TRANSITION SERVICES AGREEMENT

Exhibit 10.7

TRANSITION SERVICES AGREEMENT

among

CENDANT CORPORATION,

CENDANT OPERATIONS, INC.

and

PHH CORPORATION

PHH VEHICLE MANAGEMENT SERVICES LLC (d/b/a PHH Arval)

CENDANT MORTGAGE CORPORATION

Dated as of January 31, 2005

TABLE OF CONTENTS

Exhibits:

TRANSITION SERVICES AGREEMENT (this “ Agreement ”), dated as of January 31, 2005 (the “ Effective Date ”), by and among Cendant Operations, Inc., a Delaware corporation (“ Cendant Operations ”), Cendant Corporation, a Delaware corporation (“ Cendant ”), PHH Corporation, a Maryland corporation (“ PHH ”), PHH Vehicle Management Services LLC (d/b/a PHH Arval), a Delaware limited liability company (“ PHH Arval ”), and Cendant Mortgage Corporation (to be renamed “PHH Mortgage Corporation”), a New Jersey corporation (“ PMC ,” and together with PHH and PHH Arval, the “ PHH Entities ”). Each of Cendant Operations, Cendant and the PHH Entities is sometimes referred to herein as a “ Party ” and collectively, as the “ Parties .”

W I T N E S S E T H:

WHEREAS, Cendant, Cendant Operations and the PHH Entities have each determined that it is desirable to enter into this Agreement, which sets forth the terms of certain relationships and other agreements among Cendant, Cendant Operations and the PHH Entities as of the Effective Date.

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound, the Parties hereby agree as follows:

ARTICLE I

SERVICES

Section 1.1      Provision of Services . Upon the terms and subject to the conditions set forth in this Agreement, Cendant Operations agrees to provide to PHH, PHH Arval and PMC, and PHH, PHH Arval and PMC agree to provide to Cendant, those services described in the exhibits (collectively, the “ Exhibits ”) attached hereto, each on and pursuant to the terms set forth therein (together, with the Additional Services (as defined in Section 1.2), the “ Services ”).

Section 1.2      Additional Services . From time to time during the Term (as defined in Section 1.4), a Service Recipient may find it desirable to request, in addition to the Services described in the applicable Exhibits, additional services to be made available to such Service Recipient by the Service Provider (“ Additional Services ”). In the event that such Service Recipient makes a written request that the Service Provider provide Additional Services and the Service Provider agrees to provide such Additional Services, the relevant Parties shall negotiate in good faith and execute amendments to the relevant Exhibits for such Additional Services that shall set forth, among other things, (a) the time period during which the Additional Services shall be provided, (b) a description of the Additional Services, and (c) the estimated charge for the Additional Services. The Service Provider’s obligations with respect to providing any such Additional Services shall become effective only upon an amendment to the relevant Exhibits being duly executed and delivered by the Service Provider and the relevant Service Recipient. It is understood that the Service Provider has no obligation to provide

Additional Services and may reject any request by any Service Recipient for Additional Services for any reason or for no reason.

Section 1.3      Obligations as to Additional Services . The Service Provider agrees to enter into discussions with any Service Recipient to provide any Additional Services that (i) such Service Recipient is unable to obtain from a third party provider, (ii) are directly dependent upon or inextricably intertwined with the Services and (iii) were inadvertently and unintentionally omitted from the list of Services; provided, however, that the Service Provider shall not be obligated to provide such Additional Services if, following good-faith negotiation, the relevant Parties are unable to reach agreement on such terms.

Section 1.4      Term of Agreement and Services . The term of each Service identified in the Exhibits shall commence upon the Closing Date and, unless earlier terminated by the relevant Parties as provided herein, shall expire on the date as set forth for each Service in the relevant Exhibits (the “ Term ”).

Section 1.5      Subcontracting of Services . Each Service Recipient acknowledges that prior to the Effective Date, the Service Provider may have subcontracted with unaffiliated third parties to provide services in connection with all or any portion of the Services to be provided hereunder. The Service Provider reserves the right at any time to subcontract with either an affiliate or unaffiliated third parties to provide the Services or to enter into new subcontract relationships for any Service provided that the level of service remains consistent with the level of service previously provided to the Service Recipient.

Section 1.6      Standard of Service . The Service Provider agrees that in providing (or causing others to provide) the Services under this Agreement, it shall (and shall cause each affiliate or advisor and, to the extent practicable, any or other third-party service provider to): (i) conduct itself in accordance with (A) standards of quality consistent with the standards applied by the Service Provider as of the Effective Date with respect to the specific matters in question, and (B) standards of quality consistent with those applied by the Service Provider hereafter (or in the event of provision of Services by an unaffiliated third party, at the time of entry into such subcontract) with respect to the specific matters in question in its own business; (ii) comply in all material respects with all laws, regulations and orders applicable to the conduct of the activities contemplated hereby; and (iii) comply in all material respects with any applicable standards, procedures, policies, operating guidelines, practices and instructions set forth in the Exhibits, describing the relevant Services. Notwithstanding the foregoing, it shall not be deemed to be a breach of this Agreement if the Service Provider fails to meet the standards required under this Section 1.6 because of the failure of a Service Recipient to cooperate with or provide information or services to the Service Provider as required under this Agreement.

(a)     In addition to the provisions of Section 1.6, if a Service Recipient desires a higher quality of the Services than the Service Provider is otherwise obligated to provide pursuant to Section 1.6 or any of the other provisions of this

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Agreement, including the Exhibits, such Service Recipient will be entitled to receive such higher level of quality after giving no less than 30 days’ prior written notice to the Service Provider if (i) such Service Recipient agrees to pay for all additional Actual Costs associated with such increased level and (ii) in the sole judgment of the Service Provider, such increased level does not impose an additional burden on the Service Provider.

(b)     The Service Provider shall promptly notify the relevant Service Recipient of any event or circumstance of which the Service Provider or any of its representatives has knowledge that would or would be reasonably likely to cause a disruption in the Services.

Section 1.7      Right to Decline Services . Notwithstanding anything contained herein or in the Exhibits, the Service Provider may decline to provide all or any part of any particular Services, if the Service Provider reasonably believes that the performance of its obligations relating thereto would violate any applicable law, regulation, judicial or administrative ruling or decision, any property right or agreement or any announcement, policy or standard applicable to its business, but only (a) to the extent reasonably necessary for the Service Provider to ensure compliance therewith, (b) after the Service Provider has applied commercially reasonable efforts to reduce the amount and/or effect of any such restrictions and (c) after the Service Provider has delivered written notice to each relevant Service Recipient specifying in reasonable detail the nature of the applicable restrictions and of any proposed resulting modification in the Service Provider’s obligations.

Section 1.8      Compensation and Other Payments . Each Service Recipient agrees to pay the Service Provider, in accordance with Section 1.9, an amount equal to the sum of the following items (collectively, the “ Service Recipient Payables ”):

(a)     An amount in cash equal to the amounts set forth in the relevant Exhibits;

(b)     If applicable, the Actual Cost of any Additional Services provided by the Service Provider pursuant to Section 1.2; and

(c)     If applicable, incremental increases in the Actual Cost of Services for increased levels of Services provided by the Service Provider pursuant to Section 1.6(a).

Section 1.9 Billing and Payment Terms .

(a)     Each Service Recipient agrees to pay the Service Provider in accordance with, and subject to, the billing and payment terms set forth in the Exhibits for each of the Services. Amounts not paid in accordance with this Section 1.9(a) within the period due as set forth in the Exhibits shall accumulate interest at the rate of 10 percent per annum or the maximum lawful rate, whichever is less (such rate being referred to herein as the “ Interest Rate ”); provided , however , that no Cendant Entity, in its capacity as a Service Recipient, shall have any obligation whatsoever to pay to any PHH Entity, in its capacity as Service Provider, any such interest. Upon the termination of the

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Services, the Service Provider will invoice the Service Recipient for Services incurred or other applicable charges since the last invoice in accordance with the terms and conditions set forth herein and in the relevant Exhibits.

(b)     In the event a Service Recipient does not pay any sum, or any part thereof, in accordance with this Section 1.9, the Service Provider shall, effective 30 days following the delivery of written notice to such Service Recipient of such payment default, have no further obligation pursuant to this Agreement to provide Services to such Service Recipient until such unpaid balance plus all accrued interest at the applicable Interest Rate shall have been paid; provided that the Service Provider shall not be relieved of any of its obligations to provide Services pursuant to this Agreement if, following the delivery of such written notice but prior to 30 days following such delivery, such Service Recipient delivers written notice to the Service Provider setting forth in detail the reasons that such charges are not due and payable. If the Service Provider determines in good faith that such amounts are still due and payable and such Service Recipient has not paid such amounts within five (5) Business Days of such notice, the Service Provider may suspend all Services under this Agreement and the disputed invoices shall be referred to resolution under Section 10.7 hereunder.

(c)     Each Service Recipient shall promptly notify the Service Provider in writing of any amounts billed to it that are in dispute. Upon receipt of such notice, the Service Provider will research the items in question in a reasonably prompt manner and cooperate to resolve any differences with such Service Recipient. In the event that the relevant Parties mutually agree that any amount that was paid by such Service Recipient was not properly owed, the Service Provider will refund that amount to such Service Recipient within 20 days of the delivery of such notice (or, alternatively, the Service Provider may deduct the dollar amount from the next invoice submitted to such Service Recipient). In the event agreement is not reached by the relevant Parties within 30 days of delivery of the notice referred to above, the matter shall be referred to resolution in accordance with Section 10.7.

Section 1.10      Interruption of Services . Except as otherwise provided herein, the Service Provider will use its commercially reasonable efforts to provide uninterrupted Services through the Term. In the event, however, that the Service Provider or its respective suppliers or subcontractors are wholly or partially prevented from providing a Service or Services to a Service Recipient or if a Service or Services are interrupted or suspended, in either case by reason of any force majeure event set forth in Section 10.1, or the Service Provider shall deem it reasonably necessary to suspend delivery of a Service hereunder for purposes of maintenance, repair or replacement of equipment parts or structures, the Service Provider shall not be obligated to deliver such Service during such periods provided that the Service Provider: (a) has given, whenever possible, reasonable written notice of the interruption in accordance with Section 10.6 within a reasonable period of time, explaining the reason, purpose and likely duration thereof; and (b) use commercially reasonable efforts to minimize the duration and impact of the interruption. If such interruption of Services has a significant negative impact on a Service Recipient’s business and the Service Provider cannot readily reinstate the Service involved, the Service Provider will use its commercially reasonable efforts to assist any

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such Service Recipient in securing alternative services to minimize such negative impact on such Service Recipient.

Section 1.11      Supervision and Compensation . The Service Provider shall select, employ, pay, supervise, direct and discharge all the personnel providing Services hereunder. Subject to Section 1.7, the Service Provider shall be solely responsible for the payment of all benefits and any other direct and indirect compensation for Service Provider personnel assigned to perform services under this Agreement, as well as such personnel’s worker’s compensation insurance, employment taxes, and other employer liabilities relating to such personnel as required by law. The Service Provider shall be an independent contractor in connection with the performance of Services hereunder and the employees performing Services in connection herewith shall not be deemed to be employees of any Service Recipient.

Section 1.12      Staffing of Personnel . The Service Provider shall be solely responsible for assigning personnel to perform the Services, which personnel will be instructed by the Service Provider to perform the Services in a timely, efficient and workmanlike manner.

Section 1.13      Limitation of Damages . Notwithstanding anything to the contrary contained in this Agreement, the Service Provider shall not be liable for any claim in respect of Services relating to the external reporting of any Service Recipient or any of its Subsidiaries (including those Services provided by the Service Provider to the Service Recipient(s) set forth in the relevant Exhibits), except to the extent that such claim arises from the willful misconduct or gross negligence of the Service Provider. Furthermore, Service Recipient agrees and acknowledges, that notwithstanding any assistance from Service Provider in connection with the preparation of any of Service Recipient’s financial statements, Service Recipient shall have sole responsibility and control of the preparation and content of any of its financial statements.

ARTICLE II

MUTUAL OBLIGATIONS; COVENANTS

Section 2.1      Legal Actions .

(a)     Within five Business Days of any Party becoming a party to, or threatened with, or otherwise receiving notice of, any legal or regulatory proceeding or investigation (including inquiries or complaints from any federal agency, state attorney general’s office, from a legislator on behalf of a constituent or from any Better Business Bureau or similar organization) (in each case, a “ Proceeding ”) arising out of or in connection with the Services provided hereunder, it is agreed that such Party will promptly provide written notification of such event to the other relevant Party and, to the extent reasonably requested or appropriate, the other relevant Party will cooperate with such Party to defend, settle, compromise or otherwise resolve such Proceeding; provided that any costs incurred by the other relevant Party related to its cooperation shall be borne

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by the Party against whom the Proceeding has been brought if it is determined that such Party has been negligent or engaged in willful misconduct.

(b)     No Party shall have the authority to institute, prosecute or maintain any Proceeding on behalf of any other Party without the prior written consent of the other Party.

(c)     This Section 2.1 shall not apply to the extent provided otherwise by the provisions of ARTICLE VII.

Section 2.2      Providing Periodic Reports . The Service Provider will provide, upon reasonable written notice, such periodic reports with respect to the Services it provides hereunder as is reasonably requested by a Service Recipient, including such reports as are specified in the relevant Exhibits.

Section 2.3      Means of Providing Services . With respect to any particular Service to be provided hereunder, the Service Provider shall, unless otherwise specified in the Exhibits, determine the means and resources used to provide such Service in accordance with its prudent business judgment.

Section 2.4      Further Assurances . Each of Cendant, Cendant Operations and the PHH Entities shall execute and deliver such further documents and shall take such other actions as each of them may reasonably request of the other as may be necessary to effect or enable the provision of the Services contemplated hereunder.

ARTICLE III

TAX MATTERS

Section 3.1      Service Taxes . Each Service Recipient shall pay or cause to be paid all sales, service, valued added, use, excise, occupation, and other similar taxes and duties (together in each case with all interest, penalties, fines and additions thereto) that are assessed against the Parties on the provision of Services as a whole, or any particular Service (including with respect to amounts paid by the Service Provider to third parties), including Additional Services, received by any Service Recipient or any of its Subsidiaries from the Service Provider or any of its Affiliates pursuant to the terms of this Agreement (collectively, “ Service Taxes ”). If required under applicable law (or, in the case of Service Taxes relating to amounts paid by the Service Provider to third parties), the Service Provider shall invoice the relevant Service Recipient for the full amount of all Service Taxes, and such Service Recipient shall pay, in addition to the other amounts required to be paid pursuant to the terms of this Agreement, such Service Taxes to the Service Provider.

Section 3.2      Limitation of Damages .