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$6.3 billion portfolio deal tests the bulk MSR market’s appetite

By Bonnie Sinnock

August 03, 2020, 4:36 p.m. EDT 

The market for mortgage servicing rights is seeing an increase in activity, after coronavirus-related developments virtually froze the market earlier this year.

Incenter Mortgage Advisors is accepting bids on a nearly $6.3 billion offering on behalf of an unnamed seller. Bids must be emailed by noon Mountain time on Tuesday.

The transaction is at least the second large, seasoned MSR deal seen since the government-sponsored enterprises suspended bulk purchases of loans more than six months old in early May.

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The weighted average age of the GSE loans in the MSR portfolio is nearly 11 months. The package contains slightly more Fannie Mae loans than Freddie Mac loans, and the weighted average interest rate is nearly 3.78%.

The weighted average FICO score for the package is nearly 763 and the weighted average loan-to-value ratio is almost 74%.

The MSRs have a nearly 40% Texas concentration, based on current loan balance, and a more than 42% concentration in the Lone Star state based on loan count.

The seller would prefer to have the MSRs trade no later than Aug. 31.

That date is the current deadline for some of the GSEs’ temporary coronavirus-related relief measures, including a moratorium on foreclosures.

Other GSE relief measures scheduled to expire on Aug. 31 include a temporary exemption from rules that typically bar mortgage companies from delivering new loans to Fannie and Freddie if borrowers request forbearance after closing. Currently, new loans can still be delivered to the GSEs in this instance if mortgage companies are willing to sell them at a significant discount.

The measure that allows the GSEs to purchase these loans previously was scheduled to expire July 31, but the GSEs’ regulator and conservator, the Federal Housing Finance Agency, extended it at the last minute on Friday.

While this measure does not directly affect the market for bulk sales of seasoned loans, it can have some bearing on the refinance options available to borrowers with older mortgages.

Bonnie Sinnock

Capital Markets Editor, National Mortgage News