Mortgage Servicing Rights, Net

6 Months Ended

Jun. 30, 2021

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	2021		2020		2021		2020
Beginning Balance	$	550,251	$	449,391	$	528,983	$	432,666
Additions	22,436		34,598		70,574		73,565
Purchases from an affiliate	—		108		—		200

Amortization	(27,962)		(23,624)		(54,832)		(45,958)
Ending Balance	$	544,725	$	460,473	$	544,725	$	460,473

Valuation Allowance
Beginning Balance	$	(23,006)	$	(36,578)	$	(34,254)	$	(19,022)
Decrease (increase)	4,687		(663)		15,935		(18,219)
Ending Balance	$	(18,319)	$	(37,241)	$	(18,319)	$	(37,241)
Net Balance	$	526,406	$	423,232	$	526,406	$	423,232

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,
	2021		2020		2021		2020
Servicing fees	$	34,414	$	28,250	$	67,090	$	54,915
Escrow interest and placement fees	1,080		727		2,051		4,119
Ancillary fees	1,132		1,283		3,819		3,524
Total	$	36,626	$	30,260	$	72,960	$	62,558

Newmark’s primary servicing portfolio at June 30, 2021 and December 31, 2020 was $66.8 billion and $66.3 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 $2.2 billion and $2.3 billion at June 30, 2021 and December 31, 2020, respectively.

The estimated fair value of the MSRs at June 30, 2021 and December 31, 2020 was $577.8 million and $527.1 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, 2021 and the year ended December 31, 2020 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 $16.3 million and $31.8 million, respectively, at June 30, 2021 and by $14.8 million and $28.9 million, respectively, at December 31, 2020.