Mortgage Servicing Rights, Net

6 Months Ended

Jun. 30, 2023

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	2023		2022		2023		2022
Beginning Balance	$	556,916	$	571,581	$	576,428	$	563,488
Additions	22,654		35,426		31,619		71,626


Amortization	(29,007)		(29,059)		(57,484)		(57,166)
Ending Balance	$	550,563	$	577,948	$	550,563	$	577,948

Valuation Allowance
Beginning Balance	$	(6,375)	$	(11,986)	$	(7,876)	$	(13,186)
Decrease	343		2,718		1,844		3,918
Ending Balance	$	(6,032)	$	(9,268)	$	(6,032)	$	(9,268)
Net Balance	$	544,531	$	568,680	$	544,531	$	568,680

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,
	2023		2022		2023		2022
Servicing fees	$	37,711	$	37,089	$	74,617	$	73,034
Escrow interest and placement fees	12,657		2,389		22,748		3,406
Ancillary fees	1,829		7,482		2,760		13,156
Total	$	52,197	$	46,960	$	100,125	$	89,596

Newmark’s primary servicing portfolio as of June 30, 2023 and December 31, 2022 was $69.3 billion and $69.0 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 loan assumptions), the administration of the loan is transferred to Newmark. Newmark’s special servicing portfolio was $1.7 billion and $1.7 billion at June 30, 2023 and December 31, 2022, respectively.

The estimated fair value of the MSRs as of June 30, 2023 and December 31, 2022 was $658.1 million and $667.6 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, 2023 and year ended December 31, 2022 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 $17.6 million and $34.3 million, respectively, as of June 30, 2023 and by $18.3 million and $35.7 million, respectively, as of December 31, 2022.