Mortgage Servicing Rights

Mortgage Servicing Rights (MSRs) are the contractual rights to manage a mortgage loan’s day-to-day responsibilities, such as collecting payments, responding to customer inquiries, and handling escrow accounts. When a lender or investor sells these rights to a third party, they receive a fee for servicing the loan. MSRs represent an asset on the seller's balance sheet, and their value fluctuates based on interest rates, prepayment speeds, and the characteristics of the loan portfolio. Essentially, MSRs give the holder the ongoing revenue stream from managing mortgage loans, separate from owning the loans themselves.