The Case Against Lowering The Minimum Servicing Fee

Heid, Michael J.
March 2005
Mortgage Banking;Mar2005, Vol. 65 Issue 6, p24
This article focuses on the issue of reducing the size of the minimum service fee in mortgage market. Many investors and brokerage firms have privately voiced concerns about the impact that such a move would have on the market for mortgage backed securities. Some have gone public with their concerns. Proponents for the reduction offer a number of arguments for the change, including reduced volatility of earnings, lower capital and hedge costs, no impact on prepayments, and servicing fee alignment with servicing cost.


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