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Mortgage Servicing
 3 Months Ended
Mar. 31, 2021
Transfers and Servicing [Abstract]  
Mortgage Servicing
Note 7 – Mortgage Servicing
MSRs – Fair Value Measurement Method
Three Months Ended March 31,
20212020
AgencyNon-AgencyTotalAgencyNon-AgencyTotal
Beginning balance$578,957 $715,860 $1,294,817 $714,006 $772,389 $1,486,395 
Sales and other transfers— — — — (56)(56)
Additions:
Recognized on the sale of residential mortgage loans
34,260 — 34,260 5,930 — 5,930 
Purchase of MSRs
36,778 — 36,778 31,490 — 31,490 
Servicing transfers and adjustments (1)29 (557)(528)(263,630)(893)(264,523)
Changes in fair value:
Changes in valuation inputs or assumptions (2)82,486 1,529 84,015 (166,532)5,871 (160,661)
Realization of expected cash flows (2)(23,847)(25,278)(49,125)(27,037)(21,310)(48,347)
Ending balance$708,663 $691,554 $1,400,217 $294,227 $756,001 $1,050,228 
(1)Servicing transfers and adjustments include a $263.7 million derecognition of MSRs effective with the February 20, 2020 notice of termination of the subservicing agreement between NRZ and PMC. See Note 8 — Rights to MSRs for further information.
(2)Effective January 1, 2021, changes in fair value due to actual vs. model variances are presented as Changes in valuation inputs or assumptions. Activity for the three months ended March 31,2020 in the table above has been recast to conform to current year disclosure, resulting in a $4.5 million loss reclassified from Realization of expected cash flows to Changes in valuation inputs or assumptions.
MSR UPB
March 31, 2021December 31, 2020March 31, 2020
Owned MSRs91,284,985 $90,174,495 $70,741,200 
NRZ pledged MSRs (1)61,841,181 64,061,198 70,914,910 
Total MSR UPB$153,126,166 $154,235,693 $141,656,110 
(1)MSRs subject to sale agreements with NRZ that do not meet sale accounting criteria. See Note 8 — Rights to MSRs.
We purchased MSRs with a UPB of $6.0 billion and $2.9 billion during the three months ended March 31, 2021 and 2020, respectively. We sold MSRs with a UPB of $7.2 million and $17.6 million during the three months ended March 31, 2021 and 2020, respectively, mostly to Freddie Mac under the Voluntary Partial Cancellation (VPC) program for delinquent loans.
At March 31, 2021, the S&P Global Ratings, Inc.’s (S&P’s) 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. On April 28, 2021, Fitch affirmed PMC’s servicer ratings and revised its outlook from Negative to Stable as PMC’s performance in this evolving environment has not raised any elevated concerns. According to Fitch, the affirmation and stable outlook reflected PMC’s diligent response to the coronavirus pandemic and its impact on servicing operations, effective enterprise-wide risk environment and compliance management framework, satisfactory loan servicing performance metrics, special servicing expertise, and efficient servicing technology. The ratings also consider the financial condition of PMC’s parent, OFC.
Servicing Revenue
Three Months Ended March 31,
20212020
Loan servicing and subservicing fees
Servicing$63,892 $55,408 
Subservicing3,487 5,190 
NRZ80,385 119,669 
147,764 180,267 
Ancillary income
Late charges9,231 14,639 
Custodial accounts (float earnings)1,008 6,141 
Loan collection fees2,949 4,256 
Recording fees3,651 2,558 
Other, net7,135 3,622 
23,974 31,216 
 $171,738 $211,483 
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 unaudited consolidated balance sheets. Float balances amounted to $2.4 billion, $1.7 billion and $1.9 billion at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.