As the megabanks continue to write down the value of their residential servicing portfolios, now may be the best time ever to buy housing receivables, according to a new report from Mortgage Industry Advisory Corp. (MIAC), New York.
In a research note to clients, MIAC senior vice president Mike Carnes wrote, that MSR values “remain at historically low levels, creating one of the best buyer’s markets in history.” Carnes adds that servicing rights “are intrinsically worth more than current market values due to supply/demand dynamics and an overly risk-sensitive market.”
Almost all of the nation’s megabanks are in the process of marking down the asset value of their MSRs due to the ‘robo-signing’ scandal and ensuing enforcement actions taken against them by banking regulators and soon the states.
Earlier this week JPMorgan Chase, in releasing its first quarter earnings, unveiled a $1.1 billion MSR write down. Bank of America did the same. (See related story on this website.)
However, it remains to be seen whether any of the megabanks will become net sellers of MSRs. Mark Garland, president of MountainView Servicing Group, Denver, told National Mortgage News that, “The big boys are usually the buyers. Who's going to buy from them? Private equity firms?" (For a complete analysis on the recent servicing consent orders and MSRs see the Monday paper edition of NMN.)