Prestwick adding more fuel to a hot MSR market

The firm recently unveiled three new bulk-servicing offerings, including one loan package valued at $2 billion

Advisory and brokerage firm Prestwick Mortgage Group is out with three new mortgage-servicing rights (MSR) offerings for agency loan pools valued in total at $2.6 billion.

One of those MSR offerings involves a Ginnie Mae loan pool of 7,591 mortgages with valued at $2 billion based on the unpaid principal balance. The package is being marketed with Prestwick’s strategic partner, San Diego-based Mortgage Capital Trading (MCT) on behalf of an “independent mortgage banker.”

The average note rate for the loan pool is 3.7%, with an average servicing fee of 0.3693%, the MSR bid documents show. The average delinquency rate for the loans in the pool stands at 14.1% — which includes loans 30 days past due and foreclosures. Bids are for the MSR offering— comprised of loans originated in Colorado, Texas and the Southeast — are due Oct. 6.

“Ginnie Mae loans tend to have, or tend to be more delinquent than conventional products,” said Azad Rafat, MSR senior director at MCT, in a prior interview. “On average, the rate of delinquency is about two times as much as the conventional product.” 

Ginnie Mae makes it possible for lenders to originate qualifying mortgages that they can then securitize through the government-sponsored agency. Ginnie, however, guarantees only the principal and interest payments to purchasers of its bonds, which are sold worldwide. 

The underlying loans carry guarantees, or a mortgage insurance certification, from the housing agencies approving the loans — which include single-family mortgages backed by the Federal Housing Administration, the Department of Veterans Affairs and the U.S. Department of Agriculture

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Prestwick also is marketing a separate MSR package on behalf of an unnamed independent mortgage banker that is composed of 1,239 Ginnie Mae Loans valued at $228 million. The average note rate for loans in the pool is 3.857%, with an average servicing fee of 0.3752%, the MSR bid documents show. The average delinquency rate for the loans in the pool stands at 14.9%

Bids are for the MSR offering— comprised of loans originated primarily in Texas and the Midwest — are due today, September 27.

The third MSR package being actively marketed by Prestwick — once again on behalf of an independent mortgage banker — involves a combined Fannie MaeFreddie Mac and Ginnie Mae loan pool of 1,544 residential mortgages valued at $372 million. The average note rate for the pool is 3.659%, with the servicing-fee strip averaging 0.2548%. 

The average delinquency rate for the loan pool is 2.72%. Mortgages from Florida, New Mexico, Ohio and Wisconsin account for more than half of the originations. Bids on the MSR package due Oct. 4, offering documents show.

The current MSR offerings are not outliers by any means. Prestwick has been very active in the MSR market over the past few months, including some big-ticket deals.

In early August, Prestwick and strategic partner MCT, released bid documents for a bulk servicing offering involving a Fannie Mae and Freddie Mac loan pool composed of 5,590 mortgages valued at $1.1 billion, with bids due August 17. The seller was described in the bid documents once again as an “independent mortgage banker.”

Later in August, Prestwick unveiled another mortgage-servicing rights (MSRs) offering for a package of 2,544 Fannie Mae and Freddie Mac loans valued at $598 million — with bids due Sept. 8. Prestwick was listed as the exclusive broker, with the seller identified an “independent mortgage banker.”

In July, Prestwick, again with MCT as its partner, released bid documents for two separate MSR offerings involving loan portfolios valued at $1.85 billion in total. One of Prestwick’s packages on the auction block, offered by a party once again identified in bid documents as “an independent mortgage banker,” involved MSRs for a pool of 2,826 Freddie Mac loans valued at $749 million. The other MSR offering involved a combined package of 4,853 Fannie Mae and Freddie Mac loans valued at $1.1 billion — also being offered by a party identified only as an “independent mortgage banker.”

Over the first half of 2022, mortgage interest rates rose rapidly — with the Federal Reserve adding rate-bump accelerants to the mix. Consequently, loan-prepayment speeds dropped for lower-rate loans due to diminished refinancing activity. That, in turn, amplified the value of MSRs because the lower-rate loans are expected to pay out over a longer period. 

Those dynamics have sparked a dynamic MSR market so far this year, as HousingWire has reported previously.

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