By the Numbers
The ups and downs of servicer speeds
This material is a Marketing Communication and does not constitute Independent Investment Research.
The debate continues about whether October’s fast prepayment speeds signal new ability for lenders to find refinanceable loans or just shorter timelines to close loans. Several servicers contributed even more to the October surge than they typically do. But that outsized effect didn’t last long—each of those servicers slowed relative to their peers in November. It’s another sign that October’s surge came largely from shorter timelines.
Most servicers’ influence on prepayment speeds was consistent from October to November, but a few had big changes (Exhibit 1). United Shore, Movement, Nexus Nova and Provident all slowed more than their peers on in-the-money loans in November, after controlling for collateral differences. But each of those servicers was relatively faster from September to October. This suggests that some servicers’ speeds pick up quicker than others, but that excess speed quickly fades.
Exhibit 1. Comparing servicers prepayments in November to October
Conventional 30-year loans. Only loans with positive rate incentive are included. The “Score” is the % fast(slower) a servicer’s loans prepaid compared to similar loans with the typical servicer. Not all names are labeled due to space constraints. Includes the 43 largest servicers plus one point that represents all the smaller servicers.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
A positive number on the x-axis indicates a servicer whose loans, after controlling for collateral characteristics like loan size, prepaid faster than the typical servicer in October. The y-axis is the same metric, but for November. Servicers that fall below the 45-degree line posted a relative improvement (slowdown) in prepayment speeds. Data underlying the charts is included in the appendix.
A few other servicers of interest are noted on the chart. Rocket, while it remained the fastest servicer, had consistent prepayment behavior in September, October and November. Nationstar (aka Mr. Cooper) has also stayed consistently neutral throughout this refinance wave. Rocket recently acquired Nationstar but, thus far, has not exerted an influence on Nationstar’s speeds. Finally, Fairway is the one notable servicer that prepaid much faster this month than it did last month.
The comparison of October to September can be found here.
It is also useful to compare how servicers behaved in November relative to their longer-term behavior (Exhibit 2). This uses a 12-month horizon that ends with August 2025 as the reference month. Most servicers’ prepayment behavior in November were near the red line, indicating consistent prepayment behavior. That includes the servicers that were fast in October, except Nexus Nova.
Exhibit 2. Comparing November to the 12 months ended in August
Conventional 30-year loans. Only loans with positive rate incentive are included. The “Score” is the % fast(slower) a servicer’s loans prepaid compared to similar loans with the typical servicer. Not all names are labeled due to space constraints. Includes the 43 largest servicers plus one point that represents all the smaller servicers.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
The good news for MBS investors is that, at least in this refinance wave, the outsized negative convexity in October appears to have been temporary. Certain servicers’ speeds pickup quicker than others, likely due to shorter timeframes needed to close loans, but speeds quickly revert to normal. So, the long-term effect on convexity may be minimal, but certain servicers will be prone to fast prints when mortgage rates fall. Of course, past is not necessarily prologue, so there is always the risk that this behavior could be more persistent the next time mortgage rates fall. But that hasn’t yet happened.
Appendix
Exhibit 3. Data for Exhibit 1
Conventional 30-year loans. Only loans with positive rate incentive are included. The “Score” is the % fast(slower) a servicer’s loans prepaid compared to similar loans with the typical servicer.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
Exhibit 4. Data for Exhibit 2
Conventional 30-year loans. Only loans with positive rate incentive are included. The “Score” is the % fast(slower) a servicer’s loans prepaid compared to similar loans with the typical servicer.
“12M Aug 2025” is the 12 months from September 2024 through August 2025.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
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