Mortgage Servicing Rights, Net

6 Months Ended

Jun. 30, 2022

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


	Three Months Ended June 30,				Six Months Ended June 30,
Mortgage Servicing Rights	2022		2021		2022		2021
Beginning Balance	$	571,581	$	550,251	$	563,488	$	528,983
Additions	35,426		22,436		71,626		70,574


Amortization	(29,059)		(27,962)		(57,166)		(54,832)
Ending Balance	$	577,948	$	544,725	$	577,948	$	544,725

Valuation Allowance
Beginning Balance	$	(11,986)	$	(23,006)	$	(13,186)	$	(34,254)
Decrease (increase)	2,718		4,687		3,918		15,935
Ending Balance	$	(9,268)	$	(18,319)	$	(9,268)	$	(18,319)
Net Balance	$	568,680	$	526,406	$	568,680	$	526,406

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Servicing fees	$	37,089	$	34,414	$	73,034	$	67,090
Escrow interest and placement fees	2,389		1,080		3,406		2,051
Ancillary fees	7,482		1,132		13,156		3,819
Total	$	46,960	$	36,626	$	89,596	$	72,960

Newmark’s primary servicing portfolio at June 30, 2022 and December 31, 2021 was $69.5 billion and $68.4 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 was $1.8 billion and $2.0 billion at June 30, 2022 and December 31, 2021, respectively.

The estimated fair value of the MSRs at June 30, 2022 and December 31, 2021 was $661.5 million and $608.0 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 for the six months ended June 30, 2022 and year ended December 31, 2021 were between 6.1% and 13.5% 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 $18.9 million and $36.9 million, respectively, at June 30, 2022 and by $18.0 million and $35.1 million, respectively, at December 31, 2021.