Note 9—Mortgage Servicing Rights and Mortgage Servicing Liabilities

Mortgage Servicing Rights at Fair Value

The activity in MSRs is as follows:


	Quarter ended March 31,
	2020		2019
	(in thousands)
Balance at beginning of quarter	$	2,926,790	$	2,820,612
Additions:
Resulting from loan sales		282,315		115,751
Purchases		25,760		227,772
		308,075		343,523
Change in fair value due to:
Changes in valuation inputs used in valuation model (1)		(915,862)		(161,638)
Other changes in fair value (2)		(125,306)		(97,407)
Total change in fair value		(1,041,168)		(259,045)
Balance at end of quarter	$	2,193,697	$	2,905,090

	March 31,		December 31,
	2020		2019
	(in thousands)
Fair value of mortgage servicing rights pledged to secure Assets sold under agreements to repurchase and Notes payable secured by mortgage servicing assets	$	2,163,928	$	2,920,603

(1)

Principally reflects changes in discount rate and prepayment speed inputs, primarily due to changes in market interest rates, and servicing costs.

(2)

Represents changes due to realization of cash flows.

Mortgage Servicing Liabilities at Fair Value

The activity in MSLs is summarized below:


	Quarter ended March 31,
	2020		2019
	(in thousands)
Balance at beginning of quarter	$	29,140	$	8,681
Mortgage servicing liabilities resulting from loan sales		6,576		794
Changes in fair value due to:
Changes in valuation inputs used in valuation model (1)		4,432		3,301
Other changes in fair value (2)		(10,387)		(4,932)
Total change in fair value		(5,955)		(1,631)
Balance at end of quarter	$	29,761	$	7,844

(1)

Principally reflects changes in expected borrower performance and servicer losses given default.

(2)

Represents changes due to realization of cash flows.

Contractual servicing fees relating to MSRs and MSLs are recorded in Net loan servicing fees—Loan servicing fees—From non-affiliates on the consolidated statements of income; other fees relating to MSRs and MSLs are recorded in Net loan servicing fees—Loan servicing fees—Other on the Company’s consolidated statements of income. Such amounts are summarized below:


	Quarter ended March 31,
	2020		2019
	(in thousands)
Contractual servicing fees	$	198,653	$	166,790
Other fees:
Late charges		12,613		9,812
Other		4,850		1,661
	$	216,116	$	178,263