“While the servicers we follow pursue relatively different business models, this appears to be a 30% pretax, net margin business,” write company analysts Henry Coffey, Jason Weaver, and Calvin Hotrum in their report.
Among other things, Basel III caps how much MSRs can count toward core capital at depositories.
The research firm tracks eight mortgage-related stocks, including Nationstar Mortgage, Ocwen Financial, PennyMac, and others.
Coffey and his group predicts that if rates stay low MSR values will be “written down again” in the fall.
In a recent story, National Mortgage News noted that some of the nation’s top servicers have reduced MSR values by upwards of 70% compared to 2Q 2012.
“ResCap’s agency MSRs are being valued 1.5-1.6 x contractual fees; it will be interesting to see if the industry will ignore the ResCap sale when valuing MSRs in the future,” Stern writes.
ResCap is short for Residential Capital Corp., a bankrupt mortgage firm owned by Ally Financial, which is in the process of being sold. Known bidders on ResCap include Ocwen, Nationstar, and a division of Berkshire Hathaway.