What Are Mortgage Servicing Rights (MSR)
- Mortgage Servicing Rights (MSRs) are contractual rights that give an investor the authority to service a pool of mortgage loans and receive ongoing fees for collecting payments, managing escrow accounts, and handling borrower communication.
- The MSR investor does not own the mortgage principal or interest payments, but instead, they own the revenue stream tied to servicing of the loans.
- Asset backed securitizations from Fannie Mae and Freddie Mac pay this contractual servicing fee.
- The mortgage loans are underwritten to Fannie Mae and Freddie Mac guidelines.
- Consistency and predictability of the fee income stream are similar to a bond or a fixed income investment cash flow.
- Historically, this asset class was only available to banks, originators and large institutional investors.
- Grander is actively sourcing and purchasing attractively priced and optimized portfolios of MSR’s.
