v3.25.1
MORTGAGE SERVICING RIGHTS
 3 Months Ended
Mar. 31, 2025
Transfers and Servicing [Abstract]  
MORTGAGE SERVICING RIGHTS
NOTE 5—MORTGAGE SERVICING RIGHTS
The following table presents the activity of MSRs for the three months ended March 31, 2025 and 2024:
Three Months Ended
March 31,
(in thousands)
20252024
Balance — beginning of period$1,343,829 $1,161,357 
MSRs originated
38,484 34,234 
MSRs purchased
— 114 
Changes in fair value:
Due to collection/realization of cash flows(14,916)(12,119)
Due to changes in valuation model inputs or assumptions(55,020)32,897 
Balance — end of period$1,312,377 $1,216,483 
The following table presents the unobservable input assumptions used to determine the fair value of MSRs:
March 31,
2025		December 31,
2024
Unobservable InputRange (Weighted Average)
Discount rate
9.6% - 15.5% (10.6%)
9.6% - 15.5% (10.8%)
Prepayment rate
5.6% - 29.8% (8.6%)
5.5% - 43.9% (8.2%)
Cost to service (per loan)
$72 - $577 ($95)
$72 - $827 ($98)
At March 31, 2025 and December 31, 2024, the MSRs had a weighted average life of approximately 7.9 years and 8.2 years, respectively. See “Note 2—Fair Value Measurements” for additional information regarding the valuation of MSRs.
Actual revenue generated from servicing activities included contractually specified servicing fees, as well as late fees and other ancillary servicing revenue, including interest paid to clients on escrow account balances, which were recorded within loan servicing and other fees as follows:
Three Months Ended
March 31,
(in thousands)
20252024
Servicing fee income
$71,300 $64,034 
Late fees2,548 2,056 
Other ancillary servicing revenue and fees(1,097)(302)
Total loan servicing and other fees$72,751 $65,788 
At March 31, 2025 and December 31, 2024, the UPB of mortgage loans serviced for others totaled $94.0 billion and $92.9 billion, respectively, including loans subserviced by third-parties of $1.5 billion at March 31, 2025 and December 31, 2024. Conforming conventional loans serviced by the Company are sold to FNMA or FHLMC programs on a nonrecourse basis, whereby foreclosure losses are generally the responsibility of FNMA and FHLMC and not the Company. Similarly, certain loans serviced by the Company are secured through GNMA programs, whereby the Company is insured against loss by the FHA or partially guaranteed against loss by the VA.
The key assumptions used to estimate the fair value of MSRs are prepayment speeds, the discount rate and costs to service. Increases in prepayment speeds generally have an adverse effect on the value of MSRs as the underlying loans prepay faster. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore, the estimated life of the MSRs and related cash flows decrease. Decreases in prepayment speeds generally have a positive effect on the value of MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of MSRs generally increases as prepayments decrease and therefore, the estimated life of the MSRs and related cash flows increase. Increases in the discount rate generally have an adverse effect on the value of the MSRs. The discount rate is risk adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), premium for market liquidity, and credit risk. A higher discount rate would indicate higher uncertainty of the future cash flows. Conversely, decreases in the discount rate generally have a positive effect on the value of the MSRs. Increases in the costs to service generally have an adverse effect on the value of the MSRs as an increase in costs to service would reduce the
Company’s future net cash inflows from servicing a loan. Conversely, decreases in the costs to service generally have a positive effect on the value of the MSRs. MSR uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties.
The following table illustrates the impact of adverse changes on the prepayment speeds, discount rate and cost to service at two different data points at March 31, 2025 and December 31, 2024, respectively:
Prepayment SpeedsDiscount RateCost to Service (per loan)
(in thousands)10% Adverse
Change		20% Adverse
Change		10% Adverse
Change		20% Adverse
Change		10% Adverse
Change		20% Adverse
Change
March 31, 2025
Mortgage servicing rights$(42,037)$(82,526)$(52,275)$(101,936)$(11,951)$(24,849)
December 31, 2024
Mortgage servicing rights$(39,491)$(78,483)$(53,056)$(104,403)$(11,217)$(24,079)