PHH 10-K 2012 FY Annual report

Exhibit 12

PHH CORPORATION AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

($ in millions, except ratios)

	Year Ended December 31,
	2012		2011		2010		2009		2008
Earnings available to cover fixed charges:
Income (loss) before income taxes	$	87	$	(202)	$	115	$	280	$	(443)
Plus: fixed charges	288		289		282		243		344
Total	$	375	$	87	$	397	$	523	$	(99)
Fixed charges:
Interest expense(1)	$	280	$	281	$	274	$	236	$	333
Estimated interest portion of net rental expense(2)	8		8		8		7		11
Total	$	288	$	289	$	282	$	243	$	344
Ratio of earnings to fixed charges	1.30		0.30(3)		1.41		2.15		—(3)

(1)	Consists of interest expense on all indebtedness including amortization of deferred financing costs.
(2)	One-third of rental expense net of income from subleases is deemed an appropriate representative of the interest rate factor.
(3)	The ratio of earnings to fixed charges was less than 1:1. Earnings were deficient to cover fixed charges by $202 million and $443 million for the years ended December 31, 2011 and 2008, respectively. The earnings deficiencies were primarily due to unfavorable Valuation adjustments related to mortgage servicing rights, net.