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Mortgage Servicing Rights
 12 Months Ended
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Mortgage Servicing Rights

20) Mortgage Servicing Rights

 

The Company reports MSRs pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

 

The following table presents the MSR activity.

 

   2023   2022 
   December 31, 
   2023   2022 
Amortized cost:          
Balance before valuation allowance at beginning of year  $3,039,765   $53,060,455 
MSR additions resulting from loan sales   1,009,312    10,243,922 
Amortization (1)   (587,931)   (9,078,706)
Sale of MSRs   -    (51,185,906)
Application of valuation allowance to write down MSRs with other than temporary impairment   -    - 
Balance before valuation allowance at year end  $3,461,146   $3,039,765 
           
Valuation allowance for impairment of MSRs:          
Balance at beginning of year  $-   $- 
Additions   -    - 
Application of valuation allowance to write down MSRs with other than temporary impairment   -    - 
Balance at year end  $-   $- 
           
Mortgage servicing rights, net  $3,461,146   $3,039,765 
           
Estimated fair value of MSRs at year end  $4,543,657   $3,927,877 

 

 

(1)Included in other expenses on the consolidated statements of earnings

 

The table below summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the Company’s assumptions in its December 31, 2023 valuation of MSRs. The assumptions used in the following table are likely to change as market conditions, portfolio composition and borrower behavior change, causing both actual and projected amortization levels to change over time.

 

   Estimated MSR Amortization 
2024  $390,131 
2025   342,170 
2026   306,597 
2027   271,773 
2028   242,596 
Thereafter   1,907,879 
Total  $3,461,146 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022

 

20) Mortgage Servicing Rights (Continued)

 

The Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the consolidated statements of earnings.

 

   2023   2022 
   Years Ended December 31, 
   2023   2022 
Contractual servicing fees  $1,144,540   $15,792,105 
Late fees   97,300    398,754 
Total  $1,241,840   $16,190,859 

 

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio.

  

   December 31, 
   2023   2022 
Servicing UPB  $414,147,436   $360,023,384 

 

The following key assumptions were used in determining MSR value.

  

   Prepayment
Speeds		   Average
Life(Years)		   Discount
Rate		 
December 31, 2023   9.70    7.79    11.85 
December 31, 2022   8.12    8.49    11.95 

 

On October 31, 2022, the Company sold certain of its MSRs. The MSRs related to mortgage loans previously originated by the Company in aggregate unpaid principal amount of approximately $7.02 billion. As a result of the sale, the book value of the Company’s MSRs decreased $51,185,906 and generated a gain of $34,051,938 included in mortgage fee income on the consolidated statements of earnings. Substantially all the consideration was received by the Company with the remainder subject to certain holdbacks during transfer of the MSRs. The Company completed the physical transfer of files prior to its deadline. The holdbacks were received in 2023.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022