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61 For some MSR buyers, there will be a time of reckoning when the chickens come home to roost. everything so much easier. For companies that are originating and selling MSRs on a flow basis or originating and retaining MSRs to sell later, having a strategic partner in place that supports the servicer's business model is key. Many companies choose to retain MSRs, but don't want to manage the servicing risks, and there are subservicers available that can offer them great execution. For those that want to sell MSRs down the road, there are also subservicers available— though fewer of them—that have strong capital partners and will be able to take MSRs off their hands without paying extra onboarding or offboarding fees. For most firms, forming a strategic partnership with such a subservicer is the conservative and sensible approach. is is also a good time to be flexible and nimble, especially if you have more assets and different types of assets than you can reasonably handle. If you need to offload MSRs, your partner should be flexible and nimble as well. Some buyers in this space—especially very large ones—have arduous processes that sellers must go through in order to sell MSRs. e ideal partner is typically one that is not so big yet still has good capital partners in place. If you're selling MSRs, however, you want to work with buyers who understand the fundamentals of the market you operate in. Rather than finding the company that offers the best price, the goal should be finding a company with which you can have a mutually beneficial partnership. Holdbacks and other issues can typically derail transactions after they are executed, but with the right partner, this can easily be avoided. Sellers will also want to make sure the buyer has a good market reputation. Borrowers will complain about servicers that treat them badly, and if a lender is fortunate, the borrower won't see the connection between lender and servicer. In some cases, however, they will make the connection and will not think highly of the lender that chose to sell their loan to the servicer that treated them poorly. Is losing a repeat borrower or a cross-selling customer worth the risk? If you're retaining and considering hiring a subservicer, that subservicer's reputation is important, too. Companies need to make sure their subservicing partner has serviced similar sized portfolios and assets. If you have a $35 billion portfolio, and the subservicer you're thinking of partnering with only manages $10 billion in assets, they're probably not going to be a good partner. e same applies if you have a portfolio of Fannie loans and the subservicer specializes in fix-and-flip properties. Lastly, servicers should look closely at the management team and their backgrounds. Are they steeped in the servicing business and understand it front to back? Or is the leadership team comprised of former investment bankers, who typically do not make the best servicing experts. At the end of the day, you want to have confidence in the management team so that when trouble arises—and it always does—you know they will handle it. It's the management team that sets the tone for the entire operation, which trickles down to the boots on the ground. No doubt about it, the MSR market is hot right now, and with all the struggles happening on the origination side of the business, there's no harm in enjoying the ride. But servicing comes with its own set of challenges that will only grow in the months ahead. Regardless of their strategy and business goals—whether it's selling or buying, now or down the road— having the right relationships in place will make future market shifts much easier. Allen Price, SVP, Head of Sales at BSI Financial Services, is a mortgage industry veteran with more than 20 years' experience in primary and secondary markets. His focus at BSI Financial includes loan subservicing, quality control, trading mortgage servicing rights, and real estate business lines of operation for title and escrow, real estate, and foreclosure and default services through Entra Solutions. Prior to BSI Financial, Price served as SVP at RoundPoint Financial Group, where he oversaw the company's sales and strategy.