Sean O’Neil: Yes, we are seeing stronger bids or higher marks on predominantly at least the GSE MSRs that we see in the market. So we actively track kind of all bids that we’re aware of that hit the market and obviously participate where we’re interested and we are through the month of February seeing definitely higher marks versus the fourth quarter, probably due to maybe more investors showing up because the supply continues to be really robust. And so it’s an interesting scenario where there’s very strong amounts hitting the market, but slightly improved valuations on those.
Matthew Howlett: Great. Look, you have a great platform. Just in the mark-to-market volatility sometime difficult to model. On that note, just give me the number again on the improvement in every, you said billion of UPB you add, you see two and a half to three bps of margin. Just give me those numbers again, Glen and Sean?
Sean O’Neil: Yes, for sub-servicing additions, we said for every billion dollars of UPB added, it’s between two and a half to three basis points of profitability.
Matthew Howlett: And that’s you effectively put up no capital for it for that.
Sean O’Neil: That’s GSE sub-servicing. That’s correct.
Matthew Howlett: Well, that’s an incredible return. Last question, we’ll wait for the €“ could you give us the DTA €“ reserve against the DTA at year-end?
Glen Messina: I don’t have that handy. That’s actually going to be in the K, which is released later today. So that’ll be accessible at that point.
Matthew Howlett: Got you. And it’s €“ the timeframe is sort of three years till profitability, so you can start to release some of that, is that sort of the timing with the shock clock if you will?
Glen Messina: It’s €“ unfortunately like everything to do in the world of taxes. It’s not that cut and dried. There’s not an incredible bright line, and so we have to continuously consult with our outside tax council and auditors, we actually think it’s a sustained view of probably less than three years, but in excess of one year of sustained profitability on a GAAP basis, which allows you to drop the valuation allowance and recognize the NOL.
Matthew Howlett: Great. No, I just think there’s a lot of value, potentially in that shareholders will give you credit for it and it’d be nice to see that come on the balance sheet, at some point down the road. I appreciate taking the questions. Thanks guys.
Glen Messina: Thank you, Matt.
Sean O’Neil: Thank you.
Operator: Our next question comes from Eric Hagen with BTIG.
Eric Hagen: Hey, good morning, guys. Hope all’s going well. Just got a couple here. I mean, how much liquidity or room on funding lines do you have to buy MSRs for yourselves away from MAV and maybe how you’d characterize the market for MSR financing, especially advanced funding right now? And even the quality of financing that you guys can get with the leverage in the overall business right now. And then maybe as just kind of a little follow up to that, what is the difference in ROE when MSR are financed through MAV versus financed on your own balance sheet? Thank you, guys.
Sean O’Neil: Sure. Thanks Eric. It’s Sean, I’ll take that. So you talked about what I view as two very different financing facilities or two distinct facilities. So there’s MSR financing and then servicing advanced facilities. And we typically, like a lot of our competitors structure those separately. The exception being a Ginnie Mae book where you have to typically combine them due to the acknowledgement agreement at Ginnie Mae, which forces you to use a common lender in a therefore a common facility. On the MSR side, both in the Ginnie Mae and the GSE space. Still pretty robust opportunities to finance MSRs. So we have multiple lines. We have one line for our Ginnie’s and we have several lines for our GSEs. One or two lenders have moved in or out of this space.
But predominantly speaking, we’re still seeing broad-based interest. It’s a fairly well understood asset. It’s fairly €“ I don’t want to say predictable, but there’s extensive modeling. So a lot of the banks that have mortgage debts of their own have high confidence in understanding what GSE and Ginnie Mae MSRs do, and so that allows them to stay in that market. Similarly on the servicing advances, that’s actually even a little bit deeper between the regional and the large banks. There’s some mega €“ some of the four mega banks don’t actively participate in direct MSR financing, but almost all of them are pretty active in the servicing advanced space as well as other investment bank and mid to large size regional banks. So very active interest there.
Terms have been €“ in terms of advanced rate and spread terms have been stable to improving over the last eight quarters. You’ll typically see anywhere between 60% to 70% advanced rates on the GSEs and probably a five point reduction for Ginnie Maes, they suffer a slightly lower but still generous enough advance rate. And the spreads have been pretty stable as well. And then you want to repeat your last question with respect to MAV and ROE?
