So, how's the residential servicing sector holding up? In normal times -- and we're living in anything but normal times -- servicing would be a counter-cyclical play to originations. But the ugly delinquency numbers are making servicing rights less valuable. Don't get me wrong, some companies are living off their servicing revenue provided their portfolios include GSE, FHA and VA product. But one investment banker pointed out to me that escrow earnings are way down, collection costs are eating into profits, and prepayment speeds could rise. He added that, "No one wants to sell servicing right now because the bid price is so bad. It's better to just hold it"â¦
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