MSRs trade at richest levels in decades as lenders, funds pile in

Chicago-based Rate has recently changed its servicing strategy, retaining mortgage servicing rights (MSRs) instead of selling.“We’ve been retaining all of our MSRs for the last 12 months, so we’re over $50 billion in MSR retention,” CEO Victor Ciardelli said in an exclusive interview with HousingWire. “We really believe in retaining the MSRs, staying close to the customer.”Rate’s approach reflects a broader trend of mortgage lenders holding onto their portfolios or seeking to add MSRs as a way to recapture borrowers when rates eventually fall. John Sullivan, managing director of MSR advisory services at Milliman, has seen that shift firsthand. Speaking during IMN’s Mortgage Servicing Rights Conference in New York on Monday, he said he’s having more conversations with clients about retaining their portfolios “unless liquidity is an issue,” and about monetizing them if they are not hedging. Higher demand for MSRs is not limited to independent mortgage banks (IMBs). Depository institutions are also showing more interest, executives told HousingWire during the conference. “Banks historically are not great at recapture, but we think that given some changes on the Basel capital front, we...