Willie Newman: Yes. And I’d say normalized level is somewhere in between those two numbers.
Mark Elbaum: I would agree. I would agree. The reason it’s so much higher now is because I’m providing at around a low 70s number for severity that’s probably not going to persist because we’re going to have rates, and your current note rates and investor required rates for scratch and dents are going to converge.
Willie Newman: Right.
Kevin Barker: Okay. So, in a benign interest rate environment, we should see absolute margins?
Mark Elbaum: I would say in the 4-ish context. Yes.
Kevin Barker: Okay. All right. Thank you for taking my questions.
Operator: Our next question comes from Steven DeLaney with JMP Securities. Please go ahead.
Steven DeLaney: Thanks. good morning, Willie, and Mark, congrats on all the progress you’ve made on expenses and the operational overall. Look, I was going to – Kevin did a good job on the gain on sale. I was going to kind of hit the same thing, so I’ll move on to something else. You’ve targeted your Ginnie Maes as the MSR product that you’re primarily trying to reduce. Is that due to just higher general operating costs to service, or does credit come into that as a big factor in why you’re sticking with the GSEs, but moving away a bit from Ginnie?
Willie Newman: Yes. Hey, Steve, it’s Willie. So, it’s actually both. I’d say in my experience, especially if you’re not servicing the Ginnie Mae product yourself, and this is not to say anything bad about our servicing provider, it’s just that we’re one step removed from the action, and there tends to be hidden costs associated with Ginnie servicing, with the advances for non-performing, whether it’s some of the dings that you take when you actually sell the servicing that you may not recognize as easily when you’re holding the servicing. And so, all of that, and the fact that, as you know, we’ve sold a significant part of our Ginnie Mae previously, just led us to the point where to create liquidity and to make our servicing more predictive from a return and performance standpoint, it just made sense for us to sell the Ginnie.
Steven DeLaney: Got it. That makes sense. Now, you saw your total UPB drop about $5 billion in the fourth quarter. Obviously, the pace of shrinkage and servicing has really slowed. Where do you see – is it – have you reached sort of a stabilization point, and just looking out over the balance of 2023 for year-end, would you expect your MSR UPB to be smaller than the $89 million or flat, or what’s kind of your outlook for the size of the servicing book?
Mark Elbaum: It’s going to be in that neighborhood, I think. So far, prepaids are extraordinarily slow, but so too is the amount – the level to which we’re replenishing it, but I would expect us to be able to replenish a little bit faster than our speeds as we move through the cycle and get out of the seasonality period. But not substantial. I think 90-ish. We are going to continue to sell Ginnie, by the way. So, that’s going to be a negative on that number. And we have a Ginnie sale teed up for closing on the second quarter. So, that’s coming as well. But you can think of it being in that high 80s, 90 area.
Steven DeLaney: Thanks, Mark. That’s helpful. And one final quick thing, Willie. I realize this is premature. But in your – in this market, if you can do long range planning, I guess that’s anything past next week, but like the board, when the decision was made to eliminate the smaller $0.04 dividend, are there any like benchmarks, and I’m thinking 2004, let’s say, or whatever that point is, of accomplishment, of stability and where – conversations with the board, what timeframe should we think and investors think is realistic to have any expectation of the possible reinstatement of a cash dividend? Thanks. That’s it for me.
