Dear Robair,
Thank you for your inquiry.
In researching your request, I believe I have discovered 2 things.
First, that the financial folks who come up with a financial model for
the valuation of a servicing portfolio seem to then keep it mum and
then consult and speak on their findings. Second, I found that the
valuation of a servicing portfolio is quite complex. I asked Rob
Fear, Vice President of Mortgage Industry Advisor, what factors go
into their financial model he gave a few examples: discounted cash
flow, servicing fees, interest on escrow accounts, float on P&I, float
on prepayments, late fees, discount rates of cash flows, risk
evaluation of the portfolio.
I was unable to find a site where someone published his or her
specific financial model. So, I have 2 paths for you: 1 - Find a 3rd
party or consultant that already has a financial model and pay them to
perform the evaluation of your portfolio or 2 – Read or a take a
course on valuation of servicing portfolios from the Mortgage Bankers
Association.
Consultants – 3rd party valuation
Here are a few resources that will use the financial models to value
your servicing portfolio for you.
Mortgage Industry Advisory Co
http://www.servicing.com/ips/main.htm
I spoke to Rob Fear on your behalf, gave him as much of your loan
portfolio profile as I had and without knowing more specifics of your
portfolio, he gave me a ballpark estimate of $1000. You can go to
MIAC’s site and download their template, input your servicing
portfolio (detailed instructions are on their site), and then email it
to them. They will contact you with more specific pricing
information. Or you can call Rob at 212-233-1250 x230.
Mortgage Banking Magazine
http://www.mortgagebankingmag.com/mb0171.htm
Mortgage Banking Magazine lists companies that perform servicing
portfolio valuation services.
Bill Draving Company, Inc.
http://www.draving.com/bdci/bdabout.htm#service
I found this gentleman on the web and his background seemed
appropriate for your needs since he also has his CPA license. Bill
was president of two major Texas mortgage companies. He was Executive
Vice President for a company, which grew from a 20,000 loan-servicing
portfolio to a portfolio of well over 140,000 loans. Bill managed the
loan servicing operation as well as the data processing operation.
Other positions included Chief Financial Officer and Senior Vice
President of Strategic Planning. He holds a Bachelor of Science
degree from Drexel University in Philadelphia. He received an MBA in
Finance from the University of Texas. Currently, he teaches Finance at
the University of Texas in San Antonio. Bill is a Certified Public
Accountant who also holds professional certification in Management
Accounting and Data Processing.
Do-it-yourself
Here are a couple of resources from the Mortgage Bankers Association
that may help you come to your own conclusions or at least, give you a
good starting point.
Mortgage Bankers Association
http://www.mbaa.org/
Here is the main site for the MBA. Click on Education/Campus MBA to
get more information on their courses. They offer computer-based
training, web training and onsite courses.
MBA Online Bookstore
http://shop.mbaa.org/browse/search.cfm?search2=category&tablename=products
Here is the link to the MBA Online Bookstore. Below, I’ve listed a
few books that may be of specific interest to you on this topic.
Servicing Portfolio Evaluation and Management: A Financial Perspective
http://shop.mbaa.org/browse/details2.cfm?id=292&tablename=products
SKU: PB2-110116-BK-P
Category: Residential Mortgage Servicing
Author: Thomas J. Healy and Jeffrey L. Briggs
Publisher: Real Estate Finance Press
Pages: 80 pages
Member Price: $35.00
Non-Member Price: $40.00
Servicing Portfolio Evaluation and Management is a comprehensive guide
to understanding how mortgage-servicing portfolios are valued. Written
by two seasoned servicing executives, the book reveals their
collective experience in managing and selling servicing for over 16
years.
The book looks at the analytical process of evaluating servicing
portfolios to better understand their profit dynamics, identify and
mitigate risks, enhance revenue opportunities, and assign portfolio
values. The empirical approach to value is chosen by the authors as
the basis for managing and evaluating servicing, as it is
comprehensive, logical, and allows for stress testing of value
projections under a variety of scenarios.
The National Mortgage Servicer’s Reference Directory: The Definitive
Source of Information Related to Mortgage Servicing, 16th Edition
http://shop.mbaa.org/browse/details2.cfm?id=316&tablename=products
SKU: PB1-110056-BK-P
Category: Residential Mortgage Servicing
Author: Dennis A. Jankowski
Publisher: Vernon Enterprises
Pages: 640 pages
Member Price: $175.00
Non-Member Price: $195.00
Other Information
Here are some links that also may be of interest to you.
CREF Presentation.PDF
Commercial Servicing Rights Servicing Rights Valuation Considerations
Valuation Considerations Presented by Dan Thomas & Rob Fear Presented
by Dan Thomas & Rob Fear
http://www.mbaa.org/present/2001/thomas_0206.pdf
I know this is for the commercial sector but some of the information
is still valid for the residential sector.
Technology for Risk-Based Pricing and Management
By Kevin Winkler
Director of Analytics, LoanPerformance
http://www.loanperformance.com/publications/technology_print.shtml
Financial Glossary.com
http://www.financialglossary.com/results.cfm?Alfa=M
I understand that you are already in the financial industry but some
of the terms specifics to the “back office” of lending may be new to
you.
I hope this answer, while not the specific one you requested, is at
least adequate to point you in the right direction to get what you
needed.
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