Mortgage Servicing Rights - MSR

AAA

DEFINITION of 'Mortgage Servicing Rights - MSR'

A contractual agreement where the right, or rights, to service an existing mortgage are sold by the original lender to another party who specializes in the various functions of servicing mortgages. Common rights included are the right to collect mortgage payments monthly, set aside taxes and insurance premiums in escrow, and forward interest and principal to the mortgage lender.

INVESTOPEDIA EXPLAINS 'Mortgage Servicing Rights - MSR'

The mortgage servicer must supply an annual statement outlining the duties that were performed. In return for this assistance, the servicer is compensated with a specific fee outlined in the contract established at the beginning of the agreement. Mortgage servicing rights can be bought and sold, resulting in the transfer of any administrative obligations.

Many vertically integrated lenders today will service their mortgages in-house, which means they will also own both the loan and the servicing rights. These firms will also save money in the process.

The business of selling servicing rights for mortgages represents a large business niche, and is a multi-billion dollar industry.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
  3. Mortgage Banker

    A company, individual or institution that originates mortgages. ...
  4. Mortgagee

    An entity that lends money to a borrower for the purpose of purchasing ...
  5. Assumable Mortgage

    A type of financing arrangement in which the outstanding mortgage ...
  6. Mortgage Recast

    A feature in some types of mortgages where the remaining scheduled ...
Related Articles
  1. The Benefits Of Mortgage Repayment
    Home & Auto

    The Benefits Of Mortgage Repayment

  2. When (And When Not) To Refinance Your ...
    Home & Auto

    When (And When Not) To Refinance Your ...

  3. I'm about to retire. If I pay off my ...
    Options & Futures

    I'm about to retire. If I pay off my ...

  4. What You Need To Know About Fannie Mae ...
    Investing Basics

    What You Need To Know About Fannie Mae ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center