MCT Whitepaper:
Tax & Cash Implications of Creating Excess Servicing

a whitepaper by MCT & CWDL

In this whitepaper, MCT teams up with CWDL to explain how excess in servicing is created. We will also discuss the cash and tax consequences of retaining the excess MSR.

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The 2020 global pandemic has created many unprecedented changes in the mortgage industry, one of which is the effect of excess servicing in the mortgage servicing rights (MSR) market. The result has been an increased MSR value and servicing cash flows in the future. Contact us today to learn how MCT’s MSR Team is here to help support you.

About the Whitepaper:

In this whitepaper, MCT and CWDL team up to review how excess servicing is created, then analyze the cash and tax consequences of retaining the excess MSR.

In this whitepaper, we review:

  • How the global pandemic created an excess of MSRs
  • The definition of a “Down in Coupon” trade
  • Tax treatment of “safe harbor” and excess servicing rights

Download our whitepaper to learn more about how to handle retaining excess Mortgage Servicing Rights (MSRs)!

“The Fed’s move to drop interest rates has resulted in a refi boom with its consequent high volumes and high margins. And the Fed’s efforts to support the market led to some secondary market price distortions when it was actively buying securities with only one or two pass-thru coupons, rather than all coupons”

– Quote from Tax & Cash Implications of Creating Excess Servicing

About CWDL

CWDL specializes in consulting, tax, accounting and attest for the mortgage banking industry.  Mortgage lenders are subject to significant regulatory standards, and our acute focus gives us a unique advantage. CWDL, Certified Public Accountants is a rapidly growing audit, tax, and entrepreneurial services firm headquarter in California serving clients across the U.S. We are considered industry experts in both the mortgage banking industry as well as education. Our team members are passionate about helping clients realize their goals while following industry related guidelines. Often, this is accomplished by developing key performance indicators (KPIs), tax planning, consulting and providing a clear understanding of business results.