Glen Messina: Yeah, Matt, look, our primary objective, I think as we said in the last quarter, was to address the nearest maturities first, right? So our primary focus is addressing the PHH corporate debt, which matures first in the capital structure. And we’d like to have that addressed before it goes current, right? So within one year of its maturity. That said, in working with our advisors, I’d say, look all options are on the table. If there is an opportunity that’s accretive for our shareholders that addresses both courses of our debt stack, we certainly would give it due consideration. So look, I think we’re still early in the process. I think it’s premature to say exactly this is what we’re going to do. I think there’s a lot of options open to us and we’re exploring those with our advisors.
Sean O’Neil: And debt, Matt, the debt gets current in March of [25] (ph) for the PMC notes and March of [26] (ph) for the OSC notes, not January.
Matthew Howlett: Okay, so you can call them at PAR at both those dates.
Sean O’Neil: From the point where they go current until the debt matures, you can call it part of that is correct, and then prior to that I believe it’s at about [102] (ph).
Matthew Howlett: Got you. Well, and that falls into my next question. Obviously that’s going to alleviate significant pressure on the equity. Glen, you talked about the board about allocating capital towards share repurchases. I look at your stock trading somewhere between 40% and 50% of forward fully diluted book. Again, there’s that DTA that could come on at some point that’s worth, that could be extremely valuable. What’s the appetite when you get, this refinancing or your capital stack figured out to go buy back shares here at this discount?
Glen Messina: Oh, look, Matt once we accomplish our capital structure objectives and refinance the corporate debt, then I think the — door is open for the board to consider a lot of options for capital allocation and to allocate capital in a way that produces the most value for shareholders. So yeah, right now our priority is the corporate debt stack and after that, we have a lot more flexibility.
Matthew Howlett: Yeah, look, and I should have congratulated with the ROE and the guidance. I mean, you’re punching above your [weight class] (ph). You’re in line with the peers, which trade way above book, as we’re all aware of. So certainly, we would encourage that, and I appreciate the progress with the debt paydowns. Thank you very much.
Glen Messina: Thanks, Matt.
Operator: [Operator Instructions] We will take our next question from Eric Hagen with BTIG. Please go ahead.
Eric Hagen: Hey thanks, good morning. Hope you guys are good. I think you noted $6 billion of MSR sales that you’ve done in the second quarter, taking place above book value. Are those wholly owned or are they owned with MAV? Just any kind of detail that you have in terms of just — kind of what we should expect as a realized gain from that sale? Thanks guys.
Glen Messina: Yeah, so it’s up to $6 billion and those were PHA, Joplin owned MSRs not by MAV. So you know the 100% of the economics would come to us. I did separately mention that MAV selling up to $10 billion and again 15% of those economics come to us and look I’m sorry Eric we just don’t disclose the trading prices of our MSRs. So they were done above book, we’re excited about that. We believe that certainly demonstrates the accuracy and validity of our MSR mark, but we don’t disclose specific trades.
Eric Hagen: What would you say is driving the sales that to take place right now? Is it — is it just a really good bid — that you guys are seeing or is it some intention to free up more liquidity to buy back debt or what’s the intention?
Glen Messina: Yeah, first and foremost, it comes down to economics. Eric, look, the bids that we and MAV received were far in excess of what we could model from long-term economic value on these MSRs. So we’ve said before that market leaders have an aggressive view of MSR values. That is still the case. And we took the opportunity to take advantage of that, particularly if we don’t see our way to realize that economic value long term. And obviously, it does create capital and liquidity to support our debt refinancing, but first and foremost, the math has got to work. And in this case, it more than did.
Eric Hagen: Yep. Okay. That’s helpful. On the marks for the MSR itself, I mean, does the cost efficiencies that you guys are discussing factor into the fair value mark at all, or how should we think about some of the tangible benefits that you might reap in the cost of service and how that’s maybe showing up on the balance sheet or the mark itself.
Glen Messina: Yeah, so Eric, we use market-based assumptions. I should say our valuation expert uses market-based assumptions to value the MSR. So our specific cost to serve and any, I think we certainly look for reasonableness on individual assumptions, but we don’t necessarily price to our specific assumptions. Where that would come through the P&L effectively is day to day operations right so as we did operate and service loans if we can service them for a cost per loan that’s lower than you what the other vendors model has baked into it then we get accretive operating earnings to the business about what would have been modeled.
Eric Hagen: Okay. I had just 1 more on the modeling. I mean, looking at the servicing and subservicing fees of $205 million in the quarter. I mean, looking year-over-year, what may have driven that decrease? Is there a breakout for how much came from subservicing? Thank you guys again. Appreciate it.
Glen Messina: Yeah, so there is one big thing that would have driven the decrease. So we did — at the end of last year, deconsolidate a portion of the Rithm subservicing, which I should say not deconsolidate, but derecognize, right? Sean, that’s the appropriate terminology. You know, we used to prior, you know, this quarter last year, we used to recognize the full subservicing fee through revenues as if it was an owned MSR, and then there was a – contra-expense, which was the amount of servicing fees paid out to Rithm. Now that transaction has just reported that’s [additional] (ph) subservicing deal. When our queue comes out you’ll see the details in it and if we chat later on today or you know in the next couple of days you know Sean and Francois Grunenwald — could take you through the numbers and how to reconcile them.
