PPT Slide: Revenue Streams across the Mortgage Value Chain

Revenue Streams across the Mortgage Value Chain PPT

This PPT slide, part of the 97-slide Strategy Analytics Templates PowerPoint presentation, titled "How Money Is Made along the Mortgage Value Chain" outlines the various revenue streams associated with key players in the mortgage industry. It is structured into 4 main categories: Origination, Servicing, Securitization, and Investors. Each category highlights specific revenue sources and mechanisms that contribute to the overall financial ecosystem of mortgages.

In the Origination section, it details several fees, including application and credit report fees, which are collected regardless of the application outcome. It also mentions origination fees, which are contingent on successful applications, typically ranging from 1% to 2% of the principal. Additional revenue comes from ancillary fees and interest on mortgage loans, emphasizing the complexity of income generation at this stage.

The Servicing segment focuses on servicing fees, which are a fraction of the outstanding principal and decline as the loan is paid off. Float income is another revenue source, where servicers collect payments from borrowers and earn interest on tax and escrow accounts. The slide also notes the potential for additional income through prepayment and transfer processing fees, as well as opportunities for cross-selling insurance products.

Securitization reveals how players earn through guarantee fees for securitizing mortgage pools, with average fees around 20 basis points. Investments in mortgage-backed securities (MBS) are highlighted, noting that returns are typically higher than the cost of capital, particularly for government-sponsored enterprises (GSEs).

Lastly, the Investors section discusses returns on fixed-income investments, which tend to be higher than Treasury bills with similar risk profiles. It also mentions revenues from trading MBS, including arbitrage opportunities and bets against interest rate movements.

This slide provides a comprehensive overview of the financial mechanisms at play within the mortgage value chain, making it a valuable resource for stakeholders looking to understand revenue generation in this sector.

This slide is part of the Strategy Analytics Templates PowerPoint presentation.

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