The mortgage servicing rights (MSR) market is continuing to pump out new deals.
Freedom Mortgage, one of the country’s largest mortgage servicers, recently unveiled its second private-label offering this year backed by MSRs.
In addition, two mortgage advisory firms are out with three new MSR bulk-sales offerings involving agency loan portfolios exceeding $1.4 billion in value combined.
Mount Laurel, New Jersey-based Freedom Mortgage’s latest private-label offering seeks to raise $300 million through the sale of interest-only notes backed by participation interests in Ginnie Mae MSRs. In April, Freedom Mortgage also launched a private-label offering involving a $350 million interest-only note offering backed by participation interests in its Ginnie Mae MSRs holdings.
Monthly valuations of the MSRs for both offerings will be performed by SitusAMC, Kroll Bond Rating Agency (KBRA) reports. SitusAMC supports more most of the country’s largest MSR asset holders, including banks, mortgage banks and servicers, KBRA notes, and “every month, SitusAMC values approximately $5 trillion of MSRs and has traded more than $280 billion of MSR … since 2017.”
As of the end of June, according to mortgage-analytics firm Recursion, Freedom Mortgage ranked as the sixth largest all-agency mortgage servicer in the country, with a 4.6% market share and some $380.3 billion in agency loans serviced. It ranked as the top servicer of Ginnie Mae loans, however, with a 12.5% market share and some $256.6 billion in loans serviced, according to Recursion’s data.
MSRs gain value as interest rates rise, in part because upward-bound rates cause mortgage refinancing to slow to a crawl. That reduces mortgage-prepayment speeds — increasing the effective long-term yield of the servicing rights tied to those loans.
Freedom Mortgage is not the only mortgage originator to tap the private label market seeking to leverage its MSR holdings. Subsidiaries of Westlake Village, California-based Pennymac Financial Services Inc. (PFSI), which ranks as one of the top five mortgage lenders nationally, this past June also unveiled private-label offerings seeking to raise more than $700 million in the debt markets through the sale of notes secured by MSRs.
The transactions include a note offering of $305 million sponsored by Pennymac Mortgage Investment Trust, which is managed by PFSI, that is “secured by certain participation certificates relating to Fannie Mae mortgage servicing rights [MSRs],” according to a filing by PFSI with the U.S. Securities and Exchange Commission (SEC).
Another affiliate of PFSI, Pennymac Loan Services LLC, issued a separate private-label issuance of participation certificates valued in total at $400 million. The notes are backed by Ginnie Mae mortgage-servicing rights, according to a presale report by KBRA.
Monthly valuations of the MSRs for both offerings will be performed by Denver-based Incenter Mortgage Advisors, KBRA reports. Since inception, Incenter has managed more than $1.5 trillion in MSR sales and purchases, according to KBRA.
MSR Bulk Offerings
On another front, three new bulk MSR offerings for agency loan portfolios valued at some $1.48 billion are now in circulation with bids due in early August.
Alexandria, Virginia-based advisory and brokerage firm Prestwick Mortgage Group, along with its strategic partner, San Diego-based Mortgage Capital Trading (MCT), recently released bid documents for an MSR offering involving a portfolio of 1,004 Fannie Mae loans valued at $409 million. Separately, Prestwick just released bid documents for an MSR offering involving a pool of 1,079 Fannie Mae and Freddie Mac loans valued at $257 million.
The seller for both deals is identified as “an independent mortgage banker.”
In addition to the MSR offering being marketed by Prestwick and MCT, New York-based Mortgage Industry Advisory Corp. (or MIAC Analytics) recently released bid documents for an $816 million MSR offering involving a bulk Fannie Mae, Freddie Mac and Ginnie Mae loan-servicing portfolio composed of 2,400 mortgages. The seller is identified in bid documents as a “mortgage company that originates loans with a concentration in California.”
In early July, as the third quarter was kicking off, four mortgage-servicing rights (MSR) offerings for agency loan portfolios valued at some $3.7 billion also hit the market.
Prestwick Mortgage Group and MCT released bid documents for two separate MSR offerings involving agency loan portfolios valued at $1.85 billion in total. In addition, Incenter Mortgage Advisors in July came out with two large MSR offerings tied to agency loan packages worth $1.84 billion.
Finally, on the last day of June, MIAC Analytics released bid documents for an MSR offering it is brokering that exceeds $5 billion in value. “MIAC Analytics, as exclusive representative for the seller, is pleased to offer for your review and consideration a $5.22 billion Fannie Mae, Freddie Mac and Ginnie Mae mortgage-servicing portfolio,” the offering documents state. “The portfolio is being offered by a mortgage company that originates loans with a concentration in California.”
MIAC also came out with two large MSR offerings earlier in June involving a $4.8 billion loan pool and a separate $816.7 million package, both composed of Fannie Mae and Freddie Mac loans.
Correction: Due to a typo, an incorrect figure was reported originally for the volume of MSR sales and purchases managed by Incenter Mortgage Advisors since the firm’s inception. The correct figure is more than $1.5 trillion, according to KBRA.
