SERVICING RIGHTS, AT FAIR VALUE

12 Months Ended

Dec. 31, 2022

Transfers and Servicing [Abstract]

SERVICING RIGHTS, AT FAIR VALUE

SERVICING RIGHTS, AT FAIR VALUE

The outstanding principal balance of the servicing portfolio was comprised of the following:

	December 31,
	2022		2021
Conventional	$	104,074,252	$	127,270,097
Government	37,096,679		34,842,868
Total servicing portfolio	$	141,170,931	$	162,112,965

A summary of the unpaid principal balance underlying servicing rights is as follows:

	December 31,
	2022		2021
Current loans	$	139,295,226	$	160,302,966
Loans 30 - 89 days delinquent	703,285		504,467
Loans 90 or more days delinquent or in foreclosure	1,172,420		1,305,532
Total servicing portfolio (1)	$	141,170,931	$	162,112,965

(1)At December 31, 2022 and 2021, 0.2% and 0.6%, respectively, of the servicing portfolio was in forbearance as a result of payment relief efforts afforded to borrowers as a result of the Coronavirus Aid, Relief, and Economic Security Act and other regulatory guidance.

A summary of the changes in the balance of servicing rights, net of servicing rights liability is as follows:

	Year Ended December 31,
	2022		2021		2020
Balance at beginning of period	$	1,999,402	$	1,124,302	$	444,443
Servicing rights additions	647,716		1,610,596		986,050
Sales proceeds, net	(754,597)		(382,271)		(9,881)
Changes in fair value:
Due to changes in valuation inputs or assumptions	363,064		68,399		(95,764)
Due to collection/realization of cash flows	(230,449)		(421,624)		(200,546)
Balance at end of period	$	2,025,136	$	1,999,402	$	1,124,302

The following is a summary of the components of loan servicing fee income as reported in the Company’s consolidated statements of operations:

	Year Ended December 31,
	2022		2021		2020
Contractual servicing fees	$	423,528	$	382,501	$	174,532
Late, ancillary and other fees	25,622		11,179		11,363
Servicing fee income	$	449,150	$	393,680	$	185,895

The following is a summary of the components of changes in fair value of servicing rights, net as reported in the Company’s consolidated statements of operations:

	Year Ended December 31,
	2022		2021		2020
Changes in fair value:
Due to changes in valuation inputs or assumptions	$	363,064	$	68,399	$	(95,764)
Due to collection/realization of cash flows	(230,449)		(421,624)		(200,546)
Realized losses on sales of servicing rights	(3,663)		(9,759)		(2,701)
Net (loss) gain from derivatives hedging servicing rights	(323,309)		(82,878)		154,663
Changes in fair value of servicing rights, net	$	(194,357)	$	(445,862)	$	(144,348)

The table below illustrates hypothetical changes in fair values of servicing rights, caused by assumed immediate changes to key assumptions that are used to determine fair value.

	December 31,
	2022		2021
Fair Value of Servicing Rights, net	$	2,025,136	$	1,999,402
Change in Fair Value from adverse changes:
Discount Rate:
Increase 1%	(81,431)		(85,066)
Increase 2%	(157,281)		(163,255)
Cost of Servicing:
Increase 10%	(19,017)		(20,843)
Increase 20%	(38,127)		(41,727)
Prepayment Speed:
Increase 10%	(18,863)		(76,532)
Increase 20%	(37,546)		(148,556)

Sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of changes in assumptions to changes in fair value may not be linear. Also, the effect of a variation in a particular assumption is calculated without changing any other assumption, whereas a change in one factor may result in changes to another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates. As a result, actual future changes in servicing rights values may differ significantly from those displayed above.