Mortgage Servicing Rights (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Fair Value of MSRs and Aggregate Principal Amounts of Associated Loans

The following table presents the fair value of MSRs and the aggregate principal amounts of associated loans as of December 31, 2015 and December 31, 2014.

Table 9.1 – Fair Value of MSRs and Aggregate Principal Amounts of Associated Loans



	December 31, 2015				December 31, 2014
(In Thousands)	MSR Fair Value		Associated Principal		MSR Fair Value		Associated Principal
Mortgage Servicing Rights
Conforming Loans	$	133,838	$	12,560,533	$	81,301	$	7,705,146
Jumbo Loans	58,138		5,705,939		57,992		5,962,784
Total Mortgage Servicing Rights	$	191,976	$	18,266,472	$	139,293	$	13,667,930

Activity for Residential First-Lien Mortgage Servicing Rights

The following table presents activity for MSRs for the years ended December 31, 2015, 2014, and 2013.

Table 9.2 – Activity for MSRs



	Years Ended December 31,
(In Thousands)	2015			2014			2013
Balance at beginning of period	$	139,293		$	64,824		$	5,315
Additions	95,281			95,550			47,514
Sales	(18,206		)	—			—
Changes in fair value due to:
Changes in assumptions ⁽¹⁾	(5,453		)	(12,467		)	15,719
Other changes ⁽²⁾	(18,939		)	(8,614		)	(3,724		)
Balance at End of Period	$	191,976		$	139,293		$	64,824


(1)	Primarily reflects changes in prepayment assumptions due to changes in market interest rates.


(2)	Represents changes due to realization of expected cash flows.

Details of Retention and Purchase of MSRs

The following table details the retention and purchase of MSRs during the years ended December 31, 2015 and 2014.

Table 9.3 – MSR Additions



(In Thousands)	December 31, 2015				December 31, 2014
	MSR Fair Value		Associated Principal		MSR Fair Value		Associated Principal
Jumbo MSR additions:
From securitization	$	8,202	$	882,860	$	8,518	$	1,002,235
From loan sales	352		33,022		488		58,793
Total jumbo MSR additions	8,554		915,882		9,006		1,061,028
Conforming MSR additions:
From loan sales	55,954		5,251,537		38,995		3,618,256
From purchases	30,773		2,952,345		47,549		3,993,387
Total conforming MSR additions	86,727		8,203,882		86,544		7,611,643
Total MSR Additions	$	95,281	$	9,119,764	$	95,550	$	8,672,671

Income from Mortgage Servicing Rights, Net

The following table presents the components of our MSR income.

Table 9.4 – Components of MSR Income (Loss), net



	Years Ended December 31,
(In Thousands)	2015			2014			2013
Servicing income
Income	$	38,964		$	19,362		$	9,239
Cost of sub-servicer	(5,079		)	(1,834		)	(925		)
Net servicing income	33,885			17,528			8,314
Market valuation changes of MSRs	(24,392		)	(21,081		)	11,995
Market valuation changes of associated derivatives ⁽¹⁾	(12,708		)	—			—
MSR provision for repurchases	(707		)	(708		)	—
MSR Income (Loss), Net	$	(3,922	)	$	(4,261	)	$	20,309


(1)	In the second quarter of 2015, we began to identify specific derivatives used to hedge the exposure of our MSRs to changes in market interest rates. See Note 2 for additional detail.