILITIES Subject to master netting arrangements: Forward delivery commitments $ 2 $ (1 ) $ — $ 1 Total derivative liabilities $ 2 $ (1 ) $ — $ 1 December 31, 2016 Gross Assets Offsetting Payables Cash Collateral Paid Net Amount (In millions) ASSETS Subject to master netting arrangements: Forward delivery commitments $ 13 $ (43 ) $ 31 $ 1 MSR-related agreements 19 (22 ) 4 1 Option contracts 1 (1 ) — — Derivative assets subject to netting 33 (66 ) 35 2 Not subject to master netting arrangements: Interest rate lock commitments 18 — — 18 Forward delivery commitments 1 — — 1 Derivative assets not subject to netting 19 — — 19 Total derivative assets $ 52 $ (66 ) $ 35 $ 21 Gross Liabilities Offsetting Cash Collateral Net Amount LIABILITIES Subject to master netting arrangements: Forward delivery commitments $ 4 $ (10 ) $ 11 $ 5 MSR-related agreements 65 (55 ) 2 12 Option contracts — (1 ) 2 1 Derivative liabilities subject to netting 69 (66 ) 15 18 Total derivative liabilities $ 69 $ (66 ) $ 15 $ 18 |
Schedule of gains (losses) recorded in the Consolidated Statements of Operations | The following table summarizes the gains (losses) recorded in the Condensed Consolidated Statements of Operations for derivative instruments: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Gain on loans held for sale, net: Interest rate lock commitments $ 62 $ 100 $ 175 $ 278 Forward delivery commitments (6 ) (6 ) (11 ) (41 ) Option contracts — — (1 ) (1 ) Loan servicing income, net: MSR-related agreements — (4 ) — 139 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Assets [Abstract] | |
Schedule of other assets | Other assets consisted of: September 30, December 31, (In millions) Real estate owned, net (1) $ 21 $ 16 Derivatives (Note 5) 13 21 Prepaid expenses 10 11 Equity method investments 7 10 Repurchase eligible loans (2) 1 13 Mortgage loans in foreclosure, net (3) — 21 Income taxes receivable — 14 Other 2 3 Total $ 54 $ 109 ______________ (1) As of September 30, 2017 and December 31, 2016 , Real estate owned is net of Adjustment to value for real estate owned of $19 million and $14 million , respectively. (2) Repurchase eligible loans represent certain mortgage loans sold pursuant to GNMA programs where the Company, as servicer, has the unilateral option to repurchase the loan if certain criteria are met, including if a loan is greater than 90 days delinquent and where it has been determined that there is more than a trivial benefit from exercising the repurchase option. Regardless of whether the repurchase option has been exercised, the Company must recognize eligible loans within Other assets and a corresponding repurchase liability within Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets . (3) As of September 30, 2017 , the balance of Mortgage loans in foreclosure is not significant since a majority of the loans and associated reserves have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. As of December 31, 2016 , Mortgage loans in foreclosure is net of Allowance for probable foreclosure losses of $10 million . |
Accounts Payable and Accrued 30
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of: September 30, December 31, (In millions) Exit cost liability (Note 2) $ 64 $ 25 Income taxes payable (Note 10) 50 — Accrued payroll and benefits 47 50 Accounts payable 41 77 Accrued servicing related expenses 12 12 Repurchase eligible loans (Note 6) 1 13 Accrued interest and other 3 16 Total $ 218 $ 193 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of other liabilities | Other liabilities consisted of: September 30, December 31, (In millions) Legal and regulatory matters (Note 11) $ 58 $ 114 Pension and other post-employment benefits 11 11 Income tax contingencies 8 8 Liability to deliver MSRs (Note 12) 2 — Derivatives (Note 5) 1 18 Other 6 6 Total $ 86 $ 157 |
Debt and Borrowing Arrangemen32
Debt and Borrowing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of the components of Debt | The following table summarizes the components of Debt: September 30, 2017 December 31, Balance Interest (1) Available Capacity (2) Balance (In millions) Committed warehouse facilities $ 405 3.4 % $ 195 $ 556 Uncommitted warehouse facilities 78 2.9 % 222 — Servicing advance facility 52 3.2 % 13 99 Term notes due in 2019 97 7.375 % n/a 275 Term notes due in 2021 22 6.375 % n/a 340 Unsecured credit facilities — — 3 — Unsecured debt, face value 119 615 Debt issuance costs (1 ) (8 ) Unsecured debt, net 118 607 Total $ 653 $ 1,262 ______________ (1) Interest rate shown represents the stated interest rate of outstanding borrowings, which may differ from the effective rate due to the amortization of premiums, discounts and issuance costs. Warehouse facilities and the servicing advance facility are variable-rate. Rate shown for warehouse facilities represents the weighted-average rate of current outstanding borrowings. (2) Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements, including asset-eligibility requirements. |
Schedule of assets held as collateral that are not available to pay the Company's general obligations | Assets pledged as collateral or funded by subservicing clients that are not available to pay the Company’s general obligations as of September 30, 2017 consisted of: Warehouse Facilities Servicing Advance Facility Subservicing Advance Liabilities (1) MSRs Secured Liability (2) (In millions) Restricted cash $ 6 $ 14 $ — $ — Servicing advances — 80 228 — Mortgage loans held for sale (unpaid principal balance) 502 — — — Mortgage servicing rights — — — 440 Total $ 508 $ 94 $ 228 $ 440 ______________ (1) Under the terms of certain subservicing arrangements, the subservicing counterparty is required to fund servicing advances for their respective portfolios of subserviced loans. A subservicing advance liability is recorded for cash received from the counterparty to fund advances and is repaid to the counterparty upon the collection of the mortgage servicing advance receivables. (2) Represents MSRs that are accounted for as a secured borrowing arrangement. Refer to Note 1, 'Summary of Significant Accounting Policies' for additional information. |
Schedule of contractual debt maturities | The following table provides the contractual debt maturities as of September 30, 2017 : Warehouse Facilities Servicing Advance Facility Unsecured Debt Total (In millions) Within one year $ 483 $ 52 $ — $ 535 Between one and two years — — 97 97 Between two and three years — — — — Between three and four years — — 22 22 Between four and five years — — — — Thereafter — — — — $ 483 $ 52 $ 119 $ 654 |
Summary of components of net interest expense | The following table summarizes the components of Net interest expense: Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 2017 2016 2017 2016 (In millions) Interest income $ 10 $ 11 $ 30 $ 32 Secured interest expense (6 ) (8 ) (19 ) (24 ) MSRs secured interest expense (1) (14 ) — (15 ) — Unsecured interest expense — (10 ) (19 ) (31 ) Net interest expense $ (10 ) $ (7 ) $ (23 ) $ (23 ) _____________ (1) MSRs secured interest expense is the estimated yield on the MSRs secured liability as a result of the secured borrowing arrangement, as discussed in Note 4, 'Servicing Activities' . MSRs secured interest expense fully offsets the estimated yield on capitalized MSRs treated as a secured borrowing arrangement, which is included within Loan servicing income, net. |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of deferred tax assets and liabilities | The following table summarizes the significant components of deferred tax assets and liabilities: September 30, December 31, (In millions) Deferred tax assets: Federal loss carryforwards $ 23 $ 23 State loss carryforwards and credits 37 39 Accrued legal and regulatory matters 23 46 Reserves and allowances 31 36 Exit cost liability 26 10 Other accrued liabilities 12 24 Gross deferred tax assets 152 178 Valuation allowance (48 ) (44 ) Deferred tax assets, net of valuation allowance 104 134 Deferred tax liabilities: Mortgage servicing rights 20 234 Other 4 1 Deferred tax liabilities 24 235 Net deferred tax asset (liability) $ 80 $ (101 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of the activity in repurchase and foreclosure-related reserves | A summary of the activity in repurchase and foreclosure-related reserves is as follows: Nine Months Ended 2017 2016 (In millions) Balance, beginning of period $ 73 $ 89 Realized losses (18 ) (17 ) Transfer of reserves (1) (7 ) — Increase in reserves due to: Changes in assumptions 7 10 New loan sales 2 5 Balance, end of period $ 57 $ 87 ______________ (1) During the nine months ended September 30, 2017 , certain loans and associated reserves of Mortgage loans in foreclosure have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. Repurchase and foreclosure-related reserves consist of the following: September 30, December 31, (In millions) Loan repurchase and indemnification liability $ 38 $ 49 Adjustment to value for real estate owned 19 14 Allowance for probable foreclosure losses — 10 Total $ 57 $ 73 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following summarizes the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis: September 30, 2017 Level One Level Two Level Three Cash Collateral and Netting Total (In millions) ASSETS Mortgage loans held for sale $ — $ 545 $ 45 $ — $ 590 Mortgage servicing rights — — 500 — 500 Other assets—Derivative assets: Interest rate lock commitments — — 13 — 13 Forward delivery commitments — 1 — (1 ) — LIABILITIES Mortgage servicing rights secured liability $ — $ — $ 440 $ — $ 440 Other liabilities: Derivative liabilities—Forward delivery commitments — 2 — (1 ) 1 Liability to deliver MSRs — — 2 — 2 December 31, 2016 Level One Level Two Level Three Cash Collateral and Netting Total (In millions) ASSETS Mortgage loans held for sale $ — $ 636 $ 47 $ — $ 683 Mortgage servicing rights — — 690 — 690 Other assets—Derivative assets: Interest rate lock commitments — — 18 — 18 Forward delivery commitments — 14 — (12 ) 2 MSR-related agreements — 19 — (18 ) 1 Option contracts — 1 — (1 ) — LIABILITIES Other liabilities—Derivative liabilities: Forward delivery commitments $ — $ 4 $ — $ 1 $ 5 MSR-related agreements — 65 — (53 ) 12 Option contracts — — — 1 1 |
Schedule of difference between the carrying amounts of Mortgage loans held for sale measured at fair value, and the aggregate unpaid principal amount that the Company is contractually entitled to receive at maturity | The following table reflects the difference between the carrying amounts of MLHS measured at fair value and the aggregate unpaid principal amount that the Company is contractually entitled to receive at maturity: September 30, 2017 December 31, 2016 Total Loans 90 days or more past due and on non-accrual status (1) Total Loans 90 days or more past due and on non-accrual status (In millions) Carrying amount $ 590 $ 19 $ 683 $ 7 Aggregate unpaid principal balance 606 38 687 10 Difference $ (16 ) $ (19 ) $ (4 ) $ (3 ) ——————— (1) As of September 30, 2017 , the majority of Mortgage loans in foreclosure and associated reserves have been transferred to Mortgage loans held for sale pursuant to the Company's marketing of and intentions to sell those assets. |
Schedule of components of Mortgage loans held for sale | The following table summarizes the components of MLHS: September 30, December 31, (In millions) First mortgages: Conforming $ 473 $ 531 Non-conforming 72 105 Total first mortgages 545 636 Second lien 1 3 Scratch and Dent 44 44 Total $ 590 $ 683 |
Schedule of initial and ending capitalization rate of Mortgage Servicing Rights (MSRs) | The following tables summarize certain information regarding the initial and ending capitalization rate of MSRs: Nine Months Ended 2017 2016 Initial capitalization rate of additions to MSRs owned 1.10 % 1.00 % September 30, December 31, MSRs Owned Capitalization servicing rate 0.67 % 0.82 % Capitalization servicing multiple 2.3 2.9 Weighted-average servicing fee (in basis points) 29 28 Weighted-average life (years) 6.0 6.3 September 30, MSRs Under Secured Borrowing Arrangement Capitalization servicing rate 0.85 % Capitalization servicing multiple 3.2 Weighted-average servicing fee (in basis points) 27 Weighted-average life (years) 5.8 |
Schedule of significant assumptions used in estimating the fair value of Mortgage servicing rights (MSRs) | The significant assumptions used in estimating the fair value of MSRs were as follows (in annual rates): September 30, December 31, MSRs Owned Weighted-average prepayment speed (CPR) 8.4 % 9.2 % Option adjusted spread, in basis points (OAS) 490 1,430 Weighted-average delinquency rate 12.0 % 5.1 % September 30, MSRs Under Secured Borrowing Arrangement Weighted-average prepayment speed (CPR) 10.5 % Option adjusted spread, in basis points (OAS) 988 Weighted-average delinquency rate 3.8 % The significant assumptions used in estimating the fair value of MSRs secured liability were as follows (in annual rates): September 30, Weighted-average prepayment speed (CPR) 10.5 % Option adjusted spread, in basis points (OAS) 988 Weighted-average delinquency rate 3.8 % |
Schedule of estimated change in the fair value of MSRs from adverse changes in the significant assumptions | The following table summarizes the estimated change in the fair value of MSRs from adverse changes in the significant assumptions: September 30, 2017 Weighted- Average Prepayment Speed Option Adjusted Spread Weighted- Average Delinquency Rate (In millions) MSRs Owned Impact on fair value of 10% adverse change $ (3 ) $ (2 ) $ (4 ) Impact on fair value of 20% adverse change (5 ) (4 ) (9 ) MSRs Under Secured Borrowing Arrangement (1) Impact on fair value of 10% adverse change $ (16 ) $ (20 ) $ (6 ) Impact on fair value of 20% adverse change (30 ) (38 ) (12 ) ——————— (1) During 2017, the Company sold MSRs to New Residential, which have been accounted for as a secured borrowing and have a fair value of $440 million as of September 30, 2017 . Accordingly, the MSRs remained on the balance sheet with the proceeds from sale recognized as MSRs secured liability . Any changes in fair value of this secured borrowing are expected to fully offset within MSRs secured asset and MSRs secured liability . |
Schedule of activity in assets and liabilities classified within Level Three of the valuation hierarchy | Activity of assets and liabilities classified within Level Three of the valuation hierarchy consisted of: Three Months Ended Three Months Ended MLHS MSRs IRLCs, net MSRs Secured Liability Liability to Deliver MSRs MLHS MSRs IRLCs, net (In millions) Balance, beginning of period $ 32 $ 555 $ 16 $ (114 ) $ — $ 42 $ 679 $ 39 Purchases, Issuances, Sales and Settlements: Purchases 2 — — — — 3 — — Issuances 2 10 — (354 ) — 2 15 — Sales (3 ) (30 ) — — — (6 ) (3 ) — Settlements (2 ) — (65 ) 14 1 (4 ) — (92 ) (1 ) (20 ) (65 ) (340 ) 1 (5 ) 12 (92 ) Realized and unrealized gains (losses) included in: Gain on loans held for sale, net (6 ) — 62 — (3 ) — — 100 Loan servicing income, net — (35 ) — 28 — — (46 ) — Net interest expense 1 — — (14 ) — — — — (5 ) (35 ) 62 14 (3 ) — (46 ) 100 Transfers into Level Three 23 — — — — 13 — — Transfers out of Level Three (4 ) — — — — (5 ) — — Balance, end of period $ 45 $ 500 $ 13 $ (440 ) $ (2 ) $ 45 $ 645 $ 47 Nine Months Ended Nine Months Ended MLHS MSRs IRLCs, net MSRs Secured Liability Liability to Deliver MSRs MLHS MSRs IRLCs, net (In millions) Balance, beginning of period $ 47 $ 690 $ 18 $ — $ — $ 39 $ 880 $ 21 Purchases, Issuances, Sales and Settlements: Purchases 7 — — — — 11 — — Issuances 5 28 — (467 ) — 5 45 — Sales (20 ) (125 ) — — — (20 ) (8 ) — Settlements (11 ) — (180 ) 15 1 (9 ) — (252 ) (19 ) (97 ) (180 ) (452 ) 1 (13 ) 37 (252 ) Realized and unrealized gains (losses) included in: Gain on loans held for sale, net (6 ) — 175 — (3 ) — — 278 Loan servicing income, net — (93 ) — 27 — — (272 ) — Net interest expense 2 — — (15 ) — 2 — — (4 ) (93 ) 175 12 (3 ) 2 (272 ) 278 Transfers into Level Three 34 — — — — 33 — — Transfers out of Level Three (13 ) — — — — (16 ) — — Balance, end of period $ 45 $ 500 $ 13 $ (440 ) $ (2 ) $ 45 $ 645 $ 47 |
Schedule of unrealized gains (losses) related to assets and liabilities classified within Level Three of the valuation hierarchy | Unrealized gains (losses) included in the Condensed Consolidated Statements of Operations related to assets and liabilities classified within Level Three of the valuation hierarchy that are included in the Condensed Consolidated Balance Sheets were as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Gain on loans held for sale, net $ 8 $ 42 $ 7 $ 43 Loan servicing income, net (3 ) (9 ) (9 ) (174 ) |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Variable Interest Entities | |
Schedule of Variable Interest Entities | Assets and liabilities of significant variable interest entities are included in the Condensed Consolidated Balance Sheets as follows: September 30, 2017 December 31, 2016 PHH Home Loans Servicing Advance Receivables Trust PHH Home Loans Servicing Advance Receivables Trust (In millions) ASSETS Cash and cash equivalents $ 60 $ — $ 67 $ — Restricted cash 4 14 5 19 Mortgage loans held for sale 239 — 350 — Accounts receivable, net 17 — 9 — Servicing advances, net — 80 — 150 Property and equipment, net — — 1 — Other assets 7 — 11 1 Total assets $ 327 $ 94 $ 443 $ 170 Assets held as collateral $ 218 $ 94 $ 320 $ 169 LIABILITIES Accounts payable and accrued expenses $ 14 $ — $ 11 $ — Debt 206 52 300 99 Other liabilities 6 — 5 — Total liabilities (1) $ 226 $ 52 $ 316 $ 99 ——————— (1) Excludes intercompany payables. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment results | Segment results were as follows: Total Assets September 30, December 31, 2016 (In millions) Mortgage Production segment $ 803 $ 913 Mortgage Servicing segment 1,010 1,428 Other 488 834 Total $ 2,301 $ 3,175 Net Revenues Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Mortgage Production segment $ 98 $ 168 $ 276 $ 443 Mortgage Servicing segment 23 29 71 107 Total $ 121 $ 197 $ 347 $ 550 Segment (Loss) Profit (1) Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Mortgage Production segment $ (18 ) $ 22 $ (84 ) $ 9 Mortgage Servicing segment (37 ) (52 ) (114 ) (106 ) Other (36 ) (5 ) (73 ) (10 ) Total $ (91 ) $ (35 ) $ (271 ) $ (107 ) ——————— (1) The following is a reconciliation of Loss before income taxes to Segment loss: Three Months Ended Nine Months Ended 2017 2016 2017 2016 (In millions) Loss before income taxes $ (78 ) $ (29 ) $ (266 ) $ (98 ) Less: net income attributable to noncontrolling interest 13 6 5 9 Segment loss $ (91 ) $ (35 ) $ (271 ) $ (107 ) |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details) $ in Millions | Dec. 28, 2016 | Sep. 30, 2017USD ($)segment | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
Accounting Policies [Line Items] | |||||
Notice period of purchase requirement | 2 years | ||||
Number of reportable segments | segment | 2 | ||||
Correction of an Immaterial Error | |||||
Total PHH Corporation stockholders’ equity | $ 594 | $ 1,090 | $ 1,223 | $ 1,316 | |
Redeemable noncontrolling interest | 44 | 33 | |||
Additional paid-in capital | 558 | $ 885 | |||
Income tax expense from adoption of ASU 2016-09 | 2 | ||||
Payments related to tax withholding for share-based compensation | $ 1 | ||||
New Residential Investment Corp. | |||||
Accounting Policies [Line Items] | |||||
Subservicing contract period | 3 years | 3 years | |||
Restatement adjustment | |||||
Correction of an Immaterial Error | |||||
Total PHH Corporation stockholders’ equity | $ (33) | (37) | (32) | ||
Redeemable noncontrolling interest | 33 | 37 | 32 | ||
Additional paid-in capital | $ (2) | $ (1) | $ (2) |
Exit Costs - Narrative (Details
Exit Costs - Narrative (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Private Label Solutions business | Mortgage Production Volume | Product Concentration | |
Restructuring Cost and Reserve [Line Items] | |
Concentration risk, percentage | 79.00% |
Exit Costs - Summary of expense
Exit Costs - Summary of expenses incurred to date (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | $ 8 | $ 0 | $ 49 | $ 0 | ||
Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 5 | $ 8 | $ 17 | 30 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 8 | 8 | ||||
Program expected costs | 38 | 38 | ||||
Reorganization | Noncontrolling Interest | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 5 | |||||
Program expected costs | 8 | 8 | ||||
PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 3 | 8 | 8 | 19 | ||
Cumulative costs recognized in prior year | 41 | |||||
Estimate of remaining costs | 30 | 30 | ||||
Program expected costs | 90 | 90 | ||||
Severance and Termination Benefits | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 4 | 4 | 17 | 25 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 5 | 5 | ||||
Program expected costs | 30 | 30 | ||||
Severance and Termination Benefits | PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 3 | 4 | 4 | 11 | ||
Cumulative costs recognized in prior year | 22 | |||||
Estimate of remaining costs | 5 | 5 | ||||
Program expected costs | 38 | 38 | ||||
Facility Exit Costs | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | 2 | 0 | 2 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 1 | 1 | ||||
Program expected costs | 3 | 3 | ||||
Facility Exit Costs | PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | 0 | 4 | 4 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 18 | 18 | ||||
Program expected costs | 22 | 22 | ||||
Contract Termination & Other Costs | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 1 | 0 | 0 | 1 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 0 | 0 | ||||
Program expected costs | 1 | 1 | ||||
Contract Termination & Other Costs | PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | 8 | 0 | 8 | ||
Cumulative costs recognized in prior year | 4 | |||||
Estimate of remaining costs | 7 | 7 | ||||
Program expected costs | 19 | 19 | ||||
Non-Cash Charges & Impairments | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | 2 | 0 | 2 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 2 | 2 | ||||
Program expected costs | 4 | 4 | ||||
Non-Cash Charges & Impairments | PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | $ (4) | $ 0 | (4) | ||
Cumulative costs recognized in prior year | 15 | |||||
Estimate of remaining costs | 0 | 0 | ||||
Program expected costs | $ 11 | $ 11 |
Exit Costs - Summary of expen41
Exit Costs - Summary of expenses incurred to date by segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | $ 8 | $ 0 | $ 49 | $ 0 | ||
Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 5 | $ 8 | $ 17 | 30 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 8 | 8 | ||||
Program expected costs | 38 | 38 | ||||
PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 3 | 8 | 8 | 19 | ||
Cumulative costs recognized in prior year | 41 | |||||
Estimate of remaining costs | 30 | 30 | ||||
Program expected costs | 90 | 90 | ||||
Operating segment | Mortgage Production | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 5 | 3 | 6 | 14 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 6 | 6 | ||||
Program expected costs | 20 | 20 | ||||
Operating segment | Mortgage Production | PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 1 | 7 | 7 | 15 | ||
Cumulative costs recognized in prior year | 33 | |||||
Estimate of remaining costs | 27 | 27 | ||||
Program expected costs | 75 | 75 | ||||
Operating segment | Mortgage Servicing | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | 0 | 2 | 2 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 1 | 1 | ||||
Program expected costs | 3 | 3 | ||||
Other | Reorganization | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 0 | 5 | 9 | 14 | ||
Cumulative costs recognized in prior year | 0 | |||||
Estimate of remaining costs | 1 | 1 | ||||
Program expected costs | 15 | 15 | ||||
Other | PLS exit program | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Costs incurred in current year | 2 | $ 1 | $ 1 | 4 | ||
Cumulative costs recognized in prior year | 8 | |||||
Estimate of remaining costs | 3 | 3 | ||||
Program expected costs | $ 15 | $ 15 |
Exit Costs - Schedule of exit c
Exit Costs - Schedule of exit cost liability (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance, beginning of period | $ 25 |
Charges | 51 |
Paid | (17) |
Adjustments | 5 |
Balance, end of period | 64 |
Severance and Termination Benefits | |
Restructuring Reserve [Roll Forward] | |
Balance, beginning of period | 22 |
Charges | 36 |
Paid | (9) |
Adjustments | 5 |
Balance, end of period | 54 |
Facility Exit Costs | |
Restructuring Reserve [Roll Forward] | |
Balance, beginning of period | 0 |
Charges | 6 |
Paid | (6) |
Adjustments | 0 |
Balance, end of period | 0 |
Contract Termination & Other Costs | |
Restructuring Reserve [Roll Forward] | |
Balance, beginning of period | 3 |
Charges | 9 |
Paid | (2) |
Adjustments | 0 |
Balance, end of period | $ 10 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) | Aug. 11, 2017 | Sep. 30, 2017 | Jan. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Share Repurchases [Line Items] | ||||||
Amount authorized for share repurchases | $ 300,000,000 | $ 300,000,000 | $ 300,000,000 | |||
Stock repurchased during period | 301,000,000 | $ 23,000,000 | ||||
Payments for repurchase of common stock | $ 301,000,000 | $ 23,000,000 | ||||
Modified Dutch-auction self-tender offer | ||||||
Share Repurchases [Line Items] | ||||||
Stock repurchase program, right to purchase additional percentage of outstanding shares | 2.00% | |||||
Number of shares repurchased during period | 18,762,962 | |||||
Payments for repurchase of common stock | $ 267,000,000 | |||||
Modified Dutch-auction self-tender offer | Maximum | ||||||
Share Repurchases [Line Items] | ||||||
Stock repurchased during period | $ 266,000,000 | |||||
Open market program | ||||||
Share Repurchases [Line Items] | ||||||
Number of shares repurchased during period | 1,508,772 | 689,502 | 2,450,466 | |||
Payments for repurchase of common stock | $ 10,000,000 | $ 34,000,000 |
Earnings Per Share - Calculatio
Earnings Per Share - Calculation of basic and diluted earnings or loss per share and anti-diluted securities for the period (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net loss attributable to PHH Corporation | $ (55) | $ (27) | $ (168) | $ (69) |
Weighted-average common shares outstanding — basic & diluted (in shares) | 48,210,099 | 53,578,044 | 51,724,911 | 53,616,403 |
Basic and Diluted loss per share attributable to PHH Corporation (in usd per share) | $ (1.14) | $ (0.50) | $ (3.25) | $ (1.28) |
Anti-dilutive securities excluded from the computation of diluted shares: | ||||
Contingently issuable shares for which the contingency has not been met | 52,698 | 52,698 | ||
Outstanding stock-based compensation awards | ||||
Anti-dilutive securities excluded from the computation of diluted shares: | ||||
Anti-dilutive securities excluded from the computation of dilutive securities (in shares) | 1,006,213 | 1,971,055 | 1,006,213 | 1,971,055 |
Servicing Activities - Total Se
Servicing Activities - Total Servicing Portfolio (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Loan Servicing Portfolio [Abstract] | ||
MSRs, UPB | $ 151,482 | $ 174,642 |
MSRs, Fair Value | 500 | 690 |
Capitalized MSRs owned | ||
Loan Servicing Portfolio [Abstract] | ||
MSRs, UPB | 8,906 | 84,657 |
MSRs, Fair Value | 60 | 690 |
Capitalized MSRs under secured borrowing arrangements and subserviced | ||
Loan Servicing Portfolio [Abstract] | ||
MSRs, UPB | 51,465 | 0 |
MSRs, Fair Value | 440 | 0 |
Capitalized MSRs | ||
Loan Servicing Portfolio [Abstract] | ||
MSRs, UPB | 60,371 | 84,657 |
MSRs, Fair Value | 500 | 690 |
Subserviced | ||
Loan Servicing Portfolio [Abstract] | ||
MSRs, UPB | 90,354 | 89,170 |
Other owned servicing | ||
Loan Servicing Portfolio [Abstract] | ||
MSRs, UPB | $ 757 | $ 815 |
Servicing Activities - Loan Ser
Servicing Activities - Loan Servicing Income, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Transfers and Servicing [Abstract] | ||||
Servicing fees from capitalized portfolio | $ 22 | $ 67 | $ 125 | $ 204 |
Subservicing fees | 17 | 17 | 38 | 53 |
Late fees and other ancillary revenue | 6 | 9 | 21 | 27 |
Loss on sale of MSRs | (3) | 0 | (16) | (2) |
Curtailment interest paid to investors | 0 | (4) | (6) | (11) |
Loan servicing income | 42 | 89 | 162 | 271 |
Change in fair value of mortgage servicing rights and related derivatives | (35) | (50) | (93) | (133) |
Change in fair value of MSRs secured liability | 28 | 0 | 27 | 0 |
Net loan servicing income | 35 | 39 | 96 | 138 |
MSR yield on secured asset | $ 14 | $ 15 | ||
Net derivative gains (losses) related to mortgage servicing rights | $ (4) | $ 139 |
Servicing Activities - Sales of
Servicing Activities - Sales of MSRs (Details) Loan in Thousands, $ in Millions | Aug. 02, 2017USD ($) | Jul. 03, 2017USD ($) | Jun. 16, 2017USD ($) | May 02, 2017USD ($) | Feb. 02, 2017USD ($) | Dec. 28, 2016 | Sep. 30, 2017USD ($)LoanSale | Sep. 30, 2017USD ($)LoanSale | Sep. 30, 2017USD ($)LoanSale | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 151,482 | $ 151,482 | $ 151,482 | $ 174,642 | |||||||
MSRs, Fair Value | 500 | 500 | 500 | 690 | |||||||
Servicing advances, net | 413 | 413 | 413 | $ 628 | |||||||
Proceeds on sale of mortgage servicing rights | 31 | 122 | $ 7 | ||||||||
Proceeds from mortgage servicing rights secured liability | 318 | 420 | $ 0 | ||||||||
Accounts receivable related to holdback from executed MSRs sales and transfers | 42 | 42 | 42 | ||||||||
MSR Non-committed | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | $ 17 | $ 17 | $ 17 | ||||||||
New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
Subservicing agreement, number of loans included in transaction subject to certain transfer and termination provisions, initial period term | 3 years | 3 years | |||||||||
Subservicing agreement, number of loans subject to agreement | Loan | 377 | 377 | 377 | ||||||||
New Residential Investment Corp. | MSR commitments | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | $ 38 | $ 38 | $ 38 | ||||||||
Other counterparties | MSR commitments | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | 5 | 5 | 5 | ||||||||
Servicing advances committed | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
Servicing advances, net | 145 | 145 | 145 | ||||||||
Capitalized MSRs | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | 60,371 | 60,371 | 60,371 | ||||||||
Capitalized MSRs | MSR Non-committed | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | 1,928 | 1,928 | 1,928 | ||||||||
Capitalized MSRs | New Residential Investment Corp. | MSR commitments | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | 6,430 | 6,430 | 6,430 | ||||||||
Capitalized MSRs | Other counterparties | MSR commitments | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | 548 | 548 | 548 | ||||||||
Interest rate lock commitments and mortgage loans held for sale | Other counterparties | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
Commitment to sell Mortgage Servicing Rights | 31 | 31 | 31 | ||||||||
GNMA Loans | Lakeview Loan Servicing | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | $ 12 | $ 7 | $ 74 | ||||||||
Servicing advances, net | 2 | 1 | 11 | ||||||||
Commitment to sell mortgage servicing rights, sales price | 14 | 8 | 85 | ||||||||
GNMA Loans | Capitalized MSRs | Lakeview Loan Servicing | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 2,000 | $ 1,000 | $ 10,200 | ||||||||
Fannie Mae and Freddie Mac Loans | New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | 12 | 12 | 12 | ||||||||
Servicing advances, net | 1 | 1 | 1 | ||||||||
Commitment to sell mortgage servicing rights, sales price | 13 | ||||||||||
Fannie Mae and Freddie Mac Loans | Capitalized MSRs | New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 1,300 | $ 1,300 | $ 1,300 | ||||||||
Number of sales of MSRs | Sale | 2 | 2 | 2 | ||||||||
Fannie Mae Loans | New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | $ 342 | ||||||||||
Servicing advances, net | 24 | ||||||||||
Commitment to sell mortgage servicing rights, sales price | 366 | ||||||||||
Fannie Mae Loans | Capitalized MSRs | New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 39,500 | ||||||||||
Freddie Mac Loans | New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | $ 113 | ||||||||||
Servicing advances, net | 8 | ||||||||||
Commitment to sell mortgage servicing rights, sales price | 121 | ||||||||||
Freddie Mac Loans | Capitalized MSRs | New Residential Investment Corp. | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 13,200 | ||||||||||
Capitalized MSRs owned | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 8,906 | $ 8,906 | $ 8,906 | $ 84,657 | |||||||
MSRs, Fair Value | $ 60 | $ 60 | $ 60 | 690 | |||||||
Capitalized MSRs owned | New Residential Investment Corp. | MSR commitments | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
Subservicing agreement, number of loans subject to agreement | Loan | 30 | 30 | 30 | ||||||||
Capitalized MSRs under secured borrowing arrangements and subserviced | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | $ 51,465 | $ 51,465 | $ 51,465 | 0 | |||||||
MSRs, Fair Value | 440 | 440 | 440 | $ 0 | |||||||
Capitalized MSRs under secured borrowing arrangements and subserviced | Capitalized MSRs | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, UPB | 51,465 | 51,465 | 51,465 | ||||||||
Loans sales to other counterparties | |||||||||||
Transfers and Servicing of Mortgage Loans | |||||||||||
MSRs, Fair Value | $ 31 | $ 31 | $ 31 |
Servicing Activities - Activity
Servicing Activities - Activity in the total loan servicing portfolio unpaid principal balance associated with capitalized MSRs (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Activity in the loan servicing portfolio associated with capitalized servicing rights | ||
Balance, beginning of period | $ 174,642 | |
Balance, end of period | 151,482 | |
Capitalized MSRs | ||
Activity in the loan servicing portfolio associated with capitalized servicing rights | ||
Balance, end of period | 60,371 | |
MSRs Under Secured Borrowing Arrangement | Capitalized MSRs | ||
Activity in the loan servicing portfolio associated with capitalized servicing rights | ||
Balance, beginning of period | 0 | |
Additions from loans sold with servicing retained | 0 | |
Payoffs and curtailments | (2,494) | |
Sales that have been derecognized | 0 | |
Sales accounted for as secured borrowing | 53,959 | |
Balance, end of period | 51,465 | |
MSRs Owned | Capitalized MSRs | ||
Activity in the loan servicing portfolio associated with capitalized servicing rights | ||
Balance, beginning of period | 84,657 | $ 98,990 |
Additions from loans sold with servicing retained | 2,543 | 4,476 |
Payoffs and curtailments | (7,249) | (14,102) |
Sales that have been derecognized | (17,086) | (742) |
Sales accounted for as secured borrowing | (53,959) | 0 |
Balance, end of period | $ 8,906 | $ 88,622 |
Servicing Activities - Activi49
Servicing Activities - Activity in total capitalized MSRs (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Activity in capitalized MSRs | ||
Balance, beginning of period | $ 690 | |
Changes in fair value due to: | ||
Balance, end of period | 500 | |
MSRs Owned | ||
Activity in capitalized MSRs | ||
Balance, beginning of period | 690 | $ 880 |
Additions from loans sold with servicing retained | 28 | 45 |
Sales that have been derecognized | (125) | (8) |
Sales accounted for as secured borrowing | (467) | 0 |
Changes in fair value due to: | ||
Realization of expected cash flows | (57) | (98) |
Changes in market inputs or assumptions used in the valuation model | (9) | (174) |
Balance, end of period | 60 | $ 645 |
MSRs Secured Asset | ||
Activity in capitalized MSRs | ||
Balance, beginning of period | 0 | |
Additions from loans sold with servicing retained | 0 | |
Sales that have been derecognized | 0 | |
Sales accounted for as secured borrowing | 467 | |
Changes in fair value due to: | ||
Realization of expected cash flows | (21) | |
Changes in market inputs or assumptions used in the valuation model | (6) | |
Balance, end of period | $ 440 |
Servicing Activities - Sales 50
Servicing Activities - Sales of Mortgage Loans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows Between Transferor and Transferee [Abstract] | ||||
Proceeds from new loan sales or securitizations | $ 2,685 | $ 4,647 | ||
Servicing fees from capitalized portfolio | 115 | 229 | ||
Purchases of previously sold loans | (20) | (232) | ||
Servicing advances | (847) | (1,217) | ||
Repayment of servicing advances | 1,058 | 1,241 | ||
Realized Gain on Sale | ||||
Pre-tax gains related to sale or securitization of residential mortgage loans | $ 44 | $ 77 | 139 | $ 185 |
All loan sales | ||||
Cash Flows Between Transferor and Transferee [Abstract] | ||||
Repayment of servicing advances | $ 66 |
Derivatives - Summary of gross
Derivatives - Summary of gross notional amount of derivatives (Details) - Not designated as hedging instruments - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Interest rate lock commitments | ||
Notional amount of derivatives | ||
Notional | $ 689 | $ 862 |
Forward delivery commitments | ||
Notional amount of derivatives | ||
Notional | 1,279 | 2,104 |
Option contracts | ||
Notional amount of derivatives | ||
Notional | 75 | 120 |
MSR-related agreements | ||
Notional amount of derivatives | ||
Notional | $ 0 | $ 260 |
Derivatives - Balances of outst
Derivatives - Balances of outstanding derivative instruments (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
ASSETS | ||
Other assets-derivative assets, Total | $ 13 | $ 21 |
LIABILITIES | ||
Other liabilities-derivative liabilities, Total | 1 | 18 |
Not designated as hedging instruments | ||
ASSETS | ||
Gross Assets, subject to master netting agreements | 33 | |
Gross Assets, Not subject to master netting agreements | 19 | |
Gross Assets, Total | 14 | 52 |
Offsetting Payables | (1) | (66) |
Cash Collateral Paid | 35 | |
Derivative Asset, Fair Value, Amount Offset Against Collateral | 2 | |
Other assets-derivative assets, Total | 13 | 21 |
LIABILITIES | ||
Gross Liabilities, subject to master netting agreements | 69 | |
Gross Liabilities, Total | 2 | 69 |
Offsetting Receivables | (1) | (66) |
Cash Collateral Received | 15 | |
Derivative Liability, Fair Value, Amount Offset Against Collateral | 18 | |
Other liabilities-derivative liabilities, Total | 1 | 18 |
Not designated as hedging instruments | Interest rate lock commitments | ||
ASSETS | ||
Gross Assets, Not subject to master netting agreements | 13 | 18 |
Not designated as hedging instruments | Forward delivery commitments | ||
ASSETS | ||
Gross Assets, subject to master netting agreements | 1 | 13 |
Gross Assets, Not subject to master netting agreements | 1 | |
Offsetting Payables | (1) | (43) |
Cash Collateral Paid | 31 | |
Derivative Asset, Fair Value, Amount Offset Against Collateral | 1 | |
LIABILITIES | ||
Gross Liabilities, subject to master netting agreements | 2 | 4 |
Offsetting Receivables | (1) | (10) |
Cash Collateral Received | 11 | |
Derivative Liability, Fair Value, Amount Offset Against Collateral | $ 1 | 5 |
Not designated as hedging instruments | Option contracts | ||
ASSETS | ||
Gross Assets, subject to master netting agreements | 1 | |
Offsetting Payables | (1) | |
LIABILITIES | ||
Offsetting Receivables | (1) | |
Cash Collateral Received | 2 | |
Derivative Liability, Fair Value, Amount Offset Against Collateral | 1 | |
Not designated as hedging instruments | MSR-related agreements | ||
ASSETS | ||
Gross Assets, subject to master netting agreements | 19 | |
Offsetting Payables | (22) | |
Cash Collateral Paid | 4 | |
Derivative Asset, Fair Value, Amount Offset Against Collateral | 1 | |
LIABILITIES | ||
Gross Liabilities, subject to master netting agreements | 65 | |
Offsetting Receivables | (55) | |
Cash Collateral Received | 2 | |
Derivative Liability, Fair Value, Amount Offset Against Collateral | $ 12 |
Derivatives - Summary of gains
Derivatives - Summary of gains (losses) for derivative instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivatives | ||||
Net derivative gain related to mortgage servicing rights | $ (4) | $ 139 | ||
Gain on loans held for sale, net | Interest rate lock commitments | ||||
Derivatives | ||||
Gains on derivative instruments | $ 62 | 100 | $ 175 | 278 |
Gain on loans held for sale, net | Forward delivery commitments | ||||
Derivatives | ||||
Gains on derivative instruments | $ (6) | (6) | (11) | (41) |
Gain on loans held for sale, net | Option contracts | ||||
Derivatives | ||||
Gains on derivative instruments | $ (1) | (1) | ||
Loan servicing income, net | MSR-related agreements | ||||
Derivatives | ||||
Net derivative gain related to mortgage servicing rights | $ (4) | $ 139 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Other Assets [Abstract] | ||
Real estate owned, net | $ 21 | $ 16 |
Derivatives (Note 5) | 13 | 21 |
Prepaid expenses | 10 | 11 |
Equity method investments | 7 | 10 |
Repurchase eligible loans | 1 | 13 |
Mortgage loans in foreclosure, net | 0 | 21 |
Income taxes receivable | 0 | 14 |
Other | 2 | 3 |
Total | 54 | 109 |
Adjustment to value for real estate owned | $ 19 | 14 |
Repurchase eligibility, prior number of days delinquent | 90 days | |
Allowance for probable foreclosure losses | $ 0 | $ 10 |
Accounts Payable and Accrued 55
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Liabilities [Abstract] | ||
Exit cost liability (Note 2) | $ 64 | $ 25 |
Income taxes payable (Note 10) | 50 | 0 |
Accrued payroll and benefits | 47 | 50 |
Accounts payable | 41 | 77 |
Accrued servicing related expenses | 12 | 12 |
Repurchase eligible loans (Note 6) | 1 | 13 |
Accrued interest and other | 3 | 16 |
Total | $ 218 | $ 193 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Other Liabilities Disclosure [Abstract] | ||
Legal and regulatory matters (Note 11) | $ 58 | $ 114 |
Pension and other post-employment benefits | 11 | 11 |
Income tax contingencies | 8 | 8 |
Liability to deliver MSRs (Note 12) | 2 | 0 |
Derivatives (Note 5) | 1 | 18 |
Other | 6 | 6 |
Total | $ 86 | $ 157 |
Debt and Borrowing Arrangemen57
Debt and Borrowing Arrangements - Components of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Debt and Borrowing Arrangements | ||
Debt, net | $ 653 | $ 1,262 |
Committed warehouse facilities | ||
Debt and Borrowing Arrangements | ||
Debt, net | $ 405 | 556 |
Weighted Avg-Interest Rate (as a percent) | 3.40% | |
Available Capacity | $ 195 | |
Uncommitted warehouse facilities | ||
Debt and Borrowing Arrangements | ||
Debt, net | $ 78 | 0 |
Weighted Avg-Interest Rate (as a percent) | 2.90% | |
Available Capacity | $ 222 | |
Servicing advance facility | ||
Debt and Borrowing Arrangements | ||
Debt, net | $ 52 | 99 |
Weighted Avg-Interest Rate (as a percent) | 3.20% | |
Available Capacity | $ 13 | |
Term notes due in 2019 | ||
Debt and Borrowing Arrangements | ||
Debt, gross | $ 97 | 275 |
Stated interest rate (as a percent) | 7.375% | |
Term notes due in 2021 | ||
Debt and Borrowing Arrangements | ||
Debt, gross | $ 22 | 340 |
Stated interest rate (as a percent) | 6.375% | |
Unsecured credit facilities | ||
Debt and Borrowing Arrangements | ||
Debt, gross | $ 0 | 0 |
Stated interest rate (as a percent) | 0.00% | |
Available Capacity | $ 3 | |
Unsecured debt, face value | ||
Debt and Borrowing Arrangements | ||
Debt, gross | 119 | 615 |
Debt issuance costs | (1) | (8) |
Debt, net | $ 118 | $ 607 |
Debt and Borrowing Arrangemen58
Debt and Borrowing Arrangements - Assets pledged as collateral or funded by subservicing clients (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Debt and Borrowing Arrangements | ||
Restricted cash | $ 52 | $ 57 |
Servicing advances | 413 | 628 |
Mortgage loans held for sale (unpaid principal balance) | 590 | 683 |
Mortgage servicing rights | 500 | $ 690 |
Collateral Pledged | Warehouse Facilities | ||
Debt and Borrowing Arrangements | ||
Restricted cash | 6 | |
Servicing advances | 0 | |
Mortgage loans held for sale (unpaid principal balance) | 502 | |
Mortgage servicing rights | 0 | |
Total | 508 | |
Collateral Pledged | Servicing Advance Facility | ||
Debt and Borrowing Arrangements | ||
Restricted cash | 14 | |
Servicing advances | 80 | |
Mortgage loans held for sale (unpaid principal balance) | 0 | |
Mortgage servicing rights | 0 | |
Total | 94 | |
Collateral Pledged | Subservicing Advance Liabilities | ||
Debt and Borrowing Arrangements | ||
Restricted cash | 0 | |
Servicing advances | 228 | |
Mortgage loans held for sale (unpaid principal balance) | 0 | |
Mortgage servicing rights | 0 | |
Total | 228 | |
Collateral Pledged | MSRs Secured Liability | ||
Debt and Borrowing Arrangements | ||
Restricted cash | 0 | |
Servicing advances | 0 | |
Mortgage loans held for sale (unpaid principal balance) | 0 | |
Mortgage servicing rights | 440 | |
Total | $ 440 |
Debt and Borrowing Arrangemen59
Debt and Borrowing Arrangements - Schedule of Contractual Debt Maturities (Details) $ in Millions | Sep. 30, 2017USD ($) |
Contractual debt maturities | |
Within one year | $ 535 |
Between one and two years | 97 |
Between two and three years | 0 |
Between three and four years | 22 |
Between four and five years | 0 |
Thereafter | 0 |
Total | 654 |
Warehouse Facilities | |
Contractual debt maturities | |
Within one year | 483 |
Between one and two years | 0 |
Between two and three years | 0 |
Between three and four years | 0 |
Between four and five years | 0 |
Thereafter | 0 |
Total | 483 |
Servicing Advance Facility | |
Contractual debt maturities | |
Within one year | 52 |
Between one and two years | 0 |
Between two and three years | 0 |
Between three and four years | 0 |
Between four and five years | 0 |
Thereafter | 0 |
Total | 52 |
Unsecured Debt | |
Contractual debt maturities | |
Within one year | 0 |
Between one and two years | 97 |
Between two and three years | 0 |
Between three and four years | 22 |
Between four and five years | 0 |
Thereafter | 0 |
Total | $ 119 |
Debt and Borrowing Arrangemen60
Debt and Borrowing Arrangements - Components of Net interest expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Disclosure [Abstract] | ||||
Interest income | $ 10 | $ 11 | $ 30 | $ 32 |
Secured interest expense | (6) | (8) | (19) | (24) |
MSRs secured interest expense | (14) | 0 | (15) | 0 |
Unsecured interest expense | 0 | (10) | (19) | (31) |
Net interest expense | $ (10) | $ (7) | $ (23) | $ (23) |
Debt and Borrowing Arrangemen61
Debt and Borrowing Arrangements - Narrative (Details) - USD ($) | Sep. 29, 2017 | Sep. 08, 2017 | Jul. 03, 2017 | Jun. 30, 2017 | Jun. 19, 2017 | Jun. 15, 2017 | Apr. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Nov. 01, 2017 | Oct. 01, 2017 | Mar. 27, 2017 | Dec. 31, 2016 |
Debt and Borrowing Arrangements | |||||||||||||||
Extinguishment of debt, amount | $ 524,000,000 | ||||||||||||||
Loss on extinguishment of debt | $ 34,000,000 | $ 34,000,000 | $ 0 | ||||||||||||
Committed warehouse facilities | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt covenant, minimum financing capacity | 300,000,000 | 300,000,000 | $ 750,000,000 | ||||||||||||
Committed warehouse facilities | Barclays Bank PLC | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 100,000,000 | ||||||||||||||
Committed warehouse facilities | Wells Fargo Bank | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 350,000,000 | $ 450,000,000 | |||||||||||||
Reduction in aggregate maximum principal | $ 100,000,000 | ||||||||||||||
Committed warehouse facilities | Fannie Mae | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | 150,000,000 | ||||||||||||||
Committed warehouse facilities | Bank of America | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 150,000,000 | 200,000,000 | |||||||||||||
Reduction in aggregate maximum principal | $ 50,000,000 | 150,000,000 | |||||||||||||
Uncommitted warehouse facilities | Barclays Bank PLC | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 100,000,000 | ||||||||||||||
Uncommitted warehouse facilities | Fannie Mae | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 200,000,000 | $ 2,000,000,000 | |||||||||||||
Reduction in aggregate maximum principal | $ 1,800,000,000 | ||||||||||||||
Variable Funding Notes | Wells Fargo Bank | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 65,000,000 | $ 100,000,000 | |||||||||||||
Reduction in aggregate maximum principal | $ 35,000,000 | $ 55,000,000 | |||||||||||||
Term notes due in 2019 | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Extinguish of debt, cash consideration for each $1,000 principal amount | $ 1,100 | ||||||||||||||
Extinguishment of debt, amount | 178,000,000 | ||||||||||||||
Term notes due in 2021 | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Extinguish of debt, cash consideration for each $1,000 principal amount | $ 1,031.88 | ||||||||||||||
Extinguishment of debt, amount | $ 318,000,000 | ||||||||||||||
Warehouse Facilities | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt covenant, minimum tangible net worth | $ 450,000,000 | $ 450,000,000 | $ 750,000,000 | ||||||||||||
Subsequent Event | Committed warehouse facilities | Wells Fargo Bank | |||||||||||||||
Debt and Borrowing Arrangements | |||||||||||||||
Debt instrument current borrowing capacity | $ 200,000,000 | $ 250,000,000 |
Income Taxes - Schedule of comp
Income Taxes - Schedule of components of deferred tax assets and liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Federal loss carryforwards | $ 23 | $ 23 |
State loss carryforwards and credits | 37 | 39 |
Accrued legal and regulatory matters | 23 | 46 |
Reserves and allowances | 31 | 36 |
Exit cost liability | 26 | 10 |
Other accrued liabilities | 12 | 24 |
Gross deferred tax assets | 152 | 178 |
Valuation allowance | (48) | (44) |
Deferred tax assets, net of valuation allowance | 104 | 134 |
Deferred tax liabilities: | ||
Mortgage servicing rights | 20 | 234 |
Other | 4 | 1 |
Deferred tax liabilities | 24 | 235 |
Net deferred tax assets | 80 | 0 |
Net deferred tax liability | $ 0 | $ (101) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | (45.80%) | (27.50%) | (38.80%) | (39.10%) |
Statutory federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | |||
Jun. 30, 2015 | Sep. 30, 2017 | Aug. 08, 2017 | Dec. 31, 2016 | |
Loss Contingencies [Line Items] | ||||
Liability associated with legal and regulatory contingencies | $ 58 | $ 114 | ||
Unfavorable Regulatory Action | ||||
Loss Contingencies [Line Items] | ||||
Final order amount company must pay | $ 109 | |||
HUD Subpoenas | ||||
Loss Contingencies [Line Items] | ||||
Liability associated with legal and regulatory contingencies | $ 65 | |||
Other Subpoenas and Investigations | ||||
Loss Contingencies [Line Items] | ||||
Liability associated with legal and regulatory contingencies | $ 9.5 |
Commitments and Contingencies65
Commitments and Contingencies - Repurchase and Foreclosure-Related Reserves (Details) - USD ($) $ in Millions | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | |
Changes in repurchase and foreclosure-related reserves | |||||
Balance, beginning of period | $ 73 | $ 89 | |||
Realized losses | (18) | (17) | |||
Transfer of reserves | (7) | 0 | |||
Increase in reserves due to: | |||||
Changes in assumptions | 7 | 10 | |||
New loan sales | 2 | 5 | |||
Balance, end of period | 73 | 89 | $ 57 | $ 73 | $ 87 |
Components of Repurchase and Foreclosure-related Reserves [Abstract] | |||||
Loan repurchase and indemnification liability | 38 | 49 | |||
Adjustment to value for real estate owned | 19 | 14 | |||
Allowance for probable foreclosure losses | 0 | 10 | |||
Total | $ 73 | $ 89 | 57 | $ 73 | $ 87 |
Loan Repurchases and Indemnifications | |||||
Loans with full risk of loss or with respect to which the company has identified a breach of representation and warranty provisions | $ 53 | ||||
Percentage of loans with full risk of loss or with respect to which the company has identified a breach of representation and warranty provisions and are at least 90 days delinquent | 23.00% | ||||
Recourse obligations | |||||
Loan Repurchases and Indemnifications | |||||
Estimated amount of reasonably possible losses in excess of the recorded liability | $ 10 | ||||
LenderLive Network, LLC | Lease related guaranty | |||||
Off-Balance Sheet Arrangements and Guarantees | |||||
Amount of potential future lease payments under guarantee | $ 14 |
Fair Value Measurements - Instr
Fair Value Measurements - Instruments measured at fair value on a recurring basis (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value Measurements | ||
Mortgage servicing rights | $ 500 | $ 690 |
Other assets-derivative assets, Total | 13 | 21 |
Other liabilities-derivative liabilities, Total | 1 | 18 |
Liability to deliver MSRs | 2 | 0 |
Recurring basis | Forward delivery commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets, Cash Collateral and Netting | (1) | (12) |
Other liabilities-derivative liabilities, Cash Collateral and Netting | (1) | 1 |
Recurring basis | MSR-related agreements | ||
Fair Value Measurements | ||
Other assets—Derivative assets, Cash Collateral and Netting | (18) | |
Other liabilities-derivative liabilities, Cash Collateral and Netting | (53) | |
Recurring basis | Option contracts | ||
Fair Value Measurements | ||
Other assets—Derivative assets, Cash Collateral and Netting | (1) | |
Other liabilities-derivative liabilities, Cash Collateral and Netting | 1 | |
Recurring basis | Level One | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Mortgage servicing rights secured liability | 0 | |
Liability to deliver MSRs | 0 | |
Recurring basis | Level One | Interest rate lock commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | 0 |
Recurring basis | Level One | Forward delivery commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | 0 |
Other liabilities-derivative liabilities | 0 | 0 |
Recurring basis | Level One | MSR-related agreements | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | |
Other liabilities-derivative liabilities | 0 | |
Recurring basis | Level One | Option contracts | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | |
Other liabilities-derivative liabilities | 0 | |
Recurring basis | Level Two | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 545 | 636 |
Mortgage servicing rights | 0 | 0 |
Mortgage servicing rights secured liability | 0 | |
Liability to deliver MSRs | 0 | |
Recurring basis | Level Two | Interest rate lock commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | 0 |
Recurring basis | Level Two | Forward delivery commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 1 | 14 |
Other liabilities-derivative liabilities | 2 | 4 |
Recurring basis | Level Two | MSR-related agreements | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 19 | |
Other liabilities-derivative liabilities | 65 | |
Recurring basis | Level Two | Option contracts | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 1 | |
Other liabilities-derivative liabilities | 0 | |
Recurring basis | Level Three | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 45 | 47 |
Mortgage servicing rights | 500 | 690 |
Mortgage servicing rights secured liability | 440 | |
Liability to deliver MSRs | 2 | |
Recurring basis | Level Three | Interest rate lock commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 13 | 18 |
Recurring basis | Level Three | Forward delivery commitments | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | 0 |
Other liabilities-derivative liabilities | 0 | 0 |
Recurring basis | Level Three | MSR-related agreements | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | |
Other liabilities-derivative liabilities | 0 | |
Recurring basis | Level Three | Option contracts | ||
Fair Value Measurements | ||
Other assets—Derivative assets | 0 | |
Other liabilities-derivative liabilities | 0 | |
Recurring basis | Total | ||
Fair Value Measurements | ||
Mortgage loans held for sale | 590 | 683 |
Mortgage servicing rights | 500 | 690 |
Mortgage servicing rights secured liability | 440 | |
Liability to deliver MSRs | 2 | |
Recurring basis | Total | Interest rate lock commitments | ||
Fair Value Measurements | ||
Other assets-derivative assets, Total | 13 | 18 |
Recurring basis | Total | Forward delivery commitments | ||
Fair Value Measurements | ||
Other assets-derivative assets, Total | 0 | 2 |
Other liabilities-derivative liabilities, Total | $ 1 | 5 |
Recurring basis | Total | MSR-related agreements | ||
Fair Value Measurements | ||
Other assets-derivative assets, Total | 1 | |
Other liabilities-derivative liabilities, Total | 12 | |
Recurring basis | Total | Option contracts | ||
Fair Value Measurements | ||
Other assets-derivative assets, Total | 0 | |
Other liabilities-derivative liabilities, Total | $ 1 |
Fair Value Measurements - Diffe
Fair Value Measurements - Difference between carrying amounts of MLHS measured at fair value and aggregate unpaid principal amount (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Difference between carrying amounts measured at fair value and aggregate unpaid principal amount | ||
Carrying amount, Total | $ 590 | $ 683 |
Mortgage loans held for sale | ||
Difference between carrying amounts measured at fair value and aggregate unpaid principal amount | ||
Carrying amount, Total | 590 | 683 |
Carrying amount, Loans 90 days or more past due and on non-accrual status | 19 | 7 |
Aggregate unpaid principal balance, Total | 606 | 687 |
Aggregate unpaid principal balance, Loans 90 days or more past due and on non-accrual status | 38 | 10 |
Difference, Total | (16) | (4) |
Difference, Loans 90 days or more past due and on non-accrual status | $ (19) | $ (3) |
Fair Value Measurements - Compo
Fair Value Measurements - Components of MLHS (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Components of Mortgage loans held for sale | ||
Mortgage loans held for sale | $ 590 | $ 683 |
First mortgages | ||
Components of Mortgage loans held for sale | ||
Mortgage loans held for sale | 545 | 636 |
First mortgages, Conforming | ||
Components of Mortgage loans held for sale | ||
Mortgage loans held for sale | 473 | 531 |
First mortgages, Non-conforming | ||
Components of Mortgage loans held for sale | ||
Mortgage loans held for sale | 72 | 105 |
Second lien | ||
Components of Mortgage loans held for sale | ||
Mortgage loans held for sale | 1 | 3 |
Scratch and Dent | ||
Components of Mortgage loans held for sale | ||
Mortgage loans held for sale | $ 44 | $ 44 |
Fair Value Measurements - Assum
Fair Value Measurements - Assumptions used in MSRs and MSRs secured liability (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
MSRs Secured Liability | |||
Significant assumptions used in estimating fair value | |||
Weighted-average prepayment speed (CPR) | 10.50% | ||
Option adjusted spread | 9.88% | ||
Weighted-average delinquency rate | 3.80% | ||
MSRs Owned | |||
Significant assumptions used in estimating fair value | |||
Initial capitalization rate of additions to MSRs owned | 1.10% | 1.00% | |
Capitalization servicing rate | 0.67% | 0.82% | |
Capitalization servicing multiple | 230.00% | 290.00% | |
Weighted-average servicing fee (in basis points) | 0.29% | 0.28% | |
Weighted-average life (years) | 6 years | 6 years 3 months 18 days | |
MSRs Owned | Mortgage servicing rights | |||
Significant assumptions used in estimating fair value | |||
Weighted-average prepayment speed (CPR) | 8.40% | 9.20% | |
Option adjusted spread | 4.90% | 14.30% | |
Weighted-average delinquency rate | 12.00% | 5.10% | |
MSRs Under Secured Borrowing Arrangement | |||
Significant assumptions used in estimating fair value | |||
Capitalization servicing rate | 0.85% | ||
Capitalization servicing multiple | 320.00% | ||
Weighted-average servicing fee (in basis points) | 0.27% | ||
Weighted-average life (years) | 5 years 9 months | ||
MSRs Under Secured Borrowing Arrangement | Mortgage servicing rights | |||
Significant assumptions used in estimating fair value | |||
Weighted-average prepayment speed (CPR) | 10.50% | ||
Option adjusted spread | 9.88% | ||
Weighted-average delinquency rate | 3.80% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of estimated change in fair value of MSRs from adverse changes in significant assumptions (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Estimated change in fair value from adverse changes in significant assumptions | ||
Mortgage servicing rights secured liability | $ 440 | $ 0 |
Derivative Instruments | ||
Average pull through percentage used in measuring fair value of interest rate lock commitments | 73.00% | 77.00% |
MSRs Under Secured Borrowing Arrangement | Mortgage servicing rights | ||
Estimated change in fair value from adverse changes in significant assumptions | ||
Impact on fair value of 10% adverse change, Weighted-Average Prepayment Speed | $ (16) | |
Impact on fair value of 20% adverse change, Weighted-Average Prepayment Speed | (30) | |
Impact on fair value of 10% adverse change, Option Adjusted Spread | (20) | |
Impact on fair value of 20% adverse change, Option Adjusted Spread | (38) | |
Impact on fair value of 10% adverse change, Weighted Average Delinquency Rate | (6) | |
Impact on fair value of 20% adverse change, Weighted Average Delinquency Rate | (12) | |
MSRs Owned | Mortgage servicing rights | ||
Estimated change in fair value from adverse changes in significant assumptions | ||
Impact on fair value of 10% adverse change, Weighted-Average Prepayment Speed | (3) | |
Impact on fair value of 20% adverse change, Weighted-Average Prepayment Speed | (5) | |
Impact on fair value of 10% adverse change, Option Adjusted Spread | (2) | |
Impact on fair value of 20% adverse change, Option Adjusted Spread | (4) | |
Impact on fair value of 10% adverse change, Weighted Average Delinquency Rate | (4) | |
Impact on fair value of 20% adverse change, Weighted Average Delinquency Rate | $ (9) |
Fair Value Measurements - Level
Fair Value Measurements - Level Three Measurements (Details) - Level Three - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
IRLCs, net | ||||
Activity in assets classified within Level Three of the valuation hierarchy | ||||
Balance, beginning of period | $ 16 | $ 39 | $ 18 | $ 21 |
Purchases, Issuances, Sales and Settlements: | ||||
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | (65) | (92) | (180) | (252) |
Purchases, Issuances, Sales and Settlements Total | (65) | (92) | (180) | (252) |
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 62 | 100 | 175 | 278 |
Transfers into Level Three | 0 | 0 | 0 | 0 |
Transfers out of Level Three | 0 | 0 | 0 | 0 |
Balance, end of period | 13 | 47 | 13 | 47 |
IRLCs, net | Gain on loans held for sale, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 62 | 100 | 175 | 278 |
IRLCs, net | Loan servicing income, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | 0 | 0 | 0 |
IRLCs, net | Net interest expense | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | 0 | 0 | 0 |
MLHS | ||||
Activity in assets classified within Level Three of the valuation hierarchy | ||||
Balance, beginning of period | 32 | 42 | 47 | 39 |
Purchases, Issuances, Sales and Settlements: | ||||
Purchases | 2 | 3 | 7 | 11 |
Issuances | 2 | 2 | 5 | 5 |
Sales | (3) | (6) | (20) | (20) |
Settlements | (2) | (4) | (11) | (9) |
Purchases, Issuances, Sales and Settlements Total | (1) | (5) | (19) | (13) |
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (5) | 0 | (4) | 2 |
Transfers into Level Three | 23 | 13 | 34 | 33 |
Transfers out of Level Three | (4) | (5) | (13) | (16) |
Balance, end of period | 45 | 45 | 45 | 45 |
MLHS | Gain on loans held for sale, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (6) | 0 | (6) | 0 |
MLHS | Loan servicing income, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | 0 | 0 | 0 |
MLHS | Net interest expense | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 1 | 0 | 2 | 2 |
MSRs | ||||
Activity in assets classified within Level Three of the valuation hierarchy | ||||
Balance, beginning of period | 555 | 679 | 690 | 880 |
Purchases, Issuances, Sales and Settlements: | ||||
Purchases | 0 | 0 | 0 | 0 |
Issuances | 10 | 15 | 28 | 45 |
Sales | (30) | (3) | (125) | (8) |
Settlements | 0 | 0 | 0 | 0 |
Purchases, Issuances, Sales and Settlements Total | (20) | 12 | (97) | 37 |
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (35) | (46) | (93) | (272) |
Transfers into Level Three | 0 | 0 | 0 | 0 |
Transfers out of Level Three | 0 | 0 | 0 | 0 |
Balance, end of period | 500 | 645 | 500 | 645 |
MSRs | Gain on loans held for sale, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | 0 | 0 | 0 |
MSRs | Loan servicing income, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (35) | (46) | (93) | (272) |
MSRs | Net interest expense | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | $ 0 | 0 | $ 0 |
MSRs Secured Liability | ||||
Activity in assets classified within Level Three of the valuation hierarchy | ||||
Balance, beginning of period | (114) | 0 | ||
Purchases, Issuances, Sales and Settlements: | ||||
Purchases | 0 | 0 | ||
Issuances | (354) | (467) | ||
Sales | 0 | 0 | ||
Settlements | 14 | 15 | ||
Purchases, Issuances, Sales and Settlements Total | (340) | (452) | ||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 14 | 12 | ||
Transfers into Level Three | 0 | 0 | ||
Transfers out of Level Three | 0 | 0 | ||
Balance, end of period | (440) | (440) | ||
MSRs Secured Liability | Gain on loans held for sale, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | 0 | ||
MSRs Secured Liability | Loan servicing income, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 28 | 27 | ||
MSRs Secured Liability | Net interest expense | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (14) | (15) | ||
Liability to Deliver MSRs | ||||
Activity in assets classified within Level Three of the valuation hierarchy | ||||
Balance, beginning of period | 0 | 0 | ||
Purchases, Issuances, Sales and Settlements: | ||||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 1 | 1 | ||
Purchases, Issuances, Sales and Settlements Total | 1 | 1 | ||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (3) | (3) | ||
Transfers into Level Three | 0 | 0 | ||
Transfers out of Level Three | 0 | 0 | ||
Balance, end of period | (2) | (2) | ||
Liability to Deliver MSRs | Gain on loans held for sale, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | (3) | (3) | ||
Liability to Deliver MSRs | Loan servicing income, net | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | 0 | 0 | ||
Liability to Deliver MSRs | Net interest expense | ||||
Realized and unrealized gains (losses) included in: | ||||
Realized and unrealized gains (losses) | $ 0 | $ 0 |
Fair Value Measurements - Unrea
Fair Value Measurements - Unrealized gains (losses) related to assets and liabilities classified with Level Three valuation hierarchy (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Gain on loans held for sale, net | ||||
Unrealized gains (losses) related to assets and liabilities included in Condensed Consolidated Balance Sheets | ||||
Unrealized Gain or Loss for Level 3 Fair Value instruments | $ 8 | $ 42 | $ 7 | $ 43 |
Loan servicing income, net | ||||
Unrealized gains (losses) related to assets and liabilities included in Condensed Consolidated Balance Sheets | ||||
Unrealized Gain or Loss for Level 3 Fair Value instruments | $ (3) | $ (9) | $ (9) | $ (174) |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Other Financial Instruments (Details) - Level Two - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Debt | ||
Fair value of debt | $ 662 | $ 1,300 |
Market approach valuation technique | ||
Debt | ||
Fair value of debt | 127 | |
Observable recent pricing of similar instruments valuation technique | ||
Debt | ||
Fair value of debt | $ 535 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Millions | Feb. 15, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
ASSETS | ||||||||||||
Cash and cash equivalents | $ 494 | $ 996 | $ 494 | $ 996 | $ 906 | $ 906 | ||||||
Restricted cash | 52 | 52 | 57 | |||||||||
Mortgage loans held for sale | 590 | 590 | 683 | |||||||||
Accounts receivable, net | 94 | 94 | 66 | |||||||||
Servicing advances, net | 413 | 413 | 628 | |||||||||
Property and equipment, net | 24 | 24 | 36 | |||||||||
Other assets | 54 | 54 | 109 | |||||||||
Total assets | [1] | 2,301 | 2,301 | 3,175 | ||||||||
LIABILITIES | ||||||||||||
Accounts payable and accrued expenses | 218 | 218 | 193 | |||||||||
Debt, net | 653 | 653 | 1,262 | |||||||||
Other liabilities | 86 | 86 | 157 | |||||||||
Total liabilities | [1] | 1,663 | 1,663 | 2,052 | ||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Proceeds from PHH Home Loans asset sales | 28 | 28 | 0 | |||||||||
Gain on PHH Home Loans asset sales | 28 | 28 | 0 | |||||||||
Exit and disposal costs | 8 | $ 0 | $ 49 | $ 0 | ||||||||
Notice period of purchase requirement | 2 years | |||||||||||
Variable Interest Entity | ||||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | 60 | $ 60 | 67 | |||||||||
Restricted cash | 18 | 18 | 24 | |||||||||
Mortgage loans held for sale | 239 | 239 | 350 | |||||||||
Accounts receivable, net | 17 | 17 | 9 | |||||||||
Servicing advances, net | 80 | 80 | 150 | |||||||||
Property and equipment, net | 0 | 0 | 1 | |||||||||
Other assets | 7 | 7 | 12 | |||||||||
Total assets | 421 | 421 | 613 | |||||||||
LIABILITIES | ||||||||||||
Accounts payable and accrued expenses | 14 | 14 | 11 | |||||||||
Debt, net | 258 | 258 | 399 | |||||||||
Other liabilities | 6 | 6 | 5 | |||||||||
Total liabilities | 278 | 278 | 415 | |||||||||
PHH Home Loans | Variable Interest Entity | ||||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | 60 | 60 | 67 | |||||||||
Restricted cash | 4 | 4 | 5 | |||||||||
Mortgage loans held for sale | 239 | 239 | 350 | |||||||||
Accounts receivable, net | 17 | 17 | 9 | |||||||||
Servicing advances, net | 0 | 0 | 0 | |||||||||
Property and equipment, net | 0 | 0 | 1 | |||||||||
Other assets | 7 | 7 | 11 | |||||||||
Total assets | 327 | 327 | 443 | |||||||||
Assets held as collateral | 218 | 218 | 320 | |||||||||
LIABILITIES | ||||||||||||
Accounts payable and accrued expenses | 14 | 14 | 11 | |||||||||
Debt, net | 206 | 206 | 300 | |||||||||
Other liabilities | 6 | 6 | 5 | |||||||||
Total liabilities | 226 | 226 | 316 | |||||||||
Servicing Advance Receivables Trust | Variable Interest Entity | ||||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | 0 | 0 | 0 | |||||||||
Restricted cash | 14 | 14 | 19 | |||||||||
Mortgage loans held for sale | 0 | 0 | 0 | |||||||||
Accounts receivable, net | 0 | 0 | 0 | |||||||||
Servicing advances, net | 80 | 80 | 150 | |||||||||
Property and equipment, net | 0 | 0 | 0 | |||||||||
Other assets | 0 | 0 | 1 | |||||||||
Total assets | 94 | 94 | 170 | |||||||||
Assets held as collateral | 94 | 94 | 169 | |||||||||
LIABILITIES | ||||||||||||
Accounts payable and accrued expenses | 0 | 0 | 0 | |||||||||
Debt, net | 52 | 52 | 99 | |||||||||
Other liabilities | 0 | 0 | 0 | |||||||||
Total liabilities | 52 | $ 52 | $ 99 | |||||||||
Mortgage Production Volume | Realogy and Affiliates | Credit Concentration Risk | ||||||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Concentration risk, percentage | 29.00% | |||||||||||
PHH Home Loans Joint Venture | ||||||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Purchase by Parent of additional equity interest, percent | 49.90% | |||||||||||
Forecast | ||||||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Proceeds from sale of assets | $ 96 | |||||||||||
Reorganization | ||||||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Exit and disposal costs | 5 | $ 8 | $ 17 | $ 30 | ||||||||
Reorganization | PHH Home Loans Joint Venture | ||||||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Exit and disposal costs | $ 4 | $ 9 | ||||||||||
Subsequent Event | ||||||||||||
Variable Interest Entities Additional Information [Abstract] | ||||||||||||
Proceeds from PHH Home Loans asset sales | $ 14 | |||||||||||
[1] | The Condensed Consolidated Balance Sheets include assets and liabilities of variable interest entities which can be used only to settle the obligations and liabilities of the variable interest entities which creditors or beneficial interest holders do not have recourse to PHH Corporation and subsidiaries. These assets and liabilities are as follows: September 30, 2017 December 31, 2016ASSETS Cash and cash equivalents$60 $67Restricted cash18 24Mortgage loans held for sale239 350Accounts receivable, net17 9Servicing advances, net80 150Property and equipment, net— 1Other assets7 12Total assets$421 $613 LIABILITIES Accounts payable and accrued expenses$14 $11Debt258 399Other liabilities6 5Total liabilities$278 $415 |
Segment Information - Segment r
Segment Information - Segment results (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | ||
Segment Reporting [Abstract] | ||||||
Number of reportable segments | segment | 2 | |||||
Segment Information | ||||||
Assets | [1] | $ 2,301 | $ 2,301 | $ 3,175 | ||
Net Revenues | 121 | $ 197 | 347 | $ 550 | ||
Segment (Loss) Profit | (91) | (35) | (271) | (107) | ||
Other | ||||||
Segment Information | ||||||
Assets | 488 | 488 | 834 | |||
Segment (Loss) Profit | (36) | (5) | (73) | (10) | ||
Mortgage Production segment | ||||||
Segment Information | ||||||
Net Revenues | 98 | 168 | 276 | 443 | ||
Mortgage Production segment | Operating segment | ||||||
Segment Information | ||||||
Assets | 803 | 803 | 913 | |||
Segment (Loss) Profit | (18) | 22 | (84) | 9 | ||
Mortgage Servicing segment | ||||||
Segment Information | ||||||
Net Revenues | 23 | 29 | 71 | 107 | ||
Mortgage Servicing segment | Operating segment | ||||||
Segment Information | ||||||
Assets | 1,010 | 1,010 | $ 1,428 | |||
Segment (Loss) Profit | $ (37) | $ (52) | $ (114) | $ (106) | ||
[1] | The Condensed Consolidated Balance Sheets include assets and liabilities of variable interest entities which can be used only to settle the obligations and liabilities of the variable interest entities which creditors or beneficial interest holders do not have recourse to PHH Corporation and subsidiaries. These assets and liabilities are as follows: September 30, 2017 December 31, 2016ASSETS Cash and cash equivalents$60 $67Restricted cash18 24Mortgage loans held for sale239 350Accounts receivable, net17 9Servicing advances, net80 150Property and equipment, net— 1Other assets7 12Total assets$421 $613 LIABILITIES Accounts payable and accrued expenses$14 $11Debt258 399Other liabilities6 5Total liabilities$278 $415 |
Segment Information - Reconcili
Segment Information - Reconciliation of loss before income taxes to segment loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reconciliation of loss before income taxes to Segment loss | ||||
Loss before income taxes | $ (78) | $ (29) | $ (266) | $ (98) |
Less: net income attributable to noncontrolling interest | 13 | 6 | 5 | 9 |
Segment loss | $ (91) | $ (35) | $ (271) | $ (107) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 05, 2017 | Sep. 30, 2017 |
Subsequent Event [Line Items] | ||
Amount authorized for share repurchases | $ 300,000,000 | |
Open market program | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Amount authorized for share repurchases | $ 100,000,000 |