Ben Eisen
speaker
1,467 appearances
35 recordings
1 series
first heard Jul 2017
last heard Nov 2024
Ben Eisen’s voice in public audio — every appearance, attributed to the second.
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Appearances
So when you take out a mortgage, there is someone on the other end who's collecting the payments and handling taxes.
And there's a foreclosure handling something like that.
And that's considered a mortgage servicer.
And they take a little bit of the cut of your mortgage payment in return for those services.
And it's an asset that banks hold a lot of.
Many banks hold hundreds of billions of dollars worth of mortgage servicing rights.
Well, banks hold servicing rates on $3.6 trillion worth of mortgages.
It can generate a decent amount of fee income.
Yeah, it specifically hit the value of their mortgage servicing rights.
So banks have to mark the value of these things every quarter.
And at the end of the quarter, with rates a lot lower, the value of these rights was down.
It's important to note that this is distinct from the business of making mortgages.
So their mortgage operations themselves of kind of originating mortgages, those were all up.
But at the same time, the value of the mortgage servicing rights went down.
And at some of these banks, it was enough to offset the uptick in origination.
Exactly.
Yeah.
So the reason why the value of these rights go down when rates fall is that if you think about falling rates, it means you're more likely to refinance your mortgage.
And when you refinance your mortgage, the bank is no longer collecting your payments and doing all of those administrative tasks on the mortgage if it's kind of no longer in existence because you've gotten a new one.
So that's why these things are very sensitive to rates.
Showing 961–980 of 1,467 · page 49 of 74
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