Servicing Options

Whether your institution is looking to better retain hard-earned customer relationships, or profit from the servicing asset upfront, MPF offers a solution.

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Understanding Your Options

Before selecting a servicing option, consider the potential advantages and disadvantages to your institution. 

• Servicing Retained

  Advantages	Disadvantages
  Retain relationship with borrower	Necessary cash investment and capital reserve requirements to keep the servicing asset
  Servicing cash flow stream	Establish business policies and procedures to support servicing
  Create countercyclical annuity to smooth earnings over various interest rate cycles	Costs for subservicing and other third-party service providers, if needed
  Possible to scale servicing costs by using a subservicer	Technology investments or outsourcing technology
  Create franchise value in firm

• Servicing Released

  Advantages	Disadvantages
  Leverage funds received upfront for the servicing asset to support other business areas	Hedge interest rate risk of the MSR and accounting responsibilities
  Avoid servicing asset risk	Potential loss of borrower relationship and/or refinance opportunity
  Do not have to hold capital against the MSRs in portfolio	Loss of long-term, revenue stream
  Do not need a servicing operation	Pricing could change during lock period
  Depending on market environment, may offer a better execution	Early payoff-SRP recapture risk
  	Possible separate wires for loan asset and SRP fundings
  	Possible minimum monthly volume requirements by servicing buyer