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Rising interest rates trigger an exuberant MSR market 

“On average, historically, we’d be selling $100 billion to $125 billion [in MSRs] annually,” Incenter Mortgage Advisors’ Tom Piercy said. “And now we just did over $110 billion for the month of January.”
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Incenter Mortgage Advisors was flooded with a surge of mortgage-servicing rights business in January — with bulk MSR sales approaching in one month what the firm normally tallies in an entire year.

Denver-based Incenter’s managing director, Tom Piercy, said he expects the rising tide of business to continue for the foreseeable future, so long as the housing market is swept up in a rising-rate environment — prompting holders of MSRs to sell the assets. MSRs gain value as interest rates rise, in part because upward-bound rates cause mortgage refinancing to ebb, which slows prepayment speeds on mortgages — increasing the effective long-term yield of the servicing rights tied to those loans.

Incenter completed a dozen bulk sales transactions in January involving MSRs for agency-backed loan pools that together had a total unpaid principal balance of $113.2 billion 

“On average, historically, we’d be selling $100 billion to $125 billion [in MSRs] annually,” Piercy said. “And now we just did over $110 billion for the month of January.”

Piercy explained that companies, primarily bank and nonbank mortgage originators, have been “stockpiling” MSR assets over the past two years, holding them on their balance sheets and waiting for the right moment to sell them. That “trigger” moment finally arrived in January, he added.

“The big trigger was we had a half-point increase in the 30-year par rate [for a mortgage] in January,” he said in a recent interview. “The generally accepted benchmark par rate in the marketplace was hovering around 3 1/8 [3.125%] at the beginning of the month, and that rose to 3 5/8 [3.625%].”

San Diego-based Mortgage Capital Trading (MCT) described market conditions as being “ripe for MSR bulks sales” in an analysis posted on its website in late October of last year.  At that time, with mortgage interest rates still hovering around 3% or less, the uptick in MSR transactions was likely being driven by lenders’ year-end balance sheet adjustments and concerns over a potential capital-gains and other corporate tax increases coming out of Washington as opposed to rising interest rates, according to Piercy.

“The economy continues to heal from the pandemic and MSR pricing has seen improvement as a result,” MCT’s analysis stated. “Many servicers are still sitting on large portfolios as a result of MSR multiples/prices going to zero in early 2020, and the market is [now] becoming ripe for MSR bulk sales and there is ample capital/liquidity from buyers ready to purchase.”

Piercy said many servicers had been holding onto the lion’s share of their MSR assets since the pandemic-induced liquidity crisis hit the market in March and April of 2020. 

“Ultimately the market came back pretty quickly, by the end of Q2 [2020] really, but everybody felt the servicing was worth much more than what was being paid in the market at the time,” he explained. Consequently, Piercy said, many of the servicers chose to retain and stockpile MSRs, “with the anticipation that ultimately rates were going to rise.”

“They were willing to manage that [MSR] risk on their balance sheets because rates were historically low,” Piercy added. “So, you had two massive mortgage origination years [2020 and 2021], and you had your top mortgage originators retaining servicing, and so this asset just expanded.”

Now, with the Federal Reserve recently signaling clearly that it is taking a “hawkish position” on rates, and a rate-hike expected in March, the stage is set for a massive sell-off of MSR assets.

“Without question, with the Fed and everything it has stated and the expectation of rates rising, [MSR] buyers are much more confident with what they perceive as the [mortgage] prepayment performance going forward,” Piercy said. “And they are implementing that into their institutional valuation of the MSR assets. And so, we immediately started seeing a steepness in the pricing curves for MSRs in January, and week over week it has increased.”

As a result of the hot market for MSR sales, Incenter notched a dozen bulk MSR sales in January involving agency-backed loan pools ranging in size from $851.5 million to $23.7 billion. In fact, five of the deals involved MSRs pegged to loan pools that exceeded $10 billion in unpaid principal balance. In addition, Piercy said Incenter is already preparing bids on two new deals expected to hit the market in early February “worth about $25 billion combined.”

A look at the pricing data supplied to HousingWire by Incenter tells the story of why the MSR market is so exuberant right now. The net servicing fee — which is the MSR income stream — across the dozen MSR sales transactions brokered by Incenter last month ranged from 25 basis points to 39 basis points — with a basis point representing a fraction of 1 percent. 

The price paid for the servicing rights on the agency loan portfolios — composed of Freddie Mac, Fannie Mae and/or Ginnie Mae loans — is expressed as a multiple of the net servicing fee, and it continued to increase steadily over the month of January. Across the 12 deals handled by Incenter, the multiple paid by the MSR buyers ranged from a low of 3 to a high of 5.02. 

In fact, the largest MSR deal of the month for Incenter, involving a loan portfolio valued at $23.7 billion, commanded a price multiple of 5 — or a sales price of 125 basis points (which equates to 1.25% of the total $23.7 billion value of the loan portfolio).

MSR buyers include banks, nonbanks, real estate investment trust as well as private equity firms, according to Piercy and public records. Piercy added that private equity firms have been particularly active in the MSR market recently.

“The influence of private-equity in the space [is through] either an MSR direct investor who has their agency approvals [and] are in partnership with a servicer, or they have an equity stake in an originator,” he said. “They’ve been in this space since after the financial crisis [more than a decade ago] but their numbers have expanded.”

One of the leading purchasers of agency MSRs in 2021, according to mortgage-data analytics firm Recursion, was PHH Mortgage Corp., which is a subsidiary of Ocwen Financial Corp. PHH Mortgage ranked second among the leading purchasers of agency MSRs in 2021, with nearly $68 billion in servicing rights acquired, Recursion’s data shows. 

In May of last year, Ocwen announced it had finalized an MSR joint venture with private equity firm Oaktree Capital Management.

“Ocwen and Oaktree will invest up to $250 million of equity capital … to acquire Fannie Mae and Freddie Mac mortgage servicing rights (“MSRs”),” states the press release announcing the joint venture.. “… PHH Mortgage Corporation (“PHH”), a wholly-owned subsidiary of Ocwen, will be the sole provider of subservicing, portfolio recapture services and certain other administrative services.”

Another private-equity player in the MSR space is St. Petersburg, Florida-based Marlin Mortgage Capital, which has raised some $600 million for MSR purchases, according to industry publication Inside Mortgage Finance.

“We’ve had new groups come in that have acquired MSR platforms,” Piercy said. “We call them shells, where they are able to gain access to having Fannie and Freddie [agency] MSRs, and Marlin Mortgage is one of those.”

Marlin’s website states that it was created to act as a platform for “buying and selling residential mortgage servicing rights.”

“Marlin will enter into various subservicing agreements with best-in-class bank and nonbank operators,” the company’s website states. “… Marlin [also] has initiated the process of securing certain federal and national servicing licensing approvals necessary to own MSR assets.”

Another private equity player in the MSR space is Minneapolis-based Rice Park Capital. It announced in January of this year that it “had closed on a $300 million capital commitment from M&G Investments for its inaugural mortgage servicing rights (MSR) fund.”

“The initial $300 million of equity gives us the capacity to purchase approximately $70 billion of MSRs,” said Nick Smith, Rice Park founder and CEO, in announcing the deal. “As a result of our management team’s industry relationships, we’ve already begun cultivating MSR investment opportunities within our network of origination and sub-servicing partners.”

Yet another private equity player looking to capitalize in the MSR market is Austin, Texas-based Prophet Capital Asset Management, which purchases MSRs “in tandem with our premier mortgage-servicing partners,” the company’s website states.

Prophet in mid-January of this year filed a Form D notice of exempt offering of securities with the Securities and Exchange Commission in which it reveals that more than $65 million has been raised from investors for the “Prophet MSR Opportunities limited partnership.”

“We had a pandemic during which the government had to get involved, causing rates to drop historic levels for two years,” Piercy said. “And now you’ve got natural market influences coming out of this that are generating a significant influence in the MSR space.

“We anticipate, so long as we continue to see this perception of interest rates rising — barring something happening on the other side of world that absolutely could throw interest rates into a state of flux — that you’re going to see this type of [hot] market continuing well into the second quarter.”

The post Rising interest rates trigger an exuberant MSR market  appeared first on HousingWire.

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Pharma industry reputation remains steady at a ‘new normal’ after Covid, Harris Poll finds

The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45%…

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The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45% of US respondents in 2023, according to the latest Harris Poll data. That’s exactly the same as the previous year.

Pharma’s highest point was in February 2021 — as Covid vaccines began to roll out — with a 62% positive US perception, and helping the industry land at an average 55% positive sentiment at the end of the year in Harris’ 2021 annual assessment of industries. The pharma industry’s reputation hit its most recent low at 32% in 2019, but it had hovered around 30% for more than a decade prior.

Rob Jekielek

“Pharma has sustained a lot of the gains, now basically one and half times higher than pre-Covid,” said Harris Poll managing director Rob Jekielek. “There is a question mark around how sustained it will be, but right now it feels like a new normal.”

The Harris survey spans 11 global markets and covers 13 industries. Pharma perception is even better abroad, with an average 58% of respondents notching favorable sentiments in 2023, just a slight slip from 60% in each of the two previous years.

Pharma’s solid global reputation puts it in the middle of the pack among international industries, ranking higher than government at 37% positive, insurance at 48%, financial services at 51% and health insurance at 52%. Pharma ranks just behind automotive (62%), manufacturing (63%) and consumer products (63%), although it lags behind leading industries like tech at 75% positive in the first spot, followed by grocery at 67%.

The bright spotlight on the pharma industry during Covid vaccine and drug development boosted its reputation, but Jekielek said there’s maybe an argument to be made that pharma is continuing to develop innovative drugs outside that spotlight.

“When you look at pharma reputation during Covid, you have clear sense of a very dynamic industry working very quickly and getting therapies and products to market. If you’re looking at things happening now, you could argue that pharma still probably doesn’t get enough credit for its advances, for example, in oncology treatments,” he said.

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I created a ‘cosy game’ – and learned how they can change players’ lives

Cosy, personal games, as I discovered, can change the lives of the people who make them and those who play them.

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March 13, 2024

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Cosy games exploded in popularity during the pandemic. Takoyaki Tech/Shutterstock

The COVID pandemic transformed our lives in ways many of us are still experiencing, four years later. One of these changes was the significant uptake in gaming as a hobby, chief among them being “cosy games” like Animal Crossing: New Horizons (2020).

Players sought comfort in these wholesome virtual worlds, many of which allowed them to socialise from the safety of their homes. Cosy games, with their comforting atmospheres, absence of winning or losing, simple gameplay, and often heartwarming storylines provided a perfect entry point for a new hobby. They also offered predictability and certainty at a time when there wasn’t much to go around.

Cosy games are often made by small, independent developers. “Indie games” have long been evangelised as the purest form of game development – something anyone can do, given enough perseverance. This means they can provide an entry point for creators who hadn’t made games before, but were nevertheless interested in it, enabling a new array of diverse voices and stories to be heard.

In May 2020, near the start of the pandemic, the small poetry game A Solitary Spacecraft, which was about its developer’s experience of their first few months in lockdown, was lauded as particularly poignant. Such games showcase a potential angle for effective cosy game development: a personal one.

Personal themes are often explored through cosy games. For instance, Chicory and Venba (both released in 2023) tackle difficult topics like depression and immigration, despite their gorgeous aesthetics. This showcases the diversity of experiences on display within the medium.

However, as the world emerges from the pandemic’s shadow, the games industry is facing significant challenges. Economic downturns and acquisitions have caused large layoffs across the sector.

Historically, restructurings like these, or discontent with working conditions, have led talented laid-off developers to create their own companies and explore indie development. In the wake of the pandemic and the cosy game boom, these developers may have more personal stories to tell.

Making my own cosy game

I developed my own cosy and personal game during the pandemic and quickly discovered that creating these games in a post-lockdown landscape is no mean feat.

What We Take With Us (2023) merges reality and gameplay across various digital formats: a website, a Discord server that housed an online alternate reality game and a physical escape room. I created the game during the pandemic as a way to reflect on my journey through it, told through the videos of game character Ana Kirlitz.

The trailer for my game, What We Take With Us.

Players would follow in Ana’s footsteps by completing a series of ten tasks in their real-world space, all centred on improving wellbeing – something I and many others desperately needed during the pandemic.

But creating What We Take With Us was far from straightforward. There were pandemic hurdles like creating a physical space for an escape room amid social distancing guidelines. And, of course, the emotional difficulties of wrestling with my pandemic journey through the game’s narrative.

The release fared poorly, and the game only garnered a small player base – a problem emblematic of the modern games industry.

These struggles were starkly contrasted by the feedback I received from players who played the game, however.

This is a crucial lesson for indie developers: the creator’s journey and the player’s experience are often worlds apart. Cosy, personal games, as I discovered, can change the lives of those who play them, no matter how few they reach. They can fundamentally change the way we think about games, allow us to reconnect with old friends, or even inspire us to change careers – all real player stories.

Lessons in cosy game development

I learned so much about how cosy game development can be made more sustainable for creators navigating the precarious post-lockdown landscape. This is my advice for other creators.

First, collaboration is key. Even though many cosy or personal games (like Stardew Valley) are made by solo creators, having a team can help share the often emotional load. Making games can be taxing, so practising self-care and establishing team-wide support protocols is crucial. Share your successes and failures with other developers and players. Fostering a supportive community is key to success in the indie game landscape.

Second, remember that your game, however personal, is a product – not a reflection of you or your team. Making this distinction will help you manage expectations and cope with feedback.

Third, while deeply considering your audience may seem antithetical to personal projects, your game will ultimately be played by others. Understanding them will help you make better games.

The pandemic reignited the interest in cosy games, but subsequent industry-wide troubles may change games, and the way we make them, forever. Understanding how we make game creation more sustainable in a post-lockdown, post-layoff world is critical for developers and players alike.

For developers, it’s a reminder that their stories, no matter how harrowing, can still meaningfully connect with people. For players, it’s an invitation to embrace the potential for games to tell such stories, fostering empathy and understanding in a world that greatly needs it.

Looking for something good? Cut through the noise with a carefully curated selection of the latest releases, live events and exhibitions, straight to your inbox every fortnight, on Fridays. Sign up here.

Adam Jerrett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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The SNF Institute for Global Infectious Disease Research announces new advisory board

From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in…

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From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.

Credit: Lori Chertoff/The Rockefeller University

From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.

This international advisory board was created in part to give guidance on how to best use SNFiRU’s resources, as well as bring forward innovative ideas concerning new avenues of research, public education, community engagement, and partnership projects.

SNFiRU was established to strengthen readiness for and response to future health crises, building on the scientific advances and international collaborations forged in the context of the COVID-19 pandemic. Launched with a $75 million grant from the Stavros Niarchos Foundation (SNF) as part of its Global Health Initiative (GHI), the institute provides a framework for international scientific collaboration to foster research innovations and turn them into practical health benefits.

SNFiRU’s mission is to better understand the agents that cause infectious disease and to lower barriers to treatment and prevention globally. To speed this work, the institute launched numerous initiatives in its inaugural year. For instance, SNFiRU awarded 31 research projects in 29 different Rockefeller laboratories for over $5 million to help get collaborative new research efforts off the ground. SNFiRU also supports the Rockefeller University Hospital, where clinical studies are conducted, and brought on board its first physician-scientist through Rockefeller’s Clinical Scholars program. “One of the surprises was the scope of interest from Rockefeller scientists in using their talents to tackle important infectious disease problems,” says Charles M. Rice, Maurice R. and Corinne P. Greenberg Professor in Virology at Rockefeller and director of SNFiRU. “The research topics range from the biology of infectious agents to the dynamics of the immune response to pathogens, and also include a number of infectious disease-adjacent studies.”

In the past 12 months, SNFiRU often brought together scientists studying different aspects of infectious disease as a way to spur new collaborations. In addition to hosting its first annual day-long symposium, SNFiRU initiated a Young Scientist Forum for students and post-doctoral fellows to meet regularly, facilitating cross-laboratory thinking. A bimonthly seminar series has also been established on campus.

Another aim of SNFiRU is to develop relationships with community-based organizations, as well as design and participate in community-engaged research, with a focus on low-income and minority communities. To that end, SNFiRU is helping develop a research project on Chagas disease, a tropical parasitic infection prevalent in Latin America that can cause congestive heart failure and gastrointestinal complications if left untreated. The project will bring together clinicians practicing at health centers in New York, Florida, Texas, and California and basic scientists from multiple institutions to help the communities that are most impacted.

“The SNFiRU international advisory board convenes globally recognized leaders with distinguished biomedical expertise, unrivalled experience in pandemic preparedness and response, and a shared commitment to translating scientific advancements into equitably distributed benefits in real-world settings,” says SNF Co-President Andreas Dracopoulos. “The advisory board will advance the institute’s indispensable mission, which SNF is proud to support as a key part of our Global Health Initiative, and we look forward to seeing breakthroughs in the lab drive better outcomes in lives around the globe.”

The new advisory board will hold its first meeting on April 11th, 2024, following the second annual SNF Institute for Global Infectious Disease Research Symposium at Rockefeller.

Its members are: Rafi Ahmed of Emory University School of Medicine, Cori Bargmann of The Rockefeller University, Yasmin Belkaid of the Pasteur Institute, Anthony S. Fauci, the former director of the National Institute of Allergy and Infectious Diseases, Peter Hotez of Baylor College of Medicine and Texas Children’s Hospital Center for Vaccine Development, Esper Kallas of of the Butantan Institute, Sharon Lewin of the University of Melbourne Doherty Institue, Carl Nathan of Weill Cornell Medicine, Rino Rappuoli of Fondazione Biotecnopolo di Siena and University of Siena, and Herbert “Skip” Virgin of Washington University School of Medicine and UT Southwestern Medical Center.

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