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Servicing

MSR offloading rally continues

IMA plans another mega sale of enterprise loans

dollar zoomed in

Interactive Mortgage Advisors continues its massive offloading of mortgage servicing rights, with the firm now managing the sale of $1.14 billion in MSRs tied to enterprise loans.

The offering is up for bid on Oct. 3, and includes Fannie Mae and Ginnie Mae bulk residential MSRs.

While IMA did not reveal the names of the sellers and buyers in the deal, the portfolio carries quality characteristics, such as its Midwest-geographic concentration and delinquencies that represent less than 4% of the sale.

"This offering provides a great opportunity to purchase a substantial amount of low interest rates, high quality MSRs with performance seasoning from a highly reputable mortgage banking company," said IMA executives.

MSRs are still considered an attractive asset, with strong demand coming from private equity firms and real estate investment trusts.

As a result, demand is likely to remain strong as long as these firms shop for high single-digit returns in the historically low-rate environment.

"The market remains robust for both buyers and sellers," explained IMA managing director Tom Piercy.

He added, "The key to this current market environment is that the demand is covering all types of servicing hence, giving the current owners many options as it pertains to the management of their MSR asset. It's great to have significant capital enter the MSR market to provide for greater management of the MSR asset." 

Recently, Piercy noted that MSRs have been undervalued for quite some time, but finally reached their prime last year.

"MSRs are a yield for investors who have not been able to achieve these types of yields in the past," Piercy said. "It’s attractive massive outside capital that’s now being deployed to capitalize on the yield in the market."

The advisory firm went public last week to market another mortgage servicing right portfolio valued at $140 million. Since April, IMA has brokered more than 40 bulk or flow MSR trades.

Additionally, MSRs are the subject of many sales at banking institutions, as these firms continue to look to offload MSRs on fears that new Basel III requirements will make assets less attractive. Not surprisingly, those banks are easily finding buyers.

For instance, one of the largest U.S. lenders, Wells Fargo (WFC) is offloading mortgage-servicing rights, announcing this month a new sale involving $41 billion in loans.

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