Residential Mortgage Servicing Rights

The following table presents the changes in the Company's residential rights ("MSR") for the three and six months ended June 30, 2014 and 2013:



(in thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Balance, beginning of period	$	49,220		$	32,097		$	47,765		$	27,428
Acquired/purchased MSR	62,770			—			62,770			—
Additions for new MSR capitalized	5,362			4,708			7,770			11,110
Changes in fair value:
Due to changes in model inputs or assumptions(1)	(784		)	1,858			(1,871		)	333
Other(2)	(2,376		)	(471		)	(2,242		)	(679		)
Balance, end of period	$	114,192		$	38,192		$	114,192		$	38,192


(1)	Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.


(2)	Represents changes due to collection/realization of expected cash flows over time.

Information related to our residential mortgage serviced loan portfolio as of June 30, 2014 and December 31, 2013 is as follows:



(dollars in thousands)	June 30, 2014			December 31, 2013
Balance of residential mortgage loans serviced for others	$	10,838,313		$	4,362,499
MSR as a percentage of serviced loans	1.05		%	1.09		%

The amount of contractually specified servicing fees, late fees and ancillary fees earned, recorded in residential mortgage banking revenue, was $5.4 million and $8.3 million for the three and six months ended June 30, 2014, as compared to $2.5 million and $4.8 million for the three and six months ended June 30, 2013.

Key assumptions used in measuring the fair value of MSR as of June 30, 2014 and December 31, 2013 are as follows:



	June 30, 2014		December 31, 2013
Constant prepayment rate	11.58	%	12.74	%
Discount rate	9.14	%	8.69	%
Weighted average life (years)	6.6		6.0

A sensitivity analysis of the current fair value to changes in discount and prepayment speed assumptions as of June 30, 2014 and December 31, 2013 is as follows:



(in thousands)	June 30, 2014			December 31, 2013
Constant prepayment rate
Effect on fair value of a 10% adverse change	$	(4,610	)	$	(2,255	)
Effect on fair value of a 20% adverse change	$	(8,863	)	$	(4,323	)

Discount rate
Effect on fair value of a 100 basis point adverse change	$	(4,380	)	$	(1,832	)
Effect on fair value of a 200 basis point adverse change	$	(8,440	)	$	(3,534	)

The sensitivity analysis presents the hypothetical effect on fair value of the MSR. The effect of such hypothetical change in assumptions generally cannot be extrapolated because the relationship of the change in an assumption to the change in fair value is not linear. Additionally, in the analysis, the impact of an adverse change in one assumption is calculated independent of any impact on other assumptions. In reality, changes in one assumption may change another assumption.