Bid deadline approaching for MSRs with alternative remittance cycles

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Mortgage Industry Advisory Corp. will collect bids Tuesday on behalf of a seller for a more than $1 billion mortgage servicing rights package that includes securitized loans with alternative remittance cycles.

More than half the loans in the package are Freddie Mac accelerated remittance cycle mortgages. Almost 30% are Fannie Mae mortgages with alternative remittance cycles. The remaining MSRs are from loans from Fannie's standard mortgage-backed securities program.

The weighted averages for all the MSRs in the package are as follows: average loan size, $253,798; interest rate, 4.246%; delinquency rate, 1.48%; and loan age, 21 months.

The unnamed seller is a national lender that originated an estimated 82% of the loans in the portfolio through relationships with two banks headquartered in Massachusetts. The lender provided services for the depositories that included underwriting, processing and closing, and then acquired the loans from them.

The largest loan concentration in the MSR package is in Massachusetts. This state accounts for more than 70% of the MSRs based on principal balance and loan count. The next largest geographic is in Maryland, where roughly 5% of the mortgages are based on balance and loan count. More than 3% of the loans are in Rhode Island based on balance and loan count. West Virginia accounts for a similar, but slightly smaller share of the loans.

Written bids are due on Tuesday at 5 p.m. Eastern time.

Remittance cycles determine when monthly mortgage proceeds are due to Freddie Mac or Fannie Mae. Fannie and Freddie's pricing for alternative remittance cycle loans reflects the corresponding gain or loss in income that occurs between the receipt and delivery of payments.

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MSR GSEs Secondary market Fannie Mae Freddie Mac Massachusetts