Servicing Auctions Gather Steam, But Concerns Remain About MSR ‘Marks’
May 19, 2016
By Paul Muolo
Declining interest rates have thrown a monkey wrench into mortgage servicing sales this year, but investment bankers and advisors are seeing an increase in new auction notices of late, even though pricing remains muted.
Moreover, some market-makers expect an eventual boom – but only if interest rates would rise a bit and stay that way. “There hasn’t been a lot of activity of late,” said David Fleig, CEO of MorVest Capital, Sugar Land, TX. “But I know one thing,” he added, “there are a lot of nonbanks out there sitting on $10 billion or more in servicing rights these days.”
Fleig says that nonbanks – which have been gaining market share the past two years – eventually will move to convert some of their MSR assets into cash via bulk sales. “But what we need right now is an expansion in the multiple,” he said.
The “multiple” he refers to is the price paid on bulk and flow servicing deals, which fell after rates declined in late January and has more or less remained that way. According to Mark Garland, president of MountainView Servicing Group, Denver, buyers are being quite “rational” these days on what they are willing to pay. For the full story, see Inside Mortgage Finance.
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