Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2024

Mortgage Servicing Rights

Mortgage Servicing Rights

10. Mortgage Servicing Rights

The following tables present the changes in fair value of the Company’s MSR asset and other information related to the serviced portfolio (dollars in thousands).

	Year Ended December 31,
	2024			2023			2022
Balance, beginning of year	$	96,662		$	100,825		$	86,990
Additions		11,412			27,359			56,974
Sales		(87,268)			(19,055)			(65,108)
Changes in fair value:
Due to changes in model inputs or assumptions (1)		(11,331)			(7,848)			31,292
Due to customer payoffs		(3,752)			(4,619)			(9,323)
Balance, end of year	$	5,723		$	96,662		$	100,825
	December 31,
	2024			2023
Mortgage loans serviced for others (2)	$	358,880		$	5,227,404
MSR asset as a percentage of serviced mortgage loans		1.59	%		1.85	%

(1) Primarily represents normal customer payments, the impact of changes in interest rates, changes in discount rates and prepayment speed assumptions, and the refinement of other MSR model assumptions. Included in 2024 and 2022 are MSR asset fair value adjustments totaling $12.3 million and $0.9 million, respectively, which reflected the difference between the MSR asset carrying values and the sale prices reflected in the respective signed letters of intent to sell certain MSR assets.

(2) Represents unpaid principal balance of mortgage loans serviced for others.

The key assumptions used in measuring the fair value of the Company’s MSR asset were as follows.

	December 31,
	2024		2023
Weighted average constant prepayment rate	10.10	%	8.65	%
Weighted average discount rate	14.89	%	11.67	%
Weighted average life (in years)	7.8		8.2

A sensitivity analysis of the fair value of the Company’s MSR asset to certain key assumptions is presented in the following table (in thousands).

	December 31,
	2024		2023
Constant prepayment rate:
Impact of 10% adverse change	$	(220)	$	(3,511)
Impact of 20% adverse change		(426)		(6,796)
Discount rate:
Impact of 10% adverse change		(294)		(4,474)
Impact of 20% adverse change		(557)		(8,537)

This sensitivity analysis presents the effect of hypothetical changes in key assumptions on the fair value of the MSR asset. The effect of such hypothetical changes in assumptions generally cannot be extrapolated because the relationship of the change in one key assumption to the change in the fair value of the MSR asset is not linear. In addition, in the analysis, the impact of an adverse change in one key assumption is calculated independent of any impact on other assumptions. In reality, changes in one assumption may change another assumption.

Contractually specified servicing fees, late fees and ancillary fees earned of $22.1 million, $31.9 million and $37.5 million during 2024, 2023 and 2022, respectively, were included in net gains from sale of loans and other mortgage production income within the consolidated statements of operations.