Mortgage Servicing Rights, Net

3 Months Ended

Mar. 31, 2024

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


	Three Months Ended March 31,
Mortgage Servicing Rights	2024		2023
Beginning Balance	$	534,390	$	576,428
Additions	19,552		8,965


Amortization	(28,363)		(28,477)
Ending Balance	$	525,579	$	556,916

Valuation Allowance
Beginning Balance	$	(3,187)	$	(7,876)
Decrease (increase)	(520)		1,501
Ending Balance	$	(3,707)	$	(6,375)
Net Balance	$	521,872	$	550,541

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,
		2024		2023
Servicing fees (1)		$	41,956	$	39,054
Escrow interest and placement fees		14,190		10,091
Ancillary fees		468		931
Total		$	56,614	$	50,076

(1) Beginning in the first quarter of 2024, the portion of Spring11's revenues associated with its servicing and asset management portfolio are no longer reported under “Management services” but are instead recorded as part of “Servicing fees” for all periods from the first quarter of 2023 onwards. For the quarter ended March 31, 2023, $2.1 million was reclassified from “Management services” to “Servicing fees”.

Newmark’s primary servicing portfolio as of March 31, 2024 and December 31, 2023 was $63.8 billion and $62.2 billion, respectively. Newmark’s limited servicing portfolio with recorded MSRs as of March 31, 2024 and December 31, 2023 was $8.7 billion and $10.1 billion, respectively. As of March 31, 2024 and December 31, 2023, respectively, Newmark’s limited servicing portfolio also included $99.1 billion and $101.0 billion, of loans, which did not have recorded MSRs. 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 $2.6 billion at both March 31, 2024 and December 31, 2023.

The estimated fair value of the MSRs as of March 31, 2024 and December 31, 2023 was $659.2 million and $680.6 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 three months ended March 31, 2024 and year ended December 31, 2023 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 $17.1 million and $33.7 million, respectively, as of March 31, 2024 and by $18.1 million and $35.4 million, respectively, as of December 31, 2023.