Cars repossessed by lenders 'worse than Wonga'

Logbook loan companies that allow borrowers to secure a loan against a car are more worrying than payday lenders, according to the Financial Conduct Authority's consumer champion.

Sue Lewis said the lenders take "advantage of desperate people" who might "not understand the consequences" of their borrowing. While payday lenders such as Wonga conduct credit checks, customers taking out logbook loans simply hand over their car logbook as collateral instead.

Applications can be made online and cash transferred in less than 24 hours. If the borrower falls behind on repayments with interest rates of 400 per cent, their car is repossessed.

Unlike payday lenders who advertise on television, the loan companies advertise near pawnbrokers, in cheque cashing centres and in newspapers, according to Andrew Leakey, a lawyer and consumer litigation specialist.

He recalled one customer who secured loans against four vintage cars. After he defaulted on his repayments, a logbook loan company seized the cars and also took three others. Leakey said: "I wouldn't even go to them as a last resort."

Kerry McCarthy, Labour MP for Bristol East, said: "The deals are structured in such a way that they are designed to fail – it's about the lenders getting their hands on the cars, rather than getting interest on loans. Interest rates on these loans are so high that people inevitably default, and the agreements allow them to seize the cars after only one default."

Save money: Tips before you take a home loan

Home loans can be very beneficial for property buyers, as they not only help you buy your dream home, but also help you save on taxes. But you must remember to choose the right home loan if you do not want to face the hassles in the process. Here are a few quick tips that you could keep in mind while applying for a home loan. These tips could help ease the complicated procedure a little bit and at the same time help you save some money.

Some of the tips that are recommended are mentioned below:

Research well - These days loan are made quite attractive for the buyers with low interest rates and additional schemes. Therefore it is better to educate yourself about the terms and conditions of each loan agreement so that you are prepared beforehand. Clarify all your doubts regarding the loan scheme before you finalize anything and don't hesitate to ask questions to the sales person even if you have the smallest difficulty understanding a particular clause.

Take a look at the EMI - Calculate the EMI that you will be able to afford beforehand. Remember that you know your money more than anyone else so keeping in mind your current job and income you can make an approximate calculation about the amount of EMI you can pay. Don't make hasty decisions on this one because paying penalties due to non payment of EMI on time can prove to be more troublesome. If you have a temporary job, there are other things to take into consideration so make a wise decision taking care of all the parameters.

Negotiate on the interest rate - Even though banks and financial institutions swear that interest rates are non-negotiable, they could still make a few adjustments if you list a few honest issues with the high rates. This can be done only if you have finalized the property you would like to buy and you need it as soon as possible. Also, if it is the end of the month, it could prove to be beneficial for you. Sales persons have an aggregate number of sales that they need to complete every month; so in order to complete their target; they are bound to give you certain benefits.

Loan eligibility - Carry documents which include information like your credit history when you make purchase of a loan. You should have paid all your credit cards and car loans on time in order to move a step higher on the eligibility while applying for a loan. If you have a clean record in your credit history for payments done on time, then you can use it as an advantage when applying for the loan. Also, try to focus on the tenure of your loan. If you opt for a long tenure loan then you will be paying more overall as the interest paid would be very high.

Additional charges to be kept in mind - When you are applying for a home loan, you need to be educated about the various other charges that the lenders add to the current schemes. They will add administrative and service charges or processing fees. These additional fess fall under the amount that is sanctioned in your name and not under the amount that you take home. So before you finalize any deal, you should make note of such additional charges that the lenders put into the scheme.

Read the fine print of the agreement carefully - Even if the home loan agreement with your bank is a bulky document, make sure you read it thoroughly. Sometimes, lenders may nod to certain points but in the end whatever is present on the paper will only be taken into consideration. So it is best if you could just spend some extra time reading the document carefully rather than getting stuck in complications related to the same later on. Never sign on a blank loan paper even if the sales person asks you to sign. Ask questions if you still have some doubts because at the end it is very important to be aware of every term and condition mentioned in the loan.

Home Loan Servicing Solutions, Ltd. Schedules Conference Call 3rd Quarter 2013 Results.

 Home Loan Servicing Solutions, Ltd.^TM ("HLSS" or the "Company") (HLSS) will hold its conference call on Thursday, October 17, 2013 at 11:00 a.m. (ET) to review the Company's operating results. This event will follow Home Loan Servicing Solutions' 3rd Quarter 2013 earnings release. The press release will also be available on the HLSS Shareholder website at www.hlss.com.

A live audio webcast and slide presentation for the call will be available over the internet at www.hlss.com (through a link on the Shareholders page). Those who want to listen to the call should go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software.

The conference call will be available for replay via telephone beginning at 12:01 p.m. (ET) on Thursday, October 17, 2013 through Friday, October 25, 2013. To listen to a replay of the conference call by telephone dial 1-402-998-1711. For more information on prior releases and SEC Filings, please refer to the "Shareholders" section of our website at www.hlss.com.

Home Loan Servicing Solutions is an internally managed owner of high quality mortgage servicing assets, predominantly mortgage servicing advances and non-agency mortgage servicing rights, which are highly overcollateralized with historically stable net asset values. HLSS' primary investment objective is to generate stable, recurring fee based earnings and dividends throughout the economic cycle. For more information, visit www.hlss.com.

Loan Mods Up from Year Ago in Q2; Foreclosure Starts Plumme

Although the pace of loan modification activity slowed from the first to the second quarter this year, foreclosure starts saw an even greater quarterly decline, according to data from HOPE NOW, a private sector alliance of mortgage servicers, investors, mortgage insurers and nonprofit counselors.

In the second quarter, servicers provided 204,000 loan modifications to distressed borrowers, down by about 16 percent from the prior quarter. However, loan modifications were still up 13 percent from a year ago.
Short sales, another alternative to foreclosure, decreased 25 percent year-over-year to 81,000 in the second quarter.

Meanwhile, foreclosures were initiated on 329,000 properties in the second quarter. The total for foreclosure starts represents a 30 percent decrease compared to the first quarter and a sharp 38 percent decline from last year.
Foreclosure sales also slowed, dropping to 158,000 in the second quarter, down 2 percent from the first quarter and down 15 percent from the same quarter a year ago.
HOPE NOW data continued to show a significant majority of completed modifications are through the private sector. Out of the 204,000 completed modifications in the second quarter, 160,000 were proprietary modifications, while 44,860 were completed under the government’s Home Affordable Modification Program (HAMP).
Since 2007, about 6.52 million homeowners have received permanent loan modifications for homeowners, and about 5.31 million of those modifications were proprietary programs.
The industry has also provided 1.32 million short sales since December 2009. This brings the total for non-foreclosure solutions to over 7.84 million.
“In addition to the progress made via our solution data, HOPE NOW has sponsored over 140 face to face events in more than 70 markets nationwide and has been a driving force in bringing together all mortgage stakeholders in the interest of improving the nation’s housing market.

 

 

 

The company's post-tax profits rose 36% in six years to £62.5m and four million loans totalling £1.2bn were advanced

The payday lender's financial results for 2012 confirmed how far Wonga has come in six years. Post-tax profits rose 36% to £62.5m and four million loans totalling £1.2bn were advanced to more than one million customers. The company is on a roll.
How has it been done? Wonga's business model seems to have four key elements. First, the company rejects two-thirds of applicants as bad credit risks. Efficient assessment of credit risk kept default rates last year to 7.4% – a rate that would disgrace a mainstream lender but is easily tolerable for Wonga at its astronomical rates of interest. It is also why chief executive Errol Damelin can breezily offer to help Welby give credit unions a leg-up. Damelin, you can be sure, will not be offering to hand over the algorithms that are central to Wonga's system.
Second, Wonga is, one must admit, a slick operation that gives its customers what they want. Processing loans rapidly is not a trick mainstream banks have mastered. Whether you regard many of Wonga's customers as desperate or misguided, the company has clearly identified an appetite for instant loans.
Third, Wonga is an extraordinarily capital-efficient business. Damelin boasts that the company makes only £15 net profit per loan. That sounds low but the point to remember is that the company is turning over its capital several times each year. Thus the "same" £200 might earn £15 six or seven times in the space of 12 months. That is what produces financial statistics that leave mainstream lenders in the shade. Wonga's return on shareholders' equity is about 30% and after-tax profit margins are 20%.
The fourth characteristic is the one that – rightly – enrages Wonga's critics. It is the company's presentation of borrowing at high interest rates, even for a short period, as a fun-filled everyday activity undertaken by aspirational folk. The adverts are humorous and Damelin reports that his typical customers are "young, urban, digital, and with a very strong proportion of smartphone ownership".
There will, of course, sometimes be sensible economic reasons for some borrowers to take out a short-term loan at high interest rates – avoiding overdraft charges, for example. But, on Damelin's description of his customers as members of the "Facebook generation", most would be better off curtailing their spending or joining the world of mainstream finance.
More fool them, one might say. Well, yes, but society should also protect the interests of the victims of the growth of payday lending – the already over-indebted who are dragged deeper into trouble by becoming hooked on short-term loans. There is a clear case for placing caps on how much payday lenders can charge. A limit of 50%-60% rates of interest sounds reasonable to curb rollover lending.
Certainly somebody in the financial or government establishment should take an interest in the rise of easy-access payday lending. At the very least, Wonga and its ilk, via their cheery adverts, are undermining everything the new regulator says about the importance of financial education in avoiding the next crisis.

Greece 'may renegotiate rescue loans'

Wolfgang Schaeuble (left) was the first to break the silence, and now Yannis Stournaras is adding his voice

Greece may seek to ease its debt burden by renegotiating its bailout terms, the Greek finance minister said on Monday.

Yannis Stournaras told German newspaper Handelsblatt this could involve lower interest payments and more time to repay 240bn euros (£206bn) in loans.
It comes a day after he conceded that Greece may face a hole in its finances of up to 10bn euros.
Speculation over Athens' borrowing needs comes at a sensitive time, with German elections due in September.
Earlier this month German Finance Minister Wolfgang Schaeuble said for the first time that Greece will need another bailout to plug a forthcoming funding gap.
The Greek bailout remains a sensitive topic in Germany. Chancellor Angela Merkel is seeking re-election on 22 September, and many German voters feel they have already contributed enough to European bailouts.
High hopes Mr Stournaras told German business daily Handelsblatt on Monday that it may not be necessary for Greece to seek a third bailout package from European partners and the International Monetary Fund (IMF) after all.
This was despite having himself alluded to the possibility of a 10bn-euro package in an interview on Sunday with the Greek newspaper Proto Thema, and insisting that it should not come with any more austerity conditions attached.
The IMF last month estimated Greece would need around 11bn euros in 2014/15.
Instead, Mr Stournaras expressed optimism that the government could manage within the terms of its existing bailouts.

  Angela Merkel is running for election again in September

The finance minister claimed his government may even be able to borrow money from the financial markets by the second half of 2014, obviating the need for any further rescue loans.
He said this would be possible if his country's economy grew next year - after six years of contraction - and if the government managed to achieve a primary surplus on its finances, meaning that it only needed to borrow money in order to meet interest payments on its existing debts.
"That would be a great success which would allow us to test the market with a new bond issue in the second half of 2014," Mr Stournaras said.
He also criticised his own countrymen's habit of avoiding taxes - an issue often highlighted in the German tabloid press - admitting that many treated it as "a kind of national sport".
He said that more than 600 tax avoiders had already been sent to prison under current Greek laws.
'Domino effect' The minister ruled out the possibility of another "haircut" on the country's private sector debts, saying it would be better to alleviate the terms of the country's rescue loans instead.
Last year, as a condition to the country's second bailout package, the Greek government had to negotiate a formal reduction in the amount owed to private sector lenders.
German Chancellor Angela Merkel has also warned about writing down any more Greek debt.
Chancellor Merkel said a haircut of Greek debt would be bad for the stability of the eurozone, which has seen a return in investor confidence after years of worrying about the future of the single currency and bailouts of several nations - most recently, Cyprus.
"I am expressly warning against a haircut," Mrs Merkel said. "It could trigger a domino effect of uncertainty with the result that the readiness of private investors to invest in the eurozone again falls to nothing.

The federal government has made it easier than ever to borrow money for higher education - saddling a generation with crushing debts and inflating a bubble that could bring down the economy.

On May 31st, president Barack Obama strolled into the bright sunlight of the Rose Garden, covered from head to toe in the slime and ooze of the Benghazi and IRS scandals. In a Karl Rove-ian masterstroke, he simply pretended they weren't there and changed the subject.

The topic? Student loans. Unless Congress took action soon, he warned, the relatively low 3.4 percent interest rates on key federal student loans would double. Obama knew the Republicans would make a scene over extending the subsidized loan program, and that he could corner them into looking like obstructionist meanies out to snatch the lollipop of higher education from America's youth. "We cannot price the middle class or folks who are willing to work hard to get into the middle class," he said sternly, "out of a college education."
Flash-forward through a few months of brinkmanship and name-calling, and not only is nobody talking about the IRS anymore, but the Republicans and Democrats are snuggled in bed together on the student-loan thing, having hatched a quick-fix plan on July 31st to peg interest rates to Treasury rates, ensuring the rate for undergrads would only rise to 3.86 percent for the coming year.
Though this was just the thinnest of temporary solutions – Congressional Budget Office projections predicted interest rates on undergraduate loans under the new plan would still rise as high as 7.25 percent within five years, while graduate loans could reach an even more ridiculous 8.8 percent – the jobholders on Capitol Hill couldn't stop congratulating themselves for their "rare" "feat" of bipartisan cooperation. "This proves Washington can work," clucked House Republican Luke Messer of Indiana, in a typically autoerotic assessment of the work done by Beltway pols like himself who were now freed up for their August vacations.
Not only had the president succeeded in moving the goal posts on his spring scandals, he'd teamed up with the Republicans to perpetuate a long-standing deception about the education issue: that the student-loan controversy is now entirely about interest rates and/or access to school loans.
Obama had already set himself up as a great champion of student rights by taking on banks and greedy lenders like Sallie Mae. Three years earlier, he'd scored what at the time looked like a major victory over the Republicans with a transformative plan to revamp the student-loan industry. The 2010 bill mostly eliminated private banks and lenders from the federal student-loan business. Henceforth, the government would lend college money directly to students, with no middlemen taking a cut. The president insisted the plan would eliminate waste and promised to pass the savings along to students in the form of more college and university loans, including $36 billion in new Pell grants over 10 years for low-income students. Republican senator and former Secretary of Education Lamar Alexander bashed the move as "another Washington takeover."
The thing is, none of it – not last month's deal, not Obama's 2010 reforms – mattered that much. No doubt, seeing rates double permanently would genuinely have sucked for many students, so it was nice to avoid that. And yes, it was theoretically beneficial when Obama took banks and middlemen out of the federal student-loan game. But the dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It's not the cost of the loan that's the problem, it's the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008.
More Taibbi: The Biggest Price-Fixing Scandal Ever
How is this happening? It's complicated. But throw off the mystery and what you'll uncover is a shameful and oppressive outrage that for years now has been systematically perpetrated against a generation of young adults. For this story, I interviewed people who developed crippling mental and physical conditions, who considered suicide, who had to give up hope of having children, who were forced to leave the country, or who even entered a life of crime because of their student debts.
They all take responsibility for their own mistakes. They know they didn't arrive at gorgeous campuses for four golden years of boozing, balling and bong hits by way of anybody's cattle car. But they're angry, too, and they should be. Because the underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors.
First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington.
Next up is the government itself. While it's not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president's new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a "Save the Panda" charity. Why is this happening? The answer lies in a sociopathic marriage of private-sector greed and government force that will make you shake your head in wonder at the way modern America sucks blood out of its young.
In the early 2000s, a thirtysomething scientist named Alan Collinge seemed to be going places. He had graduated from USC in 1999 with a degree in aerospace engineering and landed a research job at Caltech. Then he made a mistake: He asked for a raise, didn't get it, lost his job and soon found himself underemployed and with no way to repay the roughly $38,000 in loans he'd taken out to get his degree.
Collinge's creditor, Sallie Mae, which originally had been a quasi-public institution but, in the late Nineties, had begun transforming into a wholly private lender, didn't answer his requests for a forbearance or a restructuring. So in 2001, he went into default. Soon enough, his original $38,000 loan had ballooned to more than $100,000 in debt, thanks to fees, penalties and accrued interest. He had a job as a military contractor, but he lost it when his employer ran a credit check on him. His whole life was now about his student debt.

Fastest and Easiest Getting Loans

The advantages of payday loans are many and as mentioned before, they are a great way to get very quick access to cash in an emergency. You can manage them online rather than having to visit a branch or bank offices. If you pay them back promptly and on time, they can also be a good way to boost your credit rating if you don’t have one already. They can save you from having to borrow from friends and family which can always cause conflict and they save time filling in huge application forms with normal lenders.

To apply for payday loans is a very easy process and can be done online or over the phone. Once you have requested an amount, the company will do a quick credit check (some companies actually offer loans without these) with regard to confirming your employment or your benefits either by checking your bank statements or other documents and if successful, your money will be with you in 24hours or even less. Most companies will offer you the option of repaying the loan early but if not, the money will be deducted on or close to your next salaried payday. You are given the option of carrying the loan forward to your next payday but are warned, this can be expensive as fresh charges are applied.

Payday loans are a quick and easy method of getting cash when you need a short-term loan.Once you have one, they are then repaid from your next months’ salary (hence ‘payday’ loans). The sums lent can vary but they are usually for small amounts, from £50 to £1000. They can be used as an easy way to get hold of cash for sudden emergencies and loans can be processed and approved within hours rather than the traditional loan you may get from more established financial providers. They are also available for people who have a ‘high risk’ financial history that would normally preclude them from getting a loan elsewhere.

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About Getting Payday Loans

Taking out a payday loan may very well be a trap, so having the entire terms of your contract in actual writing is a smart move. Do not be alarmed if a payday loan company asks for your bank account information. Before signing a payday loan contract, make sure that you fully comprehend the entire contract. Prior to signing any official documents for a payday loan, ensure you are prepared for all the terms and conditions that go along with a payday loan. Be sure that your work history makes you qualified to receive a payday loan. Even though you shouldn’t continuously get a payday loan, they can come in handy when you need fast money.

By comparing payday loans to other loans, such as personal loans, you might find out that some lenders will offer a better interest rate on payday loans. Getting a payday loan from a shady lender may put you in hot water. When looking at: blacklisted personal loans it is important to do your research and make sure that you are using the correct company for your loan. Bring proof of employment and age with you when applying for a payday loan. If you are thinking about getting a payday loan, do your research. This information is needed for any payday loan. Keep the tips from this article in mind when taking out a payday loan. Before getting a payday loan, you have to understand this fact. A lot of payday lenders desire to see at 3 months of having a stable income prior to granting their loans.

The limits to how much you can borrow with a payday loan vary greatly.

You should have some money when you apply for a payday loan. Be aware that a payday lender may be able to access all of the information about your bank accounts. Do your research on any payday lender before you trust them with your information. Find out about all the payday loans durban by referring to our informative website. A lot of people end up not getting this loan because they are uncomfortable with disclosing this information. When this happens, your money may all be going to the fees and not to the actual loan. Hefty administration fees often are hidden in the loan contract.

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Why this short term loans are recommended

A payday loan is recommended because it is easy to apply and quick to receive. The requirements for applying a payday loan are simple. Therefore, it is possible for anyone with a form of income and a bank account to apply for this type of loan. The loans are designed to be taken for short periods. Most of these loans are borrowed for approximately one month or less, although the term can be extended depending on the borrowers needs.

The loans can be received without strict requirements. This makes them ideal for borrowers who are not eligible for other types of credit. To access a payday loan, you need to provide your identification, prove you have a steady income and a bank account. Therefore, the loan is recommended for persons who lack enough savings to cater for immediate needs. Without a payday loan, you may not be in a position to cater for certain necessary expenses. The alternative to a payday loan is missing to pay your bills within the stipulated period, which could result in extra fees or charges. Furthermore, this could lead to disconnection of utilities.

Overcoming financial setbacks

Many people have stopped worrying about experiencing financial setbacks because they can access payday short-term loans. Although taking up the loan means that you will need to repay the loan plus interest, these types of loans have been designed for the short-term, therefore the interest is relatively low. Normally, the loan is usually smaller the first time but with subsequent applications, you will be able to receive more money.

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Get The Best Bookkeeping Service to Enjoy Hassle-free Business Operation

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In the present scenario, the bookkeeping is the occupation for systematizing, recording, maintaining, auditing, preparing financial business record balance. In order to smooth performance hassle-free business operation, contact the reliable accounting service providers to accomplish your target. The service is widely used in various sectors such as :- retails, pharmaceutical, banking, insurance among other organizations. The service will help to increase efficiency, flexibility, functions of the concerned business.

There are various advantage benefits available of hiring accountant Fort Lauderdale services such as :- get the right financial decision, measures and monitors agents’ performance, help in preparation of financial operation reports that facilitate details about the company to other parties, allow you to calculate annual profits losses, evaluate the productivity and many more. With their assistance you can increase customer satisfaction and work efficiency as well.

People who would like to attain the most effective expert quickbooks Professionals, then explore your search through online browsing. The world wide web will help you to attain the necessary information about the concerned companies such as :- specialization, experience, professional, their latest software, case studies their way of work and many more. Such details will also help in finding the renowned company. Moreover, there is one of the most credible service providers available to provide outsourcing accounting services at affordable prices.

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Experienced Web Designers Staffordshire Help Optimize Your Products Promotion

Are you looking for reliable web designers Staffordshire? Advertising through a website is an effective marketing solution. You can even grab more potential customers’ attention as they now tend to use this technology to fulfill their personal needs. They look for information and buy products online. As a business owner, you have to take a look at this trend. You can do the promotion and provide services needed by the customers through the well designed website.

Do you feel unsatisfied with the sales record? If you provide the highest quality products with affordable prices, the exact matter you probably have is the marketing. The promotion must be optimized. If you usually advertise the products at local newspapers, it is time to take the advantage of the digital marketing platform. There are many tools to use including an attractive and bespoke website. You can have it if you hire the experienced and expertise web designers Staffordshire. To find them, you just need to visit inLife official site, Inlife.co.uk.

The web designers Staffordshire at inLife have specialty in providing the web design services and digital marketing solutions. They do not only service wide range business, but also schools and councils. They are experienced. Even so, they still keep the price friendly enough to your pocket and it is guaranteed that this company can offer the unbeatable quote and quality. Visit their site to learn more.

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JPMorgan Reining In Payday Lenders

JPMorgan Chase will make changes to protect consumers who have borrowed money from a rising power on the Internet — payday lenders offering short-term loans with interest rates that can exceed 500 percent.

JPMorgan, the nation’s largest bank by assets, will give customers whose bank accounts are tapped by the online payday lenders more power to halt withdrawals and close their accounts.

Under changes to be unveiled on Wednesday, JPMorgan will also limit the fees it charges customers when the withdrawals set off penalties for returned payments or insufficient funds.

The policy shift is playing out as the nation’s biggest lenders face heightened scrutiny from federal and state regulators for enabling online payday lenders to thwart state law. With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or foreign locales like Belize, Malta and the West Indies to more nimbly dodge statewide caps on interest rates.

Bank of America and Wells Fargo said that their policies on payday loans remained unchanged.

At an investor meeting in February, Jamie Dimon, JPMorgan Chase’s chief executive, called the practice, which was the subject of an article in The New York Times last month, “terrible.” He vowed to change it.

While JPMorgan Chase never directly made the loans, the bank, along with other major banks, is a critical link for the payday lenders. The banks allow the lenders to automatically withdraw payments from borrowers’ bank accounts, even in states like New York where the loans are illegal. The withdrawals often continue unabated, even after customers plead with the banks to stop the payments, according to interviews with consumer lawyers, banking regulators and lawmakers.

The changes at JPMorgan, which will go into effect by the end of May, will keep bank customers from racking up hundreds of dollars in fees, generated when the payday lenders repeatedly try to debit borrowers’ accounts. Still, the changes will not prevent the payday lenders from extending high-cost credit to people living in the states where the loans are banned.

It is possible that other lenders could institute changes, especially because rivals have followed JPMorgan’s lead in recent years. In 2009, for example, after JPMorgan capped overdraft fees at three a day, Wells Fargo also changed its policies to reduce the number of daily penalties charged.

The changes come as state and federal officials are zeroing in on how the banks enable online payday lenders to bypass state laws that ban the loans. By allowing the payday lenders to easily access customers’ accounts, the authorities say the banks frustrate government efforts to protect borrowers from the loans, which some authorities have decried as predatory.

Both the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau are scrutinizing how the banks enable the lenders to dodge restrictions, according to several people with direct knowledge of the matter. In New York, where JPMorgan has its headquarters, Benjamin M. Lawsky, the state’s top banking regulator, is investigating the bank’s role in enabling lenders to break state law, which caps interest rates on loans at 25 percent.

Facing restrictions across the country, payday lenders have migrated online and offshore. There is scant data about how many lenders have moved online, but as of 2011, the volume of online payday loans was $13 billion, up more than 120 percent from $5.8 billion in 2006, according to John Hecht, an analyst with the investment bank Stephens Inc.

By 2016, Mr. Hecht expects Internet loans to dominate the payday lending landscape, making up about 60 percent of the total payday loans extended.

JPMorgan said that the bank will charge only one returned item fee per lender in a 30-day period when customers do not have enough money in their accounts to cover the withdrawals.

That shift is likely to help borrowers like Ivy Brodsky, 37, who was charged $1,523 in fees — a combination of insufficient funds, service fees and overdraft fees — in a single month after six Internet payday lenders tried to withdraw money from her account 55 times.

Another change at JPMorgan is intended to address the difficulty that payday loan customers face when they try to pay off their loans in full. Unless a customer contacts the online lender three days before the next withdrawal, the lender just rolls the loan over automatically, withdrawing solely the interest owed.

Even borrowers who contact lenders days ahead of time can find themselves lost in a dizzying Internet maze, according to consumer lawyers. Requests are not honored, callers reach voice recordings and the withdrawals continue, the lawyers say.

For borrowers, frustrated and harried, the banks are often the last hope to halt the debits. Although under federal law customers have the right to stop withdrawals, some borrowers say their banks do not honor their requests.

Polly Larimer, who lives in Richmond, Va., said she begged Bank of America last year to stop payday lenders from eroding what little money she had in her account. Ms. Larimer said that the bank did not honor her request for five months. In that time period, she was charged more than $1,300 in penalty fees, according to bank statements reviewed by The Times. Bank of America declined to comment.

To combat such problems, JPMorgan said the bank will provide training to their employees so that stop-payment requests are honored.

JPMorgan will also make it much easier for customers to close their bank accounts. Until now, bank customers could not close their checking accounts unless all pending charges have been settled. The bank will now allow customers to close accounts if pending charges are deemed “inappropriate.”

Some of the changes at JPMorgan Chase echo a bill introduced in July by Senator Jeff Merkley, Democrat of Oregon, to further rein in payday lending.

A critical piece of that bill, pending in Congress, would enable borrowers to more easily halt the automatic withdrawals. The bill would also force lenders to abide by laws in the state where the borrower lives, rather than where the lender is.

JPMorgan Chase said it is “working to proactively identify” when lenders misuse automatic withdrawals. When the bank identifies those problems, it said, it will report errant lenders to the National Automated Clearing House Association, which oversees electronic withdrawals.

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Loans Borrowed Against Pensions Squeeze Retirees

But these offers, known as pension advances, are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt. The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards.

In lean economic times, people with public pensions — military veterans, teachers, firefighters, police officers and others — are being courted particularly aggressively by pension-advance companies, which operate largely outside of state and federal banking regulations, but are now drawing scrutiny from Congress and the Consumer Financial Protection Bureau.

The pitches come mostly via the Web or ads in local circulars.

“Convert your pension into CASH,” LumpSum Pension Advance, of Irvine, Calif., says on its Web site. “Banks are hiding,” says Pension Funding L.L.C., of Huntington Beach, Calif., on its Web site, signaling the paucity of credit. “But you do have your pension benefits.”

Another ad on that Web site is directed at military veterans: “You’ve put your life on the line for Americans to protect our way of life. You deserve to do something important for yourself.”

A review by The New York Times of more than two dozen contracts for pension-based loans found that after factoring in various fees, the effective interest rates ranged from 27 percent to 106 percent — information not disclosed in the ads or in the contracts themselves. Furthermore, to qualify for one of the loans, borrowers are sometimes required to take out a life insurance policy that names the lender as the sole beneficiary.

LumpSum Pension Advance and Pension Funding did not return calls and e-mails for comment.

While it is difficult to say precisely how many financially struggling people have taken out pension loans, legal aid offices in Arizona, California, Florida and New York say they have recently encountered a surge in complaints from retirees who have run into trouble with the loans.

Ronald E. Govan, a Marine Corps veteran in Snellville, Ga., paid an interest rate of more than 36 percent on a pension-based loan. He said he was enraged that veterans were being targeted by the firm, Pensions, Annuities & Settlements, which did not return calls for comment.

“I served for this country,” said Mr. Govan, a Vietnam veteran, “and this is what I get in return.”

The allure of borrowing against pensions underscores an abrupt reversal in the financial fortunes of many retirees in recent years, as well as the efforts by a number of financial firms, including payday lenders and debt collectors, to market directly to them.

The pension-advance firms geared up before the financial crisis to woo a vast and wealthy generation of Americans heading for retirement. Before the housing bust and recession forced many people to defer retirement and to run up debt, lenders marketed the pension-based loan largely to military members as a risk-free option for older Americans looking to take a dream vacation or even buy a yacht. “Splurge,” one advertisement in 2004 suggested.

Now, pension-advance firms are repositioning themselves to appeal to people in and out of the military who need cash to cover basic living expenses, according to interviews with borrowers, lawyers, regulators and advocates for the elderly.

“The cost of these pension transactions can be astronomically high,” said Stuart Rossman, a lawyer with the National Consumer Law Center, an advocacy group that works on issues of economic justice for low-income people.

“But there is profit to be made on older Americans’ financial pain.”

The oldest members of the baby boom generation became eligible for Social Security during the recent housing bust and recession, and many nearing retirement age watched their investments plummet in value. Some are now sliding deep into debt to make ends meet.

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Caliber Funding And Caliber Home Loans Finalize Merger

Caliber Funding LLC and Caliber Home Loans, Inc., today announced the legal close of their merger. As previously announced on January 17, 2013, the organizations were combined to create a full-service, consumer-focused, residential mortgage banking organization offering both loan origination and loan servicing solutions. The combined organization will be named Caliber Home Loans, Inc. (the "Company") and will continue to be owned by and have the capital backing of Lone Star Funds.

The combined organization has a larger platform to reach a broader consumer base through multiple borrower touch points. In addition, the expanded scale afforded by the merger provides the Company with greater capacity and financial flexibility to build its business without sacrificing its commitment to providing responsible, industry-leading services to consumers and investors.

"We are very excited about the successful completion of the merger. The merger solidifies our vision to become a full-service mortgage bank, providing both originations and servicing for our customers and business partners," said Joe Anderson, Chairman and CEO of the Company.  "Our vision is to be on the leading edge of mortgage finance, and to become a next-generation provider of products and services to current and future homeowners."

The merger provides a strong foundation for the Company and creates tremendous opportunity for its investors, business partners and employees, and enhances the overall customer experience. As a full-service mortgage banking organization, the Company is positioned to deliver:

Innovative and cost-effective mortgage solutions;A holistic customer experience, beginning at loan origination;Substantial growth of the loan servicing portfolio; andA greater number of channels through which to deliver loans.

Since announcing the merger earlier this year, both organizations have experienced tremendous growth.  Caliber Home Loans materially grew its servicing portfolio with several key acquisitions. Caliber Funding further enhanced its purchase-centric growth by expanding its retail footprint and continuing to grow its wholesale division.  The Company also added two new channels, correspondent lending and consumer direct. The Company will continue to focus on helping families achieve the dream of home ownership through its consumer-centric loan origination and servicing solutions.

About Caliber Home Loans, Inc.
The Company is a full-service national mortgage lender and agency direct seller/servicer. The Company originates loans through various channels and transaction types, including a network of retail branches, wholesale lending, correspondent and mini-correspondent lending, and a consumer-direct centralized operation specializing in a variety of loan programs for purchase and refinance such as conforming, jumbo, and government products. The Company also offers innovative servicing solutions for both conforming and non-conforming loans. The Company is led by a veteran senior management team that consists of mortgage banking professionals with a history of building successful national mortgage operations.  The Company is owned by Lone Star Funds, a global private equity fund.

 

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Dallas Fed Manufacturing Index falls in June, but still positive

The Dallas Fed Manufacturing Index is a manufacturing-focused index of business activity

The Dallas Fed conducts its Texas Manufacturing Survey monthly, and it’s similar to many of the other regional Fed surveys, like the Empire State Manufacturing Survey, the Chicago Fed National Activity Index, or the Philly Fed. These are all diffusion-type indices that ask respondents whether a certain metric is increasing, decreasing, or staying the same. It subtracts the percentage of people reporting a decrease from the number of people reporting an increase to come up with the results. In other words, if businesses are asked about their hiring plans, and 30% say they intend to add to payroll, 45% say they’re holding steady, and 25% say they’re decreasing payroll, the index would be 30 – 25 = 5.  That’s generally how all diffusion indices work.

(Read more: Mortgage REITs get crushed as rates increase)

The Dallas Fed survey asks about output, employment, orders, prices, shipments, inventories, capacity utilization, prices, capital expenditures, and some other indicators. It asks respondents for their six-month outlook and usually about a subject in depth.

Highlights of the survey

The Broader Business Conditions Index fell to 4.4 after rebounding to 6.6 in June. Overall, it looks like growth in manufacturing is back to its spring highs. Production fell from 17.1 to 11.4. Capacity Utilization fell 3 points to 12.2, and shipments rose to 17.7—the highest reading in six months. Prices paid and received were flat.

On the labor front, the employment index rose to 9.3—its highest reading in nearly a year. Plus, 18% of firms reported increasing headcount, while 9% reported layoffs. Most manufacturers noted no increase in compensation costs.

(Read more: Radar Logic futures curve predicts flat real estate prices until September 2014)

Impact on mortgage REITs

Interest rates are the biggest driver of mortgage REIT returns, and nothing in this report would encourage the Fed to change its current course. The employment indices were encouraging, and the prices paid and received were flat. This is consistent with the Fed’s current path: tapering quantitative easing as the labor market improves and leaving short-term rates as low as it dares as long as inflation behaves. Still, it’s been a painful adjustment period for the REITs—as the ten-year bond has sold off, mortgage REITs, like Annaly (NLY), American Capital (AGNC), MFA Financial (MFA) and Hatteras (HTS), have under-performed.

Increasing rates are a double-edged sword for the REITs. On one hand, continued low rates mean their cost of leveraging their portfolio is low, but on the other hand, they take mark-to-market hits on their portfolio even as interest margins increase. Although increasing rates will decrease prepayment risk for the REITs, increasing real estate prices would allow some FHA borrowers to refinance into a conforming mortgage and save on mortgage insurance payments. Prepayments will negatively affect the mortgage REITs as they’re forced to reinvest into lower-yielding paper.

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PHH Corporation Announces Second Quarter 2013 Results

 

For the quarter ended June 30, 2013, the Company reported net income attributable to PHH Corporation of $90 million or $1.58 per basic share. Core loss (after-tax)* and core loss per share* for the quarter ended June 30, 2013, were $2 million and $0.03, respectively. These results include a $21 million pre-tax loss ($0.24 per basic share after tax) related to the termination of an inactive mortgage reinsurance agreement. This transaction generated $69 million of unrestricted cash of which $30 million was received in the second quarter of 2013 and $39 million was received in the third quarter of 2013.

Tangible book value per share* was $28.14 at June 30, 2013, up 6% from $26.62 at March 31, 2013.

Glen A. Messina, president and CEO of PHH Corporation, said, “Over the past year and a half, through the execution of our strategic priorities, PHH has made significant progress in placing the company in a position of strength to deal with the cyclical and dynamic nature of the mortgage industry. In the second quarter, our financial performance reflected the impact of a rising interest rate environment, which drove an increase in the value of our mortgage servicing rights and negatively impacted our mortgage origination volume. I’m pleased with the progress the company is making in managing through this transition period to a rising interest rate environment. Our results were also impacted by a charge related to the commutation of our remaining Atrium reinsurance contract. The Fleet business continued to provide solid profitability.”

Messina added, “We are taking the necessary actions to reposition our mortgage businesses for the current interest rate and regulatory environment. We are scaling expenses to be consistent with lower expected mortgage production volumes, while maintaining our commitment to high customer service levels and accommodating the demands of the rapidly-changing regulatory environment. In part due to recent regulatory changes, we also are seeking to amend certain private label contracts to address the fundamental changes in the industry and ensure our programs are meeting our mutual objectives. Further, we are working to ensure that we have access to multiple funding sources aimed at lowering our capital needs and overall cost of capital.”

* Non-GAAP Financial Measures

Core earnings or loss (pre-tax), core earnings or loss (after-tax), core earnings or loss per share, adjusted cash flow, tangible book value and tangible book value per share are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). See the “Note Regarding Non-GAAP Financial Measures” below for a detailed description of these and certain other Non-GAAP financial measures and reconciliations of such Non-GAAP financial measures to their most directly comparable GAAP financial measures as required by Regulation G.

Mortgage Production and Mortgage Servicing

Mortgage Production Segment Profit

Mortgage Production segment profit in the second quarter of 2013 was $44 million, down 44% from $78 million in the second quarter of 2012 and down $1 million from the first quarter of 2013. Segment profit declined from the second quarter 2012 primarily due to a 20% decline in IRLCs expected to close, a 33 bps decline in total loan margin and greater operating expenses as a result of higher retail origination volume. A slight decline in sequential quarter segment profit reflected the impact of narrower total loan margin offset by 9% growth in IRLCs expected to close.

Mortgage Servicing Segment Profit

Mortgage Servicing segment profit in the second quarter of 2013 was $81 million, which included a favorable $155 million market-related fair value adjustment to our MSR, primarily from an increase in mortgage interest rates, which was offset slightly by $1 million in hedge losses. The MSR fair value adjustment for prepayments and recurring cash flows was an unfavorable $80 million in the second quarter of 2013, compared to an unfavorable $77 million in the first quarter of 2013. Loan servicing income includes losses associated with the termination of reinsurance agreements of $21 million and $16 million in the second quarters of 2013 and 2012, respectively.

Repurchase and foreclosure-related charges during the second quarter of 2013 decreased to $11 million from $39 million in the second quarter of 2012 and $15 million in the first quarter of 2013. Repurchase and foreclosure-related charges were reflective of the continued decrease in repurchase requests as the Agencies have continued to focus on reviewing loans from pre-2009 origination years.

Interest Rate Lock Commitments

IRLCs expected to close of $5.4 billion in the second quarter of 2013 declined 20% from the second quarter of 2012, primarily reflecting declining demand for refinancings attributable to rising interest rates, a decline in wholesale/correspondent volume as we remain focused on cash usage and the relative profitability of wholesale/correspondent originations, and a continued shift in mix toward fee-based production. IRLCs expected to close increased 9% from $5.0 billion in the first quarter of 2013, driven by sequential quarter growth in home purchase volume and the addition of HSBC as a private label client, partially offset by a greater portion of our production done on a fee-for-service basis.

Total Loan Margin

Total loan margin on IRLCs expected to close for the second quarter of 2013 was 348 bps, a 24 bps decrease from the first quarter of 2013 and 33 bps less than the second quarter of 2012. Margins narrowed in the second quarter of 2013, primarily due to rising mortgage interest rates. Margins generally widen when mortgage interest rates decline and tighten when mortgage interest rates increase, as loan originators attempt to balance origination volume with operational capacity.

Mortgage Closing Volume

Total second quarter 2013 mortgage closings were $14.8 billion, a 15% increase from the second quarter of 2012. Retail closings increased 21% in the second quarter of 2013 compared to the second quarter of 2012 and 16% compared to the first quarter of 2013, reflecting our strategy of growth in our retail channels. Retail closings represented 91% of our total closings during the second quarter of 2013. Fee-based closings continued to trend higher in the second quarter of 2013, increasing to 51% of total retail closings. This was up from 43% of total retail closings in the second quarter of 2012 and 47% of total retail closings in the first quarter of 2013. Our private label agreement with HSBC that was launched in the second quarter of 2013 did not meaningfully contribute to closing volume in the quarter.

Unpaid Principal Balance of Mortgage Servicing Portfolio

At June 30, 2013, the UPB of our capitalized servicing portfolio was $133.1 billion, down 3% from March 31, 2013, and 10% from June 30, 2012. These decreases reflect prepayments that were not fully offset by additions from new loan production.

At June 30, 2013, the UPB of our total loan servicing portfolio was $228.6 billion, a 26% increase from March 31, 2013, and a 19% increase from June 30, 2012. The sequential quarter and year-over-year increases in our total loan servicing portfolio primarily reflect approximately $47 billion of subservicing UPB that we assumed from HSBC in the second quarter of 2013, partially offset by the aforementioned declines in the UPB of our capitalized servicing portfolio.

Mortgage Servicing Rights

At June 30, 2013, the book value of our mortgage servicing rights was $1.2 billion, up 22% from the end of 2012. During the second quarter of 2013, $71 million in MSR value was added from the capitalization of new servicing rights from new loans sold in the quarter, and our MSR value increased by $155 million due to market-related fair value adjustments. Our MSR value decreased $80 million in the second quarter of 2013 related to prepayments and the receipt of recurring cash flows, primarily attributable to continued high prepayment speeds from refinances driven by low mortgage interest rates. We also incurred $1 million in MSR hedge losses in the second quarter of 2013.

Repurchase and Foreclosure-related Charges

Repurchase and foreclosure-related charges in the second quarter of 2013 were $11 million, down from $15 million in the first quarter of 2013, reflecting a continued downward trend of repurchase requests. Total repurchase and foreclosure-related reserves were $191 million at the end of the second quarter of 2013, compared to $194 million at the end of the first quarter of 2013. As of June 30, 2013, the estimated amount of reasonably possible losses in excess of total repurchase and foreclosure-related reserves was $45 million, unchanged from the end of the first quarter of 2013. Although Fannie Mae and Freddie Mac are still expected to be complete with repurchase requests for pre-2009 origination years by the end of 2013, losses associated with government insured loan foreclosures could persist into 2014 and beyond as loans continue to work through the foreclosure process and we evaluate loans and expenses that are not eligible for insurance reimbursement.

Fleet Management Services

Segment Profit

In the second quarter of 2013, Fleet Management Services segment profit was $21 million, unchanged from the first quarter of 2013 and down from $22 million in the second quarter of 2012. Sequential quarter segment profit remained unchanged as growth in our fleet lease income was offset by greater operating expenses.

Fleet Leasing

Net investment in fleet leases at June 30, 2013, increased 2% compared to March 31, 2013, while average leased vehicle units remained unchanged during the second quarter of 2013. This was the result of higher-capitalized units continuing to replace lower-cost vehicles, consistent with our emphasis on service fleets.

Fleet Management Fees

In the second quarter of 2013, Fleet management fees decreased to $44 million from $45 million in the second quarter of 2012, primarily driven by lower client participation in driver safety training services. Fleet management fees increased by $1 million compared to the first quarter of 2013 primarily attributable to sequential quarter average unit growth in our key fleet service offerings.

Liquidity Update

Liquidity at June 30, 2013, included $1.0 billion in unrestricted cash and cash equivalents.

As of June 30, 2013, we had no outstanding balances on our $305 million in total unsecured revolving credit facilities or our $119 million Canadian secured revolving credit facility.

On July 29, 2013, we amended our U.S. revolving credit agreement to increase our flexibility to repay or refinance our 2016 and 2017 unsecured notes prior to the maturity of our revolving credit facility.

Conference Call/Webcast

The Company will host a conference call at 10:00 a.m. (Eastern Time) on Thursday, August 1, 2013, to discuss its second quarter 2013 results. All interested parties are welcome to participate. You can access the conference call by dialing (800) 344-6491 or (785) 830-7988 and using the conference ID 7283605 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed from the Investor Relations page of PHH’s website at www.phh.com/invest under webcasts and presentations.

An investor presentation of supplemental schedules will be available by visiting the Investor Relations page of PHH's website at www.phh.com/invest on Thursday, August 1, 2013, prior to the start of the conference call.

A replay will be available beginning shortly after the end of the call through August 15, 2013, by dialing (888) 203-1112 or (719) 457-0820 and using conference ID 7283605, or by visiting the Investor Relations page of PHH's website at www.phh.com/invest.

About PHH Corporation

Headquartered in Mount Laurel, New Jersey, PHH Corporation (PHH) is a leading provider of business process management services for the mortgage and fleet industries. Its subsidiary, PHH Mortgage, is one of the largest originators and servicers of residential mortgages in the United States1, and its subsidiary, PHH Arval, is a leading fleet management services provider in the United States and Canada. PHH is dedicated to delivering premier customer service and providing value-added solutions to its clients. For additional information about PHH and its subsidiaries, please visit the Company’s website at www.phh.com.

1 Inside Mortgage Finance, Copyright 2013

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward looking-statements are not based on historical facts but instead represent only our current beliefs regarding future events. All forward-looking statements are, by their nature, subject to risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in such forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Such statements may be identified by words such as “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.”

You should understand that forward-looking statements are not guarantees of performance or results and are preliminary in nature. You should consider the areas of risk described under the heading “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the U.S. Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in connection with any forward-looking statements that may be made by us or our businesses generally. Such periodic reports are available in the “Investors” section of our website at http://www.phh.com and are also available at http://www.sec.gov. Except for our ongoing obligations to disclose material information under the federal securities laws, applicable stock exchange listing standards and unless otherwise required by law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements or to report the occurrence or non-occurrence of anticipated or unanticipated events.

Capacity for Mortgage asset-backed debt shown above excludes $2.3 billion not drawn under uncommitted facilities, and $380 million available under committed off-balance sheet gestation facilities.

* NOTE REGARDING NON-GAAP FINANCIAL MEASURES

Core earnings or loss (pre-tax and after-tax), core earnings or loss per share, adjusted cash flow, tangible book value and tangible book value per share are financial measures that are not in accordance with GAAP. See Non-GAAP Reconciliations below for a reconciliation of these measures to the most directly comparable GAAP financial measures as required by Regulation G.

Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share involves differences from Segment profit or loss, Income or loss before income taxes, Net income or loss attributable to PHH Corporation and Basic earnings or loss per share attributable to PHH Corporation computed in accordance with GAAP. Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share should be considered as supplementary to, and not as a substitute for, Segment profit (loss), Income (loss) before income taxes, Net income (loss) attributable to PHH Corporation or Basic earnings (loss) per share attributable to PHH Corporation computed in accordance with GAAP as a measure of the Company’s financial performance.

Adjusted cash flow involves differences from Net increase or decrease in cash and cash equivalents computed in accordance with GAAP. Adjusted cash flow should be considered as supplementary to, and not as a substitute for, Net increase or decrease in cash and cash equivalents computed in accordance with GAAP as a measure of the Company’s net increase or decrease in cash and cash equivalents.

Tangible book value and tangible book value per share involve differences from Total PHH Corporation stockholders’ equity computed in accordance with GAAP. Tangible book value and tangible book value per share should be considered as supplementary to, and not as a substitute for, Total PHH Corporation stockholders’ equity computed in accordance with GAAP as a measure of the Company’s financial position.

The Company believes that these Non-GAAP Financial Measures can be useful to investors because they provide a means by which investors can evaluate the Company’s underlying key drivers and operating performance of the business, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying economic performance of the business for a given period.

The Company also believes that any meaningful analysis of the Company’s financial performance by investors requires an understanding of the factors that drive the Company’s underlying operating performance which can be obscured by significant unrealized changes in value of the Company’s mortgage servicing rights, as well as any gain or loss on derivatives that are intended to offset market-related fair value adjustments on the Company’s mortgage servicing rights, in a given period that are included in Segment profit (loss), Income (loss) before income taxes, Net income (loss) attributable to PHH Corporation and Basic earnings (loss) per share attributable to PHH Corporation in accordance with GAAP.

Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share

Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share measure the Company’s financial performance excluding unrealized changes in fair value of the Company’s mortgage servicing rights that are based upon projections of expected future cash flows and prepayments as well as realized and unrealized changes in the fair value of derivatives that are intended to offset changes in the fair value of mortgage servicing rights. The changes in fair value of mortgage servicing rights and related derivatives are highly sensitive to changes in interest rates and are dependent upon the level of current and projected interest rates at the end of each reporting period.

Value lost from actual prepayments and recurring cash flows are recorded when actual cash payments or prepayments of the underlying loans are received, and are included in core earnings based on the current fair value of the mortgage servicing rights at the time the payments are received.

The presentation of core earnings is designed to more closely align the timing of recognizing the actual value lost from prepayments in the mortgage servicing segment with the associated value created through new originations in the mortgage production segment. The Company believes that it will likely replenish most, if not all, realized value lost from changes in value from actual prepayments through new loan originations and actively manages and monitors economic replenishment rates to measure its ability to continue to do so. Therefore, management does not believe the unrealized change in value of the mortgage servicing rights is representative of the economic change in value of the business as a whole.

Core earnings metrics are used in managing the Company’s mortgage business. The Company has also designed certain management incentives based upon the achievement of core earnings targets, subject to potential adjustments that may be made at the discretion of the Human Capital and Compensation Committee of the Company’s Board of Directors.

Limitations on the use of Core Earnings

Since core earnings or loss (pre-tax and after-tax) and core earnings or loss per share measure the Company’s financial performance excluding unrealized changes in value of mortgage servicing rights, such measures may not appropriately reflect the rate of value lost on subsequent actual payments or prepayments over time. As such, core earnings or loss (pre-tax and after-tax) and core earnings or loss per share may tend to overstate operating results in a declining interest rate environment and understate operating results in a rising interest rate environment, absent the effect of any offsetting gains or losses on derivatives that are intended to offset changes in fair value on the Company’s mortgage servicing rights.

Adjusted cash flow

Adjusted cash flow measures the Company’s Net increase or decrease in cash and cash equivalents for a given period excluding changes resulting from the issuance of equity, the purchase of derivative securities related to the Company’s stock or the issuance or repayment of unsecured or other debt by PHH Corporation. The Company believes that Adjusted cash flow is a useful measure for investors because the Company’s ability to repay future unsecured debt maturities or return capital to equity holders is highly dependent on a demonstrated ability to generate cash. Accordingly, the Company believes that Adjusted cash flow may assist investors in determining the amount of cash and cash equivalents generated from business activities during a period that is available to repay unsecured debt or distribute to holders of the Company’s equity.

Adjusted cash flow can be generated through a combination of earnings, more efficient utilization of asset-backed funding facilities, or an improved working capital position. Adjusted cash flow can vary significantly between periods based upon a variety of potential factors including, but not limited to, timing related to cash collateral postings, mortgage origination volumes and margins, fleet vehicle purchases, sales, and related securitizations.

Adjusted cash flow is not a substitute for the Net increase or decrease in cash and cash equivalents for a period and is not intended to provide the Company’s total sources and uses of cash or measure its change in liquidity. As such, it is important that investors review the Company’s consolidated statement of cash flows for a more detailed understanding of the drivers of net cash provided by (used in) operating activities, investing activities, and financing activities.

Adjusted cash flow metrics are used in managing the Company’s mortgage and fleet businesses. The Company has also designed certain management incentives based upon the achievement of adjusted cash flow targets, subject to potential adjustments that may be made at the discretion of the Human Capital and Compensation Committee of the Company’s Board of Directors.

Tangible book value and Tangible book value per share

Tangible book value is a measure of Total PHH Corporation stockholders’ equity computed in accordance with GAAP excluding the value of goodwill and other intangible assets. Tangible book value per share is a measure of tangible book value, on a per share basis, using the number of shares of outstanding PHH Corporation common stock as of the applicable measurement date. Certain of the Company’s debt agreements contain indebtedness-to-tangible net worth ratio covenants, and such ratios are calculated using a measure of tangible net worth that is calculated on a basis similar to the Company’s calculation of tangible book value. Accordingly, the Company believes that tangible book value and tangible book value per share provide useful supplementary information to investors.

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Need for Mortgage Insurance Among New Residential Construction Market Eliminated by BurkeyLoan Program from Carpe Aquam Capital

Today, Carpe Aquam Capital LLC announced it will launch a BurkeyLoan program for the new residential construction market. Expanding on its trademarked, The More Affordable Mortgage, the program will eliminate the need for mortgage insurance and dramatically increase buying power for consumers with good credit.

The new residential construction market is sensitive to changes that increase monthly mortgage payments. In the face of rising interest rates the combination of BurkeyLoan structure and elimination of the mortgage insurance premium can increase homeowner buying power upwards of 25% while maintaining and in some cases reducing lender/investor exposure. The program will be available to banks and their builder customers in the new construction market.

The BurkeyLoan is a method of separating the risk characteristics of a loan into transparent and distinguishable tiers based on LTV that investors buy. It differs from pooling, the current process of mortgage securitization, through which all loan tiers and risk are aggregated. The BurkeyLoan was originally developed as a residential mortgage loan solution that enabled lenders to refinance negative equity mortgages and reduce monthly payments, often by as much as fifty percent.

Carpe Aquam Capital LLC is a financial service company that is committed to transforming the mortgage market and building a clear path to a new housing finance system. The Company does not directly originate loans from consumers or non-risk intermediaries. The BurkeyLoan program is only available to state and federal governments, banks chartered by them and select financial institutions. BurkeyLoan and The More Affordable Mortgage are registered trademarks of Carpe Aquam Capital LLC.

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