NOTE 12 - MSRs

For the three months ended March 31, 2016, the Company retained the servicing rights associated with an aggregate principal balance of $445,911,667 of residential mortgage loans that the Company had previously transferred to four residential mortgage loan securitization trusts. The Company’s MSRs are held and managed at the Company’s TRS, and the Company employs one or more licensed sub-servicers to perform the related servicing activities. To the extent that the Company determines it is the primary beneficiary of a residential mortgage loan securitization trust into which it has sold loans, any associated MSRs are eliminated on the consolidation of the trust. The trust is contractually obligated to pay a portion of the interest payments from the associated residential mortgage loans for the direct servicing of the loans, and after deduction of sub-servicing fees payable to contracted sub-servicers, the net amount, excess servicing rights, represents a liability of the trust. Upon consolidation of the trust, the fair value of the excess servicing rights is equal to the related MSRs held at our TRS. As a result of the Company’s determination that it is not the primary beneficiary of OAKS Mortgage Trust 2015-1 and OAKS Mortgage Trust 2015-2, it does not consolidate these trusts, and as a consequence, MSRs associated with this trust are recorded on the Company’s condensed consolidated balance sheet at March 31, 2016.

The following table presents the Company’s MSR activity as of March 31, 2016 and December 31, 2015:

	March 31, 2016			December 31, 2015
Balance at beginning of period	$	4,268,673		$	-
MSRs retained from sales to securitizations		-			4,940,630
Changes in fair value due to:
Changes in valuation inputs or assumptions used in valuation model		(656,314)			(217,663)
Other changes to fair value ⁽¹⁾		(243,974)			(454,294)
Balance at end of period	$	3,368,385		$	4,268,673

Loans associated with MSRs ⁽²⁾	$	445,911,667		$	472,886,810
MSR values as percent of loans ⁽³⁾		0.76	%		0.90	%

(1)	Amounts represent changes due to realization of expected cash flows

(2)	Amounts represent the principal balance of loans associated with MSRs outstanding at December 31, 2015

(3)	Amounts represent the carrying value of MSRs at March 31, 2016 and December 31, 2015 divided by the outstanding balance of the loans associated with these MSRs

The following table presents the components of servicing income recorded on the Company’s statement of operation for the three months ended March 31, 2016 and March 31, 2015:

	Three Months Ended		Three Months Ended
	March 31, 2016		March 31, 2015
Servicing income, net	$	223,678	$	-
Income from MSRs, net	$	223,678	$	-