An unnamed seller put nearly $817 million in agency servicing rights with an unusual geographic concentration up for sale on Wednesday, according to the
Properties in the Midwest primarily secure the retail-originated loans involved, as opposed to the more typical California concentration found in bulk servicing packages put up for bid.
“It seems like 80% of the mortgage servicing rights universe is in California these days. Midwestern offerings happen, but to have it this concentrated, that’s not all that common,” said Mike Carnes, a managing director at MIAC, in an interview.
The offering is relatively small in a market where
“There are still a lot of offerings in the market, but there has been a little bit of softening taking place.” Carnes said. “It’s not because the MSRs are less desirable but because buyers are experiencing some bandwidth issues.”
Weighted averages for the government-sponsored enterprise-backed loans involved in the Midwestern offering are: age, 17 months; interest rate, nearly 3.06%; and FICO credit score, 757. The average loan size is around $224,112. Per-loan averages for principal/interest and taxes/insurance are roughly $1,127 and $524, respectively. Most of the loans have funds set aside in escrow accounts to ensure certain payments will be made, and are primarily 30-year fixed rate, owner-occupied mortgages. One borrower has filed for bankruptcy, but the loans are otherwise pristine.
More than 60% of the portfolio consists of Accelerated Remittance Cycle mortgages Freddie Mac backs. The balance are Fannie Mae-backed loans that pass on the cash-flows from borrowers’ payments to investors on an actual/actual basis. The Money Source services the mortgages in the offering.
Roughly one-third of the loans based on unpaid principal balance carry private mortgage insurance, which borrowers may need to get if they don’t make a 20% down payment. Information on all the loans is available in the Mortgage Electronic Registration System. Notes and deeds are in hard-copy format. Other documents are available as electronic images created from paper files.
The bid deadline for the mortgage servicing rights is 5 p.m. Eastern on June 15.
Buyers examining the package will be bidding in a market where prices remain at
“Deals that are executing in the high fours are typically smaller deals that are maybe $500 million to $600 million. The larger deals, $15 billion to $20 billion and higher, because of their economies of scale, can sometimes garner an execution price in excess of five and a half,” he said.