##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                     to
 Commission File No. 1-7797
 
 PHH CORPORATION
 (Exact name of registrant as specified in its charter)
 MARYLAND(State or other jurisdiction of 
incorporation or organization)
    
    52-0551284(I.R.S. Employer
Identification Number)3000 LEADENHALL ROAD 
MT. LAUREL, NEW JERSEY(Address of principal executive offices)
    
    08054(Zip Code)
 856-917-1744  (Registrants telephone number, including area code)
 
 þ o
 þ o
 þ o o o
 o þ




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TABLE OF CONTENTS
 PageCautionary Note Regarding Forward-Looking Statements
    
    
    2PART IItem 1.
    
    Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    36Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    67Item 4.
    
    Controls and Procedures
    
    
    68PART IIItem 1.
    
    Legal Proceedings
    
    
    69Item 1A.
    
    Risk Factors
    
    
    69Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    69Item 3.
    
    Defaults Upon Senior Securities
    
    
    69Item 4.
    
    (Removed and Reserved)
    
    
    69Item 5.
    
    Other Information
    
    
    69Item 6.
    
    Exhibits
    
    
    69Signatures
    
    
    70Exhibit Index
    
    
    71EX-31.1EX-31.2EX-32.1EX-32.2




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Except as expressly indicated or unless the context otherwise requires, the Company, PHH, we,
our or us means PHH Corporation, a Maryland corporation, and its subsidiaries.
 
 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  -
 §
    
    the impact of the adoption of recently issued accounting pronouncements on our financial
statements;§
    
    the impact of the risk retention requirements and other provisions of the Dodd-Frank Act;§
    
    future origination volumes and loan margins in the mortgage industry;§
    
    our expectation of reinsurance losses and associated reserves; and§
    
    mortgage repurchase and indemnification requests and associated reserves and provisions.
  §
    
    the effects of continued market volatility or continued economic decline on the
availability and cost of our financing arrangements and the value of our assets;
 §
    
    the effects of a continued decline in the volume of U.S. home sales and home prices, due
to adverse economic changes or otherwise, on our Mortgage Production and Mortgage Servicing
segments;
 §
    
    the effects of changes in current interest rates on our business and our financing costs;
 §
    
    our decisions regarding the use of derivatives related to mortgage servicing rights, if
any, and the resulting potential volatility of the results of operations of our Mortgage
Servicing segment;
 §
    
    the effects of increases in our actual and projected repurchases of, indemnification
given in respect of, or related losses associated with, sold mortgage loans for which we
have provided representations and warranties or other contractual recourse to purchasers and
insurers of such loans, including increases in our loss severity and reserves associated
with such loans;
 §
    
    the effects of reinsurance claims in excess of projected levels and in excess of
reinsurance premiums we are entitled to receive or amounts currently held in trust to pay
such claims;
 §
    
    the effects of any significant adverse changes in the underwriting criteria or existence
or programs of government-sponsored entities, including Fannie Mae and Freddie Mac,
including any changes caused by the Dodd-Frank Wall Street Reform and Consumer Protection
Act;
 §
    
    the effects of any inquiries and investigations of foreclosure procedures or other
servicing activities by attorney generals of certain states and the U.S. Department of
Justice, any litigation related to our mortgage servicing activities, or any related fines, penalties and increased costs;
 2




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##### Table of Contents



§
    
    the ability to maintain our status as a government sponsored entity-approved seller and
servicer, including the ability to continue to comply with the respective selling and
servicing guides, including any changes caused by the Dodd-Frank Act;
 §
    
    the effects of any changes to the servicing compensation structure for mortgage servicers
pursuant to the programs of government sponsored-entities;
 §
    
    changes in laws and regulations, including changes in mortgage- and real estate-related
laws and regulations (including changes caused by the Dodd-Frank Act), status of government
sponsored-entities and state, federal and foreign tax laws and accounting standards;
 §
    
    the effects of the insolvency of any of the counterparties to our significant customer
contracts or financing arrangements or the inability or unwillingness of such counterparties
to perform their respective obligations under, or to renew on terms favorable to us, such
contracts, or our ability to continue to comply with the terms of our significant customer
contracts, including service level agreements;
 §
    
    the effects of competition in our existing and potential future lines of business,
including the impact of consolidation within the industries in which we operate and
competitors with greater financial resources and broader product lines;
 §
    
    the ability to obtain financing (including refinancing existing indebtedness) on
acceptable terms, if at all, to finance our operations or growth strategy, to operate within
the limitations imposed by our financing arrangements and to maintain the amount of cash
required to service our indebtedness;
 §
    
    the ability to maintain our relationships with our existing clients and to establish
relationships with new clients;
 §
    
    the ability to attract and retain key employees;
 §
    
    a deterioration in the performance of assets held as collateral for secured borrowings;
 §
    
    the impact of the failure to maintain our credit ratings;
 §
    
    any failure to comply with covenants under our financing arrangements;
 §
    
    the effects of the consolidation of financial institutions and the related impact on the
availability of credit; and
 §
    
    the impact of
a downgrade in the U.S. debt rating, a failure of the U.S. government to raise the debt ceiling or any
actions taken or to be taken by the U.S. Department of the Treasury and the
Board of Governors of the Federal Reserve System on the credit markets and the U.S. economy.
  3




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PART I  FINANCIAL INFORMATION
 
 
 Item 1.
    
    Financial Statements
 
 PHH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share data)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010RevenuesMortgage fees
    
    $
    56
    
    
    $
    66
    
    
    $
    142
    
    
    $
    118Fleet management fees
    
    
    44
    
    
    
    40
    
    
    
    86
    
    
    
    78Net fee income
    
    
    100
    
    
    
    106
    
    
    
    228
    
    
    
    196Fleet lease income
    
    
    343
    
    
    
    349
    
    
    
    680
    
    
    
    688Gain on mortgage loans, net
    
    
    119
    
    
    
    139
    
    
    
    178
    
    
    
    244Mortgage interest income
    
    
    23
    
    
    
    22
    
    
    
    58
    
    
    
    40Mortgage interest expense
    
    
    (48
    )
    
    
    (41
    )
    
    
    (102
    )
    
    
    (79
    )Mortgage net finance expense
    
    
    (25
    )
    
    
    (19
    )
    
    
    (44
    )
    
    
    (39
    )Loan servicing income
    
    
    117
    
    
    
    97
    
    
    
    225
    
    
    
    198Change in fair value of mortgage servicing rights
    
    
    (159
    )
    
    
    (320
    )
    
    
    (191
    )
    
    
    (372
    )Net loan servicing (loss) income
    
    
    (42
    )
    
    
    (223
    )
    
    
    34
    
    
    
    (174
    )Other income
    
    
    21
    
    
    
    19
    
    
    
    105
    
    
    
    33Net revenues
    
    
    516
    
    
    
    371
    
    
    
    1,181
    
    
    
    948ExpensesSalaries and related expenses
    
    
    117
    
    
    
    119
    
    
    
    251
    
    
    
    233Occupancy and other office expenses
    
    
    15
    
    
    
    14
    
    
    
    30
    
    
    
    29Depreciation on operating leases
    
    
    309
    
    
    
    306
    
    
    
    615
    
    
    
    614Fleet interest expense
    
    
    21
    
    
    
    25
    
    
    
    41
    
    
    
    48Other depreciation and amortization
    
    
    6
    
    
    
    5
    
    
    
    12
    
    
    
    11Other operating expenses
    
    
    114
    
    
    
    117
    
    
    
    213
    
    
    
    209Total expenses
    
    
    582
    
    
    
    586
    
    
    
    1,162
    
    
    
    1,144(Loss) income before income taxes
    
    
    (66
    )
    
    
    (215
    )
    
    
    19
    
    
    
    (196
    )Income tax (benefit) expense
    
    
    (29
    )
    
    
    (89
    )
    
    
    4
    
    
    
    (78
    )Net (loss) income
    
    
    (37
    )
    
    
    (126
    )
    
    
    15
    
    
    
    (118
    )Less: net income attributable to noncontrolling interest
    
    
    4
    
    
    
    7
    
    
    
    7
    
    
    
    7Net (loss) income attributable to PHH Corporation
    
    $
    (41
    )
    
    $
    (133
    )
    
    $
    8
    
    
    $
    (125
    )Basic (loss) earnings per share attributable to PHH Corporation
    
    $
    (0.73
    )
    
    $
    (2.40
    )
    
    $
    0.14
    
    
    $
    (2.26
    )Diluted (loss) earnings per share attributable to PHH Corporation
    
    $
    (0.73
    )
    
    $
    (2.40
    )
    
    $
    0.14
    
    
    $
    (2.26
    )
  4




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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share data)
 June 30,
    
    
    December 31,2011
    
    
    2010ASSETSCash and cash equivalents
    
    $
    212
    
    
    $
    195Restricted cash, cash equivalents and investments (including
$241 and $254 of available-for-sale securities at fair value)
    
    
    535
    
    
    
    531Mortgage loans held for sale
    
    
    1,707
    
    
    
    4,329Accounts receivable, net
    
    
    672
    
    
    
    573Net investment in fleet leases
    
    
    3,526
    
    
    
    3,492Mortgage servicing rights
    
    
    1,508
    
    
    
    1,442Property, plant and equipment, net
    
    
    60
    
    
    
    46Goodwill
    
    
    25
    
    
    
    25Other assets
    
    
    504
    
    
    
    637Total assets(1)
    
    $
    8,749
    
    
    $
    11,270LIABILITIES AND EQUITYAccounts payable and accrued expenses
    
    $
    452
    
    
    $
    521Debt
    
    
    5,697
    
    
    
    8,085Deferred taxes
    
    
    722
    
    
    
    728Other liabilities
    
    
    280
    
    
    
    358Total liabilities(1)
    
    
    7,151
    
    
    
    9,692Commitments and contingencies (Note 10)
    
    
    
    
    
    
    EQUITYPreferred stock, $0.01 par value; 1,090,000 shares authorized;
none issued or outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value; 273,910,000 shares authorized;
56,330,713 shares issued and outstanding at June 30, 2011;
55,699,218 shares issued and outstanding at December 31, 2010
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    1,079
    
    
    
    1,069Retained earnings
    
    
    473
    
    
    
    465Accumulated other comprehensive income
    
    
    36
    
    
    
    29Total PHH Corporation stockholders equity
    
    
    1,589
    
    
    
    1,564Noncontrolling interest
    
    
    9
    
    
    
    14Total equity
    
    
    1,598
    
    
    
    1,578Total liabilities and equity
    
    $
    8,749
    
    
    $
    11,270
  Continued.
 5




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CONDENSED CONSOLIDATED BALANCE SHEETS(Continued)
(Unaudited)
(In millions)
 
 (1)
    

    The Condensed Consolidated Balance Sheets include assets of variable interest

entities which can be used only to settle their obligations and liabilities of variable
interest entities which creditors or beneficial interest holders do not have recourse to PHH
Corporation and subsidiaries as follows: June 30,
    
    
    December 31,2011
    
    
    2010ASSETSCash and cash equivalents
    
    $
    36
    
    
    $
    47Restricted cash, cash equivalents and investments
    
    
    262
    
    
    
    241Mortgage loans held for sale
    
    
    364
    
    
    
    389Accounts receivable, net
    
    
    79
    
    
    
    64Net investment in fleet leases
    
    
    3,311
    
    
    
    3,356Property, plant and equipment, net
    
    
    1
    
    
    
    1Other assets
    
    
    57
    
    
    
    82Total assets
    
    $
    4,110
    
    
    $
    4,180LIABILITIESAccounts payable and accrued expenses
    
    $
    21
    
    
    $
    38Debt
    
    
    3,300
    
    
    
    3,367Other liabilities
    
    
    5
    
    
    
    5Total liabilities
    
    $
    3,326
    
    
    $
    3,410
  6




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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In millions, except share data)
 Six Months Ended June 30, 2011
 PHH Corporation StockholdersAccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Noncontrolling
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Interest
    
    
    EquityBalance at December 31, 2010
    
    
    55,699,218
    
    
    $
    1
    
    
    $
    1,069
    
    
    $
    465
    
    
    $
    29
    
    
    $
    14
    
    
    $
    1,578Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    7Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    Unrealized gains on available-for-sale
securities, net of income taxes of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    7
    
    
    
    7
    
    
    
    22Distributions to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Stock issued under share-based payment
plans, including excess tax benefit of
$0
    
    
    631,495
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Balance at June 30, 2011
    
    
    56,330,713
    
    
    $
    1
    
    
    $
    1,079
    
    
    $
    473
    
    
    $
    36
    
    
    $
    9
    
    
    $
    1,598Six Months Ended June 30, 2010PHH Corporation StockholdersAccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Noncontrolling
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Interest
    
    
    EquityBalance at December 31, 2009
    
    
    54,774,639
    
    
    $
    1
    
    
    $
    1,056
    
    
    $
    416
    
    
    $
    19
    
    
    $
    12
    
    
    $
    1,504Comprehensive (loss) income:Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    
    
    
    
    7Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    Unrealized gains on available-for-sale
securities, net of income taxes of $1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Total comprehensive (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    (1
    )
    
    
    7
    
    
    
    (119
    )Distributions to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Stock issued under share-based payment
plans, including excess tax benefit of
$0
    
    
    717,585
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Balance at June 30, 2010
    
    
    55,492,224
    
    
    $
    1
    
    
    $
    1,064
    
    
    $
    291
    
    
    $
    18
    
    
    $
    14
    
    
    $
    1,388
  7




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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
 Six MonthsEnded June 30,2011
    
    
    2010Cash flows from operating activities:Net income (loss)
    
    $
    15
    
    
    $
    (118
    )Adjustments to reconcile Net income (loss) to net cash provided by (used in) operating activities:Capitalization of originated mortgage servicing rights
    
    
    (257
    )
    
    
    (195
    )Net unrealized loss on mortgage servicing rights
    
    
    191
    
    
    
    372Vehicle depreciation
    
    
    615
    
    
    
    614Other depreciation and amortization
    
    
    12
    
    
    
    11Origination of mortgage loans held for sale
    
    
    (17,376
    )
    
    
    (13,649
    )Proceeds on sale of and payments from mortgage loans held for sale
    
    
    20,292
    
    
    
    13,001Net gain on interest rate lock commitments, mortgage loans
held for sale and related derivatives
    
    
    (102
    )
    
    
    (203
    )Deferred income tax benefit
    
    
    (6
    )
    
    
    (85
    )Other adjustments and changes in other assets and liabilities, net
    
    
    (285
    )
    
    
    55Net cash provided by (used in) operating activities
    
    
    3,099
    
    
    
    (197
    )Cash flows from investing activities:Investment in vehicles
    
    
    (819
    )
    
    
    (797
    )Proceeds on sale of investment vehicles
    
    
    169
    
    
    
    192Proceeds on sale of mortgage servicing rights
    
    
    
    
    
    
    5Purchases of property, plant and equipment
    
    
    (9
    )
    
    
    (6
    )Purchases of restricted investments
    
    
    (109
    )
    
    
    (288
    )Proceeds from sales and maturities of restricted investments
    
    
    122
    
    
    
    48(Increase) decrease in Restricted cash and cash equivalents
    
    
    (14
    )
    
    
    278Other, net
    
    
    22
    
    
    
    6Net cash used in investing activities
    
    
    (638
    )
    
    
    (562
    )Cash flows from financing activities:Proceeds from borrowings
    
    
    27,142
    
    
    
    22,125Principal payments on borrowings
    
    
    (29,564
    )
    
    
    (21,301
    )Issuances of Company Common Stock
    
    
    8
    
    
    
    6Cash paid for debt issuance costs
    
    
    (14
    )
    
    
    (29
    )Other, net
    
    
    (12
    )
    
    
    (8
    )Net cash (used in) provided by financing activities
    
    
    (2,440
    )
    
    
    793Effect of changes in exchange rates on Cash and cash equivalents
    
    
    (4
    )
    
    
    Net increase in Cash and cash equivalents
    
    
    17
    
    
    
    34Cash and cash equivalents at beginning of period
    
    
    195
    
    
    
    150Cash and cash equivalents at end of period
    
    $
    212
    
    
    $
    184
  8




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1.  Summary of Significant Accounting Policies
 Basis of Presentation
  §
    
    Mortgage Production provides mortgage loan origination services and sells mortgage
loans.§
    
    Mortgage Servicing performs servicing activities for originated and purchased loans.§
    
    Fleet Management Services provides commercial fleet management services.
      9




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Changes In Accounting Policies
 Goodwill.
 Business Combinations.
 Revenue Recognition.
 Recently Issued Accounting Pronouncements
 Receivables.
 Transfers and Servicing.
 10




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurement.
 Comprehensive Income.
 2.  (Loss) Earnings Per Share
   11




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions, except share and per share data)Net (loss) income attributable to PHH
Corporation
    
    $
    (41
    )
    
    $
    (133
    )
    
    $
    8
    
    
    $
    (125
    )Weighted-average common shares outstanding 
basic
    
    
    56,374,448
    
    
    
    55,547,650
    
    
    
    56,242,221
    
    
    
    55,293,111Effect of potentially dilutive securities:Share-based payment arrangements(1)
    
    
    
    
    
    
    
    
    
    
    619,926
    
    
    
    Conversion of debt securities(2)
    
    
    
    
    
    
    
    
    
    
    897,245
    
    
    
    Weighted-average common shares outstanding 
diluted
    
    
    56,374,448
    
    
    
    55,547,650
    
    
    
    57,759,392
    
    
    
    55,293,111Basic (loss) earnings per share attributable
to PHH Corporation
    
    $
    (0.73
    )
    
    $
    (2.40
    )
    
    $
    0.14
    
    
    $
    (2.26
    )Diluted (loss) earnings per share attributable
to PHH Corporation
    
    $
    (0.73
    )
    
    $
    (2.40
    )
    
    $
    0.14
    
    
    $
    (2.26
    )
 
 (1)
    
    Represents incremental shares from restricted stock units and stock options.(2)
    
    Represents assumed conversion of the 2012 Convertible notes. 3.  Restricted Cash, Cash Equivalents and Investments
  June 30,
    
    
    December 31,2011
    
    
    2010(In millions)Restricted cash and cash equivalents
    
    $
    294
    
    
    $
    277Restricted investments, at fair value
    
    
    241
    
    
    
    254Restricted cash, cash equivalents and investments
    
    $
    535
    
    
    $
    531
  June 30, 2011Weighted-averageAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    Unrealized
    
    
    remainingCost
    
    
    Value
    
    
    Gains
    
    
    Losses
    
    
    maturityRestricted
investments classified as available-for-sale:
    
    (In millions)Corporate securities
    
    $
    57
    
    
    $
    58
    
    
    $
    1
    
    
    $
    
    
    
    29 mos.Agency securities (1)
    
    
    111
    
    
    
    112
    
    
    
    1
    
    
    
    
    
    
    22 mos.Government securities
    
    
    71
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    25 mos.Total available-for-sale securities
    
    $
    239
    
    
    $
    241
    
    
    $
    2
    
    
    $
    
    
    
    25 mos.
 12




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010Weighted-averageAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    Unrealized
    
    
    remainingCost
    
    
    Value
    
    
    Gains
    
    
    Losses
    
    
    maturityRestricted investments classified as available-for-sale:
    
    (In millions)Corporate securities
    
    $
    71
    
    
    $
    71
    
    
    $
    
    
    
    $
    
    
    
    30 mos.Agency securities (1)
    
    
    106
    
    
    
    107
    
    
    
    1
    
    
    
    
    
    
    26 mos.Government securities
    
    
    76
    
    
    
    76
    
    
    
    
    
    
    
    
    
    
    28 mos.Total available-for-sale securities
    
    $
    253
    
    
    $
    254
    
    
    $
    1
    
    
    $
    
    
    
    27 mos.
 
 (1)
    
    Represents bonds and notes issued by various agencies including, but not limited
to, Fannie Mae, Freddie Mac and Federal Home Loan Banks.  4.  Transfers and Servicing of Mortgage Loans
    Six MonthsEnded June 30,2011
    
    
    2010(In millions)Balance, beginning of period
    
    $
    134,753
    
    
    $
    127,700Additions
    
    
    18,649
    
    
    
    12,381Payoffs, sales and curtailments
    
    
    (10,966
    )
    
    
    (9,984
    )Balance, end of period
    
    $
    142,436
    
    
    $
    130,097
 13




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Six MonthsEnded June 30,2011
    
    
    2010(In millions)Mortgage Servicing Rights:Balance, beginning of period
    
    $
    1,442
    
    
    $
    1,413Additions
    
    
    257
    
    
    
    195Changes in fair value due to:Realization of expected cash flows
    
    
    (89
    )
    
    
    (110
    )Changes in market inputs or assumptions used in the valuation model
    
    
    (102
    )
    
    
    (262
    )Balance, end of period
    
    $
    1,508
    
    
    $
    1,236
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Net service fee revenue
    
    $
    110
    
    
    $
    99

    
    $
    216
    
    
    $
    196Late fees
    
    
    4
    
    
    
    5

    
    
    10
    
    
    
    10Other ancillary servicing revenue
    
    
    8
    
    
    
    8

    
    
    19
    
    
    
    18
   Six MonthsEnded June 30,2011
    
    
    2010(In millions)Proceeds from new loan sales or securitizations
    
    $
    18,818
    
    
    $
    12,599Servicing fees received (1)
    
    
    216
    
    
    
    196Other cash flows on retained interests (2)
    
    
    
    
    
    
    1Purchases of delinquent or foreclosed loans (3)
    
    
    (20
    )
    
    
    (30
    )Servicing advances (4)
    
    
    (884
    )
    
    
    (846
    )Repayment of servicing advances
    
    
    846
    
    
    
    829
 
 (1)
    
    Excludes late fees and other ancillary servicing revenue.(2)
    
    Represents cash flows received on retained interests other than servicing fees.(3)
    
    Excludes indemnification payments to investors and insurers of the related mortgage
loans.(4)
    
    As of June 30, 2011 and December 31, 2010, outstanding servicing advance receivables
of $218 million and $187 million, respectively, were included in Accounts receivable, net.   14




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 5.  Derivatives
  
    
    Forward delivery commitmentsRelated to interest rate and price risk for Mortgage loans
held for sale and interest rate lock commitments
    
    Option contracts Related to interest rate and price risk for interest rate lock
commitments
    
    Interest rate contractsRelated to interest rate risk for variable-rate debt
arrangements and fixed-rate leases
    
    Convertible note-related agreementsRelated to the issuance of the 2014 Convertible notes
    
    Foreign exchange contractsRelated to exposure to currency fluctuations that would
impact our investment in, or borrowings related to, our Canadian operations
  June 30, 2011
    
    
    December 31, 2010Asset
    
    
    Liability
    
    
    
    
    
    
    Asset
    
    
    LiabilityDerivatives
    
    
    Derivatives
    
    
    Notional
    
    
    Derivatives
    
    
    Derivatives
    
    
    Notional(In millions)Interest rate lock commitments
    
    $
    52
    
    
    $
    4
    
    
    $
    5,076
    
    
    $
    42
    
    
    $
    46
    
    
    $
    7,328Forward delivery commitments:(1)Not subject to master netting arrangements
    
    
    13
    
    
    
    18
    
    
    
    4,061
    
    
    
    61
    
    
    
    14
    
    
    
    4,703Subject to master netting
arrangements(2)
    
    
    30
    
    
    
    34
    
    
    
    7,716
    
    
    
    248
    
    
    
    68
    
    
    
    16,438Interest rate contracts
    
    
    2
    
    
    
    
    
    
    
    552
    
    
    
    4
    
    
    
    
    
    
    
    653Option contracts
    
    
    3
    
    
    
    
    
    
    
    1,025
    
    
    
    
    
    
    
    
    
    
    
    Convertible note-related agreements (3)
    
    
    31
    
    
    
    31
    
    
    
    
    
    
    
    54
    
    
    
    54
    
    
    
    Foreign exchange contracts
    
    
    
    
    
    
    1
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    30Gross derivative assets and liabilities
    
    
    131
    
    
    
    88
    
    
    
    
    
    
    
    409
    
    
    
    182Netting adjustments:Offsetting receivables / payables
    
    
    (32
    )
    
    
    (32
    )
    
    
    
    
    
    
    (241
    )
    
    
    (241
    )Cash collateral paid / received
    
    
    9
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    190Net fair value of derivative instruments
    
    $
    108
    
    
    $
    55
    
    
    
    
    
    
    $
    168
    
    
    $
    131
 
 (1)
    
    The net notional amount of Forward delivery commitments was $5.7 billion and
$10.3 billion as of June 30, 2011 and December 31, 2010, respectively. 15




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 (2)
    
    Represents derivative instruments that are executed with the same
counterparties and subject to master netting arrangements. Forward delivery commitments
subject to netting shown above were presented in the Balance sheets as follows: June 30, 2011
    
    
    December 31, 2010Asset
    
    
    Liability
    
    
    Asset
    
    
    LiabilityDerivatives
    
    
    Derivatives
    
    
    Derivatives
    
    
    Derivatives(In millions)Other Assets
    
    $
    15
    
    
    $
    17
    
    
    $
    10
    
    
    $
    3Other Liabilities
    
    
    15
    
    
    
    17
    
    
    
    238
    
    
    
    65Total
    
    $
    30
    
    
    $
    34
    
    
    $
    248
    
    
    $
    68
 
 (3)
    
    The notional amount of derivative instruments related to the issuance of
the 2014 Convertible notes is 9.6881 million shares of the Companys Common stock as of June
30, 2011 and December 31, 2010.  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Gain on mortgage loans, net:IRLCs
    
    $
    249
    
    
    $
    379
    
    
    $
    433
    
    
    $
    581Option contracts
    
    
    (4
    )
    
    
    (12
    )
    
    
    (7
    )
    
    
    (12
    )Forward delivery commitments
    
    
    (100
    )
    
    
    (189
    )
    
    
    (90
    )
    
    
    (246
    )Fleet interest expense:Interest rate contracts
    
    
    (1
    )
    
    
    (3
    )
    
    
    (1
    )
    
    
    (6
    )Foreign exchange contracts
    
    
    (3
    )
    
    
    6
    
    
    
    (5
    )
    
    
    5Total
    
    $
    141
    
    
    $
    181
    
    
    $
    330
    
    
    $
    322
 6.  Vehicle Leasing Activities
  June 30,
    
    
    December 31,2011
    
    
    2010Operating Leases:
    
    (In millions)Vehicles under open-end operating leases
    
    $
    8,110
    
    
    $
    7,601Vehicles under closed-end operating leases
    
    
    189
    
    
    
    208Vehicles under operating leases
    
    
    8,299
    
    
    
    7,809Less: Accumulated depreciation
    
    
    (5,093
    )
    
    
    (4,671
    )Net investment in operating leases
    
    
    3,206
    
    
    
    3,138Direct Financing Leases:Lease payments receivable
    
    
    92
    
    
    
    106Less: Unearned income
    
    
    (2
    )
    
    
    (3
    )Net investment in direct financing leases
    
    
    90
    
    
    
    103Off-Lease Vehicles:Vehicles not yet subject to a lease
    
    
    221
    
    
    
    248Vehicles held for sale
    
    
    17
    
    
    
    7Less: Accumulated depreciation
    
    
    (8
    )
    
    
    (4
    )Net investment in off-lease vehicles
    
    
    230
    
    
    
    251Net investment in fleet leases
    
    $
    3,526
    
    
    $
    3,492
 16




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 7.  Debt and Borrowing Arrangements
  June 30, 2011
    
    December 31, 2010Wt. Avg-
    
    
    
    
    
    Wt. Avg-Interest
    
    
    
    
    
    InterestBalance
    
    
    Rate(1)
    
    Balance
    
    
    Rate(1)(In millions)Term notes, in amortization
    
    $
    1,627
    
    
    2.0%
    
    $
    1,167
    
    
    2.2%Term notes, in revolving period
    
    
    92
    
    
    2.1%
    
    
    989
    
    
    2.0%Variable-funding notes
    
    
    1,260
    
    
    1.6%
    
    
    871
    
    
    1.9%Other
    
    
    36
    
    
    5.1%
    
    
    39
    
    
    5.1%Total Vehicle Management Asset-Backed Debt
    
    
    3,015
    
    
    
    
    
    3,066Committed warehouse facilities
    
    
    1,352
    
    
    2.0%
    
    
    2,419
    
    
    2.1%Uncommitted warehouse facilities
    
    
    
    
    
    
    
    
    1,290
    
    
    1.2%Servicing advance facility
    
    
    76
    
    
    2.7%
    
    
    68
    
    
    2.8%Total Mortgage Asset-Backed Debt
    
    
    1,428
    
    
    
    
    
    3,777Term notes
    
    
    781
    
    
    8.1%
    
    
    782
    
    
    8.1%Convertible notes
    
    
    447
    
    
    4.0%
    
    
    430
    
    
    4.0%Credit facilities
    
    
    
    
    
    
    
    
    
    
    
    Total Unsecured Debt
    
    
    1,228
    
    
    
    
    
    1,212Mortgage Loan Securitization Debt Certificates,
at Fair Value (2)
    
    
    26
    
    
    7.0%
    
    
    30
    
    
    7.0%Total
    
    $
    5,697
    
    
    
    
    $
    8,085
 
 (1)
    
    Represents the weighted-average stated interest rate of the
facilities as of the respective date, which may be different from the effective rate
due to the amortization of premiums, discounts, and issuance costs.  Facilities are variable-rate, except for the Term
notes, Convertible notes, and Mortgage Loan Securitization Debt Certificates which are
fixed-rate.(2)
    
    Cash flows of securitized mortgage loans support payment of the debt certificates
and creditors of the securitization trust do not have recourse to the Company.  Vehicle
    
    
    MortgageAsset-Backed
    
    
    Asset-BackedDebt
    
    
    Debt(In millions)Restricted cash and cash equivalents
    
    $
    262
    
    
    $
    9Accounts receivable
    
    
    74
    
    
    
    90Mortgage loans held for sale
    
    
    
    
    
    
    1,390Net investment in fleet leases
    
    
    3,264
    
    
    
    Total
    
    $
    3,600
    
    
    $
    1,489
 17




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Vehicle
    
    
    Mortgage
    
    
    
    
    
    
    Mortgage LoanAsset-
    
    
    Asset-
    
    
    
    
    
    
    SecuritizationBacked
    
    
    Backed
    
    
    Unsecured
    
    
    DebtDebt(1)
    
    
    Debt
    
    
    Debt
    
    
    Certificates
    
    
    Total(In millions)Within one year
    
    $
    939
    
    
    $
    1,428
    
    
    $
    250
    
    
    $
    8
    
    
    $
    2,625Between one and two years
    
    
    862
    
    
    
    
    
    
    
    420
    
    
    
    7
    
    
    
    1,289Between two and three years
    
    
    712
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    717Between three and four years
    
    
    426
    
    
    
    
    
    
    
    250
    
    
    
    5
    
    
    
    681Between four and five years
    
    
    81
    
    
    
    
    
    
    
    350
    
    
    
    3
    
    
    
    434Thereafter
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8$
    3,020
    
    
    $
    1,428
    
    
    $
    1,278
    
    
    $
    28
    
    
    $
    5,754
 
 (1)
    
    Maturities of vehicle management asset-backed notes, a portion of which are
amortizing in accordance with their terms, represent estimated payments based on the expected
cash inflows related to the securitized vehicle leases and related assets.  Utilized
    
    
    AvailableCapacity
    
    
    Capacity
    
    
    Capacity(In millions)Vehicle Management Asset-Backed Debt:Term notes, in revolving period
    
    $
    92
    
    
    $
    92
    
    
    $
    Variable-funding notes
    
    
    1,511
    
    
    
    1,260
    
    
    
    251Mortgage Asset-Backed Debt:Committed warehouse facilities
    
    
    2,535
    
    
    
    1,352
    
    
    
    1,183Servicing advance facility
    
    
    120
    
    
    
    76
    
    
    
    44Unsecured Committed Credit Facilities(1)
    
    
    530
    
    
    
    16
    
    
    
    514
 
 (1)
    
    Utilized capacity reflects $16 million of letters of credit issued under the
Amended Credit Facility, which are not included in Debt in the Condensed Consolidated Balance
Sheet.   Vehicle Management Asset-Backed Debt
  18




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Term Notes
   Variable-funding Notes
   Mortgage Asset-Backed Debt
  Committed Facilities
   19




---



##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Uncommitted Facilities
   Servicing Advance Facility
  Unsecured Debt
 Term Notes
  Credit Facilities
   Convertible Notes
   20




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Debt Covenants
    8. Income Taxes
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)State and local income taxes, net of federal tax benefits
    
    $
    (4
    )
    
    $
    (13
    )
    
    $
    1
    
    
    $
    (12
    )Liabilities for income tax contingencies
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    1Changes in valuation allowance
    
    
    2
    
    
    
    3
    
    
    
    6
    
    
    
    5Noncontrolling interest (1)
    
    
    (2
    )
    
    
    (3
    )
    
    
    (3
    )
    
    
    (3
    )
 
 (1)

    Represents Realogy Corporations portion of income taxes related to the income
or loss attributable to PHH Home Loans. State and local income taxes, net of federal tax benefits.
 Liabilities for income tax contingencies.
 21




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Changes in valuation allowance.
 Noncontrolling interest.
 9. Credit Risk
  
    
    Consumer credit riskthrough mortgage banking activities as a result of originating and
servicing residential mortgage loans
    
    Commercial credit riskthrough fleet management and leasing activities
    
    Counterparty credit riskthrough derivative transactions, sales agreements and various
mortgage loan origination and servicing agreements
 Consumer Credit Risk
   June 30,
    
    
    December 31,2011
    
    
    2010Loan Servicing Portfolio Composition:
    
    (In millions)Owned
    
    $
    144,615
    
    
    $
    140,160Subserviced
    
    
    29,036
    
    
    
    25,915Total servicing portfolio
    
    $
    173,651
    
    
    $
    166,075Conventional loans
    
    $
    140,198
    
    
    $
    136,261Government loans
    
    
    26,810
    
    
    
    23,100Home equity lines of credit
    
    
    6,643
    
    
    
    6,714Total servicing portfolio
    
    $
    173,651
    
    
    $
    166,075Weighted-average interest rate
    
    
    4.8%
    
    
    
    4.9%
 22




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2011
    

    
    December 31, 2010Number

    
    
    Unpaid
    
    
    Number
    
    
    UnpaidPortfolio Delinquency(1)
    
    
    of Loans
    
    
    Balance
    
    
    of Loans
    
    
    Balance30 days
    
    
    2.17
    %
    
    
    1.82
    %
    
    
    2.36
    %
    
    
    2.01
    %60 days
    
    
    0.53
    %
    
    
    0.47
    %
    
    
    0.67
    %
    
    
    0.60
    %90 or more days
    
    
    0.95
    %
    
    
    0.93
    %
    
    
    1.21
    %
    
    
    1.27
    %Total delinquency
    
    
    3.65
    %
    
    
    3.22
    %
    
    
    4.24
    %
    
    
    3.88
    %Foreclosure/real estate owned (2)
    
    
    2.06
    %
    
    
    2.13
    %
    
    
    2.30
    %
    
    
    2.37
    %
 
 (1)
    
    Represents the loan servicing portfolio delinquencies as a percentage of the
total number of loans and the total unpaid balance of the portfolio.(2)
    
    As of June 30, 2011 and December 31, 2010, there were 16,913 and 18,554
of loans in foreclosure with unpaid principal balances of $3.0 billion and $3.3 billion,
respectively.
 Foreclosure-Related Reserves
   Six Months EndedJune 30,2011
    
    
    2010(In millions)Balance, beginning of period
    
    $
    111
    
    
    $
    86Realized foreclosure losses
    
    
    (35
    )
    
    
    (32
    )Increase in reserves due to:Changes in assumptions
    
    
    39
    
    
    
    45New loan sales
    
    
    7
    
    
    
    5Balance, end of period
    
    $
    122
    
    
    $
    104
  Loan Repurchases and Indemnifications
   23




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Mortgage Loans in Foreclosure and Real Estate Owned
    June 30,
    
    
    December 31,2011
    
    
    2010(In millions)Mortgage loans in foreclosure
    
    $
    120
    
    
    $
    128Allowance for probable losses
    
    
    (21
    )
    
    
    (22
    )Mortgage loans in foreclosure, net
    
    $
    99
    
    
    $
    106Real Estate Owned
    
    $
    49
    
    
    $
    54Adjustment to estimated net realizable value
    
    
    (13
    )
    
    
    (15
    )Real Estate Owned, net
    
    $
    36
    
    
    $
    39
 Mortgage Reinsurance
      Six Months EndedJune 30,2011
    
    
    2010(In millions)Balance, beginning of period
    
    $
    113
    
    
    $
    108Realized reinsurance losses
    
    
    (33
    )
    
    
    (6
    )Increase in liability for reinsurance losses
    
    
    17
    
    
    
    26Balance, end of period
    
    $
    97
    
    
    $
    128
 24




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Commercial Credit Risk
   10. Commitments and Contingencies
 Legal Contingencies
     11. Accumulated Other Comprehensive Income
  Six Months Ended June 30, 2011
 UnrealizedGainsCurrency
    
    
    On Available-Translation
    
    
    for-Sale
    
    
    PensionAdjustment
    
    
    Securities
    
    
    Adjustment
    
    
    Total(In millions)Balance at December 31, 2010
    
    $
    36
    
    
    $
    1
    
    
    $
    (8
    )
    
    $
    29Change during 2011
    
    
    6
    
    
    
    1
    
    
    
    
    
    
    
    7Balance at June 30, 2011
    
    $
    42
    
    
    $
    2
    
    
    $
    (8
    )
    
    $
    36
 25




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Six Months Ended June 30, 2010
 UnrealizedGainsCurrency
    
    
    On Available-Translation
    
    
    for-Sale
    
    
    PensionAdjustment
    
    
    Securities
    
    
    Adjustment
    
    
    Total(In millions)Balance at December 31, 2009
    
    $
    27
    
    
    $
    
    
    
    $
    (8
    )
    
    $
    19Change during 2010
    
    
    (2
    )
    
    
    1
    
    
    
    
    
    
    
    (1
    )Balance at June 30, 2010
    
    $
    25
    
    
    $
    1
    
    
    $
    (8
    )
    
    $
    18
  12. Fair Value Measurements
 Recurring Fair Value Measurements
  Mortgage Loans Held for Sale.
 June 30,
    
    December 31,2011

    
    2010Prepayment speed
    
    
    10
    %
    
    
    13
    %Discount Rate
    
    
    7-10
    %
    
    
    7-10
    %Yield
    
    
    3-8
    %
    
    
    3-8
    %Credit Loss (annualized)
    
    
    7-32
    %
    
    
    5-31
    %
  June 30, 2011

    
    December 31, 2010Loans 90 or
    
    
    
    
    
    
    Loans 90 ormore days past
    
    
    
    
    
    
    more days pastdue and on non-
    
    
    
    
    
    
    due and on non-Total

    
    accrual status
    
    
    Total

    
    accrual status(In millions)Mortgage loans held for sale:Carrying amount
    
    $
    1,707
    
    
    $
    16
    
    
    $
    4,329
    
    
    $
    14Aggregate unpaid principal balance
    
    
    1,689
    
    
    
    24
    
    
    
    4,356
    
    
    
    21Difference
    
    $
    18
    
    
    $
    (8
    )
    
    $
    (27
    )
    
    $
    (7
    )
 26




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  June 30,
    
    
    December 31,2011

    
    2010First mortgages:
    
    (In millions)Conforming(1)
    
    $
    1,534
    
    
    $
    4,123Non-conforming
    
    
    117
    
    
    
    138Construction loans
    
    
    8
    
    
    
    11Total first mortgages
    
    
    1,659
    
    
    
    4,272Second lien
    
    
    9
    
    
    
    11Scratch and Dent(2)
    
    
    38
    
    
    
    40Other
    
    
    1
    
    
    
    6Total
    
    $
    1,707
    
    
    $
    4,329
 
 (1)
    
    Represents mortgage loans that conform to the standards of the
government-sponsored entities.(2)
    
    Represents mortgage loans with origination flaws or performance issues. Derivative Instruments .
 Mortgage Servicing Rights
 June 30,

    
    December 31,2011
    
    2010Weighted-average prepayment speed (CPR)
    
    
    12
    %
    
    
    12
    %Option adjusted spread, in basis points
    
    
    826
    
    
    
    844Volatility
    
    
    28
    %
    
    
    29
    %
  June 30, 2011Weighted-Average
    
    OptionPrepayment
    
    AdjustedSpeed
    
    Spread
    
    Volatility(In millions)Impact on fair value of 10% adverse change
    
    $
    (79
    )
    
    $
    (68
    )
    
    $
    (29
    )Impact on fair value of 20% adverse change
    
    
    (152
    )
    
    
    (130
    )
    
    
    (60
    )
  27




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  June 30, 2011CashLevel

    
    Level
    
    
    Level
    
    
    CollateralOne

    
    Two
    
    
    Three
    
    
    and Netting(1)

    
    Total(In millions)Assets:Restricted investments
    
    $
    
    
    
    $
    241
    
    
    $
    
    
    
    $
    
    
    
    $
    241Mortgage loans held for sale
    
    
    
    
    
    
    1,552
    
    
    
    155
    
    
    
    
    
    
    
    1,707Mortgage servicing rights
    
    
    
    
    
    
    
    
    
    
    1,508
    
    
    
    
    
    
    
    1,508Other assets:Derivative assets:Interest rate lock commitments
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    52Forward delivery commitments
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    (23
    )
    
    
    20Interest rate contracts
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Option contracts
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Convertible note-related agreements
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    31Securitized mortgage loans
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    34Liabilities:Other liabilities:Derivative liabilities:Interest rate lock commitments
    
    $
    
    
    
    $
    
    
    
    $
    4
    
    
    $
    
    
    
    $
    4Forward delivery commitments
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    (33
    )
    
    
    19Foreign exchange contracts
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Convertible note-related agreements
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    31Debt:Mortgage loan securitization debt certificates
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    26
 28




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2010CashLevel

    
    Level
    
    
    Level
    
    
    CollateralOne

    
    Two
    
    
    Three
    
    
    and Netting(1)

    
    Total(In millions)Assets:Restricted investments
    
    $
    
    
    
    $
    254
    
    
    $
    
    
    
    $
    
    
    
    $
    254Mortgage loans held for sale
    
    
    
    
    
    
    4,157
    
    
    
    172
    
    
    
    
    
    
    
    4,329Mortgage servicing rights
    
    
    
    
    
    
    
    
    
    
    1,442
    
    
    
    
    
    
    
    1,442Other assets:Derivative assets:Interest rate lock commitments
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Forward delivery commitments
    
    
    
    
    
    
    309
    
    
    
    
    
    
    
    (241
    )
    
    
    68Interest rate contracts
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Convertible note-related agreements
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    54Securitized mortgage loans
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Liabilities:Other liabilities:Derivative liabilities:Interest rate lock commitments
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    46Forward delivery commitments
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    (51
    )
    
    
    31Convertible note-related agreements
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    54Debt:Mortgage loan securitization debt certificates
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30
 
 (1)
    
    Represents adjustments to arrive at the carrying amounts of assets and
liabilities presented in the Condensed Consolidated Balance Sheets for the effect of netting
the payable or receivable and cash collateral held or placed with the same counterparties
under master netting arrangements.  Three Months Ended June 30, 2011Other Assets

    
    DebtInterest rate
    
    
    
    
    
    
    Mortgage loanMortgage
    
    
    Mortgage
    
    
    lock
    
    
    Securitized
    
    
    securitizationloans held
    
    
    servicing
    
    
    commitments,
    
    
    mortgage
    
    
    debtfor sale
    
    
    rights
    
    
    net
    
    
    loans
    
    
    certificates(In millions)Balance, beginning of period
    
    $
    157
    
    
    $
    1,590
    
    
    $
    49
    
    
    $
    37
    
    
    $
    28Realized and unrealized gains (losses) for
assets
    
    
    2
    
    
    
    (159
    )
    
    
    249
    
    
    
    
    
    
    
    Realized and unrealized (gains) losses for
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Purchases
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuances
    
    
    131
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    (131
    )
    
    
    
    
    
    
    (250
    )
    
    
    (3
    )
    
    
    (3
    )Transfers into level three (1)
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of level three (2)
    
    
    (52
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, end of period
    
    $
    155
    
    
    $
    1,508
    
    
    $
    48
    
    
    $
    34
    
    
    $
    26
 29




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Six Months Ended June 30, 2011Other Assets

    
    DebtInterest rate
    
    

    
    
    
    Mortgage loanMortgage
    

    Mortgage

    
    lock
    

    Securitized
    

    securitizationloans held

    
    servicing
    
    
    commitments,
    
    mortgage
    

    debtfor sale

    
    rights
    
    
    net

    
    loans
    

    certificates(In millions)Balance, beginning of period
    
    $
    172
    
    
    $
    1,442
    
    
    $
    (4
    )
    
    $
    42
    
    
    $
    30Realized and unrealized gains (losses) for
assets
    
    
    (10
    )
    
    
    (191
    )
    
    
    433
    
    
    
    (1
    )
    
    
    Realized and unrealized (gains) losses for
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Purchases
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuances
    
    
    308
    
    
    
    257
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    (304
    )
    
    
    
    
    
    
    (381
    )
    
    
    (7
    )
    
    
    (6
    )Transfers into level three (1)
    
    
    84
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of level three (2)
    
    
    (119
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, end of period
    
    $
    155
    
    
    $
    1,508
    
    
    $
    48
    
    
    $
    34
    
    
    $
    26
 Three Months Ended June 30, 2010Other Assets
    
    DebtMortgage
    

    
    
    
    
    
    
    
    
    Interest rate
    
    

    
    
    
    Mortgage loanloans

    
    Mortgage
    
    

    
    
    
    lock

    
    Securitized
    

    securitizationheld
    

    servicing

    
    Investment
    

    commitments,
    

    mortgage
    

    debtfor sale

    
    rights
    
    securities

    
    net
    
    loans
    
    certificates(In millions)Balance, beginning of period
    
    $
    92
    
    
    $
    1,458
    
    
    $
    1
    
    
    $
    51
    
    
    $
    49
    
    
    $
    37Realized and unrealized gains (losses) for
assets
    
    
    (3
    )
    
    
    (320
    )
    
    
    
    
    
    
    379
    
    
    
    2
    
    
    
    Realized and unrealized  losses for
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Purchases, issuances and  settlements, net
    
    
    15
    
    
    
    98
    
    
    
    (1
    )
    
    
    (288
    )
    
    
    (4
    )
    
    
    (3
    )Transfers into level three (1)
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of level three (2)
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, end of period
    
    $
    103
    
    
    $
    1,236
    
    
    $
    
    
    
    $
    142
    
    
    $
    47
    
    
    $
    35
 Six Months Ended June 30, 2010Other Assets
    

    DebtMortgage
    

    
    
    
    
    
    
    
    
    Interest rate
    
    
    

    
    
    Mortgage loanloans

    
    Mortgage
    

    
    
    
    
    lock
    

    Securitized
    

    securitizationheld

    
    servicing
    

    Investment

    
    commitments,

    
    mortgage
    

    debtfor sale

    
    rights

    
    securities

    
    net
    

    loans

    
    certificates(In millions)Balance, beginning of period
    
    $
    111
    
    
    $
    1,413
    
    
    $
    12
    
    
    $
    26
    
    
    $
    
    
    
    $
    Realized and unrealized gains (losses) for
assets
    
    
    (5
    )
    
    
    (372
    )
    
    
    
    
    
    
    581
    
    
    
    4
    
    
    
    Realized and unrealized losses for
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Purchases, issuances and settlements, net
    
    
    (4
    )
    
    
    195
    
    
    
    (1
    )
    
    
    (465
    )
    
    
    (8
    )
    
    
    (7
    )Transfers into level three (1)
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of level three (2)
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transition adjustment (3)
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    51
    
    
    
    40Balance, end of period
    
    $
    103
    
    
    $
    1,236
    
    
    $
    
    
    
    $
    142
    
    
    $
    47
    
    
    $
    35
 30




---



##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 (1)
    
    Represents transfers to Scratch and Dent and Non-Conforming loans from
conforming loans. Loans that transfer into Level Three represent mortgage loans with
origination flaws, performance issues, or characteristics that would make them not currently
saleable through the agency mortgage-backed security market.(2)
    
    Represents Scratch and Dent and construction loans that were foreclosed upon,
construction loans that converted to first mortgages and Scratch and Dent or Non-Conforming
loans with origination flaws, performance issues or characteristics that were corrected.
Mortgage loans in foreclosure are measured at fair value on a non-recurring basis, as
discussed in further detail below.(3)
    
    Represents the transition adjustment related to the adoption of updates to
Consolidation and Transfers and Servicing accounting guidance resulting in the consolidation
of a mortgage loan securitization trust.  Three Months Ended June 30, 2011Mortgage

    
    
    Related toloan

    
    
    assets andMortgage

    
    Mortgage

    
Interest rate
 
    Securitized

    
    securitization

    
    
    liabilities held atloans held

    
    servicing

    
    lock

    
    mortgage

    
    debt

    
    
    June 30,for sale

    
    rights

    
    commitments

    
    loans

    
    certificates

    
    
    2011(In millions)Gain on mortgage loans, net
    
    $
    (1
    )
    
    $
    
    
    
    $
    249
    
    
    $
    
    
    
    $
    
    
    
    
    $
    43Change in fair value of
mortgage servicing rights
    
    
    
    
    
    
    (159
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (130
    )Mortgage interest income
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    Mortgage interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Six Months Ended June 30, 2011Mortgage
    
    
    Related toloan

    
    
    assets andMortgage

    
    Mortgage

    
   Interest rate
 
    Securitized
    
    securitization
    
    
    liabilities held atloans held
    
    servicing
    
    lock
    
    mortgage
    
    debt
    
    
    June 30,for sale
    
    rights
    
    commitments
    
    loans
    
    certificates
    
    
    2011(In millions)Gain on mortgage loans, net
    
    $
    (16
    )
    
    $
    
    
    
    $
    433
    
    
    $
    
    
    
    $
    
    
    
    
    $
    35Change in fair value of
mortgage servicing rights
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (102
    )Mortgage interest income
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    Mortgage interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    (3
    )
 31




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Three Months Ended June 30, 2010Mortgage
    
    
    Related toloan
    
    
    assets andMortgage
    
    Mortgage
    
    Interest rate
    
    Securitized
    
    securitization
    
    
    liabilities held atloans held
    
    servicing
    
    lock
    
    mortgage
    
    debt

    
    
    June 30,for sale
    
    rights
    
    commitments
    
    loans
    
    certificates

    
    
    2010(In millions)Gain on mortgage loans, net
    
    $
    (5
    )
    
    $
    
    
    
    $
    379
    
    
    $
    
    
    
    $
    
    
    
    
    $
    133Change in fair value of
mortgage servicing rights
    
    
    
    
    
    
    (320
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (273
    )Mortgage interest income
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    Mortgage interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
 Six Months Ended June 30, 2010Mortgage
    
    
    Related toloan
    
    
    assets andMortgage
    
    Mortgage
    
    Interest rate
    
    Securitized
    
    securitization
    
    
    liabilities held atloans held
    
    servicing
    
    lock
    
    mortgage
    
    debt
    
    
    June 30,for sale
    
    rights
    
    commitments
    
    loans
    
    certificates
    
    
    2010(In millions)Gain on mortgage loans, net
    
    $
    (10
    )
    
    $
    
    
    
    $
    581
    
    
    $
    
    
    
    $
    
    
    
    
    $
    130Change in fair value of
mortgage servicing rights
    
    
    
    
    
    
    (372
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (262
    )Mortgage interest income
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    Mortgage interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    1
 Non-Recurring Fair Value Measurements
 Other Assets.
  32




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 13. Variable Interest Entities
  June 30, 2011Chesapeakeand D.L
    
    FLRT and
    
    MortgagePHH Home

    
    Peterson

    
    PHH Lease

    
    SecuritizationLoans

    
    Trust

    
    Receivables LP

    
    Trust(In millions)ASSETSCash
    
    $
    28
    
    
    $
    5
    
    
    $
    
    
    
    $
    Restricted cash(1)
    
    
    
    
    
    
    219
    
    
    
    42
    
    
    
    Mortgage loans held for sale
    
    
    358
    
    
    
    
    
    
    
    
    
    
    
    Accounts receivable, net
    
    
    5
    
    
    
    74
    
    
    
    
    
    
    
    Net investment in fleet leases
    
    
    
    
    
    
    2,761
    
    
    
    550
    
    
    
    Property, plant and equipment, net
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    10
    
    
    
    9
    
    
    
    4
    
    
    
    34Total assets
    
    $
    402
    
    
    $
    3,068
    
    
    $
    596
    
    
    $
    34Assets held as collateral(2)
    
    $
    311
    
    
    $
    3,054
    
    
    $
    516
    
    
    $
    LIABILITIESAccounts payable and accrued expenses
    
    $
    16
    
    
    $
    2
    
    
    $
    2
    
    
    $
    Debt
    
    
    290
    
    
    
    2,523
    
    
    
    456
    
    
    
    26Other liabilities
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities(3)
    
    $
    311
    
    
    $
    2,525
    
    
    $
    458
    
    
    $
    26
 December 31, 2010Chesapeakeand D.L

    
    FLRT and

    
    MortgagePHH Home

    
    Peterson

    
    PHH Lease

    
    SecuritizationLoans

    
    Trust

    
    Receivables LP

    
    Trust(In millions)ASSETSCash
    
    $
    40
    
    
    $
    4
    
    
    $
    
    
    
    $
    Restricted cash(1)
    
    
    
    
    
    
    202
    
    
    
    39
    
    
    
    Mortgage loans held for sale
    
    
    384
    
    
    
    
    
    
    
    
    
    
    
    Accounts receivable, net
    
    
    14
    
    
    
    50
    
    
    
    
    
    
    
    Net investment in fleet leases
    
    
    
    
    
    
    2,854
    
    
    
    502
    
    
    
    Property, plant and equipment, net
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    10
    
    
    
    12
    
    
    
    18
    
    
    
    42Total assets
    
    $
    449
    
    
    $
    3,122
    
    
    $
    559
    
    
    $
    42Assets held as collateral(2)
    
    $
    331
    
    
    $
    3,106
    
    
    $
    506
    
    
    $
    LIABILITIESAccounts payable and accrued expenses
    
    $
    20
    
    
    $
    3
    
    
    $
    16
    
    
    $
    Debt
    
    
    304
    
    
    
    2,577
    
    
    
    450
    
    
    
    30Other liabilities
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities(3)
    
    $
    329
    
    
    $
    2,580
    
    
    $
    466
    
    
    $
    30
 
 (1)
    
    Relates primarily to amounts collected for lease payments and related
receivables specifically designated to purchase assets, to repay debt and/or to provide
over-collateralization related to vehicle management asset-backed debt arrangements.(2)
    
    Relates to the entitys borrowing arrangements and are not available to pay the
Companys general obligations. See Note 7, Debt and Borrowing Arrangements for further
information.(3)
    
    Excludes intercompany payables. 33




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 PHH Home Loans
  14. Segment Information
  
    
    Mortgage Production provides mortgage loan origination services and sells mortgage
loans.
    
    Mortgage Servicing performs servicing activities for originated and purchased loans.
    
    Fleet Management Services provides commercial fleet management services.
    Net RevenuesThree Months

    
    Six MonthsEnded June 30,

    
    Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Mortgage Production segment(1)
    
    $
    169
    
    
    $
    202
    
    
    $
    383
    
    
    $
    354Mortgage Servicing segment
    
    
    (58
    )
    
    
    (238
    )
    
    
    (1
    )
    
    
    (202
    )Fleet Management Services segment
    
    
    406
    
    
    
    407
    
    
    
    801
    
    
    
    797Total reportable segments
    
    
    517
    
    
    
    371
    
    
    
    1,183
    
    
    
    949Other
    
    
    (1
    )
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )Total
    
    $
    516
    
    
    $
    371
    
    
    $
    1,181
    
    
    $
    948
 Segment Profit (Loss) (2)Three Months

    
    Six MonthsEnded June 30,

    
    Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Mortgage Production segment(1)
    
    $
    25
    
    
    $
    49
    
    
    $
    77
    
    
    $
    74Mortgage Servicing segment
    
    
    (113
    )
    
    
    (284
    )
    
    
    (99
    )
    
    
    (297
    )Fleet Management Services segment
    
    
    19
    
    
    
    13
    
    
    
    35
    
    
    
    21Total reportable segments
    
    
    (69
    )
    
    
    (222
    )
    
    
    13
    
    
    
    (202
    )Other
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Total
    
    $
    (70
    )
    
    $
    (222
    )
    
    $
    12
    
    
    $
    (203
    )
 34




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Total AssetsAs of
    
    
    As ofJune 30,
    
    
    December 31,2011
    
    
    2010(In millions)Mortgage Production segment
    
    $
    1,990
    
    
    $
    4,605Mortgage Servicing segment
    
    
    2,291
    
    
    
    2,291Fleet Management Services segment
    
    
    4,333
    
    
    
    4,216Other
    
    
    135
    
    
    
    158Total Company
    
    $
    8,749
    
    
    $
    11,270
 
 (1)
    
    For the six months ended June 30, 2011, Net revenues and segment profit
for the Mortgage Production segment includes a $68 million gain on the 50.1% sale of the
equity interests in the Companys appraisal services business.(2)
    
    The following is a reconciliation of (Loss) income before income taxes to segment profit (loss): Three Months

    
    Six MonthsEnded June 30,

    
    Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)(Loss) income before income taxes
    
    $
    (66
    )
    
    $
    (215
    )
    
    $
    19
    
    
    $
    (196
    )Less: net income attributable to noncontrolling interest
    
    
    4
    
    
    
    7
    
    
    
    7
    
    
    
    7Segment profit (loss)
    
    $
    (70
    )
    
    $
    (222
    )
    
    $
    12
    
    
    $
    (203
    )
 35




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the Cautionary Note Regarding
Forward-Looking Statements and our Condensed Consolidated Financial Statements included in this
Quarterly Report on Form 10-Q and Item 1. Business, Item 1A. Risk Factors, Item 7.
Managements Discussion and Analysis of Financial Conditions and Results of Operations and our
Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K
for the year ended December 31, 2010.
  §
    
    Overview§
    
    Results of Operations§
    
    Risk Management§
    
    Liquidity and Capital Resources§
    
    Off-Balance Sheet Arrangements and Guarantees§
    
    Critical Accounting Policies and Estimates§
    
    Recently Issued Accounting Pronouncements
 Overview
   Executive Summary
  36




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2011
    
    2010
    
    2011
    
    2010(In millions, except per share data)PHH Corporation Consolidated:Net (loss) income attributable to PHH Corporation
    
    $
    (41
    )
    
    $
    (133
    )
    
    $
    8
    
    
    $
    (125
    )Basic (loss) earnings per share attributable to
PHH Corporation
    
    
    (0.73
    )
    
    
    (2.40
    )
    
    
    0.14
    
    
    
    (2.26
    )Diluted (loss) earnings per share attributable
to PHH Corporation
    
    
    (0.73
    )
    
    
    (2.40
    )
    
    
    0.14
    
    
    
    (2.26
    )Reportable Segments Profit (Loss):(1)Mortgage Production segment
    
    $
    25
    
    
    $
    49
    
    
    $
    77
    
    
    $
    74Mortgage Servicing segment
    
    
    (113
    )
    
    
    (284
    )
    
    
    (99
    )
    
    
    (297
    )Fleet Management Services segment
    
    
    19
    
    
    
    13
    
    
    
    35
    
    
    
    21
 
 (1)
    
    Segment Profit (Loss) is described in Note 14, Segment Information in the
accompanying Notes to Condensed Consolidated Financial Statements.  Mortgage Production Segment
 Quarterly Comparison:
 §
    
    Segment profit was $24 million lower compared with 2010 primarily due to an 11% decline
in the volume of interest rate lock commitments expected to close and lower gain on sale
margins.§
    
    Interest rate lock commitments
expected to close declined to $7.5 billion in 2011 from
$8.4 billion in 2010 due to lower refinance activity. Total loan margins in
2011 declined from 2010, reflecting a reduction in the level of industry originations.§
    
    Total mortgage closing volumes for 2011 were $9.7 billion of which approximately 72% were
retail and 28% were wholesale/correspondent.
 37




---



##### Table of Contents



Year-to-Date Comparison:
 §
    
    Segment profit was $3 million higher compared with 2010 due to a $68 million gain on the
sale of 50.1% of the equity interests in STARS during the first quarter of 2011 partially
offset by a 15% decline in the volume of interest rate lock commitments expected to close
and lower total loan margins.§
    
    Interest rate lock commitments expected to close declined to $12.5 billion in 2011 from $14.8 billion
in 2010 primarily due to lower purchase applications in 2011 as compared to 2010. Total loan margins declined from 2010, reflecting a reduction in the level of
industry originations.§
    
    Total mortgage closing volumes for 2011 were $23.6 billion of which approximately 71%
were retail and 29% were wholesale/correspondent.
 Mortgage Servicing Segment
 Quarterly Comparison:
 §
    
    Segment loss was unfavorably impacted in 2011 by a $117 million decrease in the fair
value of our mortgage servicing rights driven primarily by lower long-term interest rates
and higher projected foreclosure costs that were partially offset by improved projected
portfolio delinquencies, as compared to a $274 million decrease during 2010.§
    
    Loan servicing income increased by $20 million reflecting the continued growth in our
loan servicing portfolio and a lower net reinsurance loss. Our average loan servicing
portfolio increased by 11% from $154.4 billion in 2010 to $172.1 billion in 2011.§
    
    Foreclosure-related charges remain elevated at $24 million during 2011, compared to $20
million in 2010, reflecting a continued higher level of repurchase requests and loss
severities.
 Year-to-Date Comparison:
 §
    
    Segment loss was unfavorably impacted in 2011 from a $92 million decrease in the fair
value of our mortgage servicing rights driven primarily by lower long-term interest rates
that were partially offset by improved portfolio delinquencies, as compared to a $281
million decrease during 2010. Additionally, there was an $8 million unfavorable change in
fair value due to prepayments and recurring cash flows during 2011 compared to 2010,
reflecting a higher level of payoffs and payments in 2011.§
    
    Loan servicing income increased by $27 million reflecting the continued growth in our
loan servicing portfolio and a lower net reinsurance loss. Our average loan servicing
portfolio increased by 11% from $153.4 billion in 2010 to $170.4 billion in 2011.§
    
    Foreclosure-related charges remain elevated at $39 million during 2011, compared to $43
million in 2010, reflecting a continued higher level of repurchase requests and loss
severities.
 Fleet Management Services Segment
 Quarterly Comparison:
 §
    
    Segment profit increased by $6 million to $19 million in 2011, driven by higher units and
usage of fee and asset-based management services coupled with lower costs.§
    
    Maintenance service, fuel, and accident management average units all increased in 2011
compared to 2010 despite a 6% decline in the number of leased vehicles.
 Year-to-Date Comparison:
 §
    
    Segment profit increased by $14 million to $35 million in 2011, driven by higher units
and usage of fee and asset-based management services coupled with lower costs.
 38




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##### Table of Contents



§
    
    Maintenance service, fuel, and accident management average units all increased in 2011
compared to 2010 despite a 6% decline in the number of leased vehicles.
  Industry Trends
 Regulatory Trends
 Financial Regulatory Reform
      39




---



##### Table of Contents



Focus on Foreclosure Practices
   Mortgage Production Trends
 Economics and Mortgage Market Analysis
   Mortgage Servicing Trends
   40




---



##### Table of Contents



Fleet Management Services Trends
  41




---



##### Table of Contents



Results of Operations
 Consolidated Results
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Net fee income
    
    $
    100
    
    
    $
    106
    
    
    $
    228
    
    
    $
    196Fleet lease income
    
    
    343
    
    
    
    349
    
    
    
    680
    
    
    
    688Gain on mortgage loans, net
    
    
    119
    
    
    
    139
    
    
    
    178
    
    
    
    244Mortgage net finance expense
    
    
    (25
    )
    
    
    (19
    )
    
    
    (44
    )
    
    
    (39
    )Loan servicing income
    
    
    117
    
    
    
    97
    
    
    
    225
    
    
    
    198Change in fair value of mortgage servicing rights
    
    
    (159
    )
    
    
    (320
    )
    
    
    (191
    )
    
    
    (372
    )Other income
    
    
    21
    
    
    
    19
    
    
    
    105
    
    
    
    33Net revenues
    
    
    516
    
    
    
    371
    
    
    
    1,181
    
    
    
    948Depreciation on operating leases
    
    
    309
    
    
    
    306
    
    
    
    615
    
    
    
    614Fleet interest expense
    
    
    21
    
    
    
    25
    
    
    
    41
    
    
    
    48Total other expenses
    
    
    252
    
    
    
    255
    
    
    
    506
    
    
    
    482Total expenses
    
    
    582
    
    
    
    586
    
    
    
    1,162
    
    
    
    1,144(Loss) income before income taxes
    
    
    (66
    )
    
    
    (215
    )
    
    
    19
    
    
    
    (196
    )Income tax (benefit) expense
    
    
    (29
    )
    
    
    (89
    )
    
    
    4
    
    
    
    (78
    )Net (loss) income
    
    
    (37
    )
    
    
    (126
    )
    
    
    15
    
    
    
    (118
    )Less: net income attributable to noncontrolling interest
    
    
    4
    
    
    
    7
    
    
    
    7
    
    
    
    7Net (loss) income attributable to PHH Corporation
    
    $
    (41
    )
    
    $
    (133
    )
    
    $
    8
    
    
    $
    (125
    )
 Quarterly Comparison:
 Year-to-Date Comparison:
  Income tax (benefit) expense
  42




---



##### Table of Contents



Quarterly Comparison:
  Year-to-Date Comparison:
  Appraisal Services Business Joint Venture
   Segment Results
  43




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Net revenues
    
    $
    (1
    )
    
    $
    
    
    
    $
    (2
    )
    
    $
    (1
    )Salaries and related expenses
    
    
    17
    
    
    
    5
    
    
    
    36
    
    
    
    11Occupancy and other office expenses
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    Fleet interest expense
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )Other operating expenses
    
    
    11
    
    
    
    2
    
    
    
    22
    
    
    
    5Corporate overhead allocation
    
    
    (29
    )
    
    
    (7
    )
    
    
    (59
    )
    
    
    (15
    )Total expenses
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    Segment loss
    
    $
    (1
    )
    
    $
    
    
    
    $
    (1
    )
    
    $
    (1
    )
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Mortgage Production segment
    
    $
    14
    
    
    $
    3
    
    
    $
    30
    
    
    $
    7Mortgage Servicing segment
    
    
    4
    
    
    
    1
    
    
    
    7
    
    
    
    2Fleet Management Services segment
    
    
    11
    
    
    
    3
    
    
    
    22
    
    
    
    6Other
    
    
    (29
    )
    
    
    (7
    )
    
    
    (59
    )
    
    
    (15
    )Total expenses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  44




---



##### Table of Contents



Mortgage Production Segment
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010($ In millions, except average loan amount)Loans closed to be sold
    
    $
    6,834
    
    
    $
    7,660
    
    
    $
    16,530
    
    
    $
    13,333Fee-based closings
    
    
    2,913
    
    
    
    2,397
    
    
    
    7,047
    
    
    
    4,549Total closings
    
    $
    9,747
    
    
    $
    10,057
    
    
    $
    23,577
    
    
    $
    17,882Purchase closings
    
    $
    5,716
    
    
    $
    6,175
    
    
    $
    9,867
    
    
    $
    9,593Refinance closings
    
    
    4,031
    
    
    
    3,882
    
    
    
    13,710
    
    
    
    8,289Total closings
    
    $
    9,747
    
    
    $
    10,057
    
    
    $
    23,577
    
    
    $
    17,882Fixed rate
    
    $
    6,727
    
    
    $
    7,957
    
    
    $
    16,665
    
    
    $
    13,882Adjustable rate
    
    
    3,020
    
    
    
    2,100
    
    
    
    6,912
    
    
    
    4,000Total closings
    
    $
    9,747
    
    
    $
    10,057
    
    
    $
    23,577
    
    
    $
    17,882Retail closings
    
    $
    7,029
    
    
    $
    7,427
    
    
    $
    16,776
    
    
    $
    13,529Wholesale/correspondent closings
    
    
    2,718
    
    
    
    2,630
    
    
    
    6,801
    
    
    
    4,353Total closings
    
    $
    9,747
    
    
    $
    10,057
    
    
    $
    23,577
    
    
    $
    17,882Average loan amount
    
    $
    252,126
    
    
    $
    228,865
    
    
    $
    256,495
    
    
    $
    233,566Loans sold
    
    $
    6,831
    
    
    $
    6,897
    
    
    $
    19,728
    
    
    $
    12,659Applications
    
    $
    15,365
    
    
    $
    15,958
    
    
    $
    26,302
    
    
    $
    28,157IRLCs expected to close
    
    $
    7,501
    
    
    $
    8,425
    
    
    $
    12,545
    
    
    $
    14,799Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Mortgage fees
    
    $
    56
    
    
    $
    66
    
    
    $
    142
    
    
    $
    118Gain on mortgage loans, net
    
    
    119
    
    
    
    139
    
    
    
    178
    
    
    
    244Mortgage interest income
    
    
    20
    
    
    
    18
    
    
    
    51
    
    
    
    34Mortgage interest expense
    
    
    (28
    )
    
    
    (22
    )
    
    
    (61
    )
    
    
    (43
    )Mortgage net finance expense
    
    
    (8
    )
    
    
    (4
    )
    
    
    (10
    )
    
    
    (9
    )Other income
    
    
    2
    
    
    
    1
    
    
    
    73
    
    
    
    1Net revenues
    
    
    169
    
    
    
    202
    
    
    
    383
    
    
    
    354Salaries and related expenses
    
    
    76
    
    
    
    85
    
    
    
    167
    
    
    
    161Occupancy and other office expenses
    
    
    8
    
    
    
    8
    
    
    
    15
    
    
    
    16Other depreciation and amortization
    
    
    2
    
    
    
    3
    
    
    
    5
    
    
    
    6Other operating expenses
    
    
    54
    
    
    
    50
    
    
    
    112
    
    
    
    90Total expenses
    
    
    140
    
    
    
    146
    
    
    
    299
    
    
    
    273Income before income taxes
    
    
    29
    
    
    
    56
    
    
    
    84
    
    
    
    81Less: net income attributable to noncontrolling interest
    
    
    4
    
    
    
    7
    
    
    
    7
    
    
    
    7Segment profit
    
    $
    25
    
    
    $
    49
    
    
    $
    77
    
    
    $
    74
 45




---



##### Table of Contents



Mortgage Production Statistics
   Economics and Mortgage Market Analysis
 Quarterly Comparison:
 Year-to-Date Comparison:
 Mortgage Fees
  Quarterly Comparison:
 Year-to-Date Comparison:
 46




---



##### Table of Contents



Gain on Mortgage Loans, Net
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Gain on loans
    
    $
    102
    
    
    $
    140
    
    
    $
    141
    
    
    $
    234Change in fair value of Scratch and Dent and
certain non-conforming mortgage loans
    
    
    5
    
    
    
    (3
    )
    
    
    
    
    
    
    (4
    )Economic hedge results
    
    
    12
    
    
    
    2
    
    
    
    37
    
    
    
    14Total change in fair value of mortgage
loans and related derivatives
    
    
    17
    
    
    
    (1
    )
    
    
    37
    
    
    
    10Gain on mortgage loans, net
    
    $
    119
    
    
    $
    139
    
    
    $
    178
    
    
    $
    244
    Quarterly Comparison:
   47




---



##### Table of Contents



Year-to-Date Comparison:
   Mortgage Net Finance Expense
  Quarterly Comparison:
 Year-to-Date Comparison:
 Other Income
 Year-to-Date Comparison:
 48




---



##### Table of Contents



Salaries and Related Expenses
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Salaries, benefits and incentives
    
    $
    50
    
    
    $
    51
    
    
    $
    109
    
    
    $
    104Commissions
    
    
    22
    
    
    
    27
    
    
    
    42
    
    
    
    46Contract labor and overtime
    
    
    4
    
    
    
    7
    
    
    
    16
    
    
    
    11Salaries and related expenses
    
    $
    76
    
    
    $
    85
    
    
    $
    167
    
    
    $
    161
  Quarterly Comparison:
 Year-to-Date Comparison:
 Other Operating Expenses
  49




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Production-related direct expenses
    
    $
    23
    
    
    $
    24
    
    
    $
    43
    
    
    $
    43Corporate overhead allocation
    
    
    14
    
    
    
    3
    
    
    
    30
    
    
    
    7Other expenses
    
    
    17
    
    
    
    23
    
    
    
    39
    
    
    
    40Other operating expenses
    
    $
    54
    
    
    $
    50
    
    
    $
    112
    
    
    $
    90
  Quarterly Comparison:
 Year-to-Date Comparison:
 50




---



##### Table of Contents



Mortgage Servicing Segment
 
  As of June 30,2011
    
    2010($ in millions)Ending total loan servicing portfolio
    
    $
    173,651
    
    
    $
    155,967Number of loans serviced
    
    
    1,033,360
    
    
    
    968,669Ending capitalized loan servicing portfolio
    
    $
    142,436
    
    
    $
    130,097Capitalized servicing rate
    
    
    1.06
    %
    
    
    0.95
    %Capitalized servicing multiple
    
    
    3.5
    
    
    
    3.1Weighted-average servicing fee (in basis points)
    
    
    30
    
    
    
    30
 Three Months Ended
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Average total loan servicing portfolio
    
    $
    172,053
    
    
    $
    154,392
    
    
    $
    170,365
    
    
    $
    153,381Average capitalized loan servicing portfolio
    
    
    141,499
    
    
    
    129,316
    
    
    
    139,707
    
    
    
    128,736Payoffs and principal curtailments of
capitalized portfolio
    
    
    4,943
    
    
    
    5,140
    
    
    
    10,966
    
    
    
    9,984Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Mortgage interest income
    
    $
    4
    
    
    $
    4
    
    
    $
    8
    
    
    $
    7Mortgage interest expense
    
    
    (20
    )
    
    
    (19
    )
    
    
    (40
    )
    
    
    (36
    )Mortgage net finance expense
    
    
    (16
    )
    
    
    (15
    )
    
    
    (32
    )
    
    
    (29
    )Loan servicing income
    
    
    117
    
    
    
    97
    
    
    
    225
    
    
    
    198Change in fair value of mortgage servicing rights
    
    
    (159
    )
    
    
    (320
    )
    
    
    (191
    )
    
    
    (372
    )Net loan servicing (loss) income
    
    
    (42
    )
    
    
    (223
    )
    
    
    34
    
    
    
    (174
    )Other income (expense)
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    1Net revenues
    
    
    (58
    )
    
    
    (238
    )
    
    
    (1
    )
    
    
    (202
    )Salaries and related expenses
    
    
    8
    
    
    
    10
    
    
    
    17
    
    
    
    20Occupancy and other office expenses
    
    
    2
    
    
    
    2
    
    
    
    5
    
    
    
    5Other operating expenses
    
    
    45
    
    
    
    34
    
    
    
    76
    
    
    
    70Total expenses
    
    
    55
    
    
    
    46
    
    
    
    98
    
    
    
    95Segment loss
    
    $
    (113
    )
    
    $
    (284
    )
    
    $
    (99
    )
    
    $
    (297
    )
 Mortgage Net Finance Expense
  Quarterly Comparison:
 51




---



##### Table of Contents



Year-to-Date Comparison:
 Loan Servicing Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Net service fee revenue
    
    $
    110
    
    
    $
    99
    
    
    $
    216
    
    
    $
    196Late fees and other ancillary servicing revenue
    
    
    12
    
    
    
    13
    
    
    
    29
    
    
    
    28Curtailment interest paid to investors
    
    
    (5
    )
    
    
    (6
    )
    
    
    (13
    )
    
    
    (13
    )Net reinsurance loss
    
    
    
    
    
    
    (9
    )
    
    
    (7
    )
    
    
    (13
    )Loan servicing income
    
    $
    117
    
    
    $
    97
    
    
    $
    225
    
    
    $
    198
   Quarterly Comparison:
 Year-to-Date Comparison:
 Change in Fair Value of Mortgage Servicing Rights
  52




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Actual prepayments of the underlying
mortgage loans
    
    $
    (29
    )
    
    $
    (35
    )
    
    $
    (73
    )
    
    $
    (69
    )Actual receipts of recurring cash flows
    
    
    (13
    )
    
    
    (11
    )
    
    
    (26
    )
    
    
    (22
    )Credit-related fair value adjustments
    
    
    13
    
    
    
    (1
    )
    
    
    10
    
    
    
    (19
    )Market-related fair value adjustments
    
    
    (130
    )
    
    
    (273
    )
    
    
    (102
    )
    
    
    (262
    )Change in fair value of mortgage servicing
rights
    
    $
    (159
    )
    
    $
    (320
    )
    
    $
    (191
    )
    
    $
    (372
    )
  Quarterly Comparison:
   Year-to-Date Comparison:
   53




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##### Table of Contents



Other Income (Expense)
  Year-to-Date Comparison:
 Other Operating Expenses
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In millions)Foreclosure-related charges
    
    $
    24
    
    
    $
    20
    
    
    $
    39
    
    
    $
    43Corporate overhead allocation
    
    
    4
    
    
    
    1
    
    
    
    7
    
    
    
    2Other expenses
    
    
    17
    
    
    
    13
    
    
    
    30
    
    
    
    25Other operating expenses
    
    $
    45
    
    
    $
    34
    
    
    $
    76
    
    
    $
    70
  Quarterly Comparison:
 Year-to-Date Comparison:
 54




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##### Table of Contents



Fleet Management Services Segment
 
  Average for the
    
    
    Average for theThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(In thousands of units)Leased vehicles
    
    
    274
    
    
    
    291
    
    
    
    276
    
    
    
    294Maintenance service cards
    
    
    318
    
    
    
    275
    
    
    
    318
    
    
    
    273Fuel cards
    
    
    293
    
    
    
    275
    
    
    
    291
    
    
    
    273Accident management vehicles
    
    
    293
    
    
    
    291
    
    
    
    294
    
    
    
    289Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Fleet management fees
    
    $
    44
    
    
    $
    40
    
    
    $
    86
    
    
    $
    78Fleet lease income
    
    
    343
    
    
    
    349
    
    
    
    680
    
    
    
    688Other income
    
    
    19
    
    
    
    18
    
    
    
    35
    
    
    
    31Net revenues
    
    
    406
    
    
    
    407
    
    
    
    801
    
    
    
    797Salaries and related expenses
    
    
    16
    
    
    
    19
    
    
    
    31
    
    
    
    41Occupancy and other office expenses
    
    
    4
    
    
    
    4
    
    
    
    8
    
    
    
    8Depreciation on operating leases
    
    
    309
    
    
    
    306
    
    
    
    615
    
    
    
    614Fleet interest expense
    
    
    21
    
    
    
    25
    
    
    
    43
    
    
    
    49Other depreciation and amortization
    
    
    2
    
    
    
    2
    
    
    
    5
    
    
    
    5Other operating expenses
    
    
    35
    
    
    
    38
    
    
    
    64
    
    
    
    59Total expenses
    
    
    387
    
    
    
    394
    
    
    
    766
    
    
    
    776Segment profit
    
    $
    19
    
    
    $
    13
    
    
    $
    35
    
    
    $
    21
 Fleet Management Fees
  Quarterly Comparison:
 Year-to-Date Comparison:
 55




---



##### Table of Contents



Fleet Lease Income
   Quarterly Comparison:
 Year-to-Date Comparison:
 Other Income
  Quarterly Comparison:
 Year-to-Date Comparison:
 Salaries and Related Expenses
  Quarterly Comparison:
 Year-to-Date Comparison:
 56




---



##### Table of Contents



Depreciation on Operating Leases
  Quarterly
Comparison:
 Year-to-Date Comparison:
 Fleet Interest Expense
  Quarterly Comparison:
 Year-to-Date Comparison:
 Other Operating Expenses
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Cost of goods sold
    
    $
    15
    
    
    $
    25
    
    
    $
    27
    
    
    $
    35Corporate overhead allocation
    
    
    11
    
    
    
    3
    
    
    
    22
    
    
    
    6Other expenses
    
    
    9
    
    
    
    10
    
    
    
    15
    
    
    
    18Total Other operating expenses
    
    $
    35
    
    
    $
    38
    
    
    $
    64
    
    
    $
    59
   57




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##### Table of Contents



Quarterly Comparison:
 Year-to-Date Comparison:
 Risk Management
 
  Interest Rate Risk
 
   Consumer Credit Risk
 
  §
    
    Loan repurchase and indemnification obligations from breaches of representation and
warranty provisions of our loan sales or servicing agreements, which result in
indemnification payments or exposure to loan defaults and foreclosures;§
    
    Mortgage reinsurance losses; and§
    
    A decline in the fair value of mortgage servicing rights as a result of increases in
involuntary prepayments from increasing portfolio delinquencies.
 58




---



##### Table of Contents



Loan Repurchases and Indemnifications
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Balance, beginning of period
    
    $
    115
    
    
    $
    96
    
    
    $
    111
    
    
    $
    86Realized foreclosure losses
    
    
    (19
    )
    
    
    (16
    )
    
    
    (35
    )
    
    
    (32
    )Increase in reserves due to:Changes in assumptions
    
    
    24
    
    
    
    21
    
    
    
    39
    
    
    
    45New loan sales
    
    
    2
    
    
    
    3
    
    
    
    7
    
    
    
    5Balance, end of period
    
    $
    122
    
    
    $
    104
    
    
    $
    122
    
    
    $
    104
  June 30,
    
    
    December 31,2011
    
    
    2010(In millions)Loan repurchase and indemnification liability
    
    $
    88
    
    
    $
    74Allowance for probable foreclosure losses
    
    
    21
    
    
    
    22Adjustment to value for real estate owned
    
    
    13
    
    
    
    15Total
    
    $
    122
    
    
    $
    111
  As of  June 30, 2011
    
    
    As of  December 31, 2010Investor
    
    
    Insurer
    
    
    
    
    
    
    Investor
    
    
    InsurerRequests
    
    
    Requests
    
    
    Total
    
    
    Requests
    
    
    Requests
    
    
    Total(In millions)Agency Invested:Claim pending (1)
    
    $
    28
    
    
    $
    2
    
    
    $
    30
    
    
    $
    9
    
    
    $
    1
    
    
    $
    10Appealed (2)
    
    
    35
    
    
    
    14
    
    
    
    49
    
    
    
    34
    
    
    
    22
    
    
    
    56Open to review (3)
    
    
    86
    
    
    
    14
    
    
    
    100
    
    
    
    50
    
    
    
    9
    
    
    
    59Total Agency requests
    
    
    149
    
    
    
    30
    
    
    
    179
    
    
    
    93
    
    
    
    32
    
    
    
    125Private Invested:Claim pending (1)
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    1
    
    
    
    2
    
    
    
    3Appealed (2)
    
    
    14
    
    
    
    5
    
    
    
    19
    
    
    
    15
    
    
    
    7
    
    
    
    22Open to review (3)
    
    
    14
    
    
    
    4
    
    
    
    18
    
    
    
    13
    
    
    
    2
    
    
    
    15Total Private requests
    
    
    29
    
    
    
    10
    
    
    
    39
    
    
    
    29
    
    
    
    11
    
    
    
    40Total unresolved requests
    
    $
    178
    
    
    $
    40
    
    
    $
    218
    
    
    $
    122
    
    
    $
    43
    
    
    $
    165
 
 (1)
    
    Claim pending status represents loans that have completed the review process
where we have agreed with the representation and warranty breach and are pending final
execution.(2)
    
    Appealed status represents loans that have completed the review process where we
have disagreed with the representation and warranty breach and are pending response from the
claimant. Based on claims received and appealed during the last twelve month period ending
June 30, 2011 that have been resolved, we were successful in refuting over 90% of claims
appealed.(3)
    
    Open to review status represents loans where we have not completed our review
process. We appealed approximately 75% of claims received and reviewed during the last twelve
month period ending June 30, 2011. 59




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##### Table of Contents



Mortgage Reinsurance
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010(in millions)Balance, beginning of period
    
    $
    110
    
    
    $
    117
    
    
    $
    113
    
    
    $
    108Realized reinsurance losses
    
    
    (17
    )
    
    
    (4
    )
    
    
    (33
    )
    
    
    (6
    )Increase in reinsurance reserves(1)
    
    
    4
    
    
    
    15
    
    
    
    17
    
    
    
    26Balance, end of period
    
    $
    97
    
    
    $
    128
    
    
    $
    97
    
    
    $
    128
 
 (1)
    
    The increase in reinsurance reserves is recorded as an expense within Loan
servicing income in the accompanying Condensed Consolidated Statements of Operations.  Maximum
    
    
    
    
    
    
    
    
    
    
    Foreclosures/Unpaid
    
    
    Potential
    
    
    Average
    
    
    
    
    
    
    Real estatePrincipal
    
    
    Exposure to
    
    
    Credit
    
    
    
    
    
    
    owned/Year of Origination:
    
    Balance (UPB)
    
    
    Reinsurance Loss
    
    
    Score(3)
    
    
    Delinquencies(1)(3)

    
    Bankruptcies(2)(3)(In millions)2003 and prior
    
    $
    1,249
    
    
    $
    234
    
    
    
    693
    
    
    
    5.18
    %
    
    
    6.69
    %2004
    
    
    863
    
    
    
    99
    
    
    
    692
    
    
    
    4.55
    %
    
    
    9.47
    %2005
    
    
    837
    
    
    
    35
    
    
    
    694
    
    
    
    5.50
    %
    
    
    11.83
    %2006
    
    
    567
    
    
    
    11
    
    
    
    692
    
    
    
    5.72
    %
    
    
    16.94
    %2007
    
    
    1,154
    
    
    
    29
    
    
    
    700
    
    
    
    5.33
    %
    
    
    14.96
    %2008
    
    
    1,982
    
    
    
    62
    
    
    
    725
    
    
    
    3.68
    %
    
    
    5.54
    %2009
    
    
    423
    
    
    
    7
    
    
    
    758
    
    
    
    0.17
    %
    
    
    0.05
    %Total
    
    $
    7,075
    
    
    $
    477
    
    
    
    707
    
    
    
    4.57
    %
    
    
    9.20
    %
 
 (1)
    
    Represents delinquent mortgage loans for which payments are 60 days or more
outstanding as a percentage of the total unpaid principal balance.(2)
    
    Calculated as a percentage of the total unpaid principal balance.(3)
    
    Based on March 31, 2011 data. 60




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##### Table of Contents



Commercial Credit Risk
 
  Counterparty & Concentration Risk
 
   Liquidity and Capital Resources
 
  61




---



##### Table of Contents



Cash Flows
 
  Six Months EndedJune 30,2011
    
    
    2010
    
    
    Change(In millions)Cash provided by (used in):Operating activities
    
    $
    3,099
    
    
    $
    (197
    )
    
    $
    3,296Investing activities
    
    
    (638
    )
    
    
    (562
    )
    
    
    (76
    )Financing activities
    
    
    (2,440
    )
    
    
    793
    
    
    
    (3,233
    )Effect of changes in exchange rates on Cash and cash equivalents
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Net increase in Cash and cash equivalents
    
    $
    17
    
    
    $
    34
    
    
    $
    (17
    )
 Operating Activities
  §
    
    Mortgage ProductionCapitalization of mortgage servicing rights§
    
    Mortgage ServicingChange in fair value of mortgage servicing rights§
    
    Fleet Management ServicesDepreciation on operating leases
    Investing Activities
  62




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##### Table of Contents



Financing Activities
    Debt
 
  June 30,
    
    
    December 31,2011
    
    
    2010(In millions)Restricted cash, cash equivalents and investments
    
    $
    535
    
    
    $
    531Mortgage loans held for sale
    
    
    1,707
    
    
    
    4,329Net investment in fleet leases
    
    
    3,526
    
    
    
    3,492Mortgage servicing rights
    
    
    1,508
    
    
    
    1,442Assets under management programs
    
    $
    7,276
    
    
    $
    9,794
  63




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##### Table of Contents



Total AssetsHeld asBalance
    
    

Collateral (1)(In millions)Vehicle Management Asset-Backed Debt
    
    $
    3,015
    
    
    $
    3,600Mortgage Asset-Backed Debt
    
    
    1,428
    
    
    
    1,489Unsecured Debt
    
    
    1,228
    
    
    
    Mortgage Loan Securitization Debt Certificates, at Fair Value(2)
    
    
    26
    
    
    
    Total Debt
    
    $
    5,697
    
    
    $
    5,089
 
 (1)
    
    Assets held as collateral are not available to pay our general obligations.(2)
    
    Cash flows of securitized mortgage loans support payment of the debt certificates
and creditors of the securitization trust do not have recourse to the Company.  Vehicle Management Asset-Backed Debt
  Mortgage Asset-Backed Debt
   Unsecured Debt
  64




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##### Table of Contents



MoodysInvestors
    
    Standard
    
    FitchService
    
    & Poors
    
    RatingsSenior debt
    
    Ba2
    
    BB+
    
    BB+Short-term debt
    
    NP
    
    B
    
    B
     Debt Capacity and Maturities
 
  Utilized
    
    AvailableCapacity
    
    Capacity
    
    Capacity(In millions)Vehicle Management Asset-Backed Debt:Term notes, in revolving period
    
    $
    92
    
    
    $
    92
    
    
    $
    Variable-funding notes
    
    
    1,511
    
    
    
    1,260
    
    
    
    251Mortgage Asset-Backed Debt:Committed warehouse facilities
    
    
    2,535
    
    
    
    1,352
    
    
    
    1,183Servicing advance facility
    
    
    120
    
    
    
    76
    
    
    
    44Unsecured Committed Credit Facilities(1)
    
    
    530
    
    
    
    16
    
    
    
    514
 
 (1)
    
    Utilized capacity reflects $16 million of letters of credit issued under the
Amended Credit Facility, which are not included in Debt in the Condensed Consolidated Balance
Sheet.  65




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##### Table of Contents



Vehicle
    
    
    Mortgage
    
    
    
    
    
    
    Mortgage LoanAsset-
    
    
    Asset-
    
    
    
    
    
    
    SecuritizationBacked
    
    
    Backed
    
    
    Unsecured
    
    
    DebtDebt (1)
    
    
    Debt
    
    
    Debt
    
    
    Certificates
    
    
    Total(In millions)Within one year
    
    $
    939
    
    
    $
    1,428
    
    
    $
    250
    
    
    $
    8
    
    
    $
    2,625Between one and two years
    
    
    862
    
    
    
    
    
    
    
    420
    
    
    
    7
    
    
    
    1,289Between two and three years
    
    
    712
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    717Between three and four years
    
    
    426
    
    
    
    
    
    
    
    250
    
    
    
    5
    
    
    
    681Between four and five years
    
    
    81
    
    
    
    
    
    
    
    350
    
    
    
    3
    
    
    
    434Thereafter
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8$
    3,020
    
    
    $
    1,428
    
    
    $
    1,278
    
    
    $
    28
    
    
    $
    5,754
 
 (1)
    
    Maturities of vehicle management asset-backed notes, a portion of which are
amortizing in accordance with their terms, represent estimated payments based on the expected
cash inflows related to the securitized vehicle leases and related assets. Debt Covenants
 
    Off-Balance Sheet Arrangements and Guarantees
 
   66




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##### Table of Contents



Critical Accounting Policies and Estimates
 
 Form 10-K.
 Recently Issued Accounting Pronouncements
 
  
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
  Sensitivity Analysis
 
     67




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##### Table of Contents



Change in Fair ValueDown
    
    
    Down
    
    
    Down
    
    
    Up
    
    
    Up
    
    
    Up100 bps
    
    
    50 bps
    
    
    25 bps
    
    
    25 bps
    
    
    50 bps
    
    
    100 bps(In millions)Mortgage assets:Restricted investments
    
    $
    3
    
    
    $
    2
    
    
    $
    1
    
    
    $
    (1
    )
    
    $
    (2
    )
    
    $
    (5
    )Mortgage loans held for sale
    
    
    48
    
    
    
    30
    
    
    
    16
    
    
    
    (19
    )
    
    
    (38
    )
    
    
    (81
    )Interest rate lock commitments
    
    
    100
    
    
    
    68
    
    
    
    38
    
    
    
    (50
    )
    
    
    (105
    )
    
    
    (226
    )Forward loan sale commitments
    
    
    (178
    )
    
    
    (109
    )
    
    
    (57
    )
    
    
    65
    
    
    
    132
    
    
    
    272Option contracts
    
    
    (3
    )
    
    
    (3
    )
    
    
    (2
    )
    
    
    4
    
    
    
    10
    
    
    
    35Total Mortgage loans held
for sale, interest rate
lock commitments and
related derivatives
    
    
    (33
    )
    
    
    (14
    )
    
    
    (5
    )
    
    
    
    
    
    
    (1
    )
    
    
    Mortgage servicing rights
    
    
    (763
    )
    
    
    (349
    )
    
    
    (142
    )
    
    
    106
    
    
    
    190
    
    
    
    308Other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )Total mortgage assets
    
    
    (793
    )
    
    
    (361
    )
    
    
    (146
    )
    
    
    104
    
    
    
    186
    
    
    
    302Total vehicle assets
    
    
    12
    
    
    
    6
    
    
    
    3
    
    
    
    (3
    )
    
    
    (6
    )
    
    
    (11
    )Interest rate contracts
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    1
    
    
    
    1
    
    
    
    3Total liabilities
    
    
    (37
    )
    
    
    (18
    )
    
    
    (9
    )
    
    
    9
    
    
    
    18
    
    
    
    35Total, net
    
    $
    (819
    )
    
    $
    (374
    )
    
    $
    (153
    )
    
    $
    111
    
    
    $
    199
    
    
    $
    329
 
 
 Item 4. Controls and Procedures
 
 Disclosure Controls and Procedures
 
  Changes in Internal Control Over Financial Reporting
 
  68




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##### Table of Contents



PART II  OTHER INFORMATION
 
 
 Item 1. Legal Proceedings
 
  
 
 Item 1A. Risk Factors
 
  
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
  
 
 Item 3. Defaults Upon Senior Securities
 
  
 
 Item 4. (Removed and Reserved)
 
 
 
 Item 5. Other Information
 
  
 
 Item 6. Exhibits
 
  69




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##### Table of Contents



SIGNATURES
  PHH CORPORATIONBy:
    
    /s/ Jerome J. Selitto

Jerome J. SelittoPresident and Chief Executive OfficerDate: July 29, 2011By:
    
    /s/ David Coles

David ColesInterim Executive Vice President and Chief Financial
Officer(Principal Financial Officer and Principal
Accounting Officer)
  70




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Incorporation by Reference3.1
    
    Amended and Restated Articles of Incorporation.
    
    Incorporated by reference to Exhibit 3.1 to our Current
Report on Form 8-K filed on February 1, 2005.3.2
    
    Articles Supplementary.
    
    Incorporated by reference to Exhibit 3.1 to our Current
Report on Form 8-K filed on March 27, 2008.3.3
    
    Articles of Amendment to the Charter of PHH
Corporation effective as of June 12, 2009.
    
    Incorporated by reference to Exhibit 3.1 to our Current
Report on Form 8-K filed on June 16, 2009.3.4
    
    Amended and Restated By-Laws.
    
    Incorporated by reference to Exhibit 3.1 to our Current
Report on Form 8-K filed on April 2, 2009.4.1
    
    Specimen common stock certificate.
    
    Incorporated by reference to Exhibit 4.1 to our Annual
Report on Form 10-K for the year ended December 31, 2004
filed on March 15, 2005.4.2
    
    See Exhibits 3.1, 3.2, 3.3 and 3.4 for
provisions of the Amended and Restated Articles
of Incorporation, as amended, and Amended and
Restated By-laws of the registrant defining the
rights of holders of common stock of the
registrant.
    
    Incorporated by reference to Exhibit 3.1 to our Current
Reports on Form 8-K filed on February 1, 2005, March 27,
2008, June 16, 2009 and April 2, 2009, respectively.4.3
    
    Indenture dated as of November 6, 2000 between
PHH Corporation and The Bank of New York Mellon
(formerly known as The Bank of New York, as
successor in interest to Bank One Trust Company,
N.A.), as Trustee.
    
    Incorporated by reference to Exhibit 4.3 to our Annual
Report on Form 10-K for the year ended December 31, 2005
filed on November 22, 2006.4.3.1
    
    Supplemental Indenture No. 1 dated as of
November 6, 2000 between PHH Corporation and The
Bank of New York Mellon (formerly known as The
Bank of New York, as successor in interest to
Bank One Trust Company, N.A.), as Trustee.
    
    Incorporated by reference to Exhibit 4.4 to our Annual
Report on Form 10-K for the year ended December 31, 2005
filed on November 22, 2006.4.3.2
    
    Supplemental Indenture No. 2 dated as of January
30, 2001 between PHH Corporation and The Bank of
New York Mellon (formerly known as The Bank of
New York, as successor in interest to Bank One
Trust Company, N.A.), as Trustee.
    
    Incorporated by reference to Exhibit 4.1 to our Current
Report on Form 8-K filed on February 8, 2001.4.3.3
    
    Supplemental Indenture No. 3 dated as of May 30,
2002 between PHH Corporation and The Bank of New
York Mellon (formerly known as The Bank of New
York, as successor in interest to Bank One Trust
Company, N.A.), as Trustee.
    
    Incorporated by reference to Exhibit 4.5 to our Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
2007 filed on August 8, 2007.
 71




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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference4.3.4
    
    Supplemental Indenture No. 4 dated as of August
31, 2006 between PHH Corporation and The Bank of
New York Mellon (formerly known as The Bank of
New York, as successor in interest to Bank One
Trust Company, N.A.), as Trustee.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on September 1, 2006.4.3.5
    
    Form of PHH Corporation Internotes.
    
    Incorporated by reference to Exhibit 4.6 to our Quarterly
Report on Form 10-Q for the quarterly period ended March
31, 2008 filed on May 9, 2008.4.3.6
    
    Form of 7.125% Note due 2013.
    
    Incorporated by reference to Exhibit 4.5 to our Current
Report on Form 8-K filed on February 24, 2003.4.4
    
    Amended and Restated Base Indenture dated as of
December 17, 2008 among Chesapeake Finance
Holdings LLC, as Issuer, and JP Morgan Chase
Bank, N.A., as indenture trustee.
    
    Incorporated by reference to Exhibit 10.76 to our Annual
Report on Form 10-K for the year ended December 31, 2008
filed on March 2, 2009.4.4.1
    
    Series 2009-1 Indenture Supplement, dated as of
June 9, 2009, among Chesapeake Funding LLC, as
issuer, and The Bank of New York Mellon, as
indenture trustee.
    
    Incorporated by reference to Exhibit 4.5.11 to our
Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2009 filed on November 5, 2009.4.4.2
    
    Series 2009-2 Indenture Supplement, dated as of
September 11, 2009, among Chesapeake Funding
LLC, as issuer, and The Bank of New York Mellon,
as indenture trustee.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on September 16, 2009.4.4.3
    
    Series 2009-3 Indenture Supplement, dated as of
November 18, 2009, among Chesapeake Funding, LLC
as issuer and The Bank of New York Mellon, as
indenture trustee.
    
    Incorporated by reference to Exhibit 4.4.3 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.4.4.4
    
    Form of Series 2009-3 Class A Investor Note
    
    Incorporated by reference to Exhibit 4.4.4 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.4.4.5
    
    Form of Series 2009-3 Class B Investor Note
    
    Incorporated by reference to Exhibit 4.4.5 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.4.4.6
    
    Form of Series 2009-3 Class C Investor Note
    
    Incorporated by reference to Exhibit 4.4.6 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.4.4.7
    
    Series 2009-4 Indenture Supplement, dated as of
December 18, 2009 among Chesapeake Funding, LLC
as issuer and The Bank of New York Mellon, as
indenture trustee.
    
    Incorporated by reference to Exhibit 4.4.7 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.
 72




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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference4.4.8
    
    Form of Series 2009-4 Class A Investor Note
    
    Incorporated by reference to Exhibit 4.4.8 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.4.4.9
    
    Form of Series 2009-4 Class B Investor Note
    
    Incorporated by reference to Exhibit 4.4.9 to our Quarterly
Report on Form 10-Q for the period ended June 30, 2010,
filed on August 3, 2010.4.4.10
    
    Form of Series 2009-4 Class C Investor Note
    
    Incorporated by reference to Exhibit 4.4.10 to our
Quarterly Report on Form 10-Q for the period ended June 30,
2010, filed on August 3, 2010.4.4.11
    
    Series 2010-1 Indenture Supplement, dated as of
June 1, 2010 among Chesapeake Funding, LLC as
issuer and The Bank of New York Mellon, as
indenture trustee.
    
    Incorporated by reference to Exhibit 4.4.11 to our
Quarterly Report on Form 10-Q for the period ended June 30,
2010, filed on August 3, 2010.4.4.12
    
    Form of Series 2010-1 Floating Rate Asset Backed
Variable Funding Investor Notes, Class A.
    
    Incorporated by reference to Exhibit 4.4.12 to our
Quarterly Report on Form 10-Q for the period ended June 30,
2010, filed on August 3, 2010.4.4.13
    
    Form of Series 2010-1 Floating Rate Asset Backed
Investor Notes, Class B.
    
    Incorporated by reference to Exhibit 4.4.13 to our
Quarterly Report on Form 10-Q for the period ended June 30,
2010, filed on August 3, 2010.4.4.14
    
    Amended and Restated Series 2010-1 Indenture
Supplement dated as of June 29, 2011, among
Chesapeake Funding, LLC, PHH Vehicle Management
Services, LLC, JPMorgan Chase Bank, N.A.,
Certain Non-Conduit Purchasers, Certain CP
Conduit Purchaser Groups, Funding Agents for the
CP Conduit Purchaser Groups, Certain Class B
Note Purchasers and The Bank of New York Mellon.
    
    Incorporated by reference to Exhibit 4.1 to our Current
Report on Form 8-K filed on July 6, 2011.4.4.15
    
    Series 2011-1 Indenture Supplement dated as of
June 29, 2011, among Chesapeake Funding, LLC,
PHH Vehicle Management Services, LLC, JPMorgan
Chase Bank, N.A., Certain Non-Conduit
Purchasers, Certain CP Conduit Purchaser Groups,
Funding Agents for the CP Conduit Purchaser
Groups, Certain Class B Note Purchasers and The
Bank of New York Mellon.
    
    Incorporated by reference to Exhibit 4.2 to our Current
Report on Form 8-K filed on July 6, 2011.4.5
    
    Indenture dated as of April 2, 2008, by and
between PHH Corporation and The Bank of New
York, as Trustee.
    
    Incorporated by reference to Exhibit 4.1 to our Current
Report on Form 8-K filed on April 4, 2008.4.5.1
    
    Form of Global Note 4.00% Convertible Senior
Note Due 2012.
    
    Incorporated by reference to Exhibit 4.2 to our Current
Report on Form 8-K filed on April 4, 2008.
 73




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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference4.6
    
    Indenture dated as of September 29, 2009, by and between PHH
Corporation and The Bank of New York Mellon, as Trustee.
    
    Incorporated by reference to Exhibit 4.1 to our Current
Report on Form 8-K filed on October 1, 2009.4.6.1
    
    Form of Global Note 4.00% Convertible Senior Note Due 2014.
    
    Incorporated by reference to Exhibit A of Exhibit 4.1 to our
Current Report on Form 8-K filed on October 1, 2009.4.7
    
    Trust Indenture dated as of November 16, 2009, between BNY
Trust Company of Canada as issuer trustee of Fleet Leasing
Receivables Trust and ComputerShare Trust Company Of Canada, as
indenture trustee.
    
    Incorporated by reference to Exhibit 4.8 to our Annual Report
on Form 10-K for the year ended December 31, 2009 filed on
March 1, 2010.4.7.1
    
    Series 2010-1 Supplemental Indenture dated as of January 27,
2010, between BNY Trust Company of Canada as issuer trustee of
Fleet Leasing Receivables Trust and ComputerShare Trust Company
Of Canada, as indenture trustee.
    
    Incorporated by reference to Exhibit 4.8.1 to our Annual
Report on Form 10-K for the year ended December 31, 2009
filed on March 1, 2010.4.7.2
    
    Fleet Leasing Receivables Trust Series 2010-1 Class A-1a
Asset-Backed Note.
    
    Incorporated by reference to Schedule A-1a of Exhibit 4.8.1
to our Annual Report on Form 10-K for the year ended December
31, 2009 filed on March 1, 2010.4.7.3
    
    Fleet Leasing Receivables Trust Series 2010-1 Class A-1b
Asset-Backed Note.
    
    Incorporated by reference to Schedule A-1b of Exhibit 4.8.1
to our Annual Report on Form 10-K for the year ended December
31, 2009 filed on March 1, 2010.4.7.4
    
    Fleet Leasing Receivables Trust Series 2010-1 Class A-2a
Asset-Backed Note.
    
    Incorporated by reference to Schedule A-2a of Exhibit 4.8.1
to our Annual Report on Form 10-K for the year ended December
31, 2009 filed on March 1, 2010.4.7.5
    
    Fleet Leasing Receivables Trust Series 2010-1 Class A-2b
Asset-Backed Note.
    
    Incorporated by reference to Schedule A-2b of Exhibit 4.8.1
to our Annual Report on Form 10-K for the year ended December
31, 2009 filed on March 1, 2010.4.7.6
    
    Fleet Leasing Receivables Trust Series 2010-1 Class B
Asset-Backed Note.
    
    Incorporated by reference to Schedule B of Exhibit 4.8.1 to
our Annual Report on Form 10-K for the year ended December
31, 2009 filed on March 1, 2010.4.7.7
    
    Series 2010-2 Supplemental Indenture dated as of August 31,
2010, between BNY Trust Company of Canada as issuer trustee of
Fleet Leasing Receivables Trust and ComputerShare Trust Company
Of Canada, as indenture trustee.
    
    Incorporated by reference to Exhibit 4.7.7 to our Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 2010 filed on November 3, 2010.4.7.8
    
    Fleet Leasing Receivables Trust Series 2010-2 Class A
Asset-Backed Note.
    
    Incorporated by reference to Exhibit 4.7.8 to our Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 2010 filed on November 3, 2010.
 74




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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference4.7.9
    
    Fleet Leasing Receivables Trust Series 2010-2 Class B
Asset-Backed Note.
    
    Incorporated by reference to Exhibit 4.7.9 to our Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 2010 filed on November 3, 2010.4.8
    
    Indenture dated as of August 11, 2010 between PHH Corporation,
as Issuer, and The Bank of New York Mellon Trust Company, N.A.,
as Trustee.
    
    Incorporated by reference to Exhibit 4.1 to our Current
Report on Form 8-K filed on August 12, 2010.4.8.1
    
    Form of 91/4% Senior Note Due 2016.
    
    Incorporated by reference to Exhibit 4.8.1 to our Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
2011 filed on May 4, 2011.10.1
    
    Amended and Restated Competitive Advance and Revolving Credit
Agreement, dated as of January 6, 2006, by and among PHH
Corporation and PHH Vehicle Management Services, Inc., as
Borrowers, J.P. Morgan Securities, Inc. and Citigroup Global
Markets, Inc., as Joint Lead Arrangers, the Lenders referred to
therein (the Lenders), and JPMorgan Chase Bank, N.A., as a
Lender and Administrative Agent for the Lenders.
    
    Incorporated by reference to Exhibit 10.47 to our Annual
Report on Form 10-K for the year ended December 31, 2005
filed on November 22, 2006.10.1.1
    
    Second Amendment, dated as of November 2, 2007, to the Amended
and Restated Competitive Advance and Revolving Credit
Agreement, as amended, dated as of January 6, 2006, by and
among PHH Corporation and PHH Vehicle Management Services,
Inc., as Borrowers, J.P. Morgan Securities, Inc. and Citigroup
Global Markets, Inc., as Joint Lead Arrangers, the Lenders
referred to therein, and JPMorgan Chase Bank, N.A., as a Lender
and Administrative Agent for the Lenders.
    
    Incorporated by reference to Exhibit 10.3 to our Current
Report on Form 8-K filed on November 2, 2007.10.1.2
    
    Third Amendment, dated as of March 27, 2008, to the Amended and
Restated Competitive Advance and Revolving Credit Agreement, as
amended, dated as of January 6, 2006, by and among PHH
Corporation and PHH Vehicle Management Services, Inc., as
Borrowers, J.P. Morgan Securities, Inc. and Citigroup Global
Markets, Inc., as Joint Lead Arrangers, the Lenders referred to
therein, and JPMorgan Chase Bank, N.A., as a Lender and
Administrative Agent for the Lenders.
    
    Incorporated by reference to Exhibit 10.1.2 to our Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 2009 filed on November 5, 2009.10.1.3
    
    Fourth Amendment, dated as of June 25, 2010, to the Amended and
Restated Competitive Advance and Revolving Credit Agreement, as
amended, dated as of January 6, 2006, by and among PHH
Corporation and PHH Vehicle Management Services, Inc., as
Borrowers, J.P. Morgan Securities, Inc. and Citigroup Global
Markets, Inc., as Joint Lead Arrangers, the Lenders referred to
therein and JP Morgan Chase Bank, N.A. as a Lender and as a
Administrative Agent for the lenders.
    
    Incorporated by reference to Exhibit 10.1.3 to our Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
2010 filed on August 3, 2010.
 75




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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference10.2
    
    Purchase Agreement dated March 27, 2008 by and between PHH
Corporation, Citigroup Global Markets Inc., J.P. Morgan
Securities Inc. and Wachovia Capital Markets, LLC, as
representatives of the Initial Purchasers.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.1
    
    Master Terms and Conditions for Convertible Bond Hedging
Transactions dated March 27, 2008 by and between PHH
Corporation and J.P. Morgan Chase Bank, N.A.
    
    Incorporated by reference to Exhibit 10.2 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.2
    
    Master Terms and Conditions for Warrants dated March 27, 2008
by and between PHH Corporation and J.P. Morgan Chase Bank, N.A.
    
    Incorporated by reference to Exhibit 10.3 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.3
    
    Confirmation of Convertible Bond Hedging Transactions dated
March 27, 2008 by and between PHH Corporation and J.P. Morgan
Chase Bank, N.A.
    
    Incorporated by reference to Exhibit 10.4 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.4
    
    Confirmation of Warrant dated March 27, 2008 by and between PHH
Corporation and J.P. Morgan Chase Bank, N.A.
    
    Incorporated by reference to Exhibit 10.5 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.5
    
    Master Terms and Conditions for Convertible Debt Bond Hedging
Transactions dated March 27, 2008 by and between PHH
Corporation and Wachovia Bank, N.A.
    
    Incorporated by reference to Exhibit 10.6 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.6
    
    Master Terms and Conditions for Warrants dated March 27, 2008
by and between PHH Corporation and Wachovia Bank, N.A.
    
    Incorporated by reference to Exhibit 10.7 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.7
    
    Confirmation of Convertible Bond Hedging Transactions dated
March 27, 2008 by and between PHH Corporation and Wachovia
Bank, N.A.
    
    Incorporated by reference to Exhibit 10.8 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.8
    
    Confirmation of Warrant dated March 27, 2008 by and between PHH
Corporation and Wachovia Bank, N.A.
    
    Incorporated by reference to Exhibit 10.9 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.9
    
    Master Terms and Conditions for Convertible Bond Hedging
Transactions dated March 27, 2008 by and between PHH
Corporation and Citibank, N.A.
    
    Incorporated by reference to Exhibit 10.10 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.10
    
    Master Terms and Conditions for Warrants dated March 27, 2008
by and between PHH Corporation and Citibank, N.A.
    
    Incorporated by reference to Exhibit 10.11 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.11
    
    Confirmation of Convertible Bond Hedging Transactions dated
March 27, 2008 by and between PHH Corporation and Citibank,
N.A.
    
    Incorporated by reference to Exhibit 10.12 to our Current
Report on Form 8-K filed on April 4, 2008.10.2.12
    
    Confirmation of Warrant dated March 27, 2008 by and between PHH
Corporation and Citibank, N.A.
    
    Incorporated by reference to Exhibit 10.13 to our Current
Report on Form 8-K filed on April 4, 2008.
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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference10.3
    
    Third Amended and Restated Master
Repurchase Agreement dated as of June 24,
2011, between The Royal Bank of Scotland
PLC, as Buyer, PHH Mortgage Corporation,
as Seller.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on June 30,
2011.10.3.1
    
    Third Amended and Restated Guaranty dated
as of June 18, 2010, made by PHH
Corporation in favor of The Royal Bank of
Scotland, PLC.
    
    Incorporated by reference
to Exhibit 10.2 to our
Current Report on Form
8-K filed on June 23,
2010.10.4
    
    Purchase Agreement dated September 2,
2009 by and among PHH Corporation, PHH
Vehicle Management Services, LLC,
Chesapeake Funding LLC and J.P. Morgan
Securities, Inc, Banc of America
Securities LLC and Citigroup Global
Markets, Inc., as representatives of
several initial purchasers.
    
    Incorporated by reference
to Exhibit 10.12 to our
Quarterly Report on Form
10-Q/A for the quarterly
period ended September
30, 2009 filed on January
12, 2010.10.5
    
    Purchase Agreement dated September 23,
2009, by and between PHH Corporation,
Citigroup Global Markets Inc., J.P.
Morgan Securities Inc. and Wells Fargo
Securities, LLC, as representatives of
the Initial Purchasers.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.1
    
    Master Terms and Conditions for
Convertible Bond Hedging Transactions
dated September 23, 2009, by and between
PHH Corporation and JPMorgan Chase Bank,
National Association, London Branch.
    
    Incorporated by reference
to Exhibit 10.2 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.2
    
    Master Terms and Conditions for Warrants
dated September 23, 2009, by and between
PHH Corporation and JPMorgan Chase Bank,
National Association, London Branch.
    
    Incorporated by reference
to Exhibit 10.3 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.3
    
    Confirmation of Convertible Bond Hedging
Transactions dated September 23, 2009, by
and between PHH Corporation and JPMorgan
Chase Bank, National Association, London
Branch.
    
    Incorporated by reference
to Exhibit 10.4 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.4
    
    Confirmation of Warrants dated September
23, 2009, by and between PHH Corporation
and JPMorgan Chase Bank, National
Association, London Branch.
    
    Incorporated by reference
to Exhibit 10.5 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.5
    
    Master Terms and Conditions for
Convertible Bond Hedging Transactions
dated September 23, 2009, by and between
PHH Corporation and Wachovia Bank,
National Association.
    
    Incorporated by reference
to Exhibit 10.6 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.6
    
    Master Terms and Conditions for Warrants
dated September 23, 2009, by and between
PHH Corporation and Wachovia Bank,
National Association.
    
    Incorporated by reference
to Exhibit 10.7 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.7
    
    Confirmation of Convertible Bond Hedging
Transactions dated September 23, 2009, by
and between PHH Corporation and Wachovia
Bank, National Association.
    
    Incorporated by reference
to Exhibit 10.8 to our
Current Report on Form
8-K filed on September
29, 2009.
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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference10.5.8
    
    Confirmation of Warrants dated September
23, 2009, by and between PHH Corporation
and Wachovia Bank, National Association.
    
    Incorporated by reference
to Exhibit 10.9 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.9
    
    Master Terms and Conditions for
Convertible Bond Hedging Transactions
dated September 23, 2009, by and between
PHH Corporation and Citibank, N.A.
    
    Incorporated by reference
to Exhibit 10.10 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.10
    
    Master Terms and Conditions for Warrants
dated September 23, 2009, by and between
PHH Corporation and Citibank, N.A.
    
    Incorporated by reference
to Exhibit 10.11 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.11
    
    Confirmation of Convertible Bond Hedging
Transactions dated September 23, 2009, by
and between PHH Corporation and Citibank,
N.A.
    
    Incorporated by reference
to Exhibit 10.12 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.12
    
    Confirmation of Warrants dated September
23, 2009, by and between PHH Corporation
and Citibank, N.A.
    
    Incorporated by reference
to Exhibit 10.13 to our
Current Report on Form
8-K filed on September
29, 2009.10.5.13
    
    Amendment to Convertible Bond Hedging
Transaction Confirmation dated September
29, 2009, by and between PHH Corporation
and JPMorgan Chase Bank, National
Association, London Branch.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on October 1,
2009.10.5.14
    
    Confirmation of Additional Warrants dated
September 29, 2009, by and between PHH
Corporation and JPMorgan Chase Bank,
National Association, London Branch.
    
    Incorporated by reference
to Exhibit 10.2 to our
Current Report on Form
8-K filed on October 1,
2009.10.5.15
    
    Amendment to Convertible Bond Hedging
Transaction Confirmation dated September
29, 2009, by and between PHH Corporation
and Wachovia Bank, National Association.
    
    Incorporated by reference
to Exhibit 10.3 to our
Current Report on Form
8-K filed on October 1,
2009.10.5.16
    
    Confirmation of Additional Warrants dated
September 29, 2009, by and between PHH
Corporation and Wachovia Bank, National
Association.
    
    Incorporated by reference
to Exhibit 10.4 to our
Current Report on Form
8-K filed on October 1,
2009.10.5.17
    
    Amendment to Convertible Bond Hedging
Transaction Confirmation dated September
29, 2009, by and between PHH Corporation
and Citibank, N.A.
    
    Incorporated by reference
to Exhibit 10.5 to our
Current Report on Form
8-K filed on October 1,
2009.10.5.18
    
    Confirmation of Additional Warrants dated
September 29, 2009, by and between PHH
Corporation and Citibank, N.A.
    
    Incorporated by reference
to Exhibit 10.6 to our
Current Report on Form
8-K filed on October 1,
2009.10.6
    
    Form of Indemnification Agreement.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on August 20,
2010.10.6.1
    
    PHH Corporation Unanimous Written Consent
of the Board of Directors effective
August 18, 2010.
    
    Incorporated by reference
to Exhibit 10.2 to our
Current Report on Form
8-K filed on August 20,
2010.
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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference10.6.2
    
    PHH Corporation Management Incentive Plan.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on April 6,
2010.10.6.3
    
    Form of PHH Corporation Management
Incentive Plan Award Notice.
    
    Incorporated by reference
to Exhibit 10.2 to our
Current Report on Form
8-K filed on April 6,
2010.10.6.4
    
    Amended and Restated 2005 Equity and
Incentive Plan (as amended and restated
through June 17, 2009).
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on June 22,
2009.10.6.5
    
    First Amendment to the PHH Corporation
Amended and Restated 2005 Equity and
Incentive Plan, effective August 18,
2010.
    
    Incorporated by reference
to Exhibit 10.3 to our
Current Report on Form
8-K filed on August 20,
2010.10.6.6
    
    Form of PHH Corporation 2005 Equity and
Incentive Plan Non-Qualified Stock Option
Agreement, as amended.
    
    Incorporated by reference
to Exhibit 10.28 to our
Quarterly Report on Form
10-Q for the quarterly
period ended March 31,
2005 filed on May 16,
2005.10.6.7
    
    Form of PHH Corporation 2005 Equity and
Incentive Plan Non-Qualified Stock Option
Conversion Award Agreement.
    
    Incorporated by reference
to Exhibit 10.29 to our
Quarterly Report on Form
10-Q for the quarterly
period ended March 31,
2005 filed on May 16,
2005.10.6.8
    
    Form of PHH Corporation 2005 Equity and
Incentive Plan Non-Qualified Stock Option
Award Agreement, as revised June 28,
2005.
    
    Incorporated by reference
to Exhibit 10.36 to our
Quarterly Report on Form
10-Q for the quarterly
period ended June 30,
2005 filed on August 12,
2005.10.6.9
    
    Form of PHH Corporation 2005 Equity and
Incentive Plan Restricted Stock Unit
Award Agreement, as revised June 28,
2005.
    
    Incorporated by reference
to Exhibit 10.37 to our
Quarterly Report on Form
10-Q for the quarterly
period ended June 30,
2005 filed on August 12,
2005.10.6.10
    
    Form of 2009 Performance Unit Award
Notice and Agreement for Certain
Executive Officers, as approved by the
Compensation Committee on March 25, 2009.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on March 31,
2009.10.6.11
    
    Transition Services and Separation
Agreement by and between PHH Corporation
and Terence W. Edwards dated August 5,
2009.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on August 5,
2009.10.6.12
    
    Amendment to the Transition Services and
Separation Agreement by and between PHH
Corporation and Terence W. Edwards dated
as of September 11, 2009.
    
    Incorporated by reference
to Exhibit 10.2 to our
Current Report on Form
8-K filed on September
16, 2009.10.6.13
    
    Release by and between PHH Corporation
and Terence W. Edwards dated as of
September 11, 2009.
    
    Incorporated by reference
to Exhibit 10.3 to our
Current Report on Form
8-K filed on September
16, 2009.10.6.14
    
    Employment Agreement dated as of October
26, 2009, between Jerome J. Selitto and
PHH Corporation.
    
    Incorporated by reference
to Exhibit 10.1 to our
Current Report on Form
8-K filed on October 30,
2009.
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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference10.6.15
    
    Separation Agreement between PHH Corporation and
Mark R. Danahy dated as of August 4, 2010.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on August 4, 2010.10.6.16
    
    Letter Agreement between PHH Corporation and
Alvarez & Marsal North America, LLC dated March
1, 2011.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on March 4, 2011.10.6.17
    
    Separation Agreement by and between Sandra Bell
and PHH Corporation dated as of May 6, 2011.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on May 9, 2011.10.7
    
    Trust Purchase Agreement dated January 27, 2010
between Fleet Leasing Receivables Trust, as
purchaser, PHH Fleet Lease Receivables L.P., as
seller, PHH Vehicle Management Services Inc., as
servicer and PHH Corporation, as performance
guarantor.
    
    Incorporated by reference to Exhibit 10.15 to our Annual
Report on Form 10-K for the year ended December 31, 2009
filed on March 1, 2010.10.7.1
    
    Agency Agreement dated as of January 25, 2010,
between BNY Trust Company of Canada as trustee
of Fleet Leasing Receivables Trust, PHH Vehicle
Management Services Inc., as financial services
agent of Fleet Leasing Receivables Trust and as
originator, PHH Fleet Lease Receivables L.P., as
seller and Merrill Lynch Canada Inc., CIBC World
Markets Inc., RBC Dominion Securities Inc. and
Scotia Capital Inc., as agents.
    
    Incorporated by reference to Exhibit 10.15.1 to our Annual
Report on Form 10-K for the year ended December 31, 2009
filed on March 1, 2010.10.7.2
    
    Agency Agreement dated as of January 25, 2010,
between BNY Trust Company of Canada as trustee
of Fleet Leasing Receivables Trust, PHH Vehicle
Management Services Inc., as financial services
agent of Fleet Leasing Receivables Trust and as
originator, PHH Fleet Lease Receivables L.P., as
seller and Merrill Lynch Canada Inc. and Banc of
America Securities LLC, as agents.
    
    Incorporated by reference to Exhibit 10.15.2 to our Annual
Report on Form 10-K for the year ended December 31, 2009
filed on March 1, 2010.10.8
    
    Mortgage Loan Participation Purchase and Sale
Agreement dated as of July 23, 2010, between PHH
Mortgage Corporation, as seller, and Bank of
America, N.A., as purchaser.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on July 29, 2010.10.8.1
    
    Amendment No. 2 to Mortgage Loan Participation
Purchase and Sale Agreement dated as of July 14,
2011, between Bank of America, N.A. and PHH
Mortgage Corporation.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on July 20, 2011.10.9
    
    Purchase Agreement, dated August 6, 2010, by and
between PHH Corporation, Banc of America
Securities LLC, Citigroup Global Markets Inc.,
J.P. Morgan Securities Inc., and RBS Securities
Inc., as representatives of the Initial
Purchasers.
    
    Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on August 9, 2010.
 80




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##### Table of Contents



Exhibit No.
    
    Description
    
    Incorporation by Reference10.10
    
    Registration Rights Agreement,
dated August 11, 2010, by and
between PHH Corporation and
Banc of America Securities
LLC, Citigroup Global Markets
Inc., J.P. Morgan Securities
Inc., and RBS Securities Inc.,
as representatives of several
initial purchasers of the
notes.
    
    Incorporated by reference to
Exhibit 10.1 to our Current
Report on Form 8-K filed on
August, 12, 2010.10.11
    
    Mortgage Loan Participation
Sale Agreement dated as of
September 2, 2010, between PHH
Mortgage Corporation, as
seller, and JPMorgan Chase
Bank, National Association, as
purchaser.
    
    Incorporated by reference to
Exhibit 10.1 to our Current
Report on Form 8-K filed on
September 3, 2010.10.12
    
    Letter Agreement between
Fannie Mae and PHH Mortgage
Corporation dated December 16,
2010.
    
    Incorporated by reference to
Exhibit 10.1 to our Current
Report on Form 8-K filed on
December 22, 2010.31.1
    
    Certification of Chief
Executive Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    Filed herewith.31.2
    
    Certification of Chief
Financial Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    Filed herewith.32.1
    
    Certification of Chief
Executive Officer pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    Filed herewith.32.2
    
    Certification of Chief
Financial Officer pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    Filed herewith.
 
 
    
    Confidential treatment has been requested for certain portions of this Exhibit pursuant to
Rule 24b-2 of the Exchange Act which portions have been omitted and filed separately with the
Commission.
    
    Confidential treatment has been granted for certain portions of this Exhibit pursuant to an
order under the Exchange Act which portions have been omitted and filed separately with the
Commission.
    
    Management or compensatory plan or arrangement required to be filed pursuant to Item
601(b)(10) of Regulation S-K. 81