PHH to Host Conference Call at 10:00 a.m. EDT on August 4, 2009

• Second quarter 2009 Net income of $106 million and Earnings per share of $1.93 ($1.91 on a fully diluted basis); First half 2009 Net income of $108 million and Earnings per share of $1.98 ($1.96 on a fully diluted basis).
• Mortgage Production segment second quarter 2009 profit of $82 million driven by solid production volumes, healthy margins and lower fixed general and administrative costs.
• Mortgage Servicing segment second quarter 2009 profit of $86 million reflects credit-related charges of $25 million from continued recessionary trends, as well as an MSR mark-to-market valuation adjustment that benefited segment profit by $175 million.
• Fleet Management Services segment second quarter 2009 profit of $18 million driven by better than expected financing costs, and continuing efforts to renegotiate lease pricing and to reduce costs; segment profit outlook revised upward to $30-40 million for the full year 2009.
• Issued $1.0 billion of term asset-backed securities in June, improving the Company’s overall funding profile; TALF eligibility criteria permit the issuance of up to an additional $2.5 billion of securities.
• Management team and Board remain intensely focused on achieving sustainable earnings growth across cycles and in all market environments.

PHH Corporation (NYSE:PHH) today announced results for the three and six months ended June 30, 2009.

Consolidated Results

Second Quarter – 2009

• Net revenues for the second quarter of 2009 were $768 million compared to Net revenues of $663 million for the second quarter of 2008.
• Income before income taxes was $186 million for the second quarter of 2009, compared to $32 million for the second quarter of 2008. Net income attributable to PHH Corporation for the second quarter of 2009 was $106 million compared to $16 million for the second quarter of 2008.
• Basic and fully diluted earnings per share attributable to PHH Corporation was $1.93 and $1.91 for the second quarter of 2009, respectively, compared to basic and fully diluted earnings per share attributable to PHH Corporation of $0.31 and $0.30 for the second quarter of 2008, respectively.
• In comparison to the year earlier period, the improved second quarter 2009 results were a reflection of stronger mortgage production margins, a higher volume of first mortgage originations, a greater increase in the mortgage servicing rights (“MSR”) mark-to-market valuation and cost efficiency efforts by both businesses, all of which combined to more than offset increased credit-related charges in our Mortgage Servicing segment and the impact of volume declines in our Fleet Management Services segment.

Consolidated Results

Six Months – 2009

• Net revenues for the six months ended June 30, 2009 were $1.4 billion compared to Net revenues of $1.3 billion for the six months ended June 30, 2008. During the six months ended June 30, 2008, Net revenues included a $30 million benefit of adopting fair value accounting pronouncements and the receipt of a reverse termination fee from Blackstone Capital Partners V L.P. (“Blackstone”) of $50 million.
• Income before income taxes was $191 million for the six months ended June 30, 2009, compared to $76 million for the six months ended June 30, 2008. Income before income taxes for the six months ended June 30, 2008 included a $30 million benefit of adopting fair value accounting pronouncements and the receipt of a reverse termination fee from Blackstone, net of terminated merger related expenses, of $42 million.
• Net income attributable to PHH Corporation for the six months ended June 30, 2009 was $108 million compared to $46 million for the six months ended June 30, 2008.
• Basic and fully diluted earnings per share attributable to PHH Corporation was $1.98 and $1.96 for the six months ended June 30, 2009, respectively, compared to both basic and fully diluted earnings per share attributable to PHH Corporation of $0.85 for the six months ended June 30, 2008.
• In comparison to the year earlier period, the improved first half 2009 results were a reflection of stronger mortgage production margins, a higher volume of first mortgage originations, a greater increase in the MSR mark-to-market valuation and cost efficiency efforts by both businesses, all of which combined to more than offset increased credit-related charges in our Mortgage Servicing segment and increased debt fees and the impact of volume declines in our Fleet Management Services segment.

Management Comments and Outlook

George Kilroy, acting chief executive officer and president, stated, “PHH’s strong second quarter results were driven by a robust mortgage refinancing market, as well as the important steps we are pursuing to reduce costs, enhance market share, expand our sources of funding and continue delivering value to our clients.

“In our mortgage business, we have been implementing a more flexible cost structure that will allow us to adapt that business across cycles, while still taking advantage of the increased production volumes we are seeing in the current environment. Those efforts have already helped us to reduce fixed general and administrative costs by $14 million year-to-date over the prior year period. We also have identified additional areas throughout the mortgage operation where we can improve processes and service delivery, which we will continue to focus on in the months ahead.

“Moving forward, we expect the near term environment to provide attractive consumer mortgage interest rates, and we are well-positioned to leverage those dynamics. We also believe that the wider production margins we are currently experiencing are reflective of a longer term view of the returns required to manage the underlying risk of a mortgage production business, which is another encouraging trend. Our mortgage servicing portfolio may continue to see some erosion from loan defaults and prepayments due to ongoing recessionary trends. However, the servicing we are now adding is more valuable than the current portfolio given lower note rates, better credit quality and a longer expected life.

“In our fleet management business, we have made significant progress bringing fleet pricing in line with market rates and reducing other costs, and we also benefited from better than expected financing costs. These critically important initiatives were key drivers of our results this quarter. We expect that these initiatives, together with our success in accessing the market for TALF-eligible securities and our efforts to secure other alternative sources of funding, should help us deliver stronger full-year earnings than we previously anticipated.

“Overall, we believe these results demonstrate the enduring strength of PHH’s business as well as the actions we have taken to create opportunities and drive revenue growth in all environments. However, our management team and Board believe there is more work to do and we remain intensely focused on continuing to establish a more flexible cost structure, drive greater efficiencies and enhance service that drives value to our clients and, ultimately, to our shareholders.”

Mortgage Production Segment

• Segment profit of $82 million for the Mortgage Production segment was driven primarily by higher margins on mortgage loans, higher volume of interest rate lock commitments (“IRLCs”) expected to close and lower fixed general and administrative costs of $9 million. Segment profit includes a $4 million net unfavorable change in the fair value of scratch and dent, second-lien and Alt-A loans.
• Total originations were $11.0 billion during the second quarter of 2009, which were comprised of $9.0 billion of loans closed to be sold, substantially all of which were conforming, and $2.0 billion of fee-based closings.
• Interest rate lock commitments expected to close were $6.9 billion for the second quarter of 2009.
• Purchase closings represented 35% of total originations during the second quarter of 2009.

Mortgage Servicing Segment

• Segment profit for the second quarter of 2009 of $86 million includes a $175 million non-cash increase in the fair value of the MSR asset, primarily due to the increase in mortgage rates during the second quarter of 2009 partially offset by a $120 million reduction in the value of MSRs due to prepayments and portfolio decay. Segment profit also included a $19 million write-down of Investment securities, and $25 million of credit-related charges which was comprised of foreclosure-related charges of $13 million and reinsurance-related charges of $12 million.
• The capitalization rate of MSRs increased to 1.14% as of June 30, 2009, due in part to the non-cash increase in the fair value of our MSRs. Our actual prepayment experience during the second quarter of 2009 was approximately 55% of modeled prepayments.

Fleet Management Services Segment

• Segment profit of $18 million for the second quarter of 2009 was driven primarily by improved lease margins, resulting from lease re-pricing, and lower debt costs, combined with the impact of ongoing cost reduction initiatives.
• The cost reduction initiatives implemented during the fourth quarter of 2008 in anticipation of expected volume declines favorably impacted segment profit for the second quarter of 2009 by $3 million.

Mortgage Production Segment

• Segment profit of $195 million for the Mortgage Production segment was driven primarily by higher margins on mortgage loans, higher volume of IRLCs expected to close and lower fixed general and administrative costs of $14 million. Segment profit includes a $14 million net unfavorable change in fair value of scratch and dent, second-lien, construction and Alt-A loans.
• Total originations were $19.9 billion during the six months ended June 30, 2009, which were comprised of $16.3 billion of loans closed to be sold, substantially all of which were conforming, and $3.6 billion of fee-based closings.
• Interest rate lock commitments expected to close were $14.5 billion for the six months ended June 30, 2009.
• Purchase closings represented 33% of total originations during the six months ended June 30, 2009.

Mortgage Servicing Segment

• Segment loss for the six months ended June 30, 2009 of $32 million includes a $212 million reduction in the value of MSRs due to prepayments and portfolio decay, that was partially offset by a $104 million non-cash increase in the fair value of the MSR asset, which was primarily due to the increase in mortgage rates during the second quarter of 2009. Segment loss also included credit-related charges of $60 million, which were comprised of foreclosure-related charges of $34 million and reinsurance-related charges of $26 million, and a $21 million write-down of Investment securities.

Fleet Management Services Segment

• Segment profit of $25 million for the six months ended June 30, 2009 was driven primarily by improved lease margins, resulting from lease re-pricing, and the impact of ongoing cost reduction initiatives.
• Cost reduction initiatives implemented during the fourth quarter of 2008 in anticipation of expected volume declines favorably impacted segment profit for the six months ended June 30, 2009 by $4 million.

Liquidity

• As of June 30, 2009, we had $252 million of unused available capacity under our unsecured committed credit facilities.
• During the second quarter of 2009, Chesapeake Funding LLC, our wholly owned subsidiary, issued $1.0 billion in Term-Asset Backed Securities Loan Facility (“TALF”) eligible term notes. TALF eligibility criteria permit the issuance of up to an additional $2.5 billion of securities.
• We are actively engaged in evaluating alternative sources of funding for our Fleet Management Services segment in the U.S. and Canada.
• As of June 30, 2009, we had mortgage warehouse capacity (including uncommitted facilities) of $4.4 billion, $1.3 billion of which was utilized. We believe such capacity is sufficient to fund our expected Mortgage Production segment volumes for the next twelve months.

Conference Call

The Company will conduct a conference call for investors on Tuesday, August 4, 2009 at 10:00 a.m., Eastern Daylight Time. Investors will be able to access the second quarter 2009 downloadable slide presentation that will accompany management’s remarks by visiting the Investor Relations page of the Company’s website at www.phh.com prior to the conference call. Investors may also request copies via fax by calling the investor hotline at 1-856-917-7405.

Interested investors can access the conference call by dialing 1-888-481-2845 or 1-719-325-2352, using passcode 1944221, ten minutes prior to the start time. The conference call will also be broadcast on the Company’s website at www.phh.com. A replay will be available beginning shortly after the conclusion of the live call and ending on August 19, 2009 by dialing 1-888-203-1112 or 1-719-457-0820, using passcode 1944221, or by logging on to the Company’s website.

About PHH Corporation

Headquartered in Mount Laurel, New Jersey, PHH Corporation is a leading outsource provider of mortgage and vehicle fleet management services. Its subsidiary, PHH Mortgage, is one of the top five retail originators of residential mortgages in the United States¹, and its subsidiary, PHH Arval, is a leading fleet management services provider in the United States and Canada. For additional information about the company and its subsidiaries please visit our website at www.phh.com.

¹ Inside Mortgage Finance, Copyright 2009

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You should understand that these statements are not guarantees of performance or results and are preliminary in nature. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “may result”, “will result”, “may fluctuate” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts.

You should consider the areas of risk described under the heading “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the Securities and Exchange Commission under the Exchange Act in connection with any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, applicable stock exchange listing standards and unless otherwise required by law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements or to report the occurrence or non-occurrence of anticipated or unanticipated events.