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Mortgage Servicing
 6 Months Ended
Jun. 30, 2021
Transfers and Servicing [Abstract]  
Mortgage Servicing
Note 7 – Mortgage Servicing
MSRs – At Fair Value
Three Months Ended June 30,
20212020
AgencyNon-AgencyTotalAgencyNon-AgencyTotal
Beginning balance$708,663 $691,554 $1,400,217 $294,227 $756,001 $1,050,228 
Sales and other transfers— — — — (51)(51)
Additions:
Recognized on the sale of residential mortgage loans
35,802 — 35,802 9,128 — 9,128 
Purchase of MSRs
733,538 — 733,538 15,255 — 15,255 
Servicing transfers and adjustments27 (1,633)(1,606)11 1,296 1,307 
Changes in fair value:
Changes in valuation inputs or assumptions (2)(42,337)3,941 (38,396)5,321 4,471 9,792 
Realization of expected cash flows (2)(27,273)(29,764)(57,037)(18,857)(21,889)(40,746)
Ending balance$1,408,420 $664,098 $2,072,518 $305,085 $739,828 $1,044,913 
MSRs – At Fair Value
Six Months Ended June 30,
20212020
AgencyNon-AgencyTotalAgencyNon-AgencyTotal
Beginning balance$578,957 $715,860 $1,294,817 $714,006 $772,389 $1,486,395 
Sales and other transfers— — — — (107)(107)
Additions:
Recognized on the sale of residential mortgage loans
70,062 — 70,062 15,689 — 15,689 
Purchase of MSRs
770,316 — 770,316 46,745 — 46,745 
Servicing transfers and adjustments (1)
56 (2,190)(2,134)(263,846)403 (263,443)
Changes in fair value:
Changes in valuation inputs or assumptions (2)40,149 5,470 45,619 (161,815)10,342 (151,473)
Realization of expected cash flows (2)(51,120)(55,042)(106,162)(45,694)(43,199)(88,893)
Ending balance$1,408,420 $664,098 $2,072,518 $305,085 $739,828 $1,044,913 
(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 and six months ended June 30, 2020 in the table above has been recast to conform to current year disclosure, resulting in a $9.5 million and $5.0 million gain, respectively, reclassified from Realization of expected cash flows to Changes in valuation inputs or assumptions.
MSR UPB
June 30, 2021March 31, 2021December 31, 2020June 30, 2020
Owned MSRs148,882,743 $91,284,985 $90,174,495 $70,243,789 
NRZ pledged MSRs (1)59,038,668 61,841,181 64,061,198 68,490,109 
Total MSR UPB$207,921,411 $153,126,166 $154,235,693 $138,733,898 
(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 $67.3 billion and $5.7 billion during the six months ended June 30, 2021 and 2020, respectively. Purchases during the six months ended June 30, 2021 include a bulk MSR acquisition of performing GSE loans from an unrelated third party effective June 1, 2021, with a UPB and fair value of $46.8 billion and $575.3 million, respectively. We sold MSRs with a UPB of $13.1 million and $41.7 million during the six months ended June 30, 2021 and 2020, respectively, mostly to Freddie Mac under the Voluntary Partial Cancellation (VPC) program for delinquent loans.
At June 30, 2021, the S&P Global Ratings, Inc.’s (S&P’s) servicer ratings outlook for PMC is stable. On June 29, 2021, S&P affirmed PMC’s servicer rating as Average, raising management and organization ranking to Above Average. In addition, S&P raised PMC’s master servicer rating from Average to Above Average reflecting the industry experience of PMC’s management, multiple levels of internal controls to monitor operations, and resolution of regulatory actions, amongst other factors mentioned by S&P. 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 June 30,Six Months Ended June 30,
2021202020212020
Loan servicing and subservicing fees
Servicing$79,377 $52,336 $143,269 $107,745 
Subservicing2,617 10,630 6,104 15,820 
NRZ77,716 88,405 158,101 208,073 
159,710 151,371 307,474 331,638 
Ancillary income
Late charges11,447 12,672 20,679 27,311 
Recording fees3,202 3,369 6,854 5,927 
Loan collection fees2,761 2,744 5,711 7,000 
Boarding and deboarding fees2,184 1,077 5,203 1,356 
Custodial accounts (float earnings)1,306 1,590 2,313 7,731 
Other, net3,831 2,417 7,945 5,760 
24,731 23,869 48,705 55,085 
 $184,441 $175,240 $356,179 $386,723 
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 $2.1 billion, $1.7 billion and $1.9 billion at June 30, 2021, December 31, 2020 and June 30, 2020, respectively.