Blog Talk Radio Show February 6, 2012: Retaining Servicing

2017-12-20T17:34:14+00:00 February 7th, 2012|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , |

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 [...]

Blog Talk Radio Show Summary January 7, 2011: Keep Your Flow Servicing

2017-12-20T17:34:15+00:00 January 11th, 2011|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , |

Michael Lau, EVP of Phoenix Capital, a specialist in evaluating and brokering mortgage servicing rights, joined the LykkenonLending blog-talk-radio show this week to provide his opinions on the status of the mortgage servicing market.  According to Michael, the market for servicer-to-servicer bulk transfers is just about non-existent.  The only portfolios changing hands are done to move servicing of delinquent or distressed loans to special servicers.  Fortunately, the market for servicing on newly originated loans is still active.  There are a number of servicers buying this servicing, but they are paying very little for it.  Michael sees the price paid for flow serving as being between two and four times the service fee.  I remember being paid six to seven times the servicing fee on 2003 and 2004 originations.  How can servicing on loans that may never pay off (4% note rates) be worth only two to four times?  Servicing on today’s loans is worth more.  Now is a good time to consider keeping servicing on new production, if you can.  Hold on to it for three or four years and then sell it.  You need to have cash reserves, experienced people, and quality systems to be a servicer.  If you [...]