Is your company one of the many looking into selling their mortgage loan originations on a servicing retained basis? If so, the Lykken on Lending show today is one to which you should listen. Servicing experts Austin Tilghman and David Stephens, from United Capital Markets, were guest speakers. They explained that economics have forced many former release shops to consider retaining servicing. With so many correspondent lenders out of the market or having curtained their volume, there is very little competition for loans and as a result the correspondents are not having to pay full value for servicing.
Even though the economics may compel originators to retain servicing, there are several complicating factors to be considered before doing so. One should consider the time it takes to become approved as a servicer with the agencies, the need to acquire sufficient net worth to qualify, employing servicing knowledge, and adapting to the changing cash flows of your business.
Other non-economic risks need to be understood in making a decision to retain servicing, including the significant regulatory uncertainty surrounding servicing and that there is an unclear secondary market for servicing rights in the future. What is clear is that the servicing cash flows from today’s originations, sub-4% rates with very high quality, should be some of the most valuable servicing rights ever.
MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.
Tune in every Monday at 1:00pm(et) for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending