PHH Cornering the Credit Union Market

PHH Corp (NYSE:PHH), which was spun off from Cendant (NYSE:CD) earlier this year, said it had agreed to acquire the mortgage assets from CUNA Mutual Group, making it the largest mortgage bank for credit unions. Under the deal, PHH, which already provides mortgage services for as many as 500 credit unions, will take on the 1,400 served by CUNA Mutual Mortgage and the $11 billion in credit union-originated mortgages being serviced by CUNA Mutual. In the last 12 months, the origination volume at CUNA was approximately $1 billion.

The company’s decision to sell the business operations of CUNA Mutual Mortgage comes after several months of strategic review of CUNA Mutual’s mortgage division. The company is also conducting reviews of non-core business areas companywide in an effort at improving its focus and efficiency. PHH, long a player in credit union mortgages, was acquired by Cendant, then spun off again in February as publicly traded company. The company has a servicing portfolio of almost $150 billion in mortgages, ranking it 11th largest in the country, according to National Mortgage News.

The acquisition of CUNA Mutual's mortgage operations will significantly expand the credit union market for PHH Mortgage and immediately make it the top mortgage lender in the credit union market. After completion of the deal, CUNA Mutual said it expects to eliminate the 200 jobs in the mortgage operation in the Madison suburb of Fitchburg.

Since Monday's news, the stock has fell 5% to $26.35.