As the megabanks continue to write down the value of their residential servicing portfolios, now may be the best time ever to buy housing receivables, according to a report from Mortgage Industry Advisory Corp.
In a research note to clients, Mike Carnes, a senior vice president at the New York company, wrote that values of mortgage servicing rights "remain at historically low levels, creating one of the best buyer's markets in history." Carnes said that servicing rights "are intrinsically worth more than current market values due to supply/demand dynamics and an overly risk-sensitive market." The report was released April 12.
Almost all of the nation's megabanks are in the process of marking down the asset value of their MSRs because of the robo-signing scandal and ensuing enforcement actions taken against them by banking regulators and soon the states. However, it remains to be seen whether any of the megabanks will become net sellers of MSRs. "The big boys are usually the buyers," said Mark Garland, the president of MountainView Servicing Group in Denver. "Who's going to buy from them? Private-equity firms?"
