Mortgage Servicing Rights, Net

3 Months Ended

Mar. 31, 2020

The changes in the carrying amount of MSRs were as follows (in thousands):



	Three Months Ended March 31,
Mortgage Servicing Rights	2020			2019
Beginning Balance	$	432,666		$	416,131
Additions	38,967			17,254
Purchases from an affiliate	92			298
Amortization	(22,334		)	(20,679		)
Ending Balance	$	449,391		$	413,004

Valuation Allowance
Beginning Balance	$	(19,022	)	$	(4,322	)
Decrease (increase)	(17,556		)	(1,722		)
Ending Balance	$	(36,578	)	$	(6,044	)
Net Balance	$	412,813		$	406,960

Servicing fees are included in “Management services, servicing fees and other” on the accompanying unaudited condensed consolidated statements of operations and were as follows (in thousands):



	Three Months Ended March 31,
	2020		2019
Servicing fees	$	26,665	$	25,631
Escrow interest and placement fees	3,392		5,363
Ancillary fees	2,241		3,184
Total	$	32,298	$	34,178

Newmark’s primary servicing portfolio at March 31, 2020 and December 31, 2019 was $61.1 billion and $59.9 billion, respectively. Also, Newmark is the named special servicer for a number of commercial mortgage backed securitizations. Upon certain specified events (such as, but not limited to, loan defaults and loans assumptions), the administration of the loan is transferred to Newmark. Newmark’s special servicing portfolio at March 31, 2020 and December 31, 2019 was $2.4 billion and $2.4 billion, respectively.

The estimated fair value of the MSRs at March 31, 2020 and December 31, 2019 was $434.8 million and $441.7 million, respectively.

Fair values are estimated using a valuation model that calculates the present value of the future net servicing cash flows. The cash flows assumptions used are based on assumptions Newmark believes market participants would use to value the portfolio. Significant assumptions include estimates of the cost of servicing per loan, discount rate, earnings rate on escrow deposits and prepayment speeds. The discount rates used in measuring fair value as of March 31, 2020 and December 31, 2019 were between 6.1% and 13.5%, and 6.1% and 13.5%, respectively, and varied based on investor type. An increase in discount rate of 100 basis points or 200 basis points would result in a decrease in fair value by $11.7 million and $22.9 million, respectively, at March 31, 2020 and by $11.9 million and $23.3 million, respectively, at December 31, 2019.