QuantyPhi recently announced an enhanced Mortgage Servicing Rights (MSR) valuation model offering. QuantyPhi built the sophisticated model to calculate the value of a credit union’s mortgage loan servicing income on loans that have been sold, but for which the servicing rights are retained as an income stream.

The value of MSRs must be reported as an asset amount on the credit union’s call report and should be determined by calculating the net present value of all expected future income from servicing the loans. QuantyPhi’s model uses industry-best prepayment projections and distinct discount rates, applied granularly to each mortgage loan. Further, the results are shown under not only a base case interest rate projection, but also potential shocked rate environments to give an expected array of results based on future interest rate fluctuations.

"QuantyPhi's MSR model provides credit unions with an accurate way to record a present value based on the variable future cash flows of these loans," said Adam Stone, Vice President ALM & Investments. "Recent interest rate movements stress the importance of understanding how prepayment speeds change with interest rates and how those effect your MSR income."