PHH » Topics » Competition

These excerpts taken from the PHH 10-K filed Mar 2, 2009.
Competition
 
The principal factors for competition for our Mortgage Production and Mortgage Servicing segments are service, quality, products and price. Competitive conditions also can be impacted by shifts in consumer preference between variable-rate mortgages and fixed-rate mortgages, depending on the interest rate environment. In our Mortgage Production segment, we work with our clients to develop new and competitive loan products that address their specific customer needs. In our Mortgage Servicing segment, we focus on customer service while working to enhance the efficiency of our servicing platform. Excellent customer service is also a critical component of our competitive strategy to win new clients and maintain existing clients. We, along with our clients, consistently track and monitor customer service levels and look for ways to improve customer service.
 
According to Inside Mortgage Finance, PHH Mortgage was the 7th largest retail mortgage loan originator in the U.S. with a 4.0% market share as of December 31, 2008 and the 10th largest mortgage loan servicer with a 1.3% market share as of December 31, 2008. Some of our largest competitors include Bank of America/Countrywide Financial, Wells Fargo Home Mortgage, Chase Home Finance and CitiMortgage. Many of our competitors are larger than we are and have access to greater financial resources than we do, which can place us at a competitive disadvantage. In addition, many of our largest competitors are banks or affiliated with banking institutions, the advantages of which include, but are not limited to, the ability to hold new mortgage loan originations in an investment portfolio, access to lower rate bank deposits as a source of liquidity and the ability to access the benefits under several government initiatives, such as funding under the EESA’s Troubled Asset Relief Program (“TARP”).
 
Beginning in the second half of 2007, many mortgage loan origination companies commenced bankruptcy proceedings, shut down or severely curtailed their lending activities. More recently, the adverse conditions in the mortgage industry, credit markets and the U.S. economy in general has resulted in further consolidation within the industry, with many large financial institutions being acquired or combined, including the related mortgage operations. Such consolidation includes the acquisition of Countrywide Financial Corporation by Bank of America Corporation, JPMorgan Chase’s acquisition of Washington Mutual’s banking operations and the acquisition of Wachovia Corporation by Wells Fargo & Company.
 
The consolidation or elimination of several of our largest competitors has thus far resulted in reduced industry capacity and higher loan margins. However, many of our competitors continue to have access to greater financial resources than we have, which places us at a competitive disadvantage. Additionally, more restrictive underwriting standards and the elimination of Alt-A and subprime products has resulted in a more homogenous product offering. This shift to more traditional prime loan products may result in a further increase in competition within the mortgage industry, which could have a negative impact on our Mortgage Production segment’s results of operations during 2009.
 
Many smaller and mid-sized financial institutions may find it difficult to compete in the mortgage industry due to the consolidation in the industry and the need to invest in technology in order to reduce operating costs while maintaining compliance in an increasingly complex regulatory environment. We intend to take advantage of this environment by leveraging our existing mortgage origination services platform to enter into new outsourcing relationships as more companies determine that it is no longer economically feasible to directly originate mortgage


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loans. However, there can be no assurance that we will be successful in continuing to enter into new outsourcing relationships.
 
We are party to a strategic relationship agreement dated as of January 31, 2005 between PHH Mortgage, PHH Home Loans, PHH Broker Partner, Realogy Venture Partner and Cendant (the “Strategic Relationship Agreement”), which, among other things, restricts us and our affiliates, subject to limited exceptions, from engaging in certain residential real estate services, including any business conducted by Realogy. The Strategic Relationship Agreement also provides that we will not directly or indirectly sell any mortgage loans or mortgage loan servicing to certain competitors in the residential real estate brokerage franchise businesses in the U.S. (or any company affiliated with them). See “— Arrangements with Realogy—Strategic Relationship Agreement” below for more information.
 
See “Our Business—Mortgage Production and Mortgage Servicing Segments—Mortgage Production Segment” and “Item 1A. Risk Factors—Risks Related to our Business—The industries in which we operate are highly competitive and, if we fail to meet the competitive challenges in our industries, it could have a material adverse effect on our business, financial position, results of operations or cash flows.” for more information.
 
Competition


 



The principal factors for competition for our Mortgage
Production and Mortgage Servicing segments are service, quality,
products and price. Competitive conditions also can be impacted
by shifts in consumer preference between variable-rate mortgages
and fixed-rate mortgages, depending on the interest rate
environment. In our Mortgage Production segment, we work with
our clients to develop new and competitive loan products that
address their specific customer needs. In our Mortgage Servicing
segment, we focus on customer service while working to enhance
the efficiency of our servicing platform. Excellent customer
service is also a critical component of our competitive strategy
to win new clients and maintain existing clients. We, along with
our clients, consistently track and monitor customer service
levels and look for ways to improve customer service.


 



According to Inside Mortgage Finance, PHH Mortgage was
the 7th largest retail mortgage loan originator in the
U.S. with a 4.0% market share as of December 31, 2008
and the 10th largest mortgage loan servicer with a 1.3%
market share as of December 31, 2008. Some of our largest
competitors include Bank of America/Countrywide Financial, Wells
Fargo Home Mortgage, Chase Home Finance and CitiMortgage. Many
of our competitors are larger than we are and have access to
greater financial resources than we do, which can place us at a
competitive disadvantage. In addition, many of our largest
competitors are banks or affiliated with banking institutions,
the advantages of which include, but are not limited to, the
ability to hold new mortgage loan originations in an investment
portfolio, access to lower rate bank deposits as a source of
liquidity and the ability to access the benefits under several
government initiatives, such as funding under the EESA’s
Troubled Asset Relief Program (“TARP”).


 



Beginning in the second half of 2007, many mortgage loan
origination companies commenced bankruptcy proceedings, shut
down or severely curtailed their lending activities. More
recently, the adverse conditions in the mortgage industry,
credit markets and the U.S. economy in general has resulted
in further consolidation within the industry, with many large
financial institutions being acquired or combined, including the
related mortgage operations. Such consolidation includes the
acquisition of Countrywide Financial Corporation by Bank of
America Corporation, JPMorgan Chase’s acquisition of
Washington Mutual’s banking operations and the acquisition
of Wachovia Corporation by Wells Fargo & Company.


 



The consolidation or elimination of several of our largest
competitors has thus far resulted in reduced industry capacity
and higher loan margins. However, many of our competitors
continue to have access to greater financial resources than we
have, which places us at a competitive disadvantage.
Additionally, more restrictive underwriting standards and the
elimination of Alt-A and subprime products has resulted in a
more homogenous product offering. This shift to more traditional
prime loan products may result in a further increase in
competition within the mortgage industry, which could have a
negative impact on our Mortgage Production segment’s
results of operations during 2009.


 



Many smaller and mid-sized financial institutions may find it
difficult to compete in the mortgage industry due to the
consolidation in the industry and the need to invest in
technology in order to reduce operating costs while maintaining
compliance in an increasingly complex regulatory environment. We
intend to take advantage of this environment by leveraging our
existing mortgage origination services platform to enter into
new outsourcing relationships as more companies determine that
it is no longer economically feasible to directly originate
mortgage





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loans. However, there can be no assurance that we will be
successful in continuing to enter into new outsourcing
relationships.


 



We are party to a strategic relationship agreement dated as of
January 31, 2005 between PHH Mortgage, PHH Home Loans, PHH
Broker Partner, Realogy Venture Partner and Cendant (the
“Strategic Relationship Agreement”), which, among
other things, restricts us and our affiliates, subject to
limited exceptions, from engaging in certain residential real
estate services, including any business conducted by Realogy.
The Strategic Relationship Agreement also provides that we will
not directly or indirectly sell any mortgage loans or mortgage
loan servicing to certain competitors in the residential real
estate brokerage franchise businesses in the U.S. (or any
company affiliated with them). See
“— Arrangements with Realogy—Strategic
Relationship Agreement” below for more information.


 



See “Our Business—Mortgage Production and Mortgage
Servicing Segments—Mortgage Production Segment” and
“Item 1A. Risk Factors—Risks Related to our
Business—The industries in which we operate are highly
competitive and, if we fail to meet the competitive challenges
in our industries, it could have a material adverse effect on
our business, financial position, results of operations or cash
flows.” for more information.


 




Competition
 
We differentiate ourselves from our competitors primarily on three factors: the breadth of our product offering; customer service and technology. Unlike certain of our competitors that focus on selected elements of the fleet management process, we offer fully integrated services. In this manner, we are able to offer customized solutions to clients regardless of their needs. We believe we have developed an industry-leading technology infrastructure. Our data warehousing, information management and online systems enable clients to download customized reports to better monitor and manage their corporate fleets. Our competitors in the U.S. and Canada include GE Commercial Finance Fleet Services, Wheels Inc., Automotive Resources International, Lease Plan International and other local and regional competitors, including numerous competitors who focus on one or two products. Certain of our competitors are larger than we are and have access to greater financial resources than we do. Additionally, to the extent that our competitors have access to financing with more favorable terms than we do, we could be placed at a competitive disadvantage, particularly as we seek to extend our existing borrowing arrangements or enter into new borrowing arrangements. (See “Item 1A. Risk Factors—Risks Related to our Business—The businesses in which we engage are complex and heavily regulated, and changes in the regulatory environment affecting our businesses could have a material adverse effect on our business, financial position, results of operations or cash flows.” for more information.)
 
Competition


 



We differentiate ourselves from our competitors primarily on
three factors: the breadth of our product offering; customer
service and technology. Unlike certain of our competitors that
focus on selected elements of the fleet management process, we
offer fully integrated services. In this manner, we are able to
offer customized solutions to clients regardless of their needs.
We believe we have developed an industry-leading technology
infrastructure. Our data warehousing, information management and
online systems enable clients to download customized reports to
better monitor and manage their corporate fleets. Our
competitors in the U.S. and Canada include GE Commercial Finance
Fleet Services, Wheels Inc., Automotive Resources International,
Lease Plan International and other local and regional
competitors, including numerous competitors who focus on one or
two products. Certain of our competitors are larger than we are
and have access to greater financial resources than we do.
Additionally, to the extent that our competitors have access to
financing with more favorable terms than we do, we could be
placed at a competitive disadvantage, particularly as we seek to
extend our existing borrowing arrangements or enter into new
borrowing arrangements. (See “Item 1A. Risk
Factors—Risks Related to our Business—The businesses
in which we engage are complex and heavily regulated, and
changes in the regulatory environment affecting our businesses
could have a material adverse effect on our business, financial
position, results of operations or cash flows.” for more
information.)


 




These excerpts taken from the PHH 10-K filed Feb 29, 2008.
Competition
 
We differentiate ourselves from our competitors primarily on three factors: the breadth of our product offering; customer service and technology. Unlike certain of our competitors that focus on selected elements of the fleet management process, we offer fully integrated services. In this manner, we are able to offer customized solutions to clients regardless of their needs. We believe we have developed an industry-leading technology infrastructure. Our data warehousing, information management and online systems enable clients to download customized reports to better monitor and manage their corporate fleets. Our competitors in the U.S. and Canada include GE Commercial Finance Fleet Services, Wheels Inc., Automotive Resources International, Lease Plan International and other local and regional competitors, including numerous competitors who focus on one or two products. Certain of our competitors are larger than we are and have access to greater financial resources than we do. (See “Item 1A. Risk Factors—Risks Related to our Business—The businesses in which we engage are complex and heavily regulated, and changes in the regulatory environment affecting our businesses could have a material adverse effect on our financial position, results of operations or cash flows.” for more information.)


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Table of Contents

Competition


 



We differentiate ourselves from our competitors primarily on
three factors: the breadth of our product offering; customer
service and technology. Unlike certain of our competitors that
focus on selected elements of the fleet management process, we
offer fully integrated services. In this manner, we are able to
offer customized solutions to clients regardless of their needs.
We believe we have developed an industry-leading technology
infrastructure. Our data warehousing, information management and
online systems enable clients to download customized reports to
better monitor and manage their corporate fleets. Our
competitors in the U.S. and Canada include GE Commercial
Finance Fleet Services, Wheels Inc., Automotive Resources
International, Lease Plan International and other local and
regional competitors, including numerous competitors who focus
on one or two products. Certain of our competitors are larger
than we are and have access to greater financial resources than
we do. (See “Item 1A. Risk Factors—Risks Related
to our Business—The businesses in which we engage are
complex and heavily regulated, and changes in the regulatory
environment affecting our businesses could have a material
adverse effect on our financial position, results of operations
or cash flows.” for more information.)





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Table of Contents







This excerpt taken from the PHH 10-K filed May 24, 2007.
Competition
 
We differentiate ourselves from our competitors primarily on three factors: the breadth of our product offering; customer service and technology. Unlike certain of our competitors that focus on selected elements of the fleet management process, we offer fully integrated services. In this manner, we are able to offer customized solutions to clients regardless of their needs. We believe we have developed an industry-leading technology infrastructure. Our data warehousing, information management and online systems enable clients to download customized reports to better monitor and manage their corporate fleets. Our competitors in the U.S. and Canada include GE Commercial Finance Fleet Services, Wheels Inc., Automotive Resources International, Lease Plan International and other local and regional competitors, including numerous competitors who focus on one or two products. Certain of our competitors are larger than we are and have access to greater financial resources than we do.
 
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