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Mortgage Servicing
 12 Months Ended
Dec. 31, 2020
Transfers and Servicing [Abstract]  
Mortgage Servicing
Note 9 — Mortgage Servicing     
During each period, we remeasure our MSRs at fair value, which contemplates the receipt or nonreceipt of the servicing income for that period. The servicing income, including expectations of future servicing cash flows, are inputs for the measurement of the MSR fair value. The net result on the statement of operations is that we record the contractual cash received in each period as revenue within Servicing and subservicing fees, partially offset by the remeasurement of the MSR fair value within MSR valuation adjustments, net.
Mortgage Servicing Rights – Fair Value Measurement Method
Years Ended December 31,
202020192018
Agency
Non-AgencyTotalAgencyNon-AgencyTotalAgencyNon-AgencyTotal
Beginning balance
$714,006 $772,389 $1,486,395 $865,587 $591,562 $1,457,149 $11,960 $660,002 $671,962 
Fair value election - Transfer from MSRs carried at amortized cost
— — — — — — 336,882 — 336,882 
Cumulative effect of fair value election
— — — — — — 82,043 — 82,043 
Sales
— (143)(143)(3,578)(766)(4,344)(4,748)(1,492)(6,240)
Additions:
Recognized on the sale of residential mortgage loans
68,734 — 68,734 8,795 — 8,795 8,279 — 8,279 
Recognized in connection with the acquisition of PHH
— — — — — — 494,348 23,779 518,127 
Purchase of MSRs
285,134 — 285,134 153,505 — 153,505 5,433 — 5,433 
Servicing transfers and adjustments (1)
(266,248)403 (265,845)— (7,309)(7,309)(1,047)(4,833)(5,880)
Changes in fair value (2):
Changes in valuation inputs or assumptions
(133,072)26,870 (106,202)(171,050)265,003 93,953 11,558 (5,705)5,853 
Realization of expected future cash flows and other changes
(89,597)(83,659)(173,256)(139,253)(76,101)(215,354)(79,121)(80,189)(159,310)
Ending balance
$578,957 $715,860 $1,294,817 $714,006 $772,389 $1,486,395 $865,587 $591,562 $1,457,149 
(1)Servicing transfers and adjustments include a $263.7 million derecognition of MSRs/Rights to MSRs effective with the February 20, 2020 notice of termination of the PMC subservicing agreement by NRZ. See Note 10 — Rights to MSRs for further information.
(2)Changes in fair value are recognized in MSR valuation adjustments, net in the consolidated statements of operations.
MSR UPB
UPB at December 31,
202020192018
Owned MSRs$90,174,495 $70,973,496 $68,236,270 
NRZ pledged MSRs (1)64,061,198 108,837,877 126,643,940 
 Total MSR UPB$154,235,693 $179,811,373 $194,880,210 
(1)MSRs subject to sale agreements with NRZ that do not meet sale accounting criteria. See Note 10 — Rights to MSRs.
We purchased MSRs with a UPB of $31.7 billion, $14.6 billion and $144.1 million during 2020, 2019 and 2018, respectively. We sold MSRs with a UPB of $80.0 million, $140.8 million and $901.3 million during 2020, 2019 and 2018, respectively, mostly to Freddie Mac under the Voluntary Partial Cancellation (VPC) program for delinquent loans. We sold non-Agency MSRs with a UPB of $140.8 million during 2019.
A significant portion of the servicing agreements for our non-Agency servicing portfolio contain provisions where we could be terminated as servicer without compensation upon the failure of the serviced loans to meet certain portfolio delinquency or cumulative loss thresholds. To date, terminations as servicer as a result of a breach of any of these provisions have been minimal.
At December 31, 2020, the S&P Global Ratings, Inc.’s (S&P) servicer ratings outlook for PMC is stable. On March 24, 2020, Fitch Ratings, Inc. (Fitch) placed all U.S Residential Mortgage Backed Securities (RMBS) servicer ratings on Outlook Negative, resulting from a rapidly evolving economic and operating environment due to the sudden impact of the COVID-19
virus. Downgrades in servicer ratings could adversely affect our ability to service loans, sell or finance servicing advances and could impair our ability to consummate future servicing transactions or adversely affect our dealings with lenders, other contractual counterparties, and regulators, including our ability to maintain our status as an approved servicer by Fannie Mae and Freddie Mac. The servicer rating requirements of Fannie Mae do not necessarily require or imply immediate action, as Fannie Mae has discretion with respect to whether we are in compliance with their requirements and what actions it deems appropriate under the circumstances in the event that we fall below their desired servicer ratings.
Certain of our servicing agreements require that we maintain specified servicer ratings from rating agencies such as Moody’s and S&P. To date, terminations as servicer as a result of a breach of any of these provisions have been minimal.
The geographic concentration of the UPB of residential loans and real estate we serviced at December 31, 2020 was as follows:
 AmountCount
California$38,640,172 144,717 
New York13,474,135 56,917 
Florida11,443,408 86,518 
New Jersey8,564,107 39,287 
Texas7,476,092 73,382 
Other74,637,779 556,596 
 $154,235,693 957,417 


Years Ended December 31,
Servicing Revenue
202020192018
Loan servicing and subservicing fees
Servicing$216,263 $227,490 $227,639 
Subservicing28,886 15,459 8,904 
NRZ383,685 577,015 539,039 
Total loan servicing and subservicing fees628,834 819,964 775,582 
Ancillary income
Late charges47,687 57,194 61,453 
Home Affordable Modification Program (HAMP) fees (1)565 5,538 14,312 
Custodial accounts (float earnings)9,939 47,562 40,115 
Loan collection fees12,919 15,539 18,392 
Other37,376 29,710 27,229 
Total ancillary income108,486 155,543 161,501 
 $737,320 $975,507 $937,083 
(1)The HAMP expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first-, second- and third-year anniversary of the start of the trial modification.
Float balances (balances in custodial accounts, which represent collections of principal and interest that we receive from borrowers) are held in escrow by unaffiliated banks and are excluded from our consolidated balance sheets. Float balances amounted to $1.74 billion, $1.71 billion and $1.68 billion at December 31, 2020, 2019 and 2018, respectively.