Servicing Discount Rates Need to be Revisited

The interest rate decline has not been kind to those who own mortgage servicing rights.  As interest rates dropped, prepay speeds soared, and values plummeted.  As can be seen from the graph below, all of the major servicers experienced significant…

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OAS ANALYSIS IS NOT A VALUATION TOOL

Option-adjusted spread (“OAS”) analysis is not well understood by our industry.  OAS should not be used to generate an assessment of value but, rather, as a very useful output of the valuation process.  It is an important financial tool that…

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