Annual report [Section 13 and 15(d), not S-K Item 405]

MORTGAGE SERVICING RIGHTS

v3.25.0.1
MORTGAGE SERVICING RIGHTS
 12 Months Ended
Dec. 31, 2024
Transfers and Servicing [Abstract]  
MORTGAGE SERVICING RIGHTS MORTGAGE SERVICING RIGHTS
The following table presents the activity of MSRs for the years ended December 31, 2024 and 2023:
Year Ended
December 31,
(in thousands)
 2024 2023
Balance — beginning of year $ 1,161,357  $ 1,139,539 
MSRs originated
 203,191  161,378 
MSRs purchased, net
 17,826  — 
Changes in fair value:
Due to collection/realization of cash flows (75,531) (55,588)
Due to changes in valuation model inputs or assumptions 36,986  (83,972)
Balance — end of year $ 1,343,829  $ 1,161,357 
The following table presents the unobservable input assumptions used to determine the fair value of MSRs:
December 31,
2024 2023
Unobservable Input Range (Weighted Average)
Discount rate
9.6% - 15.5% (10.8%)
9.6% - 15.5% (10.9%)
Prepayment rate
5.5% - 43.9% (8.2%)
6.4% - 32.0% (8.5%)
Cost to service (per loan)
$72 - $827 ($98)
$72 - $366 ($96)
At December 31, 2024 and 2023, the MSRs had a weighted average life of approximately 8.2 years and 8.0 years, respectively. See “Note 2—Fair Value Measurements” for additional information regarding the valuation of MSRs.
Actual revenue generated from servicing activities included contractually specified servicing fees, as well as late fees and other ancillary servicing revenue, including interest paid to clients on escrow account balances, which were recorded within loan servicing and other fees as follows:
Year Ended
December 31,
(in thousands)
 2024 2023
Servicing fee income
 $ 269,629  $ 242,003 
Late fees 8,478  6,788 
Other ancillary servicing revenue and fees (2,783) (2,647)
Total loan servicing and other fees $ 275,324  $ 246,144 
At December 31, 2024 and 2023, the UPB of mortgage loans serviced for others totaled $92.9 billion and $85.0 billion, respectively, including loans subserviced by third-parties of $1.5 billion at December 31, 2024. Conforming conventional loans serviced by the Company are sold to FNMA or FHLMC programs on a nonrecourse basis, whereby foreclosure losses are generally the responsibility of FNMA and FHLMC and not the Company. Similarly, certain loans serviced by the Company are secured through GNMA programs, whereby the Company is insured against loss by the FHA or partially guaranteed against loss by the VA.
The key assumptions used to estimate the fair value of MSRs are prepayment speeds, the discount rate and costs to service. Increases in prepayment speeds generally have an adverse effect on the value of MSRs as the underlying loans prepay faster. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore, the estimated life of the MSRs and related cash flows decrease. Decreases in prepayment speeds generally have a positive effect on the value of MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of MSRs generally increases as prepayments decrease and therefore, the estimated life of the MSRs and related cash flows increase. Increases in the discount rate generally have an adverse effect on the value of the MSRs. The discount rate is risk adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), premium for market liquidity, and credit risk. A higher discount rate would indicate higher uncertainty of the future cash flows. Conversely, decreases in the discount rate generally have a positive effect on the value of the MSRs. Increases in the costs to service generally have an adverse effect on the value of the MSRs as an increase in costs to service would reduce the Company’s future net cash inflows from servicing a loan. Conversely, decreases in the costs to service generally have a positive effect on the value of the MSRs. MSR uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties.
The following table illustrates the impact of adverse changes on the prepayment speeds, discount rate and cost to service at two different data points at December 31, 2024 and 2023, respectively:
Prepayment Speeds Discount Rate Cost to Service (per loan)
(in thousands) 10% Adverse
Change		 20% Adverse
Change		 10% Adverse
Change		 20% Adverse
Change		 10% Adverse
Change		 20% Adverse
Change
December 31, 2024
Mortgage servicing rights $ (39,491) $ (78,483) $ (53,056) $ (104,403) $ (11,217) $ (24,079)
December 31, 2023
Mortgage servicing rights $ (36,968) $ (72,701) $ (47,899) $ (93,196) $ (11,315) $ (23,573)