At March 31, Mr. Cooper serviced $629 billion worth of home mortgages, including $129 billion of Fannie Mae/Freddie Mac product and $108 billion of Ginnie Mae loans. However, roughly half its portfolio, $317 billion, is represented by subservicing contracts.
Apparently, it’s not Ginnie Mae MBS payments that are keeping the 15 up at night, but remittances on Fannie Mae and Freddie Mac single and multifamily securities. Private-label products also pose a concern.
Delinquencies in commercial MBS loans are likely to jump due to the economic impact arising from the COVID-19 outbreak, with hotels and malls likely to be the early casualties.
The first quarter is over and financial blood is in the streets. Now comes the hard part: figuring out MSR values that have been slammed by lower rates and (coming) delinquencies. It won’t be pretty.
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