A NEW STUDY ON Valuing Servicing Rights

Cochran, Robert J.; Coffman, Edward N.; Harless, David W.
February 2005
Mortgage Banking;Feb2005, Vol. 65 Issue 5, p58
This article focuses on effects due to valuation of mortgage services. Portfolio churning negatively affected mortgage lenders due to a reduction in the economic value of the servicing asset. Not only did transaction costs reduce the lifetime value of the servicing asset, the need for back-office personnel to handle repetitive transfers increased costs and decreased the long term profitability of the servicer. Additionally, the mortgage lending industry suffered a serious loss of public confidence due to the high volume of servicing errors caused by multiple servicing transfers.


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