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Mortgage Servicing Rights | 9 Months Ended
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Sep. 30, 2014
Mortgage Servicing Rights | Note 9. Mortgage Servicing Rights We invest in mortgage servicing rights associated with residential mortgage loans and contract with a licensed sub-servicer to perform all servicing functions for these loans. The following table presents the fair value of MSRs and the aggregate principal amounts of associated loans as of September 30, 2014 and December 31, 2013.
|  | September 30, 2014 |  |  | December 31, 2013 |
|  |  |  |  | Associated |  |  |  |  |  | Associated |
(In Thousands) |  | MSR Fair Value |  |  | Principal |  |  | MSR Fair Value |  |  | Principal |
Mortgage Servicing Rights |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Conforming Loans |  | $ | 73,953 |  |  | $ | 6,254,058 |  |  | $ | 3,331 |  |  | $ | 308,258 |
Jumbo Loans |  |  | 61,199 |  |  |  | 5,962,758 |  |  |  | 61,493 |  |  |  | 5,483,500 |
Total Mortgage Servicing Rights |  | $ | 135,152 |  |  | $ | 12,216,816 |  |  | $ | 64,824 |  |  | $ | 5,791,758 |
The following table presents activity for MSRs for the three and nine months ended September 30, 2014 and 2013. MSR Activity
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(In Thousands) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Balance at beginning of period |  | $ | 71,225 |  |  | $ | 43,098 |  |  | $ | 64,824 |  |  | $ | 5,315 |
Additions |  |  | 61,606 |  |  |  | 16,676 |  |  |  | 76,272 |  |  |  | 45,291 |
Changes in fair value due to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in assumptions (1) |  |  | 4,323 |  |  |  | 1,444 |  |  |  | (318) |  |  |  | 11,764 |
Other changes (2) |  |  | (2,002) |  |  |  | (984) |  |  |  | (5,626) |  |  |  | (2,136) |
Balance at End of Period |  | $ | 135,152 |  |  | $ | 60,234 |  |  | $ | 135,152 |  |  | $ | 60,234 |
(1) | Primarily reflects changes in prepayment assumptions due to changes in market interest rates.
(2) | Represents changes due to realization of expected cash flows.
We make investments in MSRs through the retention of servicing rights associated with the residential mortgage loans that we have acquired and subsequently transfer to third parties or through the direct acquisition of MSRs sold by third parties. The following table details the retention and purchase of MSRs during the three and nine months ended September 30, 2014. MSR Additions
|  | Three Months Ended |  |  | Nine Months Ended |
(In Thousands) |  | September 30, 2014 |  |  | September 30, 2014 |
|  |  |  |  | Associated |  |  |  |  |  | Associated |
|  | MSR Fair Value |  |  | Principal |  |  | MSR Fair Value |  |  | Principal |
Jumbo MSR additions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
From securitization |  | $ | 4,356 |  |  | $ | 516,004 |  |  | $ | 6,542 |  |  | $ | 773,205 |
From loan sales |  |  | - |  |  |  | - |  |  |  | 488 |  |  |  | 58,793 |
Total jumbo MSR additions |  |  | 4,356 |  |  |  | 516,004 |  |  |  | 7,030 |  |  |  | 831,998 |
Conforming MSR additions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
From loan sales |  | $ | 14,630 |  |  | $ | 1,352,122 |  |  | $ | 23,933 |  |  | $ | 2,232,559 |
From purchases |  |  | 42,620 |  |  |  | 3,497,224 |  |  |  | 45,309 |  |  |  | 3,770,566 |
Total conforming MSR additions |  |  | 57,250 |  |  |  | 4,849,346 |  |  |  | 69,242 |  |  |  | 6,003,125 |
Total MSR additions |  | $ | 61,606 |  |  | $ | 5,365,350 |  |  | $ | 76,272 |  |  | $ | 6,835,123 |
MSR Income The following table presents the components of our MSR income.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(In Thousands) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Servicing income, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income |  | $ | 4,590 |  |  | $ | 3,008 |  |  | $ | 12,287 |  |  | $ | 5,820 |
Cost of sub-servicer |  |  | (437) |  |  |  | (355) |  |  |  | (1,040) |  |  |  | (767) |
Net servicing income |  |  | 4,153 |  |  |  | 2,653 |  |  |  | 11,247 |  |  |  | 5,053 |
Market valuation adjustments |  |  | 2,321 |  |  |  | 460 |  |  |  | (5,944) |  |  |  | 9,628 |
MSR provision for repurchases |  |  | (653) |  |  |  | - |  |  |  | (653) |  |  |  | - |
Income from MSRs, Net |  | $ | 5,821 |  |  | $ | 3,113 |  |  | $ | 4,650 |  |  | $ | 14,681 |

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- Definition Mortgage Servicing Rights Disclosure + References No definition available. + Details
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