Valuation of Mortgage Servicing Rights for Managing Counterparty Credit Risk
Industry Update
January 12, 2023
Source: Federal Housing Finance Industry
This Advisory Bulletin communicates FHFA’s supervisory expectations for Fannie Mae and Freddie Mac (collectively, the Enterprises or individually, an Enterprise) to establish and implement risk management policies and procedures for monitoring and valuing seller/servicers’ mortgage servicing rights (MSRs).[1],[2] Enterprise-wide risk management policies and procedures should be commensurate with an Enterprise’s risk appetite, and based on an assessment of seller/servicer financial strength and MSR risk exposure levels. Although seller/servicers assign values to their MSRs, the Enterprises should have their own processes to evaluate the reasonableness of seller/servicer MSR values.
This bulletin applies to only MSRs for single-family mortgage loans and is effective April 1, 2023.
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