A number of small to mid-size mortgage firms appear to be taking a second look at holding onto their newly created mortgage servicing rights. There are a handful of forces at work driving this dynamic for smaller companies. First, some big servicers such as Bank of America are dumping their MSRs, in some cases because of the increasingly unattractive legal environment, while others are trying to align their portfolios for the upcoming Basel III capital framework or reacting to hedging strain in a low interest-rate environment. Additionally, the economics are developing in such a way as to encourage smaller...