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Bank of America will continuing outsourcing origination services through PHH Corp., to its Merrill Lynch clients.
According to a press release, the renewed agreement between PHH and Bank of America will outsource Merrill Lynch mortgages to PHH.
The current agreement between the two companies will end on December 31, 2015. The new deal will be effective January 1, 2016.
“We are extremely pleased to continue our relationship with our largest private label client, a trusted and well-respected firm," said Glen A. Messina, President and CEO of PHH Corp.
She added, "We thank the Bank of America and Merrill Lynch teams for working with us to achieve our mutual objectives and are committed to fulfill our obligations and commitments under our new agreement.”
A Bank of America spokesperson was not immediately available to comment at the time of publication.
PHH Corp., third quarter 2015 financial results took a large hit of $50 million or $0.84 per share. In addition, the results showed that PHH's mortgage production segment took a loss of $10 million, compared to the $3 million gain recorded in the second quarter and the $28 million in last year's third quarter.
"We are resolute in our commitment to executing a capital deployment framework to achieve our long-term return objectives," Messina said. "The current dynamics in the mortgage industry reinforce the need to meaningfully increase scale in both our production and servicing segments to achieve sustained profitability. We are making the necessary investments in our business that we believe will generate shareholder value, and we look forward to continuing to respond to the challenges and opportunities that lie ahead for our business."
On the other hand, Bank of America posted strong financial results, with a third quarter net income of $4.5 billion, or $0.37 per share, the bank's earnings statement showed.
Bank of America's year-to-date net income totals $13.2 billion or $1.09 per share. Revenue declined $521 million to $20.9 billion from last year, mostly driven by higher negative market-related adjustments on their debt securities portfolio sue to lower long-term interest rates.
The company originated $13.7 billion in first-lien residential mortgage loans and $3.1 billion in home equity loans in the third quarter of 2015, compared to $11.7 billion and $3.2 billion, respectively, in the year-ago quarter.
Bank of America CEO Brian Moynihan explained that the "solid results" in the third quarter reflected the execution of their "long-term strategy."
"The key drivers of our business–deposit taking and lending to both our consumer and corporate clients–moved in the right direction this quarter and our trading results on behalf of clients remained fairly stable in challenging capital markets conditions. Our balanced approach to serving customers and clients is on track as the economy continues to move forward,"
"Our results this quarter reflect our ongoing efforts to improve operating leverage while continuing to invest in our business," said Paul Donofrio, CFO at Bank of America. "We built capital and liquidity to record levels and grew total loans for the second consecutive quarter while continuing to operate within our risk framework."
