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MSR Losses Hurt Mortgage Servicing Income

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Mortgage Daily

                                                 August 29, 2017

An increase in quarterly losses from mortgage servicing rights drove earnings down from the prior period. But income was better than in the same quarter last year.

Independent mortgage bankers and mortgage subsidiaries of chartered banks earned 1 basis point in total net servicing financial income during the second quarter.

Income plummeted from 10 BPS during the preceding three-month period. The decline was primarily driven by a 9-basis-point increase in losses from MSR valuations and hedging.

But earnings swung from a negative 8 BPS in the same three months last year. The improvement reflected a 5-basis-point decline in MSR financial items

The
Mortgage Bankers Association reported the data in its Quarterly Mortgage Bankers Performance Report Q2 2017, which can be purchased by MBA members for an annual subscription fee of $675 and by non-members for $1,125.

There were 204 companies that participated in the survey. But only the 171 firms that participated in the first- and second-quarter surveys were reflected in the prior-period comparisons.

At companies that serviced fewer than 2,500 loans, net income was a negative 2 BPS, while the net was
a positive 5 BPS at companies with portfolios of between 2,500 loans and 10,000 loans. Servicers with between 10,000 and 50,000 loans earned nothing, and those with portfolios of at least 50,000 mortgages had net financial income of 3 BPS.

The average company
serviced 76,554 loans with an aggregate unpaid principal balance of $13.140 billion as of June 30. Portfolios grew from 74,170 loans for $12.637 billion three months earlier. But the average portfolio receded from 78,730 loans for $13.173 billion one year earlier.

Average loans serviced per full-time employee dropped to 1,254 from 1,509 in the first quarter. But the average rose from 1,114 in second quarter of last year.

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