v3.25.2
Mortgage Servicing Rights
 6 Months Ended
Jun. 30, 2025
Transfers and Servicing [Abstract]  
Mortgage Servicing Rights
5. MORTGAGE SERVICING RIGHTS
The following table presents changes in the fair value of the Company's MSR portfolio related to its mortgage banking business and other information related to its servicing portfolio:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(in millions)
Balance, beginning of period$1,241 $1,178 $1,127 $1,124 
Additions from loans sold with servicing rights retained284 214 545 403 
Carrying value of MSRs sold(452)(241)(535)(397)
Change in fair value23 32 3 92 
Realization of cash flows(52)(38)(96)(77)
Balance, end of period$1,044 $1,145 $1,044 $1,145 
June 30, 2025December 31, 2024
(in millions)
Unpaid principal balance of mortgage loans serviced for others$59,441 $61,089 
Changes in the fair value of MSRs are recorded as Net loan servicing revenue in the Consolidated Income Statement. Due to the regulatory capital impact of MSRs on capital ratios, the Company sells certain MSRs and related servicing advances in the normal course of business. The Company may also sell excess servicing spread related to certain mortgage loans serviced by the Company. During the three and six months ended June 30, 2025, the Company recognized a net gain of $6.6 million and $6.3 million on MSR sales, respectively. The UPB of loans underlying these sales totaled $22.5 billion and $31.2 billion for the three and six months ended June 30, 2025, respectively. During the three and six months ended June 30, 2024, the Company recognized a net gain of $0.8 million and $3.5 million on MSR sales, respectively. The UPB of loans underlying these sales totaled $16.4 billion and $27.2 billion for the three and six months ended June 30, 2024, respectively. As of June 30, 2025 and December 31, 2024, the Company had a remaining receivable balance of $53 million and $37 million, respectively, related to holdbacks on MSR sales for servicing transfers, which are recorded in Other assets on the Consolidated Balance Sheet.
The Company receives loan servicing fees, net of subservicing costs, based on the UPB of the underlying loans. Loan servicing fees are collected from payments made by borrowers. The Company may receive other remuneration from rights to various borrower contracted fees, such as late charges, collateral reconveyance charges, and non-sufficient funds fees. Contractually specified servicing fees, late fees, and ancillary income associated with the Company's MSR portfolio totaled $66.8 million and $125.8 million for the three and six months ended June 30, 2025, respectively, compared to $70.1 million and $137.1 million for the respective periods in 2024. Early payoff fee income totaled $6.1 million and $10.5 million for the three and six months
ended June 30, 2025, respectively, compared to $4.1 million and $8.8 million for the respective periods in 2024. These amounts are recorded as Net loan servicing revenue in the Consolidated Income Statement.
In accordance with its contractual loan servicing obligations, the Company is required to advance funds to or on behalf of investors when borrowers do not make payments. The Company advances property taxes and insurance premiums for borrowers who have insufficient funds in escrow accounts, plus any other costs to preserve real estate properties. The Company may also advance funds to maintain, repair, and market foreclosed real estate properties. The Company is entitled to recover all or a portion of the advances from borrowers of reinstated and performing loans, from the proceeds of liquidated properties or from the government agency or GSE guarantor of charged-off loans. Servicing advances are charged-off when they are deemed to be uncollectible. As of June 30, 2025 and December 31, 2024, net servicing advances totaled $51 million and $84 million, respectively, which are recorded as Other assets on the Consolidated Balance Sheet.
The following table presents the effect of hypothetical changes in the fair value of MSRs caused by assumed immediate changes in the below inputs that are used to determine fair value:
June 30, 2025
(in millions)
Fair value of mortgage servicing rights$1,044 
Increase (decrease) in fair value resulting from:
Interest rate change of 50 basis points
Adverse change(92)
Favorable change76 
Option adjusted spread change of 50 basis points
Increase(23)
Decrease24 
Conditional prepayment rate change of 1%
Increase(34)
Decrease38 
Cost to service change of 10%
Increase(9)
Decrease10 
Sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of changes in assumptions to changes in fair value may not be linear. In addition, the offsetting effect of hedging activities are not contemplated in these results and further, the effect of a variation in a particular assumption is calculated without changing any other assumptions, whereas a change in one factor may result in changes to another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates. As a result, actual future changes in MSR values may differ significantly from those reported.