Two staples of modern life -- homes and houses -- come together at PHH. The company's operations consist of PHH Vehicle Management Services and PHH Mortgage. PHH Vehicle Management (better known as PHH Arval) is the #3 provider of commercial fleet management services in the US and Canada. It caters to corporations and government agencies throughout North America. PHH's mortgage-related activities are split between residential mortgage production and servicing. The company also provides appraisal services through its 50%-owned STARS unit. PHH Corporation was formed in 2005 when Cendant (now Avis Budget Group) spun off its mortgage and fleet management businesses to focus on other operations.
PHH has been working to re-energize its business as the US pulls itself out of a recession. As a result, losses deepened in 2008 to $254 million, spurring PHH to launch a restructuring plan that has eliminated inefficiencies and improved its operational and administrative processes. The plan, which took aim at $570 million in expenses, has been helped by higher margins on mortgage loans and fleet management leases.
The housing and automobile markets have been hard hit by lingering tough economic conditions. Demand for PHH's fleet management services had slipped as its clients have shrunken their own cost structures in recent years. But there's a turnaround in the works. Profits in the company's fleet management segment rose $12 million to $75 million in 2011, driven by higher units and the use of fee-based and asset-based management services -- with lower operating costs. US government initiatives, implemented to shore up the housing and credit markets, have benefited PHH's mortgage production and servicing businesses.
Hedge fund Pennant Capital Management continues to own about 10% of PHH's shares. In mid-2009 the hedge fund won a successful proxy contest to appoint two of its own nominees to the company's board. Pennant had objected to the proposed acquisition of PHH by GE and Blackstone, which stated that a tax-free spinoff of PHH Arval would prove more lucrative. In addition to Pennant, Matthew Sirovich from Scopia Capital LLC owns an 11% stake in PHH Corporation.
Since 2009, after Pennant prevailed in the proxy contest, PHH's executive suite has seen some worn carpet. President and CEO Terrence Edwards was succeeded in late 2009 by Jerome Selitto, formerly a senior consultant and top executive at Ellie Mae. Selitto's rein was short-lived, however. In 2012, the company appointed COO Glen Messina to the top spot as Selitto stepped down. – less