One of the great sets of mortgage servicing rights accrued during the pandemic is said to have a perfect loan performance track record and is now on sale.
A portfolio of nearly $12.5 billion in payment entitlements associated with loans purchased by two government-sponsored firms shows no defaults or foreclosures, according to Incenter, which is marketing the package on behalf of an anonymous seller . And loans are not a new production. The weighted average age of loans is 15.5 months and the interest rate on mortgages, 85% of which are 30-year loans, is 3.19%.
While lots of big MSR packets have been exchanged lately“it may be the most pristine of them all,” Incenter said in an email.
It also contains a wider range of loan ages than other deals that have been negotiated recently, according to Tom Piercy, president of national business development at Incenter.
“What’s unique about this portfolio compared to other recent offerings is that while it contains the majority of those lower rates from the ’20 and ’21 vintages, it also contains seasoned loans over five years. “, he said in an email. .
This “offers a hugely profitable opportunity for managers who have strong recovery capabilities through solicitations, etc., and can convert those old loans into new loans via cash refinancesaid Piercy, who is also managing director of his firm’s capital markets trading and valuation subsidiary, Incenter Mortgage Advisors.
The package currently being tendered is also somewhat unusual in that it has a Texas rather than typical California focus, with 13,906 of the loans (28.5% of the package by number, 26.3% based on current balance) located in the Lone State State. The Golden State, where the second highest concentration of mortgages is found, has only 5,525 loans associated with MSRs (11.3% by number, 17.9% by balance). The third largest concentration of loans is in Georgia with 5,213 (10.7% by number and balance). No other state has a mortgage concentration above 10%.
Servicing fees are almost entirely (99.7%) associated with loans originated through the retail channel. The estimated 12-month average escrow for loans as a percentage of principal is 0.84%. The weighted average FICO credit score is 750.6. The averages for size and loan-to-value ratio are $255,937 and 75.1%, respectively.
About three-quarters of the associated loans are Fannie Mae mortgages for which the actual principal and interest payments are remitted to the GSE. The balance is made up of loans that Freddie Mac agrees to pay on an accelerated installment cycle.
The anonymous seller is an independent mortgage company that uses the Finastra Fusion Servicing Director system and indicates that it has electronic data transfer capabilities.
While a $12.5 billion service portfolio is generally considered large, anonymized records provided by Incenter show that several transactions tens of billions of dollars have been publicly or privately traded recently, at least two of which were nearly twice the size of this trade.
All offers must be received in writing for the $12.5 billion portfolio currently on sale by 2 p.m. Mountain time on Feb. 24, according to Incenter.