Assessing Involuntary Termination Risk on Residential Mortgage Servicing Rights

10 Pages Posted: 21 Mar 2017 Last revised: 20 May 2017

Richard Christopher Whalen

Economic Advisory Committee of FINRA; Indiana State University - Networks Financial Institute; Association of Private Enterprise Education (APEE); National Association of Business Economists (NABE)

Date Written: March 17, 2017

Abstract

This research paper outlines some of the issues facing investors in mortgage servicing rights (MSRs) and/or creditors holding security interests against these intangible assets or the underlying collateral. These issues include swings in the valuation of the MSR, repayments of loans in the underlying portfolio that may cause the MSR to decay more rapidly, and most important, the possibility of an involuntary transfer of the MSR that causes the investor and/or secured creditor a total loss. The paper concludes by suggesting some of the key quantitative and qualitative indicators which investors and regulators should assess to avoid situations where involuntary servicing termination may occur.

Keywords: Residential Mortgage, Morgage Servicing Rights, MSR, Fannie Mae, Freddie Mac, Ginnie Mae, Federal Housing Finance Authority, Federal Housing Adminsitration, Taylor Bean Whittaker, FDIC, Involuntary Transfer, Termination

JEL Classification: G00, G20, G23, G32, G33, G38, K2, K23, M2, M48, N2

Suggested Citation

Whalen, Richard Christopher, Assessing Involuntary Termination Risk on Residential Mortgage Servicing Rights (March 17, 2017). Available at SSRN: https://ssrn.com/abstract=2936422

Richard Christopher Whalen (Contact Author)

Economic Advisory Committee of FINRA ( email )

1735 K Street NW
Washington, DC 20006
United States

HOME PAGE: http://tinyurl.com/2bne6p

Indiana State University - Networks Financial Institute ( email )

Terre Haute, IN 47809
United States

HOME PAGE: http://tinyurl.com/4ckcoxo

Association of Private Enterprise Education (APEE) ( email )

313 Fletcher Hall, Dept. 6106
615 McCallie Avenue
Chattanooga, TN 37403-2598
United States

HOME PAGE: http://https://www.apee.org/

National Association of Business Economists (NABE) ( email )

1920 L St. NW, Suite 300
Washington, DC 20036
United States

HOME PAGE: http://www.nabe.com

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