The residential finance industry’s reliance on higher asset values for mortgage servicing rights is coming to an end.
In fact, based on a new analysis by Inside Mortgage Finance of fourth quarter earnings reports released thus far, the days of “marking up” MSR values ended in the third quarter of 2022.
That’s the bad news. The good news is that for the institutions reporting thus far — all publicly traded depositories — the markdowns on MSRs have been ever so slight.
JPMorgan Chase, for example, the nation’s second largest owner of servicing rights, valued its third-party MSR portfolio at 137 basis points at Dec. 31 compared to 138 bps at the end of the third quarter.