XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Mortgage Servicing Rights
3 Months Ended
Mar. 31, 2018
Transfers and Servicing [Abstract]  
Mortgage Servicing Rights
Mortgage Servicing Rights
We invest in mortgage servicing rights associated with residential mortgage loans and contract with licensed sub-servicers to perform all servicing functions for these loans. The majority of our investments in MSRs were made through the retention of servicing rights associated with the residential jumbo mortgage loans that we acquire and subsequently transfer to third parties. We hold our MSR investments at our taxable REIT subsidiary.
At March 31, 2018 and December 31, 2017, our MSRs had a fair value of $66 million and $64 million, respectively, and were associated with loans with an aggregate principal balance of $5.42 billion and $5.56 billion, respectively.
The following table presents activity for MSRs for the three months ended March 31, 2018 and 2017.
Table 8.1 – Activity for MSRs
 
 
Three Months Ended March 31,
(In Thousands)
 
2018
 
2017
Balance at beginning of period
 
$
63,598

 
$
118,526

Additions
 

 
7,485

Sales
 

 
(11,928
)
Changes in fair value due to:
 
 
 
 
Changes in assumptions (1)
 
4,346

 
(657
)
Other changes (2)
 
(1,448
)
 
(2,413
)
Balance at End of Period
 
$
66,496

 
$
111,013

(1)
Primarily reflects changes in prepayment assumptions due to changes in market interest rates.
(2)
Represents changes due to the realization of expected cash flows.
The following table presents the components of our MSR income for the three months ended March 31, 2018 and 2017.
Table 8.2 – Components of MSR Income, net
 
 
Three Months Ended March 31,
(In Thousands)
 
2018
 
2017
Servicing income
 
$
3,796

 
$
6,907

Cost of sub-servicer
 
(592
)
 
(1,380
)
Net servicing fee income
 
3,204

 
5,527

Market valuation changes of MSRs
 
2,892

 
(3,070
)
Market valuation changes of associated derivatives
 
(5,139
)
 
(749
)
MSR reversal of provision for repurchases
 

 
5

MSR Income, Net
 
$
957

 
$
1,713