Glen Messina: Yes. Look, I think Wells Fargo was the most prominent in announcing they’re downsizing their MSR portfolio. We are seeing other smaller banks as well really think long and hard about do they want to own MSRs on a go-forward basis. And we are seeing some MSR packages enter the bulk market from the banking community. We expect, unfortunately, the Basel III Endgame rules are likely to put further pressure on banks who own MSRs and don’t have the capacity within the Basel III Endgame rules to hold MSRs. So we do think the bulk market is going to continue to be fairly robust for the coming several quarters as a result of just a really tough originations market affecting largely IMBs and the constraints – increasing constraints that banks are facing holding MSRs and mortgage assets.
Operator: Next question comes from the line of Eric Hagen from BTIG.
Eric Hagen: So the outlook for a 9% pre-tax ROE next year, how do you feel like that would maybe change in response to interest rates being both higher or lower? And how much of that return do you feel like is coming from the forward versus reverse origination and servicing side of the business?
Glen Messina: Yes. Right now, I’d say, it’s pretty obvious looking at our results, the majority of the returns are coming from our servicing platform. We expect on a go-forward basis that we’ll continue to see, if interest rates stay steady, strong performance out of our servicing platform. That said, if rates do change in a material way, again, I think that profit dynamic, we expect would shift. We’d see more profitability coming from originations, less coming from servicing as MSR run-off would go up. And increasing originations volume typically would mean more opportunity for originations as well as — historically, margins have typically widened as interest rates have go down and refinancing volume picks up. In terms of relative performance of reverse versus forward, Sean, you laid out that.
Look, our reverse servicing and subservicing platform continues to be profitable and generates good returns. But reverse originations is struggling just like forward is. So look, it’s the benefits of our balanced business model. Having both forward and reverse servicing and originations allows us to balance and balance out the impact of the interest rate environment. And we expect that will continue to serve us well on a go-forward basis.
Eric Hagen: Yes. A follow-up on that. I mean, if marks — mark-to-market and other one-time items contribute to the ROE exceeding 9% or something thereabout or do you think that would change your approach to buying back either stock or debt?
Glen Messina: So this quarter, I think as you saw, there was really zero neutral impact from any notable items. There wasn’t any opportunistic transaction gains and distressed assets and MSR values, we’re essentially fully hedged throughout the quarter. Our priority continues to be focused on deleveraging the balance sheet as we think about it. Look, our higher financial leverage relative to peers does contribute to higher earnings volatility. And we do think our stock — the trading price of our stock reflects the fact that we have a higher leverage against the company, which creates more capital structure risk and increased potential earnings volatility. So our preference here in the near-term is really to allocate excess liquidity when it’s available to repurchase debt. And as our debt ratios become more consistent with our peer group average, then we can think about a variety of different applications for our capital.
Eric Hagen: Yes. No, that makes sense. Just a couple of questions around subservicing. I mean, how should someone think about the gross margin on like incremental subservicing? Like, is there a rule of thumb for every $1 billion of subservicing you add from here? What’s the kind of pre-tax profit margin? And I think I heard you guys talk about commercial subservicing. Can you talk about the nature of what you’re subservicing there? And kind of how the cost may be compared to forward resi servicing?
