5 trends in mortgage servicing to watch

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Prices in the mortgage servicing rights market are still strong historically, but as recent negative valuation adjustments in public earnings show, there've been some shifts.

Relative differences in interest rates have led to prepayment variability in high coupons, and while home equity overall remains robust, some areas have high underwater loan rates. Also, foreclosure volumes are higher in certain markets and some delinquencies are drifting higher.

What follows are some of the datasets that illustrate trends in these numbers. They are important for servicing buyers and lenders who are looking to sell MSRs, because they drive trends that could affect the value of their assets and the risk management profiles.

There's been a little more variability in servicing prices as the market has come down slightly from its peak, and the need sell them, for many, to sell has grown as the crunch in origination volume has persisted.

Seasoned MSRs can still sell for historically high 5 multiples as they did during the peak of rate-hike era, but others have fallen a little into the 4-4.5 range or around 3 for Ginnie Mae portfolios, according to David Lykken, an industry veteran and executive leadership coach.

"Because of the back-to-back quarterly losses that are being suffered and the fact that volume, while improved, is still relatively low, people that did hold onto their servicing are finding that they need, for liquidity reasons, to sell," Lykken said.