Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

Legal Contingencies

The Company is party to various claims and legal proceedings from time to time related to contract disputes and other commercial, employment and tax matters.

PHH Mortgage Corporation, a wholly-owned subsidiary of the Company, is the defendant in a lawsuit initiated in 2009 in the United States District Court, Middle District of Georgia, by a borrower with a loan that has been serviced by the Company. The borrower alleged breach of contract, negligent servicing and violations of the Real Estate Settlement Procedures Act. On March 21, 2011, the jury issued a verdict in favor of the borrower, awarding compensatory damages of $1 million and punitive damages of $20 million, resulting in an exposure of $21 million.

The Company has sought further judicial review of the case, including appeal. The recorded liability for probable losses related to this matter as of June 30, 2011 was not significant.

In connection with the heightened focus on foreclosure practices across the mortgage industry in 2010 and 2011, the Company has received inquiries from regulators and attorneys general of certain states as well as from the Committee on Oversight and Government Reform of the U.S. House of Representatives, requesting information regarding foreclosure practices, processes and procedures, among other things. Although the Company has not been assessed any material penalties or fines associated with its foreclosure practices to-date, it is reasonably possible that the Company could experience an increase in foreclosure-related litigation and could be assessed fines and penalties related to foreclosure practices in the future. However, the amount of any losses in connection with such matters cannot be reasonably estimated given the inherent uncertainty around the outcome of such matters.