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PHH Corporation (NYSE:PHH)

Q3 2010 Earnings Call Transcript

November 2, 2010 10:00 am ET

Executives

Nancy Kyle – VP, IR

Jerry Selitto – President and CEO

Sandra Bell – EVP and CFO

Marty Foster – SVP, Servicing

Analysts

Bose George – KBW

Samuel Crawford – Stone Harbor

Gabe Kim – Wellington

Howard Shainker – Third Point

Wayne Archambo – Monarch Partners

Saud Siddique – Peterhill Captial

Joe Jolson – Harvest Capital

Operator

Good morning, ladies and gentlemen, welcome to the PHH Corporation 2010 third quarter earnings conference call. Your lines will be in a listen-only mode during the remarks by PHH management. At the conclusion of the company's remarks, we will begin the question-and-answer session, at which time, I will give you instructions on entering the queue to ask your questions.

Today's call is also being webcast and recorded for replay purposes. The audio replay can be accessed even on the company's website at www.phh.com or by telephone at 1-719-457-0820 or 1-888-203-1112 using conference ID 9012324 beginning shortly after the conclusion of this call. It will be available until November 17, 2010. This access information is also described in the company's earnings release and I will repeat it again at the end of our session. This call is scheduled to conclude in one hour. At this time, Nancy Kyle, Vice President of Investor Relations will proceed with the introduction. Please go ahead.

Nancy Kyle

Thank you, John. Good morning and welcome to the PHH third quarter 2010 earnings conference call. On the call today are Jerry Selitto, President and Chief Executive Officer; Sandra Bell, Executive Vice President and Chief Financial Officer; Luke Hayden, Executive Vice President of Mortgage; and George Kilroy, Executive Vice President of Fleet; and Smriti Popenoe, Executive Vice President and Chief Risk Officer.

Remarks by our management team will be supplemented by a presentation that is posted on our website at www.phh.com. Click on investors, then on webcast and presentations and that will take you to the slide desk – excuse me. You are invited to follow along as we go through each slide. If you did not receive a copy of the earnings release we issued this morning, you may access it from our website or you may call our Investor Hotline at 856-917-7405 and request a faxed or mailed copy.

Please note that statements made during this conference call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as further described in slide two of the presentation. We will also be discussing various non-GAAP financial measures, including core earnings pre-tax, core earnings after-tax and core earnings per share. Please refer to our third quarter 2010 earnings release and the accompanying investor presentation for a description of these non-GAAP financial measures as well as a reconciliation of such measures to their respective, most directly comparable GAAP financial measures.

Now, I'll turn the call over to Jerry.

Jerry Selitto

Thank you, Nancy. Good morning, everyone and thank you for joining our third quarter earnings conference call. I'll begin with a brief review of the quarter, Sandra will then discuss our financial results and I will conclude with a summary of our outlook for the remainder of 2010.

The third quarter marked another very strong quarter in terms of operating performance across each of our business segments. In mortgage, we were able to grow income and increase market share without compromising our credit standards.

Beginning on slide three, third quarter core earnings were more than double core earnings for the first half of 2010. Our core year-to-date earnings for the nine-month ended September 30 exceeded core earnings for the full year 2009.

Our GAAP results reflected a substantial year-over-year improvement. Each segment delivered strong earnings for the quarter as it regained momentum through a strategic focus on fee-based services. We realized an unexpected spike in mortgage refinance activity that began in mid-June and continue throughout the quarter. As a result of this unexpected spike in volume, we postponed certain mortgage transformation initiatives.

We captured the profitable mortgage origination volume during the quarter. Notwithstanding these actions, we reported $83 million in annualized run rate savings from transformation through the end of the quarter and remain on track to achieve our $100 million goal of annualized run rate savings by year end 2010.

Turning to the summary table on slide four. For the quarter, our GAAP pre-tax loss before non-controlling interest was $2 million. GAAP after-tax loss was $8 million and GAAP EPS was a loss of $0.14. The unfavorable market-related MSR mark of $191 million were substantially offset by profitable production volume.

Our core earnings pre-tax for the third quarter were $180 million, core earnings after-tax were $109 million and a core EPS was $1.96. Mortgage production was $12.7 billion in the quarter, while interest rate lock commitments were $14.4 billion. Declining interest rates drove the strong refi activity and margins.

Our pricing margin was 190 basis points in the quarter. Our fleet business is making progress against these goals for the year, by focusing on fee-based services within both new and existing clients. Leased units, accident management units and fuel cards remained stable while maintenance units were up for the quarter compared to the second quarter of 2010.

Our focus in fleet is to increase ROE by driving revenues through fee-based services and continuing to lead the industry in innovative solutions for our clients. Fleet won the TechForum Best Practice Award for the second year in a row, sponsored by the Technology Managers Forum, the professional associations for enterprise IT managers. We were awarded first place in the technology innovation category to the fleet industries first mobile applications for drivers.

On slide five, work on our transformation effort continued during the quarter, transformation is an ongoing process of PHH. We will continue to improve processes, automate where possible and build a more scalable and flexible model. We will report more on these projects as we finalize plans for 2011.

Turning to slide six, the mortgage industry had more than its fair share of news this quarter with foreclosure and put back related issues, dominating the headlines. So I’d like to offer the PHH perspective. As we announced a few weeks ago, we undertook a comprehensive review of our updated procedures and determined not to impose a foreclosure moratorium.

PHH did not use robust signing processes. We take our responsibilities as a servicer very seriously. Foreclosures are our last resort. Approximately, 1.7% of the first mortgage loans we service are currently in foreclosure representing less than 17,000 loans. Borrowers in foreclosure are on average over one-year delinquent.

Although, we do not believe there will be an industry-wide foreclosure moratorium, should that occur, we are comfortable that our excess liquidity is more than adequate to cover any additional requirements. We will now hear from Sandra to report further on our results.

Sandra Bell

Thank you, Jerry. On slide eight, as Jerry mentioned, our mortgage production segment closed $12.7 billion of loans in the third quarter, up 26% from the second quarter and 41% from the previous year. Stronger application volume of $27 billion in the quarter continued into October. This should bode well in what is typically a slow first quarter. Consistent with the overall trends in the industry, our purchase volume was down to 42% of total volume compared to 50% in the third quarter of 2009 and 61% in the second quarter of 2010.

During the third quarter, our volume at our correspondence channel grew to 32% of total production volumes compared to 26% in the second quarter and 16% in the same quarter last year. Given strong profit margins overall, we were able to grow that channel profitably from both existing and new clients without compromising our credit standards.

Slide nine is a breakdown of refinance and purchase activity for both PHH and the industry. The key takeaway here is that we've grown share in both purchase and refinance this year. Our refinance market share improved from 1.8% in 2009 to 2.7% for the third quarter of 2010, while our purchase market share improved from 2.8% from the full year 2009 to 3.9% at the end of the third quarter. We have consistently grown share in 2010 in both markets, taking advantage of attractive margins in the corresponding channel and adding volume as new private label clients ramp up.

Slide 10 is a table from the most recent issue of Inside Mortgage Finance, showing our market share at 2.9% on a year-to-date basis. Our overall volume grew by 5.9% for the same period while everyone else showed a year-over-year decline.

On slide 11, we compare our initial production margins, which consist of the pricing margin plus the base servicing value on new lock. While pricing margins have increased steadily through the year from 118 basis points in the first quarter to over 190 basis points in the third. They were partially offset by a decline in base servicing values. Total initial production margins, while historically attractive this year, are down 20 basis points on a year-to-date basis versus last year.

Turning to Mortgage Servicing on slide 12, our short-term prepayment speeds continue to be slower than modeled. And the weighted average note rate on the portfolio is down to 5.1%. While our MSR asset is down $330 million for the nine-month ended September 30, our capitalized servicing portfolio grew by over $4 billion and servicing fees remained stable at 30 basis points.

New originations have gone into the servicing portfolio at lower note rate enhancing the long-term potential value of the portfolio. There has been a heightened sensitivity to potential exposure to put backs from private advanced investors, as Jerry mentioned earlier. As a reminder, we did not originate subprime loans. Of the loans, we originated during the 2004-2008 timeframe, less than a quarter was sold to private investors and substantially all of those were prime jumbo loans.

As a result, turning to slide 13, we believe our representation on warranty risk from that loan population is limited. Currently, $1.3 billion of loans that we serviced for private investors are more than 90 days delinquent. Based on our experience over the last 18 months, we have successfully defended 83% of $191 million of repurchase request from private investors.

On slide 14, our Fleet Management Services segment reported pre-tax earnings of $17 million for the quarter, up 31% from the second quarter, driven by transporting – transformation initiatives of $2 million somewhat offset by an unfavorable mark-to-market on the interest rate cap. New vehicle orders were up 30% on a year-to-date basis compared to 2009. And our focus remains on growing share in fee-based services, which take less capital and enhance our overall ROE in the fleet business. Over 40% of new clients signing are for services only.

A quick review of our liquidity position is on slide 15. By the end of the third quarter of 2010, we’ve met the financing objectives we had outlined to you a year ago to extend maturities, to more closely match future repayments with future cash flows and to diversify our sources of funding.

In addition to the facilities, we put in place in the first half, we executed approximately $1.7 billion of new or renewed financings including re-establishing our presence in the bond market with the 350 million unsecured note offering. At the end of the third quarter of 2010, we had available liquidity under committed unsecured facilities of $784 million. That concludes my review of the quarter and I will turn it back over to Jerry.

Jerry Selitto

Thank you, Sandra. We are now 10 months into 2010. And last week, I reached my one-year anniversary with PHH. It's been a very productive year. PHH has accomplished the great deal and while we have a lot more to do, we are well on our way to deliver on the initiatives that we announced at the beginning of the year.

The PHH has conservative business model and prudent underwriting culture continue to carry us through this uncertain time and should go a long way to ensure future success. On September 30, we were pleased to fill a new position on the senior management team of PHH. Executive Vice President and Chief Risk Officer, Smriti Popenoe, who is now reporting directly to me.

She is responsible for designing and implementing an enterprisewide risk framework and will also work directly with our business units to effectively manage and mitigate credit market and operational risk. This is a testament to both the Board and my commitment to the importance of enterprise risk management. We welcome her and look forward to her contributions.

So to conclude before we take questions, please turn to slide 16. With one month of the fourth quarter behind us, we sit with a robust mortgage application pipeline that should drive results for the remainder of the year. We now expect mortgage origination volume to be around $45 billion for the year. We expect to achieve full year core earnings per share of $3.15 to $3.25. We operate in an uncertain market.

The key to success is to remain focused on what we do best. PHH enjoys a unique position as a leading and trusted outsource provider to our mortgage and fleet customers. We are committed to deliver sustainable earnings through the cycle and remain confident in our ability to deliver on our 13% run rate ROE goals based on core earnings by 2011. On that note, I'm sure you'll ask questions. So let's open the line to hear from you. Operator?

Question-and-Answer Session

Operator

Yeah, sir. Absolutely. (Operator Instructions) Our first question will be from Bose George with KBW. Please go ahead.

Bose George – KBW

Hey, good morning. Great quarter. I just wanted to explore a little more your guidance for the year. Given what you've done already, it seems to work out to $0.45 to $0.55 for the fourth quarter. And just on the mortgage banking side, I mean, I just wanted to see what that implies? You did – you had rate locks of 14.3 billion last quarter. That was $8.4 billion in the second quarter, assuming that $0.45 to $0.55 for the fourth quarter, now what does that suggest for rate locks this quarter?

Sandra Bell

I think as you noted in your note this morning, we do expect lock to be down from third quarter going into the fourth quarter. That is obviously, given that we take most of our income with the locks going to be a part of the impact in the fourth quarter.

The other components that delay in some of the transformation initiatives did dampen the impact for the year 2010 from the transformation initiatives versus what we had outlined in the second quarter. And then thirdly, while we are cautiously optimistic about our lower credit-related provisions in the third quarter, with everything going on in the industry, we certainly think that there could be some higher provisions in the fourth quarter.

Bose George – KBW

Okay. Yeah, that definitely makes sense. Just on the guidance that you gave for closings, which is also very wide. I guess the range is from $8.5 billion to $14.5 billion for the fourth quarter. I mean, if you guys end up on the high end of that range, does that suggest that your guidance on the earnings side could end up being conservative?

Sandra Bell

The earnings actually reflect the higher end of the range, the earnings guidance.

Bose George – KBW

So it does reflect the closings at that range?

Sandra Bell

Yeah. We're looking at approximately 45 for the year.

Bose George – KBW

Okay. And then actually just in terms of the impact of the expenses, I mean, you guys did achieve the $83 million, expect to get to the 100 million. So the cost saves that's been deferred is essentially just the remaining $20 million that you had highlighted earlier, is the right?

Jerry Selitto

Yeah. Of course, Jerry, yeah. We did was, we postponed some of the initiatives. We are really highly confident that we can deliver the $100 million and the additional $20 million. We gave a range of $100 to $120 million, would be postponed probably into the first quarter. But that postponed, we're still working on those initiatives.

Bose George – KBW

Okay. Great. And then just one last thing. In terms of the commentary you gave on the servicer, the issue of – if there is a foreclosure moratorium and the impact of it have on you. Do the GSEs, generally they reimburse on the fixed rates, so is the increase in servicer advance is related to the private label side or how does that $8 million number work?

Jerry Selitto

Yeah. The $8 million increment is really our estimate to the extent that there is a delay in a foreclosure moratorium, with that though, just more specifically, I will turn it over to Marty Foster, our Head of Servicing.

Marty Foster

Yeah. Those that increase in advanced reserve mostly on the private investor's side, the agency's side we stopped advancing at 90 days on most of our securities with the agencies.

Bose George – KBW

Okay. Great. Thanks a lot.

Operator

We will take our next question from Samuel Crawford from Stone Harbor. Please go ahead.

Samuel Crawford – Stone Harbor

Yeah. Thank you very much. I wanted to go back over some of the issues with mortgages and foreclosure, potential for closures. What is your actual experience now, what are you seeing in terms of slower foreclosure experience with the pipeline of in foreclosure loans and properties? Is there any discernible impact that you are witnessing?

Jerry Selitto

I’m going to let Marty Foster answer – respond to the question.

Marty Foster

Yeah. Mostly, the delays are in some of the core systems, especially in Florida and where they're requiring mediation hearing, but we've continued to press forward. And we've really haven't seen any – really extended and increasing the portfolio timeline.

Samuel Crawford – Stone Harbor

Okay. And what would a slowdown mean from volume of advances, as you will moderate your liquidity, you made this statement at the beginning and you said, very reassuring statements that you have modeled your liquidity and you're satisfied that you have adequate treasury liquidity to handle any increase in the volume or advances related to a potential moratorium. But how did you go about modeling that, what level of stress did you decide to build in?

Sandra Bell

We basically look at the impact on escrow advances, P&L advances and the incremental cost of loans that are already in foreclosure. And we looked at what that could impact on a monthly basis and then we basically look at what any extended time period would do to our liquidity, but we cover all of these components.

Samuel Crawford – Stone Harbor

Okay. Last is really minor clarification, but you've mentioned successfully defended yourself in about 83% of the cases when you've been asked to repurchase a loan. And I wanted to understand is that what reference to the $191 billion. So that's a buy value kind of statistics. That 191 figure, is that defined with reference to your vintage cohort of origination, or is it defined with reference to when you receive the repurchase request?

Sandra Bell

That’s UPB. Then, 191 is a unpaid principal balance. And, yeah, the 83% refers to our defense of that 191 million of request.

Samuel Crawford – Stone Harbor

And that sounds – the way you said by UPB, that sounds like you're talking about the vintage cohort of originations, so.

Sandra Bell

Correct.

Samuel Crawford – Stone Harbor

Right. Great.

Sandra Bell

Yeah. The ones that are there, yeah.

Samuel Crawford – Stone Harbor

Good enough. Thank you so much.

Jerry Selitto

Thank you.

Operator

We will take our next question from Gabe Kim with Wellington. Please go ahead.

Gabe Kim – Wellington

Good morning. Congratulations on one year, Jerry.

Jerry Selitto

Thank you, Gabe.

Gabe Kim – Wellington

Can I ask you the mortgage production slide, right, would you give us the sensitivities? How much of the cost savings are allocated to mortgage – are any of the cost savings allocated in this table – to this table?

Sandra Bell

It's production metrics. The answer is, it reflects our expectation of our current economic situation in the mortgage production business.

Gabe Kim – Wellington

Right.

Sandra Bell

So to the extent there are savings that are attributable to the production segments, which there are – those would be included in that table, yeah.

Gabe Kim – Wellington

I mean, how much should I – like $40 million, $20 million how much?

Sandra Bell

Gabe, we don't disclose that.

Gabe Kim – Wellington

Okay. The other question I had was on servicing fees? Is there a chance here that you guys benefit from higher servicing fee rates?

Jerry Selitto

Not really, Gabe. I'm not sure I understand the question.

Gabe Kim – Wellington

Can you charge more for servicing?

Jerry Selitto

No, we cannot.

Gabe Kim – Wellington

Okay. And why is that?

Jerry Selitto

It's a contractual obligation between us and the investor with a fixed service fee.

Gabe Kim – Wellington

Right. But can't those – as you sign new contracts, can that not, I mean can that not move higher if the industry starts to price more for the service?

Jerry Selitto

Certainly, the industry starts to price more for the service and investors are willing to pay services more, we would certainly take advantage of that.

Gabe Kim – Wellington

But why wouldn't that happened here, given all the costs (inaudible) the industry is probably going to have to pay more for service?

Jerry Selitto

We would like it to happen, to be clear, but it is not happening today.

Gabe Kim – Wellington

Okay.

Sandra Bell

Just as a reminder, Gabe, we are essentially a conventional shop, most of our production goes – substantially all of our production goes to the GSEs.

Gabe Kim – Wellington

Right.

Sandra Bell

So – but the GSEs charge, overall pay is what we get. So unless they change their fee structure, we are essentially getting paid by them when they pay everyone.

Gabe Kim – Wellington

But I mean, if 30 basis points moves higher, would you not be in a better position to sort of capture a margin there because my thinking on PHH is that you got too many people in that business and not enough efficiencies. So prices actually move higher and industry has got to add more folks, you are already there. Doesn't that potentially down the road help the margin, the servicing margin?

Jerry Selitto

Yeah. That would definitely help the servicing margin.

Gabe Kim – Wellington

Okay. Thank you.

Operator

(Operator Instructions). We will take our next question from Bose George with KBW. Please go ahead.

Bose George – KBW

Hi. I had a couple of follow-ups. In the release, you mentioned that the rep and warranty expenses were down related to the timing of the loan repurchases and indemnifications. Can you just elaborate on that?

Sandra Bell

Yeah. If you remember in the second quarter, those we did do adjustment as we look forward into 2011, we believe that the majority of our expectation to 2011 we had taken in the second quarter. And so, this just reflected the additional view going into 2011.

Bose George – KBW

Okay. And then just switching to again on sale margins, your commentary you highlighted that you did see some softening in margins in the fourth quarter. Can you just elaborate on that a little bit like how much from the third quarter?

Sandra Bell

Yeah. They're reasonably consistent, just slightly off.

Bose George – KBW

Okay. Great. Thanks, again.

Operator

(Operator Instructions). We will take our next question from Howard Shainker with Third Point. Please go ahead.

Howard Shainker – Third Point

Hey, guys. How are you?

Jerry Selitto

Good. How are you, Howard?

Howard Shainker – Third Point

Good. I wanted to go back to Bose's original question, which I'm trying to understand the high-end of the mortgages nation guidance and reconcile that with the EPS guidance and it seems that mortgage margin has remained relatively constant. And we look at the production number from the quarter of 160-odd million dollars. And we sort of account for the fact that rate locks are going to be down somewhat, but the high-end, which I'd suggest they can't be down that much. It seems hard to get to $0.55 unless there was something really big in some place out, maybe you can just sort of help me think through whatever would be missing?

Sandra Bell

I'll start with the closings through the end of September 30 of $30 million.

Howard Shainker – Third Point

Yeah.

Sandra Bell

And $30 billion, sorry.

Howard Shainker – Third Point

Yeah.

Sandra Bell

And with roughly $14 billion in the pipeline. If you assume, most of that pull through, that put you around 44.

Howard Shainker – Third Point

Yeah.

Sandra Bell

And then most of the locks will do in the fourth quarter will actually flow into closings in the first and there will be some that closed in the fourth quarter. So again most of the profitability is being driven by the locks. And with those expected to be down both seasonally and just based on what we're seeing right now, we would expect earnings to be off and then as I said, some of the savings we had originally expected to come in 2010 will actually flow through into 2011 because of some of the delays. And we're also anticipating, we might see a little bit of moment back up in credit given the activities in the core.

Howard Shainker – Third Point

Okay. I will ask – will take this – offline.

Jerry Selitto

Okay.

Howard Shainker – Third Point

Thanks.

Jerry Selitto

Thank you, Howard.

Operator

We will take over next question from Wayne Archambo with Monarch Partners. Please go ahead.

Wayne Archambo – Monarch Partners

Yes. Thank you. Just going back to the ROE targets and the direct relationship to management compensation with respect to the targets. Is it let's say ROE is 10%, would you still get half of your bonuses or is it – you're going to get to the 13% number to recoup most of your bonuses. Just explain the relationship between the – how close you get to that target in your direct compensation?

Jerry Selitto

All right. This is Jerry Selitto. Good morning.

Wayne Archambo – Monarch Partners

Good morning.

Jerry Selitto

One of the things that I have been on board a year now and one of the first things that we did is we implemented something called management by objectives. So both the senior team and – this cascaded throughout the organization. The senior teams bonus compensation is really based on hitting our targets both for earnings for the year as well as some of the cost saves that we had projected and also ROE target.

The 13% that we're referring to is a run rate for 2011, not 2010. But we are paid on performance and if we don't hit our numbers, we don't get a balance. It's that simple. So everyone is very motivated to hit the numbers. We also have credit qualities tied into those MBOs. So we cannot hit our numbers by increasing or taking additional credit risk in the organization. But again the 13% is an ROE number for 2011.

Wayne Archambo – Monarch Partners

Okay. Is that if you – if hit an ROE of 11%, you don’t necessarily get 80% of your bonus.

Jerry Selitto

No. It's really a cut-off and we have to get – we started the year with what was a greater fund to be a stretch goal. We have to hit that stretch goal. If we hit 90% of that stretch goal, our bonus was reduced by 50%. If we hit 89%, we did not get a bonus.

Wayne Archambo – Monarch Partners

Okay. Great. Thank you.

Jerry Selitto

You're welcome.

Operator

And we will take our next question with Saud Siddique with Peterhill Captial [ph]. Please go ahead.

Saud Siddique – Peterhill Captial

Yes. Hi. I was wondering if you could help me please to understand in fleet. I guess, the story there was always with regards to the asset liability mismatch and that should improve, I guess, you know, it was almost three quarters ago that I think you guys had it over a year. That should sort of – can truly offset on each other but the operating margins still sort of improved a lot. How much of that asset liability mismatch is now worked through the system would you say?

Sandra Bell

We expect it to fully work through during the remainder of 2011. We probably done about two-thirds of it. The driving factor there is the vehicle orders and the turnover of the lease portfolio and that – we are up 30% year-over-year. But we're still working through the orders on the leases from our clients to get through that.

Saud Siddique – Peterhill Captial

Okay. I mean, I guess on a percentage basis, as a percentage of average leased vehicles, I think, when we walked through this one, that was the best way to sort of think about it. On a percentage basis, it doesn't really look as if the interest expenses really decreased over the past couple of quarters. So there's some sort of having hard time understanding how two-thirds of it or any of it is or how even sort of worked its way through the system?

Jerry Selitto

Let me ask to get back to you on that. I'm not sure...

Saud Siddique – Peterhill Captial

Okay.

Jerry Selitto

We just don't have that interest expense.

Saud Siddique – Peterhill Captial

Okay. I could follow later on that. Okay. Thank you.

Jerry Selitto

Thank you.

Operator

(Operator Instructions) We will take our next question from Joe Jolson with Harvest Capital. Please go ahead.

Joe Jolson – Harvest Capital

Hey, guys. Congratulations on a good quarter. I just had a quick clarification just to understand how you account for these rate locks? When you book these rate locks, you book a mark-to-market gain on those?

Sandra Bell

When we book the rate locks, we book them on a – based on a pull-through expectation at the time of lock and then throughout the time, it's in the pipeline. We do adjust on a mark-to-market basis based on changing pull through assumptions as well as the changing interest rate assumptions.

Joe Jolson – Harvest Capital

So just to clarify, the major delta, I guess, between the fourth quarter earnings guidance outlook that's implied in your yearly outlook and crushing this quarter was a lot of the pipeline was already was for this quarter, which is why you had one of the reasons you had such a great quarter?

Sandra Bell

Correct.

Joe Jolson – Harvest Capital

Okay. Thank you.

Operator

And it appears, we have no further questions at this time. I would now like to turn the call back over to our presenters.

Jerry Selitto

Thank you for your attention, your words of encouragement and support. Before we sign off, I want to recognize and thank all of our employees here at PHH whose tremendous effort and dedication have been critical to our success this year. The industry has many remaining challenges ahead of us. But as we all know, challenges bring opportunities. PHH is uniquely positioned to capture on our fair share of those opportunities. We look forward to completing the year and to discussing fourth quarter results with you in late February. Thank you once again.

Operator

This concludes the PHH Corporation third quarter 2010 earnings conference call. Once again, ladies and gentlemen, the replay will be available beginning later today at the company's website at www.phh.com or by dialing 1-719-457-0820 or 1-888-203-1112 using conference ID, 9012324. It will be archived until November 17, 2010. You may now disconnect and have a wonderful day.

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