MSR market individuals supply blended outlook on purchaser curiosity

Forecasts from the mortgage servicing rights market have been strong, but stakeholders are watching carefully to see how buyer interest holds up this year.

Some panelists at an industry conference said they’ve seen new players coming in, others haven’t.

“I think there’s a lot of capital that wants to go into MSRs,” Christopher King, senior vice president of business development at Mr. Cooper told attendees at the Mortgage Bankers Association’s secondary market conference.

Both bank and nondepository investors have been “consistently active,” he said.

Dan Fleishman, managing director, RiskSpan, said he’s seen some new entrants, but that some buyers are selective.

“Some investors just want to play in the low coupons,” he said.

Michelle Richardson, senior vice president and chief financial officer at Plaza Home Mortgage, said she’s seeing a limited, if consistent, base of investors in instances where the company sells to offload some of its advancing risk. 

“I’m really seeing the same players,” Richardson said. She also noted that she anticipates a further dip in rates and possible pickup in refinancing this year.

Panelists at the MBA’s national secondary market conference discuss servicing trends.

Michael Kelleher, a senior director at SitusAMC, said he has been seeing some interest from real estate investment trusts, noting that they’re “not interested in units or recapture” like lenders, but are focused on the interest-only strip involved.

Recently, investors have been focused on distinctions that include home price volatility in areas affected by pandemic-related inflows that are reversing. They’ve also started to build climate risk into pricing, panelists said.

Mortgage servicing rights will likely be in the $3 trillion range over the next three years combined, and be at its height in 2024, according to a forecast Mr. Cooper released earlier this year, King noted.

The forecast suggests MSR volume will be on the order of $1.3 trillion this year, $1.5 trillion in 2024 and drop back a little in 2025 to $1.1 trillion.

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