What drives BSI Financial's MSR acquisition strategy?

"Although these lower-coupon notes generate less revenue for a servicer, there's also a safety net factor that must be considered. Borrowers who secured rates of 4% or less during the pandemic-era purchase and refi frenzy are less likely than others to be searching for a new loan today. They entail less risk for an MSR portfolio than today's more common note rates of 6% to 7%, which are more likely to be paid off and dilute the value of a portfolio."

"On average, servicers have only retained 30% of their borrowers in the past 15 years, according to ICE Mortgage Technology. We tend to be mindful of that, Price said. We want to make sure that the things we buy strategically, from a coupon perspective, will perform the way we're forecasting, and that the weighted average life of that asset will be aligned with the way that we're modeling it to make sure that the return requirements we have meet those objectives."

Lower-coupon, pandemic-era mortgages produce less servicing revenue but carry lower prepayment risk, acting as a safety net for MSR portfolios. Borrowers with rates of 4% or less are less likely to refinance today, reducing churn compared with borrowers on 6%–7% notes that are more prone to payoff and portfolio dilution. Servicers have retained roughly 30% of borrowers over the past 15 years. A $30.6 billion servicing portfolio at the end of Q3 2025 consisted mainly of agency notes, with over half tied to Fannie Mae and $9.8 billion tied to Ginnie Mae. Ginnie Mae pools show higher delinquency rates driven by FHA and VA loans, and the gap between conventional and FHA delinquencies widened significantly while the conventional-VA spread also rose.

Read at www.housingwire.com