Mortgage Servicing Rights, Net

12 Months Ended

Dec. 31, 2020

The changes in the carrying amount of MSRs were as follows (in thousands):


	Year Ended December 31,
Mortgage Servicing Rights		2020		2019		2018
Beginning Balance		$	432,666	$	416,131	$	399,349
Additions		193,913		103,160		95,284
Purchases from an affiliate		200		1,489		3,107

Amortization		(97,796)		(88,114)		(81,609)
Ending Balance		$	528,983	$	432,666	$	416,131

Valuation Allowance
Beginning Balance		$	(19,022)	$	(4,322)	$	(6,723)
Decrease (increase)		(15,232)		(14,700)		2,401
Ending Balance		$	(34,254)	$	(19,022)	$	(4,322)
Net Balance		$	494,729	$	413,644	$	411,809

Servicing fees are included in “Management services, servicing fees and other” on the accompanying consolidated statements of operations and were as follows (in thousands):


	Year Ended December 31,
		2020		2019		2018
Servicing fees		$	116,005	$	104,305	$	103,365
Escrow interest and placement fees		6,140		22,417		18,293
Ancillary fees		7,353		13,671		10,118
Total		$	129,498	$	140,393	$	131,776

Newmark’s primary servicing portfolio at December 31, 2020 and 2019 was $66.3 billion and $59.9 billion, respectively. Also, Newmark is the named special servicer for a number of commercial mortgage-backed securitizations. Upon certain specified events (such as, but not limited to, loan defaults and loans assumptions), the administration of the loan is transferred to Newmark. Newmark’s special servicing portfolio was $2.3 billion and $2.4 billion at December 31, 2020 and 2019, respectively.

The estimated fair value of the MSRs at December 31, 2020 and 2019 was $527.1 million and $441.7 million, respectively.

Fair values are estimated using a valuation model that calculates the present value of the future net servicing cash flows. The cash flows assumptions used are based on assumptions Newmark believes market participants would use to value the portfolio. Significant assumptions include estimates of the cost of servicing per loan, discount rate, earnings rate on escrow deposits and prepayment speeds. The discount rates used in measuring fair value for the years ended December 31, 2020 and 2019 were between 6.1% and 13.5% and varied based on investor type. An increase in discount rate of 100 basis points or 200 basis points would result in a decrease in fair value by $14.8 million and $28.9 million, respectively, at December 31, 2020 and by $11.9 million and $23.3 million, respectively, at 2019.