MSR Valuation

MSR valuation refers to determining the worth of Mortgage Servicing Rights (MSRs), which are the rights to manage and collect payments on mortgage loans. Essentially, it assesses how much a company could earn from servicing a portfolio of loans, considering factors like future cash flows, interest rates, prepayment trends, and costs. This valuation helps lenders and investors understand the value of their servicing portfolios and make informed financial decisions. MSR valuation involves estimates of expected income over time, discounted to present value, reflecting the anticipated profitability of servicing rights.