Moody's downgraded PHH Corp.'s corporate family rating and senior unsecuredrating to B1 from Ba3.
The outlook is stable.
The rating agency also downgraded PHH's senior unsecured MTNrating to (P)B1 from (P)Ba3.
Moody's said the actions are based on significant challengesto PHH's core private label servicing business, which the rating agencybelieves is not profitable as currently constituted. The company announced inMarch that it was exploring strategic options. PHH continues to lose clients, havingannounced that it would be losing nearly one-third of its subservicingportfolio, as HSBC Bank had agreed to sell the mortgage servicing rights with the buyer notplanning to retain PHH as a subservicer. In addition, PHH announced that it hadreceived notice fromBank of America that it was exercising its right to terminate its agreement forPHH to provide private label origination services on behalf of Merrill Lynch,effective as of March 31, 2017.
The outlook recognizes PHH's strong capital position andliquidity, as well as Moody's expectation that the company will maintainsufficient capital to fully repay its debt, the rating agency said.