8. Discontinued Operations

In November 2016, the Company announced its plan to exit the PLS business. In February 2017, the Company announced its intention to operate as a smaller business that is focused solely on subservicing and portfolio retention services, and exit the Real Estate channel. As a result, the Company would exit the PLS business through the run-off of operations, and exit the Real Estate channel through the sale of certain assets of PHH Home Loans and its subsidiaries and subsequent run-off of the operations, both of which were previously reported within the Mortgage Production segment. Refer to Note 7, 'Exit Costs' and Note 12, 'Variable Interest Entities' for additional information.

The Company determined that the exits of the PLS business and Real Estate channel represented a strategic shift that met the criteria to be reported as discontinued operations upon completion of substantially all of the run-off activities of these businesses, which occurred during the three months ended March 31, 2018. Accordingly, the results of the PLS business and Real Estate channel have been presented as discontinued operations in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), and are excluded from continuing operations and segment results for all periods presented. Certain corporate overhead costs that were previously allocated to the PLS business and Real Estate channel for segment reporting purposes were determined to not directly support the discontinued operations, and those costs are presented in continuing operations.

Results of Operations

The results of discontinued operations are summarized below:



	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018			2017
	(In millions)
Net revenues	$	2	$	81		$	9		$	155
Total expenses	—		90			11			192
Loss before income taxes	2		(9		)	(2		)	(37		)
Income tax benefit	—		(1		)	—			(11		)
Net loss	2		(8		)	(2		)	(26		)
Less: net loss attributable to noncontrolling interest	—		(4		)	—			(8		)
Income (loss) from discontinued operations attributable to PHH Corporation, net of tax	$	2	$	(4	)	$	(2	)	$	(18	)

Assets and Liabilities

The carrying amounts of major classes of assets and liabilities related to discontinued operations consisted of the following:



	June 30, 2018		December 31, 2017
	(In millions)
ASSETS
Cash and cash equivalents	$	—	$	33
Restricted cash	1		8
Mortgage loans held for sale	3		167
Accounts receivable, net	—		5
Other assets	—		1
Total assets related to discontinued operations	$	4	$	214

LIABILITIES
Accounts payable and accrued expenses	$	8	$	43
Mortgage warehouse and advance facilities	1		135
Mandatorily redeemable noncontrolling interest	—		20
Other liabilities	—		1
Total liabilities related to discontinued operations	$	9	$	199

Cash Flows

The cash flows related to discontinued operations have not been segregated, and are included in the Condensed Consolidated Statements of Cash Flows. There was no significant depreciation and amortization or capital expenditures for discontinued operations during either period. The following table summarizes the significant adjustments necessary to reconcile Net loss to net cash provided by operating activities that relate to discontinued operations:



	Six Months Ended June 30,
	2018			2017
	(In millions)
Capitalization of originated mortgage servicing rights	$	(2	)	$	(10	)
Origination of mortgage loans held for sale	(52		)	(3,185		)
Proceeds on sale of and payments from mortgage loans held for sale	208			3,226
Net gain on interest rate lock commitments, mortgage loans held for sale and related derivatives	(1		)	(100		)
Deferred income tax benefit	—			(11		)

Continuing Involvement

The Company's continuing involvement with these businesses is generally limited to certain indemnification and guarantee obligations, including those associated with lease arrangements and loan repurchases and indemnifications as described below.

Lease Arrangements. During 2017, the Company entered into assignments with LenderLive Network, LLC ("LenderLive") and Guaranteed Rate Affinity, LLC ("GRA") related to certain facility leases that were transferred in connection with transactions associated with the PLS business and Real Estate channel exits. Under the terms of the original facility leases, the Company remains jointly and severally obligated with LenderLive and GRA for performance under the lease agreements. As of June 30, 2018, the total amount of potential future lease payments under this guarantee with LenderLive was $12 million and extend into 2023. The total amount of potential future lease payments under this guarantee with GRA was $1 million and extend into 2021. However, the Company does not believe any amount of loss under these guarantees is probable.

Loan Repurchases and Indemnifications. At the time a loan is sold, representations and warranties are provided to investors and insurers which may result in a repurchase of the mortgage loan, or an indemnification to the investor against loss in the event of a breach of representations and warranties. The representation and warranties made by us are set forth in our loan sale agreements and relate to, among other things, the ownership of the loan, the validity of the lien securing the loan, the underwriting standards required by the investor and the loan’s compliance with applicable local, state and federal laws. Refer to Note 11, 'Commitments and Contingencies' for additional information.