PHH CORPORATION (NYSE:PHH) Files An 8-K Other EventsItem 8.01. Other Events.
Third Closing of PHH Home Loans Asset Sales
On October23, 2017, PHH Corporation (the “Company”) closed the third sale of certain assets of PHH Home Loans, LLC (“PHH Home Loans”) and RMR Financial, LLC (“RMR”), a wholly-owned subsidiary of PHH Home Loans, to Guaranteed Rate Affinity, LLC (“GRA”), a new joint venture formed by subsidiaries of Realogy Corporation (“Realogy”) and Guaranteed Rate,Inc., to the asset purchase agreement dated as of February15, 2017, by and among the Company, PHH Home Loans, RMR and GRA. PHH Home Loans is a joint venture between the Company and Realogy, which provides mortgage origination services for brokers associated with brokerages owned or franchised by Realogy.
The purchase price paid by GRA for the third sale was $14 million (which represents 20% of the total purchase price for the asset sales) and the Company expects to recognize $7 million of pre-tax gain from the sale, which is net of the portion of the proceeds attributable to Realogy’s interest in PHH Home Loans. This third asset sale closing included assets related to PHH Home Loans’ Western Region operations.
The remaining asset sales are expected to be effected over two additional closings, with 20% of the purchase price to be paid at each closing. Each additional closing for the remaining asset sales is subject to the satisfaction or waiver of the conditions applicable to such closing, including receipt of certain specified licensing approvals. There can be no assurance that the sales of the remaining assets of PHH Home Loans will close as contemplated, if at all. The Company and GRA are parties to the above-referenced asset purchase agreement. There are no other pre-existing relationships between GRA and the Company.
As previously disclosed, in connection with the PHH Home Loans asset sales, the Company entered into an agreement to purchase Realogy’s 49.9% ownership interests in PHH Home Loans, for an amount equal to Realogy’s interest in the residual equity of PHH Home Loans after the final closing of the asset sale transactions. At the completion of the above described transactions, the Company expects to monetize its net investment in the PHH Home Loans legal entity. If all of these actions are completed, the Company estimates it will receive total proceeds of approximately $92 million from the asset sales and subsequent monetization of the Company’s net investment in PHH Home Loans.