See: Mortgage.
As of 2018, Americans collectively owed over $10 trillion—that’s “trillion” with a “t”—in mortgage debt. Nearly $2 billion worth of mortgages were originated that year, and if we consider that the average purchase price of a home was somewhere in the neighborhood of $300,000, that’s a whole lot of mortgages. Our point is that mortgage originators are busy people. So when it comes time to manage those mortgages—billing borrowers, collecting and processing payments, dealing with property taxes, etc.—a lot of mortgage originators say, “Ain’t nobody got time for that.”
Enter MSRs, which stands for “mortgage servicing rights.” MSRs happen when the original lending company contracts with a third party to handle all of the mortgage administration stuff we mentioned above. In essence, the MSR is buying the mortgage from the original lender, which means the lender can go off and lend more money to other wannabe homeowners. MSRs handle billing, deal with mortgage insurance premiums, and tackle tax issues and interest rate concerns and everything else that goes along with managing a mortgage. And all they ask for in return is (surprise!) a fee.
Related or Semi-related Video
Finance: What is a Mortgage?345 Views
Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello
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