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Tranche-level stratification for the MSR portfolio. Stratification is based on the portfolio’s risk profile (Conventional vs Government, 15 year fixed vs. 30 year fixed products, etc….). Analysis includes period to period portfolio activity and impairment testing.
Monthly analysis and capitalization of newly originated and retained mortgage assets. The capitalization of retained assets are based on fair market valuation and assigned at the loan level.
Detailed service release premium analysis that is based on loan risk profile including origination principal balance, interest rate, investor, loan product, property state, FICO score, loan to value, and occupancy. Other adjustments are available based on need.
Cash-flow yield methodology amortization analysis, per FAS 157. Calculation, based on fair market value. The monthly amortization expense is based on the first month’s net cash fows divided by the aggregate lifetime net cash fows, multiplied by the outstanding book basis -capitalized basis.
Comprehensive valuation and risk analysis of target portfolio as well as market analysis, purchase and sale agreement negotiation.
CMC approaches MSR valuation combining mortgage servicing expertise and market dynamics. Our experience and knowledge in mortgage servicing and finance translates into a well balanced approach to MSR valuation analysis. Our approach results in less volatile valuations in times of dramatic market rate movements.
Volatile fair value changes can potentially have adverse and negative impacts on a company’s financials. CMC’s approach proves to minimize such impact.
As you shop for a Fair Value Provider, ask the 12 critical questions below to understand the assumptions and process that the provider uses to form the valuation results.
If your Fair Value Provider is unable to provide the answers to these questions, contact CMC so that we can walk through how each answer might affect your final valuation.
1. How and where do you gather your market assumptions used in your models?
2. How often do you change assumptions used in your models?
5. Do you participate in secondary market servicing trades and securitization?
6. Do you have mortgage servicing and mortgage originations experience?
7. Do you perform “easy-to-follow” analyses and reporting?
8. Do you provide servicing portfolio characteristics and roll-forward reports?
9. Do you provide prepayment and default activity reports?
10. Do you provide stress testing and rate shock analyses with your valuations?
11. What disclosures do you provide with your analysis?
12. Do you address each model input you utilize?
