Supervisors Symposium

MSR TRADE IN AN ILLIQUID MARKET

• MSRs trade through brokers • When defaults rise, MSRs—especially Ginnie Mae MSRs—become hard to sell • Even in the mild stress of 2016, one MSR broker noted that: • “Ginnie Mae servicing offerings often receive between 0 and 3 bids” • Fannie and Freddie servicing received between 2 and 6 bids • “MSRs for low FICO borrowers are a challenge to sell”

CONSIDERATIONS IN SETTING CAPITAL FOR MSR